KURNELL DEVELOPMENTS PTY. LIMITED & ANOR. v. ORICA AUSTRALIA PTY. LIMITED & ORS. [1999] NSWCA 163

JUDGMENT 1 POWELL JA: This is an application for leave to appeal made by two unsuccessful plaintiffs whose proceedings were dismissed by Bryson J on 28 September 1998 pursuant to the provisions of SCR Pt 13 r 5. 2 The first named Claimant Kurnell Developments Pty. Limited ("Kurnell") is a company incorporated on 17 March 1994 - a date which is not without significance having regard to the allegations in the Claimants' Statement of Claim - at the behest of the Second Named Claimant, Paul Williams ("Mr. Williams") a man who - writing on the letterhead of "Williams Group of Companies" describes himself as "Chairman" - appears not to be unacquainted with matters of business and who claims at the relevant time to have had "considerable experience in sand and stone mining in Sydney and elsewhere". 3 The First Named Opponent, Orica Australia Pty. Limited, which was formerly called ICI Operations Pty. Limited ("Operations") is said at all material times to have been a subsidiary of the Second Named Opponent, Orica Limited, which was formerly called ICI Australia Limited ("ICI"). The Third Named Opponent, John Loschiavo ("Mr. Loschiavo") when writing on the letterhead of both ICI and of Operations - both of which appear to have had the same address in Melbourne - signed as "National Property Manager". 4 ICI appears at all relevant times to have been registered as the proprietor of the lands now the subject of Folio Identifier 8/586986 which lands - approximately 30 hectares area - appear to be located on the Kurnell peninsula and appear to front Captain Cook Drive in the area of Quibray Bay, which area appears to be zoned an industrial area. At all relevant times there was situated on the subject land a large sand dune which, at the time, appears to have been unstable. 5 The Statement of Claim which was considered by Bryson J when dealing with the application by the Opponents to dismiss the proceedings was described by Bryson J in the Judgment from which the Claimants seek leave to appeal as "prolix and diffuse", a comment with which I wholeheartedly agree, as also do I agree with his Honour's comment that "there are many allegations of the history of dealings which have no apparent place in the Statement of Claim". Those aspects of the Statement of Claim, in my view, make it difficult indeed to discern what was the case which the Claimants sought to advance and what were the material facts upon which the Claimants sought to found that case. Nor was one's task made any the easier by the fact that the pleader has resorted to such unsatisfactory devices as asserting that "the First Defendant and/or the Second Defendant and/or the Third Defendant" took particular actions and that "the Third Defendant was an agent and/or principal of or for the First Defendant and/or the Second Defendant and/or was operating on his own account or had the ability and/or authority to operation on his own account" and, finally, has prayed relief in the nature of specific performance of an alleged agreement for sale of the subject land to Kurnell, and either additionally, or in the alternative, damages for the alleged breach of that alleged agreement and, further, damages based upon the provisions of ss. 51AA, 52 of the Trade Practices Act (1974) (Cth) and s.42 of the Fair Trading Act 1987. 6 Although, in the summary of Appellant's argument which was filed with the Claimant's application for leave to appeal the nature of the Claimant's case was described as: "Claim for damages or other relief based on the respondent's failure to honour representations and an agreement to sell land to the first appellant. The causes of action are misleading and deceptive conduct contrary to s.52 of the Trade Practices Act 1974 (Clth) (sic) and s.42 of the Fair Trading Act 1987 (NSW), unconscionability under the general law and s.51AA of the Trade Practices Act, and contract". a description suggesting that the foundation of the Claimant's case was either an agreement said to have been made, or representations said to have been made, at a meeting said to have occurred on 1 August 1997 between Mr. Williams and others on behalf of the Claimants and Mr. Loschiavo on behalf of the Opponents, that impression was dispelled and the issues once more clouded by the following further paragraphs in the summary of Claimants' argument: "The statement of claim alleged that at the outset of dealings the third respondent made misleading and deceptive representations to the appellants to the effect that any deal which he struck with them was virtually certain to bind the corporate respondents because he had always influenced their directors who had never rejected his recommendations. The plaintiffs therefore had a case for relief against the third respondent based on contraventions of s.52 of the Trade Practices Act 1974 (Clth) and s.42 of the Fair Trading Act 1987 (NSW). ……… The statement of claim also alleged that on 1 August 1997 at a meeting between Mr. Williams, Ms. Yard and the third respondent, representations were made by the third respondent that a deal was concluded on the basis that the corporate respondents would sell the land to the appellants for $7.4 million which included all outstanding lease, rental payments and disbursements, and an oral agreement to that effect was reached. The third respondent did not dispute this. ……… Such representation and agreement were unconditional when made. ……… The representations made at the said meeting between Williams, Yard and the third respondent on 1 August 1997 was pleaded as being in relation to a future matter and it was … Consequently by operation of s.51A of the Trade Practices Act the respondents were deemed not to have had reasonable grounds for making the representations unless they adduced evidence to the contrary and the representation was deemed to be misleading. The respondents did not adduce contrary evidence and even if they had it would have been an issue to be resolved at a trial. ……… Part of the appellants' case is that the respondents misrepresented their contractual intention at the said meeting on 1 August 1997 between Williams, Yard and the third respondent. Under the general law such conduct may be regarded as unconscionable depending on all the circumstances as they emerge at the trial. Equity may provide relief, and relief is also available via s.51AA and ss. 82 and 87 of the Trade Practices Act. ………" 7 A number of observations might conveniently be made at this stage as to this description of the Claimants' case:

the Statement of Claim makes it clear, as also did the evidence which was tendered before Bryson J, that the representations said to have been made "at the outset of the dealings (by) the third respondent" were made no later than early December 1993 - that is at least 3 months prior to the incorporation of Kurnell - so that the assertion in the Statement of Claim that the representations were made to both Claimants and that each of them was believed by each of the Claimants cannot be sustained;
so far as the representation alleged to have been made by Mr. Loschiavo on 1 August 1997 is concerned, it is not correct to say that Mr. Loschiavo did not dispute the making of that representation. On the contrary, in an Affidavit sworn by Mr. Loschiavo on 18 August 1998, Mr. Loschiavo did dispute the making of a representation in those terms. A letter written on 20 August 1997 by the then solicitor for the Claimants provides confirmation of the evidence given by Mr. Loschiavo in his Affidavit;
if, as the Claimants seem now to assert, what was said at the meeting of 1 August 1997 amounted to a representation as to a future matter - and thus not a concluded agreement - then the Claimants' claim for relief in the nature of specific performance would seem to be untenable;
if, however, what is said to have occurred at that meeting is said to have constituted a concluded agreement, then the material which was put forward by the Claimants to establish that agreement would indicate that, as Bryson J held, it was not open to the Claimants to seek to enforce the completion of that agreement unless and until - which did not occur - certain conditions precedent were fulfilled. That being so, the Claimants claim for relief in the nature of specific performance would seem to have been untenable. Although in the light of that matter it is of no consequence, I note that the Claimants' Statement of Claim was, in any event, demurrable as it did not assert the Claimants' readiness and willingness to perform nor did it contain the Claimants' offer to perform the agreement insofar as it remained to be performed on their part. 8 In making those comments, however, I have anticipated matters a little and I therefore return to record such of the narrative of the relationship between the parties as seems to me to be relevant to the issues which need to be considered on this application. 9 As will be apparent from what I have earlier written, ICI was, in the latter part of 1993, registered as the proprietor of the subject lands. Although it is not entirely clear that this was so, it would seem that, at that time, ICI's interest in the land was to have it used for sand mining, perhaps with a view ultimately - after the dune had been reduced to the level of the surrounding lands - to securing development approval for the creation upon the land - perhaps after sub-dividing it - of what I understand is, in these days, known as an industrial park. 10 According to an Affidavit sworn by him on 15 June 1998 Mr. Williams became interested in the subject land in 1993 as a result of his having visited adjoining premises and having noted the existence of the sand dune to which I have earlier referred. In the event, so he said, Mr. Williams made inquiries to ascertain the owner of the subject land and became aware that ICI was the owner and that Mr. Loschiavo was the National Property Manager of ICI. 11 Having become so aware, so he says, Mr. Williams telephoned Mr. Loschiavo and made an appointment to see him in Melbourne. When he went to Melbourne, so Mr. Williams seems to suggest, he told Mr. Loschiavo of his interest in the subject property and of his wish to obtain an option to purchase over it. It was at this time, so Mr. Williams says, that Mr. Loschiavo made the representations to which I have earlier referred. 12 Discussions as to the subject land are said to have occurred over a period of time, those discussions leading to Mr. Loschiavo on 3 December 1993 writing to him a letter in which he advised him (Mr. Williams) "That a detailed lease proposal has been prepared for approval by senior management. The general conditions of the proposal are as follows: ………" 13 The nature of the conditions were such that, even if they had been made - as they were later made - the subject of a formal offer, acceptance of that offer would not have led to the conclusion of an enforceable agreement - at best, as it seems to me, the purported acceptance of an offer in such terms would have led to no more than a limited consensus of the third type described in the well known passage in the Judgment of Dixon CJ, McTiernan and Kitto JJ in Masters v. Cameron (1954) 91 CLR 353, 360-362. 14 That this was so is made clear by the further letter which Mr. Loschiavo wrote to Mr. Williams on 23 December 1993, which letter contained the following (inter alia): "The company formally confirms agreement to enter into a "Lease/Option to Purchase contract for the property. The general conditions of the contract are reiterated as follows: · The company enters a three year lease of the property with a minimum annual volume sand extraction clause · The lessee applies for a Development Application at its own expense for redevelopment of the site for Light Industrial purposes and succeeds in such application. All documentation would be provided to the company and the lessee will be required to comply with all conditions of the Development Application. · The lessee pays the company a royalty rate of $0.50 cents per tonne for sand removed from the site. A public weighbridge would be used to confirm volumes. · The royalty rate would be reviewed annually. · The lessee would be responsible for all statutory charges pertaining to the site during the lease term. The company is currently paying $60K per annum. · At any time during the term of the lease the lessee would be provided with first right of refusal to purchase the property. If another party lodged an offer to purchase the property and the lessee did not match or exceed this offer then the company could terminate the lease and divest the property. ……… Final Issues to be Clarified 1. Mechanism for measuring sand extracted and means of recording and verifying information. 2. Minimum annual sand extraction volume to be stipulated in Agreement. 3. Rental review clause for royalty rate. 4. Period of Option to Purchase in the event of an offer being lodged by another party. Needless to say the option clause would only apply to an offer deemed acceptable to the company. 5. Management of public relations issues. 6. Progress reporting/documentation on Development Application relating to the property. The company will at its expense arrange preparation of legal documentation confirming arrangements. The abovementioned issues will be confirmed following discussions between the parties. ………" 15 On 4 January 1994 Mr. Williams wrote to Mr. Loschiavo as follows: "Following receipt of your letter dated 23 December 1993 and your confirmation of approval by ICI of our agreement to enter into a Lease/Option to Purchase contract for the above mentioned property. I accept the terms and conditions set out in your letter. I look forward to receiving copy of the agreement ready for execution." 16 Although, as I have previously recorded, Kurnell was not incorporated until 17 March 1994, a form of lease intended to give effect to the arrangements which had been agreed upon - but omitting the name of the proposed lessee - appears to have been prepared meantime by ICI's then solicitors, Minter Ellison Morris Fletcher. Although the form of lease bears date 16 March 1994, it seems clear enough that the form of lease must have been executed at some later date. 17 The lease contained the following (inter alia) provisions: "1. DEVELOPMENT CONSENT 1.1 The tenant must properly make and diligently pursue an application (the 'Development Application') under the Environmental Planning and Assessment Act 1979 in respect of some or all of the Land for development consent ("Development Consent") for such development as the tenant may decide provided that (a) the development is permissible with Development Consent under any relevant planning instrument relating to the land; (b) the nature and all other aspects of the development as described in the Development Application is subjectively acceptable to the Lessor; 1.2 The Tenant must give the Lessor: (a) copies of all documents forming part of the Development Application 7 days before the Development Application is lodged; (b) copies of any subsequent correspondence or other document given by the Tenant to the Sutherland shire Council or any other relevant authority concerning the Development Application within 2 Business Days after it is given to the council or other authority (c) copies of any correspondence or other document given by Sutherland Shire Council or any other authority to the Tenant concerning the Development application with 2 Business Days after it is received by the Tenant 1.3 If the Development Application is determined by refusing consent or if it is not determined at all within 6 months from the date of this Lease either party may rescind this Lease. 1.4 If the terms of the Development Consent are not subjectively acceptable to the Tenant, the Tenant may rescind this Lease within 21 Business Days after the relevant notice of determination of the Development Application is received by the Tenant or the Tenant's agent for receiving that notice. 1.5 The 21st Business Day after the date on which the Lessor receives a copy of the Development Consent as required under Clause 1.2 is the 'Lessor's Rescission Date'. If the terms of the Development Consent are not subjectively acceptable to the Lessor, the Lessor may rescind this Lease not later than the Lessor's Rescission D ate. 1.6 If this Lease is rescinded by either party under any express right to rescind it, neither party shall have any claim against the other in respect of this Lease or its rescission. ……… 2. COMMENCEMENT DATE 2.1 The Commencement Date will be the day after the Lessor's Rescission Date and the Lessor is authorised to insert this date in paragraph (G)2 on the front page of this Lease and in any counterpart of this Lease at any time after the Commencement Date can be ascertained. ………" 18 The form of lease provided (clause 4.1) for the payment by the tenant to the lessor of a "Base Rent" for each month, that Base Rent being equal to the greater of $8,333.34 or an amount representing the royalty payable on the number of tonnes of sand removed from the subject land during the relevant month and, further (clause 4.3), that the tenant should reimburse the lessor, or pay at the lessor's request, the amount of any outgoing within 7 days of the lessor giving the tenant a written request so to do. Clause 4.4 also provided for the payment of interest on all overdue amounts, such interest to be calculated daily but capitalised monthly (clause 4.7). 19 The lease also provided (clause 16) that, during the term of the lease the tenant should have what might, in general terms, be called a "right of first refusal" in the event of the lessor wishing to sell the subject land. The terms and conditions of that "right of first refusal" varied according as the lessor sought to sell the subject land at public auction or by private treaty. The lease did not contain an option to purchase in the conventional sense. 20 Despite the provisions of clause 1 of the Lease, it would seem that no Development Application had been lodged with the Council of the Shire of Sutherland prior to 23 September 1994, on which day Mr. Loschiavo wrote to Mr. Williams a letter which provided (inter alia): "The purpose of this letter is to confirm approval for the Development Application for subdivision of the company's property on behalf of the applicant Kurnell Developments Pty. Ltd." 21 The Development Application, when lodged, appears to have been lodged at that time or shortly thereafter for, on 6 October 1994, there was forwarded to Kurnell on behalf of the General Manager, a letter which read in part: "Development Application for an Industrial Subdivision to create 17 New Lots at Lot 8 Captain Cook Drive, Kurnell I refer to your above application and wish to advise that in its present form it does not contain sufficient information for Council to properly assess the matter. Should you wish to proceed with your development proposal you will need to provide the Council with more detailed information on the subject land and its constraints and opportunities. You will also need to provide information on the land which surrounds your site in terms of the constraints and opportunities that surrounding land provides. To assist you in this matter the following items and suggestions are drawn to your attention: ………" 22 Although the materials which are before the Court do not reveal in any detail what occurred in the following six months, later events would make it tolerably plain that, if not refused, Kurnell's Development Application had not been approved by the Council of the Shire of Sutherland prior to the beginning of April 1995. 23 On 3 April 1995 there was executed by ICI and Kurnell a form of Variation of Lease, that Variation of Lease providing (inter alia) as follows: "4. The Lease is amended by deleting clauses 1.3, 1.4 and 2.1. 5. The parties agree that the Lease is amended to the extent that the term of the lease will commence on 1 March 1995 and will terminate on 28 February 1998. The Lessor is authorised to insert the commencing date and terminating date of the term on the front page of the Lease. 6. To ensure that the meaning of this Variation of Lease is clear, the Lessor and Lessee agree that, subject to clause 1.5 of the Lease, the Lessee is to be bound by the Lease whether or not the Development Consent is granted." 24 The commencement date and termination date of the Lease appear then to have been included on the front page of the form of Lease and of the form of Lease and Variation of Lease appear then to have been lodged with the Land Titles Office and together registered as Dealing No. O168844. 25 It is convenient, here, to pause for the purpose of noting the following: 1. contrary to the assertion in para. 20 of the Statement of Claim that "on or about 16 March 1994 (Kurnell) and (ICI) and/or (Operations) and/or (Mr. Loschiavo) entered into an agreement for lease with an option to purchase the subject land for a term of 180 days" it was on or about 16 March 1994 when Kurnell and ICI executed the formal Lease; 2. the term provided for in that Lease was, not 180 days, but 3 years; 3. notwithstanding that, under the terms of the Lease prior to the execution of the Variation of Lease, it would have been open to Kurnell to rescind the Lease by reason of it not having obtained development approval, Kurnell elected not to rescind the Lease and entered into the Variation of Lease by which it became bound by the other terms of the Lease notwithstanding that development consent had not then been, and might not thereafter be, obtained; 4. contrary to the assertion, in paragraph 23 of the Statement of Claim that "following difficulties which were being experienced by (Kurnell) and/or (Mr. Williams) in obtaining the necessary development approvals, (Operations) and/or (ICI) and/or (Mr. Loschiavo) agreed with (Kurnell) and/or (Mr. Williams) to an extension of agreement to lease/with option to purchase from 1 March 1995 for three years to 28 February 1998" it is clear that no such extension was agreed upon; 5. contrary to the assertion in clause 24 of the Statement of Claim that "on or about 16 March 1996 (Kurnell) and (ICI) entered into Registered Lease No. 0168844 the facts, as I have recorded, make it clear that the form of Lease was executed at some time in or about March 1994 and the Variation of Lease was executed on 3 April 1995, the two documents being thereafter lodged and registered together as Dealing No. 0168844. 26 The fact that Kurnell elected not to rescind the Lease but, instead, executed the Variation of the Lease and thus became bound to prosecute an application for Development Consent must, of necessity, have a considerable bearing upon the fate of the Claimants' assertion that the Opponents have, by reason of the matters alleged in paras. 28-37 of the Statement of Claim, engaged in conduct "that is unconscionable within the meaning of the unwritten law, from time to time of the States and Territories of Australia". 27 Although it is not entirely clear that this was so, it would appear likely that, by January 1996, Kurnell had abandoned the Development Application which had been lodged in about September 1994 and either had lodged, or was proposing to lodge, a fresh Development Application. That this was so is indicated by a letter written by Mr. Loschiavo to Mr. Williams on 31 January 1996 which letter headed "Notice of Lease Default" drew attention to the alleged failure of Kurnell to provide to ICI copies of all correspondence submitted by Kurnell to the Sutherland Shire Council and all other authorities and required Kurnell to provide to it, as a matter of urgency, copies of the Environmental Impact Statement which was thought to have been lodged. The same letter drew attention to the fact that Kurnell had not made payments of rental pursuant to the lease for the months of November and December 1995 and January 1996 and continued: "Pursuant to clause 4.1 of the lease rental is to be paid within 14 days after the end of each month. At this stage the company is not requested reimbursement of outgoing expenses incurred, however this will occur in the near future. Pursuant to clause 4.7 of the agreement the company reserves the right to charge interest on all overdue amounts. The company has consistently demonstrated support for Kurnell Developments in its Development Application and restraint with regard to late payment of outstanding rents. The company requires copies of all correspondence submitted to the Sutherland Shire Council and all other authorities together with a cheque for $25,000.02 by not later than Wednesday 14 February 1996." 28 On 1 March 1996, Mr. Loschiavo wrote again to Mr. Williams, on this occasion as follows: "I refer to our telephone discussions on 28 February 1996 concerning approval for the Development Application in respect of the company's property described above. The purpose of this letter is to confirm approval by ICI Australia Limited as follows: "Authority is hereby given to Kurnell Developments Pty. Ltd ACN:063056598 to make, at its expense an application or applications to The Council of Sutherland Shire in respect of the development, subdivision of the land owned by ICI Australia Limited ACN:004145868 situated at Captain Cook Drive, Kurnell comprising the whole of the land in Certificate of Title Folio Identifier 8/586986.'" 29 On 15 April 1996, Kurnell's then solicitors, Deacons Graham & James, wrote to Mr. Loschiavo a letter which, in part, read as follows: "As discussed, we act for Kurnell Developments Pty. Limited. Our client has instructed us to offer to purchase the land from you subject to the following conditions: (1) The purchase price will be $5,000,000.00. (2) A deposit of $500,00.00 (sic) shall be payable on exchange of Agreements. (3) Upon payment of the purchase price you will waive any outstanding rent or the obligations of our client and its guarantor to pay outgoings under the existing Lease. ……… (8) Otherwise the Agreement for Sale will be in accordance with the New South Wales Law Society standard conditions for the sale of land in New South Wales. Would you please advise whether you are prepared to sell the land on the above basis. Of course, no legal obligations will arise until such time as Agreements for Sale of Land are executed and exchanged (which our client will be able to do within 14 days of the later of the contract being provided to it or you notify your acceptance of the above offer)." 30 On 16 April 1996, Mr. Loschiavo wrote to Deacons Graham & Jones a letter which, omitting formal parts, was as follows: "The company formally acknowledges receipt of the offer and in particular written confirmation that the suggested deposit is $500,000 and not $50,000. A number of reports will be prepared in respect of the property and you will be further advised as soon as possible." 31 The materials which are before the Court do not disclose the fate of that offer, but as the materials which are before the Court contain a reference to an offer made in May 1996 - which offer was said, in February 1997, not to have been accepted by ICI at that stage - one can but assume that the offer made in April had not been accepted by ICI and had been treated by the parties as having lapsed. 32 On 3 February 1997, Mr. Loschiavo wrote to Deacons Graham & James a letter which, omitting formal parts, was as follows: "KURNELL DEVELOPMENTS I refer to previous correspondence in this matter and your client company's Development Application. The company requests a full status report on the Development Application including copies of recent correspondence with all statutory bodies within seven days of this letter. In the event that satisfactory documentation and details are not submitted the company will formally approach the Shire Of Sutherland for full details. Your client has not remedied the outstanding rental arrears for the property; currently in the amount of $243,741.74 (copy fo (sic) invoice enclosed). This situation will not be permitted to continue and the company reserves all rights to pursue legal action in this matter. Please advise the date of receipt of all outstanding costs to ICI Australia Operations within 7 days of this letter." 33 Deacons Graham & James replied by letter dated 7 February 1997, which letter, after giving what might be called "a status report" on the progress of the Development Application, concluded: "Our client is well aware that there is (sic) substantial arrears and outgoings payable in respect of the property. You will recall that our client suggested in our letter of May 1996 that those amounts not be charged as part of the offer, on behalf of our client, to purchase the property. We are well aware of the substantial steps which you have taken for the purposes of considering the offer made in our May letter and appreciate that ICI needs to consider its various options in relation to the property. However, as stated in our meeting last year in our offices, our clients cannot allow the offer to stay open on an indefinite basis. At this stage, we are instructed that our client has in place, access to sufficient financial resources to complete the purchase of the property on usual settlement terms (i.e. with a six week completion period). Further, our client (and its financiers) do not require any further due diligence inquiries to be conducted of the property and would, for an appropriate adjustment to the purchase price, consider settling in a shorter time. We appreciate that ICI has extended considerable indulgences to our client to date. Nonetheless, our client has some difficulties in resolving the outstanding balance whilst it does not know whether the offer contained in our letter of May 1996 is going to be accepted. Quite simply, the acceptance of that offer has a fundamental effect on the structuring of our client's proposed use of the property. Until such times our client knows the attitude of ICI to the offer made in our letter of May 1996, it cannot finalise the financial arrangements for the financing of that use. For these reasons we would be grateful if you would provide us with an indication of ICI (sic) attitude of that offer." 34 The materials which are before the Court do not disclose the fate of the offer apparently made in May 1996. 35 It would seem that at some time prior to 13 May 1997, Kurnell had retained Rosenblum & Partners to act as its solicitors for, on that day, Mr. R.A. Gelski who appears then to have been a member of that firm wrote to Mr. Loschiavo as follows: "We act for Kurnell Developments Pty. Limited. We have been instructed by our client to make to ICI Australia Limited an offer for our client to purchase from it the above property. The terms of this offer are as follows: 1. Purchase price $5 million 2. 10% deposit on exchange of contracts 3. The balance of the purchase price to be paid on settlement 4. Settlement to take place six weeks after the date of exchange of contract 5. This is an unconditional offer in the sense that it is not subject to FIRB approval or any other condition 6. The purchase price of $5 million includes all outstanding monies owing to you under our client's Lease from you and there is to be a full and mutual release in respect of all matters under or pursuant to the Lease. This offer will remain open for acceptance for a period of 14 days commencing on the date of this letter. Once the offer is accepted our client would expect that both parties would proceed on the basis of contracts being exchanged within 7 days after such acceptance. We hold the sum of $500,000.00 for the purposes of the 10% deposit in our trust account. Upon exchange of contracts the deposit monies will be paid to your solicitors to be held by them as stakeholder pending settlement. Our client looks forward to acceptance of this offer." 36 On 20 May 1997, Mr. Loschiavo wrote to Rosenblum & Partners as follows: "I refer to your offer dated 13 May 1997 and acknowledge receipt thereof. The company views the offer and outstanding rental arrears as separate matters. In order to re-establish credibility with the company the sum of $277,075 must be paid immediately by your client in accordance with the terms and conditions of the created (sic) lease. Upon receipt of the abovementioned sum the company will commence negotiations for divestment of its property. Please note that the company is presently in receipt of offers to purchase the property and is currently finalising its divestment approval procedures." 37 On 19 June 1997, there was filed in the Land and Environment Court on behalf of Kurnell an Application in the Class 1 jurisdiction of that Court based upon the deemed refusal by the Sutherland Shire Council of the Development Application which had earlier been filed on behalf of Kurnell. 38 Although the materials which are before the Court do not clearly demonstrate that this was so, the probability is that the practices of Rosenblum & Partners and Blake Dawson Waldron were merged on and from 1 July 1997 on which day Mr. Gelski became a partner in the firm of Blake Dawson Waldron. 39 In the Statement of Claim filed on their behalf, the Claimants allege (inter alia): "29. On or about 1 August 1997 (Operations) and/or (ICI) and/or (Mr. Loschiavo) agreed to sell to Kurnell the Subject Land for the sum of $7,400,000. PARTICULARS The agreement was made orally at a meeting held on 1 August 1997 at the International Hotel in Sydney between (Mr. Williams) and (Mr. Loschiavo). Also present at that meeting was Janet Elizabeth Yard. 30. In the alternative, on or about 1 August 1997, (Operations) and/or (ICI) and/or (Mr. Loschiavo) represented to (Kurnell) and/or (Mr. Williams) that (ICI) would sell to (Kurnell) the Subject Property for the sum of $7,400,000. PARTICULARS OF THE MAKING OF THE REPRESENTATIONS The representation was made orally at a meeting held on 1 August 1997 at the Intercontinental Hotel in Sydney between (Mr. Williams) and (Mr. Loschiavo). Also present at that meeting was Janet Elizabeth Yard." 40 Mr. Loschiavo, while denying the making of any such agreement or any such representation as was alleged by the Claimants in those paragraphs in the Statement of Claim asserted that, on 1 August 1997, there was held at the offices of Blake Dawson Waldron, which had by then become the solicitors for Kurnell, a meeting between Mr. Williams, Mr. Gelski and himself (Mr. Loschiavo), at which meeting, so Mr. Loschiavo said, there was a discussion at which Mr. Williams said he wished to buy the property for $7,000.000 and he (Mr. Loschiavo) said: "Any offer to purchase the land will be subject to Board approval. I will not submit any offer to the Board until I am satisfied that all outstanding arrears and a 10% deposit have been placed in the Mallesons Stephen Jaques trust account. If you can meet these conditions I would recommend it to the Board but the matter is entirely at the discretion of the Board." to which Mr. Williams replied: "That's okay." 41 A note made by Mr. Loschiavo in his diary for 1 August 1997 provides corroboration for his evidence on this matter. It was as follows: "I attended a meeting with P. Williams and R. Gelski of Blake Dawson Waldron Solicitors. Key points. · Kurnell Developments in breach of its lease. · All rental arrears must be paid in full into trust account of Mallesons Stephen Jaques. · Offer at $7M will not be submitted for approval to ICI Board unless arrears and a 10% deposit credited to trust account at MSJ. · Offer subject solely to Board approval." 42 The diary note made by Mr. Gelski at the time was as follows: " F/N 591478 Williams re Kurnell Paul W. John Loschiavo 1/8/97 re: Kurnell Investors prepared to back acquisition - won't pay arrears W/O certainty they can buy John - can only recommended - Bd decides - never been knocked back yet - prefers rental up front - will recommend $7 m MUST be unconditional U/took that will confirm 700 t cleared funds in trust as soon as we have committ." 43 Further corroboration of Mr. Loschiavo's version of events is provided by a letter written by Mr. Gelski on 20 August 1997 after, so he said, Mr. Loschiavo had telephoned Mr. Gelski and said to him: "I am not happy with the progress of this matter. I have not heard anything about it. I want a letter from you stating what your client's intentions are." 44 Mr. Gelski's letter was as follows: "Kurnell Developments Pty. Limited (KDPL) and ICI Australia Limited (ICI) This is to confirm that our client Mr. Paul Williams is finalising arrangements to proceed to the purchase of Lot 8 Captain Cook Drive, Kurnell as per our discussions in our meeting on Friday 1 August 1997. Our understanding subsequent to our meeting is that you require that an additional payment of $347,000.00 be made to bring arrears of rent from KDPL up to date. Immediately thereafter or simultaneously with the rent payment, we will confirm an unconditional offer to purchase the property for $7 million, settlement to take place within 60-90 days. ICI will hand over all reports both internal and external, it being acknowledged that ICI will have no responsibility in relation to the contents of reports so provided. As agreed upon confirmation that we hold $700,000 cleared funds in our trust account you will do all things in your control to prepare the matter for submission to your Board of Directors and that submission will go with your positive recommendation." 45 Although, in the Statement of Claim filed on their behalf the Claimants asserted that (inter alia): "34. Acting in reliance upon the representation" (semble, that referred to in paragraph 30 "and as a result of the conduct alleged above" (semble, that asserted in paragraph 29) "(Kurnell) and/or the Second Plaintiff expended moneys in prosecuting the appeal to the Land and Environment Court in relation to the development approval for the Subject Land." subsequent events would cast more than a shadow of doubt upon the accuracy of that assertion. 46 Although, on 29 August 1997, the Class 1 Application in the Land and Environment Court had been fixed for hearing on 26-28 November and 1-5 December 1997, on 12 November 1997, those hearing dates were vacated, the Application not being fixed again for hearing until 10 December 1997, on which day 30-31 March, 1-3, 6-8 April 1998 were allotted as the days for hearing. 47 Before that had occurred, however, Mallesons Stephen Jaques had, on 2 December 1997, written to Mr. Gelski as follows: "We act for ICI Australia Operations Pty. Ltd and have been instructed to respond to your facsimiles dated 20 August 1997 and 14 November 1997. It is appropriate that we state very clearly our instructions: - 1. Your client is significantly in arrears of rent and statutory charges under the terms of the lease and has consistently refused and neglected to pay the arrears and statutory charges notwithstanding repeated requests. Unless arrears and statutory charges - · arrears to 31 December 1997 $216,667 · statutory charges to 31 December 1997 $187,197 Total $403,864 are paid in full within 21 days then ICI will have no choice but to consider termination of the lease and the commencement of recovery proceedings against the lessee and the guarantor. 2. While some discussions occurred between the parties, there is no current offer from your client or ICI for purchase/sale of the property and the matter has never been submitted to the ICI Board for approval which is an essential prerequisite before any agreement for sale can be entered into. 3. A previous offer put on behalf of your client by Deacons Graham and James (in April 1996) has lapsed. 4. There is no agreement/arrangement in place between your client and ICI which could give rise to any expectation that ICI would even consider any offer your client may wish to make in the future for the purchase of the property. 5. ICI is aware that your client is proceeding with its appeal to the Land and Environment Court of NSW seeking development consent to use the land for an extractive industry. In undertaking this litigation, your client is acting entirely at its own risk. Even if your client incurs all of the expenses of running the proceeding and is ultimately successful and obtains a development consent to use the land for an extractive industry (which will presumably increase the value of the land) there is no agreement or arrangement in place whatsoever which would give your client any expectation either at law or in equity that it will be able to use the land after the lease expires on 28 February 1998 (subject to earlier termination as referred to in paragraph 1) or that ICI would then be willing to sell the property to your client or any other person. ICI is entitled, if so minded, to negotiate with any person, including your client, in its absolute and sole discretion, in respect of the sale, lease, disposal or use of the property. 6. Accordingly, even if your client obtains a development consent, ICI would be entitled to sell the land to a third party (subject to the terms of the existing lease) and, thereby, to gain benefit from the consent for itself in its capacity as the owner. 7. The proceedings before the Land and Environment Court, ICI understands, do not presently have a hearing date and the matter will be considered again in December. If your client chooses to obtain a hearing date it does so entirely at its own risk as set out in paragraph 5. 8. Insofar as the request for use of documents is concerned, the reports in question have been prepared confidentially for ICI at its own costs and for its own purposes and, accordingly, these reports are not available for the use of your client. Please advise what your client proposes to do about payment of the arrears of rent and statutory charges." 48 On 18 December 1997, Mr. Gelski wrote to Mallesons Stephen Jaques as follows: "We refer to your letter dated 2 December 1997 and are instructed to reply as follows: 1. Our client met with Mr. John Loschiavo of ICI Australia Pty. Limited on two occasions in the presence of the writer. 2. During the course of those meetings Mr. Loschiavo agreed with our client that he would use his best endeavours to shepherd through to Board approval an acquisition by our client of Lot 8 Kurnell for the price of $7M plus arrears of rent capped at $400,000.00. 3. Our client has continued to pursue proceedings in the Land and Environment Court with a view to obtaining development consent for the removal of the overburden on the land. These proceedings have been set down for hearing on 31 March 1998. The proceedings are set down for approximately 8 days. Mr. Loschiavo at the aforementioned meetings undertook to supply all documentation relating to reports provided by experts in relation to the said land which are now required for these proceedings. Naturally you will be aware that a favourable outcome to the abovementioned proceedings at our client's cost would enure to your client's benefit. In these circumstances, we can see no good reason why your client would choose to withhold access to those reports especially when it is clear that they would facilitate a speedier conclusion to the proceedings. In these circumstances we are instructed to renew our client's request for access to the consultants' report in respect of the property. It is understood that your client makes no representations in relation to the contents of those reports. We are instructed to request a draft contract for the sale of Lot 8 to our client or his nominee at your earliest convenience. The terms should be as agreed with Mr. Loschiavo." 49 On 7 January 1998, Mallesons Stephen Jaques wrote to Mr. Gelski as follows: "We refer to your letter of 18 December 1997 and we have instructions to respond as follows: 1. Agreed. 2. Denied. At the meetings, held in June and July 1997, Mr. Loschiavo made it very clear that he would not submit your client's offer to the ICI Board for consideration until: · arrears of rent were paid; and · your client lodged a sum equal to 10% of the purchase price then discussed ($7 million) in the Mallesons Stephen Jaques trust account. Further, at all times, it was also made abundantly clear that any decision on the acquisition was that of the Board and the Board alone. Mr. Loschiavo would have been able to make a recommendation to the Board he did not agree (and, indeed, was not in a position) to 'shepherd through' a Board approval. This allegation is strenuously denied. As more than 5 months have elapsed since those discussions and as your client has failed to pay the arrears and to lodge the monies referred to, the matter has never been referred to the ICI Board and the discussions have lapsed. 3. Noted. We note that your client has continued to pursue the Land and Environment proceedings at its own risk. It has elected to do so with a full appreciation of the fact that any consent obtained would run with the land, in circumstances where it is not the owner of the land. We note that these proceedings have been set down for hearing commencing on 31 March 1998, but the lease expires on 28 February 1998. Thus, any consent granted by the Court will enure for the benefit of our client. 4. Denied. There was no agreement to provide the reports for the purposes of your client's Land and Environment Court proceedings. The discussion about the availability of reports was that your client would pay the monies referred to in paragraph 2 above and that, thereafter, the offer would be placed before the Board for its consideration. Our client would only make the reports available as part of its divestment of the land. We note the following matters: (a) reports which have been prepared confidentially for ICI are not available to your client; (b) negotiations between our clients have ended and your request for a contract is declined; (c) apparently your client has chosen to fund the Land and Environment proceedings rather than follow through with the payment of the arrears of rent and the lodgment of monies so as to permit referral of the matter to the ICI Board for consideration; (d) after expiry of the lease in February 1998 our client will institute debt recovery proceedings against your client and the guarantor; (e) our client reserves all its rights." 50 On 9 March 1998, Mr. Gelski wrote to Mallesons Stephen Jaques as follows: "We refer to our letter dated 18 December 1997 and reiterate our client's contention that Mr. Loschiavo agreed to recommend an offer from our client to purchase Lot 8, Captain Cook Drive, Kurnell for the price of $7.0 million plus arrears of rent capped at $400,000. We note that in your letter dated 7 January 1998 you deny that he agreed to 'shepherd through' such an offer. Our client reaffirms in the strongest possible terms that Mr. Loschiavo did indeed agree to support and recommend the described offer to the Board. Furthermore he stated that when he recommended a course of action in relation to a property matter his recommendations had in the past always been accepted. Mr. Loschiavo has at all times been aware that our client has continued to pursue the proceedings in the Land and Environment Court and, as you are aware, these are set down for hearing on 31 March 1998. Indeed, your client provided consents in relation to the DA which was lodged. We reiterate our request that your client make available any experts' reports which are presently in existence in relation to the land. We are further instructed once again to request a draft unconditional contract for sale of the abovementioned land at your earliest convenience. " 51 To that letter Mallesons Stephen Jaques replied on the same day as follows: "We refer to your letter of 9 March 1998. We are informed by our client that your client has requested that a meeting be convened to discuss the matter. We have been instructed to advise that our client will not consider attending a meeting with representatives of Kurnell Developments Pty. Ltd. unless and until all arrears of rent and statutory charges in the sum of $432,580.50 have been paid by bank cheque. LAND AND ENVIRONMENT COURT PROCEEDINGS Your client continues to press these proceedings in the clear knowledge that he has no interest in the land - our letter of 2 December 1997 could not be any clearer in this regard. There can be no reliance factor. We confirm the matters set forth in our letter of 7 January 1998. Your request for use of the reports is denied." 52 It would seem that, by 20 March 1998, Kurnell and Mr. Williams had terminated the retainer of Blake Dawson Waldron and had retained one Alex Lee as its, and his, solicitor, for, on that day, Mr. Lee wrote to Mallesons Stephen Jaques as follows: "Kurnell Development Pty. Ltd. Property: Lot 8 Captain Cook Drive Kurnell. I refer to your faxed letter dated 9 March 1998 and have noted its contents. Please be informed that we disagree with the substance of the second paragraph therein and to the detail contained in the third paragraph to the extent of your statement that my client has no interest in the land. It is my belief that my client does have an interest in the land and intents to seek to uphold such right." 53 On 20 March 1998, Mr. Lee caused to be filed in the Land Titles Office a Caveat, given Dealing No. 3868111V, in which Caveat Kurnell sought to prohibit the recording in the Register of any dealing affecting the subject land - of which Operations was said to be the registered proprietor - and in respect of which land Kurnell claimed "equitable interest in the land by option to purchase". 54 Thereafter, on or about 7 April 1998, Mallesons Stephen Jaques sought the issue of, and caused to be served on Kurnell, a notice pursuant to the provisions of s.74J of the Real Property Act 1900. Kurnell did not, thereafter, obtain an order extending the duration of the Caveat, and a Computer Folio Search of Folio Identifier 8/586986 carried out on 11 May 1998 indicates that the Caveat had lapsed at sometime prior to that date. 55 In the Statement of Claim which was filed on their behalf, the Claimants alleged (inter alia): "35. On 3 April 1998 the Land and Environment Court handed down a decision that subject to certain additional design work being carried out in respect of the end use of the Subject Land, the sand on the Subject Land could be removed to a level of 2 metre (sic) AHD approximately. PARTICULARS The decision of Senior Assessor P.R. Jensen in Land and Environment Court of New South Wales Appeal No. 10349 of 1997. 36. By reason of the decision of the Land and Environment Court the value of the subject land has increased. 37. The First Defendant and/or the Second Defendant and/or the Third Defendant have (sic) refused to carry out the agreement to sell the Subject Land to the First Plaintiff for the sum of $7,400.000. 38. By reason of the matters pleaded above the First Defendant and/or the Second Defendant have, in trade or commerce, engaged in conduct that is unconscionable within the meaning of the unwritten law, from time to time of the States and Territories of Australia. 39. By reason of the matters pleaded above, the First Defendant and/or the Second Defendant and/or the Third Defendant have (sic) been unjustly enriched in circumstances where: (a) the First Defendant and/or the Second Defendant and/or the Third Defendant encouraged and/or acquiesced in the First Plaintiff and/or the Second Plaintiff undertaking and pursuing the Development Application in respect of the Subject Land and the appeal in the Land and Environment Court of New South Wales; (b) the First Defendant and/or the Second Defendant and/or the Third Defendant freely accepted the benefit of the First Plaintiff and/or the Second Plaintiff undertaking and pursuing the Development Application and the appeal in the Land and Environment Court of New South Wales; (c) the benefit to the First Defendant and/or the Second Defendant and/or the Third Defendant is incontrovertible; (d) by virtue of the matters pleaded herein, it is unconscionable and inequitable for the First Defendant and/or the Second Defendant and/or the Third Defendant not to adequately and properly compensate the First Plaintiff and the Second Plaintiff in respect of the Development Application and the appeal in the Land and Environment Court of New South Wales." 56 It is convenient, here, to pause for the purpose of noting the following:

At a glance

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Judgment (10 paragraphs)

Legislation Cited (1)

Cases Cited (3)

Cited By (1)