Key Infrastructure Australia Pty Ltd v Bensons Property Group Pty Ltd [2019] VSC 522

EQUITY - Whether defendant estopped from relying on strict wording of term of development management agreement - Conventional estoppel - Equitable estoppel - Holding that estoppel not established.

1 The plaintiff, Key Infrastructure Australia Pty Ltd ('KIA'), carries on business providing professional services in property planning and engineering. Its activities relevantly include preparing properties for development, including having plans drawn up, dealing with the relevant council and finding a developer to buy the property with all the relevant permits and plans.

2 There are three principals and owners of the plaintiff: Mr Barry Gale, Mr Nigel Hutchinson-Brooks and Mr Bruno Gatsby.

3 The defendant, Bensons Property Group Pty Ltd ('Bensons'), is a property developer which has about 40 employees. Bensons mainly purchases development sites without a planning permit, obtains the permit and carries out the development. The developments are usually apartment blocks.

4 Bensons is owned and controlled by Mr Elias Jreissati, who is also its chairman. Bensons' chief executive officer is Mr Richard Curtis. At relevant times, Mr George Semenov was a development manager at Bensons who reported to Mr Curtis.[1]

5 A short summary of the factual background to this matter follows. A much more detailed consideration of the relevant facts and evidence will be given later in this judgment.

6 Prior to March 2015, KIA identified a potential development site at 103 Beach Street, Port Melbourne. The site, directly opposite Station Pier, was occupied by a supermarket. The proposed development included shops and a café on the ground floor, with apartments on the second and third floors. A basement was to be included for car parking.

7 In March 2015, KIA agreed to purchase the land and the business being conducted on the site with a view to developing the site itself, and paid deposits under relevant contracts totalling $100,000 to the owners, who I will refer to collectively as the Mandile parties.[2]

8 In June 2015, KIA applied to the City of Port Phillip ('council') for a planning permit for the proposed three-level development ('planning permit' or 'permit').[3] The council, however, prevaricated about issuing the permit. Frustrated by the delay and daunted by the sums involved, KIA and the Mandile parties began looking for a joint venture partner in January 2016. They subsequently were contacted by Bensons. Bensons was invited to inspect the proposed project, which it did on 1 February 2016.

9 It is alleged by KIA, and disputed by Bensons, that at all times from this first meeting on 1 February 2016, Bensons understood that there was difficulty obtaining the planning permit from the council and that it was likely that an appeal from the failure of the council to grant a planning permit would have to be made to the Victorian Civil and Administrative Tribunal ('VCAT') to obtain a planning permit.

10 KIA alleges that in negotiations leading up to the execution of the agreement between the parties, Bensons made representations to the effect that it would appeal to VCAT in relation to the planning permit. By this time, KIA had done a great deal of work in preparing the application to the council for the planning permit, which KIA costed at approximately $2.5 million. KIA initially sought a fee of $3 million from Bensons to compensate it for the work it had already done towards getting the permit and for future costs to obtain the permit. KIA subsequently agreed to accept a lower fee, it claims, on the basis that Bensons, not KIA, would incur the costs of a future appeal to VCAT to obtain the permit.

11 On 5 April 2016, the parties executed a development management agreement ('DMA'). Under the DMA, KIA was to procure the planning permit by 31 December 2016, designated 'the Sunset Date', and Bensons was to pay KIA a development management fee of $2 million (plus GST) in four instalments. The first instalment of $40,000 was paid prior to entry into the DMA. The second instalment of $360,000 was paid on the signing of the DMA. If KIA did not obtain the issue of the planning permit by the Sunset Date, KIA was not entitled to the third and fourth instalments and was required to repay to Bensons the instalments it had already received. This repayment was guaranteed by Mr Gale, Mr Gatsby and Mr Hutchinson-Brooks.

12 Also on 5 April 2016, KIA cancelled the sale contracts it had with the Mandile parties and Bensons entered into sale contracts directly with the Mandile parties.

13 The DMA did envisage that an appeal to VCAT may be made by Bensons. Clause 2.3(e) of the DMA provided:

If Bensons elect (without being obliged to do so) to appeal any decision of the Responsible Authority in connection with the Planning Application or the issue of the Planning Permit all costs in doing so are to be borne by Bensons.

14 When the council continued to delay, KIA encouraged Bensons to file an application with VCAT. KIA contends that, by reason of its conduct at meetings on 15 April 2016, 26 April 2016 and 5 May 2016, Bensons elected to appeal the failure by the council to issue the planning permit under clause 2.3(e) of the DMA. Bensons disputes that it so elected.

15 On 10 May 2016, Bensons communicated to KIA that it did not intend to appeal to VCAT at that stage, citing concern about the prospects of such an appeal. Bensons stated, however, that KIA was free to appeal at its own cost.

16 On 18 May 2016, KIA lodged an application with VCAT, appealing the council's failure to make a decision in respect of the planning permit. Although Bensons was not aware of the application, on the same day, its solicitors wrote to KIA informing it that, contrary to its stated position on 10 May 2016, any application by KIA to VCAT without Bensons' consent (which was refused) would be in breach of the DMA. Further, the letter stated that a planning permit obtained through VCAT would not, in any event, satisfy KIA's obligations under the DMA.[4] As a result of Bensons' stance, KIA withdrew its application to VCAT.[5]

17 KIA was concerned to meet its obligations under the DMA and to earn its management fee. Accordingly, KIA made further attempts to obtain the permit through the council, however, this was unsuccessful. KIA also made attempts to meet with Bensons to discuss the issue, however, these attempts were rebuffed. On receipt of its own legal advice, KIA lodged two further applications with VCAT. KIA expended considerable time and effort in preparing and conducting the VCAT applications, including having counsel retained to appear at the hearing.

18 Between June and November 2016, Bensons claimed KIA was in breach of the DMA by failing to provide Bensons with documents relevant to launching an appeal (such as counsel's advice as to merits) and by failing to inform Bensons of the applications in fact made to VCAT. Bensons also issued notices of default under the DMA.

19 On 22 December 2016, VCAT made orders for the granting of the planning permit.[6] The council was obliged to observe the order of VCAT and on 6 February 2017, the council issued the permit.[7]

20 KIA then sought payment of the third and fourth instalments (totalling $1.6 million plus GST) under the DMA. Bensons contended, however, that as KIA had failed to comply with the DMA (the planning permit being issued after the Sunset Date of 31 December 2016), it was not obliged to pay those instalments, and that KIA (and its directors) were obliged to repay those instalments already received.

21 In January 2017, Bensons gave notice that the DMA was at an end and did not settle the sale contracts it had entered into with the Mandile parties.

22 With Bensons no longer interested in proceeding with the purchase of the development, KIA sought to interest another purchaser in the site, and between January 2017 and June 2017, continued to work on the development.

23 As a result of its further efforts, in June 2017, the land and business (now with permit) was sold to a third party, V-Leader Pty Ltd ('V-Leader'), for the sum of $11.2 million.[8] KIA received $2.232 million of the sale proceeds.

(a) Representations were made by Bensons on 1 February 2016, 22 February 2016 and 5 April 2016 to the effect that Bensons would appeal to VCAT and in reliance on those representations, KIA entered into the DMA. KIA suffered loss as the assumption induced by those representations was departed from.

(b) By its conduct at meetings on 15 April 2016, 26 April 2016 and 5 May 2016, Bensons elected to appeal to VCAT pursuant to clause 2.3(e) of the DMA, and accordingly it was obliged to exercise its rights, powers and discretions under clause 2.3(e) of the DMA to appeal any decision (including a failure to make a decision) of the council in connection with the planning application or the issue of the planning permit, and to bear all costs of doing so.

(c) There was a term of the DMA that Bensons was under a duty to do all such things as were necessary to enable KIA to have the benefit of the DMA, and not to do anything which would make it materially more difficult for KIA to satisfy the DMA ('duty of co-operation').

(d) There was a term of the DMA that Bensons was under a duty to perform its obligations and to exercise its rights, powers and discretions under the DMA in good faith ('duty of good faith').

(e) Bensons refused to proceed to VCAT, or alternatively refused to fund proceedings in VCAT in relation to the planning permit application, and in doing so breached clause 2.3(e), the duty of co-operation and the duty of good faith.

(f) Bensons sent KIA the letter dated 18 May 2016 which, inter alia:

(i) informed KIA that Bensons refused to proceed to VCAT;

(ii) informed KIA that Bensons refused to fund VCAT proceedings; and

(iii) asserted that any proceeding commenced by KIA in relation to the development without the express prior written consent of Bensons (which consent was refused) would constitute a breach by KIA of its obligations under the DMA

and in doing so, breached clause 2.3(e), the duty of co-operation and the duty of good faith.

(g) Between 18 May 2016 and 5 July 2016, Bensons failed and refused to meet with KIA to discuss these matters or at all, and in doing so, breached the duty of co-operation and the duty of good faith.

(h) By reason of Bensons' breaches, KIA, at its own cost, sought to mitigate any loss it may suffer by seeking to obtain a planning permit by means other than an application to VCAT, including engaging further with the council.

(i) KIA satisfied the conditions under the DMA when VCAT granted the planning permit on or about 22 December 2016, and that Bensons breached the DMA by failing to pay the instalments due in the sum of $1.6 million (plus GST).

(j) In breach of the DMA, Bensons denied that the development management conditions under the DMA (and therefore the planning permit conditions under the contracts of sale with the Mandile parties) were met by the Sunset Date. Bensons failed or refused to settle under the contracts of sale with the Mandile parties, and KIA suffered loss and damage, including the loss of the deposit of $100,000.

(k) Bensons is estopped from relying on the strict wording of clause 2.3(e) in order to deny liability for VCAT costs.

(l) KIA suffered loss and damage as a result of Bensons' breaches of the DMA.

25 KIA claims damages from Bensons under the following heads:

(a) the third and fourth instalments of its development management fee;

(b) the loss of deposits to the Mandile parties;

(c) costs it incurred in its VCAT applications;

(d) costs it incurred in mitigation in attempting to obtain the permit through the council; and

(e) costs it incurred in mitigation in re-selling the land to V-Leader.

26 Bensons denies these allegations and has counterclaimed against KIA. Bensons claims that it was not obliged to effect settlement under the sale contracts with the Mandile parties prior to the issue of a planning permit, and that the balance of the development management fee was due only after satisfaction of the development management conditions, provided these were satisfied on or before 31 December 2016.

27 Pursuant to clause 2.3(d) of the DMA, if the development management conditions were not satisfied by 31 December 2016, KIA was obliged to repay to Bensons any instalments already received, such repayment being personally guaranteed by Mr Gale, Mr Gatsby and Mr Hutchinson-Brooks.

28 According to Bensons, the planning permit did not issue on or before 31 December 2016, and Bensons' demand for the return of the instalments already paid has not been met.

29 As a consequence, Bensons alleges that KIA is indebted to Bensons in the sum of $440,000. Bensons also claims against the directors for the sum of $440,000 pursuant to their personal guarantees.

30 Bensons asserts that KIA must give credit for the $2.232 million sale proceeds it received pursuant to the V-Leader contract, and therefore its entitlement to anything other than nominal damages depends upon KIA proving it suffered loss exceeding $2.232 million.

31 Despite the extensive pleadings the main issues are:

(a) Did Bensons elect to go to VCAT under clause 2.3(e) of the DMA?

(b) If so, did Bensons breach any and what obligations to KIA?

(c) Did KIA procure the issue of the planning permit before the Sunset Date?

(d) If not, did Bensons prevent KIA from procuring the issue of the planning permit?

(e) Did Bensons owe a duty of co-operation to KIA under the DMA?

(f) Did Bensons owe a duty of good faith to KIA under the DMA?

(g) If so, did Bensons breach those duties:

(i) by refusing to proceed to VCAT;

(ii) by refusing to fund the proceedings in VCAT;

(iii) by instructing KIA not to commence any proceeding in VCAT;

(iv) by informing KIA that any proceeding commenced by KIA in relation to the development without the express prior written consent of Bensons (which consent was refused) would constitute a breach by KIA of its obligations under the DMA;

(v) by seeking to prevent KIA from appealing to VCAT and threatening to terminate the DMA if KIA did appeal?

(h) Is Bensons estopped from relying on the strict wording of clause 2.3(e) of the DMA?

(i) If Bensons did breach the DMA, what loss or damage, if any, was suffered by KIA?

32 For the following reasons, I have found in substance, that:

(a) Bensons did not elect to go to VCAT within the meaning of clause 2.3(e) of the DMA, although it did lead KIA to believe that it was seriously considering doing so;

(b) KIA failed to procure the issue of the planning permit before the Sunset Date;

(c) Bensons deprived KIA of a substantial chance of obtaining the permit before the Sunset Date by its act of prevention in sending the letter dated 18 May 2016;

(d) Bensons breached the implied duty of co-operation in the DMA by sending the letter dated 18 May 2016;

(e) There is no implied duty of good faith in the DMA;

(f) Bensons is not estopped from relying on the strict wording of clause 2.3(e) of the DMA; and

(g) The loss and damage suffered by KIA is in the total sum of $2,031,505.50, comprising:

(i) the loss of the third and fourth instalments of its development management fee under the DMA;

(ii) some costs in mitigation in relation to further attempts to obtain a permit from the council; and

(iii) some costs in mitigation in relation to attempts to sell the land to V-Leader.

33 In coming to those conclusions, I have found as follows. When Bensons was introduced to the potential development, Bensons was aware that KIA was having difficulty with the council in obtaining a planning permit and that it was likely that to obtain the permit an application would need to be made to VCAT. I am satisfied that when Bensons entered into the DMA, it was aware of KIA's expectation that if KIA was unsuccessful in obtaining a planning permit from the council, Bensons would take the matter to VCAT at Bensons' expense. I am satisfied that up to around 10 May 2016, Bensons did not consider that it had sufficient information to launch an appeal. I am satisfied that, for reasons Mr Jreissati was not prepared to disclose, around 18 May 2016 when Mr Jreissati took over conduct of the project, he decided that he no longer wished for Bensons to proceed with the development and resolved to prevent the DMA's performance.

34 I am satisfied that to that end, Mr Jreissati had the letter of 18 May 2016 sent to KIA advising KIA that it was not entitled to go to VCAT and in any event a permit obtained through VCAT would not satisfy KIA's obligations under the DMA. I consider that when Mr Jreissati subsequently obtained advice from a different firm of solicitors he was informed that Bensons' actions may have breached the implied duty of co-operation in the DMA in failing to act to achieve the object of the DMA. From that point, Bensons did not expressly further object to the application by KIA to VCAT, even purporting to ask if Bensons could assist KIA in its application to VCAT. On the other hand, Bensons continued to demand information and give notices of default. The damage, however, was already done as Bensons' letter of 18 May 2016 led to a lengthy delay in KIA re-applying to VCAT and KIA was not able to meet the time set by the Sunset Date for the issue of the planning permit.

35 Before I turn to a consideration of the evidence that has led me to these findings, I make the following observations as to the credit of various witnesses.

36 Each side made criticisms of the credibility of the witnesses for the other. For example, the trial of this matter had been delayed because Mr Gale had suffered memory loss following two serious medical procedures. Mr Gale agreed that he had refreshed his memory by reading court books and by speaking to Mr Gatsby and Mr Hutchinson-Brooks. Counsel for Bensons submitted that his evidence, while given honestly, was therefore a recreation and a product of collusion. Bensons also relied upon Mr Gatsby being convicted of fraud in the past.

37 On the other hand, counsel for KIA criticised Bensons' witnesses as being rehearsed, uncorroborated and failing to make appropriate concessions.

39 I found Mr Jreissati for the defendant to be an unreliable witness, whose verbose explanations often did not explain his actions, when those actions were questioned. I also found evidence of Mr Curtis difficult to accept. As will be addressed in more detail later, I was troubled by the construction or understanding of clause 2.3(e) which both Mr Jreissati and Mr Curtis propounded, that being that clause 2.3(e) only applied to circumstances after the planning permit was issued and Bensons elected to seek a variation of the conditions attached to the permit. The construction does not make sense. I am troubled by the fact that both Mr Jreissati and Mr Curtis put forward this construction of the clause.

40 I am not satisfied that I should accept the evidence of Mr Jreissati unless corroborated. I consider that Mr Jreissati was not frank with the Court. I also generally prefer the evidence of the KIA witnesses to the evidence of Mr Semenov where they conflict.

41 On 29 June 2015, KIA made a formal application for a planning permit with the council, for a three-level (plus basement) redevelopment of the land at 103 Beach Street, Port Melbourne.

42 The council's initial response was that the application was invalid because of a covenant registered on the certificate of title in favour of Mirvac (Beacon Cove) Pty Ltd ('Mirvac') ('Mirvac Covenant') which provided, amongst other things, that the covenantor could not, without the consent of Mirvac, demolish any building on the land unless it was replaced by a building built in accordance with plans prepared by Mirvac architects.

43 KIA obtained advice from Jane Sharp of counsel that Mirvac's permission was not required to apply for the planning permit.[9] Ms Sharp advised that the planning permit could be issued but with a condition attached that the consent of Mirvac under the covenant be obtained. The council reversed its decision and accepted the application. KIA found the council to be very difficult and was frustrated by its delays.[10] KIA and the Mandile parties were concerned that they would have to proceed to VCAT to obtain a permit (at an approximate cost of $400,000). KIA was also concerned that it may have to pay stamp duty of $500,000 on the purchase of the site from the Mandile parties.[11]

44 By this stage, KIA had spent nearly $2.5 million getting all the documentation together.[12] After discussions with the Mandile parties, KIA decided to offer the site for sale, with its enhanced equity that KIA had contributed through its work on the plans and in seeking to obtain the planning permit.

45 Consequent upon KIA's decision to seek the interest of a developer in the proposed project, KIA posted on realestate.com information about the project. In mid-January Bensons approached KIA through a broker.

46 On 1 February 2016, a meeting between the parties was held at the site. Mr Jreissati, Mr Curtis and Mr Semenov attended from Bensons. Mr Gale and Mr Gatsby attended from KIA.

47 Relevantly to the issues in this case, the evidence given by the witnesses present at this meeting addressed whether:

(a) Bensons was notified of the delay with council;

(b) there was discussion regarding a likely VCAT application;

(c) there was discussion regarding KIA's management fee; and

(d) Bensons expressed interest in purchasing the development.

48 During the meeting, Mr Gale showed Mr Jreissati around the site and also showed him various plans and drawings, including a display of the proposed apartments. KIA had constructed a viewing platform so that the view from the first-floor apartments could be appreciated by potential purchasers. At some stage during the meeting, Mr Gale, Mr Gatsby and Mr Jreissati went up to the viewing platform.[13] Mr Semenov and Mr Curtis did not go onto the viewing platform.

49 According to Mr Gale, he showed Mr Jreissati an executive summary of the project.[14] The summary, dated 1 February 2016, stated that KIA had spent approximately two years and $2.5 million on the project to date. At the bottom of the page appeared the following:

Key - anticipates a 33% return - profit $10.4 m, on land initial purchase $10.12m. or on a current 'as is' land value of $13m a 24% return - profit $7.5m.

50 Mr Gale said he explained to Mr Jreissati that the bottom two lines showed what was needed from a purchaser: an initial land purchase price of $10.12 million that would go to the vendors (the Mandile parties), made up of $8.62 million for the land and $1.5 million for the business, and a fee to KIA of $3 million.[15]

(a) Mr Jreissati pointed out his penthouse from the viewing platform, saying he knew the area very well and considered it to be the best site in Melbourne. He also said that he was 'very interested' and wanted to purchase it.[16]

(b) Mr Gale advised Mr Jreissati that KIA had 'taken all the risk out of the project, with all the documentation that we have'. Mr Jreissati said he would like his solicitors, Norton Rose, to look at the documents; Mr Gale indicated that there should not be any problem with that, as Norton Rose were also the solicitors for Mirvac.[17]

(c) Mr Gale told Mr Jreissati about the problems with the council, particularly how KIA had put in the application to the council the year before and that the council had contended it was invalid. The memorandum from Jane Sharp (that said the council could issue the planning permit without Mirvac's consent) had been provided, but nevertheless that the council were continuing to delay. Mr Gale told Mr Jreissati that while they were hopeful of getting a permit from council, it was likely that they were going to have to go to VCAT and that was the reason that, having spent nearly $2.5 million dollars to that point, KIA needed $3 million because KIA had to pay stamp duty and VCAT costs.[18]

(d) Mr Jreissati said in response: 'I just give - I understand the position. I just give $1 million to the lawyers, and they take it to VCAT. You should have gone to VCAT last year.'[19]

(e) Mr Jreissati asked for 48 hours to look at the documents, and requested that KIA did not sell it to anyone else.

(f) Mr Jreissati said of the drawings of the apartments that 'This is the best design that I've seen of its type...' and reaffirmed his interest saying: 'I'm comfortable with $13 million.'

(g) Mr Semenov, said: 'Yeah, look it's the policy of, Bensons, to go to VCAT when councils won't give a permit.'[20]

52 I interpolate here to explain the stamp duty issue. KIA was concerned that if it assigned the contracts it had with the Mandile parties to purchase the land and business, KIA may be liable for stamp duty as well as the stamp duty that would be paid by the ultimate purchaser, Bensons. This issue was ultimately resolved by the contracts between KIA and the Mandile parties being cancelled and fresh contracts being entered into between the Mandile parties and Bensons.

53 Mr Gatsby said that VCAT was mentioned in the context of Mr Gale saying that all the risks had been taken out of the project but for the council. Mr Gatsby said that he could vaguely recall Mr Jreissati saying: 'Well, as I've said before, ah, I just throw $1 million to my lawyers...and they get the permit.'[21] Mr Gatsby also confirmed the price was discussed, his evidence being that Bensons was told it was $10 million for the Mandile parties and $2 million for KIA for costs and expenses to date, plus future costs that included what they would pay for VCAT and for stamp duty.[22]

(a) denied saying that Bensons was very interested (but conceded he was interested).

(b) denied that either Mr Gatsby or Mr Gale said the development was delayed due to delays by council in issuing the permit. Mr Jreissati said: 'If that happened I would've left it and never looked at it again',[23] explaining that he was not interested in buying anything at that time without a permit, certainly not of that size.[24]

(c) denied there was any discussion about going to VCAT. Bensons' counsel asked Mr Jreissati what he would have done if KIA had said to him: 'We're having a lot of trouble with the council. We think we'll have to go to VCAT.'? Mr Jreissati replied: 'I would've run away very fast.'[25] Mr Scerri asked Mr Jreissati did he say anything to the effect of, 'I just give $1 million to the lawyers, and they take council to VCAT.' Mr Jreissati said no and when pressed he said: 'I'm 100 per cent sure about that. I'd hate to give lawyers a million dollars as a starting position.'[26]

(d) said the entire meeting only went for about half an hour and ending with him saying: 'Give me the information to my people. They'll have a look at it. We'll come back to you very quickly, and say whether we're interested or not.'

55 Mr Semenov was also in attendance at this meeting. Mr Semenov gave evidence that:

(a) Mr Gale said in a firm manner that the price was $13 million, but did not mention that there was to be a $3 million fee to KIA.[27]

(b) there was mention of VCAT as a way of obtaining a permit. Mr Semenov said that Mr Jreissati said: 'We - if we have delays in projects, then we'll get the lawyers involved, give a million bucks and get them to go to VCAT.'[28] Mr Semenov said that Mr Jreissati said this as a general statement, not specifically directed to KIA's project, but as a way of saying 'This is the way I've dealt with potential developments previously.'[29]

(c) Mr Jreissati said Bensons was interested in buying the project.[30]

56 Mr Semenov also said that Mr Gatsby advised that KIA was expecting the permit to be issued in February at the council meeting and if it was not obtained in February then it would be issued in March of 2016.[31]

(a) Mr Gatsby informed Bensons that the application for the planning permit had been lodged with the council the year before and KIA expected the permit in April or May of that year.[32]

(b) Mr Gatsby asked what Bensons normally did in situations where the council was slow to deal with an application. Mr Jreissati responded that where there was no prospect that council would approve it themselves, that Bensons would normally issue VCAT proceedings.[33]

(c) There was a discussion about buying the site with a permit in place.

(d) Mr Gale said the asking price was $13 million,[34] but there was no discussion about how much would go to KIA.

(e) Mr Jreissati said that he was interested in looking at the development further.

(f) There was no mention of delays in getting the development through council.

58 I consider there is inconsistency in Mr Curtis' evidence that Mr Gatsby asked about Bensons' practice when a council was slow to deal with an application, but there was no mention of delays with the council in relation to this project. It would seem strange for KIA to ask about Bensons' policy or practice in such a situation, if that particular situation had not been raised as a potential issue.

59 After further inspecting drawings, a Bensons' representative signed a confidentiality agreement and was given a folder of relevant documents that they took away. Bensons was also given other information through Dropbox.[35] Mr Gale said that the documents Bensons was given included sworn valuations from CBRE, quantity surveyor reports on the bill of quantities, Yarra Trams' approval, deeds of agreement, survey plans, structural drawings and engineering drawings, so that Bensons could continue the due diligence with the documents provided.

60 The evidence about Bensons going to VCAT and throwing money at lawyers was disputed by Mr Jreissati and Mr Curtis and is of some importance to KIA's case. KIA contends that the statements led it to believe that Bensons would be prepared to go to VCAT to obtain the planning permit and readily spend a large sum in doing so. Specifically, KIA identifies the following representations:

(a) Mr Jreissati, in response to Mr Gale's comment that it was likely that KIA would have to go to the VCAT replied in order to obtain a planning permit, replied: 'I just give $1 million to the lawyers, and they take it to the VCAT.'

(b) Mr Jreissati further stated that KIA should have gone to the VCAT last year.

(c) Mr Semenov said that it was the policy of Bensons to go to the VCAT when councils will not give a permit.

61 It is evident that at times during the meeting not all of the persons who attended were together, and statements may have been made to some which were not heard by all. I am satisfied, however, on the basis of the evidence of Mr Gale and Mr Semenov, that Mr Jreissati did make the statements identified above.

62 I am satisfied therefore that the evidence establishes that it was the mutual understanding of both KIA and Bensons at this stage that it was likely that KIA may need to go to VCAT to get the planning permit, that Bensons generally agreed with and approved of that plan, and that Bensons was generally prepared to spend significant moneys going to VCAT to obtain a planning permit.

63 Between 1 February 2016 and 5 April 2016 (when the DMA was entered into), KIA and Bensons negotiated the terms of their arrangement.

64 A formal offer was allegedly made on 4 February 2016 by Mr Semenov in a telephone conversation with Mr Gatsby to the effect that the Mandile parties would receive $10.02 million and KIA would receive $3 million plus GST. The terms of this offer, KIA claims, are confirmed in an email of 5 February 2016 to Mr Semenov, in which Mr Gatsby details his understandings of their telephone conversation the previous day.[36] The content of that phone call is disputed by Mr Semenov, but, in any event, I do not need to make any findings with respect to it.

65 Despite KIA nominating the price of the project as $13 million, on 8 February 2016 Bensons made an offer by email of $11.2 million, which included a development management fee of $1 million plus GST payable to KIA (subject to entry into a development management agreement).[37] As this was not what had been agreed, Mr Gale and Mr Gatsby went to the offices of Bensons to retrieve their documents. Mr Gale claims Mr Semenov told them that he was acting under instructions from Mr Jreissati and that he was disgusted with Bensons' behaviour and he asked Mr Gatsby if KIA would offer him a job.[38] This is denied by Mr Semenov.[39]

66 The next relevant date to KIA's claim is 22 February 2016. According to KIA, on this date, representations were made in a phone call between Mr Gatsby and Mr Semenov:

(a) Mr Semenov stated that Mr Jreissati instructed him to make another offer.[40]

(b) When Mr Gatsby asked Mr Semenov: 'What's the offer this time? Is it along the $3 million....what's it likely to be?', Mr Semenov replied: 'It won't be what you want but it will be at least $2 million and some consideration for other costs.'[41]

67 Mr Gatsby said that he told Mr Semenov the offer had to cover their VCAT costs and stamp duty (because of the double stamp duty issue).[42] Mr Semenov allegedly told Mr Gatsby that he would send the new offer to KIA and Bensons would change it afterwards to reflect what Mr Gatsby had said. Mr Semenov denied there was discussion about the double stamp duty or VCAT issues, saying he had no authority to discuss those matters.[43]

68 As Mr Semenov foreshadowed, on 22 February 2016, Bensons made a further offer of $12.2 million.[44] The sum was made up of $8,620,000 for the land, $1,500,000 for the business and $2 million plus GST for the additional development management fee to KIA. Mr Gale said that he, Mr Gatsby and Mr Hutchinson-Brooks agreed to accept the offer on the basis that Bensons would be responsible for both the costs of going to VCAT and for any stamp duty incurred in transferring the contract for the purchase of the land to Bensons. However, the written offer made by Bensons was conditional on no stamp duty being payable and made no reference to VCAT.

69 On 23 February 2016, Mr Gatsby responded to Mr Semenov's email, thanking Mr Semenov for the revised offer.[45] The email makes no objection to the price offered by Bensons, nor does it make reference to the alleged conditions about VCAT and stamp duty. On 2 March 2016, Bensons sent KIA a draft agreement relating to the purchase of the land and business and the development management agreement.[46]

70 A further meeting was held between the parties on site on 15 March 2016. The fact of this meeting is not included in any of KIA's pleadings, nor does it appear that any statements alleged to have been made at this meeting are relied on by KIA as relevant representations. KIA's case, however, was opened on the basis that, at this meeting, Bensons agreed to pay for VCAT and for KIA's stamp duty.[47]

71 Mr Gale's evidence of the meeting was that Mr Curtis reiterated that Bensons would be liable to pay the costs of VCAT, and that Mr Semenov made notes to that effect in his diary. Mr Gale was shown the note in Mr Semenov's diary where it said 'BPG to bear VCAT costs'.[48] Mr Gale confirmed that Mr Curtis said those words.[49] Mr Gale also said KIA discussed its concerns about having to pay stamp duty as well as Bensons.[50]

72 Mr Gatsby also gave evidence about the meeting, but conceded he had a poor memory of it.[51] Mr Gatsby said that at the meeting it was agreed that KIA would be paid $2 million, Bensons would look after VCAT and KIA would not be exposed to stamp duty.[52] He was asked what exactly was said about VCAT and he replied: 'That they would pay for VCAT. After all, that's why Bensons came into the joint venture'.[53] Mr Gatsby said that Mr Curtis agreed to this, saying: 'we accept that proposition'.[54] Mr Gatsby also gave evidence that at this meeting the parties discussed extending the Sunset Date. Mr Gatsby said that Mr Semenov requested a further extension to accommodate the time required to mount an application to VCAT.[55]

73 Mr Curtis agreed that there was a discussion about VCAT at the meeting on 15 March 2016, but only in the context of describing what would be a satisfactory planning permit in terms of planning permit conditions. Mr Curtis said that Mr Gatsby had asked what Bensons would do if the permit contained conditions unsatisfactory to Bensons.[56] Mr Curtis said that Bensons wanted the right to appeal at its discretion if the permit approved by the council had variations to that applied for.

74 Mr Curtis explained that Bensons wanted a planning permit with no material differences to that applied for and also a 'friendly permit'. A friendly permit is one which has the support of the local community as well as the council. This would enable Bensons, if it wanted to make changes, to do so with the support of the council.[57] A term of Bensons' offer was that if there was a material difference in the saleable area approved by the council, then the permit conditions would not be satisfied. Mr Curtis said that there were also terms about site conditions that were not adverse and that Bensons would then have the right to appeal against these conditions.[58]

75 Mr Curtis said that from this discussion evolved the clause in the heads of agreement that permitted Bensons to appeal.[59] Mr Curtis said that there was a discussion about costs and that, in the context of conditions on a permit that had been issued, then the costs would have been at Bensons' expense.[60]

76 I do not accept Mr Curtis' version of the discussion. I do not accept that, in discussing in a general way who would be liable for costs of a VCAT application, Bensons limited its indication that Bensons would pay to an appeal only against conditions imposed on the permit by the council. I am satisfied that at this stage of negotiations it was the mutual understanding of both Bensons and KIA that an appeal would include an appeal against a failure of the council to decide.

77 On 18 March 2016, Mr Semenov provided Mr Gatsby with proposed sale terms, including a proposed development management agreement.[61] Mr Curtis gave evidence that he drafted the terms and they were reviewed by a Mr Will Grinter of K&L Gates.[62] On 21 March 2016, Mr Gatsby sent Mr Semenov the draft terms of the development management with amendments proposed by Mr Gatsby. Mr Gatsby had added a term that provided 'Should BPG elect to apply to VCAT all costs to be borne by BPG'.[63] This would become clause 2.3(e) in the DMA.

78 Mr Curtis met again with Mr Gatsby around 22 March 2016 to go through the proposed heads of agreement. Mr Curtis recalled Mr Gatsby amending the proposed heads of agreement to include the term that if Bensons elected to appeal, the appeal would be at Bensons' expense, but gave evidence that he understood the term to be in the context of an appeal against conditions imposed on a planning permit issued by the council (not an appeal against the failure of the council to issue a planning permit).[64] Again, I am not satisfied that Mr Curtis stated any such limitation on the proposed term. I am satisfied that Mr Curtis knew, at least, that KIA was proceeding on the assumption that the clause covered an appeal against the failure of the council to issue a permit and he did not seek to correct KIA's assumption.

79 On 23 March 2016, Mr Gatsby and Mr Curtis signed the draft heads of agreement.[65] On 1 April 2016, Mr Semenov sent to Mr Gatsby and Mr Curtis draft contracts of sale of land and business and the draft DMA based on the heads of agreement.[66] Clause 2.3(e) in this draft of the DMA was in the same form as finally executed.[67] Mr Curtis said that he read clause 2.3(e) of the DMA (the appeal to VCAT clause) and said that it accorded with his understanding of what had been agreed.[68]

80 The DMA was signed on 5 April 2016 at a meeting at the offices of Indovino's Lawyers, solicitors for the Mandile parties. Those present from KIA were Mr Gale, Mr Gatsby, Mr Hutchinson-Brooks, Ms Stephanie Nicola and KIA's solicitor, Mr Michael Benjamin of Michael Benjamin & Associates ('MBA'). For Bensons, there were Mr Curtis, Mr Foley (a director of Bensons), and Bensons' solicitor, Mr Will Grinter.[69] Also present were Michelina and Bernard Mandile, the vendors, and Mr Tom Indovino, their solicitor.

81 It is apparent from the evidence given that there were times when some of these parties had meetings in separate rooms, and, even when the parties were all in the same room, some parties may have been involved in discussions, for example, at one end of the table, and may not have heard certain statements made by others.

82 It is at this meeting that KIA alleges the third set of relevant representations were made by representatives of Bensons, on which KIA relied in executing the DMA.

83 Mr Gale's evidence was that the meeting went for some two hours. There was a discussion between Mr Hutchinson-Brooks, Mr Foley, Mr Semenov and Mr Curtis about receiving a planning permit and going to VCAT. Mr Gale said that in that discussion 'they' (presumably one or other of the Bensons' people) acknowledged the necessity of going to VCAT. Mr Gale said that Mr Foley said that it was the policy of Bensons to go to VCAT when councils failed to make a decision.[70]

84 Mr Gatsby said that a day or so before the meeting he had asked Mr Semenov to explain the words in brackets which had been added to clause 2.3(e) of the DMA '(without being obliged so to do)'. Mr Gatsby said that Mr Semenov had told him (about the inserted words) that 'Look, it's just that we want to have a say in the choice of Queen's Counsel, um, which solicitors would run the VCAT that were running it'. Mr Gatsby said that Mr Semenov clarified that observation by saying that they wanted to have a good say in the choice of legal representatives and other experts who would be involved in VCAT proceedings. Mr Gatsby commented on this evidence, saying: 'we had all our people, that they did this all the time, and they wanted the control over all these things'.[71]

85 At the meeting on 5 April 2016, Mr Gatsby asked Mr Semenov to explain to his colleagues about those added words, but gave evidence that he himself could not hear Mr Semenov's response from the other end of the table. Mr Gale's evidence was that Mr Gatsby asked Mr Semenov about this clause and was assured by Mr Semenov that 'we should not worry about it, that it was only - only put in meaning that Bensons would not be obliged to go to VCAT before they were ready.'[72] Mr Gale said that he 'took that to mean before they were ready' with 'their legal team, their barristers and what firms would represent them.'[73]

86 Mr Gale said that the words in parenthesis '(without being obliged so to do)' were puzzling to KIA because KIA was under the impression, having accepted $2 million instead of $3 million, that Bensons would be paying for VCAT.

87 Mr Curtis said that at this meeting he asked for personal guarantees from the directors of KIA as he realised that they may settle with KIA earlier and pay all the instalments but there may still be conditions, such as the terms of the permit dealing with Mirvac, that may not have been met, in which case all the moneys may have to be repaid from KIA to Bensons.[74]

88 Mr Curtis said that he did not hear Mr Semenov say, and he himself did not say, that it was essential to lodge an application with VCAT as the council would simply continue to delay. Mr Curtis said that at this stage he thought the permit was due within April or May.[75]

89 Mr Curtis further said that he did not hear Mr Semenov say that, in Bensons' view, VCAT would provide a planning permit as the proposed plans were compliant with the statutory provisions and Bensons had obtained advice from its lawyers, Norton Rose Fulbright, which confirmed this view. Mr Curtis added that Bensons was not anxious to get a VCAT permit as it wanted a 'friendly' permit. Also, Mr Curtis said that at this stage, Bensons had switched from Norton Rose Fulbright to K&L Gates because Norton Rose could not act for Bensons because of a conflict with Mirvac.[76]

90 Mr Curtis said that he did not hear Mr Foley say that it was Bensons' practice to make an application to VCAT in situations like this where the council had failed to issue a permit.[77] Mr Grinter also said that he did not hear this.[78] Mr Curtis said that this alleged practice was not consistent with his own view about when to go to VCAT. Mr Curtis said that Bensons only went to VCAT if it thought there was no prospect that council would support the application.[79] Mr Curtis said that with a friendly permit it was much easier to work with council officers to make design changes and that it was much better to work with the council or the relevant authority to do so.[80]

91 Mr Curtis denied hearing Mr Semenov say words to the effect that KIA should not worry about clause 2.3(e) of the DMA as Bensons intends to go to VCAT. Mr Curtis said that it was not consistent with his understanding of the transaction.[81] Mr Grinter did not recall Mr Semenov saying anything of that nature.[82] Mr Grinter did not recall any discussion about clause 2.3(e) of the DMA.[83]

92 Mr Curtis was asked what Bensons wanted from paying the fee of $2.2 million. Mr Curtis said that Bensons was interested in buying a site, particularly a high-end apartment site. He said that Bensons also needed a project relatively quickly in order to have something to market. He said that Bensons had two projects underway due for completion on construction, and that Bensons needed another project in order to generate income, and from a balance sheet point of view, to amortise corporate costs over projects on board.[84] Mr Curtis said that if Bensons did not have new projects it could not amortise corporate costs.

93 Mr Curtis said that the site was already going to have a permit, or was going to have a quick permit, so Bensons could get on with actually pre-selling the apartments.[85]

94 Mr Grinter said that he did not hear Mr Curtis or Mr Semenov say that in Bensons' view, it was essential to lodge an application with VCAT.[86] Mr Grinter said that he would have remembered if such a statement was made, as if an appeal to VCAT was contemplated he would have wanted to amend the DMA to give Bensons some control over the conduct of the proceeding, such as the appointment of senior counsel.[87] Mr Grinter admitted that it may have been possible that he did not hear such a conversation but said he would be surprised if that was the case.[88]

95 The specific representations relied on by KIA at this meeting as identified in KIA's closing submissions are as follows:

(a) Mr Foley's statement that it was the policy of Bensons to go to VCAT when council fails to make a decision;

(b) Mr Curtis' acknowledgement of the necessity of going to VCAT; and

(c) When Mr Gatsby asked Mr Semenov about clause 2.3(e), Mr Semenov replying that 'KIA should not worry, that [clause 2.3(e)] was only put in to ensure that Bensons were not obliged to go to VCAT before it was ready';

96 I am satisfied that at this meeting the necessity of going to VCAT was acknowledged. In my view it must have been fairly clear to all concerned that after the council had sat on the application for nearly 12 months that it would be necessary to go to VCAT and that was the very reason clause 2.3(e) was added to the DMA.

97 Under the DMA, dated 5 April 2016, Bensons appointed KIA as the development manager to perform specified development management services and satisfy certain development management conditions.

98 The DMA included terms, inter alia, that Bensons would pay to KIA a development fee of $2 million (plus GST), payable in four separate instalments, if KIA satisfied the development management conditions (as defined in the DMA) by 31 December 2016. Relevantly, clause 2.4(a) of the DMA provided:

The Development Management Conditions are the following conditions which must be satisfied (in each case to the reasonable satisfaction of Bensons, subject to clause 2.4(b)) on or prior to the Sunset Date:

(i) the issue of a Planning Permit;

(ii) the issue of written consent of Mirvac as contemplated by paragraph (b) of Item 3.

99 KIA was to perform the development management services at its own costs and in accordance with the directions of Bensons. If the development management conditions were not satisfied by the Sunset Date, KIA was to repay to Bensons the first instalment, the second instalment and, if applicable, the third instalment in full within 14 business days.

100 As mentioned, the DMA provided under clause 2.3(e) that if Bensons elected (without being obliged to so do) to appeal any decision of the responsible authority in connection with the planning application or the issue of the planning permit, all costs in doing so were to be borne by Bensons.

101 The DMA and the appointment of KIA as the development manager were to end on the earlier of either the Sunset Date or the completion of all the development management services.

102 Under the DMA, KIA agreed to transfer to Bensons all the intellectual property that KIA had accrued in preparing plans for the development and all associated work. Under the DMA, Bensons was to take over that property and further the development. KIA had no further interest in developing the intellectual property relating to undertaking the development.

103 Further terms of the DMA are referred to in detail below where necessary.

104 The meeting of 15 April 2016 is the first of three meetings at which KIA alleges that Bensons elected to go to VCAT pursuant to clause 2.3(e) of the DMA. The meeting of 15 April 2016 was held between Mr Gale, Mr Gatsby and Mr Semenov at the site.

105 Mr Gatsby sent an email to Mr Semenov prior to the meeting, indicating that Mr Gatsby wished to discuss council delays in granting the planning permit. Mr Gatsby said in his email that they wanted to obtain as much information as possible to use at VCAT challenging the council's failure to make a decision, if Mr Semenov thought that was appropriate.[89]

106 Mr Gatsby gave evidence that at the meeting they discussed an email from the council, which included comments provided by the Office of the Victorian Government Architect ('OVGA') on the application.[90] They also discussed a 42-page report dated 12 April 2016, which had been prepared by Mr Axford of AXOS Urban Pty Ltd ('AXOS Urban'), in response to the council's email.[91] Mr Gatsby said that Mr Semenov observed that the comments that had been made by the planning officer, to which Mr Axford had responded, were 'just rubbish'.[92] Mr Gatsby said that it took about an hour and a half to go through Mr Axford's report. Mr Gatsby said: 'and from that he (Mr Semenov) concluded there was just - it's - "Look, we've got to go to VCAT"'. Mr Gatsby was asked specifically what were Mr Semenov's words and he replied: 'We have to go to VCAT. This is outrageous'.[93]

107 Mr Gatsby said, however, that Mr Semenov also said words to the effect: 'Look, try one more time. Ring the council officer. If he doesn't undertake to complete an officer's report in time for the agenda, which had to be filed with council before 17 May 2016, if you don't get a commitment - they'll do that - then we need to - he needs to - I'm going to say, we need to proceed to VCAT.'[94]

108 To obtain a planning permit from the council, the usual procedure was for a council officer to complete a report on the application to accompany the application. The report had to be completed in time to be included on the agenda prepared for the council meeting dealing with planning applications, which in this case was to be held on 17 May 2016.

109 In my opinion, that evidence, if correct, does not constitute an election by Bensons. In my view, Mr Semenov was merely foreshadowing what he proposed to do in the future. This interpretation is also consistent with the minute of the meeting referred to below.

110 In his evidence, Mr Gatsby repeated the assertion that Bensons had elected to go to VCAT and that the only outstanding element was they could not make up their mind as to which silk to brief.[95]

111 Under cross-examination, Mr Gatsby said that the election was confirmed in the minutes of the meeting.[96] Mr Gatsby agreed that there was no written confirmation by Bensons that it had elected to go to VCAT and that KIA relied on no other document other than the minute of the meeting prepared by Mr Gatsby.[97] Mr Gatsby said that at the meeting, Mr Semenov said: 'Well, it seems to me there's no choice but to go to VCAT.' Mr Gatsby conceded that the case he was putting was that on 15 April 2016, Bensons elected to go to VCAT.[98]

112 As indicated, Mr Gatsby prepared minutes of the meeting that he sent to Mr Semenov on 19 April 2016.[99] The minutes noted that the planning permit status and strategies were discussed at length. The minutes record that KIA was arranging to meet the CEO of the council to endeavour to secure a permit. The minutes then note:

11 George recommended two approaches: 1. Last effort to obtain undertaking that report to council will be ready for the 17th May and conditions detailed at coming meeting the following Thursday and 2. Failing 1 consider expediting by an appeal to VCAT on failure to make decision, retaining Bensons preferred barristers including Chris Kanavan [sic]...

At that meeting [of 15 April 2016], ....

(i) ....

(ii) George Semenov on behalf of Bensons:

(1) reiterated that, in Bensons' view, the Council had no argument and that a win at VCAT was certain; and

(2) recommended two approaches:

(a) first, KIA and Bensons make a last effort to obtain an undertaking from the Council Officer that a Council Officer's Draft Report with "detailed conditions" will be ready for an upcoming Council meeting scheduled for 17 May 2016, at which the Planning Permit Application would be considered; and

(b) secondly, failing the first approach by the following Thursday, to expedite the process by an appeal to VCAT on failure to make a decision, retaining Bensons' preferred barristers including Chris Canavan QC.

114 Bensons submits that the pleading omitted the qualification recorded in the minute, that Mr Semenov recommended to 'consider expediting an appeal' not 'expediting' an appeal, as pleaded.

115 Mr Gale also gave evidence of the meeting. Mr Gale said that Mr Semenov said: 'can we please have one last effort to obtain a permit from the council, and failing that, expedite an appeal to VCAT'. Mr Gale said 'one last effort' was a reference to obtaining a draft of the report (on the application for a planning permit) from the council officer so that it would be ready for the upcoming council meeting to be held on 17 May 2016. Mr Gale said that Mr Semenov also said that Bensons wished to retain Chris Canavan QC to run the appeal.[100]

116 Under cross-examination, Mr Gale agreed that Mr Gatsby asked Mr Semenov: 'What do you think we should do if we can't get a permit from the council?', or a question of that nature. He agreed that Mr Semenov suggested another meeting with the CEO. It was put to Mr Gale that Mr Semenov said that 'If that fails, you should go to VCAT'. Mr Gale conceded that he may have said that.[101]

117 Bensons submits that the Court should reject KIA's allegation that it elected at the 15 April 2016 meeting. Bensons submits that KIA was simply seeking Bensons' advice and received a 'recommendation'.

118 In my opinion, the minutes taken by Mr Gatsby confirm that Bensons only went so far as to recommend that further attempts be made to obtain the permit from the council and advising that an application to VCAT would be considered if the council still had not approved the application. This falls short of an election by Bensons to go to VCAT. Accordingly, I am not satisfied that Bensons elected to go to VCAT at the meeting of 15 April 2016.

119 This is the second meeting at which KIA alleges Bensons elected to go to VCAT. Prior to the meeting, Mr Axford had received an email of 20 April 2016 from Donna D'Alessandro of the planning department of the council containing a long list of queries about the planning application which was forwarded to Mr Gatsby. The email was also forwarded to Mr Semenov and Mr Curtis on 22 April 2016.[102]

On or about 26 April 2016, [Mr Gatsby] and [Mr Hutchinson-Brooks] met with [Mr Semenov] to discuss the Planning Permit Application and the anticipated application to VCAT. At the meeting, it was discussed that the appropriate action was, inter alia, to:

(i) make a last attempt to ensure that Council will have "draft conditions" ready for the upcoming Council meeting scheduled for 17 May 2016; and

(ii) if that is not achieved immediately then to fast track an appeal to VCAT for Council's failure to decide within the required time frame.

121 As alleged by Bensons, on 26 April 2016, Mr Semenov met with Mr Gatsby and Mr Hutchinson-Brooks in the small conference room at Bensons' offices. Mr Gale did not attend this meeting. Those in attendance went through much the same list of issues that they had discussed on 15 April 2016.

122 Bensons submits that once again the minutes of the meeting do not refer to an 'election', 'agreement', or 'decision' to go to VCAT, but rather Mr Semenov 'recommending' future 'consideration' of an appeal to VCAT.

123 Minutes of the meeting were taken by Mr Gatsby and typed up. Paragraph 6 of the minutes relevantly recorded:

Further to George recommending previously two approaches: it is now amended to:

1. Another effort to obtain undertaking from council that report to council will be ready for the 17th May and/or discussions at a proposed meeting to be about conditions for a planning permit.
2. Failing 1 consider expediting by an appeal to VCAT on failure to make a decision, retaining Bensons preferred barristers being Chris Townsend ... George advised would be better if possible to achieve 1 "before firing trigger".[103]

124 The minutes do not confirm or even suggest that an election had been made. Rather, the minutes convey that failing having the report to council being ready for the council meeting on 17 May 2016, consideration would be given to expediting an appeal. That is, any decision to appeal was being deferred.

125 Under cross-examination, Mr Hutchinson-Brooks agreed that at the meeting of 26 April 2016, Mr Gatsby said that the council's email of 20 April 2016 (the email sent by Donna D'Alessandro to Mr Axford) made it clear that KIA was not going to get anywhere with the council. Mr Hutchinson-Brooks agreed that Mr Semenov asked how had KIA gotten on with the CEO of the council. Mr Hutchinson-Brooks agreed that he told the meeting he had spoken to Tracey Slatter, the CEO of the council, who informed Mr Hutchinson-Brooks that she would not interfere in the processes of the planning department but had instructed the planning department to expedite the issue of the permit.

126 Mr Hutchinson-Brooks agreed that Mr Gatsby asked Mr Semenov what he thought 'we should do.' Mr Hutchinson-Brooks said that Mr Semenov replied that 'You should phone the officer handling the file and find out if they could put an officer's report onto the agenda for the 17 May meeting', and if the officer could not do that, then there was no option left but to go to VCAT.[104] Mr Hutchinson-Brooks said that at this meeting there was a strong sense of co-operation and that both Bensons and KIA were working as a team. Mr Hutchinson-Brooks' evidence is consistent with the minute prepared by Mr Gatsby.

127 Accordingly, I am not satisfied that Bensons elected to go to VCAT by agreeing to do so at the 26 April 2016 meeting.

128 This is the third meeting at which KIA alleges Bensons elected to go to VCAT. On 5 May 2016, Mr Gatsby, Mr Gale, Mr Axford and Mr Curtis attended a meeting at Bensons' offices.

129 KIA's pleaded case about the 5 May 2016 meeting is as follows:

On 5 May 2016, KIA informed Bensons, and Bensons agreed, that the option of obtaining a Planning permit from the Council had failed and that it was appropriate to expedite an appeal to VCAT on the basis of Council's failure to make a decision.

Particulars

(a) ....

(b) Stephen Axford tabled and summarised a report prepared by Axos Urban dated 2 May 2016. ...

(c) ....

(d) Bruno Gatsby and Barry Gale gave Richard Curtis a memorandum of advice, prepared by Jane Sharp, Barrister...

(e) Richard Curtis said words to the effect that:

(i) he agreed that the option of obtaining a Planning Permit from Council had failed;

(ii) an appeal to VCAT should be expedited, retaining Bensons' preferred barrister, being Chris Townsend QC;

(iii) Norton Rose or Arnold Bloch Leibler might be appropriate solicitors and that it was not likely that Bensons would retain K&L Gates; and

(iv) he would consider the choice of senior counsel.[105]

130 The report tabled by AXOS Urban dated 2 May 2016 dealt with options open to KIA in respect of the failure of the council to issue a planning permit and stated one option was to appeal against the council's failure to determine the application for a planning permit.

131 Mr Axford said in evidence that his report was tabled and Mr Gatsby asked Mr Axford to address the meeting to explain why Mr Axford thought 'we should go to VCAT.' Mr Axford said that his recollection was that Mr Curtis accepted that it would be difficult to get a permit from council in a timely manner and so now was probably the appropriate time to go to VCAT.[106] He said that the conversation moved on to who would be the appropriate counsel and which lawyers to use.[107] Mr Axford said that he suggested a barrister and Mr Curtis suggested another two names.[108]

132 Under cross-examination, Mr Axford said that he could not recall Mr Curtis saying that before Bensons could contribute to any funding (of a VCAT appeal), Bensons would need to take its own legal advice on the merits of a VCAT application.[109] He conceded that Mr Curtis did say that Bensons normally used Norton Rose or Arnold Bloch Leibler ('ABL'). Mr Axford recalled Mr Curtis saying that Bensons usually used the barrister Chris Townsend.

133 It was put to Mr Axford in cross-examination that Mr Curtis said that he would get back to Mr Gatsby with a formal response about VCAT proceedings after Mr Gatsby informed Bensons how KIA was going to win the VCAT proceeding. Mr Axford replied: 'That's not how I recall it, no.'[110]

Counsel: You said in your evidence that you considered that the parties had agreed to go to VCAT; is that correct?

Mr Axford: The impression I got from the meeting, is that the, um, um - there was agreement that was the correct path to go down.

Counsel: Yes?

Mr Axford: That now was the time to go to VCAT, because it was quite likely that we were not going to get a decision in any timely way.

...

Counsel: Yes. And was there mention of whom might pay for those proceedings?

Mr Axford: Ah, that was certainly raised by - by um, [KIA] Infrastructure ...

But the response was indeterminate.[111]

135 KIA submitted that Mr Axford was a most impressive witness and gave his evidence in a straightforward and unaffected manner. KIA submits that his evidence ought to be accepted.

136 Mr Curtis gave evidence that the meeting came about as Mr Gatsby wanted Mr Curtis to meet with him and Mr Axford. Mr Curtis said that at that stage, in April, Bensons had had some discussions with a town planner, Vaughan Connor of Contour, as Bensons was interested in amending the permit to improve the development, once the permit was obtained.[112]

137 Mr Curtis was given a copy of Mr Axford's report at the meeting, but he said that he did not review it at the meeting.[113] Mr Curtis was also given a copy of Jane Sharp's advice about the Mirvac Covenant.

138 Mr Curtis said that at the meeting, Mr Gatsby said that the CEO of the council was not prepared to override the planning department and expedite the application going to the council on 17 May 2016. Mr Gatsby then said that KIA wanted to initiate VCAT proceedings.[114] Mr Curtis said that he asked Mr Gatsby what had changed. Mr Curtis said that Mr Gatsby replied that they were tired of waiting for council and they wanted to initiate VCAT proceedings in order to get the council into a mediation within a short period.[115]

139 Mr Curtis said that he had not previously been told by Mr Gatsby that there was a problem getting the permit. Mr Curtis said that he had been told that the April submission to council did not occur and that it was meant to go to the May meeting of councillors.[116]

140 Mr Curtis said that Mr Gatsby said that they wanted to initiate VCAT proceedings, and they wanted Bensons to contribute to the cost of those proceedings.[117]

141 Mr Curtis said that he again asked Mr Gatsby what had happened that appeared to have changed the council's mind. Mr Curtis said that he did not get a response to that question.

142 Mr Curtis said that he told Mr Gatsby that before Bensons could respond to the request to contribute to the cost of the proceedings, Bensons would need to know the basis of the application, what were the adjoining owner issues, what were the council's issues, and how the Mirvac Covenant was being dealt with.[118] Mr Curtis said that he told Mr Gatsby that subject to receiving that advice, Bensons would then take its own independent legal advice as to the merits of launching in VCAT.[119] Mr Curtis said that he asked Mr Gatsby on a number of occasions how they were going to win but that Mr Gatsby did not respond.[120]

143 Mr Curtis said that he wanted to know that because he thought that in the first place it was wrong to institute any sort of court proceedings unless you had a good prospect of winning. Secondly, he said that he wanted to know why KIA did not believe that they would not get a permit from the council after having previously told Bensons that they were going to get the council's consent to a permit.[121]

144 Mr Curtis said that he told Mr Gatsby that, subject to receiving the information he had asked of Mr Gatsby, that Bensons would get its own independent legal advice. Mr Curtis said that he was asked who Bensons normally used as solicitors for planning matters. He said he told KIA that Bensons used Norton Rose Fulbright, or ABL and normally for senior counsel Bensons used Chris Townsend. Mr Curtis said that Norton Rose Fulbright could not act, as they had already been excluded because of the conflict with Mirvac.[122]

145 If what Mr Curtis says is correct, Mr Curtis had not elected to go to VCAT but was asking for information which would be taken into account in making a decision whether or not to go to VCAT.

146 It was put to Mr Curtis that Bensons confirmed it was electing to proceed with the application to VCAT. Mr Curtis says he was not asked that question. If he had been asked he would have said no. Mr Curtis said that at this stage they had not been involved in the application and knew little about the application and that he wanted to know why it would be successful.

147 At the meeting on 5 May 2016, Mr Curtis was given a copy of the advice of Jane Sharp that an appeal to VCAT could take place even with the Mirvac Covenant being in place.[123] That is, according to Ms Sharp, an appeal to VCAT could take place even if Mirvac had not given consent to the development as required under the covenant in favour of Mirvac, at that stage. Ms Sharp opined that VCAT could issue a valid planning permit subject to Mirvac subsequently consenting to the development under the covenant. Mr Curtis, however, said that he wanted to resolve this threshold issue as to whether legally it was possible to appeal with the covenant in place before deciding whether to go to VCAT.[124]

148 Mr Gale also gave evidence of the meeting of 5 May 2016 at which the letter of AXOS Urban to the council of 12 April 2016 was discussed at Bensons' offices. Mr Gale said VCAT was discussed. Mr Gale's evidence was as follows:[125]

Mr Gale: But it was brought out that Mr Semenov in that meeting (the meeting of 26 April 20 which Mr Gale had not attended) had repeated the two-stage process, um, of going - trying one last time with the council but changed from using Mr Canavan to, um, ah, um - can't think of his name. Sorry. I'm sorry ... and then, having gone through those minutes in this meeting on 5 May, the 26 April minutes, ah, Mr Curtis repeated that the - well, he said that the first stage of going to the council had failed and we would now expedite an appeal to VCAT.

Counsel: His words were "we would"? --- "We" meaning Bensons.

Mr Gale: Yes.

Counsel: "We would"?

Mr Gale: Bensons would expedite an appeal to VCAT on the basis of the council's failure to make a decision.

149 That was the evidence on the meeting of 5 May 2016. In deciding whether or not Bensons elected to go to VCAT at this meeting, it is relevant, however, to consider the parties' subsequent conduct.

150 After the meeting of 5 May 2016, on 9 May 2016, Mr Curtis, Mr Semenov and Mr Jreissati met with Rhodie Anderson, the planning partner of Rigby Cooke in Mr Jreissati's office. They discussed Jane Sharp's advice regarding the Mirvac Covenant and in particular whether one could actually issue proceedings in the first place with the covenant in place.[126] Notes were taken of the meeting.[127]

151 Mr Curtis said that he instructed Ms Anderson to brief senior counsel if necessary, regarding the Mirvac Covenant issue.[128] He also sought Ms Anderson's advice in respect of the planning application, subject to receipt of further information. The issues discussed at the meeting, confirmed in an email, all related to whether or not VCAT would be able to hear the planning application.[129] The matters upon which Bensons was seeking preliminary advice were:

1. How might Mirvac's Covenant No. X354973K impact on any VCAT proceedings to be initiated by [KIA] in respect of its current Planning Permit Application No. 673/2015?
2. Would VCAT have the power to amend Mirvac's Covenant X354973K to allow approval of Planning Permit Application No. 673.2015 without there being a specific additional Planning Permit Application in respect of the Covenant?
3. How might VCAT's prior decision in Waterfront Place Pty Ltd v Port Phillip CC assist or hinder a hearing of Planning Permit Application No. 673/2015?[130]

152 Mr Curtis said that the advice of Ms Anderson was that the Mirvac Covenant was not an impediment to an applicant to VCAT.[131] (This was consistent with Ms Sharp's opinion.) Mr Curtis said that Bensons requested Rigby Cooke to obtain further advice from counsel and Bensons subsequently consulted with Mr Fernanzio of counsel about the issue, but did not receive any written advice, as Mr Fernanzio took up another matter.

153 In my opinion, the matters discussed at this meeting with Ms Anderson suggest that Bensons was still assessing whether or not to appeal to VCAT. The conduct of Mr Curtis at this meeting with Ms Anderson is not consistent with him having already elected to go to VCAT at the meeting of 5 May 2016.

154 Further, there was no written confirmation after the meeting by KIA that Bensons had elected to go to VCAT at the meeting of 5 May 2016.

On or around 9 May 2016, Bensons advised KIA of Bensons' engagement of solicitors for the anticipated application to VCAT.

Particulars

In a conversation between George Semenov and Bruno Gatsby on or around 9 May 2016, George Semenov said words to the effect that Norton Rose are acting in the VCAT matter and are not compromised with Mirvac.

KIA confirmed Bensons' advice in writing in an email from Bruno Gatsby to Richard Curtis and George Semenov dated 9 May 2016.

156 Mr Gatsby, however, gave no evidence about this alleged conversation with Mr Semenov. KIA submits that its version of events is supported by an email written by Mr Gatsby to Mr Semenov on 9 May 2016, that read:

I confirm your advice that Norton Rose are acting in the VCAT matter and [are] not compromised with Mirvac.

For efficacy (and cost savings) please arrange for us to meet Norton's with you ... They should be able to file this week....[132]

157 Bensons submits that the Court should reject KIA's allegations that Bensons had engaged Norton Rose Fulbright to act in the VCAT proceedings. The evidence establishes that Bensons had retained Rigby Cooke for advice on potential VCAT proceedings and that Mr Curtis and Mr Semenov were both present at the conference with Ms Anderson of Rigby Cooke on 9 May 2016.

158 In support of its contention that it had not elected to go to VCAT, Bensons submits that as at 9 May 2016 it did not have:

(a) a document precisely identifying each of the council's issues with the planning application;

(b) an explanation from an independent expert (whether planning, engineering or otherwise) as to what KIA's answer to each council issue was and what evidence was required;

(c) a document precisely identifying any issue from adjoining owners; or

(d) KIA's advice from senior or junior counsel on evidence and the prospects of success.

159 On 10 May 2016, the day after conferring with Ms Anderson of Rigby Cooke, Mr Curtis emailed Mr Gatsby advising that Bensons did not intend to appeal to VCAT but that KIA was free to do so at its own expense. The email said:

At our meeting on 5 May 2016 you advised that KIA wished to commence VCAT proceedings to obtain a planning permit for the site, due to the failure of the Council to make a determination. You also requested that Bensons fund the VCAT proceedings, presumably in accordance with clause 2.3(d)[sic] of the Development Management Agreement.

Our current position is as follows:

1. Commencing VCAT or other Court proceedings under clause 2.3(d)[sic] of the Development Management Agreement is at the discretion of Bensons. This does not stop KIA from initiating proceedings at its own cost.
2. We have real concerns about whether VCAT proceedings based on the current Planning Permit Application No. 673/2015 would be successful. Bensons does therefore not consent to fund any VCAT or other proceedings at this stage.
3. A key threshold issue is the impact of the Mirvac Covenant. ....
4. We briefed yesterday new planning solicitors. This firm is not Norton Rose as it could not act if there is any dispute with Mirvac. We are also meeting with another firm of planners on Thursday. Our desired outcome is to get clear advice as to if and how VCAT proceedings could be successfully run. The issues are reasonably complex and therefore Bensons is unlikely to have a clear position or strategy for a least 2 weeks. We may then need to obtain Senior Counsel advice.

160 Mr Curtis was asked about paragraph 4 of the email. He said that the issues were:

(a) whether under the Planning and Environment Act 1987 (Vic) ('P&E Act') you could not get a permit if it would infringe the restrictive covenant as opposed to 'may'. Mr Curtis said that the threshold issue was whether you could validly lodge for a permit;

(b) who the relevant authority was, either the council, or one of the State Government entities;

(c) whether it was a planning permit application or a consent application which was required. Mr Curtis referred to an email chain which concluded with an email to Ms Anderson of 12 May 2016.[134]

161 Mr Curtis said that Bensons was still awaiting information from KIA relating to adjoining owners and authority issues.[135]

162 Mr Curtis said that at this stage KIA was not asking Bensons to initiate the proceedings itself.[136] Mr Curtis said that his email of 10 May 2016 was designed to make clear that Bensons had not actually consented to go to VCAT.[137]

163 The email of 10 May 2016 from Bensons to KIA conveys that Bensons had not elected to go to VCAT but that KIA was free to do so at its own costs. That email was in response to an email from Mr Gatsby to Mr Curtis that discussed a potential sale of a penthouse unit and said that the interested party was aware that 'we will be asking VCAT to intervene and make a decision/issue a planning permit.' The email does not suggest or imply that Bensons had 'elected' to go to VCAT. On the contrary, the email is consistent with Mr Curtis' evidence of what transpired at the meeting of 5 May 2016 and with Bensons' case, that at that stage, Bensons was still considering what it should do in respect of the failure by KIA to obtain the planning permit from the council and whether or not an appeal should be made to VCAT.

164 The same day, Mr Gatsby emailed Mr Curtis advising him that KIA was in a position to brief counsel directly and that its files were ready for discovery. Mr Gatsby said to Mr Curtis: 'We had hoped you would work with us and just fund SILK.'[138] There is no suggestion by Mr Gatsby in that email that Bensons had elected to appeal to VCAT.

165 Mr Gatsby's email of 10 May 2016 also took issue with the suggestion in Mr Curtis' email that Mirvac's consent was required before a planning permit could be issued. Mr Gatsby said that KIA had counsel's advice that Mirvac's consent was not a bar to obtaining the planning permit, as the permit could issue with a condition that Mirvac's consent under the covenant be obtained.[139]

166 Mr Curtis said that prior to the issue of these proceedings, no one from KIA asserted that Bensons was in breach of the DMA by refusing to fund the VCAT application.[140]

167 In my opinion, after taking into account the conduct of both parties from the meeting of 5 May 2016 up to and including 10 May 2016, I am not satisfied that at the meeting of 5 May 2016 Bensons elected to go to VCAT. Further, and having regard to all the relevant events, from 15 April 2016 to 10 May 2016, I am not satisfied that KIA has established that Bensons elected to go to VCAT as alleged.

168 On 12 May 2016, Mr Curtis and Mr Semenov met with a Mr Govenlock about a more intensive development of the Beach Street site and about planning issues with the site particularly based on his experience with the adjoining site in dealing with the covenants and council.[141]

169 At this time, KIA was directly dealing with the barrister Jane Sharp on the merits of the planning application. On 17 May 2016, Mr Gatsby sent to Ms Sharp a draft VCAT application and asked her to check it. Later that day, Ms Sharp returned a draft application, but stated that she considered that a planner and possibly a traffic engineer would still need to review it.[142]

170 As mentioned above, on 18 May 2016, KIA lodged its own application with VCAT to appeal against the council's failure to issue a planning permit. Also on that day, Bensons' solicitors wrote to KIA a letter which KIA alleges constituted a breach of clause 2.3(e) of the DMA and a breach of Bensons' duty to co-operate and the duty of good faith. At the time that Bensons' solicitors wrote the letter, Bensons was not aware that KIA had lodged the application.

171 The letter was sent by Mr Will Grinter, solicitor from K&L Gates who acted for Bensons, to MBA, solicitors for KIA, and stated the following:

We are instructed that, in a meeting which occurred on 5 May 2016, Mr Bruno Gatsby of KIA informed Mr Rick Curtis of Bensons that KIA wishes to commence a proceeding in the Victorian Civil and Administrative Tribunal (the Tribunal) seeking review of a failure by City of Port Phillip (Council) to grant a Planning Permit. Mr Gatsby sought Bensons' approval to this course of action and also requested that Bensons pay the costs of such a proceeding.

In response to Mr Gatsby's requests, we are instructed to confirm as follows:

1. Bensons does not agree to or approve any proceeding being commenced in the Tribunal in relation to the Property.
2. Bensons does not agree to pay the costs of any proceeding.
3. For the reasons outlined below, any proceeding commenced by KIA in relation to the Property (without the express prior written consent of Bensons which, as noted above, is refused) would constitute a breach by KIA of its obligations under the Agreement. To avoid doubt, any such breach will result in the immediate issue of a written notice under clause 4.2(a) of the Agreement.
4. All of Bensons' rights are reserved.[143]

172 Mr Curtis said that he did not see the letter before it was sent. Mr Curtis left for China on 18 May 2016 and returned on 31 May 2016. He said that it could have been emailed to him in China, but he would have read it sometime later. Mr Curtis said that the letter was authorised by Mr Jreissati,[144] who had taken over instructing K&L Gates in his absence. As discussed below, Mr Jreissati was responsible for the letter being sent and he approved a draft of the letter. The evidence failed to disclose whether or not Mr Jreissati had the opportunity of discussing the draft with Mr Curtis.

173 Mr Grinter said that he received instructions from Samantha Jreissati, general counsel for Bensons and Mr Jreissati's daughter, to send the letter of 18 May 2016. Mr Jreissati admitted, however, that he gave the instructions for the letter and reviewed a draft of the letter before giving instructions for it to be sent.

174 Mr Grinter was asked by Mr Scerri whether paragraph 3 referred to above, represented his opinion at the time.[145] He agreed that it did. He was asked a similar question about other paragraphs in the letter. These questions implied that Mr Scerri was seeking to meet the allegation that the letter was sent in breach of the DMA and the duties of co-operation and good faith.

Accordingly, it is the express obligation of KIA under the Agreement to procure the Planning Permit in accordance with and pursuant to the Planning Application, being the existing application to the Council as defined. KIA cannot satisfy its obligation to procure the Planning Permit by means other than pursuant to the existing Planning Application to the Council, including by way of application to the Tribunal, and would be in breach of its obligations should it seek to do so.

176 Mr Grinter was taken to paragraph 5 of the letter that provided:

In addition to the above, the request to commence proceedings in the Tribunal is wholly inconsistent with the representations and assurances provided by KIA prior to and in connection with Bensons' entry into the Agreement. In particular, we are instructed that it was at all times represented by KIA to Bensons that:

(a) Council supported the Planning Application and Mirvac would provide the necessary consent under the Covenant;

(b) the Planning Permit would issue by 31 May 2016; and

(c) KIA has the knowledge, skills and site specific experience to procure the issue of the Planning Permit in accordance with and pursuant to the Planning Application.

Bensons relied upon these representations in relation to its entry into the Agreement. On the basis of the requests by KIA, it appears that these representations may be false.

177 Mr Grinter said that this paragraph contained instructions he received.[146]

178 Under cross-examination, Mr Grinter agreed that the position taken by Bensons in the letter was that if KIA wanted to go to VCAT it required Bensons' consent to do so.[147] He said that was his opinion. He said the only clause dealing with an appeal to VCAT was clause 2.3(e) and by implication any appeal to VCAT had to be at Bensons' election. Mr Grinter considered that any assertion that KIA could go to VCAT at its own cost without Bensons' permission would be incorrect under the DMA.[148]

179 Mr Jreissati said that he met with Mr Curtis before he went to China. He said that the meeting was confronting as Mr Curtis told him that not only was the permit not to issue imminently, but that there had been discussion about VCAT, and that Bensons had been asked to contribute to the VCAT fight. Mr Jreissati said that he was surprised, dumbfounded and 'gobsmacked'.[149] Mr Jreissati said that at that point he took over the project from Mr Curtis. Mr Jreissati said that he was involved in instructing Mr Grinter of K&L Gates. Mr Jreissati agreed that his daughter was involved at that time, but to what extent he did not know.

180 Mr Jreissati approved the letter of 18 May 2016 before it was sent.[150] Mr Jreissati said that he would have seen a draft of the letter and he would have approved the draft before it was sent out. He could not recall whether he spoke to Mr Grinter but he may have. He said that he was across the issues. He had read the DMA both before and after its execution and had then reviewed the letter. Mr Jreissati said that he authorised the DMA.

181 Mr Jreissati said that he understood the purpose of clause 2.3(e) was to enable Bensons to appeal the conditions to the permit after it had been issued by the council. He said that KIA was handling the permit and Bensons did not know what topics were on the council's mind.

182 Mr Jreissati said that when he approved the letter of 18 May 2016, he had not seen Mr Curtis' email of 10 May 2016. He was also unaware that KIA had lodged a VCAT application on 18 May 2016 and did not find out that fact for some weeks.[151] He said that he also was not aware that KIA subsequently withdrew the application to VCAT on 19 May 2016.

183 Mr Jreissati said that Mr Semenov had told him that KIA believed that Bensons could not stop KIA going to VCAT.

184 The 18 May 2016 letter also included a request for further information from KIA, pursuant to clause 2.2(a) of the DMA. The requested information included particulars of feedback received from the council in relation to the planning permit application, particulars of all communications with Mirvac, and a detailed statement outlining KIA's proposed strategy for any proceeding at VCAT (including legal or other advice as to the merits of such a proceeding).

185 Mr Gatsby asserted that the information sought in the letter of 18 May 2016 had already been provided to Bensons.[152] Mr Gatsby forwarded the letter to KIA's lawyers. Mr Gatsby said that KIA was very concerned about the letter, as it contained the threat of litigation, and importantly it could delay KIA obtaining the planning permit, and KIA did not want to be delayed.[153] Mr Gatsby said that because of the threat in the letter, KIA pulled the application from VCAT and tried to avoid the application from being given an application number as that may have led to termination of the DMA by Bensons.

186 As mentioned, KIA alleges that Bensons breached the DMA by failing to meet with KIA to discuss the planning application and an application to VCAT after Bensons sent KIA the letter of 18 May 2016 (and in effect to resolve the issues raised by that letter). As discussed below, after sending the letter, Bensons deliberately avoided meeting with KIA to discuss these matters.

187 Under cross-examination, Mr Jreissati confirmed that Bensons generally purchased development properties without a permit.[154] Mr Jreissati agreed that in April 2016, Bensons acquired a development site at 10-16 Cecil Place, Prahran, without a planning permit, that was subject to many objections, and that in February 2017, Bensons applied to VCAT on the basis of the council failing to make a decision.[155]

188 Mr Jreissati said that they look at sites with permits and sites without permits. In the case of 103 Beach Street, they looked at it with a promised, easy to obtain permit, and agreed to pay a sum of money for that permit.[156]

189 Mr Jreissati was taken to the correspondence of 10 and 18 May 2016. He confirmed that in each case Bensons was seeking information, but in the 10 May 2016 email Bensons said that KIA could go to VCAT, and in the 18 May 2016 letter Bensons said that KIA could not go to VCAT. Mr Jreissati was asked what changed. In a lengthy and rambling answer Mr Jreissati insisted that Bensons did not say that KIA could not go to VCAT, but did not answer the question. He was asked again and said that nothing changed.[157] An objection from Mr Scerri to the question was disallowed. Mr Jreissati again failed to answer the question, but in doing so said that there was no contemplation of ever going to VCAT for a permit when Bensons bought the site.[158] Mr Jreissati said that KIA going to VCAT involved a change in the 'deal' but then backtracked and said that Bensons would be happy to accommodate discussions about VCAT, if Bensons understood what KIA was doing.

190 As mentioned above, I found Mr Jreissati to be an unreliable witness whose actions spoke louder than his words. I am satisfied that in May 2016, Mr Jreissati decided that Bensons no longer wished to proceed with the development under the DMA. Mr Jreissati professed to the contrary, but I did not believe him. I find that the letter of 18 May 2016 was sent by Mr Jreissati to enable Bensons to avoid purchasing the planning permit. The construction of the DMA put in the letter of 18 May 2016 was entirely inconsistent with the prior negotiations between the parties. Mr Jreissati was clearly aware from day one that it would probably be necessary to go to VCAT to get the planning permit. The DMA made express reference to Bensons going to VCAT to get the permit. By implication, that would have required KIA's co-operation.

191 The suggestion that clause 2.3(e) only was meant to apply to conditions attached to the permit by the council does not make any sense. If the council issued a permit with conditions, then Bensons' obligations under the DMA were at an end. Bensons was free to do as it wished. There was no need to have any agreement with KIA. KIA would have been paid and disappeared from the scene. Or, if Bensons contended the permit did not comply with the DMA, but nevertheless wanted to retain it, then Bensons was free to appeal against the conditions without KIA's consent.

192 Mr Curtis said that he understood clause 2.3(e) only applied to circumstances after the planning permit was issued and Bensons elected to seek a variation of the conditions attached to the permit. I reject this construction. Further, I am not satisfied that Mr Curtis ever held this understanding. As discussed above, the construction does not make sense. I am troubled by the fact that both Mr Jreissati and Mr Curtis put forward this construction of clause 2.3(e). As mentioned earlier, I find that, on balance, they contrived to give this bogus explanation of clause 2.3(e), particularly after witnessing Mr Jreissati's demeanour in the witness box and his false denial about his comment of throwing money at lawyers to go to VCAT.

193 KIA submits that, as a matter of construction, clause 2.3(e) applies to all applications to VCAT. KIA submits that this is because the clause does not by its ordinary words limit the type of application to which it applies, and the narrow meaning advanced by Bensons gives the clause no meaning, since once the parties' obligations pursuant to the DMA had been satisfied, Bensons could always go to VCAT to vary a condition.

194 Further, KIA submits that the wider meaning advanced by KIA is consistent with the other terms of the DMA, such as schedule 1, item 3(g), which provides that after the planning permit is obtained, Bensons may seek the assistance of KIA to amend that permit.

195 Mr Gatsby understood the letter of 18 May 2016 as an action by Bensons to prevent KIA obtaining the planning permit.[159] KIA immediately withdrew its VCAT application. After receiving the letter, KIA attempted to meet with Mr Jreissati to discuss the planning application and application to VCAT, including sending various emails and making a number of telephone calls.[160] In one email to Mr Semenov, Mr Gatsby asserted that the DMA did not state KIA needed Bensons' approval to lodge with VCAT and that part of the consideration given in reducing Bensons' original offer by $1 million was the likely VCAT intervention, and the keenness of Bensons to employ VCAT.[161] Despite KIA's efforts to organise a meeting with Bensons, Bensons failed and refused to meet with KIA to discuss the matter.[162] Mr Gale said that meetings were scheduled between KIA and Bensons but were then cancelled by Bensons.[163]

196 I am satisfied that Mr Jreissati was well aware of these desperate attempts by KIA to meet with Bensons, but Mr Jreissati refused to do so. He acknowledged that Mr Gale had left a message at his office to organise a meeting, but he refused to arrange one. Mr Jreissati said that he could not have added a lot of value to the meeting because Mr Curtis was overseas and that he was not close to the detail. He said that he would have been 'mumbling' at the meeting.[164]

197 I did not believe this evidence of Mr Jreissati. I am satisfied that Mr Jreissati had decided to frustrate KIA's efforts to obtain the planning permit in accordance with the DMA and wanted to avoid a meeting so he would not be called on to justify his actions. Mr Jreissati had approved the draft of the letter of 18 May 2016. I find that he intended the letter to stop KIA going to VCAT and that he knew that if KIA did not go to VCAT it was likely that KIA would not be able to procure the planning permit in accordance with the DMA. I am satisfied that Mr Jreissati wanted to stop KIA obtaining the planning permit.

198 I am satisfied that Mr Jreissati was successful in having KIA withdraw its application to VCAT, although I accept that at that stage, he may have been under the view that KIA was merely intending to go to VCAT in the near future. The result was the same. His letter had the desired effect of impeding KIA in going to VCAT. KIA did not re-lodge an application to VCAT until July 2016.

199 On 8 June 2016, K&L Gates, on behalf of Bensons, served a notice of default on KIA alleging that KIA had failed to provide information to Bensons that it was required to under the DMA, and that if the default was not rectified, Bensons may by further notice end the DMA in accordance with clause 4.2 of the DMA.[165] Mr Gatsby said that this notice further held KIA up as KIA had to get legal advice.[166]

200 On 16 June 2016, MBA, the solicitors for KIA, responded to K&L Gates' letter of 18 May 2016, taking issue with many of the contentions contained therein.[167] MBA said that Bensons, by its actions, was hindering KIA procuring the planning permit. Importantly, MBA asserted to Bensons that there was 'an implied obligation on each party to act in good faith, to co-operate with each other and to act reasonably, for the proper purpose and legitimate interest of the parties and to inter alia provide Bensons (being the purchaser of the land) with a planning permit to complete the project'. MBA contended that Bensons was in breach of the obligation to act in good faith by reason of the matters expressed in the letter of 18 May 2016.

201 Mr Jreissati received and read the letter of MBA of 16 June 2016.[168] Mr Jreissati said at that point he was beside himself and he decided that he should get advice from another law firm, so he went to fresh solicitors, ABL, with the letters of 18 May and 16 June 2016.[169] I can only infer that Mr Jreissati was beside himself as he now realised that he may have caused Bensons to breach the DMA and exposed Bensons to a damages claim.

202 At this point in his evidence, it appeared to me that Mr Jreissati sought to demonstrate that Bensons was not acting in breach of the implied duties of good faith, of co-operation and to act reasonably. In the witness box, Mr Jreissati said that the letter of 18 May 2016 was not telling KIA that it could never go to VCAT.[170] Mr Jreissati said that the letter, towards the end, kept the VCAT matter open.[171] The letter did seek information about the merits of the application that implied that Bensons may possibly consent to KIA going to VCAT in the future.

203 In his evidence, Mr Jreissati explained what he said was the purpose of the letter. He said Bensons was saying that KIA had other obligations under the DMA which Bensons placed as much value on, as achieving the permit, such as consulting with Bensons and keeping Bensons informed.

204 Mr Jreissati said that if KIA breached those obligations and went off to VCAT, then KIA was in breach of the DMA.[172] Mr Jreissati said that the letter said that if KIA went to VCAT in circumstances where KIA was not keeping Bensons informed, KIA could be jeopardising Bensons' reputation and the project's reputation, then KIA would be in breach of the DMA.[173]

205 Following the letter of 18 May 2016 and the withdrawal of its first application, KIA obtained further legal advice about its entitlement to go to VCAT, the likely success of its VCAT application, and made further attempts to obtain a planning permit from the council and attended an OVGA hearing.[174]

206 On 5 July 2016, KIA lodged a second application with VCAT in respect of the planning permit. Mr Jreissati said that he did not find out that KIA had lodged with VCAT again on 5 July 2016 until sometime later.

207 On 14 July 2016, ABL withdrew the notice of default that had been given to KIA on 8 June and stated that Bensons affirmed the DMA.[175]

208 On 8 August 2016, Mr Semenov emailed Mr Gatsby saying that Bensons was very keen to get an update from KIA and information where KIA was at in pursuing the planning permit.[176] On 9 August 2016, Mr Gatsby met with Mr Semenov to discuss the progress of the VCAT application. A minute was taken of the meeting which included a note that Mr Gobbo QC advised the application would be successful.[177]

209 On 18 August 2016, ABL, on the instructions of Mr Jreissati, wrote to MBA[178] asking for copies of the VCAT application of 4 July 2016 and contending that the failure of KIA to keep Bensons informed as to the progress of the performance of the DMA services, despite Bensons' reasonable requests, constituted a breach of clause 2.2(b) of the DMA.[179]

210 On 23 August 2016, ABL, on the instructions of Mr Jreissati, again wrote to MBA seeking, pursuant to KIA's obligations under clause 2.2(b) of the DMA, information about the VCAT application, including KIA's intended strategy for the hearing of its VCAT application; what legal advice had KIA received regarding its VCAT application or the planning application; who were the objectors to the planning application and what were the grounds of objection; and enquiring whether KIA required any assistance from Bensons for the purpose of facilitating the grant of the planning permit.[180] Mr Jreissati was asked by his counsel whether this had been a genuine inquiry to get information, or whether he had just tried to fob KIA off.[181]

211 Mr Gatsby was directed to paragraph 5 of the letter, where Bensons asked whether KIA required any assistance from Bensons for the purpose of facilitating the planning permit (in circumstances where Bensons knew that KIA was then in the process of applying to VCAT). Mr Gatsby said that Bensons had not previously offered any assistance in that respect.[182] In my opinion, this was an extraordinary request by Bensons, in view of the fact that previously Bensons had asserted to KIA that KIA was not entitled to go to VCAT under the DMA and that obtaining a planning permit from VCAT would, in any event, not comply with the DMA that required the permit to be granted only by the council.

212 On 26 August 2016, KIA lodged a third application with the VCAT, being VCAT application number P1753/2016, in respect of its planning permit application. It was a formality only. In November 2015, KIA had paid a fee for this addendum on council consent for 'residential use'. However, as the council had not formally confirmed their verbal approval, it was decided to add this to the original application.

213 Mr Jreissati claimed that he had not lost interest in the project. He said that if KIA had obtained the permit by the end of December, Bensons would have 'absolutely' completed the deal, which I take to include settling the contracts with the Mandile parties. I do not believe this evidence. Mr Jreissati's conduct satisfies me that by 18 May 2016, Mr Jreissati had decided that Bensons no longer wished to proceed with the development and that he had decided to frustrate KIA's attempts to obtain a planning permit. I am satisfied that when Mr Jreissati became aware that his attempts to frustrate the DMA may have constituted a breach of the DMA by Bensons, he sought to have the DMA terminated by other means and even pretended he was interested in helping KIA at VCAT, when in fact he did not wish to perform the DMA.

214 Mr Jreissati said that his view was that KIA had failed to obtain the issue of the planning permit before the Sunset Date. Mr Jreissati said that he was not prepared to waive the non-performance of this condition because he was dealing with people that they (Bensons) could no longer understand.[183] Mr Jreissati said that KIA promised Bensons a permit and within a month that permit was evaporating and KIA was starting to make allegations against Bensons - that Bensons had promised things and said things and agreed to things that Bensons never had agreed to. He said KIA failed to apologise for its behaviour.

215 On 22 December 2016, VCAT delivered judgment in relation to the second and third VCAT applications and granted and ordered the issue of a planning permit for a three-level (plus basement) development of the land (as defined in the DMA) pursuant to the Planning Application (as defined in the DMA) (the VCAT Decision).[184] The planning permit and conditions thereon were not substantially different to the original application lodged with the council. Mirvac provided its verbal consent on the same day, and KIA issued tax invoices for the payment of the Third and Fourth Instalments (as defined in the DMA). As already mentioned, Bensons claimed the DMA was at an end and that KIA was not entitled to payment of the further instalments.

216 Bensons then gave notices, pursuant to the DMA and the sale contracts with the Mandile parties, to terminate each of those agreements.

217 As will be explored further below, KIA claims that it then sought to mitigate its loss between January 2017 and June 2017 by working with the Mandile parties to re-sell the land. During this period it worked on planning permit requirements and other requirements for the project; reviewed and updated documentation for the sale or development of the project; prepared marketing and promotional materials; identified and approached potential real estate agents; identified and approached potential purchasers; and prepared documentation and negotiated tenancies. On or about 2 June 2017, KIA and the Mandile parties received an offer for the purchase of the land with the permit from Miaomiao Zhang of V-Leader for $11.2 million , of which KIA ultimately received $2.232 million.

Did Bensons elect to go to VCAT under clause 2.3(e) of the DMA?

If Bensons elects (without being obliged so to do) to appeal any decision of the Responsible Authority in connection with the Planning Application or the issue of the Planning Permit all costs in doing so are to be borne by Bensons.

219 I find that a failure to approve the issuing of a permit would constitute a decision of the council for the purposes of clause 2.3(e). It is accepted by VCAT that the failure by a council to issue a planning permit may be appealed to VCAT.

220 KIA submits that Bensons elected to go to VCAT by agreeing to do so:

(a) at the 15 April 2016 meeting;

(b) at the 26 April 2016 meeting; and

(c) at the 5 May 2016 meeting.

221 On this issue, KIA bears the onus of proof. The evidence, discussed in detail above, establishes that, at these relevant times, Bensons was open to appealing to VCAT but did not have sufficient information about what it saw to be the problems with the application to commit to doing so. The evidence establishes that Bensons consulted solicitors about going to VCAT and what problems it may have to address. This evidence does not establish that Bensons had elected to go to VCAT. I also find that the alleged statements made by Mr Semenov and Mr Curtis at the various meetings do not constitute an election by Bensons.

222 I find that at the meeting of 15 April 2016, Bensons did not elect to appeal any decision of the council. In particular, I find that Mr Semenov did not make any decisions on behalf of Bensons, but rather urged KIA to make one last effort to convince the council to approve the permit, and in the event that failed, Mr Semenov said that consideration should be given to whether an appeal to VCAT should be instituted.

223 As to the meeting of 26 April 2016, I find that Mr Semenov did not elect to appeal to VCAT but, similarly to the meeting of 15 April 2016, urged further steps be taken to procure the council's approval of the permit.

224 As to the meeting of 5 May 2016, I have discussed that in detail above. For the reasons given above, I find that Mr Curtis did not elect on behalf of Bensons to go to VCAT at the meeting of 5 May 2016.

225 Accordingly, I find that Bensons did not elect within the meaning of clause 2.3(e) to go to VCAT as alleged by KIA.

Did KIA procure the issue of the planning permit before the Sunset Date?

226 Bensons counterclaims that KIA did not comply with its obligation under the DMA to procure the issue of the planning permit before the Sunset Date and is therefore liable to repay the instalments already paid (this repayment being guaranteed by each of the directors).

(a) In consideration of the performance of the Development Management Services and subject to the settlement of the Sale Contracts and satisfaction of the Development Management Conditions, Bensons must pay the Development Management Fee to the Development Manager in accordance with clause 2.3(b).

(b) The parties acknowledge and agree that, subject to clauses 2.3(c) and 2.3(d), the Development Management Fee is to be paid in the following instalments and in the following manner:

(i) the first instalment of $40,000 (plus GST) is acknowledged by the parties as having already been paid and held in the Development Manager's lawyer's trust account (First Instalment). The parties agree that First Instalment may be released from trust on the signing of this Agreement by both parties.

(ii) the second instalment of $360,000 (plus GST) is to be paid on the signing of the Agreement by both parties (Second Instalment).

(iii) if settlement under the Sale Contracts occur prior to the issue of a Planning Permit, a third instalment of $1,400,000 (plus GST) is to be paid concurrently upon settlement occurring (Third Instalment). To avoid doubt, Bensons is under no obligation to effect settlement under the Sale Contracts prior to the issue of the Planning Permit; and

(iv) the balance of the Development Management Fee of $200,000 (plus GST) is to be paid within 14 Business Days after satisfaction of the Development Management Conditions, provided that the Development Management Conditions are satisfied on or before the Sunset Date (Fourth Instalment).

(a) The Development Management Conditions are the following conditions which must be satisfied (in each case to the reasonable satisfaction of Bensons, subject to clause 2.4(b)) on or prior to the Sunset Date:

(i) the issue of a Planning Permit;

(ii) the issue of written consent of Mirvac as contemplated by paragraph (b) of Item 3,

(together, the Development Management Conditions).

(b) For the purpose of clause 2.4(a)(i), a Planning Permit will be taken to be reasonably satisfactory to Bensons where the plans approved under the Planning Permit and the conditions on which the Planning Permit is issued are not materially different from the plans submitted in connection with the Planning Application (as the date of this Agreement) and all other information provided by Bensons by the Development Manager before the date of this Agreement. ....

Planning Permit means a planning permit for a proposed 3 level (plus basement) redevelopment of the Land issue pursuant to the Planning Application.

230 Schedule 1 item 3 sets out the 'Development Management Services'. Item 3(a) specifies as a 'Development Management Service':

Procure the issue of a Planning Permit in accordance with and pursuant to the Planning Application.

231 Clause 2.2(a) provides that (KIA) must perform the Development Management Services at its own cost (which includes Item 3(a)).

Termination on conclusion of Development Management Services

This Agreement and the appointment of the Development Manager ends on the earlier of:

(a) Sunset Date; and

(b) completion of all Development Management Conditions including satisfaction of all Development Management Conditions.

233 In construing these clauses an objective approach must be adopted. As held by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd:[185]

[46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.

[51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result". Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".[186]

234 Once VCAT has granted the permit, the responsible authority (in this case, the council) must issue that permit.[187] It has no discretion to do otherwise. Both matters are relevant to the construction of clause 2.4(a).

1. Pursuant to section 127 and clause 64 of Schedule 1 of the Victorian Civil & Administrative Tribunal Act 1998, the permit application is amended by substituting for the permit application plans, the following plans filed with the Tribunal:

* Prepared by: Key Infrastructure Australia

* Drawing numbers: TPV-01 to TPV 25 (excluding TPV 04), TPV 33

* Dated 30 September 2016

1. The decision of the Responsible Authority is set aside.
2. The use and development of the land at 103 Beach Street & Part Lot O, Plan of Subdivision 406491Q, Port Melbourne pursuant to clauses 2.0 and d.0 of Schedule 1 to the Comprehensive Development Zone are approved, generally in accordance with the plans to be endorsed under the planning permit granted in proceeding P1335/2016.
3. In permit application P673/2015 a permit is granted and directed to be issued for the land at 103 Beach Street & Part Lot O, Plan of Subdivision 406491Q, Port Melbourne in accordance with the endorsed plans and on the conditions set out in Appendix A. The permit allows:

* Construction of a building and carrying out of works in the Comprehensive Development Zone

* Buildings and works for accommodation - pursuant to the Environment Significance Overlay

* Reduction of parking pursuant to Clause 52.06

* Waiver of (on site) loading bay requirement pursuant to Clause 52.07.

236 Under s 85 of the P&E Act, on review of a council's failure to grant a planning permit, VCAT has the power to 'grant the permit and direct the responsible authority to issue it.'

237 In permit application P673/2015, the Tribunal distinguished between the permit being 'granted' and the permit being 'issued'. The decision clearly stated that the permit 'is granted' and VCAT directed that the permit 'be issued'. Thus while the permit was granted on 22 December 2016, the permit was directed to be issued at some later date by the council.

A permit operates -

(a) from the date specified in the permit; or

(b) if no date is specified, from -

(i) the date of the decision of the Tribunal, if the permit was issued at the direction of the Tribunal; or

(ii) the day on which it is issued, in any other case.

239 In this case, the permit did not specify a date from which it was to operate. Accordingly, the permit operated from 22 December 2016, the date of the decision of the Tribunal (as the permit was issued at the direction of the Tribunal). The day on which the permit was issued, however, was 7 February 2017.

240 KIA submits that it satisfied item 3(a) of the DMA, as it procured the issue of the planning permit by succeeding in its application before VCAT on 22 December 2016.

241 Bensons submits that, on the proper construction of the DMA, the issue of the permit had not occurred by 31 December 2016 and consequently, under clause 4.1, the DMA ended on 31 December 2016.

242 Bensons relies on the objective fact that the planning permit had not been issued by the Sunset Date. KIA relies on the fact that by the Sunset Date, KIA had procured the grant of the permit that operated from 22 December 2016. KIA says, upon the handing down of the Tribunal's decision, it had done all that was necessary to have the permit issued by 22 December 2016; the council was obliged to issue the planning permit upon the planning permit being granted by the Tribunal.

243 As discussed above, both the P&E Act and VCAT draw a clear distinction between the granting of the planning permit and the issue of a planning permit. Both parties to the DMA were experienced with town planning matters. There is no reason to suppose the parties intended that a reference to 'issuing the planning permit' in the DMA was intended to refer to the 'granting of the planning permit'.

244 The DMA is replete with references to the issue of the planning permit. There is no reference to the granting of the planning permit.

245 I can see no reason for giving the reference to the issue of the planning permit in the DMA any other meaning than its meaning under the P&E Act.

246 To avoid the conclusion that KIA did not satisfy the Development Management Conditions, it would be necessary to construe the issuing of the planning permit as a reference to the granting of the planning permit. In my view, there is no basis for adopting such a distortion of the language used in the DMA.

247 KIA submits that an analogy may be drawn with the equitable cases where it has been held that formalities will not be allowed to stop an imperfect gift. KIA refers to the discussion in Re Chambeyron Pty Ltd.[188] By the same reasoning, KIA says that the failure of the council to promptly issue the planning permit should not detract from the fact that KIA had fulfilled all steps necessary to obtain the planning permit by the Sunset Date.

248 In my view, this is not a case of perfecting an imperfect gift. The matter is simply one of construction of an agreement made between two parties experienced with town planning matters. As indicated, they chose the critical date to be the issuing of the permit, not the date of the granting of the permit, or even the date the permit commenced. I see no reason for diverging from giving the term 'issue of the planning permit' any other meaning than that under the P&E Act.

249 Accordingly, KIA did not comply with the requirement of the DMA to procure the issue of the planning permit in the time set by the DMA.

Did Bensons prevent KIA from procuring the issue of the planning permit?

250 In answer to Bensons' counterclaim for the repayment of instalments already paid, and in support of its claim for payment of the remaining instalments, KIA pleads that, if the planning permit did not issue before the Sunset Date (which I have now found to be the case), by its conduct, Bensons prevented KIA from obtaining, or otherwise delayed, the issue of the planning permit.[189]

251 For the reasons which follow, I have concluded that Bensons deprived KIA of a substantial chance of obtaining the issue of the planning permit by the Sunset Date. As discussed below, the deprivation of a 'substantial chance' of performing a contract has a particular significance in this context.

252 In Hera Project Pty Ltd v Bisognin [No 3] ('Hera Project'),[190] Riordan J discussed the prevention principle:

[105] The principle, which is of long standing, is that a person cannot take advantage of the existence of a state of things that he has produced himself. Accordingly, a party to a contract who, by his own act, brings about an event to terminate a contract, 'cannot be permitted ... to insist upon the stipulation...because to permit the blameable party to do [so] ... would be to permit him to take advantage of his own wrong'.

[106] The consequence of the act of prevention is that the relevant term 'transform[s] from one requiring performance at a specified time to one requiring performance within a reasonable time'.

[107] With respect to the application of the principle on a right to rescind a contract of sale of land, the Court of Appeal in Joseph Street Pty Ltd v Tan stated the position as follows:

It is well established that a party wishing to rescind cannot take advantage of its own ineffective or inefficient measures to comply with its contractual obligations, and that where a vendor's default has deprived the purchaser of a 'substantial chance' that the condition would have been fulfilled, the vendor cannot exercise the right of rescission.

[108] Although there is authority for the proposition that the principle arises from a term implied into the contract by law, the better view is that the principle is a 'positive rule of law' based on fairness and reasonableness. The acts or omissions of prevention may be in breach of the contract, including the implied duty to co-operate.[191]

253 In Cahill v Kiversun Pty Ltd ('Cahill'),[192] Kennedy J also considered the principle of prevention:

[239] The rationale for the 'prevention principle' is that a person cannot take advantage of the existence of a state of things which he has produced himself. The prevention principle is described in an early decision of the High Court in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (Peter Turnbull),[193] which has subsequently been cited by the High Court in the joint judgment in Park v Brothers.[194]

[240] In Peter Turnbull, Dixon CJ said:

... it was always the law that, if a contracting party prevented the fulfilment by the opposite party to the contract of a condition precedent therein expressed or implied, it was equal to performance thereof ... But a plaintiff may be dispensed from performing a condition by the defendant expressly or impliedly intimating that it is useless for him to perform it and requesting him not to do so. If the plaintiff acts upon the intimation it is just as effectual as actual prevention.[195]

[241] In GR Securities,[196] McHugh JA summarised the principle as applying where one party to a contract makes it 'impossible for a condition of the contract to be fulfilled'.[197]

254 Bensons submits that KIA has the burden of proving that any alleged act of prevention by Bensons directly caused KIA's failure to achieve the issue of the permit by the Sunset Date. In support of this contention, Bensons refers to authorities to the effect that a party in breach of a non-essential term can only be prevented from rescinding for a fundamental breach by the other party if there is a causal relationship between the breaches of the non-essential terms by the party attempting to rescind and the fundamental breach relied upon. [198]

255 Bensons says KIA failed to tender expert evidence demonstrating how long it would have taken VCAT to deal with KIA's first application, or what the usual duration of a VCAT proceeding was through its various procedural steps. Further, KIA led no evidence as to the dates of council meetings in 2016, such meetings being necessary for the issue of the permit.

256 KIA, in turn, submits that, in the absence of evidence regarding when VCAT might have heard the application, it is entitled to rely on the presumption against the wrongdoer, referring to the decision in Tesrol Joinery Pty Ltd v CEFLA Scri.[199]

257 The relevance of that decision, however, seems to be to the issue of quantifying damages in a problematic case, than to determining whether there was a sufficient relationship between non-compliance and a failure to complete.

258 The decisions of this Court to which I have already referred, however, indicate that the relevant question in relation to the prevention principle is whether the conduct of the party alleged to be preventing performance deprived the opposite party of a 'substantial chance' of meeting the condition.[200]

259 For example, in Cahill, Kennedy J identified two acts of Kiversun which breached the duty of co-operation and concluded that '[the] acts both individually and/or cumulatively deprived Mr Cahill of a substantial chance of meeting the condition that he return the executed final documentation within the relevant five business days'.[201]

260 In Hera Project, Riordan J considered whether the vendors' failure to use their best endeavours to obtain registration of a plan of subdivision and obtain consents from relevant authorities had deprived the purchasers of a substantial chance of the plan of subdivision being registered and settlement occurring. His Honour concluded that the vendors' conduct was 'consistent with an owner who, while purporting to comply with his obligations, was determined to "facilitate the earliest termination of the Contract"' and that it had deprived the purchaser of a substantial chance of meeting a condition of the contract.[202]

261 In Cahill and Hera, Kennedy J and Riordan J respectively, referred to conduct of the party found to be preventing performance of the contract as part of a strategy to bring about non-compliance with the condition for purposes extraneous to the contract itself.[203] Kennedy J noted in Cahill that regardless of intent, conduct which had the requisite effect was sufficient.[204]

262 I consider that Bensons' letter of 18 May 2016 was objectively likely to bring about the withdrawal of any current permit application (or prevent the filing of any foreshadowed application) which it in fact did. In particular, the inclusion of an allegation that KIA would be in breach of the DMA was objectively likely to encourage or induce KIA to withdraw or withhold from any application to VCAT. The letter of 18 May 2016 seeks to prevent KIA from proceeding with what it had been told it could do in the email of 10 May 2016, that is, go to VCAT at its own cost.

263 I am satisfied that Bensons' actions in sending the letter of 18 May 2016 were part of a strategy calculated by Bensons and Mr Jreissati to bring about the non-compliance of KIA with the permit condition and allow Bensons to exit from the DMA without itself being in breach. As discussed earlier, the strategy is evidenced by the contradictory correspondence of 10 May 2016 and 18 May 2016, the backtracking of Bensons in the subsequent letter dated 23 August 2016 following further legal advice, and the ongoing failure by Bensons to meet with KIA to resolve the issues concerning the obtaining of the permit. Bensons' conduct during that period falls short of what would be expected of a contracting partner who wished to achieve the object of the contract and was consistent with a party who, while purporting to comply with its obligations, sought to bring to an end the DMA. I am satisfied that the letter of 18 May 2016 was intended to and did deprive KIA of a substantial chance to procure the issue of the permit by the Sunset Date.

264 The authorities referred to above also indicate that the consequence of an act of prevention is that the relevant term transforms from one requiring performance at a specific time to one requiring performance within a reasonable time. KIA in fact obtained the issue of the permit on 6 February 2016, approximately five weeks after the Sunset Date (which time included Christmas and the New Year). Given Bensons' act of prevention resulted in a delay of approximately seven weeks between KIA's applications to VCAT, I consider that KIA obtained the issue of the permit within a reasonable time.

265 In case I am wrong in the test to be applied, I should also state that I am satisfied on the balance of probabilities that a sufficient causal relationship exists between Bensons' act of prevention and KIA's failure to complete.

266 Bensons, however, submits that even if the permit had been obtained by the Sunset Date, there remains the issue of clause 2.3(a) of the DMA, which required settlement of the sale contracts which Bensons had entered into with the Mandile parties. KIA's entitlement to payment of the Development Management Fee was subject to both settlement of those contracts as well as satisfaction of the Development Management Conditions.

267 Specifically, Bensons contends that a condition requiring the removal of encumbrances from the title to the land at 103 Beach Street by 30 December 2016 ('prior liens condition') was not satisfied, and therefore, whether or not the permit was obtained, Bensons was entitled to terminate the DMA and to the return of its instalments.

268 KIA did not respond to Bensons' pleaded non-satisfaction of this condition. It was submitted only on KIA's behalf that the prior liens 'would have been removed, as is the normal case, at settlement time', and the prior liens condition would have been satisfied.[205]

269 Bensons points to the evidence of Mr Mandile that the purchase price from Bensons was needed to be able to remove the encumbrances; his resources were not sufficient.[206]

270 The relevant clause is a standard clause that settlement is subject to the land being free of encumbrances. This would have been achieved in the normal way by part of the purchase price being paid to the mortgagee on settlement and the purchaser taking its title free from the encumbrance.

271 On the basis that Bensons wished to acquire the property as it had contracted to do, I am satisfied that the prior liens condition would have been satisfied. Bensons' defence on this ground has no merit.

272 I am satisfied on the balance of probabilities that the conduct of Bensons deprived KIA from obtaining the permit by the Sunset Date and otherwise satisfying the conditions of its entitlement to the fee.

273 Mr Jreissati gave evidence that he had not lost interest in the project and that, if KIA had obtained the permit by the end of December, Bensons would have 'absolutely completed the deal'. As discussed above, I do not accept this evidence. On the contrary, I am satisfied that Mr Jreissati, and thus Bensons, intended to and successfully frustrated KIA in performing the DMA and receiving the fee.

Alleged duties of good faith and co-operation

274 In addition to relying on the prevention principle, KIA alleges that Bensons was under the following duties:

(a) to do all such things as are necessary on its part to enable KIA to have the benefit of the DMA; and/or

(b) not to do anything which would make it materially difficult for KIA to satisfy the Development Management Conditions in accordance with the DMA ('duty of co-operation');

(c) to perform its obligations and to exercise its rights, powers and discretions under the DMA in good faith ('duty of good faith').[207]

275 KIA pleads that the duties of co-operation and of good faith are implied both by law and to give business efficacy to the DMA.

276 KIA further submits that each of the duty of good faith and the duty of co-operation are 'implied into the DMA as either universal terms that are implied into all contracts, or alternatively as terms that are implied into contracts of the type of the DMA'.[208] No attempt, however, was made in written or oral submissions by KIA to establish the 'business efficacy' argument.

277 The conduct of Bensons on which KIA relies as breaching either the duty of good faith or of co-operation can be summarised as follows:

(a) the email of 10 May 2016 refusing to proceed to VCAT or to fund VCAT proceedings;

(b) the letter of 18 May 2016, instructing KIA not to commence any proceeding in VCAT and informing KIA that any proceeding commenced by KIA without consent would be a breach of the DMA;

(c) the refusal to meet with KIA between 18 May 2016 and 5 July 2016; and

(d) the failure to exercise its discretion reasonably in electing not to appeal to VCAT.[209]

Did Bensons owe KIA a duty of co-operation under the DMA?

278 For the following reasons, I have concluded that there was an implied duty of co-operation in the DMA and that Bensons breached this duty by sending the letter of 18 May 2016, but did not breach the duty by failing to proceed to (or fund) VCAT or by failing to meet with KIA.

279 An implied duty of co-operation in the performance of a contract is not controversial.[210] The duty requires a party 'to do all such things as are necessary on his part to enable the other party to have the benefit of the contract'.[211] What is required by the duty, however, is constrained by the need to formulate the content of the implied duty by reference to express obligations under the contract.[212] This is because there cannot be a duty to co-operate in bringing about something which a contract does not require to happen.[213]

280 In James E McCabe Ltd v Scottish Courage Ltd,[214] Cooke J said:

A duty to cooperate in, or not to prevent, fulfilment of performance of a contract only has content by virtue of the express terms of the contract and the law can only enforce a duty of cooperation to the extent that it is necessary to make the contract workable. The court cannot, by implication of such a duty, exact a higher degree of cooperation than that which could be defined by reference to the necessities of the contract. The duty of cooperation or prevention/inhibition of performance is required to be determined, not by what might appear reasonable, but by the obligations imposed upon each party by the agreement itself.

281 In Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd,[215] the Full Court of the Federal Court considered the interpretation of a franchise agreement. The Full Court upheld the primary judge's conclusion that the agreement granted an exclusive franchise to the franchisee, and further held that that franchisor was accordingly subject to certain prohibitions, including from licensing or authorising another franchisee to operate in that territory.[216]

282 On appeal, however, the trial judge's conclusion that the franchisor's obligations extended beyond refraining from positive conduct and extending to 'taking reasonable and available steps which were open to it to ensure that [the] territory remained exclusive',[217] exceeded the requirement of necessity.[218]

To what extent, it might be asked, is cooperation required to make workable the relevant prohibitions? In our view, the content of the obligation to do all things necessary to give the other party the benefit of the contract required Spanline to refrain from taking positive steps that would infringe upon or cause a third party to infringe upon the exclusive franchise granted to RPR. To require Spanline to do more, such as to take positive steps to investigate possible incursions by Marmax upon the rights of RPR, would exceed the requirement of necessity. It could not be said that the absence of a requirement to investigate such conduct would render the RPR Franchise agreement nugatory, worthless or seriously undermined.[219]

284 The recent decision of Riordan J in Simcevski v Dixon[220] provides a further example in this Court of the necessity of identifying relevant contractual obligations in respect of the duty of co-operation.

285 It has also been suggested that the notion of 'engineering a default' can also been seen as a breach of the duty of co-operation.[221]

286 In my view, KIA's claims that Bensons breached the duty of co-operation by refusing to fund VCAT proceedings, failing to elect to go to VCAT and failing to meet with KIA cannot be sustained. KIA has not identified any express terms of the DMA which would allow such a conclusion to be drawn. In fact, pursuant to the express terms of the DMA, Bensons was explicitly not required to go to VCAT, and while clause 2.2(b) of the DMA provided that KIA must keep Bensons fully and regularly informed as to the status and progress of performance of the Development Management Services, this clause is for the sole and express benefit of Bensons. Imposing an implied duty to meet with KIA and/or to go to VCAT would be to 'exact a higher degree of cooperation than that which could be defined by reference to the necessities of the contract'.[222]

287 The letter of 18 May 2016 is altogether different. Pursuant to clause 2.1 of the DMA, Bensons appointed KIA as Development Manager to perform the Development Management Services. KIA was obliged under the DMA to perform the Development Management Services (clause 2.2, Schedule 1), including obtaining the planning permit. KIA had contracted for the opportunity to obtain the planning permit and be paid the Development Management Fee if successful. Contrary to the construction of clause 2.3(e) of the DMA contended for by Messrs Curtis and Jreissati, I consider that a permit issued by VCAT would satisfy the requirements of the DMA. Bensons was not required to take positive steps to assist KIA to obtain the permit (leaving to one side consideration of the estoppel argument advanced by KIA), but in my view, the duty of co-operation required that it refrained from taking positive steps that would infringe upon or prevent KIA from performing its obligations under the DMA. This is a level of co-operation which I consider necessary to make the contract workable.

288 As mentioned, I have found that, for a reason not disclosed to the Court, Bensons decided it no longer wished to proceed with the DMA and set about to bring the DMA to an end. Accordingly, the letter by Bensons which stated that KIA would be in breach of the DMA by doing what it was obliged to do (obtain the permit) is, in my opinion, properly characterised as a breach of the duty of co-operation.

Did Bensons owe KIA a duty of good faith under the DMA?

289 As mentioned earlier, KIA pleads that Bensons was under an implied duty to perform its obligations and to exercise its rights, powers and discretions under the DMA in good faith.

290 For the reasons which follow, I have concluded that KIA has failed to establish that the DMA contains an implied duty of good faith.

291 There is a conflict of opinion between Victoria and New South Wales as to whether or not a duty of good faith should be implied by law into commercial contracts. The acceptance of such an implied duty in respect of both performing obligations and exercising rights in New South Wales appears to follow the decisions of Renard Constructions (ME) Pty Ltd v Minister for Public Works ('Renard')[223] and Burger King Corp v Hungry Jack's Pty Ltd ('Hungry Jack's').[224] In Renard, Priestly JA, following an extended discussion of good faith, concluded that 'reasonableness' was an implied term of a termination clause in a standard form building contract. In Hungry Jack's, terms of co-operation, good faith, and reasonableness were implied into a complex franchising transaction between sophisticated parties.

292 In Victoria, however, a more conservative approach has been adopted. In Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL (Receivers and Managers appointed) (Administrators appointed) ('Esso'), Buchanan AJA held:[225]

I am reluctant to conclude that commercial contracts are a class of contracts carrying an implied term of good faith as a legal incident, so that an obligation of good faith applies indiscriminately to all the rights and power conferred by a commercial contract. It may, however, be appropriate in a particular case to import such an obligation to protect a vulnerable party from exploitive conduct which subverts the original purpose for which the contract was made. Implication in this fashion is perhaps ad hoc implication meeting the tests laid down in BP Refinery (Westernport) Pty Ltd v Shire of Hastings, rather than implication as a matter of law creating a legal incident of contracts of a certain type.[226]

293 Subsequently, in Specialist Diagnostic Services Pty Ltd v Healthscope Ltd ('Specialist Diagnostic v Healthscope'), Buchanan, Mandie and Osborn JJA concluded:[227]

We do not accept that an obligation of good faith should be implied indiscriminately into all commercial contracts.

In the case of a detailed written lease entered into between commercial entities of equivalent bargaining power, such a condition will ordinarily arise only if it meets the tests laid down in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings ('BP Refinery').[228]

294 The question of whether a standard of good faith should be applied generally to contracts has not yet been determined by the High Court.[229] Until this conflict is resolved by the High Court, I can see no good reason to depart from the approach adopted by the Victorian authorities.[230]

295 Accordingly, no duty of good faith can be implied into the DMA unless it satisfies the well-known test in BP Refinery,[231] approved by the High Court in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd,[232] that a propounded term:

(a) must be reasonable and equitable;

(b) must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it;

(c) must be so obvious that it 'goes without saying';

(d) must be capable of clear expression; and

(e) must not contradict any express term of the contract.

296 KIA did not, in either written or oral submissions, attempt to demonstrate how the pleaded term for which it contends could satisfy the above test. In my view, it is obvious that it could not. A term qualifying Bensons' express right to elect, by reference to 'an amorphous standard of good faith', is not so obvious that 'it goes without saying', is not 'necessary to give business efficacy to the contract' and is not 'capable of clear expression'.[233]

297 Bensons submits that it is implicit in KIA's argument that the implied term of good faith in fact 'compelled' or 'required' Bensons to appeal and to bear the costs of doing so. Any alleged term that Bensons had an obligation to exercise its discretion in favour of going to VCAT would also fall foul of the test in BP Refinery, as such a term directly contradicts the express terms of the DMA.[234]

298 In any event, I consider that it is not strictly necessary to determine whether a term requiring the exercise of good faith is to be implied into the DMA, for even if such an obligation was implied, in my opinion, it had not been breached.

299 KIA submits that Bensons did not properly exercise its discretion pursuant to clause 2.3(e) of the DMA because Bensons relied on issues with the Mirvac Covenant and a failure by KIA to provide information to Bensons as the reason for its failure to elect to go to VCAT. KIA submits these were not genuine reasons.

300 I am not satisfied that these grounds were not genuine. Further, Bensons also stated that it had not satisfied itself of the likelihood of success of an appeal to VCAT. I accept that by 10 May 2016, Bensons had not fully satisfied itself on the merits of the issues raised by the council that had impeded the issue of the permit, or how those issues were to be met and that, accordingly, Bensons was not in a position to form a view on the likelihood of success if an appeal was pursued. I am not satisfied that Bensons' decision not to pursue an appeal at that time, as conveyed on 10 May 2016, could be said to have been made in bad faith.

301 Mr Curtis went to China soon after 10 May 2016 and Mr Jreissati took over the administration of the DMA. As already discussed, for reasons Mr Jreissati did not disclose, he then decided to prevent the contract being performed. This I have already found to be a breach of the non-controversial duty of co-operation.

Is Bensons estopped from relying on the strict wording of clause 2.3(e) of the DMA?

302 KIA's final argument in support of its claim for VCAT costs from Bensons is that Bensons is estopped from relying on the strict wording of clause 2.3(e) and denying liability to pay the costs KIA incurred in going to VCAT because of certain statements made by Bensons' representatives. For the reasons which follow, I have concluded that KIA has failed to establish that any such estoppel arises.

303 The doctrine of estoppel prevents an unjust departure by one person from an assumption adopted by another person, if that assumption was the basis of some act or omission by that other person, and if departure from that assumption would cause detriment to that other person.[235] Whether it would be unjust for a party to depart from the assumption depends on the role played by that person in the other party adopting the assumption.[236]

304 KIA pleads both a conventional estoppel and an equitable estoppel. I will deal with each in turn.

305 A conventional estoppel arises when both parties adopt a mutual assumption as the basis of their relationship. If established, both parties are prevented from departing from that assumption.[237]

306 KIA submits that the parties adopted an assumption as to the terms of their legal relationship that Bensons would make an application to VCAT in respect of a planning permit and Bensons would pay for the costs of that application. This mutual assumption, KIA says, is evidenced by the pre-contractual First, Second and Third Representations, together with, in substance, the statements identified by KIA as establishing an election by Bensons to appeal to VCAT at the meetings of 15 April 2016, 26 April 2016 and 5 May 2016.

307 Pre-contractual conduct and representations, however, cannot be relied upon to establish a conventional estoppel, as these are 'treated as superseded by the subsequent written contract'.[238]

308 The remaining post-contractual statements and conduct on which KIA relies in support of its conventional estoppel claim are, in substance, those on which it relied to allege an election by Bensons pursuant to clause 2.3(e) of the DMA. The difficulty KIA faces in this regard is that though I made findings to the effect that Bensons made those representations and led KIA to believe Bensons was seriously considering electing to appeal to VCAT, that conduct or those representations did not constitute an election by Bensons to appeal to VCAT. In this analysis, I do not accept that that same conduct or those same representations can then constitute an assumption on the part of Bensons that it would, in fact, appeal. While I am satisfied that KIA assumed Bensons would appeal, and Bensons led KIA to believe it was seriously considering that appeal, the evidence as to post-contractual conduct does not establish that each party subjectively assumed that Bensons would appeal.

309 This is sufficient to dispose of KIA's conventional estoppel claim.

310 KIA claims alternatively that pre-contractual representations gave rise to an equitable estoppel.

311 The elements which a plaintiff is required to prove to establish an estoppel in equity have been set out in various ways, but in particular, the formulation by Brennan J in Waltons Stores (Interstate) Ltd v Maher[239] has been widely applied:[240]

[I]t is necessary for the plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.[241]

312 KIA contends that it had negotiated with Bensons in the belief that the DMA would provide that Bensons would undertake any appeal to VCAT to obtain the planning permit or bear the cost of such an appeal.

313 KIA was then presented with a draft DMA that provided 'if Bensons elected (without being obliged to do so) to appeal any decision of the Responsible Authority in connection with the Planning Application or the issue of the Planning Permit, all costs in doing so are to be borne by Bensons'.

314 KIA contends that Bensons is estopped from relying on the strict wording of clause 2.3(e), or denying liability to pay for the costs of the VCAT application, because of alleged statements by Bensons' representatives.

315 For convenience, I will set out again the specific evidence given in respect of the representations which are said to support that assumption or expectation (which are already referred to earlier in this judgment as the First, Second and Third Representations):

(a) the evidence of Mr Gale in relation to the 1 February 2016 meeting:

(i) Mr Jreissati, in response to Mr Gale's comment that it was likely that KIA would have to go to the VCAT in order to obtain a planning permit, replied: 'I just give $1 million to the lawyers, and they take it to the VCAT';[242]

(ii) Mr Jreissati further stated that KIA should have gone to the VCAT last year;[243]

(iii) Mr Semenov said that it was the policy of Bensons to go to the VCAT when councils will not give a permit;[244]

(the First Representations).

(b) the evidence of Mr Gatsby in relation to the 22 February 2016 telephone call with Mr Semenov:

(i) Mr Semenov stated that Mr Jreissati instructed him to make another offer;[245]

(ii) when Mr Gatsby asked Mr Semenov: 'What's the offer this time? Is it along the $3 million ... what's it likely to be?', Mr Semenov replied: 'It won't be what you want but it will be at least $2 million and some consideration for other costs';[246]

(the Second Representations).

(c) the evidence of Messrs Gale and Hutchinson-Brooks in relation to the 5 April 2016 meeting:

(i) Mr Foley stated that it was the policy of Bensons to go to the VCAT when councils fail to make a decision;[247]

(ii) Mr Curtis acknowledged the necessity of going to the VCAT;[248]

(iii) Mr Gatsby asked Mr Semenov about clause 2.3(e) and Mr Semenov replied: 'KIA should not worry, that was only put in to ensure that Bensons were not obliged to go to the VCAT before it was ready';[249]

(the Third Representations).

316 KIA alleges that the representations led KIA to assume that Bensons would pay for VCAT and that Bensons would not rely on the strict wording of clause 2.3(e) of the DMA. KIA says that acting on those assumptions it entered into the DMA. KIA says that if Bensons was able to resile from those representations KIA would suffer detriment, namely the cost of going to VCAT.

317 In my view, the only statement which could found a relevant assumption is the alleged statement by Mr Semenov that 'KIA should not worry [about clause 2.3(e)], that was only put in to ensure that Bensons were not obliged to go to the VCAT before it was ready'.

318 Assuming that statement was made, it implied a representation by Bensons that, despite what the DMA said, it would go to VCAT to appeal any decision of the council in connection with the planning application or the issue of the planning permit when it was ready to do so, and the costs of doing so would be borne by Bensons.

319 Thus, Bensons would be estopped from denying it was obliged to go to VCAT when it was ready to do so to appeal any decision of the council in connection with the permit.

320 In examination-in-chief, Mr Semenov was asked whether he said: 'KIA should not worry about clause 2.3(e) of the DMA because Bensons intended to go to VCAT.' Mr Semenov denied saying that, explaining he was not even sure what clause 2.3(e) would have been, because the draft DMA had only been presented in that meeting and he did not have a copy of it.[250]

321 Under cross-examination, it was put to Mr Semenov that he said to Mr Gatsby: 'Don't worry. That was only put in to mean that Bensons would not be obliged to go to VCAT before they were ready.' Mr Semenov said that he did not believe there was such a conversation, again saying that he did not have a copy of the agreement prior to that meeting and he was not issued with a copy at the meeting. Mr Semenov said that if Mr Gatsby had asked him about clause 2.3(e) he would have asked what the wording was of that clause as he did not have a copy of the agreement.[251] Mr Semenov, however, did have a copy of the draft DMA in his possession on 1 April 2016 (at which time he emailed the draft DMA to Mr Curtis and Mr Gatsby), and in that draft, clause 2.3(e) was in the same form as in the executed DMA.

322 Notwithstanding the above, I am not satisfied on the balance of probabilities that the representation was in fact made. The alleged representation does not feature in any correspondence by KIA or its solicitors to Bensons following Bensons' communications of 10 and 18 May 2016. If such a representation had been made, one would expect that it would be brought up to counter Bensons' assertions, prior to its appearance in KIA's reply and defence to the counterclaim dated 27 March 2017. Instead, for example, in his response to the email of 10 May 2016, Mr Gatsby stated: 'we had hoped you would work with us and just fund SILK'.[252] Further, when KIA's solicitors responded substantively to Bensons' 18 May 2016 letter on 16 June 2016, despite mention being made of meetings on 26 April 2016 and 5 May 2016, no mention is made of the alleged representation made in relation to clause 2.3(e) upon the signing of the DMA. In fact, the letter states that KIA is to obtain the permit at its own cost, and that clause 2.3(e) is 'currently inoperative' as no decision had been made by the responsible authority in connection with the permit.[253] Later letters do refer in vague terms to discussions between the parties about the VCAT appeal, but do not identify the specific alleged representation.[254] In my view, the failure of KIA and its solicitors to refer contemporaneously to the alleged representation lends support to a finding that the representation was not in fact made.

323 In any event, even if the representation was made, I consider that Bensons did not seek to adopt a position in performance of the agreement that was contrary to that specific representation. Nor did KIA allege that it did.

324 Mr Curtis wrote to Mr Gatsby on 10 May 2016. That email does not suggest that Bensons would not be commencing VCAT proceedings at any stage. Rather, the email identifies issues that Bensons was concerned about that needed to be resolved prior to Bensons forming a clear position or strategy. The email suggested that Bensons would need at least a further two weeks, at which time it may still need to obtain senior counsel's advice.

325 The email referred to the issue of the Mirvac Covenant, and stated that Bensons had briefed new planning solicitors. Mr Curtis said: 'our desired outcome is to get clear advice as to if and how VCAT proceedings could be successfully run'. I take this to be referring to being run by Bensons.

326 Thus, even if Mr Semenov made the alleged representation on behalf of Bensons, the email of 10 May 2016 indicates that, at that stage, Bensons was not ready to commence an appeal. Thus the email does not constitute any repudiation of the position that Bensons was alleged to have taken with respect to the construction of clause 2.3(e).

327 Notwithstanding that Bensons, up to that date, had not sought to resile from the position implied by the alleged representation that it would appeal when it was ready, KIA then proceeded to lodge its own application to VCAT on 18 May 2016. On 19 May 2016 it received Mr Jreissati's letter of 18 May 2016, which asserted that KIA was not entitled to go to VCAT.

328 In the letter of 18 May 2016, Bensons makes quite clear that, on its construction of the DMA, KIA could not go to VCAT without Bensons' consent as KIA was obliged to obtain the permit from the council, and obtaining it from VCAT would not satisfy the agreement. On the other hand, Bensons also asks for information about the council's objections and about KIA's communications with Mirvac, together with details as to KIA's proposed VCAT strategy and any advice it had received as to the merits of such an application. This was all information relevant to any decision whether to appeal to VCAT.

329 Assuming that the statement by Bensons that it was not obliged to elect is to be construed in the light of its request for further information of the type that would enable Bensons to be ready to appeal, then that letter also does not take a position contrary to the alleged representation.

330 When Mr Gatsby forwarded the letter of 18 May 2016 to Mr Semenov on 19 May 2016, he claimed that 'everything purported to be requested you have already been given and it's up to you whether you do or not [appeal to VCAT]'.[255] Notwithstanding, the evidence reveals that after 19 May 2016, KIA was still seeking this relevant information itself. On Monday, 23 May 2016, for example, in response to an email from Mr Gatsby, Jane Sharp of counsel stated that she would not have completed a full review of the matter by Wednesday, and noted 'that a part of a review of the merits of the application will...require the involvement of a senior member of the bar'.[256]

331 On 8 June 2016, Bensons' solicitors issued a Notice of Default to KIA in respect of KIA's failure to provide the information requested by Bensons on 18 May 2016. It does not appear that by 16 June 2016, when KIA's solicitors responded to Bensons' letters of 18 May 2016 and 8 June 2016, that KIA had provided any further information to Bensons. In fact, the letter from MBA dated 16 June 2016 denied that KIA was obliged to provide the requested information that would have been necessary for Bensons to ready itself to launching an appeal to VCAT, pursuant to clause 2.2(a) of the DMA.

332 KIA then lodged its second application on 5 July 2016.

333 KIA did not plead that Bensons had all the information it needed to be ready to appeal to VCAT, and in breach of its representation failed to do so. KIA's witnesses made various claims to the effect that KIA had provided Bensons with all the relevant information. In light of the evidence discussed above, however, I am not satisfied that that is the case.

334 KIA asserts in its submissions that if Bensons was able to resile from the representations KIA would suffer detriment, namely, the cost of going to VCAT. I conclude, however, that KIA did not rely on the alleged representation in its performance of the DMA. I find that nothing that KIA did or did not do was based on any reliance on the alleged representation.

335 KIA went to VCAT when it did because of the tight time constraints it had agreed to in the contract. It first went to VCAT on 18 May 2016 (before receiving Bensons' letter of 18 May 2016), at which stage it had a letter from Bensons of 10 May 2016 reasonably saying Bensons needed two weeks at least to gather relevant information as to the prospects of an appeal and to obtain advice relevant to appealing. Thus before it was arguable that Bensons was obliged under its alleged representation to appeal, KIA had already appealed and decided it would seek to recover the costs from Bensons.

336 As already discussed, Bensons' letter of 18 May 2016 constituted conduct in breach of the DMA, and the damages which flow from that breach are discussed below. The damages do not include the costs of KIA appealing to VCAT. Even if the representation alleged was made, Bensons did not take a position contrary to that representation, nor did KIA seek to prove that it did. Thus it is not necessary to consider if damages could have been claimed if the representation had not been observed.

What loss did KIA suffer as a result of Bensons' breach?

337 KIA claims that, as a result of Bensons' breach of the DMA, it suffered:

(a) the loss of the third and fourth instalments under the DMA, totalling $1,760,000 (inclusive of GST);

(b) the loss of deposits under the contracts with the Mandile parties, totalling $100,000 (inclusive of GST);

(c) costs incurred in its first and second VCAT applications, totalling $668,003.92 (inclusive of GST);

(d) costs incurred in mitigation of loss between 18 May 2016 and 5 July 2016, totalling $52,250.00 (inclusive of GST);

(e) costs incurred in mitigation of loss between January 2017 and February 2018, totalling $382,044.36 (inclusive of GST).[257]

339 First, in respect of the third and fourth instalments, Bensons submits that KIA has failed to establish that, but for Bensons' letter of 18 May 2016 (which I have found to be an act in prevention and a breach of the duty of co-operation), the permit would have been granted by the Sunset Date. As mentioned earlier, Bensons submits that evidence is not before the court as to how long it would have taken VCAT to deal with the application and when the council was available to meet. I accept that such evidence would have been useful, however, I need only be satisfied on the balance of probabilities that such an outcome would have occurred. I am so satisfied. As already mentioned, the time which elapsed between KIA's VCAT applications was approximately seven weeks. The permit was in fact issued approximately five weeks after the Sunset Date, which included the Christmas and New Year period. The subsequent applications were in substantially the same form as the first. I consider that KIA has established that it was entitled to the third and fourth instalments, either on the basis that it obtained the issue of the permit within a reasonable time following Bensons' act of prevention, or on the basis that it would have obtained the issue of the permit by the Sunset Date but for Bensons' breach. KIA has established it suffered loss in the sum of $1,760,000.

340 Second, pursuant to clause 2(b) of the deeds of cancellation entered into between KIA and the Mandile parties (which took place to avoid the double stamp duty issue), if the Bensons' sale contracts with the Mandile parties were terminated, the Mandile parties could retain deposits already paid by KIA pursuant to their original contracts.

341 A plaintiff is entitled to recover such damages as may reasonably be supposed to have been in the contemplation of both parties concerned at the time they made the contract, as the probable result of a breach of that contract.[258] KIA submits that Bensons' knowledge of the relevant circumstances can be inferred from the following:

(a) the presence of Messrs Semenov, Curtis and Foley at the settlement meeting on 5 April 2016, where the deeds of cancellation between KIA and the Mandile parties were signed and new contracts entered into between Bensons and the Mandile parties;

(b) the contracts entered into on 5 April 2016 were entered into as a suite of contracts by which Bensons would take KIA's place as purchaser of the land and business;

(c) it can be inferred that Messrs Semenov, Curtis and Foley read the suite of documents, including the deeds of cancellation.

342 Bensons contends that KIA's claim for loss of the deposits must fail due to remoteness. There was no evidence that on 5 April 2016 when the DMA was entered into that Bensons ever received or saw the cancellation deeds, let alone had knowledge of the specific clause 2(b). In this regard, Bensons points to the evidence of Mr Grinter to the effect that Mr Grinter was concerned to ensure that Bensons did not have anything to do with the arrangements or transactions between KIA and the Mandile parties, including any arrangements to cancel their existing agreements. This was to avoid any associated stamp duty risks. Mr Grinter gave evidence that he declined to accept a copy of the deeds of cancellation offered to him by KIA's solicitor, and subsequently left the meeting with Messrs Foley and Curtis, reminding them not to review any documentation between KIA and the Mandile parties and not to take a copy of any of the cancellation contracts.[259]

343 In my view, KIA has failed to establish that, contrary to the evidence of Mr Grinter, representatives of Bensons had within their reasonable contemplation the content and effect of deeds entered into between KIA and the Mandile parties.

344 Third, KIA claims its loss includes the costs of steps it took in mitigation after receiving the 18 May 2016 letter. This included withdrawing the VCAT application, obtaining legal advice about the assertions in the 18 May 2016 letter and about its VCAT application, making further attempts to obtain a planning permit from the council and attending an OVGA hearing.[260]

345 Bensons submits that these costs claimed by KIA are properly described as 'internal costs' and are not recoverable. In support of this statement, Bensons refers to the decision in PND Civil Group Pty Ltd v Bastow Civil Constructions Pty Ltd ('PND v Bastow').[261]

346 In PND v Bastow, PND breached a construction sub-contract it had with Bastow, the head contractor. Bastow's employees oversaw rectification works. Bastow claimed as damages $43,699 for the time its employees were engaged in rectification work. The New South Wales Court of Appeal confirmed that the trial judge was correct in disallowing the entirety of this claim, because there was no evidence that Bastow incurred additional expenses to what it was obliged to pay its employees under existing contracts of employment. It would have been different if Bastow had had to pay overtime, or to hire additional employees to complete other available work, or led evidence that other valuable business opportunities were lost.[262] Bensons contends this approach is apposite.

347 In PND v Bastow, all costs claimed were for employees. McDougall J (with whom McColl and Gleeson JJA agreed) referred to the decision of the Queensland Court of Appeal in Orlit Pty Ltd v JF&P Consulting Engineers Pty Ltd.[263] In that case, a developer had incurred expenses for the time spent by executives who were not employed by the developer. That expense was incurred through book entries whereby the developer was debited and the actual employer credited with the cost of their time. Their Honours upheld the claim for management time, stating:

Each of the relevant executives ... gave evidence of the time spent and steps taken by him in respect of or associated with rectification work. It was this time which formed the basis of the calculations upon which the damages were assessed... It is irrelevant that [the developer] did not prove that any other activities of theirs which would have profited [the developer] were curtailed by the need to spend time in relation to the rectification work. It is sufficient and reasonable to infer that they would otherwise have been engaged in [the developer's] business.[264]

348 In this matter, evidence was given that KIA paid each of Messrs Gale, Gatsby and Hutchinson-Brooks on invoices issued by their respective service companies, that is, Messrs Gale, Gatsby and Hutchinson-Brooks were director contractors, not employees. Mr Gatsby gave evidence as to the work that the director contractors did which formed the basis of the calculations for the damages which KIA claims.

349 In light of the above, I consider that KIA is entitled to recover the costs it paid the director contractors (save for any GST component),[265] but not the costs it paid its employees, as KIA led no evidence to show that those employees did anything other than that which they were employed to do. Accordingly, KIA is entitled to recover $43,000 of those costs (being the non-GST component of the director contractors' costs).[266]

350 Fourth, KIA claims its costs of going to VCAT. KIA has failed to establish that Bensons was obliged, either pursuant to the DMA or by reason of estoppel, to appeal to VCAT or to fund the costs of an appeal. KIA was always entitled to go to VCAT at its own cost to obtain the permit. Bensons' breach was that on 18 May 2016 it prevented KIA from doing so, and as a result, prevented KIA from complying with the Sunset Date and earning its fee. KIA cannot claim, therefore, that in going to VCAT to obtain the permit, as it was entitled to do under the DMA, that it has suffered loss for which Bensons is responsible.

351 Fifth, in respect of the period after Bensons gave notice that the DMA was at an end due to the failure of KIA to satisfy the planning permit condition, KIA seeks to recover, as costs in mitigation, both its internal and external costs incurred in respect of finding and entering into a sale contract with a new purchaser.

352 KIA pleads that between January 2017 and June 2017 it sought to mitigate its loss by continuing to work on the development, to work with the Mandile parties to sell or develop the land with the permit, and to market the land with the permit for sale. As a result, by way of contract dated 13 June 2017, the land was resold to V-Leader for $11,200,000. Of this sum, KIA received $2.232 million.

353 Mr Gale gave general evidence about what KIA did in 2017 to achieve the resale of the land under the V-Leader contract on 13 June 2017.[267]

354 KIA further claims that it is entitled to internal and external costs between the date of the V-Leader contract (13 June 2017) and the date of settlement (1 February 2018). In this regard, KIA alleges that it received the $2.232 million pursuant to an oral agreement with the Mandile parties made in early June 2017 between Messrs Gatsby and Gale for KIA and Mr Indovino for the Mandile parties ('Split Agreement'). On 13 June 2017, Mr Indovino confirmed in writing the agreement between the Mandile parties and KIA concerning the sale of the Land as follows:

I confirm that it has been agreed to sell the property (103 Beach Street, Port Melbourne) to V-Leader for $11,200,000 and that the sale proceeds are to be distributed as follows in full settlement of the parties claims:

Mandile/Bluewater Sands $ 8,800,000

Key $ 2,232,000

Estate Agents fees $ 168,000

$11,200,000

355 KIA's pleaded allegations about the Split Agreement were as follows:

31. KIA further sought to mitigate its loss by:

(a) in around early June 2017, agreeing with the Land Owner to sell the Land with the Permit (Split Agreement), on the following terms:

(i) the parties would accept the offer from V-Leader of $11,200,000 even though it was lower than the target of $13,500,000;

(ii) the sum of $168,000 representing the estate agent's commission would be deducted from the sale proceeds;

(iii) the Land Owner would receive the sum of $8,800,000;

(iv) KIA would receive the sum of $2,232,000;

(v) the sums paid by KIA ($3,714.03) and the Land Owner ($13,167.92) in respect of Cushman & Wakefield's marketing costs would lie where they fell; and

(vi) KIA would bear all other costs of marketing and selling the Land with the Permit, the costs of continuing to work on the Development and the costs of providing a detailed handover of the Development and assistance as required to V-Leader leading up to settlement.

The Split Agreement was oral. The terms of the Split Agreement were discussed between Bruno Gatsby and Barry Gale on behalf of KIA and Tom Indovino on behalf of the Land Owner between February 2017 and early June 2017. The Split Agreement was agreed in conversations in early June 2017 between Bruno Gatsby, Barry Gale and Tom Indovino, the substance of which was to the effect alleged. The Split Agreement is partly evidenced in writing in an email from Tom Indovino to Bruno Gatsby and others dated 13 June 2017, a copy of which is in the possession of the plaintiff's solicitor and may be inspected by appointment.[268]

356 KIA, however, led no evidence about its alleged obligation to bear 'the costs of providing a detailed handover of the development and assistance as required to V-Leader leading up to settlement'. The V-Leader contract included no such requirement.

357 Bensons, in submissions, accepted in principle that if Bensons was in breach of the DMA, KIA was entitled to recover as damages expenses it can prove that it incurred between 1 January 2017 and 13 June 2017 in relation to the resale of the land.[269] Bensons submits, however, that once the V-Leader contract was executed on 13 June 2017, it was not necessary for KIA to do any further work of any nature to mitigate KIA's losses. Put shortly, Bensons submits that any expenses incurred by KIA after 13 June 2017 were incurred unreasonably and should not be recovered.[270] Further, Bensons submits the court should find there was no Split Agreement, only the agreement recorded in Mr Indovino's email dated 13 June 2017.

358 KIA did not explain (other than by reference to the alleged Split Agreement) why it incurred significant costs in assisting V-Leader up to settlement when it was apparently not obliged to. The evidence given in respect of the alleged Split Agreement was less than satisfactory. Accordingly, I consider that KIA has failed to establish that any of the costs it incurred after 13 June 2017 were reasonably incurred in mitigation.

359 I consider, however, that KIA is entitled to recover expenses it incurred between 1 January 2017 and 13 June 2017 in relation to the re-sale of the land, those costs being reasonably incurred in mitigation following Bensons' breach. As it did in respect of costs in the period 18 May 2016 to 5 July 2016, Bensons contends that KIA is not entitled, in the period 1 January 2017 to 13 June 2017, to employee costs and to GST on the amount it paid its director contractors. I accept that position.

360 Accordingly, KIA is entitled to recover the non-GST component of its director contractors' costs - that sum being $214,437.50.[271]

361 I consider that KIA is also entitled to its external marketing costs in the sum of $14,068, being the claimed amount of $20,386.36, subject to some adjustments.[272]

363 Bensons has not established its counterclaim for repayment of instalments by KIA.

364 KIA has not established its claim in respect of its VCAT costs, whether by reason of breach of contract or estoppel.

365 KIA has established its loss and damage as follows:

(a) $1,760,000, being damages equal to the sum of the third and fourth instalment;

(b) $43,000, being the non-GST component of the director contractors' costs in the period 18 May 2016 to 5 July 2016;

(c) $214,437.50, being the non-GST component of the director contractors' costs in the period 1 January 2017 to 13 June 2017; and

(d) $14,068, being the external marketing costs of the re-sale of the land

totalling $2,031,505.50.

366 KIA, however, has received the sum of $2.232 million in mitigation as a result of the V-Leader contract.

367 A plaintiff who has proved a breach of contract by the defendant but has failed to establish loss is entitled to nominal damages only, which are vindicatory, not compensatory.[273]

368 Accordingly, KIA has established an entitlement only to nominal damages. I order that on the claim there be judgment for KIA, with nominal damages, which I fix at $100. Bensons' counterclaim is dismissed.

[1] At the time of the hearing, Mr Semenov no longer worked for Bensons.

[2] $80,000 was paid as a deposit to Blue Sands Pty Ltd for the sale of the land and $20,000 was paid as a deposit to Mandile Nominees Pty Ltd for the sale of the business.

[10] Transcript of Proceedings (11 February 2019) 92.

[11] Transcript of Proceedings (11 February 2019) 92.

[12] Transcript of Proceedings (11 February 2019) 102.

[13] Transcript of Proceedings (11 February 2019) 100.

[15] Transcript of Proceedings (11 February 2019) 99-100.

[16] Transcript of Proceedings (11 February 2019) 100.

[17] Transcript of Proceedings (11 February 2019) 101.

[18] Transcript of Proceedings (11 February 2019) 102.

[19] Transcript of Proceedings (11 February 2019) 102.

[20] Transcript of Proceedings (11 February 2019) 103.

[21] Transcript of Proceedings (14 February 2019) 397.

[22] Transcript of Proceedings (14 February 2019) 397-8.

[23] Transcript of Proceedings (25 February 2019) 916.

[24] Transcript of Proceedings (25 February 2019) 916.

[25] Transcript of Proceedings (25 February 2019) 916.

[26] Transcript of Proceedings (25 February 2019) 917.

[27] Transcript of Proceeding (20 February 2019) 744.

[28] Transcript of Proceedings (20 February 2019) 741.

[29] Transcript of Proceedings (20 February 2019) 741.

[30] Transcript of Proceedings (20 February 2019) 741.

[31] Transcript of Proceedings (20 February 2019) 741.

[32] Transcript of Proceedings (19 February 2019) 649.

[33] Transcript of Proceedings (19 February 2019) 650.

[34] Transcript of Proceedings (19 February 2019) 650.

[35] Transcript of Proceedings (11 February 2019) 104.

[38] Transcript of Proceedings (12 February 2019) 118.

[39] Transcript of Proceedings (20 February 2019) 763.

[40] Transcript of Proceedings (14 February 2019) 401.14-15.

[41] Transcript of Proceedings (14 February 2019) 401.15-23.

[42] Transcript of Proceedings (12 February 2019) 401.

[43] Transcript of Proceedings (20 February 2019) 765, (25 February 2019) 852.

[47] Transcript of Proceedings (11 February 2019) 5.

[48] Exhibit P29; Transcript of Proceedings (12 February 2019) 128.

[49] Transcript of Proceedings (12 February 2019) 128.

[50] Transcript of Proceedings (12 February 2019) 127.

[51] Transcript of Proceedings (14 February 2019) 423.

[52] Transcript of Proceedings (14 February 2019) 423-4.

[53] Transcript of Proceedings (14 February 2019) 424.

[54] Transcript of Proceedings (14 February 2019) 424.

[55] Transcript of Proceedings (18 February 2019) 469.

[56] Transcript of Proceedings (19 February 2019) 654.

[57] Transcript of Proceedings (19 February 2019) 654.

[58] Transcript of Proceedings (19 February 2019) 655.

[59] Transcript of Proceedings (19 February 2019) 656.

[60] Transcript of Proceedings (19 February 2019) 657.

[62] Transcript of Proceedings (19 February 2019) 658.

[64] Transcript of Proceedings (19 February 2019) 658.

[68] Transcript of Proceedings (19 February 2019) 661.

[69] Transcript of Proceedings (12 February 2019) 131.

[70] Transcript of Proceedings (12 February 2019) 131-2.

[71] Transcript of Proceedings (14 February 2019) 420.

[72] Transcript of Proceedings (12 February 2019) 132.

[73] Transcript of Proceedings (12 February 2019) 132.

[74] Transcript of Proceedings (19 February 2019) 664.

[75] Transcript of Proceedings (19 February 2019) 665.

[76] Transcript of Proceedings (19 February 2019) 666.

[77] Transcript of Proceedings (19 February 2019) 666.

[78] Transcript of Proceedings (25 February 2019) 887.

[79] Transcript of Proceedings (19 February 2019) 666.

[80] Transcript of Proceedings (19 February 2019) 667.

[81] Transcript of Proceedings (19 February 2019) 667.

[82] Transcript of Proceedings (25 February 2019) 887.

[83] Transcript of Proceedings (25 February 2019) 887.

[84] Transcript of Proceedings (19 February 2019) 667.

[85] Transcript of Proceedings (19 February 2019) 667-8.

[86] Transcript of Proceedings (25 February 2019) 885.

[87] Transcript of Proceedings (25 February 2019) 886.

[88] Transcript of Proceedings (25 February 2019) 892.

[92] Transcript of Proceedings (14 February 2019) 425.

[93] Transcript of Proceedings (14 February 2019) 426.

[94] Transcript of Proceedings (14 February 2019) 426.

[95] Transcript of Proceedings (14 February 2019) 441.

[96] Transcript of Proceedings (18 February 2019) 514, 555.

[97] Transcript of Proceedings (18 February 2019) 514, 555.

[98] Transcript of Proceedings (18 February 2016) 520.

[100] Transcript of Proceedings (12 February 2019) 137.11-25.

[101] Transcript of Proceedings (13 February 2019) 304.

[104] Transcript of Proceedings (14 February 2019) 386.

[105] Plaintiff's Fourth Further Amended Statement of Claim, 15 February 2019 [7(k)].

[106] Transcript of Proceedings (13 February 2019) 327.

[107] Transcript of Proceedings (13 February 2019) 327-8.

[108] Transcript of Proceedings (13 February 2019) 328.

[109] Transcript of Proceedings (13 February 2019) 335.

[110] Transcript of Proceedings (13 February 2019) 336.

[111] Transcript of Proceedings (13 February 2019) 336-7.

[112] Transcript of Proceedings (19 February 2019) 668.

[113] Transcript of Proceedings (19 February 2019) 670.

[114] Transcript of Proceedings (19 February 2019) 669.

[115] Transcript of Proceedings (19 February 2019) 669.

[116] Transcript of Proceedings (19 February 2019) 669.

[117] Transcript of Proceedings (19 February 2019) 670.

[118] Transcript of Proceedings (19 February 2019) 670.

[119] Transcript of Proceedings (19 February 2019) 670.

[120] Transcript of Proceedings (19 February 2019) 671.

[121] Transcript of Proceedings (19 February 2019) 671.

[122] Transcript of Proceedings (19 February 2019) 671.

[123] Transcript of Proceedings (19 February 2019) 672.

[124] Transcript of Proceedings (19 February 2019) 672.

[125] Transcript of Proceeding (12 February 2019) 148.19-149.5.

[128] Transcript of Proceedings (19 February 2019) 672.

[129] Transcript of Proceedings (19 February 2019) 672.

[131] Transcript of Proceedings (19 February 2019) 681.

[135] Transcript of Proceedings (19 February 2019) 674.

[136] Transcript of Proceedings (19 February 2019) 674.

[137] Transcript of Proceedings (19 February 2019) 674.

[139] Transcript of Proceedings (14 February 2019) 448; Exhibit P36.

[140] Transcript of Proceedings (19 February 2019) 675.

[141] Transcript of Proceedings (19 February 2019) 675.

[144] Transcript of Proceedings (19 February 2019) 676.

[145] Transcript of Proceedings (25 February 2019) 888.

[146] Transcript of Proceedings (25 February 2019) 890.

[147] Transcript of Proceedings (25 February 2019) 893.

[148] Transcript of Proceedings (25 February 2019) 895.

[149] Transcript of Proceedings (25 February 2019) 920.

[150] Transcript of Proceedings (25 February 2019) 920-1.

[151] Transcript of Proceedings (25 February 2019) 922.

[152] Transcript of Proceedings (14 February 2019) 443.

[153] Transcript of Proceedings (14 February 2019) 444.

[154] Transcript of Proceedings (26 February 2019) 945.

[155] Transcript of Proceedings (26 February 2019) 947.

[156] Transcript of Proceedings (26 February 2019) 948.

[157] Transcript of Proceedings (26 February 2019) 954-5.

[158] Transcript of Proceedings (26 February 2019) 956.

[159] Transcript of Proceedings (14 February 2019) 447.

[160] Transcript of Proceedings (14 February 2019) 450.

[162] Transcript of Proceedings (12 February 2019) 157.

[163] Transcript of Proceedings (12 February 2019) 158.

[164] Transcript of Proceedings (25 February 2019) 925.

[166] Transcript of Proceedings (12 February 2019) 446-8.

[168] Transcript of Proceedings (25 February 2019) 926.

[169] Transcript of Proceedings (25 February 2019) 922.

[170] Transcript of Proceedings (25 February 2019) 923.

[171] Transcript of Proceedings (25 February 2019) 924.

[172] Transcript of Proceedings (25 February 2019) 923-4.

[173] Transcript of Proceedings (25 February 2019) 924.

[174] Transcript of Proceedings (13 February 2019) 276-7; Transcript of Proceedings (18 February 2019) 505.1-9.

[178] Transcript of Proceedings (25 February 2019) 927.

[181] Transcript of Proceedings (25 February 2019) 927.

[182] Transcript of Proceedings (18 February 2019) 476.

[183] Transcript of Proceedings (25 February 2019) 942.

[185] [2015] HCA 37; (2015) 256 CLR 104.

[186] Ibid [46]-[51] (citations omitted).

[187] See s 86 of the Planning and Environment Act 1987 (Vic) ('P&E Act').

[188] [2017] VSC 241 [26]-[38].

[189] Plaintiff's Reply and Defence to Counterclaim, 27 March 2017 [38].

[190] [2017] VSC 268 ('Hera Project') affd Bisognin v Hera Project Pty Ltd [2018] VSCA 93. See also Simcevski v Dixon [2017] VSC 197 [62]-[63] (Riordan J).

[191] Hera Project (n 190) [105]-[108] (citations omitted) (emphasis added).

[192] [2017] VSC 641 ('Cahill').

[193] [1954] HCA 25; (1954) 90 CLR 235 ('Peter Turnbull').

[194] [2005] HCA 73; (2005) 222 ALR 421, 433 [42] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

[195] Peter Turnbull (n 193) 246-7 (Dixon CJ).

[196] (1986) 40 NSWLR 622, 637.

[197] Cahill (n 192) [239]-[241].

[198] See, eg, Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd (1984) 3 NSWLR 613, 614E, 620F, 632D; Roadshow Entertainment Pty Ltd v. ACN 053 006 269 Pty Ltd (recs & mgr apptd) [1997] NSWSC 473; (1997) 42 NSWLR 462, 480A; Kyrwood v. Drinkwater [2000] NSWCA 126, [154]; Mitchell v. Pattern Holdings Pty Ltd (2002) 11 BLR 20,241 at [56]-[57]; Cypjayne Pty Ltd v. Babcock & Brown International Pty Ltd [2011] NSWCA 173; (2011) 282 ALR 152 [82].

[199] [2005] NSWSC 528 [8]-[12].

[200] Cahill (n 192) [252]; Hera Project (n 190) [142]; Simcesvski v Dixon [2017] VSC 197 [64]; Joseph Street Pty Ltd v Tan [2012] VSCA 113; (2012) 38 VR 241. See also SMK Cabinets v Hili Electrics Pty Ltd [1984] VicRp 31; [1984] VR 391.

[201] Cahill (n 192) [252].

[202] Hera Project (n 190) [121].

[203] Cahill (n 192) [256]-[257]; Hera Project (n 190) [121].

[204] Cahill (n 192) [258].

[205] In relation to the Mandile company contracts, Mr Mandile gave evidence that they would have paid out the mortgage and caveats on the land and settled the sale: Transcript of Proceedings (11 February 2019) 70.11-23. Mr Grinter, Bensons' former solicitor, accepted that he had never asked Mr Indovino whether or not the Mandile parties would be able to settle: Transcript of Proceedings (25 February 2019) 899.18-27.

[206] Transcript of Proceedings (11 February 2019) 77.

[207] Plaintiff's Fourth Further Amended Statement of Claim, 15 February 2019 [6(g)-(h)].

[208] Plaintiff's Outline of Closing Submissions, 5 March 2019 [21].

[209] Plaintiff's Fourth Further Amended Statement of Claim, 15 February 2019 [10]-[15].

[210] See, eg, Bell Group NV (in liq) v Insurance Commission of Western Australia [2017] WASCA 229 [92] ('Bell Group').

1. [211] Griffith CJ in Butt v M'Donald (1896) 7 QLJ 68, 70-71 and confirmed in the High Court in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 607; [1979] HCA 51; 26 ALR 567 at 577 (per Mason J, Gibbs, Stephen and Aickin JJ concurring).

[212] See, eg, Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd [2015] FCAFC 127; (2015) 327 ALR 45 [130]-[138] (Middleton, Foster and Gleeson JJ) ('Marmax') and the authorities cited therein; Bell Group (n 210) [109]-[110], [118].

[213] Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104, 124D.

[214] [2006] EWHC 538 ('James E McCabe v Scottish Courage'), quoted in Marmax (n 212) [133].

[215] Marmax (n 212).

[220] [2017] VSC 197.

[221] J W Carter, 'Good Faith in Contract: Why Australian Law is Incoherent' (Speech, Bar Association of Queensland 2014 Annual Conference, 8 March 2014) 30, 49, citing Council of the City of Sydney v Goldspar Australia Pty Ltd [2006] FCA 472 (Gyles J) ('Council of Sydney v Goldspar') and Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187; (2001) 69 NSWLR 558 ('Hungry Jack's).

[222] James E McCabe v Scottish Courage (n 214).

[223] (1992) 26 NSWLR 234 ('Renard').

1. [224] Hungry Jack's (n 221). See also United Group Rail Services Limited v Rail Corporation New South Wales [2009] NSWCA 177; Hughes Brothers Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91; Alcatel Australia Ltd v Scarcella [1998] NSWSC 483; (1998) 44 NSWLR 349; Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15.

[225] [2005] VSCA 228 ('Esso').

[226] Ibid [25] (Warren CJ and Osborn AJA agreeing) (citations omitted).

[227] [2012] VSCA 175; (2012) 41 VR 1 ('Specialist Diagnostic v Healthscope').

[228] Ibid [86]-[87] (citations omitted).

[229] Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 [107] (Kiefel J).

[230] See, eg, DPN Solutions Pty Ltd v Tridant Pty Ltd [2014] VSC 511: 'In this State, an obligation of good faith is not implied as a legal incident of all contracts'; Cahill (n 192) [210] (Kennedy J): 'the preponderance of authorities in Victoria suggests that there is no duty of good faith implied by law'; Bakers Investment Group (Aust) Pty Ltd v Caason Investments Pty Ltd [2014] VSC 598 [411] (Elliott J): 'In this jurisdiction, there has been a reluctance to imply a term of good faith as a legal incident of commercial contracts', citing Esso (n 225) [25] (Buchanan JA, with whom Warren CJ and Osborn AJA agreed); see also [2]-[4] (Warren CJ). See also Androvitsaneas v Members First Broker Network Pty Ltd [2013] VSCA 212, [101]-[110] (Redlich and Priest JJA and Macaulay AJA); Specialist Diagnostic v Healthscope (n 227) [86]-[87] (Buchanan, Mandie and Osborn JJA); Bytan Pty Ltd v BB Australia Pty Ltd [2012] VSCA 233, [45] and fn 30 (Warren CJ, with whom Osborn JA agreed); Tote Tasmania Pty Ltd v Garrott [2008] TASSC 86; (2008) 17 Tas R 320, 326 [16] (Tennent J and Buchanan and Mandie AJJ). But see: Far Horizons Pty Ltd v McDonalds Australia Ltd [2000] VSC 310 where Byrne J considered he was bound to imply in a franchise agreement a term of good faith and fair dealing.

[231] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 ('BP Refinery').

[232] [1979] HCA 51; (1979) 144 CLR 596.

[233] See, eg, David A Harris v AMP Financial Planning [2019] VSC 24 [52] (Digby J).

[234] Compare Specialist Diagnostic v Healthscope (n 227) [86]-[87].

[235] Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507, 546-7(Dixon J).

[236] Ibid. See also IOOF Building Society Pty Ltd v Foxeden Pty Ltd [2009] VSCA 138; (2009) 23 VR 536 [119]-[121] (Maxwell P, Ashley JA and Hansen AJA).

[237] See, eg, Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226 (Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ).

[238] Retirement Services Australia (RSA) Pty Ltd v 3134 Victoria Street Doncaster Pty Ltd [2012] VSCA 134; (2012) 37 VR 486 (Warren CJ, Harper and Robson JJA) [137]-[139] quoting Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190, 195 (McLelland J).

[239] (1988) 164 CLR 387 ('Waltons Stores').

[240] See J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2014), 540 [14]-[260]; Moala v Free Wesleyan Church of Tonga (Ruling No 4) [2017] VSC 635 [53] (Ginnane J); Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2007] VSC 40 [108] (Hargrave J). But see Bullhead Pty Ltd v Brickmakers Place Pty Ltd [2017] VSC 206 [184] where Sifris J considered Brennan J's 'elements a useful starting point, although not universally accepted, but sufficient for present purposes'. This aspect was not disturbed on appeal in [2018] VSCA 316 (Kyrou, McLeish and Hargrave JJA). See also CC Growth Pty Ltd v Amiga Growth No. 2 Pty Ltd [2019] VSC 340 [81] (Riordan J).

[241] Waltons Stores (n 239) 428-9.

[242] Transcript of Proceedings (11 February 2019) 101.15-16.

[243] Transcript of Proceedings (11 February 2019) 101.16--19.

[244] Transcript of Proceedings (11 February 2019) 103.9-11.

[245] Transcript of Proceedings (14 February 2019) 401.14-15.

[246] Transcript of Proceedings (14 February 2019) 401.15-23.

[247] Transcript of Proceedings (12 February 2019) 131.29-132.2; Transcript of Proceedings (14 February 2019) 356.11-13.

[248] Transcript of Proceedings (12 February 2019) 131.28-30; Transcript of Proceedings (14 February 2019) 355.12-14.

[249] Transcript of Proceedings (12 February 2019) 132. 23-30.

[250] Transcript of Proceedings (20 February 2019) 785.

[251] Transcript of Proceedings (25 February 2019) 853.

[254] See, eg, Exhibit D41; Exhibit D45.

[257] Plaintiff's Fourth Further Amended Statement of Claim, 15 February 2019, Schedules A and B.

[258] Hadley v Baxendale [1854] EngR 296; (1854) 9 Ex 341.

[259] Transcript of Proceedings (25 February 2019) 883-4.

[260] Transcript of Proceedings (18 February 2019) 505.1-9.

[261] [2017] NSWCA 159 ('PND v Bastow').

[263] [1993] QCA 277 ('Orlit v JF&P Consulting Engineers').

[264] PND v Bastow (n 261) [67] (McDougall J) quoting Orlit v JF&P Consulting Engineers (n 263).

1. [265] Where a plaintiff paid an expense which included a GST component, the plaintiff's damages based on that expense will not include the GST component if the evidence establishes that the plaintiff has claimed the GST component as an input credit or by way of refund or could do so: Gagner Pty Ltd v Cantouri Corporation Pty Ltd [2009] NSWCA 413; (2009) 262 ALR 691 (NSWCA) [149]-[154]; Fulton Hogan Construction Pty Ltd v Grenadier Manufacturing Pty Ltd (in liq) [2012] VSC 358 [468]; Millington v Waste Wise Environmental Pty Ltd (2015) 295 FLR 301; Penson v Titan National Pty Ltd (No 4) [2015] NSWCA 350 [25].

[267] Transcript of Proceedings (12 February 2019) 179.26 - 180.9.

[268] Plaintiff's Fourth Further Amended Statement of Claim, 15 February 2019 [31] (emphasis added).

[269] Defendant's Closing Submissions, 5 March 2019 [161].

[270] See, eg, Tuncel v Renown Plate Co Pty Ltd [1976] VicRp 50; [1976] VR 501, 503-4; Powercor Australia Ltd v Thomas (2012) VR 220 [52]-[53].

[271] Calculated as follows from Exhibit P95: Mr Gatsby - 554.5 hours at $250/hour = $138,625; Mr Gale - 249.25 hours at $250/hour = $62,312.50; Mr Hutchinson-Brooks - 54 hours at $250/hour = $13,500.

[272] GST in the sum of $1,853 is not recoverable - see footnote 265 above. Invoices totalling $4,465 which are dated 2016 and post-13 June 2017 have been excluded.

[273] New South Wales v Stevens [2012] NSWCA 415; (2013) 82 NSWLR 106. See also Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) CLR 286; Baume v Commonwealth [1906] HCA 92; (1906) 4 CLR 97; Chappel v Hart (1998) 195 CLR 232; NCON Australia Ltd v Spotlight Pty Ltd (No 5) [2012] VSC 604 [354]; Motium Pty Ltd v Arrow Electronics Australia Pty Ltd (2009) 68 SR (WA) 277.