John Holland Services Pty Ltd v Terranora Group Management Pty Ltd - [2004] FCA 679 - FCA 2004 case summary — Zoe

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John Holland Services Pty Ltd v Terranora Group Management Pty Ltd

[2004] FCA 679

Federal Court of Australia|2004-03-10|Before: Emmett J

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Source facts

Court

Federal Court of Australia

Decision date

2004-03-10

Before

Emmett J

Source

Original judgment source is linked above.

Judgment (26 paragraphs)

[1]

REASONS FOR JUDGMENT 1 The applicant, John Holland Services Pty Limited ('John Holland'), is a subsidiary of John Holland Group Pty Limited and ultimately of Leighton Holdings Limited. John Holland specialises in providing property, facilities management and building services. 2 The first respondent, Terranora Group management Pty Limited ('Terranora'), is part of the Mantle group of companies, which are owned or beneficially controlled by the second respondent, Mr Godfrey Mantle. Terranora is the owner of 184 hectares of land situated between the towns of Cobaki and Bilambil, New South Wales ('the Land'). The Land is an important potential development site. It is located approximately 10 km from Coolangatta Airport, 30 km from Surfers Paradise and 100 km from Brisbane. In 2002 the Land consisted of a golf course and country club known as 'Terranora Lakes Country Club' and an adjourning site, used for grazing purposes, known as 'Norvil'. 3 In late 2002 and the beginning of 2003, arrangements were entered into between John Holland and Terranora concerning the possible development of the Land. Specifically, on 18 December 2002, John Holland and Terranora entered into an instrument described as a 'Deed of Confidentiality' ('the Confidentiality Deed'). On 4 April 2003, John Holland and Terranora entered into an instrument described as 'Heads of Agreement' ('the Heads of Agreement'). However, ultimately the arrangements came to naught and the relationship between John Holland and Terranora was severed in October 2003. 4 John Holland has now commenced a proceeding in the Court under Order 15A rule 6, seeking orders that Terranora and Mr Mantle make discovery of certain documents that may be in their possession, custody or power. John Holland asserts that there is reasonable cause to believe that it has, or may have, the right to obtain relief in the Court from Terranora and Mr Mantle by reason of contraventions of ss 52, 51AA and 51AC of the Trade Practices Act 1974 (Cth) ('the Act'). It says that it needs to inspect such documents related to the parties dealings in order to decide whether it has any such right to relief.

[8]

John Holland says that there is reasonable cause to believe that Terranora's conduct in making those representations was misleading or deceptive or likely to mislead or deceive because it did not have that intention at the time of entering into the Heads of Agreement. 9 Alternatively, John Holland says that, having entered into the Heads of Agreement, Terranora should be taken to be continuing to represent that it maintained that intention, until it notified John Holland to the contrary. It says that there is reasonable cause to believe that Terranora's conduct in continuing that representation was misleading or deceptive or likely to mislead or deceive because in or about late July or early August 2003 it abandoned that intention without notifying John Holland of that change. 10 John Holland asserts that, in reliance upon the representations, it expended money and effort in performing its obligations under the Heads of Agreement and that it would not have done so but for its reliance upon the representations. It asserts that it has suffered loss and damage as a consequence of acting in reliance upon the conduct of Terranora in making those representations. If the representations were false then that conduct was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Act. 11 In addition, John Holland asserts that, in contravention of s 51AA(1), Terranora engaged in conduct that was unconscionable within the meaning of the unwritten law from time to time of New South Wales. Finally, John Holland asserts that there has been a contravention of s 51AC(1), which relevantly provides that a corporation must not, in trade or commerce, in connection with the acquisition or possible acquisition of services from a person (other than a listed public company), engage in conduct that is, in all the circumstances, unconscionable. Under s 51AC(10) a reference in s 51AC to the acquisition or possible acquisition of services does not include a reference to the acquisition or possible acquisition of services at a price in excess of $3 million. Under s 4(1) of the Act, the term 'price' includes a charge of any description. 12 John Holland's contention as to unconscionability is that it formulated material and a valuation methodology which Richard Ellis could utilise in producing a valuation report, that Richard Ellis did utilise that material in producing a draft valuation report and that Terranora took advantage of that material by accepting the benefit of the draft valuation report without in any way compensating John Holland for the money and effort expended in furnishing information and methodology to Richard Ellis.

[9]

THE RELEVANT PRINCIPLES 13 There is no dispute between the parties as to the principles to be applied in the consideration of an application under O 15A. It is not necessary in an application for orders under O 15A r 6 to establish even a prima facie case. It is necessary, however, for the applicant to show objectively that there is reasonable cause for the belief that the applicant has or may have the right to obtain relief. Thus, the words of r 6(a) are not satisfied by mere assertion on behalf of the applicant that he or she believes that there is a case (per Sackville J in Minister for Health & Aged Care v Harrington Associates Limited [1999] FCA 549 at par [29]). Belief requires more than mere assertion and more than suspicion or conjecture (per Emmett J in Austrac Operations Pty Limited v State of New South Wales [2003] FCA 1013 at par 10). 14 The facts that can reasonably ground a suspicion may be quite insufficient to reasonably ground a belief. Objective circumstances that will be sufficient to demonstrate a reason to believe something, point more clearly to the subject matter of the belief than circumstances that will give rise to a mere suspicion. That is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition. The grounds that can reasonably induce that inclination of the mind may nevertheless, depending on the circumstances, leave something to surmise or conjecture (George v Rockett (1990) 170 CLR 104 at pars [115.6 - 116.4]). 15 The questions posed by O 15A r 6 are to be answered in the context of the adversary system of forensic contest in which a proposed respondent is ordinarily entitled to withhold its evidence prior to the commencement of a proceeding. Nevertheless, it is clear that the section is intended to have a beneficial effect being clearly designed to enable a properly informed choice to be made (per Tamberlin J in CGU Insurance Limited v Malaysia International Shipping Corporation Berhad [2001] FCA 1223 at par 23). 16 The question posed by rule 6 is not whether any cause of action has actually been established. Rather, the question is limited to whether there is reasonable cause to believe that there is a cause of action. If the evidence in an application under Order 15A suggests that there is reasonable cause to believe that an inference can be drawn, the inference can be more confidently drawn where a respondent adduces no evidence to deny the fact or matter. It may be that, upon full exploration of the matter, the inference would be rebutted. However, where an applicant is not met by any denial from those best able to throw light on whether an inference as to a relevant fact or matter is correct, namely, the respondent, the inference can be drawn more confidently (Paxus Services v People Bank (1990) 99 ALR 728 at 732-3). 17 Nevertheless, such a principle cannot of itself replace the need for evidence from which an inference can properly be drawn. Thus, it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question.

[11]

Each party was to ensure that any confidential information provided by the other party would be stored in a secure place and each party would, upon request, promptly return all material containing confidential information and any copies of it. 20 Under clause 2A, the parties agreed to act in utmost good faith to the other and acknowledged that the best use of the Land may be to enlarge the size of the development by acquiring adjoining land. John Holland agreed that it would not take any action that would adversely affect Terranora with regards to that plan. 21 Under clause 3, the obligations of confidence referred to above, were to 'continue until this Deed is terminated by one party providing to the other in writing 30 days notice of its intention to terminate the agreement'. Curiously there appears to be no obligation to maintain confidentiality after termination. It appears that the parties were content with the obligation to return material containing confidential information upon request. Such request, of course, would have to be made prior to the expiration of the notice of intention to terminate. 22 A project coordination group was established and met from time to time. The project coordination group consisted of representatives from the Mantle Group and from John Holland. 23 Minutes of a meeting of the project coordination group held on 21 February 2003 record the following: 'JOHN HOLLAND REPORT: … 4. Project forecast is almost cash neutral until hotel is complete - profit is in core facilities; 5. Model currently includes $7.0m to GM at financial close then $7.5m at month 28 LAND VALUATION: 1. Current land valuation is well below comparable market rate / Ha quoted by valuer; 2. Valuation needs management to reflect proposed use, adjusted for site development costs … CONSULTANTS: 1. JH, as project sponsor and deliverer, will take over the consultants; 2. JH to satisfy itself as to their capability and supplement as they see fit. …' 24 One of the consultants retained by John Holland was Spectrum Property Solutions Pty Ltd ('Spectrum'). Mr John Pacholski is an executive of Spectrum. Mr Pacholski attended project coordination group meetings. 25 On 30 March 2003, Spectrum prepared a document entitled 'FINANCE STRATEGY FOR THE REDEVELOPMENT OF THE TERRANORA GOLF COURSE PRECINCT' ('the Finance Strategy'): 26 The Finance Strategy recorded that a related company of John Holland had invited Spectrum to propose a finance strategy for the development of the Terranora Golf Course Precinct 'for the Mantle Group'. After describing three alternative project development options, the Finance Strategy said: 'The optimal financing structure is for the Mantle Group to deliver the Project using the land valued at $42m with the existing land debt of $12m as equity and fund the Project with 100% debt finance secured over presale contracts and existing assets.' It appears that, during 2002, Richard Ellis had prepared a valuation of the Land. The valuation is not in evidence, but it appears that the value arrived at was $24m.

[12]

THE HEADS OF AGREEMENT 27 After repeating certain of the recitals in the Confidentiality Deed, the Heads of Agreement recited that John Holland and Terranora had entered into the Confidentiality Deed and that they had agreed 'to negotiate in good faith with the aim of reaching and documenting a formal agreement in respect of the development of the land owned by [Terranora]'. The Heads of Agreement define 'the Project' as meaning: 'the development of the land… in accordance with the development consent issued by the Tweed Shire Council and amendments currently before the Tweed Shire Council and subject to any variations that the parties may agree upon and generally in accordance with the plan produced by Geoff Young … and dated 2nd April 2003.' That plan is not in evidence. 28 The principal obligations of the parties under the Heads of Agreement were as follows: '2A Intention of the parties 2.1.1 The parties intend to negotiate in good faith to reach a formal agreement governing the development, construction, financing and the partial sale of the Project and to reduce that formal agreement to writing. 2.1.2 The parties acknowledge that they remain bound by the terms of the deed of confidentiality dated 18th December 2002 for the duration of this deed as if that deed formed part of this deed. 2.1.3 The parties agree to diligently prosecute negotiations, and to endeavour to sign a formal agreement for the project by 15th June 2003 with a projected commencement of the project by 30th June 2003. 2.1.4 It is acknowledged by both parties that the dates may change providing that both parties are agreeable to the changes. 3. Duration 3.1 This deed will continue until it is terminated by either party giving to the other thirty days written notice of its intention to terminate this agreement or the parties signing an agreement referred to in clause 2.1.1 hereof whichever is the first to occur. 3.2 At the termination of this deed pursuant to clause 3.1 or otherwise neither party shall have any claim against the other arising out of this deed or any agreement whatsoever between the parties. 4. Obligations of the parties under this agreement 4.1 JHS will use its best endeavours to arrange the following finance approvals during the term of this agreement. (i) Mezzanine finance upon terms and conditions that are satisfactory to TGM. (ii) Project Finance upon terms and conditions that are satisfactory to TGM. … 4.2 JHS will in conjunction with TGM will use its best endeavours to develop the design and cost plan, for approval by TGM, so that a GMP contract can be available by 31st May 2003. … 4.3 The contract referred to in clause 2.1.3 will provide that any savings achieved against budget will be shared as to 70% to TGM and 30% to JHS. 4.4 The contract referred to in clause 2.1.3 will provide that if JHS performs the role of Project Sponsor and Debt Arranger and delivers the finance approvals referred to in clause 4.1 it will receive a fee for providing this service of 1.5%… of the projected sales of the strata titled accommodation… . 4.5 The contract referred to in clause 2.1.3 will provide that JHS will act as Project Development Manager and Project Deliverer and will receive a fee of 8% of the total construction cost. … 8. COSTS The parties will each meet their own costs in relation to the preparation and review of this agreement and any activities undertaken by each of them in accordance with its terms.' The terms 'Mezzanine finance' and 'Project finance' were defined as follows:

[13]

'"Mezzanine finance" means the sum of six million dollars which is to be used by [Terranora] for the sales and marketing of the resort prior to the receipt of project finance. "Project finance" means the sum of one hundred and fifty million dollars ($150,000,000.00) which is to be used for the project in accordance with the project budget…'. 29 In April 2003, Mr Pacholski, on behalf of Spectrum, prepared a document entitled 'Mezzanine Funding Application' ('the Funding Application'). It described the Project in the following terms: 'The Grande St Michaels Project is a three and a half year, multi-stage development of a 237 all - suite Sheraton Grande Hotel, 2 private apartment developments with 158 apartments, an Arnold Palmer golf course and club and a Pat Rafter tennis/racquet club and associated facilities. The estimated on completion value will exceed $430 million.' Relevantly, for present purposes, the Funding Application said that the revenue model for the project assumed asset sales of $331.8 million from the sale of the hotel and units in the development. It also stated that the design and construction costs for the Project were expected to be $231,435,801. Those figures may be relevant for assessing the applicability of s 52AC of the Act, for reasons that will become apparent in due course. 30 The Funding Application also stated that Terranora had engaged Richard Ellis to undertake a comprehensive review and valuation analysis of the Project in accordance with the standard requirements of the four major Australian banks. That report was to be available during May 2003. It is significant that the Funding Application referred to Richard Ellis as having been engaged by Terranora. 31 A meeting of the project coordination group held on 2 May 2003 was attended by, inter alios, Messrs Mantle, Grosvenor and Pacholski. Mr Ric Grosvenor is the managing director of John Holland. The minutes of the meeting record that the funding application had been lodged with a number of prospective lenders and described the structure preferred by Spectrum. The minutes record that a 'valuation of $45m' was required from Richard Ellis. The minutes also recorded that an amended development application was required for such a valuation. 32 Meetings of the project coordination group were held on 15 May, 23 May, 30 May and 14 June 2003. The minutes record that the meetings were attended by Messrs Mantle and Grosvenor and, except in one case by Mr Pacholski. The minutes record reports on the progress of the Funding Application and the proposed valuation expected from Richard Ellis.

[14]

INSTRUCTIONS FOR THE DRAFT VALUATION 33 On 19 June 2003, Mr Mantle sent an email to Mr Pacholski relevantly saying: 'I am concerned 1. That Richard is not providing information agreed to to [sic] your self [sic] and others. For example today Jacqui Reiser told me that she was awaiting information that Richard agreed to provide before Easter. 2. He is taking on roles that I have not asked him to take on and which should be the area of others. I would like a format to see that he delivers on time and limits his in put [sic] to a clearly defined role. I would appreciate your suggestions.' Mr Pacholski responded as follows: 'Richard is without doubt passionate about the Project and easily distracted. The valuation and (with the transfer of the design and F E & E responsibility) the Third Party Agreements are an important component of the Project where time management of data, data integrity and the integrity of the Agreements will significantly influence the Project finance and timing. I suggest that the first steps are for: 1. Ric Grosvenor and I (excluding Richard) to meet with Jacqui Reiser on Friday (tomorrow) and determine her requirements/concerns. … Following that meeting I would suggest we set a timetable for the supply of data and the data management which Richard must meet. … 2. Ric and I to meet with Paul Bolster, Glenn Crisp, Bill Malone early next week to discuss the form and content of the Third Party Agreements and their impact on the Project delivery and Project finance. …' The 'Richard' referred to is Richard Turner of the Mantle Group. Jacqui Reiser is from Richard Ellis and Paul Bolster and Glenn Crisp were respectively the solicitors for Terranora and John Holland. 34 Mr Mantle responded to Mr Pacholski's email by saying 'I agree'. 35 On 28 June 2003, there was a further exchange between Messrs Mantle and Pacholski. Mr Pacholski sent to Mr Mantle a copy of the email that he had sent to Ms Reiser. Mr Pacholski's email to Ms Reiser said: 'Further to our meeting on Friday 20 June 2003 … the Grande St Michaels Development Control Group undertook a review of the key project elements and it has been agreed that: John Holland Services as Development Manager has assumed responsibility for the St Michael's Development. As part of that function I have assumed responsibility for working in concert with yourself to complete the valuation in line with the current brief. My role will be to maintain communication with you and review all data supplied to you and ensure that the data from Richard or any member of the project team is reviewed for integrity/appropriate form/and fit for the purpose of being used in the valuation. We have also agreed to split the delivery time of the various valuation components as follows: · Valuation of the existing site - completed as soon as practical after 4 July 2003, · Assessment of fair market value of product and market research 31 July 2003, and · Analysis of Resort Operations - 7 August 2003. … To avoid any breakdown of communication, I suggest from now on, all communications be directed through me, with a copy to Ric Grosvenor.' Mr Mantle responded saying 'Thanks for this format and schedule which I concur with'. 36 On 15 July 2003, Mr Pacholski, on behalf of Spectrum, wrote to Ms Reiser at Richard Ellis, saying that Spectrum had 'reviewed and consolidated the available information applicable to the valuation of the Project site'. After describing that information, Spectrum's letter went on to say: 'Pursuant to the engagement letter of 12 March 2003 between Terranora … and … Richard Ellis, could you please review the information set out below and complete: · the valuation of Stages I & II site, and · the valuation of the residual land bank (Norvil land).' It may be significant that Spectrum was writing in the context of an engagement of Richard Ellis by Terranora. However, the letter of 12 March 2003 is not in evidence. 37 In his letter of 15 July 2003, Mr Pacholski said that the July 2002 valuation by Richard Ellis had been examined and set out 'the critical elements of the valuation'. The letter asserted that the purpose of that valuation was to assess the asset security of the Mantle Group to support a corporate facility of the order of $12 million and then said: 'Accordingly, the July 2002 valuation of $24 million was completed on: 1. A broad hectare average on an englobo basis at an average rate per hectare of $130,000, which was significantly lower than the market evidence … 2. A rate per saleable entitlement site for stages 1 and 2 at $75,000 per saleable entitlement and for stages 3 to 7 $5,000 per saleable entitlement.' 38 Under the heading 'July 2003 Position' Mr Pacholski asserted that there had been 'a number of changes to the Project's status that have occurred since the July 2002 valuation'. He said that those changes had had a significant impact on:

the Project delivery capability;
the marketing plan and associated risks;
Project timing; and
Project finance. 39 The letter also contained information concerning zoning of the Land and recent sales of other land in the area. After suggesting a range of values for the Grande St Michael's stages I and II site and the Norvil land, Mr Pacholski ended by saying: 'Accordingly we believe the overall value of the Project site is between $46.9 million and $53.2 million.' Specifically Mr Pacholski suggested that the range of values for the project site should be between $17.2 million and $19.7 million, and that the range for the Norvil land was between $23 million and $25.8 million. Mr Pacholski was clearly endeavouring to persuade Richard Ellis to provide a valuation of the Land at a figure considerably in excess of the value of $24 million that had apparently been assessed by Richard Ellis is July 2002. 40 Meetings of the Project Coordination Group were held on 30 July and 6 August 2003. They were attended by Messrs Mantle, Grosvenor, Pacholski and others. The second meeting was also attended by Mr Glenn Crisp, John Holland's solicitor. One set of minutes recorded the discussion at both meetings. An item under the heading 'Mezzanine Finance' included the following: 'Credit approved discussion paper faxed by CBA today. CBA would provide non-recourse funding (fees apply). $20m facility available if valuation exceeds $40m…' 41 Under the heading 'Valuation' the following item appears: 'Jacqui Reiser is expected to issue a valuation in excess of $40m next week following her visit to Darren Gibson and Paul Bolster.'

[17]

(ii) Project Finance upon terms and conditions that are satisfactory to [Terranora]. 4.2 [John Holland] will in conjunction with [Terranora] continue to use its reasonable endeavours to develop the design and cost plan, for approval by [Terranora], so that a GMP contract can be available by 1st November 2003. … 4.3 The GMP contract will provide that any savings achieved against budget will be shared as to 70% to [Terranora] and 30% to [John Holland]. 4.4 If [John Holland] performs the role of Project Sponsor and Debt Arranger and delivers the finance approvals referred to in clause 1.2 and 1.3 it will receive a fee for providing this service of 1.5% (being 1% for Project Sponsor and .5% for debt arranger) of the projected sales of the strata titled accommodation in the hotel, palaces and chateaus [sic] being stages 1 to 3. The fee becomes due and payable when the Project Finance is available to be drawn down. 4.5 The GMP contract will provide that [John Holland] will act as Project Development Manager and Project Deliverer and will receive a fee of 8% of the total construction cost which is included in the GMP contract (being 2% for project development management and 6% for project deliverer). 4.6 The obligations of [Terranora] are: (a) all marketing endeavours for the Project … (b) the co-ordination and conduct of the leasing management, marketing and sales activities for the Project … (c) obtaining from Council the revised Development Approval for stages 1 to 3; (d) obtaining and having executed binding Third Party Agreements.' 46 The Draft Project Agreement contained other provisions. In particular, it contained clauses dealing with 'ASSIGNMENT' and 'INTELLECTUAL PROPERTY'. The Intellectual Property clause was the subject of comment and suggested amendment by Mr Crisp. In addition, Mr Crisp requested amendment to the definition of 'Mezzanine Finance' in the draft Project Agreement. 47 The parties attach some significance to the terms of clause 9.4 in the draft Project Agreement and the requested amendments to that clause. Clause 9.1 of the draft Project Agreement provided that 'subject to the provisions of subclause 9.4' any 'Intellectual Property' created during the term of the agreement was to remain the property of the party that created it. Clause 9.4 in the form contained in the draft received by Mr Crisp was as follows: 'In the event that [Terranora] has sold the land and the purchaser from [Terranora] does not proceed with the project, then [John Holland] shall be entitled to be paid all of its costs and expenses incurred to the date of that sale. Notwithstanding the provisions of subclause 6.2 [John Holland] will have no other claim against [Terranora]. Anything produced by another party that is specifically for the Project by way of plans, designs, specifications, feasibilities or the like will remain with the Project and be the property of [Terranora].' Clause 6.2 was relevantly in the following terms: [John Holland] is aware and the parties have agreed to [Terranora] assigning its rights, benefits, interests and obligations under this agreement either in part or in whole to a joint venture partner or a purchaser with notice to [John Holland] by means of a separate agreement … . [Terranora] will ensure that the terms of the separate agreement will provide that such joint venture partner and or purchaser is bound by the terms and conditions of this agreement.' 48 Mr Crisp requested that clause 9.4 be amended to read as follows: 'In the event that [Terranora] has sold the land then [John Holland] shall be entitled to be paid all of its costs and expenses incurred to the date of that sale except if clause 6.2 applies. If the provisions of subclause 6.2 apply [John Holland] will have no other claim against [Terranora]. …' 49 Mr Bolster responded to the requested amendments later in the afternoon of 8 August 2003. After dealing with the proposed amendment to the definition of Mezzanine Finance, Mr Bolster said: 'In relation to subclause 9.4 Godfrey [Mantle] is not happy with what is proposed. The offer made to pay the expenses of [John Holland] should Godfrey sell and the purchaser not proceed was an offer made in good faith to provide protection that was not previously available in the document. Godfrey has not [sic] intention of selling but in the current market who knows what offer may be made to him. Godfrey wants the wording left as it was previously submitted as it gives him the certainty of knowing where he stands. After all clause 6.2 can apply if there is a breach of it.' 50 There is no evidence before me of any offer such as is referred to in that communication. On 11 August 2003, Mr Crisp wrote again to Mr Bolster. After referring to a telephone conversation on 8 August 2003 when they discussed Terranora's requirements in relation to the definition of Mezzanine finance and 'your client's wish to amend clause 9.4 of the revised draft Project Agreement', Mr Crisp said: 'The writer advised that our client did not wish it to be thought or indeed for it to be provided with two opportunities for the recovery of its costs/expenses, from your client, (as you say, "double dipping"). We also understand there was no disagreement between our clients on this point. The writer's concern was your proposed wording blurred the distinction between the entitlements to be provided by clauses 6.2 and 9.4 of the Project Agreement. Your client is firm in its requirement to proceed with its proposed words. In the spirit of co-operation our client will accede to this requirement and as to its entitlement proceeds on the basis that the operation of clause 9.4 will be as your emails received at 10.17 am and 5.52 pm interpret.' Mr Crisp then requested that the Project Agreement be concluded by the exchange of executed counterparts as soon as possible. 51 There is no evidence concerning the telephone conversation of 8 August 2003, nor of Mr Bolster's email of 10.17 am. The email of 5.52 pm is the one to which reference is made at [49] above. One is left to speculate as to precisely what the nature of the discussion was concerning the proposed clause 9.4. Mr Crisp's letter of 8 August 2003 suggests amendments to clause 9.4. On the other hand, his letter of 11 August 2003 refers to Terranora's wish to amend clause 9.4. The precise course of drafting and amending is by no means clear. 52 Later in the afternoon of 11 August 2003, Mr Bolster responded to Mr Crisp's letter of that day. Mr Bolster attached a revised form of the proposed project agreement and confirmed that Mr Mantle was not happy with 'the discussion paper that came from the Commonwealth Bank concerning the proposed Mezzanine finance'. Mr Bolster said that Mr Mantle would not proceed to sign the agreement unless it was subject to his being satisfied with the budget for the Mezzanine finance and the project budget. 53 The email went on to say: 'In relation to the project budget Godfrey received a copy on Friday which is defective in two respects: 1. The costs are far greater than he was previously lead (sic) to believe. There is an amount of $12,000,000.00 for corporate overheads in addition to the other fees and expenses being charged. 2. It does not met [sic] the normal requirements of a cash return to the developer of 20%. Godfrey thinks this can be achieved after talking to Mark Buskey but it will need an amendment to the project budget.' 54 The revised form of the Project Agreement attached to Mr Bolster's email of 11 August 2003 contained clause 9.4 in the form in which it appeared in the revised draft originally received by Mr Crisp and referred to in his letter of 8 August 2003. In order to accommodate Mr Mantle's concern in relation to Mezzanine finance, a new clause 12 was included as follows: 'The parties agreement [sic] that the documents to be attached and marked "A" and "B" are either not attached and or are not in a form acceptable to [Terranora]. This agreement is subject to and conditional upon [Terranora], within 30 days from the date hereof, confirming in writing that it has received replacements for attachments "A" and "B" which are acceptable to it. If [Terranora] does not receive replacement attachments "A" and "B" that are acceptable to it then it shall be entitled to rescind this agreement …' Attachment A is referred to in the definition of 'Mezzanine finance' and Attachment B is referred to in the definition of 'Project Finance' contained in the draft Project Agreement. 55 On 14 August 2003, Mr Crisp wrote to Mr Bolster referring to Mr Bolster's email of 11 August 2003. The letter relevantly said: '[John Holland] continues its efforts to support the project as required by the Heads of Agreement … The dates for completion of the negotiation and reaching formal agreement as required by the Heads of Agreement having been extended by the conduct of the parties [sic]. The statements of Godfrey Mantle do not recognise the requirements of the Heads of Agreement. We note that those requirements were discussed between Godfrey Mantle and Ric Grosvenor at their meeting and subsequent telephone conversation on Tuesday 12 August 2003. …' There is no evidence of the terms of any discussions between Messrs Mantle and Grosvenor such as are referred to in that letter. 56 Mr Bolster asked Mr Crisp to specify the statements made by Mr Mantle that 'do not recognise the requirements of the Heads of Agreement'. Mr Crisp responded on the following day, 15 August 2003 that the statements referred to were those recorded in Mr Bolster's email of 11 August 2003 concerning the project budget. 57 On 18 August 2003 Mr Crisp wrote to Mr Bolster again saying that he understood that Messrs Grosvenor and Mantle had spoken on 16 August 2003 when they discussed the 'issues identified' in Mr Crisp's letter of 14 August 2003. He went on to say that 'there is no need (nor do they wish us) to continue our present exchange of letters'. Once again, there is no evidence of the discussions between Messrs Mantle and Grosvenor that occurred on 16 August 2003. 58 A 'Product/Price Value Management Workshop' was conducted on 22 and 23 August 2003. The document relating to the workshop recorded that the following objectives were established: '2.1 Developer's Objective To achieve a developer's margin of 20% of sales or 25% of costs in cash - in Stages 1 to 3 without compromising the integrity of the Product, i.e.: the Resort has to be consistent with the marketing catch phrase: "For those who know the difference". 2.2 Value Management Workshop Objectives. 1. To critically analyse the market acceptability, market absorption and time line of the product. 2. To identify the optimum probable project outcome. 3. To agree action to develop the above.' 59 There is no evidence as to who attended the meeting or of the discussion at that meeting, other than the document to which I have just referred. I would draw the inference that it was attended by representatives of both sides. It is significant that there is no dissent recorded in relation to the developer's objective. 60 On 27 August 2003, Ms Reiser sent to Mr Pacholski a draft valuation report in respect of the Land. It was stated to be prepared for Terranora and expressed the opinion that the market value as at 11 August 2003 of the freehold interest in the Land, subject to overriding stipulations set out in the body of the report, is: 'Site Value "As Is" with Current Development Approval (Exclusive of GST) $41,000,000 (Forty one million dollars).' 61 The report contains the following disclaimer: 'This valuation report is provided subject to the assumptions, qualifications, limitations and disclaimers detailed throughout this report which are made in conjunction with those included within the assumptions, qualifications, limitations and disclaimers section located at the end of this report. Reliance on this report and extension of our liability is conditional upon the reader's acknowledgement and understanding of these statements. This valuation is for the use only of the party to whom it is addressed and for no other purpose. No responsibility is accepted to any third party who may use or rely on the whole or any part of the content of this valuation. The valuer has no pecuniary interest that would conflict with the proper valuation of the property.'

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TERMINATION 62 There is no evidence of any communication between Terranora and John Holland or their representatives after Mr Crisp's letter of 18 August 2003 and prior to 13 October 2003. Of course, there was the workshop and, as I have said, an inference can be drawn that representatives of both parties participated in the workshop. An inference can also be drawn that at some stage the draft valuation report received by Mr Pacholski from Ms Reiser on 27 August 2003, was sent to Terranora and its representatives. That inference is readily drawn from the fact that the report was prepared for Terranora. 63 In any event, so far as the evidence is concerned, the next communication between the parties was an email from Mr Grosvenor to Mr Mantle of 13 October 2003, setting out Mr Pacholski's 'commentary regarding the CBA's offered facility'. That facility is not in evidence. Mr Grosvenor draws attention to the final paragraph of Mr Pacholski's communication as follows: 'Lastly, the offer from the Commonwealth Bank expires at close of business tomorrow, given the previous history of false starts on this project I believe any further delays will be detrimental, if not disastrous to the success of funding this project.' Mr Grosvenor then said in his email to Mr Mantle: 'By our conduct, we believed that we have satisfied the good faith and actual performance requirements, set out under our Heads of Agreement. The Project is critically poised to proceed to market. We now look to you, to satisfy your part of the bargain.' 64 On 14 October 2003, Mr Mantle wrote to Mr Grosvenor. His letter begins by referring to receipt of an email from Mr Pacholski dated 3 October 2003 and emails from Mr Grosvenor dated 3 October and 13 October 2003. Neither of the emails of 3 October 2003 is in evidence. 65 Mr Mantle's letter goes on to say: 'I find it necessary to formally respond to these direct to you particularly after our discussions on 10 October 2003 where you made it clear to me that if for any reason I did not proceed with entering into an agreement with your company you would sue me. I find this a strange and disconcerting approach for someone to take who is trying to foster a mutually agreeable working relationship. I can understand your frustrations, but question the viability of the business relationship with you if this is the way that you respond when things don't go the way you would like. Our Current Agreement To date we have been working according to the terms of the Heads of Agreement and deed of confidentiality that exists between the parties. There have been various attempts to reach an agreement to progress beyond this stage but no agreement has been reached. Your obligations under the heads of agreement are to do the following: 1. Use your best endeavours to obtain Mezzanine finance upon terms and conditions that are satisfactory to me. 2. Use your best endeavours to obtain Project Finance upon terms and conditions satisfactory to me. 3. Use your best endeavours to develop a design and cost plan for approval by me. 4. Use your best endeavours to produce a Guaranteed Maximum Price contract by 31st May 2003. Your endeavours have not been successful.' 66 There is no evidence of any discussions between Messrs Grosvenor and Mantle of 10 October 2003 other than the reference in the letter. After dealing with the four obligations under the Heads of Agreement summarised above, Mr Mantle finished by saying: 'In good faith I have patiently waited for you to comply with your obligations under the Heads of Agreement to use your best endeavours to provide mezzanine finance, project finance, design and cost plan and provide a GMP. I have not received any of these things in terms that are satisfactory to me. I therefore have to say that you have not satisfied the actual performance requirements set out under our Heads of Agreement. I have worked hard to move this project forward. However, my patience should not be interpreted as a waiver of any power or right under our heads of agreement - neither should any of my efforts or indulgence during the course of our dealings be so interpreted.' 67 After several communications crossed, Mr Grosvenor responded to Mr Mantle's letter of 14 October 2003 in the following terms: 'Our discussions on Friday October 10, 2003 related to, as you have correctly observed, my frustration with the fact that I believed John Holland had satisfied its obligations under the Heads of Agreement, but that this notwithstanding, the process of taking the project to market, had stalled, seemingly because of your change of sentiment, for reasons other than those enshrined in the agreement. By our actions, I hoped that we had lived up to my motto of "your value building partner" and as such, we have invested heavily to launch this project, foregoing certain other opportunities that have presented themselves, while our resources were deployed on focusing on this project. You have previously acknowledged our sunk costs, by stating that you would compensate [John Holland] in the event that you sold the land. As your partner, it is not my intention to sour our relationship by entering into an unnecessary stream of claims and counter claims. I do wish, however, to address the concerns raised in your letter and provide an appendix hereto, as an attempt to satisfy you that we have used our best endeavours to achieve our obligations, under the Heads of Agreement. Enough! …' Attached to the letter was a detailed response to the matters dealt with in Mr Mantle's letter of 14 October 2003. 68 On 26 October 2003, Mr Mantle wrote to Mr Grosvenor giving notice of the intention of Terranora to terminate the Heads of Agreement. Mr Mantle said that he would deal separately with the contents of Mr Grosvenor's letter of 22 October 2003. Mr Grosvenor responded on 28 October 2003 saying that John Holland reserved all of its rights against Terranora and Mr Mantle 'accruing to it because of the facsimile dated 26 October 2003'. Mr Grosvenor also requested a response to his letter of 22 October 2003. 69 On 31 October 2003 Mr Mantle wrote to Mr Grosvenor saying that he would deal with the letter of 22 October 2003 when Mr Bolster returned from the United States of America. On 12 November 2003, Mr Grosvenor wrote again to Mr Mantle saying that his letter of 31 October 2003 was unsatisfactory and an insufficient response and requested that the parties meet with a view to satisfying the conditions of the Heads of Agreement to negotiate in good faith to reach a formal agreement. 70 After further exchanges between Messrs Grosvenor and Mantle, Mr Crisp wrote to Terranora and to Mr Mantle on 24 December 2003 saying that John Holland had instructed him to investigate whether it has a cause of action arising from the dealings between Terranora and John Holland. Mr Crisp asked each of them to make available for inspection and to provide copies of communications with third parties and file notes or diary entries, in relation to the sale or potential sale of the Land between 18 December 2002 and 27 November 2003. Terranora and Mr Mantle have failed to make any such documents available for inspection and, on 22 January 2004 this proceeding was commenced by the application filed by John Holland. 71 It now appears that Terranora proposes to proceed with development of the Land without John Holland. Thus, a report in the Financial Review of 30 January 2004 contains the following: 'The reviving Tweed region in northern NSW is luring major investment. Mirvac is undertaking due diligence on a 190 hectare holding and Multiplex is finalising the $64.7 million land acquisition in the Casuarina Beach estate. Mirvac yesterday confirmed it was investigating a joint venture project on Brisbane businessman's Godfrey Mantle's Terranora Lakes site. Mirvac has been combing the region for opportunities and was one of the parties initially interested in 110,000 square metre site in Casuarina Beach that was snared by Multiplex. The Terranora site had been previously earmarked by Mr Mantle for a $1 billion estate incorporating a Sheraton Hotel. However, the deal with Sheraton lapsed last year. … Mirvac's Queensland chief executive officer, Chris Freeman, said his group had an exclusive mandate to carry out its due diligence. He would not elaborate on the likely configuration of the Project. … CB Richard Ellis's director of assets, Glenn Bechtel, is acting for Mr Mantle on the negotiations. … Mr Mantle said from Bangkok yesterday that he was excited by the possible opportunity of working with Mirvac on his Terranora project. …' 72 A report in the Gold Coast Bulletin of 12 February 2004 contains the following: 'A plan to build a massive $1 billion Sheraton tennis and golf resort in the Tweed hinterland has been canned. The old Terranora Lakes Country Club, which has sat dormant since going into liquidation almost a decade ago, was to have been transformed into the huge luxury resort, but owner Godfrey Mantle has decided to explore other options for what he calls Australia's greatest block of real estate. Already, development giant Mirvac has confirmed its interest in the site, which has been one of the Tweed's great white elephants. … Speaking from Bangkok last week, Mr Mantle said he had opted not to proceed with Sheraton's bold plan, which was to include a tennis resort capable of hosting international Davis Cup tennis matches and a series of elaborate mansions, with price tags of up to $16 million each. "Sheraton did not pull out of negotiations, but I have decided to look elsewhere," he said. "I think Mirvac is by far and away the best company of this nature going round at the moment. They are the market leader and there is no doubt in my mind they can produce a better product than Sheraton." … Mirvac's Queensland CEO, Chris Freeman, said the Group had signed an exclusive mandate to carry out due diligence on the site and was hopeful a deal could be made.'

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SECTION 52 74 An essential element in the cause of action based on contravention of s 52 is that the alleged representations alleged were false. Thus, it is necessary for the Court to be satisfied that there are reasonable grounds for believing that any such representations as might have been made were false. 75 John Holland relies on the drawing of inferences in support of its contention that there is reasonable cause to believe that the representations alleged to have been made by Terranora were false. In particular, John Holland points to the change of attitude on the part of Terranora and Mr Mantle that John Holland says is discernable from about the time when it seemed likely that Richard Ellis would provide a valuation for the Land in excess of $40 million. John Holland also points to the newspaper reports of 30 January 2004 and 12 February 2004 that mention the possible development of the Land by Terranora in conjunction with the Mirvac organisation. It is important in considering whether such an inference is capable of being drawn to have regard to the chronology of events so far as the evidence discloses those events. 76 The essential obligation of John Holland under the Heads of Agreement was to use its best endeavours to arrange finance approvals during the term of the agreement. Under clause 4.1, those approvals were for mezzanine finance upon terms and conditions that were to be satisfactory to Terranora and project finance upon terms and conditions that were to be satisfactory to Terranora. That provision must be understood in the context of the right conferred by clause 3 for either party, in effect, to terminate the agreement on 30 days' notice, upon which, neither party was to have any claim against the other arising out of the Heads of Agreement. 77 The correspondence between Mr Mantle and Mr Grosvenor that led up to the termination contained unequivocal statements by Mr Mantle that he was not satisfied with the terms of finance that had been arranged at that time. He was entitled, according to the literal terms of the Heads of Agreement, to take that stance. It may well be that some qualification could be read into the literal terms of the Heads of Agreement. For example, it may be that the reference to 'terms and conditions that are satisfactory to Terranora' in both subclauses of clause 4.1 should be taken to require that Terranora, in determining whether terms and conditions offered were satisfactory, act reasonably and in good faith and not arbitrarily. 78 However, there has been no suggestion on the part of John Holland that Mr Mantle was acting arbitrarily in expressing his dissatisfaction with the arrangements that were proffered by John Holland. In his letter of 14 October Mr Mantle referred expressly to the obligations of John Holland to use its best endeavours to obtain finance upon terms and conditions that were satisfactory to Terranora. In the detail of his letter that I have not so far described, he set out the reasons why the offer of mezzanine finance was unacceptable to him. Thus, he said: '● I have not seen or approved of the application to the bank that resulted in the letter of offer.

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● The terms of the offer are unacceptable and the dates are unrealistic.' 79 Mr Grosvenor's response dealt with those complaints in some detail as follows: '· The Mezzanine Finance funding application was presented to and approved by you, at the PCG meeting of 24 April 2003. This meeting also approved the release of the funding application to five financiers - Jardine Fleming, Australian Financial Services (AFS), Rothschild Australia, Gresham Winchester and Commonwealth Bank (Commonwealth). The structure and terms of the funding application were consistent with the Project finance strategy presented to you at the PCG of 2 April 2003. At the PCG on 14 June 2003 we considered the indicative funding offers received from AFS $8 million (inclusive of fees and interest) and Jardine Fleming $3 million. It was agreed at that meeting: - that funding should be secured for the first 6 months of the Project and that funding was of the order of $7 million, - to reduce the finance costs - (the incremental interest, up front fees and establishment fees included in the AFS offer were estimated at $1 million) that concurrent with completing the AFS application, Spectrum should seek an offer from the Commonwealth, - That if an offer could be secured from the Commonwealth as a Project specific extension to the existing corporate facilities the savings in fees would be of the order of $500,000. On 24 July 2003 John Pacholski and you met with Murray Butler and Reid Hannington of the Commonwealth Property Group to discuss the impact of the Project specific funding on your corporate banking facilities. You confirmed to them: - your intention to fund the first phase of the project with an extension of your corporate facilities, - a desire to keep documentation and establishment costs to a minimum during this phase of the project, - your understanding of the impact of the loan extension on your corporate facilities, and the importance of retaining the flexibility to proceed, mothball or sell the project as is, based on the market response to the project. On 15 August 2003, upon confirmation that John Holland and Spectrum had secured an indicative valuation of $41 million, you authorised John Pacholski to mandate the Commonwealth to proceed with the credit approval for the Mezzanine Facility. · The budget upon which the funding application was based was emailed to you by David Dunn on Friday, 29 August 2003. The Budget incorporated the outcome of discussion held between David Dunn and yourself of Thursday, 28 August 2003. Additionally, it should be noted that the term sheet from the Commonwealth provides as a condition precedent to funding the initial drawdown item 8 "An updated "soft-costs" budget for the period ending 31 May 2004". Accordingly, you have an opportunity to review and finalise the "soft costs" budget prior with [sic] the Commonwealth. · The requirement to structure the Mezzanine facility in the tranches was agreed and minuted at the PCG meeting on 17 August 2003. It was designed to allow you to mothball the Project if pre-sales did not meet expectations. It also provides you with the flexibility to either retain the land and service the debt from your corporate operations or sell the land. · In the light of the above and following, we do not understand why you say that "the terms of the offer are unacceptable and the dates are unrealistic". As to the date we are confident that we can secure an extension of time to the offer to allow you to consider the term sheet in detail.' 80 As is apparent, Mr Grosvenor refers in that response to project co-ordination group meetings at which he says the Funding Application was presented and approved. As appears from the extract, he ends by saying that: '... we do not understand why you say that "the terms of the offer are unacceptable and the dates are unrealistic."' 81 As to the date, we are confident that we can secure an extension of time to the offer to allow you to consider the term sheet in detail.' 82 It may be that there is merit in Mr Grosvenor's response. However, as I have said, there has been no suggestion that the stance taken by Mr Mantle was irrational or based upon an arbitrary rejection of the proposal. The most that is put is that an inference can be drawn from an apparent change in attitude on the part of Terranora and Mr Mantle at the time when the valuation was foreshadowed, leading up to the publication in January and February of the fact of negotiation between Terranora and the Mirvac organisation. 83 One complaint that is made by John Holland, however, is that, at the time when the Heads of Agreement were entered into, Mr Mantle and Terranora did not have the intention that is set out in clauses 2.1.1 and 2.1.3 of the Heads of Agreement. I do not consider that, even if it could be shown that Mr Mantle's change of heart was irrational or arbitrary, there was anything other than a change. That is to say, there is no basis for drawing any inference that, as at 4 April 2003, Terranora and Mr Mantle had no intention to negotiate in good faith to reach a formal agreement governing the development of the Land. Nor is there any basis for drawing an inference, merely from the apparent change of heart, that Terranora and Mr Mantle did not intend, as at 4 April 2003, to prosecute negotiations and endeavour to sign a formal agreement by 15 June 2003. 84 The second way in which John Holland puts the matter, so far as reliance is placed on s 52 of the Act, is that, even if Mr Mantle and Terranora had the relevant intention as at 4 April 2003, that intention changed at some time without notification to John Holland. It is said that an inference should be drawn that the change occurred when it was intimated that Richard Ellis would produce a draft valuation of the Land in excess of $40 million. I do not consider that such an inference is available on the evidence before me. It is, of course, a possibility but the evidence does not point in that direction any more than in any other direction. 85 The Finance Strategy, which had been produced on 30 March 2003, indicated that the optimal financing structure for the Project was for Terranora to use the Land valued at $42 million. In the Funding Application, it was contemplated that Richard Ellis would undertake a comprehensive review and valuation analysis of the Project. The meeting of the project co-ordination group on 2 May 2003 recorded that a valuation of $45 million was required from Richard Ellis. There is no suggestion that Terranora or Mr Mantle had any reservation about the possibility of obtaining such a valuation. It is a curious suggestion, in the light of that expectation, that when the valuation that was hoped for materialised, Terranora and Mr Mantle must be taken to have had a change of heart. I consider that something more than the mere possibility of the hope turning into the probability was necessary before the relevant inference could be drawn. 86 At one of the meetings of 30 July 2003 or 6 August 2003, the valuation in excess of $40 million was foreshadowed. Within days there was a dispute between the parties as to the provisions of the proposed project agreement concerning reimbursement for John Holland in the event that Terranora did not proceed with the Project. Thus, it was obviously apparent to John Holland, as must have followed from the terms of the Heads of Agreement, that there was, at least, a prospect that, despite John Holland's efforts, the Project would not proceed. As I have said, I have no evidence before me as to the circumstances in which the proposal contained in clause 9.4 arose. By 14 August 2003, Mr Crisp was complaining that Mr Mantle's statements did not 'recognise the requirements of the heads of agreement'. Thus, it is clear that, within days of the foreshadowing of the revised valuation, there was some dissent. 87 The draft valuation did not materialise until 27 August 2003, by which time there had been communication between Mr Grosvenor and Mr Mantle on 16 August 2003 to the effect that there was no need to continue the discussion about reimbursement in the event that the Project did not proceed. 88 I do not consider that the evidence points towards a change of heart on the part of Mr Mantle and Terranora that was not foreshadowed to John Holland. I am not persuaded that there is reasonable cause to believe that, if any continuing representation is to be found in the making of the Heads of Agreement, that representation was, at any time, false. 89 Having regard to the conclusion that I have reached in relation to the falsity of alleged representations, it is not necessary for me to express any view as to whether the representations did arise in the circumstances. As I have said, however, I have not excluded the possibility that the alleged representations did arise.

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SECTIONS 51AA AND 51AC 90 John Holland asserts that its claim against Terranora of unconscionable conduct in relation to the acquisition of services can be formulated as follows:

On or around 19 June 2003, Terranora mandated John Holland, through Spectrum, to take over the responsibility for achieving a higher valuation for the Land. That responsibility went beyond the obligations of John Holland under the Heads of Agreement.
John Holland revealed a new land use concept for the Land at the meeting between Terranora and John Holland representatives on 25 June 2003. The concept, which is referred to as 'ascribing value to the Norvil land', involved the development of part of the site as a gated golf course estate.
John Holland, through Spectrum, approached Richard Ellis seeking a higher land valuation. By its letter of 15 July 2003, Spectrum explained the new land use concept, whereby 'the valuation of the Norvil land should be made on the assumption of it being developed as a gated residential community'. It suggested that application of that concept should increase the valuation of the Land to between $46.9 million and $53.2 million.
On or around 30 July 2003, Richard Ellis indicated that it proposed to issue a draft valuation report, which valued the Land at approximately $40 million. That was communicated to the representatives of Terranora at the meeting of 30 July 2003.
In its draft valuation report, Richard Ellis assessed the value of the Norvil land at $21 285 000.00.
The inference should be drawn that the new concept was used by Terranora, or an agent of Terranora, in its negotiations with Mirvac. 91 John Holland asserts that those facts, if established, would demonstrate serious misconduct on the part of Terranora and Mr Mantle. However, there are two elements that must be established before a finding of serious misconduct could be made or a conclusion could be reached that there is reasonable cause to believe that there has been serious misconduct on the part of Terranora and Mr Mantle. First, it must be possible to draw an inference that the 'new concept' was used by Terranora in its negotiations with Mirvac. The second is that there was some impropriety in that use. 92 Before dealing with those issues, it is preferable to consider the inter relationship between ss 51AA and 51AC in the present context. Section 51AA does not apply to conduct that is prohibited by s 51AC. The conduct alleged for the purposes of s 51AC is conduct in connection with the acquisition or possible acquisition of services by Terranora and Mr Mantle from John Holland. Those services were to be provided in pursuance of the Heads of Agreement. The consideration flowing to John Holland for the performance of its obligations under the Heads of Agreement were the promises contained in the Heads of Agreement on the part of Terranora. Clauses 4.3, 4.4 and 4.5 provided for the consideration to be payable to John Holland under the formal agreement contemplated by clause 2.1.1 and 2.1.3. It is almost impossible to assess the value of those promises. I am not persuaded on the evidence before me that their value exceeded $3 million. 93 Of course, if the formal agreement contemplated by clauses 2.1.1 and 2.1.3 of the Heads of Agreement were entered into, the 'price' payable to John Holland would be likely to exceed $3 million. Thus, the Funding Application, of April 2003, projected asset sales of $331.8 million. 1.5 per cent of that amount, as contemplated by clause 4.4 of the Heads of Agreement would exceed $3 million. The Funding Application also projected construction costs of $231,435,801 and 8 per cent of that amount, as contemplated by clause 4.5 of the Heads of Agreement, would also clearly exceed $3 million. However, that remuneration was to be payable for the services to be performed under the proposed formal agreement governing development of the Land. It was not payable under the Heads of Agreement. Accordingly, I am not persuaded that s 51AC does not apply. In any event, the same inferences are invited by John Holland as giving rise to unconscionability either under s 51AA or under s 51AC. 94 I consider that an inference can be drawn that in connection with its negotiations with Mirvac, Terranora made some use of the draft evaluation prepared by Richard Ellis. That inference arises because the valuation is clearly capable of having some bearing on the bargain that might be struck between Terranora and Mirvac in relation to the possible development of the Land. In so far as that draft valuation made use of the 'new concept' developed by Spectrum, the inference is capable of being drawn that the concept was, to that extent, used by Terranora. However, I do not consider that there is any basis for drawing an inference that any such use involved any impropriety on the part of Terranora or Mr Mantle such as would constitute unconscionability. 95 Under clause 4.2 of the Heads of Agreement, John Holland promised to use its best endeavours to develop the design and cost plan for development of the Land for approval by Terranora. Under clause 4.1, John Holland was to use its best its best endeavours to arrange approvals for mezzanine finance and project finance as defined. There was no express obligation on the part of John Holland to provide material for the purposes of obtaining a valuation of the Land on a basis different from the valuation that had previously been provided by Richard Ellis. 96 Nevertheless, it is clear, from before the Heads of Agreement were entered into, that the parties were working towards a higher valuation than had been provided by Richard Ellis in 2002. When Mr Pacholski suggested on 19 June 2003 to Mr Mantle that he and Mr Grosvenor meet with Ms Reiser to agree a timetable for project data and the completion of the valuation, and subsequently did so, Mr Pacholski was acting on behalf of John Holland in the pursuance of the aims of the Heads of Agreement. In writing his letter of 15 July 2003 to Richard Ellis, Mr Pacholski was also acting on behalf of John Holland in the furtherance of the objects of the Heads of Agreement. 97 The draft valuation report is expressed to be prepared for Terranora. Richard Ellis had in fact been retained by Terranora to make the earlier valuation. Clause 8 of the Heads of Agreement provided that each party would meet its own costs in relation to the preparation and review of that agreement and any activities undertaken by each of them in accordance with its terms. 98 I do not consider that there is any basis on the material before me for concluding that there was any impropriety on the part of Terranora or Mr Mantle in using, in any negotiations with Mirvac, the draft valuation prepared for Terranora by Richard Ellis. Mr Pacholski had undertaken to speak to Ms Reiser. Certainly he did so with the agreement of Mr Mantle but there was no suggestion that he would be seeking additional remuneration for doing so beyond the benefits that already existed for John Holland under the Heads of Agreement. I am not persuaded that there is any reasonable cause to believe that any use made of the draft valuation report by Terranora or Mr Mantle in negotiations with Mirvac constituted impropriety or improper conduct such as may give rise to a contravention of ss 51AA or 51AC.