IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440

5. Mark and Antonio Assetta (to whom I shall refer as the Assettas) are in the business of property development and construction. They are the directors of the first defendant, King & Taylor Pty Ltd, and they are also the directors of Assetta Constructions Pty Ltd (which, until this proceeding, was proposed to undertake the construction of a supermarket and retail complex on vacant land at Taylors Road, Delahey).

8. King & Taylor was incorporated in 1997 for the purpose of acquiring the land and on 29 June 1997 King & Taylor entered into a contract to purchase the land from the Commonwealth at a price of $ 505,000 (of which $450,000 was borrowed from ANZ Banking Group Ltd). Since acquisition the zoning of the land has been changed to B1 (which enables it to be used for retail purposes) and some roads have been constructed on the land.

11. Once the rezoning had been achieved, Mark Assetta spoke to a number of potential tenants to endeavour to interest them in the proposed shopping centre. In the course of that exercise, in November 1998 Mark Assetta spoke concerning the land to Glen Fagan the chief financial officer of IGA and later, in February 1999, to Peter Shaw, the Victorian Property and Development Manager of IGA, and Shaw told Assetta that IGA was interested in establishing a supermarket on the land.

14. After some months of discussion between the Assettas and IGA, on or about 19 August 1999 the Assetta's solicitor, Richard Szental, produced a first draft agreement for the construction by King & Taylor of a shopping centre on the land (as depicted in plans annexed to the agreement) and the lease of the supermarket within the shopping centre to IGA; with the intention that the supermarket then be subleased to an independent operator called Victory Supermarkets. The Assettas obtained a planning permit for the proposed development on 7 December 1999.

17. Early in 2000, Victory Supermarkets decided not to proceed and for the next couple of months IGA looked for another interested independent operator. Ultimately it found one in the form of the Morgan family - an established IGA operator with a number of existing IGA shops - and a meeting was arranged between Mark Assetta , the Morgans, Glen Fagan and Jonathan Carlile, the National Asset Manager of IGA. Further meetings followed between Richard Szental for IGA and Ms Natasha Zusman, the senior corporate solicitor for IGA, in which the terms of the proposed lease to IGA and sublease to the Morgans were negotiated.

20. Matters came to a head in May 2000 at two meetings between Zusman, Carlile and Hamilton and Szental and Mark Assetta, at the Assettas' offices in Melbourne. The subject of discussion at the first meeting was some outstanding issues of exclusivity and outgoings. At the second meeting, which followed immediately after the first, the principal topic of conversation was a large number of amendments to the proposed agreement for lease and proposed lease, which had been requested by Mr Roger King, the solicitor for the Morgans. Reference was also made to 15 November 2000 and 15 February 2001 as possible opening dates for the supermarket. A considerable degree of consensus was reached on the various points, and Ms Zusman and to a lesser extent Mr Szental were deputed to attend to drafting to give effect to the changes which had been agreed.

23. Telephone conferences followed between Ms Zusman and Mr Szental on 17 May 2000 and on 1 June 2000, and on 20 June Ms Zusman sent revised drafts of the proposed lease to Mr Szental with copies to Roger King. Thereafter there was even more detailed correspondence between Ms Zusman and Mr Szental, of which again a great deal appears to have been directed to changes suggested by Mr King and conveyed as such by Ms Zusman to Mr Szental. That culminated in a conference call on 30 August 2000 between Mark Assetta, Mr Szental, Mr King, Carlile, Fagan and Ms Zusman, and a further conference call on 8 September 2000 between King, Mr Szental and Carlile and Ms Zusman, at which final differences were resolved.

26. Having reached that measure of agreement, on 11 September 2000 Ms Zusman sent to Mr King the final form of sublease for execution and on 20 September 2000 she received from Mr King a fax of the completed execution page of the agreement for sub-lease. Immediately afterwards IGA executed the agreement for lease with King & Taylor and Ms Zusman faxed to Mr Szental a copy of the completed execution page of the agreement for lease. The next day she sent to Mr Szental both parts of the agreement for lease as executed by IGA. Some further communications followed between Ms Zusman and Mr Szental, to give effect to changes to the plans annexed to the agreement for lease. Finally, on 29 November 2000 Ms Zusman received from Mr Szental notice that King & Taylor had executed the agreement for lease.

29. In this proceeding IGA seeks an order for specific performance of the agreement for lease, and King & Taylor resists performance.

32. King & Taylor alleges that IGA repudiated the agreement by not paying stamp duty on the agreement for lease; and by "granting" an agreement for sub-lease to the Morgans without the prior approval of King & Taylor; and by asserting that the agreement for lease was not properly executed; and by submitting to King & Taylor a new agreement for lease different in form to the agreement for lease which had already been executed; and by demanding that King & Taylor execute that new form of agreement for lease in substitution for the existing agreement for lease.

36. The facts which give rise to the allegations of repudiation begin with the letter of 29 November 2000 by which Mr Szental gave notice that the agreement for lease had been executed by King & Taylor. It was as follows:

"I have now received the Agreement for Lease executed by my client. Unfortunately, the Agreement for Lease is executed by David's Distribution Pty Ltd, whereas the Deed of Guarantee and Indemnity refers to IGA Distribution Pty Ltd (the new name of David's Distribution Pty Ltd). Whilst that in itself is not a problem, the problem that arises is that the deed of guarantee and indemnity refers to an agreement for lease of the same date as the deed of guarantee. Given that the agreement for lease was executed before David's Distribution Pty Ltd changed its name, the documents are inconsistent. My client requires that the agreement for lease and the deed of guarantee and indemnity has the same date. I suggest, therefore, that you arrange to provide me with two copies of page 21 of the agreement for lease re-executed by IGA Distributions Pty Ltd and an authority from you to insert that page into the existing agreement for lease. I can then date the documents and arrange for them to be stamped. With regard to stamping, you need to provide me with an estimate of rental addressed to the State Revenue Office of Victoria estimating total rent and GST payable for the term of the lease. At the same time, you need to provide me with a cheque in favour of State Revenue Office in payment of estimated stamp duty calculated on the basis of that total rent and GST."

40. On 18 December 2000 Ms Zusman faxed in answer to that letter the following:

"Further to your facsimile dated 29 November 2000, rather than re-executing any documents I suggest that I authorise you to amend the reference to the date of the Agreement for Leas in the Deed of Guarantee and Indemnity. I do not see why the 2 documents need to be dated the same date. Can you please advise whether this is acceptable and the matter can then be resolved immediately. In relation to stamp duty, would it be possible for you to prepare the estimate of rental in the form required in Victoria. I can then provide you with the cheque for the State Revenue Office. (Emphasis added.) Regards Natasha Zusman Corporate Solicitor"

44. Ms Zusman gave evidence, which I accept, that she was not familiar with the form of estimate of rental required in Victoria and that is why she asked Mr Szental to prepare the estimate. But her request was not to be answered. Mr Szental said in evidence, which I also accept, that he left on 18 December 2000 to travel overseas and so he did not receive Ms Zusman's request until his return late in January 2001. Even then he did not respond to the letter.

47. Not surprisingly, on 2 February 2001 Ms Zusman sent a further fax to Mr Szental, as follows:

"I refer to my facsimile dated 18 December 2000. I note that I have not had a response. The documents must be stamped as soon as possible and I would be grateful if you could respond to my last facsimile. Regards Natasha Zusman Corporate Solicitor"

52. It is possible, but I am unable to reach a concluded view about it, that Mr Szental's delay in responding to Ms Zusman's letters was in the first place the result of some uncertainty on the part of the Assettas as to whether or not they wished to proceed with IGA. I say that because, according to the evidence given by Mr Carlile, late in January or early in February 2001 Mark Assetta telephoned Carlile and said that the Assettas had just realised that the lease to IGA was for a term of 10 years, not 15 years, and that a 10 year term was causing problems with the Assettas' financiers.

55. Mark Assetta agreed in his evidence that he did telephone Carlile about the length of the lease, and he did tell Carlile that he intended to follow up the issue with the Morgans, but he denied that he said anything about difficulties with his financiers, and he said that there were none.

58. On balance I prefer the evidence of Carlile on that point. As he said, there had been extensive discussions about the term of the lease during the negotiations for the agreement for lease and there could not have been any mistake in the mind of the Assettas about what had been agreed to. In the absence of any other rational explanation, it seems to me not improbable that it was financier concern that made the issue resurface when it did. But I am unable to find that was so.

61. Because of the absence of any response from Mr Szental, on 6 March 2001 Ms Zusman spoke by telephone directly to Tony Assetta and asked him if he could chase up the documents and see whether they had been stamped. Tony Assetta agreed to do so and he subsequently consulted Mr Szental as to what was happening. According to Tony Assetta's evidence, Szental told Tony Assetta that Szental had done everything that he could, and that he was still waiting on the rental estimate and cheque for which he had asked in his letter of 29 November 2000. But I do not consider that Tony Assetta's evidence on that point is wholly accurate.

64. I accept that Tony Assetta spoke to Mr Szental about the delay, as he said he did, and I accept that Mr Szental gave him some sort of explanation for the delay. But I do not accept that the explanation was as clear as Assetta now recalls. Although Tony Assetta said that Mr Szental showed him Ms Zusman's letters of 18 December 2000 and 2 February 2001, and explained them in the context of Mr Szental's own letter of 29 November 2000, Szental's own evidence was that he probably did not show the correspondence to Assetta and simply told Assetta that Mr Szental was still waiting on Ms Zusman. That seems to me to be a more likely version of events, for a number of reasons.

67. To begin with, by the time that Ms Zusman telephoned Tony Assetta in March 2001, approximately three months had gone by since the documents had been executed, and hence it was possible that a late stamping penalty could be imposed. I think it is probable that Mr Szental experienced some embarrassment about his inefficiency and consequent rudeness in failing to reply to either of Ms Zusman's faxes, and that he was disposed to defend his position lest it be suggested that he should pay any late stamping penalty. As a result I think that his advice to Tony Assetta was likely to be less than complete and skewed towards an attribution of blame to Ms Zusman.

70. In the second place, there is objective evidence that Tony Assetta did not call back to Ms Zusman and tell her what Szental had said. If Mr Szental's advice had been as clear as that he had to have an estimate from IGA, I think that Tony Assetta would have telephoned Ms Zusman immediately and said exactly that. In his evidence, Tony Assetta sought to explain away the incongruity on the basis that he felt it inappropriate to speak directly to Ms Zusman about a matter which he regarded as being the province of the lawyers. But that explanation suggests a degree of punctiliousness and sensitivity which I was unable to discern anywhere else in Tony Assetta's actions or correspondence. I reject the explanation as unconvincing.

73. In the third place, after receiving no response to her inquiry of Tony Assetta, Ms Zusman turned to Carlile and asked him to telephone Assetta and see if Carlile could find out where the documents were and whether they had been stamped. When Carlile did so, Tony Assetta's immediate response was that he would find out what was happening and revert; not that he had already spoken to Szental and established that the fault lay with Ms Zusman in failing for the best part of three months to provide an estimate and cheque.

76. In the fourth place, Tony Assetta did consult Mr Szental again as to whether the documents had been stamped, and I do not accept that he would have done so if Mr Szental had already explained in clear terms that the fault lay with Ms Zusman in failing to comply with Mr Szental's 29 November 2000 request for a rental estimate and cheque and that Mr Szental could do nothing further until those things were provided.

79. Tony Assetta gave evidence that when he did consult Mr Szental again, Szental again said that he had done what was required of him; and that he was still waiting on the rental estimate and cheque which he had sought in his letter of 29 November 2000; and that he could do nothing further until they were provided. Tony Assetta also said in evidence that after receiving that information from Mr Szental, Assetta called back to Carlile and told Carlile the substance of what Mr Szental had said. But I do not accept that Tony Assetta's response to Carlile was as clear as that either.

82. According to Carlile's evidence, when Tony Assetta called back on 16 March 2001, Tony Assetta said only that Mr Szental claimed to have done everything that was required of him, and when Carlile questioned Assetta as to whether that included stamping the documents, Assetta was unable to say. I am satisfied that is what occurred. The objective evidence bears it out. If Assetta had reported that Szental had been waiting on a rental estimate from Ms Zusman for more than two months, Carlile was very much the sort of man who would have done something about it immediately. Yet instead of doing that, Carlile continued to act as if he did not know what it would take to get the documents stamped and continued to ask what it was that was required to get the matter completed. In an e-mail of 20 March 2001 to Ms Zusman he reported as follows:

"I spoke to Tony Assetta last Friday - he tells me Richard confirmed that what he was required to do has been done - Tony didn't know if this extended to stamping the doc.s however he thought so. I suggested he should find out as we well look to them for any fine - if the doc.s haven't been stamped. I also asked Tony to ensure that a copy of the doc.s were returned to you . Please let me know if you hear nothing further by this Friday"(Emphasis added).

86. Carlile would not have sent such a message if he had been told by Assetta on 16 March 2001 that the problem was that Mr Szental was still waiting on a rental estimate and cheque from Ms Zusman and could do nothing further without them.

89. On at least one further occasion at about that time, Carlile spoke again to Tony Assetta and pointed out that IGA had still not seen the executed lease documents and that they were concerned at Mr Szental's delay in getting the documents back to IGA. According to Carlile, Assetta said on that occasion that his relationship with his solicitor had broken down so badly that he would have to get his accountant to telephone Mr Szental, and that he could not understand what the problem was. Carlile says that he replied that if Assetta had a problem dealing with his solicitor IGA would be happy to arrange for Bill Hamilton of IGA to pick up the documents from Szental's office and arrange for them to be stamped. Carlile says that he reiterated that he would look to King & Taylor for any late stamping penalty which may be imposed and he said that he wanted an indemnity against it.

92. Tony Assetta gave evidence which was substantially similar. He denied that he said anything to Carlile to the effect that Assetta's relationship with Mr Szental had broken down. But he agreed that he was so frustrated about the lack of progress that he may have mentioned the possibility of involving his accountant (perhaps, as someone skilled in figures, who he surmised might be able to undertake a rental estimate calculation). He also recalled Carlile offering to send Hamilton to collect the documents and have them stamped. Assetta said that when he passed that suggestion on to Mr Szental, Szental was opposed to it, because Szental said he wanted to retain the documents and receive a rental estimate and cheque for duty in the way he had asked.

95. It is possible that, after that conversation with Mr Szental, Tony Assetta passed on to Carlile something to the effect that Mr Szental required IGA to provide Szental with a rental estimate and cheque. But Assetta's evidence on the point varied from time to time during the course of his cross examination. Carlile on the other hand was convinced that, even though Assetta may have spoken to him, Assetta was unable to explain to him what it was that was required to get the documents stamped. I therefore conclude on balance that, even at this stage, Tony Assetta either did not sufficiently understand or, for one reason or another, was not prepared to say to Carlile that it was the need for IGA to prepare a rental estimate that was holding up the stamping.

98. But things were about to change. On 20 March 2001 Roger King sent a stamped executed part of the agreement for sublease to Ms Zusman and in his letter of the same date noted his concern that the agreement for lease had still not been finalised. He asked that he be told what the position was and when it was considered that the stamped executed agreement for lease would be available.

101. On 23 March 2001 Ms Zusman reported by e-mail to Carlile that she had received that communication from Mr King and that she had still heard nothing back from Mr Assetta. She did not, however, report anything to Carlile about the contents of Mr King's letter, or of what she proposed to do about it, and I think that may be because she was beginning to understand the need for a rental estimate and perhaps that she should have done something about it.

104. On 27 March 2000 Ms Zusman spoke by telephone to Mr King and in her note of that conversation, she recorded the following:

"I will send Roger a copy of Richard's fax of 29/11 & my responses. Roger will send me the estimate of rental they used for the agt. for sublease. We will keep trying to obtain our copy of the Agt. for Lease & have it stamped."

108. The reference to Mr King's rental estimate also suggests that Ms Zusman was beginning to understand that she might have to prepare one.

111. On 27 March 2001 Carlile sent Shaw to speak to the Assettas about the delay in stamping. Shaw was the representative of IGA with whom Tony Assetta had had the most to do when dealing with planning and building issues on the lease, and Assetta trusted and respected him.

114. Tony Assetta may have had some reservations about passing on to Carlile the full content of what Mr Szental was saying about the need for a rental estimate. But he had no such reservations in passing on that information to Shaw. I find that he told Shaw that, according to Mr Szental, Szental was still waiting for the estimate and cheque for duty for which he had asked on 29 November 2000, and that the fault for the delay in stamping the agreement for lease lay entirely with Ms Zusman.

117. On 28 March 2001, Shaw reported by telephone to Ms Zusman in Sydney the substance of what had been said. As a result, I find that as from 28 March 2001 Ms Zusman knew what it was that Szental wanted.

120. Other things being equal, the stamp duty issue (as it was to come later to be called) may have come to an end at that point. In the scheme of things the amount of stamp duty was insignificant. Primary duty was in the order of only about $23,000, and it was unlikely that any penalty imposed would be more than nominal. Whatever the rights or wrongs of the delay to that point, Ms Zusman understood from that point that all that was required was an estimate and a cheque, and both could have been provided. But that did not occur. Instead, the parties began a sustained debate about which of them should pay any late stamping penalty. And that debate escalated into this proceeding.

123. It appears to me that four things combined to produce that result. The first is that Ms Zusman's initial reaction to the news from Shaw was to seek to maintain that she was not in any way at fault, and thus she set out to persuade others at IGA that she was without blame. The second, and it is in part related, is that just as an opportunity arrived for Ms Zusman to take some practical steps to provide Mr Szental with the rental estimate and cheque upon which he insisted, and thus to stem the problem before it got any more out of hand, Ms Zusman departed on a holiday of about one month's duration leaving the matter in the hands of a junior corporate solicitor with inadequate instructions. The third is that the corporate attitude at IGA was regrettably such that, once Carlile had adopted the stance that the fault lay with Mr Szental, IGA was not about to back down lightly from that position. And, for a long time, it refused to do so. The fourth and in the end most significant is that, whereas until this point the Assettas side of the project had been largely the province of Tony Assetta, from this point on Mark Assetta became increasingly involved and his attitude to the project was significantly different. In the end he determined that there was more money to be made by dealing with someone else and he seized upon the existence of the stamp duty issue as an excuse to achieve that result.

126. Ms Zusman's first response to the news given to her by Shaw was to fax back to him the next day, 28 March 2001, implying that she was not at fault. The fax asserted that it was the usual practice for the landlord's solicitor to prepare the estimate of stamp duty, and noted that Ms Zusman had been requesting Mr Szental to prepare the estimate since 18 December 2001. She attached copies of Mr Szental's letter of 29 November 2000, and of her communications to Szental of 18 December 2000 and 2 February 2001, and instructed Shaw to send those back to the Assettas.

129. On the same day Ms Zusman wrote the following memorandum to Tony Partridge, a solicitor in the IGA legal department junior to herself:

"Tony, The above Agreement for Lease was executed last year. It has not been stamped. I am told the landlord's lawyer will send us a statement to sign and request a cheque for stamp duty in the next couple of days. Can you please arrange for the statement to be signed and for the cheque to be prepared and then send the statement and the cheque to the landlord's lawyer, Richard Szental. Please note that the subtenant's solicitor, Roger King of Rogers & Gaylard, is sending us the statement he prepared in relation to the Agreement for Sublease."

133. It does not appear who told Ms Zusman that the landlord's solicitor usually prepares the estimate of rental, although I gathered from what Ms Zusman said in evidence that it is the practice in New South Wales (which is the jurisdiction with which she is principally familiar). She may also have been told that by Roger King, because he subsequently wrote her a letter of 5 April 2001 in which he stated as much. It is also not clear who if anyone told Ms Zusman that Szental would be sending a statement to sign or any further request for a cheque. Ms Zusman said in her evidence that she thought it might have been Carlile, but I do not think that is correct. It was contrary to Carlile's recollection and it is contrary to the objective evidence. It is not suggested in any of the notes of conversations which appear to have been kept at the time. What is even stranger is that Ms Zusman did not leave Partridge with any instruction to use the form coming in from King as a basis from which to prepare a rental estimate for IGA .

136. I take the view that Ms Zusman was more intent on leaving a record which vindicated her own position than with getting the estimate completed.

139. Meanwhile Shaw did as he had been asked by Ms Zusman on 28 March 2001 and on 29 March 2001 he faxed to Tony Assetta as follows:

"Further to our meeting of yesterday, please find attached copies of correspondence to your solicitor, Mr Richard Szental, from our legal department dated 18th December 2000 and 2nd February 2001 relating to Stamp Duty. I confirm advice from our legal department of yesterday that to date we have still not received a response to this issue. It should be noted that the Stamp Duties Office levies penalties for late payment..."

143. There was no immediate response and on or about 29 March 2001 Ms Zusman departed on leave for about a month.

146. No one did a great deal about the stamp duty issue during Ms Zusman's absence. There were one or two more desultory conversations about stamping between Carlile and Tony Assetta, and in each of those conversations Carlile reiterated his demand for an indemnity against penalty. But in a fashion which appears bizarre, each of those conversations was left on the basis that Assetta would consult Mr Szental and revert. Inexplicably, Tony Assetta never did point out directly to Carlile what Assetta had pointed out clearly to Shaw and which Shaw had reported to Ms Zusman. I find that, for whatever reason, Assetta never did say directly to Carlile that the fault lay with IGA in failing to provide the rental estimate for which Szental had asked.

149. In the result Carlile seems somehow to have continued in the misconception that nothing could be done until Szental prepared an estimate or gave up the documents for stamping.

152. On 5 April 2001, Roger King wrote to Ms Zusman enclosing the form of rental estimate which he had prepared for the Morgans, and advising as follows:

"Ms Natasha Zusman Corporate Solicitor Metcash Trading Limited PO Box 6226 SILVERWATER BUSINESS CENTRE NSW 1811 - By Facsimile: (02) 9741 3027 - Dear Natasha, SUB LEASE KINGS PARK SUPERFRESH PTY LTD (TYSULE NO.14 PTY LTD) FROM DAVIDS DISTRIBUTION PTY LTD Thank you for your correspondence of 28 March 2001. It is usual in Victoria for the Landlord's Solicitors to prepare the Section 83A Statement which is an estimate of rent for stamp duty purposes. This is usually provided by the Landlord's Solicitors, signed by the Tenant, returned to the Landlord's Solicitors who then pay the stamp duty. You asked me to arrange for the Agreement to Sub Lease to be stamped and accordingly I prepared a Statement, a copy of which is enclosed and which I consider accurately reflects the rent payable under the Lease when it comes into existence. I agree with you that any guarantee of the Agreement for Lease can be dated at any time and entered into under the name of the then appropriate entity. I can not see that it is necessary that the Agreement for Lease and the Deed of Guarantee have the same date. I repeat my concern that although Davids has entered into an Agreement to Sub Let, at the present time it does not have the documentation to support its ability to do so. I would have thought that from your own point of view, the Tenant would want to minimise any penalty stamp duty or interest incurred as a result of the Agreement to Lease not being stamped. I consider that it is essential that the Agreement to Lease (Head Lease) be dated at a time when Davids was in existence rather than when it changed its name as Metcash. A Lease should be stamped within 3 months of it being dated and the Agreement to Sub Lease should therefore be dated at a time when Davids is the Tenant which, ceased to be the case some months ago. I suggest that you adapt in any way you consider desirable, the enclosed Section 83A Statement and submit it to Richard referring, once again, to the fact that you have not had any response to your letter of 18 December. (Emphasis added.) Both I, and no doubt my client, are concerned at the additional legal costs being incurred as a result of there being no valid Agreement to Lease, duly executed and stamped, being available at the present time. However, I do not consider that I have done my job until this takes place. Should you have any queries, please to no hesitate to contact me. Regards Roger J King"

156. At the time that letter came in to IGA , Ms Zusman was still away on her holiday, and it does not appear that the letter came to the attention of Partridge or anyone else at IGA capable of understanding its significance. Neither Partridge nor anybody else at IGA made any use of Mr King's precedent or made any other sort of attempt to prepare a rental estimate to send to Mr Szental.

159. Meanwhile, on 3 April 2001 Tony Assetta had obtained a valuation of the project in which it was pointed out that clause 7 of the agreement for lease provided that if construction were not sufficiently advanced by 30 June 2001 to allow fit out to commence, IGA would have the right to terminate the agreement for lease. As a consequence, Bank of Melbourne (from which the Assettas were seeking the project finance) said to the Assettas that the Bank would not provide the finance unless the date were extended to 31 March 2002.

162. Towards the end of April, Tony Assetta instructed Mr Szental to attempt to obtain the agreement of IGA to such an extension and, in accordance with those instructions, on 27 April 2001 Richard Szental prepared a fax or e-mail, addressed to Ms Zusman , as follows:

"Ms Natasha Zusman Metcash Trading Ltd By e-mail Dear Ms Zusman King & Taylor Pty Ltd & Metcash Trading Ltd I note from my letter dated 29 November 2000 that I am still waiting for a stamp duty estimate from you, and a cheque in payment of estimated stamp duty. Your company has accused me of delaying the completion of this matter. I cannot complete the matter until you provide me with these items! Clause 7 of the Agreement for Lease provides that if a Certificate of Fit-Out Commencement has not issued by 30 June 2001, your company can terminate the Agreement for Lease. Since construction of the development has not yet commenced, it is quite clear that Clause 7 need to be altered. My client therefore, requests that Clause 7 be altered so that the date referred to in that Clause is 31 March 2002, rather than 30 June 2001. Yours faithfully Richard Szental"

166. As best as I am able to tell, the fax or e-mail was not sent to Ms Zusman directly. It was instead handed in hard copy form to Shaw at a meeting with Tony Assetta and the Morgans on 7 May 2001, at which time both Shaw and the Morgans expressed the view that they could not foresee any difficulties in obtaining agreement to the extended clause 7 date. Later in the day on 7 May 2001 Shaw faxed a copy of the e-mail to Ms Zusman at the Sydney offices of IGA. But because of the lateness of the hour, she did not receive it in the office until the next day.

169. On 9 May 2001 Ms Zusman responded to Mr Szental by fax as follows:

"I have been provided with a copy of your e-mail dated 27 April 2001 which for some reason I never received. I note that your e-mail does not refer to my facsimile to you dated 18 December 2000 and 2 February 2001 (copies attached). Can you please respond to the issues raised in my facsimiles. In the meantime, I will seek instructions regarding the proposed amendments to clause 7 of the Agreement for Lease. Regards Natasha Zusman Corporate Solicitor"

173. Remarkably, Ms Zusman did not make use of any King's precedent in order to prepare the estimate that she knew that Mr Szental wanted.

176. During the month or so which followed that, two further significant events occurred. The first was that IGA chose to delay in confirming that it would agree to an extension of the clause 7 fit-out date and, ultimately, it refused to do so unless King & Taylor provided an indemnity against any stamp duty late payment penalty. The second was that, as a consequence of his concern about the delay and whether IGA would go ahead, towards the end of May Tony Assetta quietly reopened discussions with Coles Myer about the possibility of constructing a Coles or Bi-Lo supermarket on the site, instead of the planned IGA supermarket.

179. During May 2001 Tony Assetta had at least one and I think probably more than one conversation with Carlile concerning both the extension of the clause 7 fit-out date and the requirement of IGA that King & Taylor indemnify IGA against any late stamping penalty. Each discussion was inconclusive. I find that Carlile did not say that IGA would not agree to an extension of the fit-out date, but he did not commit to agree to one, and he kept insisting that King & Taylor provide a penalty indemnity.

182. Tony Assetta gave evidence, which I accept that, as a result of those conversations, he was by late May beginning to doubt the bona fides of IGA. He said and I accept that the dispute about penalties had by then dragged on without resolution and his request for an extension of the clause 7 date had remained unresolved for such a period of time, that he was beginning to wonder whether IGA were playing games or just had no time seriously to address his project. His doubts were exacerbated by the views of his bank manager, Mr Chin, to whom it appeared that IGA were taking an extraordinarily long period of time to agree to a simple extension of the clause 7 date. Assetta also knew and thought to be significant that IGA were heavily involved in purchasing former Franklins stores made available by the departure of Franklins from Australia.

185. By the end of May Tony Assetta was also out on something of a financial limb. Earlier in May, when he had still been confident that IGA would go ahead, he had given the go ahead for the road works for the project to begin. But by late May he appeared to be no closer to getting IGA to agree to the extension of the Clause 7 date, and he was starting to get worried that he was still no closer to getting the finance that he needed. He decided to hedge his position.

188. On or about 24 May 2001 Tony Assetta telephoned Ross Philpott of Coles Myer. Assetta had had some discussions about the site with Philpott some months earlier, before IGA had committed to taking a lease. But those discussions had proved inconclusive and were not pursued once IGA had given its commitment. Now, however, Assetta told Philpott that IGA were holding the project up and that Assetta would like to "boot IGA out" in the next two weeks. Philpott responded that he would be interested in talking about the site if the deal with IGA "fell over".

191. At very much the same time, Tony Assetta also called Shaw and the Morgans to ascertain from them whether there had been any change of heart on the part of IGA or the Morgans. He was told by both of them that there was not and Mr Shaw volunteered to speak to those in the Sydney office of IGA to attempt to get the outstanding issues finalised.

194. Thus assured, on or about 5 June 2001 Assetta had a further conversation with Philpott of Coles in which he told Philpott that he now wanted to resolve his difficulties with IGA and expected that he would do so by the end of the following week.

197. But the difficulties did not resolve. Shortly after speaking to Philpott, Tony Assetta had a further conversation with Carlile to endeavour to reach completion. Mr Carlile's response was that he would agree to extend the clause 7 date if King & Taylor would agree to indemnify IGA against any late stamping penalty.

200. Carlile denied in evidence that he conditioned the extension of the clause 7 date on the provision of a penalty duty indemnity. But I find that he is mistaken in that recollection. Contrary, to some of the evidence given by Tony Assetta in chief, I do not think that there was more than one occasion on which Carlile expressly linked the extension of the clause 7 date with the stamp duty indemnity. I accept Carlile's evidence that on each other occasion in which he discussed the matters with Assetta, the issues were kept discrete. But I am satisfied that on this one occasion, Carlile did condition the one upon the other. Among other considerations which lead me to that view, Assetta regarded the demand as such an outrage that he remembered it vividly, in a way which I consider he could not have synthesised in the witness box, and subsequent events are also very difficult to explain unless it occurred.

203. Immediately following that conversation, Tony Assetta spoke to Carlile and to Mr Szental. According to Assetta, Szental once again denied any responsibility for delay and Assetta asked him to put his position in writing. Szental did so in the form of a letter to Tony Assetta dated 7 June 2001, and a copy of that letter appears to have been faxed to IGA on or about 8 June 2001, as follows:

"Mr Tony Assetta King & Taylor Pty Ltd 3 St Kilda Road St Kilda 3182 Dear Mr Assetta King & Taylor Pty Ltd with Davids Distribution Pty Ltd Agreement for Lease of premises at Sydenham As you are aware, the Agreement for Lease in this matter is not stamped. Metcash claim that the failure to stamp the document is my fault and that, accordingly, they require from your company an indemnity against any stamp duty penalties (including interest for late payment of duty). I have advised you that under no circumstances should you agree to any indemnity. I wrote to Davids on 29 November 2000, requesting them to provide me with an estimate of rental and a cheque in payment of estimated duty. They subsequently asked me to prepare for them an estimate of rental. I advised them that I could not prepare it, because it needed to include an estimate of percentage rent (which involved an estimate of sales to be made from the premises). Davids have now asked you for an indemnity against penalty stamp duty. Since I can only submit the agreement for lease for stamping once I have a rental estimate, and it is Davids who has failed to provide that estimate of rent, my unequivocal advice to you is that you cannot agree to the indemnity. Fault rests entirely with Davids. Yours faithfully Richard Szental"

207. Szental also telephoned Carlile on his mobile phone while Carlile was on holiday in Queensland and, in a terse conversation, Szental left no doubt that in his view, he had not been responsible for any delay which may have occurred, and that King & Taylor were not prepared to provide the indemnity which was sought.

210. The warning seems to have had the effect that Szental desired. On or about the same date Carlile gave instructions to Ms Zusman to prepare new execution copies of the agreement for lease and agreement for sublease incorporating the extended day for fit-out and other minor changes to do with the change of name of IGA to Metcash. He appears also to have given up on the idea that IGA be provided with an indemnity against any stamp duty penalty resulting from delay in stamping. As was later to appear, the plan from that point became one of using new agreements to avoid stamp duty altogether (consequent upon the coming into force of the Duties Act 2000). For the time being, however, that was not communicated to the Assettas.

213. Meanwhile, the Assettas remained incensed by what they regarded as Carlile's intransigence on the provision of a penalty indemnity. In their view the delay in stamping the documents was due to the failure or refusal of IGA to prepare an estimate of the rental and they should not have to provide any indemnity. Once Carlile had expressly linked the clause 7 extension date with the provision of a penalty indemnity, Mark Assetta decided to look elsewhere as to what the Assettas might do with the land. In the week which followed or soon afterwards he began negotiations by telephone with Myer Herszberg (who was then in the United States) for the sale of the land to Mr Herszberg or interests associated with him.

216. Tony Assetta was not at first aware that his brother had begun negotiations with the Herszbergs. Thus Tony Assetta continued to think in terms of completing the arrangements with IGA or, if they fell through, of entering into an arrangement with Coles or one of Coles' and IGA's competitors. Consequently, on 18 June 2001 he issued an ultimatum to Shaw that, if resolution of outstanding matters had not been achieved by 30 June, the Assettas would be re-opening discussions with both Bi-Lo and Aldi . As Shaw knew, Bi-Lo is a Coles company which operates discount supermarkets and Aldi is a foreign supermarket operator which was looking to set up in Australia.

219. On the next day, Tony Assetta spoke again to Philpott of Coles and told him that Assetta was still having a problem with stamp duty with IGA and that he had given IGA until 30 June 2001 to resolve the problem. He asked Philpott whether Coles were interested and he said also that Aldi had shown interest (although in fact Assetta had not recently spoken to Aldi at that time) and Philpott replied apparently with enthusiasm that Coles would be able to put a deal together in 30 days.

222. Shaw was deeply concerned by the 30 June ultimatum. He was committed to the project (upon the planning and development of which he had done a large amount of work) and he considered that the recalcitrance of the Sydney office was about to lose the deal for IGA. Following his 18 June 2001 conversation with Tony Assetta, he e-mailed more or less immediately to Carlile and Ms Zusman and also to two of the most senior executives of IGA, Fagan and Daryl Watts . His message was as follows:

"Please be advised that I received a telephone call from Tony Assetta yesterday relating to the above. During the course of this discussion he advised that if resolution of outstanding matters had not been achieved by 30th June they would be re-opening discussions with both Bi-Lo and Aldi concerning our tenancy. I requested at this time that he fax. to me a list of the outstanding issues (in summary the change of dates in the lease and the withdrawal of our requirement for an indemnity over Stamp Duty) I have again contacted his office this morning requesting this fax. but as yet have not received anything. I have also contacted his Architect this morning requesting copies of the latest plans (as listed in Natasha's e-mail of 6th June). Their advice was that electronic copies of the same should be available to me either later today or tomorrow. Upon receipt I will run three plots of each and forward to Natasha via internal mail. Regards PETER J. SHAW State Retail Development Manager IGA Distribution (Vic) Pty Ltd Telephone: [03] 9206-5422/[018] 833-557"

226. By this stage, however, IGA had turned to their external solicitors, Cornwall Stodart, for advice on the plan to avoid stamp duty on the agreement for lease and, after taking that advice, IGA resolved to attempt to proceed by way of execution of new agreements in place of the existing agreements. According to the evidence, the advice was given by Mr Gary Eather and Mr Michael Norberry of Cornwall Stodart, although there is no evidence of the content of the advice. Legal professional privilege has been claimed in respect of the content and I have upheld the claim. IGA does not seek to rely upon the advice as justifying the actions which were subsequently taken by IGA. They point to their taking of the advice only as a reference point in time for what was subsequently to occur.

229. Following receipt of the advice, Carlile telephoned Mark Assetta and told him that IGA thought that they had the solution to the impasse. Mark Assetta asked what it was and Carlile replied that IGA proposed to issue new documents which extended the sunset date as agreed and corrected the names on the guarantee. Carlile added that this should also fix the stamp duty issue because the documents would have a current date on them.

232. According to Mark Assetta, he told Carlile that he would show the documents to his brother and to Richard Szental and, if they approved of them, the documents would be executed. But according to Carlile, Mark Assetta was far more enthusiastic than that. As Carlile remembered it, Mark Assetta's immediate response was something to the effect of "Fantastic, that was Richard's proposal in the first place". And then, after Carlile said that he would arrange for Zusman to send the new documents directly to Mark Assetta, Mark Assetta said that he would show them to his brother and to Richard Szental and that they would be executed and ready for collection by Carlile on Friday next.

235. I doubt that it matters which version of the evidence is correct. On either version, the Assettas were prepared to look at the new documents and to consider whether they did provide a means of overcoming the penalty impasse. For reasons to which I shall come, I think that is all that is relevant. But in case it does matter, I should say that I prefer Mark Assetta's account of the conversation. By the time the conversation occurred, Mark Assetta had quietly moved close to reaching an agreement in principle with Myer Herszberg for the sale of the property, and had reason to believe that the deal could not be done if IGA were the tenant. At the same time Tony Assetta appears to have gone considerably further with his discussions with Coles, which was the tenant favoured by Herszberg. In those circumstances I think it unlikely that Mark Assetta's enthusiasm for the deal with IGA would have been unqualified.

238. On 21 June 20001 Ms Zusman sent the new forms of agreement for lease, including the amendment sought by King & Taylor to extend the day for commencement of fit-out to 31 March 2002, to the Assettas, under cover of the following letter:

"Assetta Group 3 St Kilda Road St Kilda Vic Attention: Mark Assetta Dear Mark IGA SUPERMARKET, CNR KINGS & TAYLOR ROADS, SYDENHAM Although Davids Distribution Pty Ltd executed the above Agreement for Lease last year, we never received a copy of the above Agreement for Lease executed by King & Taylor Pty Ltd and the Agreement for Lease was never exchanged. Therefore, I enclose 2 copies of the above Agreement for Lease which now refers to 31 March 2002 in clause 7 instead of 30 June 2001. I also enclose a Deed of Guarantee and Indemnity executed by Metcash Trading Limited. Please arrange for the documents to be executed by King & Taylor Pty Ltd and then provide our copy of the documents to Jonathan Carlile when he meets with your tomorrow to complete exchange. Yours sincerely Natasha Zusman Corporate Solicitor"

242. On the same day, however, Tony Assetta had a further conversation with Philpott of Coles, concerning the prospect of the Coles supermarket on the site. He asked Philpott whether Coles would be agreeable to the re-positioning of the supermarket on the site in such a way as to accommodate the inclusion of a pharmacy in the shopping centre. I infer that Philpott was agreeable to the idea.

245. When the next Friday came, and Carlile attempted to contact the Assettas to obtain execution of the new documents, he was told that the Assettas were not available or were out of the office.

248. According to the Assettas' evidence in chief, the reason that they would not speak to Carlile on that Friday was that Mr Szental had told them that the new agreements would not have the effect of avoiding stamp duty, unless the Assettas were prepared to pretend that the original agreements had not been executed, and that to pretend that the original agreements had not been executed would constitute a fraud on the revenue in which they should not get involved. I am not persuaded that that was the reason.

251. I accept that Mr Szental may have given advice more or less to the effect suggested. Mr Szental confirmed that he did and, in any event, it is obvious. But I do not think that the advice was the reason, as opposed to an excuse, for what followed. I find instead that by the time the documents arrived, or at least had been considered by Mr Szental, Mark Assetta had either reached or was very close to reaching agreement in principle with Myer Herszberg to sell the land to Herszberg, and Mark Assetta knew or thought it likely that it would be a condition of that agreement that the land not be subject to a lease to IGA. I conclude that that was the reason for what followed.

254. Each of the Assettas had different views about the amount of money which it would take to develop the project. According to the evidence of Tony Assetta, the demand for finance was not high and the project could be regarded as being more or less self funding. According to Mark Assetta, at that time the Assettas were facing heavy demands for capital in another of their projects (which concerned the construction of railway terminals), and did not need the added strain of having to finance the IGA project. For present purposes, it does not matter which view is correct. But I find that it was Mark Assetta who had the overriding say in Assetta financial matters and thus if he decided that the Assettas would be better off being out of the project, that is what would occur. In the end he decided that the property should be sold and, he having so decided, Tony Assetta felt compelled to comply.

257. On 27 June 2001 Tony Assetta telephoned Shaw. They discussed the possibility of putting the project on hold. Assetta said that the Assettas' bank was not happy with the project's viability and that the site was for sale and that an offer was on the table. For the reasons which follow I think that the offer which was said to be on the table was an offer of $1.8M made by Myer Herszberg.

260. Although the evidence as to Mark Assetta's negotiations with Myer Herszberg was less than clear, I find that the negotiations started shortly after 10 June 2001 and continued for a couple of weeks. In the course of those negotiations Mark Assetta disclosed that an area of the site had been leased to McDonald's for the construction and operation of a McDonald's restaurant. That was the fact and meant that without any thing more, the site was worth a minimum of about $500,000. He also told Herszberg that it was proposed to construct a medium size supermarket on the site and a further six or so large box retail shops and sundry smaller premises. That was also the fact and meant that unconstructed the project would be worth in the order of about $1M. But Herszberg was not interested in a medium size supermarket. It was his practice only to buy the sorts of centres which contain large scale supermarkets of the kind which are operated by Coles and Woolworths, and he had close relations with both. His interest in the site was as one suitable for Coles or Woolworths. As such the land had a value to him of approximately $1.8M, but only if it were free of the agreement for lease with IGA.

263. Mark Assetta either knew from the outset or learned in the course of the negotiations that Herszberg would not be interested if the IGA agreement for lease were in place. To get over that difficulty, and thus attract an offer at the sort of price which Herszberg was able to pay, Assetta told Herszberg that the Assettas had been dealing with IGA for the lease of the supermarket but that the deal had fallen over. How much more he said about IGA is uncertain. Both Assetta and Herszberg said that that was as far as it went. I regard it as improbable, however, that the conversation would be so truncated and I suspect that something further was said to satisfy Herszberg's concerns. On or about 21 June 2001, and certainly no later than 26 June 2001, Herszberg told Assetta that he would be willing to buy the site for $1.8M. His only condition was that IGA not have any claim to a lease.

266. When Tony Assetta told Shaw on 27 June 2001 that there was an offer already on the table, Shaw asked that IGA be given first opportunity to buy the land and Assetta said that if it were decided to sell the land, IGA would be given first opportunity to purchase.

269. The matter was taken one step further on 3 July 2001 at a meeting between Carlile and Hamilton of IGA and the Assettas at the Assettas' offices at St Kilda Road in Melbourne. At that meeting Mark Assetta said that he was embarrassed that he could no longer afford to go ahead with the project and that if IGA wanted to buy it, they should buy it. Hamilton responded that IGA was not in a position to buy it but that they might be able to find someone who was if the Assettas could provide the details of tenants. The Assettas subsequently faxed tenancy details to IGA to assist evaluation.

272. According to the evidence of Tony Assetta, the meeting of 3 July 2001 was the first occasion on which he learned that Mark Assetta had formed the intention to sell the land and his recollection was that the meeting took place late in June 2001; not 3 July 2001. But I consider that both of those aspects of Tony Assetta's evidence are incorrect. Carlile had a diary note of the meeting which established that it was held on 3 July 2001 and by then Tony Assetta had already told Shaw on 27 June 2001 that the property could be for sale.

275. IGA did not do anything further about the purchase of the land or finding a purchaser for the land. Instead, on 4 July 2001 Ms Zusman faxed the following letter to Mark Assetta:

"Assetta Group 3 St Kilda Road St Kilda Vic BY FACSIMILE: 03 9525 4339 Dear Mark IGA SUPERMARKET, CNR KINGS & TAYLOR ROADS, SYDENHAM I refer to my letter to you dated 21 June 2001. I am advised that you agreed with Jonathan Carlile, our National Asset Manager, that: 1. the Agreement for Lease and Deed of Guarantee and Indemnity in relation to the above property (`the Documents') executed by Metcash would be delivered to you on 21 June 2001; 2. you would then arrange for the Documents to be executed by King & Taylor Pty Ltd; and 3. the Documents would be available for collection by Jonathan Carlile on Friday 22 June. The Documents have not been executed and returned to us. If the Documents, executed by King & Taylor Pty Ltd, are not returned to us by the close of business on Friday 6 July 2001 then we will assume that you do not intend to honour your agreement and will take the appropriate action. You are aware that we have entered into an Agreement for Sublease with Tysule No. 14 Pty Ltd and we intend to do everything necessary to protect our interests and the interests of Tysule No. 14 Pty Ltd. Yours sincerely Natasha Zusman Corporate Solicitor"

279. There was no response to that fax. By then Mr Mark Assetta had reached the agreement in principle with Mr Herszberg to sell the land and thus had to be able to sell it unencumbered by the IGA tenancy. Mark Assetta realised that that would not be possible if the Assettas signed the new agreements which had been sent on 21 June 2001 or so long as the existing agreement for lease remained in place. Thus he took advice from Szental as to how IGA's interest in the land could be brought to an end.

282. Mr Szental's advice was that it was arguable that IGA's letter of 21 June 2001 constituted a repudiation of the existing agreement for lease, and that it may be possible to bring the agreement to an end by accepting the repudiation. He also considered that the prospects of resisting IGA's claim would be improved if a contract of sale with the Herszbergs were entered into before the expiration of the 6 July 2001 deadline which had been set in Zusman's letter.

285. In accordance with that advice, late on 4 July 2001 Mark Assetta gave instructions to Szental to do what was necessary to execute a contract of sale to the Herszbergs before the end of 6 July 2001. Szental began drafting the contract that night and he completed it the next day.

288. Szental also arranged for the acquisition of a new shelf company, which is the third defendant, Delahey Properties Pty Ltd , to act as the Herszbergs' purchasing vehicle, and Szental paid for that company himself. He had acted for the Herszbergs for a number of years and as a consequence he was familiar with the practice which they adopted when purchasing a site such as this one. In accordance with that practice, and without need first to refer to them, he nominated Myer Herszberg's two sons, David Herszberg and Samuel Herszberg, as directors of the company. As opposed to his ordinary practice, however, which was to incorporate such companies himself, on this occasion he borrowed the log in code of an accountant with whom he was associated, a Mr Schmidt, and with that he ordered a shelf company from Thrifty Shelf Companies.

291. In the course of conducting the searches necessary for the completion of the Section 32 Statement Mr Szental discovered that IGA had not lodged a caveat on title to protect its interest in the land. At that point he formed the view that the chances of defeating IGA would be enhanced if the Herszbergs were not only to execute the contract of sale before the end of 6 July 2001 but also to lodge a caveat of their own on title before the end of 6 July 2001.

294. Mr Szental also drew both the requisitions on title on behalf of the purchaser and the answers to requisitions on behalf of King & Taylor for inclusion with the contract.

297. Late on 5 July 2001 or possibly on 6 July 2001 Mr Szental conferred with the Assettas and showed them the contract he had prepared. He also explained to them the necessity of having Delahey execute the contract and lodge the caveat before the end of 6 July 2001. Tony Assetta signed the contract on behalf of King & Taylor and dated it 6 July 2001, but did not sign the Section 32 Statement. Mark Assetta did not sign either document.

300. David Herszberg gave evidence that some time before 6 July 2001 he was telephoned by his father from the United States and told that Szental would be calling to arrange for the execution of documents for the acquisition by Herszberg of the site at a price of $1.8M, on a deposit of $100,000, and that David should execute the documents when that occurred.

303. In apparent accordance with that arrangement, during 6 July 2001, Mr Szental telephoned David Herszberg and said that the documents had to be signed by both David and Samuel Herszberg that day. David in turn telephoned Samuel Herszberg and instructed him to get to Szental's offices as soon as possible. Each man travelled independently to Szental's offices.

306. David was the first to arrive, at about 1.00 pm, and the first to sign the documents. David's evidence on this point, which I accept, was that he was simply directed to sign the documents at places which were indicated by stickers. The documents included a directors guarantee which David signed as directed, but without any comprehension that he was going guarantor. As he said, however, he trusted Szental to tell him if there was anything wrong with the contract from his point of view, because Mr Szental did other work for the Herszbergs. The need to sign the Section 32 Statement was apparently overlooked. The caveat was dealt with later in circumstances mentioned below.

309. According to both David Herszberg and Szental, it was only a short while later that Samuel Herszberg arrived and it was at about that time that Samuel Herszberg signed the contract and guarantee and also allegedly signed the caveat which had been prepared for lodging on behalf of Delahey and which David had already signed. David is then said to have travelled into the city and lodged the caveat late in the afternoon and later still to have arranged for the telegraphic transfer of the deposit of $100,000 into Szental's trust account. But I find that some aspects of this evidence are incorrect. In particular, Samuel did not ever sign the caveat, even though a signature purporting to be his signature appeared on the caveat as lodged, and the caveat was not lodged in the Titles Office late in the afternoon, but at 2.47 pm; probably before Samuel even got to Szental's offices at about 3.00 pm.

312. The truth of the matter seems to me to be that as David was signing the contract at about 1.00 pm, Szental told David that it was important for David and Samuel to lodge a caveat on title that day. David demurred because it was a Friday afternoon and David needed to be home before sundown. But Szental stressed the importance of doing it that day and David agreed to comply. Szental said that he could not lodge the caveat himself, because he was not or could not be seen to be acting as solicitor for the purchaser, and David asked him to recommend someone that could act for the purchaser in order to lodge the caveat. Szental recommended Irene Herman of Herman Partners and offered to call her, which he did.

315. As matters transpired Ms Herman was also affected by the fact that it was Friday afternoon and said that she could not help that day. Nevertheless, at Szental's request, she gave to Szental the Hermans' Titles Office lodging code, so that a caveat could be prepared and lodged as if by Hermans. Then, armed with that information, Szental himself or his secretary prepared the caveat in hand, showing Hermans as the lodging agent. At that point, David signed the caveat and either Szental or David affixed the common seal of Delahey and also a signature which purported to be that of Samuel, but which was not Samuel's signature and which was not authorised by Samuel.

318. At about 2.00 pm David left Szental's offices and, in accordance with instructions given to him by Szental, travelled to the Titles Office and lodged the caveat at 2.47 pm.

321. At some time, most probably between about 3.00 pm and 4.00 pm, Samuel Herszberg got to Szental's offices and signed the contract of sale and guarantee after a cursory examination of those documents. He was not shown the caveat and he was not told anything about it. It was not until months later that Samuel Herszberg learned that someone had forged his signature on the caveat. Even then, however, he said, he was not curious to know who it was and he did not ask either David or Szental how it had come about. So far as he was concerned, David was in charge of the operation, and he just signed the contract documents as he was asked. I infer that he, like David, trusted Szental implicitly to look after the interests of the Herszbergs.

324. It is possible, although not clear, that David returned to Szental's offices while Samuel was there. David could not recall where he went after lodging the caveat at the Titles Office, but both David and Samuel had a recollection of seeing each other at Szental's offices that afternoon. It is also possible, although I consider that it is less than likely, that Samuel got to Szental's offices at about 1.00 to 2.00 pm., before David departed to lodge the caveat, and that he either signed the contractual documents in such a rush that he overlooked the need to sign the caveat or even that it had not been prepared by the time he left Szental's offices; leaving David to deal with the loose ends. What is clear is that Samuel did not see or sign the caveat, and hence I find that it was either David or Szental, or one of Szental's staff, who forged the signature of Samuel on the caveat. It could not have been anyone else.

327. That evening some hours after the caveat had been filed, Mr Szental sent the following fax to Ms Zusman:

"Ms N. Zusman Metcash Trading Limited 4 Newington Road SILVERWATER NSW 2128 Dear Ms Zusman, KING & TAYLOR PTY LTD I refer to your letter dated 4 July, 2001 addressed to Mr. Mark Assetta. My client is not prepared to sign the document that was enclosed with your letter dated 21 June, 2001. My client takes the view that your company's failure to provide my client with a rental estimate and a cheque in payment of estimated stamp duty was a fundamental breach of your company's obligations and as constituting a repudiation of that agreement. My client has accepted that repudiation. The fact that you have seen fit to submit a fresh agreement for lease is itself evidence that your company regards the previous document as no longer binding. With regard to the sublease to which you refer in your letter, I point out to you that the now repudiated agreement for lease required your company to obtain my client's prior approval to any sublease arrangement. At no stage did you submit to me for approval a final form of sublease. Accordingly, my client does not accept any responsibility for the consequences of your company having entered into a sublease. Yours faithfully Richard Szental"

331. Szental did not inform IGA and IGA did not know that the site had been sold, however, and another two weeks would pass before IGA was given any hint of the sale. In those two weeks Tony Assetta continued to negotiate with Coles for an agreement to construct and lease a supermarket on the site to Coles and at least by the second week Coles had sufficiently advanced in its due diligence examination of the proposal that Assetta anticipated that Coles would make an offer by the end of the month.

334. Those negotiations are said by the Assettas and Szental to have been conducted by the Assettas in the capacity in effect of project manager on behalf of Delahey. But there is considerable doubt about the nature of this so called project management. There was no appointment of the Assettas as project manager as such. The evidence showed that to this day there has not been a board meeting of Delahey (at least since its acquisition by the Herszbergs) and Myer Herszberg was adamant that although the possibility of a construction, management and marketing role for the Assettas was discussed at the time of reaching agreement for the sale of the land to the Herszbergs, it was at most a gentlemen's agreement that some such role would be negotiated after completion of the sale. Even Tony Assetta, when pressed, put the arrangement little higher than that. Contrastingly, Mark Assetta's evidence was that something more concrete had been arrived at, and the scale of activities following 6 July 2001 is consistent with that being so. Not only the Assettas but at times also Richard Szental were actively involved after 6 July 2001 in planning and endeavouring to let up premises proposed to be constructed on the site.

337. On 17 July 2001 Tony Assetta telephoned Peter Shaw and told him that the Assettas deal with IGA was off, and he gave as the reason that the Bank needed $160 per square metre to make the deal stack up. Shaw asked if they could meet.

340. On 18 July 2001 Shaw met Tony Assetta at the Assettas' offices in Melbourne. Assetta told Shaw that the site was currently under a due diligence arrangement with another party who was reworking total development options with a completely different retail mix, and Assetta implied that the developer had a retailer other than IGA in mind. Assetta said that the Assettas expected to receive an offer from the developer to purchase the site by 27 July 2001. But he refused to identify the developer, saying or implying no more than that the Bank had some control over it. Assetta said that IGA's refusal to agree to an extension of the Clause 7 fit-out date had led to the present situation and he criticised the inefficiency of IGA and the delays experienced in resolving difficulties. Assetta invited IGA to submit a new offer based on a rental of $160 per square metre, and a lease term of 15 years with two options of 5 years each. He said that it could be submitted to the new developer or, if the sale to the developer did not proceed, it could form the basis of a new viable arrangement with the Assettas which would be acceptable to the Bank.

343. On 20 July 2001 Tony Assetta sent the following letter to Coles:

"Coles Myer Ltd P.O. Box 480 Glen Iris Victoria 3146 ATTENTION: MR NICK CARTER/STATE RETAIL PROPERTY MANAGER VIC/TAS RE: KINGS PARK SHOPPING CENTRE Dear Nick, I refer to previous discussions in relation to the Coles Myer Group's interest in leasing space at the above-mentioned development for a Supermarket. Planning for the development has reached a critical stage and we need to know by 5 pm on Monday 23rd of July 2001 whether your offer is a Coles Supermarket or a Bi-Lo Store with specific area requirements. We also need to know by that time the terms that Coles Myer Group is offering for a lease at the site. Both of these issues will determine the outstanding issues for the development to proceed. I regret the need for a deadline. Unfortunately, however, we are faced with other deadlines that require us to have certainty about the Coles Myer proposal. Yours faithfully ASSETTA GROUP PTY LTD TONY ASSETTA PROJECT MANAGER"

347. On or about 21 July 2001 IGA obtained advice from Cornwall Stodart that the caveat had been lodged on title by Delahey, and on or about the same day IGA lodged a caveat on title prohibiting the transfer of the land to Delahey.

350. On 22 July 2001 Coles submitted a written offer, addressed to Tony Assetta at Assetta Holdings Pty Ltd, to take a lease of a supermarket to be constructed on the site to its specifications at a rental of $170 per square metre.

353. On 24 July 2001 The Warehouse submitted an offer in writing to Tony Assetta of King & Taylor Pty Ltd, to take a lease of another area of approximately 3000 square metres in the centre to be constructed.

356. On 27 July 2001 Carlile had a telephone conversation with David Herszberg in which Herszberg confirmed, at first somewhat reluctantly, that Delahey had purchased the site and was not interested in doing any business with IGA. There is a dispute on the evidence as to the extent to which David Herszberg admitted knowing of IGA's interest in the land.

359. On 31July 2001 Cornwall Stodart wrote to Szental on behalf of IGA responding to his letter of 6 July 2001. It rejected the charge that IGA had repudiated the agreement for lease and asserted that it was always the intention of IGA to attend to the stamping of the lease in accordance with clause 12.4 of the agreement for lease. It rejected the charge that the submission of the new form of agreement of 21 June 2001 was intended to do other than give effect to the changes which King & Taylor had asked for and it asseverated that the existing agreement for lease remained on foot. It asked that the existing agreement for lease be delivered to Cornwall Stodart's offices so that they could attend to stamping.

362. The agreement for lease was not provided for stamping and this proceeding was instituted in August 2001.

365. Despite the institution of the proceeding, on or about 6 September 2001 Delahey executed an agreement for lease with Coles, substantially in accordance with Coles letter of offer of 22 July 2001, but subject to Delahey becoming the registered proprietor of the site. The evidence shows that Mr Szental was actively involved in the negotiation of the agreement on behalf of the lessor. According to Mr Szental he did that also as solicitor for the Assettas in their role as project manager of the site for the Herszbergs.

371. The first allegation of breach of agreement relied upon as amounting to repudiation of the agreement is the alleged failure to pay stamp duty in breach of clause 12.4 of the Agreement.

374. Clause 12.4 of the agreement for lease provides that:

"12.4 Stamp Duty (a) The Tenant will as between the parties be liable for and duly pay all stamp duties (including any fines or penalties except where they arise from default by the other party) on or relating to this Agreement, the Lease and any document executed under it. (b) If a party other than the Tenant pays any stamp duty (including any fine or penalty) on or related to this Agreement, the Lease or any document executed under it, the Tenant will pay that amount to the party on demand."

378. It is contended that IGA breached that clause because the agreement for lease was executed in November 2000 and yet, despite the requests for a cheque for payment of stamp duty which were made in Richard Szental's letters of 29 November 2000 and 27 April 2001, the stamp duty was not paid by IGA.

381. I do not consider that the alleged failure to pay stamp duty amounted to a repudiation of the contract. I doubt that it was a breach of clause 12.4 and, if it were, I do not consider that a breach of that kind evinces an intention to throw up the contract.

384. The evidence of Carlile and Zusman makes plain that there was never any dispute on the part of IGA that it was liable to pay stamp duty. That evidence is not contradicted. As has been seen, there was an issue about penalties, and the related issue of the submission of the new form of agreement under cover of the letter of 21 June 2001. They will have to be dealt with separately. But the evidence is clear that from the outset up until at least the letter of 21 June 2001, IGA was willing to pay the stamp duty; even to the point of offering to have its own solicitors arrange for the stamping of the documents.

387. It is true that by his letter of 29 November 2000 Szental requested an estimate of the duty payable and a cheque drawn payable to State Revenue for that amount. And it is true that neither was provided. But that does not mean that IGA were refusing to pay the stamp duty payable on the agreement for lease. To the contrary, the response to Mr Szental's letter was a polite inquiry as to whether it would be possible for Mr Szental to prepare the estimate of rental in the form required in Victoria. For reasons at which I have had to guess, Szental did not respond to that request, and thus a cheque was not provided. But Ms Zusman did follow up on her request of 2 February 2001 and Szental did not respond to that either.

390. It is also true that in his letter of 27 April 2001 Szental noted that he was still waiting for a stamp duty estimate and a cheque. But he did not have the courtesy to refer to Ms Zusman's letters of 18 December 2000 and 2 February 2001 and, even after she had faxed to him again on 9 May 2001 asking for a response, he did not provide one or explain that he was not prepared to provide one or why he was not prepared to provide one.

393. Perhaps the criticism may be made of Ms Zusman that as senior corporate counsel of a leading grocery wholesaler she should have known better than to sit on her hands once it appeared that Szental was intent on doing nothing. Szental did not owe her any legal obligation to prepare the estimate or to guide her as to how it was to be done, even though it would have cost him next to nothing to do so and even though provision of such assistance as he was asked for was really no more than professional courtesy demanded. But he did not, and that having once appeared, it might be thought that Ms Zusman should have got on and done it herself. It would have been easy for her to have IGA's external solicitors prepare the estimate and provide it to Szental. If that had been done early on, the problem would in all probability have evaporated.

396. It is not clear why Ms Zusman did not do so although, as I have noted already, time does seem to have got away from her and, once it did, she and those whom she was capable of influencing appear to have been more intent on establishing the rectitude of their own actions and positions than in getting the job done with a minimum of fuss. But whether that is so or not, it is not suggested that her inaction was the consequence of any sort of attempt to avoid payment of the duty and it could not be thought that it was. IGA was keen to have the stamp duty paid and, albeit ineffectually, Carlile continued until the letter of 21 June 2001 to endeavour to have the documents stamped.

399. As the first defendant's Defence and Counterclaim originally stood, there was an assumption implicit in the allegation that IGA breached clause 12.4 of the agreement, that clause 12.4 required IGA to provide an estimate and a cheque for stamp duty to Mr Szental. But that is not what clause 12.4 provides in terms and such evidence as was given about prevailing practice fell far short of establishing that such was an inevitable practical consequence of the clause. On one side there was some evidence that Szental regarded it as ordinary practice for the tenant to provide the estimate of rental. But there was also some evidence in the form of King's letter of 5 April 2001 to Ms Zusman that the prevailing practice is that the estimate is ordinarily prepared by the landlord's solicitor. Moreover, no practice was pleaded and it was not suggested that the practice was so notorious, certain or reasonable as to amount to a term implied by custom.[1]

402. If IGA had continued for long enough to do nothing except complain about waiting on Mr Szental to respond to the communications of 18 December 2000 and 2 February 2001, there may have come a point at which it could be said that its conduct constituted a breach of clause 12.4. Enough delay could eventually signify that IGA was not bona fide in its claims of wanting to have the agreement stamped. But that did not occur. Such delay as existed was punctuated by activity, which was bona fide, albeit ineffectually, directed to getting the document stamped.

406. So much for the Defence and Counterclaim as it first stood. On the eighth day of trial, the first defendant sought and was granted leave to amend its defence and counterclaim to plead that it was an implied term of the agreement for lease that IGA provide an estimate of rental and cheque for payment of duty to Mr Szental and that IGA had breached that term and thereby repudiated the agreement. The term was alleged to be implied as a matter of law, as a result of the obligation imposed on a tenant by section 83A of the Stamps Act 1958 and in order to give business efficacy to the agreement.

409. In my opinion that contention also fails. Section 83A of the Stamps Act no more imposes an obligation to provide an estimate and cheque to the solicitor for the landlord than does clause 12.4(a) of the agreement. It imposes an obligation to provide an estimate to the Comptroller of Stamps and to pay stamp duty. And an implied term of the kind contended for will not be implied unless it is necessary to do so in order to give business efficacy to the agreement[2]. I do not consider that it is necessary to imply the term contended for in order to give the agreement business efficacy. The agreement is capable of working without the term alleged. It is obvious, and as one would expect Mr Szental conceded in cross examination, there are a number of ways in which the agreement could have been stamped without providing an estimate and cheque to Mr Szental; even if that be the way in which one would ordinarily expect it to be done. One which springs most immediately to mind is the way contemplated by IGA, namely, it would do the stamping.

413. Because I do not consider that there was any breach of clause 12.4, or of any implied term of the kind contended for, I do not consider that there was any repudiation constituted of a failure to pay stamp duty.

416. But even if the failure of IGA to provide an estimate and cheque for stamp duty to Mr Szental did amount to a breach of clause 12.4 of the agreement, or of some ancillary implied term, I do not consider that it would have amounted to a repudiation of the agreement. Plainly, it is not every breach of contract that entitles the innocent party to rescind. In the absence of express provision for rescission for breach, an innocent party may rescind only if the breach is such as to evince an intention on the part of the other party no longer to be bound by the contract or to show an intention to fulfil the contract only in a manner substantially inconsistent with its obligations and not in any other way, or if the term which is breached is a fundamental term of the contract, in the sense that it is to be taken as being of such importance to the promisee that it would not have entered into the contract unless assured of strict or substantial performance[3]. In my opinion, it is not to be thought that the failure to provide Mr Szental with a stamp duty estimate and cheque evinced an intention to throw up the contract or showed an intention on the part of IGA to fulfil the contract only in a manner substantially inconsistent with its obligations and not in any other way. The observations of Gibbs CJ in Shevill suggest that a failure to pay rent timeously under a lease will rarely if ever amount to repudiation of the lease.; a fortiori, failure to pay stamp duty in a manner and time not mandated by express contractual imperative.

419. There is also the further reason that, even if IGA's failure to provide an estimate and cheque to Mr Szental were a breach of clause 12.4 of the agreement, I think that it would only be a breach in the sense that IGA bona fide misconstrued the obligations which the clause imposed upon them. It was never put to Ms Zusman or indeed to any of the witnesses for the plaintiff that they knew or suspected that the clause required them to submit the estimate to Mr Szental as he asked. And the objective evidence suggests that they did not have that belief. Ms Zusman gave evidence that she felt herself entitled to ask Mr Szental to prepare the estimate and Mr King's letter of 5 April 2001 tends to bear her out.

422. It is not ordinarily regarded as repudiation of a contract mistakenly but bona fide to adopt an incorrect view of the meaning of the contract. A mere honest misapprehension, especially if open to correction, will not justify a charge of repudiation[4]. As Buckley J put the matter in Sweet and Maxwell Ltd v Universal News Services Ltd[5]:

"If A and B, parties to a contract, form different views as to the construction and effect of their contract, and A demands performance by B of some act which B denies he is obliged to perform upon the true interpretation of the contract then, if B says `I am ready and willing to perform the contract according to its true tenor of the contract, but I contend that what you, A, require of me is not obligatory upon me according to the true construction of the contract' and if in so saying he is acting in good faith, he does not manifest the intention to refuse to perform the contract but merely puts in issue the true effect of the contract. The test whether a party has or has not repudiated the contract as established by the authorities referred to by Harmann LJ is the answer to the question `has the party who, it is said, has repudiated the contract, evinced an intention not to perform the contract?' It seems to me to be manifest, in such a case as I have supposed, that B has not evinced such an intention".

426. So it is in this case. If IGA misconstrued the obligation to pay stamp duty it was nonetheless acting honestly, and I think that it was or at least would have been open to correction. Its stance would have been no more than a bona fide mistake as to the true meaning of the stamp duty obligation imposed by the contract, from which it would have been prepared to depart once shown authoritatively to be wrong.

429. I should perhaps record that in cross examination much was made to the effect that both Ms Zusman and Carlile would have known only too well what the turnover of the sub-tenant was to be and therefore could so easily have prepared the estimate. So much is more or less plain. But I do not think it was ever sought to establish or, if it were, that it ever was established that IGA did or should have understood that the Assettas lacked knowledge of what the turnover was likely to be. There was uncontradicted evidence given by Carlile that the projected turnover was such that in all probability the only rent payable for the foreseeable future would be the base rent provided for in the agreement for lease and uncontradicted evidence that the Assettas and IGA had engaged in extensive negotiations about the rent payable under the lease before entering into the agreement for lease. Since the rent payable under the lease was intended to be the same as the rent payable under the sublease, I do not accept the evidence given by Mark Assetta that he did not have any conception of the turnover which it was thought likely that the store would generate and I do not accept that IGA should have seen it differently.

433. The second alleged act of repudiation is the entry by IGA into the agreement for sublease with Tysule Pty Ltd (the Morgans). The allegation is put in three ways. It is said, first, that the sub-lease[6] is in breach of clause 9.1 of the agreement for lease[7], in that it was entered into without consent, because, contrary to clause 16.7(b) of the agreement for lease, it does not provide for a term that ends before the end of the term of the lease or contain a provision that if the lease ends or is terminated before the date of expiry by effluxion of time of the term then the sublease ipso facto also ends. Secondly, it is contended that the sub-lease is in breach of clause 9.1, in that it was entered into without consent, because, contrary to clause 16.7(c) of the agreement for lease, it does not contain a provision that prohibits the assignment of the sub-lease or any further subletting of the premises without the first defendant's prior written consent. Thirdly, it is said that the sub-lease is in breach of clause 9.1 of the agreement for lease, in that it was entered into without consent, because, contrary to clause 16.7(d) of the agreement for lease, it does not contain a clause to the effect thereby required (scil, in substance, that a change in ownership of the sub-tenant is to be treated as an assignment of the sub-lease).

436. It was argued on behalf of IGA that all three contentions were misplaced, because of the contents of Clause 2.1 of the proposed sub-lease. It provides that:

"2.1 Incorporation of Terms Subject to the terms and conditions of this Sublease and clause 1.3, the provisions of the Headlease (including without limitation, the definitions, interpretations, terms and conditions, appendices, annexures and schedules of the Headlease) are incorporated into this Sublease as if those provisions were reproduced in this Sublease and set out in full and, where appropriate, with references to: (a) `the Lessor' in the Headlease being a reference to the Sublessor; (b) `the Lessee' in the Headlease being a reference to the Sublessee; and (c) `this Lease' in the Headlease being a reference to this Sublease."

440. According to IGA, the effect of clause 2.1 would be that the sub-lease to be granted pursuant to the agreement for sub-lease would necessarily contain provisions mutatis mutandis the same as those of clauses 16.7(b), (c) and (d).

443. That analysis is superficially attractive. But I do not think that it is correct. As I read clause 2.1 it would operate to insert into a sub-lease requirements which bind the sub-lessee to ensure that any further sub-lease has conditions which match clause 16.7 of the agreement for lease. But it would not mean that the sub-lessee would be bound vis a vis the sub-lessor by obligations in terms that correspond to clause 16.7.

446. A better answer by IGA is that clause 16.7 of the agreement for lease does not prohibit a sub-lease which does not comply with its conditions. It operates rather as an exception to the overriding requirement in clause 9.1 that IGA obtain consent of King & Taylor to any sub-lease. Accordingly, if, as I think to be the case, the actions of IGA in entering into the agreement for sub-lease do not contravene the prohibition in clause 9.1, it does not matter that the agreement for sub-lease may not comply with clause 16.7.

449. As matters stand there is no sub-lease, only an agreement for sub-lease, and the agreement for sub-lease expressly provides in clause 3.2 of the form of sub-lease which is annexed to it, that the sub-lease will not bind the sub-lessor until consents from the lessor have been procured in a form reasonably satisfactory to the sub-lessor. It further provides, in clause 3.3, that wherever the consent or approval of the sub-lessor is required or requested in relation to the sub-lease, the consent and approval of the lessor will also be required and the sub-lessee will be required to comply with any conditions the lessor is entitled to impose under the head lease with respect to such consent or approval. In short, in terms, the sub-lease will not bind IGA until and unless King & Taylor consent to the terms of the sub-lease. I consider that means that there has been no sub-lease without consent.

452. It has been argued on behalf of King & Taylor that clause 3.3 of the agreement for sub-lease is no more than a condition subsequent - as opposed to a condition precedent to the existence of the agreement - and hence that, because, other things being equal, equity would order specific performance of the agreement, it must follow that the agreement operates in equity as an existing sub-lease created without the consent of King & Taylor. Further, it is said, because the sub-lease is for the whole term of the agreement for lease, it operates as an immediate assignment of the agreement for lease, and it has been effected without the consent of King & Taylor, in breach of clause 9.1. Then, so the argument goes, because such a breach is an irremediable breach, King & Taylor would be entitled to forfeit the lease and, hence, equity will not grant specific performance of the agreement for lease, because it would be futile to do so.

455. Some of the propositions bound up in this argument are correct. To begin with, given the law's propensity to construe contractual conditions as conditions subsequent, rather than as conditions precedent, I do not doubt that clause 3.2 of the agreement for sub-lease is to be construed as a condition subsequent of the agreement for sub-lease[8]. Secondly, it is trite that, other things being equal, a court of equity will grant specific performance of an agreement for lease and that, as a general proposition, it may be said that equity treats an agreement for lease of which it will order specific performance as the equivalent of a lease at law[9]. Thirdly, it is clear enough that a sub-lease for the whole term of the lease may operate at law as an assignment of the lease[10]and that an assignment which is effected contrary to a covenant not to assign without consent is an irremediable breach which may entitle the landlord to forfeit the lease[11]. It may also be correct that equity will not compel specific performance of an agreement for lease if the lessor would be entitled forthwith to forfeit the lease; either because the lessee is in breach of the lease or because it would be futile to order specific performance of that which could be brought to and end immediately[12].

458. But all that having been said, I do not accept that the agreement for sub-lease amounted to a prohibited assignment of IGA's interest under the agreement for lease. There is high authority that a covenant not to assign demised premises operates to prohibit legal assignments as opposed to equitable assignments[13]. There is also authority that a covenant not to assign without consent is not contravened by an agreement to assign subject to consent[14]. Most importantly, the proposition that a specifically enforceable agreement for sub-lease is treated in equity as the equivalent of a lease at law, is at best an approximation and, as it is used in the argument advanced on behalf of King & Taylor, it is erroneous. The aphorism that equity treats as done that which ought to be done, does not mean that an agreement to create a lease subject to consent is in equity transformed into a lease which is not subject to consent. The rule in Walsh v Lonsdale[15] does not operate to convert a conditional agreement to create an estate into an unconditional estate. It asks instead whether the title acquired by specific performance of the agreement justifies at law the act complained of or supports at law the action in question. And here, specific performance of the agreement for sub-lease with the Morgans would not yield a title that supported Morgan's unconditional right to a sub-lease of the premises. It would justify no more than a right to compel IGA to seek the consent of King & Taylor to a grant of a sub-lease binding on IGA[16]. It may be, as has been argued on behalf of King & Taylor, that those rights would be sufficient in themselves to create in the Morgans an interest in the site. But even assuming that is so, it does not amount to an assignment of IGA's interest under the agreement for lease.

461. But then it is said by King & Taylor that even if the agreement for sub-lease does not constitute an assignment of IGA's interest under the agreement for lease, it still amounts to a dealing with IGA's interest under the agreement and thus contravenes clause 9.1 of the agreement for that reason.

464. One possible answer advanced by IGA to that contention was that the prohibition on dealings in clause 9.1 is directed to dealings at law and thus is not contravened by dealings in equity[17]. But King & Taylor answer that by saying that the reference in clause 9.1 to "charge" bespeaks an intention to extend also to equitable dealings, because a charge can only be equitable.

467. Another answer advanced by IGA was that clause 9.1 should be seen as directed only to dealings with the whole of the interest of IGA and should not be seen as extending to dealings which do no more than carve out lesser entitlements in favour of third parties. That strikes me as unlikely. One need only think of an assignment in equity of part, or of a charge of part, in order to conclude that the prohibition was probably not intended to be restricted to dealings with the whole of IGA's interest.

470. The best answer advanced by IGA, and the one which I think to be correct, is that the words of clause 9.1 need to be construed in context and understood in the way in which it would be supposed that honest business men would understand them; with reference to their subject matter and surrounding circumstances[18]. When so construed, the words of clause 9.1 would not be understood as extending undiscriminatingly to everything that answers the literal conception of "dealing" . They would instead be understood as directed selectively to those sorts of transactions which may affect the contractual and proprietary ties that bind King & Taylor to IGA under the agreement for lease. The object is plain enough. Dealings with third parties are not to be permitted, without consent, if they may impinge upon the contractual rights and obligations which bind King & Taylor and IGA. But if a dealing is incapable of that effect, it is res inter alios acta and surely not intended to be included amongst that which King & Taylor may prohibit.

473. The provisions of clause 3.2 mean that the agreement for sub-lease is incapable of impinging on the contractual rights and obligations which bind King & Taylor and IGA under the agreement for lease, unless the consent of King & Taylor is given. I consider it follows that clause 9.1 of the agreement for lease has not been infringed.

476. I add for the sake of completeness however, that, even if the agreement for sub-lease were in contravention of clause 9.1, the magnitude of the contravention would be so slight that in my opinion it would neither amount to repudiation nor other sufficient reason to withhold specific performance.[19]

480. I turn to the third alleged breach of agreement and therefore to the question of whether IGA's demands for an indemnity in respect of any penalties payable was a breach of the agreement entitling the Assettas to bring it to an end.

483. The Assettas contend that IGA's persistence in demanding an indemnity breached clause 12.4 of the agreement for lease, because the Assettas say that they were not guilty of any default responsible for the imposition of a penalty, and thus the persistence of IGA in demanding an indemnity evinced an intention on the part of IGA not to perform the contract in accordance with its terms.

486. I think that the Assettas are correct in their contention that it was not default on their part which caused the delay in stamping and the risk of the imposition of penalty. I say that because, just as I consider that there was not any obligation on IGA to provide an estimate and cheque to Mr Szental, I take the view that there was not any obligation on Mr Szental to provide the form of estimate and advice which was sought by Ms Zusman in her letters of 18 December 2000 and 2 February 2001. Basic professional courtesy demanded that Mr Szental respond to Ms Zusman's inquiries, at least to the extent of advising that Mr Szental was not equipped or prepared to assist. And, if there had been such a response, the probability is that the problem would have evaporated; because something would then have been done about it by IGA before positions became entrenched. But, in this context, basic professional courtesy did not impose any legal obligation. And, if IGA chose to assume that Mr Szental would observe the standards of basic professional courtesy, it took the risk that it may be wrong in its assessment.

489. In the event, Mr Szental did not adhere to the standards of basic professional courtesy, and as a consequence IGA did not do in sufficient time what needed to be done to have the agreement stamped within three months of execution (and thereby avoid the risk of late stamping penalty). But regrettable as that may be, as a matter of contract the fault in that rests with IGA, and not with the Assettas. In my view it follows that it was a breach of the agreement by IGA for IGA to demand that the Assettas indemnify IGA against the possibility of penalty.

492. I should say that I was for a while attracted to the view that the demand for indemnity was only ever sought as a quid pro quo for agreeing to an extension of the clause 7 fit-out date. That seemed to follow from the fact that it was only on the one occasion early in June 2001 that Carlile expressly conditioned an extension of the clause 7 fit-out date on the provision of a penalty indemnity. If that were so, the demand for the indemnity would not have been a breach, because IGA were not contractually bound to agree to an extension and thus were free to demand an indemnity as the price of agreement. But on reflection it seems to me that the indemnity was not only sought as the price of an extension. It was demanded more or less continuously from early March 2001 up until 21 June 2001, even though it was only made a condition of the extension of the clause 7 fit-out date on one occasion in June. In my view each such demand was tantamount to a refusal to pay penalty which should properly have been borne by IGA.

495. So to say, however, falls a long way short of concluding that IGA evinced an intention to throw up the contract. Of course, a refusal to perform a contract on the basis of an unjustifiable interpretation of the contract may amount to repudiation[20]. But where the terms of a contract are not clear, and there is a dispute over their meaning, bona fide insistence on a particular interpretation of them is not repudiation[21]. Equally, I consider that where the facts of a matter are not clear, and there is thus a dispute over the application of the terms of the contract to the facts of the matter, bona fide insistence on a particular interpretation of the facts and thus of the application of the terms of the contract to the facts of the matter, is not repudiation.

498. I have to say that one does not find in the authorities the same support for that latter proposition as one finds for the former; but as a matter of principle it appears to be correct. While, strictly speaking, the construction of the terms of a contract is a question of law, and the application of the terms to the facts, is a question of fact[22], the two processes are in reality so closely bound up together as often in effect to mean that they are inseparable[23]. Given that the whole theory of offer and acceptance and repudiation and rescission proceeds by reference to the ways in which it is to be supposed that honest and reasonable business people would perceive each other's actions and communications[24], I regard it as untenable in the present context that bona fide errors in construction and interpretation should be treated any differently.

501. In my opinion, IGA's demand was the consequence of a bona fide mistake about the facts of the matter, because it believed that the delay was the result of default on the part of Mr Szental. In that respect it was naive and I think it was presumptuous. Too quickly and for too long did it assume that it was the responsibility of others to look after IGA's affairs. But it was bona fide and, in the confusion which seems to have reigned, it was not unreasonable.

504. In case I am wrong about that, however, and there is a distinction to be drawn between maintaining a bona fide mistaken view on the meaning of the terms of a contract and maintaining a bona fide mistaken view of the application of the terms to the facts of the matter, I should say that I still would not consider that IGA persisted in its demand for an indemnity long enough to evince an intention not to be bound by the terms of the contract.

507. Ordinarily, if a party to a contract takes the wrong view of the operation of the contract that party should be given an opportunity to reform and an attempt should be made by the other party to the contract to persuade the defaulting party of the error of its ways and to allow it an opportunity to reconsider[25]. And indeed, that is what happened in this case. There were a number of discussions in which the Assettas sought to persuade IGA that the Assettas had not been responsible for the delay in stamping and therefore were not liable to indemnify IGA against any late stamping penalty which might be imposed. And ultimately IGA gave ground on its demand, once the Assettas made clear by their communications with Mr Shaw on 16 June 2001 that, unless IGA accepted the Assettas' position by 30 June 2001, the Assettas would regard themselves as free to open up negotiations with Aldi and Bi-Lo. After that ultimatum issued IGA did not again ask that King & Taylor provide it with a penalty indemnity.

510. It was contended on behalf of the Assettas that IGA did not really recant from its insistence upon an indemnity and that, far from demonstrating a change of heart, the submission of the alternative forms of agreement on 21 June 2001 bespoke an intransigent persistence by IGA in the view that the Assettas alone were responsible for any penalty which may be imposed. But I do not think that is right. As I understood the contention it was that IGA's position should be seen as having been that the new forms of agreement were calculated to save the Assettas from liability, not IGA, and that, if the new forms of agreement were ineffectual to avoid penalty, IGA would still regard the Assettas as being liable. But that seems to me to be illogical. It makes no sense for IGA to have sought a means of avoiding the penalty if it were still insisting on an indemnity against the penalty. Contrastingly, it makes considerable sense to read the attempt to avoid the penalty as informed by a recognition on the part of IGA that it was not going to get the indemnity it had asked for and therefore something else had to be done. That is the way I read it.

513. I should say, moreover, that, if I am wrong about that, and the submission of the new forms of agreement of 21 June 2001 is properly to be viewed as IGA maintaining its earlier demand for indemnity against any penalty imposed, I would still consider that the demand for indemnity would not have entitled the Assettas to treat the agreement for lease as having been repudiated.

516. If the Assettas had not purported to rescind the agreement, it is likely that one of two things would have happened. Either the Assettas would have agreed to execute the new forms of agreement, or they would have refused and required the original documents to be amended to extend the fit-out date in clause 7.3 (and be submitted for stamping as amended). But what might have occurred thereafter is distinctly problematic. It is impossible to know, or even to conclude it is likely that IGA would have continued to demand a penalty indemnity in whatever circumstances then obtained.

519. If the Assettas had come back and demanded that the original agreement be used, and if at that stage IGA had continued to demand a penalty indemnity, it would have been possible to say that IGA had not repented of its former error and, possibly also, that IGA thereby evinced an intention no longer to be bound by the agreement. But the point was never reached. The Assettas prevented its arrival by purporting to rescind the agreement. Because they did so, they prevented the occurrence of the circumstances in which such a repudiation might have come about.

522. Putting the matter another way, at the time at which the Assettas purported to rescind the agreement, IGA had not unequivocally asserted that it insisted on a penalty indemnity and that it would not proceed with the agreement without one. And one could not know if it would or would not do so, at least until the Assettas responded to IGA's letter of 21 June 2001 and IGA then replied. The Assettas moved too quickly to bring the agreement to an end and they thereby deprived themselves of a chance of ending it effectively.

526. The fourth alleged breach of agreement relied upon as constituting an act of repudiation is the submission of the new forms of agreement under cover of Ms Zusman's letter of 21 June 2001. As pleaded the contention is that the submission of the new forms of document amounted to a demand that King & Taylor execute an agreement which was significantly different to the existing agreement in that it "attempted to extend (IGA's) right to terminate the agreement for non-completion of construction by 12 months to 31 March 2002". As argued, the contention incorporated an additional dimension: namely, that the submission of the new forms of agreement for execution was itself an intimation that IGA refused to pay stamp duty on the existing agreement, because it was a demand that in its place King & Taylor enter into a new agreement to which duty would not apply.

529. The opportunism of both forms of the contention is remarkable once it is remembered that the new forms of agreement included the change to the clause 7 fit-out date for which the Assettas had asked and were submitted after the conversations between Carlile and Mark Assetta in which Assetta expressed interest at the prospect of entry into the new forms of agreement to avoid stamp duty on the old. Against the background[26] of the request for amendment to the clause 7 date, and the discussion about stamp duty, one could not objectively construe the submission of the new forms of agreement as repudiatory of the old. I consider that they were no more than a step taken towards reaching a new agreement, with the assent and encouragement of the Assettas.

532. That is not to say that the Assettas were bound by the conversation between Carlisle and Mark Assetta to execute the new forms of agreement once submitted. It is to say that, having invited Carlile to submit the documents for consideration (as even upon Mark Assetta's evidence was the case), the Assettas could not as objective reasonable people regard the submission of the new forms of documents as repudiating the old.

535. In my opinion, a reasonable objective person in their position would understand that IGA continued to rely on the existing agreement until and unless the new forms were executed, and thus that IGA continued to regard itself as bound by their obligation to pay stamp duty imposed by clause 12.4 of the existing agreement, until and unless the new forms were executed.

539. The fifth thing relied upon as evincing an intention on the part of IGA no longer to be bound by the agreement is the contents of the letter of 21 June 2001. It was contended by King & Taylor that by referring to the fact that executed parts of the agreement had not been exchanged, IGA was signifying that it regarded the original agreement as never having come into being.

542. There might be some force in that contention if the letter of 21 July 2001 were to be taken at face value. If, however, it were to be taken as mere window dressing, designed to do no more than save stamp duty, the position would be different.

545. There are other ramifications of attempting to avoid stamp duty in that fashion, and they will need to be considered separately, because they are alleged to form an independent basis for resisting specific performance of the agreement. But if enough facts were known to a recipient of the letter to enable an understanding that the letter was for the purpose of laying a paper trail for the revenue, and no more, I do not consider that an objective recipient armed with the relevant knowledge would perceive the letter as evincing an intention of throwing up the existing agreement. Again, I think that such a recipient would perceive it as a step toward reaching a new agreement and not as intended to supplant the existing agreement until the new agreement had been reached and concluded.

548. Here the facts show that the Assettas were possessed of enough knowledge to comprehend that the letter was only for the purposes of window dressing for the revenue and was not intended to repudiate the existing agreement. The letter came almost immediately after the conversation between Carlile and Mark Assetta, in which Carlile said that his lawyers considered that the execution of new forms of agreement would avoid stamp duty penalties, and Mark Assetta invited the submission of the new forms for consideration by the Assettas and their solicitor.

551. Perhaps it is open to doubt that the Assettas as opposed to their solicitor would have understood completely how the contents of the letter were calculated to achieve the avoidance of duty. But I do not think so. Mark Assetta struck me as a particularly shrewd businessman who was more than passingly familiar with most aspects of the trade of property development, in which he said that he had spent his last 20 years. I think he understood as well as most in his trade how and why paper trails are sometimes laid for the revenue, unscrupulous though the practice may be, and that it was the purpose of the letter to do just that. Moreover, I do not doubt that Mr Szental understood it. And whatever the Assettas personally did or did not understand about the way in which the contents of the letter could conceivably assist in the avoidance of duty, I am of the firm view that the Assettas, like any objective recipient of the letter in their position and with their knowledge of what had gone before, would not for a moment have perceived the contents of the letter as meaning that IGA were prepared to throw away the old agreement if the Assettas would not agree to the new.

554. I conclude that the reference in the letter of 21 June 2001 to the parts of the agreement for lease not having been exchanged, did not amount to a repudiation of the agreement for lease.

558. I turn therefore to the sixth allegation of repudiation, which is that IGA repudiated the agreement for lease by threatening in their letter of 4 July 2001 that, unless the Assettas execute and return the new forms of agreement, IGA "would take appropriate action".

561. This allegation assumes that "the appropriate action" is action to enforce or obtain other relief in respect of an agreement to execute the new forms of agreement which were sent to the Assettas under cover of the letter of 21 June 2001. If the assumption were well founded, there would be something to be said for the view that the letter of 4 July 2001 treated the existing agreement as already supplanted by the new forms of agreement (and thus that IGA has repudiated the existing agreement). But if the assumption is not well founded, the allegation is bereft of substance. And if the correct construction of letter is that action will be taken to enforce the existing agreement, the letter represents a strong affirmation of the existing agreement. I do not think that the allegation is made out.

564. The terms of the letter are equivocal. They leave room for doubt as to whether the action referred to is action to enforce the existing agreement or action to enforce an agreement to execute the new forms of agreement. Consequently, I do not consider that the assumption is shown to be well founded. Since that is so, I consider it must follow that the allegation fails. Repudiation of an agreement is not lightly to be inferred[27]. Unless it is clear that a communication does throw up the agreement or evinces clearly an intention no longer to perform it substantially in accordance with its terms, repudiation will not be inferred.

567. Even if there were no doubt about the meaning of the letter of 4 July 2001, and one could say with confidence that it does threaten enforcement of an agreement to execute the new forms of agreement, I do not think that the allegation of repudiation would succeed. An intention to enforce an agreement to execute the new forms of agreement is not necessarily inconsistent with an intention that the existing agreement inure until the new forms of agreement are executed. To assume that it is is to suppose that an agreement to amend or even replace an agreement cannot ever be enforced until the agreement to be amended or replaced has been brought to an end. Ordinarily, that is not the way an amending or replacing agreement operates. Ordinarily, the agreement to be amended or replaced does not cease to operate in unamended form until the amending or replacing agreement is executed or, if it be later, when it provides for the amendment or replacement to come into force.

570. There may be some amending or replacing agreements which will not begin to operate until the agreements which they are designed to amend or replace have ceased to operate (although it is difficult to think of an amending agreement of that kind). But I see nothing in the proposed new forms of agreement which were submitted for consideration under cover of the letter of 21 June 2001 which warrants or even suggests the conclusion that the cessation of the old agreements and the inception of the new agreements either had to be or was intended to be separated in time.

573. Perhaps it might be said that the submission of the new forms of agreement and the threat to take action to enforce them proceeded from an erroneous assumption that agreement to enter into the new agreements had been reached, when in reality it had not. Thus it might be said that to submit the new forms of agreement for execution and to threaten action to compel their execution was an assertion as to the terms of the contractual relationship between the parties which was at odds with the true position, as represented by the original agreement in unamended form. But even assuming all that were true, it would amount in the end to more than a bona fide mistake as to the terms of the contractual relationship and, inasmuch as the threat was to seek enforcement, an apparent willingness to accept an authoritative determination as to the correct view of the matter.

576. For those reasons I do not consider that submission of the new forms of agreement or the demands made in the letter of 4 July 2001 for execution of the new forms of agreement amounted to a repudiation of the existing agreement for lease.

580. In further answer to IGA's claim, the Assettas contend that even if IGA did not repudiate the existing agreement for lease, IGA is not entitled to an order for specific performance because IGA was and remains in breach of the existing agreement for lease; IGA is not ready and willing to perform the existing agreement for lease in accordance with its terms; the agreement is not capable of being specifically enforced; an order for specific performance would cause undue hardship to King & Taylor; damages are an adequate remedy; and, in any event, IGA does not come to court with clean hands. It is necessary to deal with each of these contentions separately.

584. The only particulars given of the allegation that IGA remains in breach of the existing agreement for lease were that from about 9 May 2001 Mr Carlile told the Assettas that IGA would agree to extend the date specified in clause 7 of the agreement for lease only if the first Defendant agreed to provide IGA with an indemnity for any penalties imposed in respect of stamp duty payable on the agreement for lease.

587. I have earlier found that Carlile did in the first week of June 2001 condition the agreement of IGA to an extension of the clause 7 date on a demand that the Assettas provide an indemnity against any penalty imposed by reason of the delay in stamping of the original agreement for lease. I have also found that it remained the position up until the submission of the new forms of agreement on 21 June 2001, but that it ceased at that point. However, a variation on the theme emerged in the course of final submissions. Counsel for IGA said that if IGA were successful in obtaining an order for specific performance, it was its intention to pay any penalties which may be imposed and then, if it be open to do so, to seek to recover those from King & Taylor. And for the reasons already expressed, I do not consider that it would be open to IGA to recover the penalties from King & Taylor in respect of the period up to 21 June 2001 (although I say nothing in respect of the period after that date).

590. Be that as it may, I do not consider that means that IGA is now in breach of the agreement for lease. There is nothing in the agreement for lease which precludes IGA paying penalties and then seeking to recover them from King & Taylor (although my decision as to who is liable to pay those penalties will probably now have that effect in respect of the period up to 21 June 2001), and there is nothing in the agreement for lease which obliged IGA to agree to an extension of the date specified in clause 7.3. As a matter of contract, I consider that IGA was entitled to make its agreement to an extension of the clause 7 fit-out date conditional upon anything lawful which IGA chose to specify, and that is what it did.

593. It has not been suggested that there was any implied obligation of good faith and fair dealing[28] which compelled IGA unconditionally to agree to an extension of the fit-out date, and it has not been suggested that the issue is affected by any implied obligation so to act as to enable the other party to the contract to have the benefit of that for which they contracted[29]. Nor do I think that it could be. No doubt the date provided for in clause 7.3 has now long passed. But that does not present any problem. Clause 7 does not require that anything happen or be done by the date specified in the clause. It provides only that IGA might have chosen to bring the contract to an end if construction has not been completed to the point where fit out could commence by that date. Since construction has not begun, let alone been taken to the point where fit-out could now begin, and since so far from bringing the contract to an end, IGA seeks now to enforce the contract, IGA must be taken to have waived and lost such rights to end the agreement as clause 7 may ever have conferred[30].

597. The contention that IGA is not ready and willing to perform the agreement rests upon the allegations to which I earlier referred, that the failure of IGA to provide an estimate of rental and a cheque for stamp duty to Mr Szental, and the insistence that King & Taylor pay any penalty imposed, constituted breaches of the agreement. For the reasons already given I do not consider that the failure to provide the estimate and cheque was a breach of the agreement and although I have found that there was a breach in connexion with the penalty, it has ceased to be material. Accordingly, I do not consider that it is the case that IGA is not ready and willing to perform the agreement.

600. I add, moreover, that if I were wrong in the view which I take of the effect of clause 12.4, and if it did require the provision of an estimate and cheque, I would still not regard such failure as there was in not providing the estimate and cheque as a bar to specific performance.

603. The principles are well established. They do not require the plaintiff to show that it has strictly and literally complied with all of its obligations under the agreement: Fullers Theatres Ltd v Musgrove[31] or even that it is now ready and willing to perform strictly and literally its obligations in future. The requirement is rather one of substantial compliance, as was explained by Barwick CJ in Mehmet v Benson[32] as follows:

"The question as to whether or not the plaintiff is ready and willing to perform the contract is one of substance not to be resolved in any technical or narrow sense. It is important to bear in mind what is the substantial thing for which the parties contract and what on the part of the plaintiff in a suit for specific performance are his essential obligations. Here the substantial thing or which the defendant bargained was the payment of the price: and, unless time be of the essence, he obtained what he bargained for if by the decree he obtains hes price with such ancillary orders as recompense him for the delay in its receipt. To order specific performance in this case would not involve the court in dispensing with anything for which the vendor essentially contracted. But it is the essential terms of the contract which he must be ready and willing to perform. He seeks a transfer of the interest in land, the subject of the contract: the counterpart obligations the payment of the price. In considering the question of the plaintiff's readiness and willingness in this respect in this case there are many factor. His default in paying the instalments of the price, whilst not conclusive, is amongst these factors... In my opinion, notwithstanding the defaults of the plaintiff in the payment of the instalments of price, he was not unready or unwilling to perform the contract in its essential terms; specific performance ought to have been granted."[33]

607. IGA stands ready now to provide the estimate and cheque if that is what clause 12.4 is held to require. Hence, even assuming the breach which is contended for, I do not see in it any or at least sufficient reason to refuse specific performance.

610. In my opinion, a breach of the agreement constituted of failing to provide an estimate of rental or a cheque to Mr Szental would not be of such nature as to have deprived King & Taylor of the substance of that for which they contracted.

(3) Is the agreement for lease susceptible to an order for specific performance?

614. I turn to the contention that the agreement for lease is incapable of being specifically enforced. No particulars of that allegation have ever been given or sought. It was nevertheless submitted by Mr Hammond QC in the course of opening and again in the course of final submissions that because the agreement is more than just a contract for lease of land, in that it entails also the construction of the supermarket in accordance with the plans annexed to the contract, it is of the class of contract that is not susceptible to specific performance (because it would require the continuing supervision of the Court)[34]. Mr Hammond recognised what may perhaps be called the building contract exception to the rule against specific performance of contracts requiring continuing supervision, but he submitted that the exception is not applicable to the facts of this case. I take the opposite view.

617. The principles which govern orders for the specific performance of building contracts are summarised in Spry[35], as follows:

"The principles that have been discussed here in regard to difficulties in the enforcement of equitable orders have a special application in the case of agreements to construct buildings. Agreements of this nature are often complex and indefinite, and require performance by the parties of a very large number of individual acts, so that it is sometimes inappropriate to enforce performance in specie. However it is consistent with those principles that sometimes considerations of hardship to the plaintiff induce a greater readiness than might otherwise have been expected to undertake the enforcement of complex or uncertain obligations. The governing principle is that the court takes into account any hardship or prejudice that may arise if specific enforcement is not ordered, the extent to which damages constitute an adequate remedy and the extent of any burden that may assume in relation to possible applications to enforce its order, and grants specific performance if the balance of justice so inclines."

621. I consider that this is a case where the balance of justice does incline in favour of an order for specific performance. There is no uncertainty about the building to be constructed. It is defined in the plans annexed to and which form part of the agreement for lease. The exact nature of the work to be carried out is not subject to question. King & Taylor are under a contractual obligation to procure the construction of a supermarket in accordance with the plans and specifications annexed to the contract.[36] IGA has a substantial interest in having the construction completed and the lease granted because, as the evidence shows, the land is in a new developing suburb where for the time being there are few other opportunities to establish a comparable facility. Mr Carlile gave uncontradicted evidence of the unique value to IGA of a supermarket on the site. I also take notice of the fact that site locations are regarded by supermarket chains as of the first importance. Finally, King & Taylor has possession of the site, if that is to be regarded as a relevant consideration.[37]

624. It was submitted on behalf of King & Taylor that, although it may be in possession of the site for the time being, that will not last for long. It was said that the contract of sale once completed will give the right to possession to Delahey and, because the contract does not in terms preserve the rights of IGA under the agreement for lease, neither IGA nor King & Taylor will have any right even to go upon the land; let alone to have possession for the purposes of constructing a supermarket.

627. These points might be significant if the effect of the contract of sale were to give Delahey the land unencumbered by the agreement for lease in favour of IGA. But if the correct analysis is that Delahey takes subject to the rights of IGA under the agreement for lease, the fact that King & Taylor is no longer the owner may not be as important. IGA would have the right as against the purchaser to build a supermarket on the land, and King & Taylor would be bound as against IGA to build the supermarket or to procure its building in accordance with the agreement for lease. In those circumstances I consider that the obligation to construct the supermarket might still be susceptible to an order for specific performance.

630. The applicable principles are again to be found in Spry[38]:

"...the preferable view is that specific performance may be appropriate even where the defendant does not have possession of the land on which the building work is to be carried out. No doubt in other cases damages are often found to be an appropriate remedy, but this is not always so, and, for example, in Greene West Cheshire Ry Co the defendant railway company was required to construct a siding on land in the possession of the plaintiff in accordance with the terms of an agreement that had been entered into by it. Likewise in the Channel Tunnel case the House of Lords accepted that the defendant could be ordered to continue with the performance of construction works. Further, an obligation to build that might, if it stood alone, be adequately satisfied by damages may be contained in a contract the breach of other terms of which cannot be adequately satisfied by damages; and, if so, it may be held that damages are not appropriate for the contract as a whole, and specific performance may accordingly be granted, if for example difficulties of enforcement are not in all the circumstances excessive."

634. No doubt there are cases where damages are an adequate remedy for breach of a contract to build. That is because, in those cases, the damages which are awarded may be used in paying another builder to do the work which the defendant failed to do. But damages will not ordinarily be regarded as an adequate remedy for breach of an agreement to lease, because of the unique value which is ascribed to land. A fortiori in this case, where the land at stake is sought after as a site suitable for a new supermarket in the new and developing suburb of Delahey. This is the very sort of case where damages would not be appropriate for the contract as a whole and thus, other things being equal, specific performance may be granted.

637. There is then a further argument, pressed by the Assettas, that if the sale to Delahey were to go ahead subject to the prior interest of IGA, specific performance of the obligation to construct the shopping centre would be specific performance of only part of the agreement for lease, and that in itself would be sufficient reason to refuse the order sought. The basis of the argument is that the agreement for lease is not just an agreement to construct - it is an agreement both to construct and to lease what is constructed - and if the sale to Delahey goes ahead subject to the agreement to lease, King & Taylor may still be able to construct but it will not be able to lease (because it will no longer own the land).

640. At a theoretical level there is something to be said for the argument. As a general rule it may be said that when the court cannot compel specific performance of a contract as a whole, it will not interfere to compel specific performance of part of a contract[39]. But that is not a rule of universal application. If an agreement is severable, or divisible, so that it can be said to be not one contract but several agreements in one document, then one or more of those agreements may, if there is no other objection to a decree, be enforced specifically[40].

643. At a practical level there is nothing to be said for the argument. Delahey contends and King & Taylor concedes that if IGA's interest in the site is held to rank in priority ahead of the interest of Delahey, Delahey will be entitled to an order for rescission of the contract of sale, pursuant to s. 32 of the Sale of Land Act or s. 87 of the Trade Practices Act. Since IGA would not be entitled to an order for specific performance unless it ranks in priority ahead of Delahey, there is no possibility of an order being made in circumstances where King & Taylor would not be in possession of the site.

647. The question is whether Delahey should be seen as taking its interest in the land free from the claims of IGA or as subject to the rights of IGA under the agreement for lease. In my view, it is the latter.

650. This is not a case like Bahr v Nicolay (No 2)[41] where the vendor of land had stipulated that the purchaser of the legal estate should take subject to the existing equitable interest of the plaintiff, and the purchaser was held bound in conscience to observe the interest of the plaintiff. Here, so far from endeavouring to preserve the interest of the plaintiff, King & Taylor set out to destroy the interest of IGA by procuring a sale which made no mention of the rights of IGA. But here there is also the difference that, unlike Bahr v Nicolay, where the purchaser had obtained registration of its interest and had become the registered proprietor of the legal estate before the contest was heard, the matter still rests in contract. There has as yet been no registration of the first defendant's interest in the land and hence for the time being it is still a matter of competing equitable interests. Hence, the first in time prevails[42] unless there be something "tangible and distinct having grave and strong effect to accomplish the purpose"[43] which is to say there is something in the conduct of IGA which in all the circumstance dictates that in fairness and in justice the interest of IGA should be postponed to the interest of the Delahey[44].

654. The only thing relied upon by Delahey as establishing circumstances sufficient to postpone the interest of IGA is the failure of IGA to lodge a caveat on title to protect its interest (until some two weeks after Delahey had entered into a contract with King & Taylor to purchase the land). In my opinion that is not enough. Not only is it established by the decision in Jacobs v Platt Nominees[45] that failure to caveat is not sufficient of itself to postpone a prior interest holder to a subsequent taker, here there is no suggestion that Delahey relied on the register or the absence of a caveat. It will be recalled that Mr Szental conducted a title search before the completion of the contract with the Delahey, and that the results of the search led him to procure the lodgment of a caveat by Delahey (in an attempt to close out the interest of IGA). But there is no evidence that Delahey was aware of the title search or of what it showed and Mr Szental was not misled by the absence of a caveat because he knew exactly the position of IGA.

657. It was at one point suggested that Delahey had been prejudiced by the absence of a caveat from the register because, as it was put, if it were not for the absence of a caveat, Mr Szental would not have been able to draw answers to requisitions on title and prepare a Section 32 Statement which made no mention of the interest of IGA's interest in the site. On that basis it was contended that there had been prejudice suffered by the second defendant, because it had proceeded on the basis of a contract and statement which would have been different if the caveat had been lodged.

660. I reject that contention for two reasons. First, there is no evidence that Delahey read, let alone placed any reliance upon the Section 32 Statement or the answers to the requisitions on title. The evidence is that David Herszberg spent a minimal amount of time in executing the contract once it was handed to him at Mr Szental's office and that Samuel Herszberg spent even less. That is as far as it went.

663. Secondly, I do not consider that the absence of a caveat is likely to have made any difference to the propensity of Mr Szental to draw the answers to requisitions on title and the Section 32 Statement in the way that he did. I regard it as overwhelmingly probable that he would have done exactly the same if a caveat had been lodged.

666. The requisitions on title and the answers are a remarkable document. According to Mr Szental it is his usual practice when acting as solicitor for a vendor to draw both the requisitions on title and the answers, and to include them with the contract, because he says that it accelerates the acceptance of title and thus the release of deposit moneys under s. 27 of the Sale of Land Act. Mr Szental also says it is becoming an increasingly common practice amongst conveyancers generally and, for what it is worth, Samuel Herszberg (who is an estate agent) shared that view. I must say, however, that it is the first time that I have ever heard of the practice and it appears to me that it is calculated to create serious problems. Moreover, the thing which makes the document really remarkable is that its contents are so blatantly misleading and, paradoxically, it is that which serves best to demonstrate that a caveat would have made no difference.

669. According to Mr Szental's own evidence, although he considered that the letter of 21 June 2001 may possibly have constituted a repudiation of the agreement for lease, he knew that the agreement could not come to an end until and unless the repudiation were accepted. Yet at the time at which he drew the requisitions and answers there had been no acceptance of the repudiation, and even at the time that the contract of sale was apparently signed by the Herszbergs, there had been nothing done to accept the repudiation.

672. Despite that, the following requisitions and answers were included among others:

"2. Is the vendor aware of: (a) any mortgages, liens, charges, restrictions, or other encumbrances, easements, rights or licences which affect or benefit the land, which have not been disclosed to the purchaser or which have been created after the date of the contract?

Answer: Save and except as disclosed in the attached Vendor's Statement, no.

(b) any easements, tights, or encumbrances mentioned in Section 42 of the Transfer of Land Act 1958 which affect the property which have not been disclosed to the purchaser? These must be removed prior to completion, if required by the purchaser.

Answer: Save as disclosed in the attached Vendor's Statement, no.

... 15. If the property is sold subject to any tenancy or occupancy, provide particulars of the terms of the tenancy or occupancy, including a copy of any lease or agreement for lease.

Answer: A copy of the Agreement for Lease with McDonald's Properties (Australia) Pty Ltd is included in the attached Vendor's Statement.

The property is not sold subject to any other lease or agreement for lease or tenancy arrangement."

682. The Section 32 Statement was equally Delphic in its inclusion of the following description of "Restrictions":

"Information concerning any registered or unregistered easement, covenant or similar restriction affecting the Property follows: (a) Easements and covenants The easement(s) and covenants ( if any), copies of which are attached, and other easement(s) (if any) implied or otherwise arising under any law. (b) McDonald's Agreement The attached Agreement for Lease with McDonald's Properties (Australia) Pty Ltd dated 1 June 2001 (c) Similar restrictions The restriction(s) (if any), copies of which are attached, and other restriction(s) (if any) implied or otherwise arising under any law."

686. It is not credible that Mr Szental could have drawn answers to requisitions on title and the Section 32 Statement in the fashion he did, without making any reference to IGA, unless he knew that reliance would not be placed upon them (or unless he were prepared deliberately to mislead the Herszbergs, which I do not consider to be the case).

689. During the course of evidence Mr Szental was asked a number of questions as to how he was able to draw the answers and Section 32 Statement as he did when he knew that the interest of IGA would not come to an end at earliest until the alleged repudiation had been accepted and not at all if the letter of 21 June 2001 were held not to have been repudiatory. His response was that that his instructions were to terminate the agreement for lease and sell the property freed from that agreement. But Mr Szental knew that the termination would be contentious, he said so, and he believed it was likely that there would be a fight as to whether the termination of the agreement for lease had been effective. He said so. And there is no doubt that the ordinary practice of conveyancing solicitors in similar circumstances, and Mr Szental said that his practice ordinarily, would be to include in the Section 32 Statement full details of what the interest had been and what the dispute was likely to be; lest the purchaser later seek to use the absence of that information from the Section 32 Statement as a basis to resile from the purchase. Towards the end of his cross examination Mr Szental was asked repeatedly why he had not made reference to the position concerning IGA, if only to avoid the risk of the purchaser seeking later to resile, and on all but one of those occasions he avoided giving an answer. Finally, he responded:

"Because I was intending to terminate the agreement and on that basis from my clients point of view there was no longer an agreement on foot. Now, the sequence of events turned out differently but that was the intention that I prepared the documents (sic)."

693. I do not accept that evidence as completely accurate. I conclude that the principal reason that Mr Szental did not make any reference to IGA in the Section 32 Statement is because he wanted the purchaser to be able to say that it was a bona fide purchaser for value without notice of IGA's claim. He hoped that the sale transaction would thereby defeat such if any interest of IGA as survived the purported rescission of the agreement for lease. Mr Szental at one point frankly conceded that the overall plan was to sell the land and lodge a caveat before the expiration of the 6 July 2001 deadline which had been set in the 4 July 2001 letter, in the hope of thereby closing out the claim of IGA. I find that, despite his unwillingness to admit it, he considered that the plan would be enabled if the purchaser could say that it had no knowledge of the existence of the agreement for lease.

696. Evidently, in those circumstances, his answers to requisitions on title would have been the same whether there was a caveat on title or not.

700. Even if the failure of IGA had aided Mr Szental in his ability to exclude reference to IGA from the answers to requisition on title and from the Section 32 Statement, and even if it were shown that the Herszbergs were cognizant of the form of the Section 32 Statement and the answers to the requisitions on title, I would still not be satisfied that the failure to caveat is sufficient reason to postpone the interest of IGA to the interest of the second defendant.

703. The decision of the Appeal Division in Jacobs v Platt Nominees[46] resolved doubts which previously existed as to the application in Victoria of the High Court's decision in Heid v Reliance Finance Ltd[47]. Before Jacobs it was thought that differences between the Transfer of Land Act 1958 and the Real Property Act 1900 (NSW) may mean that the consequences of failing to lodge a caveat differed according to which of those Acts was applicable[48]. Jacobs established that such differences as there are between the two Acts are relevantly immaterial and hence that the consequences of failure to lodge a caveat in this State are the same as in New South Wales[49].

706. The decision in Jacobs makes clear that mere change of position is not enough to have the effect of postponing an interest earlier in time to one subsequently created. Consistent with ordinary principle, it is necessary for a party who seeks to reverse the order of priorities to go further and show that it has suffered detriment the consequence of the failure of the earlier interest holder to caveat. It is true that the Appeal Division's observations as to the need for detriment were made in the context of a consideration of whether failure to caveat could amount to estoppel by representation. The court dealt separately with what it termed the second method of deciding the postponement question, namely, whether in all the circumstances the conduct of the earlier interest holder is such that in justice and fairness it ought be postponed to the subsequent taker. But given that what is in issue is a question of competing equities, it is difficult to envisage anything short of detriment which would make it inequitable for the prior interest holder to insist upon priority[50].

709. If the Herszbergs had been aware of the contents of the Section 32 Statement and the answers to requisitions on title, they might now be able to say with truth that they changed their position because of the contents of those documents. But, in my view, they would still not be able to say with truth that they suffered any detriment because of the contents of the documents.

712. The detriment which is alleged is said to reside in the fact that that the price of $1.8M which Delahey agreed to pay for the site was computed on the assumption of the sorts of rentals which Coles is willing to pay, whereas, if the rentals are as set out in the IGA agreement for lease, the property will have a value of only $1M; and thus Delahey would suffer a loss of in the order of $800,000. But so much is true only if Delahey is forced to accept title subject to the IGA agreement for lease. The values of $1.8M and $1M are borne out by the expert evidence given by Mr Schuh and, in broad terms, there is little reason to doubt them. But as will be seen later in these reasons for judgment, if IGA is held to rank ahead, King & Taylor is agreeable that Delahey have an order for rescission of the contract of sale and for return of the deposit which was paid, with interest. In those circumstances I cannot see that there would be any detriment of the relevant kind.

716. IGA contended that a further or another reason to refuse Delahey priority was that Delahey had actual or constructive notice of IGA's interest in the land and thus that, even if there were detriment, it would not be unconscionable or inappropriate that Delahey should rank behind IGA[51].

720. In case I am not correct about detriment, I make the following observations about actual notice:

* Mr Szental knew that IGA had an interest in the land under the agreement for lease. He said so.

* I find on the balance of probabilities that the Herszbergs did not have the same degree of knowledge.

* I accept Myer Herszberg's evidence that he believed that the IGA interest in the land had been brought to an end before negotiations for the purchase began, and, although there are indications the other way, I am not satisfied that either David Herszberg or Samuel Herszberg knew anything more than their father.

* Myer Herszberg's evidence is supported by that of Mark Assetta. He said that he told Myer Herszberg that the Assettas dealings with IGA had come to an end and he had no reason to think that Myer Herszberg believed otherwise.

* That evidence is more compelling than might at first be thought. Although the Assettas and Delahey are in the same interest in attempting to defeat IGA, Delahey has a claim against King & Taylor for misleading and deceptive conduct constituted of Mark Assetta's failure to disclose the true nature of IGA's interest. Mark Assetta's evidence on this point is therefore evidence against interest.

* In the result, I find on the balance of probabilities that the Herszbergs did not have actual knowledge of the fact that the IGA agreement for lease remained in existence and therefore did not have actual knowledge of IGA's interest in the land.

730. The question of constructive or imputed knowledge is more complex. The concept of constructive knowledge is now controlled by Section 199 of the Property Law Act 1958 and although it has been said[52] that the section should not have any application to registered land, the law is that it does[53]. Under the section a purchaser is not to be affected prejudicially by constructive notice of any instrument , fact or thing unless it would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him or unless it has come to the knowledge of his counsel or of his solicitor or other agent as such or would have come to the knowledge of his solicitor or other agent as such if such inquiries and inspections had been made as ought reasonably to have been made by the solicitor to other agent.

733. The inquiries which ought reasonably to be made are those which a prudent man of business would make in the circumstances which obtain. In this case the only inquiries which might reasonably have been made were requisitions on title (because there was no one in physical possession of the land and hence physical inspection would have revealed nothing of relevance). But it is not usual to deliver requisitions on title before entry into a contract of sale. Ordinarily, they are delivered after the contract has been entered into in order to test the title to be acquired. Hence I do not think it can be said that the Herszbergs failed to make the inquiries which they ought reasonably to have made at the stage of the transaction which they reached.

736. It was suggested in the course of argument that the inquiries which the Herszbergs ought to have made should at least have included a demand for particulars of the dealings which King & Taylor had had with IGA, in order to test that the dealings were at the end that Mark Assetta represented. But I do not agree with that suggestion. At the stage which the transaction reached it would not be normal or even normally regarded as prudent practice to seek details of that kind.

739. It was then said that I should conclude that Mr Szental was acting as the solicitor or other agent as such for the Herszbergs and thus, because Mr Szental had actual knowledge of the facts, that knowledge is to be imputed to the Herszbergs despite the fact that they had not failed to make the sorts of inquiries which might be regarded as prudent.

742. The words "as such" in section 199 appear to mean no more than " in the capacity of"[54] and they include a solicitor who acts for both parties to a transaction. Information gained in acting for one party to the transaction is imputed to the other[55].

745. Unquestionably, Mr Szental acted for the Assettas and for King & Taylor. But there is a body of evidence that he also acted for the Herszbergs. As has been seen, he arranged for the incorporation or acquisition of Delahey to act as the purchasing vehicle and the transfer of its control to the Herszbergs. He drew requisitions on title (as well as the answers to requisitions which he drew on behalf of King & Taylor). He drew and gave advice to David Herszberg concerning the lodging of the caveat which was lodged on behalf of Delahey. And, because of the previous dealings which he had had with the Herszbergs, he was trusted by David Herszberg to ensure that the contract was in order to sign.

748. Despite that evidence, both the Assettas and the Herszbergs contend that it is not open to find that he acted as solicitor for the Herszbergs because, they say, there is clear evidence that he did not. They rely on the following:

* An assertion of Myer Herszberg that at not time did he ever retain or instruct Mr Szental to act for the Herszbergs interest in the purchase of the property;

* Evidence of Myer Herszberg that although Mr Szental had acted for the Herszbergs several times in the past, he was only one of a number of solicitors used by the Herszbergs and it was the practice of Myer Herszberg never to use the same solicitor as the opposite party to a transaction;

* Evidence of Myer Herszberg that he did not give instructions to Mr Szental to prepare a caveat to lodge on behalf of Delahey;

* Evidence of Myer Herszberg that he did not consider that the transaction was sufficiently complex to warrant the retention of a solicitor;

* An assertion of Mr Szental that he was not acting for the Herszbergs;

* Evidence of Mr Szental that he did not open a file in the name of the purchaser in connexion with the transaction;

* Evidence of Mr Szental that he did not enter into a costs agreement with the Herszbergs in connexion with the transaction and that he has never charged them any fees in connexion with the transaction;

* Evidence of Mr Szental that the incorporation of Delahey and the preparation of the caveat was done as a favour to the Herszbergs and was no more than something in effect on behalf of the Assettas to speed the transaction.

759. The circumstances in which the existence of a professional retainer may be implied were essayed by Charles JA in Meerkin & Apel v Rossett Pty Ltd[56], as follows:

"It is well-established that a professional engagement may be implied (Allen v. Bone [1841] EngR 1203; (1841) 4 Beav. 493; 49 E.R. 429; Morgan v. Blyth [1891] 1 Ch. 337 at 355; Vroon BV v. Fosters Brewing Group Ltd. [1994] VicRp 53; [1994] 2 V.R. 32 at 83 per Ormiston J.) or inferred (as Tadgell J. preferred to put it, in Toyota Motor Corporation Australia Ltd. v. Ken Morgan Motors Pty. Ltd. [1994] VicRp 55; [1994] 2 V.R. 106 at 178). The question whether a relationship of solicitor and client had been established was considered recently in Pegrum v. Fatharly (1996) 14 W.A.R. 92 by the Full Court of the Supreme Court of Western Australia. Kennedy, Ipp and Anderson JJ. held that such a relationship would be presumed if the conduct of the parties showed that the relevant relationship had, in fact, been established between them. In Integrated Computer Services Pty. Ltd. v. Digital Equipment Corporation (Aust.) Pty. Ltd. (1988) 5 B.P.R. 11, 110 at 11,117, McHugh J.A. said that a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words, but that: The question in this class of case is whether the conduct of the parties as viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an expressed contract. See also Groom v. Crocker [1939] 1 K.B. 194 at 222 per Scott L.J. In Pegrum v. Fatharly, to the facts of which I will later, Ipp J. said at 95: A contractual relationship of solicitor and client will therefore be presumed if it is proved that the relationship of solicitor and client existed de facto between a solicitor and another person. Upon proof of that kind it would not be necessary to prove when, where, by whom or in what particular words the agreement of retainer was made... [T]he de facto relationship of solicitor and client has to be a necessary and clear inference from the proved facts before a retainer will be presumed. In this passage, Ipp J. said that he was applying `the rule expressed by Thomas J. in Australian Energy Ltd. v. Lennard Oil NL' [1986] 2 Qd. R. 216 at 237. If the rule as so expressed means no more than that one has to find a necessary inference, on the balance of probabilities, of the kind suggested, I have no difficulty with it. The words used by Ipp J. (and, for that matter, Thomas J.) make use of the established formula for the implication of terms in a contract, and apply that formula to the process by which an agreement is to be inferred. If, in so doing, their Honours were suggesting that a test more stringent than the balance of probabilities was to be used to establish the existence of an inferred or implied retainer, a real question would, with respect, be raised as to whether the test was correctly posed."

763. Reference may also be made to the following observations of Anderson J in Pegrum v Fatharly[57] to which Charles JA also referred in Meerkin & Appel[58]:

"In Pegrum v. Fatharly the facts were that a man called Wilkins and his group of companies wished to borrow money from the appellants. The loan deed and securities for this purpose would ordinarily be prepared by the lender's solicitors, at the borrower's expense. Wilkins proposed to the male appellant that the respondent, who was retained as solicitor for the Wilkins group, prepare all the documents, and the male appellant agreed. Both parties together visited the solicitor and gave him the information to be put into the documents, it being understood that he was the only solicitor involved in receiving instructions and in preparing the documents. At the meeting, the solicitor sought and obtained the male appellant's confirmation that it was in order for him to prepare the documents. In these circumstances the court held that there was an implied retainer. Anderson J said, at 102, that: When both parties to a transaction consult the same solicitor and together given him the information needed to prepare the documents in which their respective rights and obligations are to be set out and the solicitor accepts responsibility to prepare the documents without any indication that he cannot fully discharge his professional duties to them both there is a strong bias towards finding that the solicitor tacitly agrees to act for both parties and to undertake the usual professional responsibilities to them both: see Midland Bank Trust Co. Ltd. v. Hett, Stubbs & Kemp [1979] Ch. 384 esp. at 396. In the absence of a clear indication by the solicitor that the solicitor does not accept one of the parties as his client it is natural in such a case to assume both are relying on him for professional advice and assistance. This follows from the mere fact that both have consulted him. There may be other circumstances which show that there is no reliance by one or other of the parties on the solicitor, but, if not, reliance should be inferred as a fact. And when a solicitor accepts responsibility to do professional work requiring special knowledge and skill and there is in fact a reliance on him to apply his expert knowledge and skill in the performance of that work, there exist `the elements which lie at the heart of the ordinary relationship between a solicitor and his client...': See Hawkins v. Clayton (1988) 164 C.L.R. 539 at 578 per Deane J. An examination of the facts in Pegrum v. Fatharly shows at once a situation very different from the present case. The fact that both parties to the transaction consulted the same solicitor together (mentioned twice in the paragraph just quoted) was clearly fundamental to the finding that a retainer existed. In the present case, it is clear that Meerkin & Apel's instructions came from W.O.T.P., through U.P.I. Rossett did not consult the solicitors at all. On the evidence Rossett provided no information to Meerkin & Apel, although Cook drew the attention of W.O.T.P. to errors in the documents. Rossett was, of course, consulting its own solicitor, Elliott, at this time in relation to matters involving the units."

767. Having regard to what has been said in the authorities and to all that Mr Szental did for the Herszbergs in connexion with the purchase of the site, it is difficult to resist the conclusion that Mr Szental did tacitly agree to act for the Herszbergs, up to the point where the caveat was lodged.

770. Regardless of the euphemism with which he and the Herszbergs now seek to characterise the communications which passed between Mr Szental and David Herszberg, the fact is that David Herszberg did consult Mr Szental in connexion with the purchase of the site and did ask Mr Szental to incorporate a company with which to effect the purchase and Mr Szental did do as he was asked. Thereafter until the caveat was lodged, the Herszbergs relied upon Mr Szental to make sure that all was in order from their point of view. David Herszberg said so. Furthermore, Mr Szental had such a relationship with and degree of respect for the Herszbergs that as far as both of them were concerned it went without saying that he would take care to ensure that the Herszbergs interests were protected. He knew that there was no other solicitor acting for them. He knew that unless he looked out for their interests they would be at risk of loss. He knew that Myer Herszberg was prepared to proceed without another solicitor, and he must have believed that was so because Myer Herszberg was confident that the Herszberg interests would be safeguarded by Mr Szental. He did take care to look out for the Herszberg interests. He drew requisitions of title on their behalf and, paradoxically, he answered the requisitions inaccurately in order, as I find, to serve what he considered to be the best interests of the Herszbergs. Finally, he drew the caveat on behalf of the Herszbergs ,when Irene Herman was not available to do the job in the time required, and he advised David Herszberg as to how and why he should lodged the caveat on the afternoon of 6 July 2001 (in circumstances which made it clear that David Herszberg was dependent upon Mr Szental to do for the Herszbergs whatever in that connexion needed to be done for them).

773. It was, however, urged on behalf of both the Assettas and Delahey that what Mr Szental did for the Herszbergs in connexion with the transaction was no more than or no different in principle to what many solicitors acting for one party to a transaction may do for an unrepresented counter party (as for instance occurs each week at the auction sales of domestic real estate or in litigation), and just as one would not infer the existence of a solicitor client relationship in those circumstances, one should not infer the existence of such in the circumstances of this case. It was accepted of course that, in circumstances such as those which were posited, the officious solicitor may come under a tortious duty of care to the unrepresented party, but it was said that there is no retainer, because there is no intention that there be a contract of retainer between the solicitor and the unrepresented party.

776. I do not accept the argument. It is a question of fact and degree, not a process of a priori logic that, because the conclusion to be drawn in one set of the sorts of circumstances suggests that there is no retainer, the result in another significantly different set of circumstances is that there is no retainer. It is the circumstances of each case that are critical. And here I regard the circumstances as compelling the conclusion that Mr Szental did act as solicitor for the Herszbergs on the purchase, whatever may be the conclusion to be drawn about assistance given by a solicitor in other sorts of cases.

779. Moreover, I should say that I do not accept that there must be a retainer between solicitor and client before it may be said that the solicitor is acting as such for a party within the meaning of s. 199; at least if the expression "retainer" is to be confined to a legally binding relationship constituted of an exchange of promises supported by consideration. There are a number of situations in which solicitors are prepared to act gratis and, when they do, it may well be that their only liability to the party for whom they act is a liability in tort (assuming there is not consideration apart from fee to support the existence of a contract of retainer). But it is not tenable to suggest that such a solicitor would not be a "solicitor as such" for the party for whom he so acts.

782. It was also said that it was impossible to reach the view that Mr Szental was acting as solicitor for the Herszbergs, because of the evidence that he had said to David Herszberg that he could not act as solicitor for the Herszbergs on the transaction. I also reject that argument. It is true that Mr Szental did say something to David Herszberg to the effect that he could not act, although I do not accept that it was expressed as clearly or understood as clearly as Mr Szental would have had it in his evidence. David Herszberg certainly did not recall it with that clarity either in evidence in chief or when he was cross examined upon it. But even at its highest, it was not said until after the exchange of contracts and I find that it amounted to no more than a declaration that Mr Szental could not act for the Herszbergs upon the completion of the sale. As such it said nothing about all the work which Mr Szental had already done for the Herszbergs in connexion with the transaction, including the work that he continued to do, following the declaration, in connexion with the caveat.

785. It was then said that it was impossible to find that Mr Szental acted as solicitor for the Herszbergs in connexion with the purchase, because has never rendered an account for fees to the Herszbergs and has not been paid anything by them for the work which he did. But that point is already covered by the observations which I have made as to whether a solicitor acting without fee may be a solicitor as such within the meaning of s. 199 of the Property Law Act. I add that I am far from convinced by the evidence that Mr Szental does not intend to charge a fee once the dust of this proceeding has settled. I regard as extraordinary the evidence which he gave that he has not charged anyone for the work which he did in connexion with the acquisition of Delahey, even though it entailed a disbursement of more than $900 paid to Thrifty Shelf Companies, and I found completely unconvincing his explanation that such is his inefficiency in the conduct of his practice that outstanding fees of that kind are nothing out of the ordinary. I think it more likely that the reason that no fees have yet been rendered is the same reason that Irene Herman's lodging code was used for the caveat and Mr Schmidt's code was used for the acquisition of Delahey, and that is to endeavour to give the appearance, contrary to the fact, that Mr Szental was not acting as solicitor for the Herszbergs in connexion with the purchase.

788. Finally, it was said that even if Mr Szental did act as solicitor as such, he only acted on the limited aspects of the acquisition of Delahey and the preparation of the requisitions on title and the preparation of the caveat and the provision of advice as to how it should be lodged. It was contended that acting as solicitor on those limited aspects of the matter is not sufficient to impute his knowledge of the IGA agreement for lease to Delahey. I disagree for two reasons. First, for the reasons already given, I consider that he was acting as solicitor as such for the Herszbergs on all aspects of the transaction up to and including the lodging of the caveat. Secondly, even if he were only acting on the limited aspects identified, I consider that they would be sufficient to allow for the attribution of knowledge. He drew the requisitions on title and he advised on the lodging of the caveat for the purpose known to him of endeavouring to improve the chances of defeating the IGA claim. Both functions were profoundly informed by his knowledge of the true state of affairs.

791. Accordingly, if it matters, I conclude that even though the Herszbergs did not have actual knowledge of the IGA interest, they did have imputed knowledge by reason that Mr Szental acted for them as solicitor as such within the meaning of s. 199 of the Property Law Act.

795. Early in the trial King & Taylor sought leave to amend its particulars of Defence and Counterclaim to add as a head of hardship that by reason of the delay which has occurred, the cost of constructing the shopping centre has increased but the rentals have not. For the reasons given in Ruling No [4] I refused leave to them to do so. In the result the only basis on which it is now contended that a decree of specific performance would result in undue hardship to King & Taylor is that the deal which it has done with IGA would not be nearly as profitable as the deal which it would like to be able to complete with Delahey, and that if specific performance is decreed it will be compelled to endure a long term landlord and tenant relationship with IGA with whom it no longer wishes to be associated.

798. These contentions may be dealt with briefly. The sort of hardship which will preclude the grant of specific performance does not extend to precluding specific performance because the defendant has made an improvident contract. If the defendant has agreed to the terms of the contract sought to be enforced, they should be enforced[59]. There may be cases in which the bargain which is sought to be enforced is so improvident from the defendant's point of view that equity will refuse specific relief, but the circumstances will be rare and where they occur there is likely to be involved something tantamount to undue influence which renders enforcement unconscionable. The defendant has to show that a decree of specific performance would impose hardship amounting to oppression far outweighing the inconvenience to the plaintiff if he is left to his remedy in damages[60].

801. Judged according to those principles, King & Taylor has not established the existence of hardship sufficient to prelude the grant of specific performance.

805. For the reasons earlier given when considering whether the IGA agreement for lease is susceptible to an order for specific performance, I consider that damages would not be an adequate remedy.

809. I turn finally to the question of clean hands. Apart from cases of fraud or misrepresentation or illegality or a breach of contract leading to a lack of readiness or willingness on the part of the plaintiff to perform his obligations, there are broadly speaking two main categories of cases in which plaintiffs are denied specific performance on the basis of a lack of clean hands[61]: first, where the plaintiff is shown materially to have misled the court or to have abused its process, or to have attempted to do so; and, secondly, where the grant of relief would enable the plaintiff to achieve a dishonest purpose and where in all the circumstances it appears to the court to be inequitable to grant the particular relief in question. It is the second of those categories which is said to be of relevance here.

812. The gist of that second category of case is that equity will not assist unconscionable conduct on the part of the plaintiff, either by enforcing a right already improperly obtained or by otherwise furthering unconscionable purposes. But the undesirable behaviour in question must involve more than mere "general depravity". It must have an immediate and necessary relation to the equity sued for; it must be a depravity in a legal as well as in a moral sense; and, in order to have an immediate and necessary relation to the equity sued for, the plaintiff must seek to derive advantage from his dishonest conduct in so direct a manner that it is considered to be unjust to grant him relief.

815. In my view, that is not the present case. IGA is not engaging in unconscionable conduct. Its rights under the agreement for lease were not improperly obtained and it does not pursue those rights in furtherance of any unconscionable purpose. What is put against IGA is that, in submitting the new forms of agreement under cover of the letter of 21 June 2001, IGA had in mind the evasion of duty properly payable on the original agreement for lease. But even assuming that were so, it would rise no higher than the category of "mere general depravity", lacking an immediate and necessary relation to the specific performance of the original agreement.

818. IGA no longer seeks the avoidance of stamp duty and, even if it were to undergo a change of heart, an order for specific performance of the original agreement would do nothing to aid it in the avoidance of duty on the original agreement. Granted that in equity, just as at law, a suit will not lie in respect of an illegal transaction, an illegal purpose will not prevent an equitable interest arising. Equity recognises a locus poenitentia and, if the illegal purpose has not been carried out, will uphold the interest[62]. Here it cannot even be said that the acquisition of IGA's interest was informed by some sort of unconscionable purpose.

822. By its Defence and Counterclaim Delahey seeks orders for the removal of the caveat which IGA lodged on title on 21 July 2001, on the grounds that IGA no longer has an interest in the land. In the alternative, it seeks orders as against King & Taylor for rescission of the contract of sale and return of the deposit of $100,000, on the basis, it is said, that in as much as the land is subject to the interest of IGA under the agreement for lease, it is subject to a substantial defect of title which King & Taylor did not disclose to Delahey. Delahey also alleges that, if IGA is entitled to succeed, King & Taylor engaged in misleading and deceptive conduct, contrary to sections 52 and 53A of the Trade Practices Act 1974 and the kindred provisions of the Fair Trading Act 1999, by representing that IGA did not have an interest in the land, and claims orders pursuant to Section 87 of the Trade Practices Act declaring the contract of sale void ab initio, and for return of the deposit, and claims damages pursuant to sections 82 and 87 of the Trade Practices Act.

826. It is unnecessary for me to decide whether the existence of the IGA agreement for lease constitutes a substantial defect in title, because it is agreed between Delahey and King & Taylor that, if IGA is held to rank in priority to Delahey, Delahey is entitled to an order for rescission of the contract of sale and a refund of its deposit with interest.

830. For reasons to which I shall come, it is also unnecessary that I decide whether King & Taylor engaged in any misleading and deceptive conduct towards the Herszbergs. But in case it is later thought to matter, I record the following:

* I consider that both the Section 32 Statement and the answers to requisitions on title were capable of being misleading: the Section 32 Statement, because it did not make any reference to the IGA agreement for lease, and the answers to requisitions on title because they falsely asserted that there were no third party interests in the land other than the McDonald's lease.

* In Krakowski v Eurolynx Properties Pty Ltd[63] O'Bryan J expressed the view that s. 32 did not require that details of leases be given in a Section 32 Statement. But even if that is correct, which with respect I take leave to doubt, because the Section 32 Statement drafted by Mr Szental did make reference to the McDonald's lease I consider that it implied or at least was likely to induce the belief in a reader of the Section 32 Statement that there were no other agreements for lease which affected the land[64].

* Accordingly, unless the Herszbergs knew or believed that the IGA agreement for lease was still in existence, they would have been misled and deceived by the Section 32 Statement and the answers to requisitions on title if they had read them and placed reliance upon them.

* It is clear that Mr Szental knew that IGA had an interest in the land under the agreement for lease.

* I find that the Herszbergs did not have the same degree of knowledge. I accept Myer Herszberg's evidence that he believed that the IGA interest in the land had been brought to an end before negotiations for the purchase began, and, although there are indications the other way, I am not satisfied that either David Herszberg or Samuel Herszberg knew anything more than their father.

* I also find that Mr Szental believed that the Herszbergs were proceeding on the basis that the IGA interest had been brought to an end and that he did not say anything to the Herszbergs to disabuse them of the belief that it had come to an end.

* As matters transpired, the Herszbergs did not read and therefore did not rely upon the section 32 statement or the answers to requisitions on title, and thus they were not misled or deceived by them.

* Nonetheless, I find that they were misled by Mr Szental's failure to mention to them that the IGA interest had not been brought to an end or that it was possible that its termination would be a contentious issue.

* I do not consider that Mr Szental deliberately misled the Herszbergs.

* I find that that Mr Szental approached the matter on the basis of a belief that the IGA interest would be brought to an end as soon as he served the notice of rescission at the end of 6 July 2001, or perhaps as a result of the Herszbergs lodging a caveat on title, and that the Herszbergs would thereby get all that they hoped to get.

* I find, as a consequence, that Mr Szental genuinely believed that it was not necessary or desirable, in order to protect the Herszberg's interests, that he say anything to them about the details. Indeed I am inclined to think that he considered that their interests would be better served if he said nothing to them about the detail; taking the view that if it came to a fight with IGA, the less that the Herszbergs were able to say they knew, the more likely it was that their interests would prevail.

* The question if intent is, however, largely irrelevant to the question of whether conduct is misleading or deceptive.

* In the result I conclude, that although Mr Szental did not set out or intend to mislead the Herszbergs, his conduct towards them was misleading and deceptive within the meaning of section 52 of the Trade Practices Act.

847. It is also unnecessary for me to decide the question of damages and thus the effect which the rule in Bain v Fothergill[65] might have had on any amount of damages sought to be recovered[66]. In counsel's final submissions, Delahey put its case on the basis that if it is held to rank behind IGA and succeeds in obtaining an order for rescission and for refund of its deposit and interest, there are no other damages which it seeks to recover. Counsel for King & Taylor accepted that if IGA's interest were held to rank ahead, Delahey would be entitled to an order for rescission and to the refund of deposit and interest.

850. Nevertheless, in case it comes later to matter, I note that in a case of this kind the damages which might be awarded upon rescission for defect of title and the damages which might be awarded pursuant to Part V of the Trade Practices Act would be unlikely to be much different. Since the rule in Bain v Fothergill ordinarily precludes the recovery of expectation loss[67] and the measure of damages awarded under Part V is ordinarily such as to place the representee in the position in which they would have been if the misleading conduct had not been engaged in[68], the two will come very close; if they diverge at all. Thus in this case, if I were called upon to calculate the damages recoverable under Part V of the Trade Practices Act, I would calculate the amount necessary to put the Herszbergs back into the position in which they would have been and presumably that would be the amount of the deposit which they paid and the time value of that money. I say presumably, because such evidence as there was upon the point was to the effect that, if the Herszbergs had known of the existence of the IGA interest, they would not have been prepared to deal at all. It would of course be different if the evidence had been that they would have been prepared to deal but only at the lower price of, say, $1M (representing the value of the land subject to the IGA agreement for lease), but that was not the case.

854. It follows from the reasons which I have given that there should be judgment for IGA on its claim for specific performance of the agreement for lease and judgment for Delahey on its counterclaim against King & Taylor for rescission of the contract of sale.

857. I will hear counsel as to the form of orders to be made.

[1] Yates v Pym (1816) 6 Taunt 446 16 RR 653; Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410, 423.

[2] Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 346; Byrne, ibid at p. 422; Arthurson v State of Victoria [2001] VSC 244 at [266-7].

[3] Shevill v Builders Licensing Board [1982] HCA 53; (1982) 149 CLR 600, 625-7,per Gibbs CJ; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423; Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17, 30-31, per Mason J.

[4] Ross T Smyth & Co Ltd v TD Barley, Son & Co [1943] All ER 60 at p. 72, per Lord Wright.

[5] [1964] 2 QB 699 at p. 737; see also Tenth Dancote Pty Ltd v Pyramid BC 950 2547 at 46, per Eames J, aff'd on appeal at BC 970 1646.

[6] For which the agreement for sub-lease provides

[7] Clause 9.1 of the Agreement for Lease provides that: "The Tenant is not entitled to assign, transfer, mortgage, charge or otherwise deal in any way with its interest under this Agreement without the prior consent of the Tenant which consent will not be unreasonably withheld."

[8] see, for example, Gange v Sullivan [1966] HCA 55; (1966) 116 CLR 418 at 441; Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537 at 552.

[9] see Chan v Cresdon [1989] HCA 63; (1989) 168 CLR 242 at 252-3.

[10] Beardman v Wilson (1868) 4 LR CP 57 at 58; White v Kenny [1920] VicLawRp 60; [1920] VLR 290 at 295; Milmo v Carreras [1946] KB 307; Bradbrook & Croft, Commercial Tenancy Law in Australia 2nd Ed at[15.2].

[11] Scala House and District Property Co Ltd v Forbes [1974] QB 575; David Blackstone v Burnetts (West End) [1973] 3 All ER 782 at 790.

[12] Australian Hardwoods Pty Ltd v Commissioner for Railways ]1961] 1 All ER 737 at 742; Hercy v Birch [1804] EngR 165; (1804) 9 Ves 357; 32 ER 640; Liquorland (Australia) Pty Ltd v GYG Holdings Pty Ltd [1994] NSWJB 110; BC 9403356; but see Spry, Equitable Remedies, 6th Ed at p 137.

[13] Gentle v Faulkner [1900] 2 QB 267 at 275-6; MacDonald v Robbins [1954] HCA 5; (1954) 90 CLR 515 at 520, per Dixon CJ; cf the argument advanced in Bradbrook & Croft, supra, at [15.16];

[14] see Bowen v Wratten [1892] 17 VLR 371 at 374; see also, in a different context, Magnacrete Ltd v Douglas Hill ( 1989) 7 ACLC 1056 at 1058; cf. Baden Pacific Ltd v Portreave Ltd (1989) 7 ACLC 194

[15] (1882) 21 Ch D 9 and see Manchester Brewery Co v Coombs [1901] 2 Ch 608 at 617; Chan v Cresdon supra at 253

[16] Chan v Cresdon ibid; and see Brown v Heffer [1967] HCA 40; (1967) 116 CLR 344 at 350; and Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600 at 605-6

[17] cf. McDonald v Robbins, supra; Richardson v Somas [1967] WAR 109 at 114

[18] cf_. Cohen & Co v Ockerby & Co Ltd_ [1917] HCA 58; (1917) 24 CLR 288 at 300; Schenker & Co (Aust) Pty Ltd v Maplas Equipment [1990] VicRp 74; [1990] VR 834 at 840-5; Di Dio Nominees v Brian Mark Real Estate [1992] VicRp 99; [1992] 2 VR 732 at 741-2

[19] see Axelsen v O'Brien [1949] HCA 18; (1949) 80 CLR 219 at 226.

[20] see, for example, Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144, aff'd (1919) 26 DLR 180; Lennon v Scarlett & Co (1921) CLR 499; Dimmond v Moore [1931] HCA 12; (1931) 45 CLR 159; Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 276; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423; Progressive Mailing House Pty Ltd, supra.

[21] see Cheshire and Fifoot's Law of Contract , 7th Australian Edition at [21.11] and the authorities there cited.

[22] S v Crimes Compensation Tribunal [1998] 1 VR 83 at 88-89.

[23] cf Life Insurance Co of Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60 at 85; Collector Customs v Agfa-Gevaert Lrd [1996] HCA 36; (1995) 186 CLR 389 at 397.

[24] Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 502; Di Dio Nominees v Brian Mark Real Estate [1992] VicRp 99; [1992] 2 VR 732 at 743-4, per Hedigan J; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 327 at 351; Progressive Mailing House v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17 at 33; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 634; Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

[25] DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 at 432.

[26] As to the need to read the letter in the context of the preceding correspondence, see: Woodar Investment Development Ltd v Wimpy Constructions UK Ltd [1980]1 WLR 277 at 280 and 298.

[27] Shevill v Builders Licensing Board; Capalaba; Tenth Dancote Pty Ltd v Pyramid Building Society (in liq), supra.

[28] cf Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Burger King Corp v Hungry Jacks [2001] NSWCA 187; Hughes Aircraft Systems International v Airservices Australia [1997] FCA 558; (1997) 76 FCR 151; cf. Service Station Association Ltd v Berg Bennett Pty Ltd [1993] FCA 445; (1993) 45 FCR 84.

[29] see Mackay v Dick (1881) 6 App Cas 251 at 263; Butt v M'Donald (1896) 7 QLJ 68 at 70-1; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 607-8.

[30] Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305; Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634; Verwayen v The Commonwealth (1990) 170 CLR 394 at 407.

[31] [1923] HCA 12; (1923) 31 CLR 524 at 549-550.

[32] [1965] HCA 18; (1965) 113 CLR 295 at 307-8.

[33] And see Meagher Gummow and Lehane, Equity Doctrines and Remedies, at [2024].

[34] The principles are essayed in JC Williamson v Lukey & Mullholland [1931] HCA 15; (1931) 45 CLR 282 at 292-3 but as Spry points out, it is an unduly restrictive statement of the law to say that equity will not as a rule enforce contracts the execution whereof would require continued superintendence by the court: see Spry_,_ Equitable Remedies, 6th Ed at 103.

[36] cf. Wolverhampton Corporation v Emmons [1901] 1 KB 515 at 525.

[37] see Spry, supra at p. 117; Greene v West Cheshire Rwy Co (1871) LR 13 Eq 44; Channel Tunnel Group; Ltd v Balfour Beatty Construction Ltd [1993] AC 334; Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1997] UKHL 17; [1998] AC 1 at 13-14.

[39] see Ryan v Mutual Tontine Westminster Chamber Assn [1892] 1 Ch 116 at 123.

[40] see Meagher Gummow & Lehane at [2026].

[41] [1988] HCA 16; (1988) 164 CLR 604; see also Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198; Unregistered lease enforceable against Purchaser (1992) 66 ALJ 670.

[42] Abigail v Lapin [1934] AC 491 at 504.

[43] per Lord Cairns LC in Shropshire Union Railways and Canal Co v R (1875) LR 7 HL 496.

[44] see J & H Just (Holdings) Pty Ltd v Bank of New South Wales [1971] HCA 57; (1971) 125 CLR 546; Heid v Reliance Finance Corporation Pty Ltd [1983] HCA 30; (1983) 154 CLR 326 at 341; Jacobs v Platt Nominees Pty Ltd [[1990] VicRp 14; 1990] VR 146 at 159.

[46] [1990] VicRp 15; [1990] VR 161 at 159; see also Avco Financial Services Ltd v Fishman [1990] 1 VR 90.

[47] [1983] HCA 30; (1983) 154 CLR 326.

[48] see Osmanoski v Rose [1974] VicRp 64; [1974] VR 523.

[49] see TD Castle: Caveats and priorities: the "mere failure to caveat" (1994) 68 ALJ 143.

[50] cf. Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 at 341 per Deane J. See also Castle, supra, especially the conclusions expressed at 145.

[51] see Moffett v Dillon [1999] VSCA 32; [1999] 2 VR 480 at 491, 501, 506.

[52] Robinson, Property Law Act Victoria, at p.448.

[53] J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971)125 DLR 546; Robinson op cit.

[54] Lloyds Bank v Marcan [1973]1 WLR 339 at 348;Taylor v London and County Banking Co [1901] 2 Ch 231; Robinson, supra at p.445.

[56] [1998] 4 VR 54 at 62.

[57] (1996) 14 WAR 92 at 102.

[59] Pacta sunt servanda in equity as much as at law: Axelsen v O'Brien [1949] HCA 18; (1949) 80 CLR 219 at 226.

[60] Dowsett v Reid [1912] HCA 75; (1912) 15 CLR 695.

[62] Coltinghorn v Fletcher ([1740] EngR 94; 1740) 2 Atk 155; 26 ER 498; Perpetual Executors & Trustees Association of Australia Ltd v Wright [1917] HCA 27; (1917) 23 CLR 185 at p. 193; Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538 at p.577.

[63] (1992) V Conv R 54-436.

[64] cf. Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31.

[65] (1874) LR 7 HL 158.

[66] Or the differences between the damages recoverable upon rescission for defect in title and damages recoverable pursuant to Part V of the Trade Practices Act.

[67] see Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd [1972] HCA 36; (1972) 128 CLR 529 at p. 548.

[68] Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494; Brudenell v Gaygentern Pty Ltd [2002] VSCA 71 [9].