176 On 15 December Mr Morrison sent Dr Wenkart the draft of a letter to be sent to Area Health requesting approval for the borrowing of up to $4,000,000 on the security of the car park lease. He expressed doubt as to Macquarie's ability to provide information to Area Health as to its arrangements and resources for the delivery of a private hospital. He requested authorisation to send the proposed letter. There was no evidence that the letter was authorised or sent.
1999 (pars 177 - 190)
177 Between February and August there was much correspondence between Macquarie and Area Health concerning the car park, and the need for compliance with some conditions of council's approval for it to become operational. Particular issues were the installation of traffic signals at the intersection of Missenden Road and Carillon Avenue, and the construction of a link road extending New Hospital Road to Lucas Road to allow access to the car park.
The parties negotiated in an attempt to reach an agreement whereby Area Health would undertake the necessary work, and the conditions for doing so. The chain of correspondence ended with the letter to Macquarie of 9 August in which Area Health asserted that arrangements were not in place for it to complete the works on behalf of Macquarie. It invited Macquarie to put a request for its conditions for doing the work.
178 By letters of 7 March and 4 May Area Health asked Macquarie for further information as to current progress of the private hospital project, noting that its only information was a report that development was continuing with final design and contractual arrangements.
179 On 7 June the car park project had reached practical completion under the building agreement, according to the contractor's certificate issued on 15 June.
180 On 26 June Macquarie asked council to grant an interim certificate of occupancy for the car park pending resolution of outstanding conditions of the development approval.
181 In his letter of 15 July to Dr Horvath, Dr Wenkart sought approval to encumber the leaseholds as security for debt funding in order to progress further development. He said it was unreasonable for Area Health to expect that a development of such magnitude could be undertaken or completed on the basis of a 100 per cent equity contribution.
182 By letter of 24 August council informed Macquarie that it did not have the authority to grant an interim certificate of occupancy. It advised that although the car park had been physically constructed and could be used for car parking purposes, operation as a car park was prohibited until all outstanding conditions of consent had been met.
183 On 13 September Area Health served on Macquarie notices of default under the leases and construction deed and, on 15 September, an amended notice under the car park lease.
184 On 24 September the car park was opened by Macquarie.
185 On 13 October council notified Macquarie of its intention to issue a cease use order on grounds that the car park was being operated without an occupancy certificate, and in breach of the development consent.
186 On 19 October Macquarie's solicitors advised it that the introduction of hospital purchase provider agreements under the National Health Act 1953 (Cth) had made the profitable operation of private hospitals more difficult.
187 In their letter of 25 October Macquarie's solicitors informed Area Health's solicitors that Macquarie had the right to change the permitted use of the premises under cl 8.7(b) hospital lease and cl 7.6(b) car park lease.
Reference was made specifically to the changes to the National Health Act , which permitted the making of hospital purchaser provider agreements. The letter included:
"… The practical consequence of these agreements has been to virtually eliminate the profitability of private hospitals. We are aware of instances of private hospitals achieving high occupancy levels without generating a profit.
On the basis of these changes to the NHA we submit that it is reasonable for our client to conclude that the operation of the tenant's business is no longer economically viable even if operated in a proper and efficient manner.
Our client has instructed us that unless it receives your confirmation that in the circumstances it is entitled to invoke [the clauses] it will seek declarations from the Supreme Court of New South Wales to that effect.
Our client has asked us to advise you that it will be prepared to enter into meaningful negotiations with you concerning the proposed change of use so that proposals can be submitted to Council which will have the support of CSAHS and be generally complimentary to the master plan for the site."
188 On 1 November the council ordered Macquarie to cease operation of the car park on grounds that it was being operated unlawfully without an occupation certificate, and in breach of various conditions of consent.
189 In their letter of 4 November, Area Health's solicitors advised Macquarie's solicitors of its position on various matters. They disputed the entitlement to invoke the change of use provisions on the basis that there was no relevant business to be affected. They expressed readiness to negotiate the terms upon which Macquarie would leave the project, but insisted on performance of the agreements meanwhile.
190 On 21 December Macquarie requested council for an interim certificate for the operation of the car park to accommodate up to 600 RPAH staff cars. With reference to consent conditions referable to substantial commencement of the hospital it said:
"Since that time the question of the viability of a private hospital due to legislative changes has crystalised [sic] and there is currently no reasonable assurance a private hospital will be constructed on the site."
2000 (pars 191 - 194)
191 On 10 February council informed its solicitors that before occupancy would be permitted to Macquarie compliance with all conditions referred to in its letter of 1 November 1999 was required.
192 On 17 March Area Health served the notices of termination on Macquarie, and took possession of the car park.
193 On 16 June the Land and Environment Court, by consent, ordered variations to the conditions of consent for the car park to defer the requirement for building the traffic lights, and the need for Area Health to grant an easement for the link road. The proceedings had been commenced by Pace on 19 November 1999 as an appeal against the cease use order, and were taken over by Area Health.
194 On 23 June council issued to Area Health an occupation certificate for the car park for 600 spaces.
The issues
The 96 agreements
195 Area Health claimed that the defaults arose under the 96 agreements. The issues raised by Macquarie's challenges to the validity of the notices of default and the notices of determination necessitate analysis of the circumstances in which these agreements were made. For this purpose, it is sufficient that the analysis commence with the situation as in January 1996. Much of what follows is taken from the documents and was not disputed. In any event, it is supported by the evidence.
196 The HOA provided the context in which the 96 agreements were negotiated. What became these agreements were referred to in the HOA as the "Related Agreements", a term defined (cl 2.1) to mean the agreement to lease with the head lease and car park lease annexed; the car park agreement; and any document or agreement entered into pursuant to those agreements or contemplated by them.
197 Under cl 7.2 HOA Area Health's solicitors were to produce the first drafts of the related agreements. The parties were required to cause their respective solicitors to meet to negotiate and agree to the final terms of these agreements. Clause 11 stipulated the means for resolving disputes or differences between the parties as to any matter arising under the HOA, and as to the terms and conditions of any un-finalised related agreement. Clause 11.2 envisaged resolution of the dispute or difference by conciliation or mediation, failing which, by arbitration. Clause 11.3 provided that the arbitrator's award would be final and binding on both parties. Clause 7.4 recorded the parties' agreement to a number of matters with respect to the agreement to lease, the head lease, and the car park lease. Clause 3.1(o) recorded agreement to matters for inclusion in the car park agreement.
198 In January the parties were in dispute. The principal issue arose from the rejection by Area Health on 24 January of Macquarie's revised proposal for a 200 bed hospital, and its insistence that Macquarie comply with its obligations to build a 400 bed hospital and 1200 car park spaces, as approved. As at the end of February, mediation had failed, and the differences between the parties remained unresolved.
199 On 29 March Area Health referred the dispute to arbitration under cl 11.2 HOA for the purpose of settling the terms of the leases, the construction deed, and related agreements.
200 On 26 June Macquarie's solicitors sent Area Health's solicitors a statement of issues for arbitration, together with their detailed comments on the draft leases and related agreements. The issues included Macquarie's entitlement under the HOA to build a 200 bed hospital, and to postpone or delay payments by reason of changes in government policies (including the Lawrence reforms) which adversely affected the economic viability of the project, and whether Area Health was in breach of cl 3.1(r) HOA by giving support to Strathfield Private Hospital.
201 On 20 August Dr Wenkart wrote to Area Health offering to settle the dispute to avoid the costs and delays associated with arbitration. The offer included prompt completion of the lease documents, a proposal for a hospital of not less than 200 beds, the commercial funding of the car park, and a timetable for completion of the hospital and car park. On 23 August Area Health rejected the offer on grounds that it was inconsistent with the HOA and, particularly, that a commercially funded car park was unacceptable. It stated it would continue with the arbitration.
202 On 6 September the arbitration hearing was fixed for 2 December. At directions hearings on 20 and 26 November the hearing date was confirmed unless the dispute was resolved.
203 From September until the 96 agreements were signed on 2 December, the principal participants in the negotiations were Mr Puplick, Dr Horvath and Mr Wallace for Area Health, and Dr Wenkart and Mr Block for Macquarie. The following is a summary of the relevant evidence.
204 Mr Block was the chairman of MHC from March 1996 until late 1998. Between 1986 and 1994 he was an investment banker, including as a director of SBC Australia. He had also practised as a financial consultant in the health industry with involvement with private and public hospitals. Between 1993 and 1996 he organised seminars on the crisis in health care policy at Federal and State levels for the Committee of Economic Development, and had held discussions on health policy issues with Federal and State Departments of Health. He had the carriage of negotiations for Macquarie whilst Dr Wenkart was overseas during September and October.
205 Mr Block said that his communications with Mr Puplick were for the purpose of resolving all outstanding issues at the level of chairman to chairman. He understood the arbitration would proceed on 2 December if there was no resolution. Their first meeting was on 4 September, following which he wrote the letter of 5 September which described the 10 outstanding matters. The car park and the timetable for construction were identified as key issues for negotiation. He advised that detailed instructions regarding the lease documents had been provided to Macquarie's solicitors, who were in a position to meet with Area Health's solicitors to resolve remaining lease issues.
206 He referred to meetings between himself and Mr Puplick and other representatives of the parties, on 23 September, 8 October, 11 October, and 22 October when outstanding issues for the leases were discussed in detail, and differences were narrowed.
207 Mr Block said that his letter to Mr Puplick of 22 October summarised the outstanding issues as at that time, the car park being the major one. His letter contained detailed proposals for the finalisation of each issue, including the car park. It suggested that the proposals were fair solutions, acceptance of which would avoid arbitration "… costing up to 1 million dollars each". He wrote again to Mr Puplick on 24 October, emphasising Macquarie's commitment to finalising the documentation urgently, and suggesting 6 November as a deadline.
208 Mr Block received the letter of 31 October from Mr Wallace on behalf of Mr Puplick, with which were enclosed revised drafts of the construction deed, the hospital lease, and the car park lease, responses to the proposal, and rejection of the car park proposal with a counter offer. He replied by letter of 1 November, in which he stated his disappointment, and confirmed his wish to resume productive discussions.
209 He referred to a meeting with Mr Puplick attended by Dr Horvath and Mr Klinger during which Mr Puplick told of the SUPH proposal. He recalled a very heated conversation between Dr Horvath and Mr Klinger, during which Mr Klinger said in effect that Macquarie would not accept any proposal involving a competing hospital. He also referred to a meeting on 18 November attended by himself, Dr Wenkart, Mr Davison, Mr Klinger, Mr Puplick, Dr Horvath and Mr Wallace at which agreement was reached on the 10 matters discussed, and to the memorandum of understanding which resulted from it. With respect to the redevelopment of RPAH he said that he was aware by about mid-1996 that Area Health was reconsidering its master plan for the RPAH site but that Macquarie had not been provided with any details and did not know whether it was likely to have any effect on plans for the campus. He said that it was his understanding that Campus 2010 represented Area Health's planning intentions, and he was unaware of the development of master plan options until after execution of the documents on 2 December.
210 Mr Block said that late on 27 November Macquarie received the transaction documents from Area Health's solicitors, and that early in the morning of 30 November there was a board meeting of Macquarie at which the documents were approved and signed. He said that he sent copies to Mr Puplick with his letter of 30 November, which recorded the chronology of the receipt of the documents, and final discussions with Area Health's solicitors. The letter included the following:
"… Macquarie has conceded numerous other rights under the Heads of Agreement to progress matters and negate the need for Arbitration. It is estimated it would have cost over $2 million with further delays to produce lease documents to take the place of those now tabled.
A major concession by Macquarie, not in the Heads of Agreement, is the very strict and deal breaking timetable. Macquarie has accepted this fundamental CSAHS requirement. Macquarie to show its good faith and best efforts has greatly expanded its liabilities to further concede any compensation if this was broken. This means Macquarie foregoes its $5.5 million already paid to CSAHS on default as well as determination of the lease forthwith.
The recent negotiations under your very constructive chairmanship lead Macquarie to believe it had, as noted by you at the final meeting on 18th November 1996, an agreed set of guidelines to conclude outstanding matters …
…
At the Macquarie Board meeting today, during which I reviewed the documents, I noted a one word change which took place AFTER the deadline. I consider this a major fundamental issue with NO ADVERSE affects on CSAHS but an absolutely debilitating burden on Macquarie. I refer to clause 23.5 of the Hospital Lease 12/809663 where rent has been added. This permits overt competition by CSAHS supporting another private hospital initiative. This prevents Macquarie readily concluding funding negotiations with its bankers. Clearly this is a core issue.
I refuse to sign the documents without this being corrected to the position demanded by CSAHS at its deadline. I request your support in accepting this correction for the vital reasons given. It would reflect your and my efforts to establish a genuine expression of cooperation and good faith in helping finalise all matters and put the difficult past behind."
211 Under cross-examination, Mr Block asserted that he was forced to sign the 96 agreements without adequate time to read and understand them. He described the circumstances as amounting to "virtual blackmail", "a gun to my head", and that Macquarie had been "hoodwinked".
212 He said that at the time of signing the agreements it was his belief that, although he was aware Missenden Road would not be closed, Macquarie believed in the Campus 2010 concept. He made no enquiries of Area Health or the Department of Health as to its status, and saw no need to do so. Although aware the master plan was being reconsidered, no enquiries were made to ascertain what was involved. He said that Macquarie's approach was not to enquire, but to wait for official information from Area Health. He agreed that it was possible to have co-location benefits if the admissions facility was east of Missenden Road, and that physical links between the hospitals were desirable, but not essential, for co-location. In his mind it was still a practical possibility to have a "… very operational western side of the campus allied with the eastern side … the private hospital was to be on the western side. We thought it was still feasible" (T p 750).
213 His evidence was (T p 749):
"Block: … So when it came to 1 December 2006, I realised there was no way out. It was a sinking ship. There was nothing I could do.
Burton: There was a way out, Mr Block, you could have considered [sic] with the arbitration and let the arbitrator decide?
Block: That was a possibility, but we at Macquarie wanted to get on it [sic] with it. We were tired of all these fruitless negotiations and so on. We wanted to at least get on with it. We wanted to build a car park. We wanted to get some cash flow going.
Burton: So can the Court take it from that answer that you so much wanted to build the private hospital, that is Macquarie wanted to build the private hospital and the car park, that it was prepared to take the risks of proceeding no matter what they were?
Block: That was - it was an extremely unpalatable proposition, but in a sense that is true."
214 Mr Block agreed (T pp 793, 808) that he decided to sign the documents although he had been aware, since 8 November, of the risk of a competing private hospital being built on a site near the RPAH campus.
215 Dr Wenkart's involvement in the negotiations is mainly evidenced by his letters to Area Health.
216 He said (affidavit 30 April 2002) he first became aware of the SUPH proposal when informed by either Mr Klinger or Mr Teulan of what Mr Puplick told them about it. He said that on 28 and 29 November, when he protested to Area Health's solicitors at the lack of opportunity to consider the documents, he was told that there would be no further discussion and if it was not accepted, the deal was off. He said on 2 December he attended the offices of Area Health's solicitors with Mr Block, Mr Klinger, and others from Macquarie, including senior counsel, and signed the documents prior to 10.00am, the time set for commencement of the arbitration hearing. He said he was then unaware of Area Health's plans for redevelopment of RPAH east of Missenden Road, or of changes to Campus 2010, or of changes to the master plans.
217 In cross-examination he denied that in July 1996 Dr Horvath told him that the redevelopment of RPAH had been funded as part of the Resource Transition Programme. When referred to her letter to him of 27 November (par 113) he accepted that Macquarie knew that the site would be redeveloped. He made no enquiries about the proposal to build a public hospital car park behind KGV.
218 Further, in cross-examination, he said that knowledge of the SUPH proposal did not change Macquarie's negotiating stance or decision to enter into the agreement. He said he understood the effect of cl 23.5 hospital lease. His view at the time was that the SUPH would be unviable, and that Macquarie would build its hospital before the University could build its hospital. He said that he finally accepted Area Health's wording of cl 23.5 of the hospital lease because his understanding was that the good faith provision in the lease, and the landlord and tenant relationship, would operate to preclude Area Health from supporting a competing hospital before MPH was opened.
219 Mr Puplick was chairman of the board of Area Health from August 1996 until June 2003. It was his practice to take diary notes of the substance of what was said at meetings with Macquarie representatives. His evidence was based on these notes, and the correspondence.
220 On 23 September, after receiving a copy of Macquarie's points of claim, there was a discussion with Mr Block and representatives of Macquarie about the potential affect of changes in government policy on the project. He said that on 30 September he attended a meeting with Mr Block, Mr Teulan, Mr Klinger, Mr Joyce and Mr Wallace at which Mr Wallace said that Area Health needed a car park of its own, and that the most likely site was behind KGV. He also said that the amount of $300 million was to be spent on capital works on the RPAH campus. There was no complaint in response.
221 He said that at the time of the meeting on 8 November the main sticking point was in relation to the car park, and Macquarie emphasised the importance of agreement on that issue. He said that on 30 November he informed Dr Wenkart of the rejection of Macquarie's proposed amendments. Dr Wenkart then said to him that Mr Block would not agree unless the word "Rent" was deleted from cl 23.5 of the hospital lease. On occasions he asked Mr Block for information on Macquarie's proposal for financing the project, but was not given any.
222 Mr Greg Anderson is a chartered accountant with experience in health sector financing. In 1996 he was a director of Health Care Business Assurance Services, of Coopers & Lybrand. He had responsibility for managing and conducting the assignments undertaken to review the feasibility study of the proposed MPH prepared by MHC. His report was sent to Macquarie on 3 October.
223 In cross-examination he said that for the purposes of preparing the report he had discussions with Dr Horvath and Mr Wallace who informed him of significant government funding, and of the nature of the proposed redevelopment of the RPAH site. He did not dispute that he was told by them that the bulking up concept was to take place on the eastern side of Missenden Road. He had no recollection of a plan being shown to him in mid-1996 by Dr Horvath. He said that he discussed his report with Dr Wenkart at a Macquarie board meeting.
224 At this point it is convenient to refer to some of the provisions of the 96 agreements.
225 Under the construction deed, cl 2, Macquarie undertook to commence, carry out, and complete the construction of a 200 bed hospital and the car park, and the fitting out of the hospital, in accordance with the timetable. The timetable prescribed dates for the lodgement of development and building applications with Area Health and the council, and for obtaining approval. The construction of the car park was to commence on 14 November 1997 with completion on 14 April 1998. The construction of the hospital was to commence on 14 April 1998 with completion, admission of first patients, and rent commencement, on 1 December 1999.
226 Clause 4.5 stipulated the criteria for the preparation by Macquarie of the necessary plans and applications. These included harmony with proximate improvements owned by Area Health, and the integration, so far as was possible, of mechanical and other services in common with such proximate improvements.
227 Clause 7 stipulated essential terms and Area Health's rights to terminate. Under cl 8, MHC guaranteed Macquarie's due and punctual performance of its obligations under the deed and in connection with the construction of the hospital. Clause 10.8 required the parties to act in the utmost good faith towards each other.
228 Under the car park lease Macquarie and Area Health leased the car park land for a term of 103 years from 1 December 1996 to 30 November 2099. (Area Health let its interest to Macquarie for a term of 28 years under the car park sub-lease.)
229 Clause 1.5 provided that the provisions of the HOA merged in the grant of the lease. Clause 16 stipulated essential terms and Area Health's right to terminate. Under cl 19.7 Macquarie warranted that it relied only on its own enquiries and not on any representation or warranty by Area Health. Clause 19.13 required the parties to act in the utmost good faith towards each other.
230 Under the hospital lease, Area Health let the hospital land to Macquarie for a period of 103 years from 1 December 1996 to 30 November 2099.
231 In cl 1.1 "Rent Commencement Date" was defined as follows:
"Rent Commencement Date means the date when the Works are complete to a stage where the Hospital is substantially fit for occupation and use by the Tenant and the first patient is Admitted to receive clinical in-patient or out-patient services delivered from the Hospital."
232 Clause 1.5 provided that the provisions of the HOA merged in the grant of the lease. Clause 11.1 required Macquarie to erect the hospital and ancillary services in accordance with the construction deed. Clause 17 stipulated essential terms and Area Health's right to terminate. By cl 20.7 Macquarie warranted that it had relied only on its own enquiries and not on any representation or warranty by Area Health. Clause 20.13 required the parties to act in the utmost good faith towards each other.
233 Clause 23.5(a) provided:
"23.5 The Landlord must for a period of five years after the Rent Commencement Date:
(a) not recommend, support or approve a private hospital within the area controlled by the Landlord as at 15 September 1989, if the Tenant is of the reasonable opinion that such a hospital would materially adversely affect the revenue derived by the Tenant from the Premises; …"
234 Clause 23.11 provided:
"The Landlord acknowledges the developmental, financial, professional and operational independence of the Premises from both the Landlord and Royal Prince Alfred Hospital and the intention of the parties to create a campus concept encouraging the movement of people between the Hospital and Royal Prince Alfred Hospital."
Consideration
235 Consideration of the documentary, affidavit, and oral evidence of the circumstances in which the 96 agreements were made enables a description to be given of Macquarie's position for financing the project, and of the extent and significance of Macquarie's knowledge of plans for the redevelopment of RPAH, and of the SUPH project as at 2 December 1996.
236 In its statement of issues for arbitration of 26 June Macquarie pleaded the necessity to determine whether it should be required to construct a 400 bed hospital or a 200 bed hospital. It also raised as an issue changes in health policy which had occurred since the HOA was made, and which could affect the viability of the project, including changes to health insurance arrangements made by Federal legislation in 1995, the Lawrence reforms. It alleged that the cumulative effect of the changes was to reduce market opportunities for MPH, and to adversely affect its capacity to generate the earnings required to support its initial proposal. It also alleged that, in breach of cl 3.1(r) HOA, Area Health had given support to Strathfield Private Hospital, a likely competitor, thereby threatening the commercial viability of the initial proposal.
237 The development for which Macquarie was contending was the subject of submissions lodged by Fletcher with the council on 5 June. The accompanying concept plans made no reference to the existence, present or future, of a public hospital building behind KGV. A design objective in respect of the buildings and facilities was "… to respond to the existing built environment". It noted Missenden Road had cut the RPAH site in half.
238 On 29 July Dresdner advised Macquarie of its interest in providing finance for the construction phase. It sought information on a number of matters relevant to its ability to finance the project. These included details relating to the 400 bed proposal; the responses of banks which were approached; background to the operation of MHC, and "… details of Government plans for RPAH and evidence of the continuing importance of RPAH as a major public hospital in the catchment area".
239 On 5 September Mr Block advised Mr Puplick of the 10 issues said to be the main outstanding matters. Finalisation of documents, including remaining lease issues, was to be left to the parties' solicitors based upon the level of agreement achieved during the mediation. Car park issues required resolution. He saw the timetable as the key provision for negotiation of the construction deed. It was proposed that current drawings of the proposed 200 bed hospital would be provided to Area Health. No reference was made to any need for physical links between MPH and RPAH, or to the location of public hospital buildings.
240 On 19 September Macquarie served on Area Health further points of claim for arbitration. Various claims for relief were made, including a declaration that it was entitled to modify the existing development approval and/or to obtain a new one, and that it was entitled to delay construction by reason of major changes in State or Commonwealth health policy which adversely affected private hospitals, and threatened the viability of the complex. Particulars of such changes included the requirement for agreements between health insurance funds and private hospitals, and other factors, which operated to the detriment of private hospitals.
241 In Coopers & Lybrand's report to Macquarie of 3 October the government proposal to rebuild and modernise the facilities, and to streamline patient services at RPAH, and Area Health's wish to have a co-located facility as soon as possible were referred to. It also advised that Area Health was committed under the HOA not to recommend or support development of other private hospitals in the areas under the control of Area Health within a period of five years from the date of first admission.
242 According to Mr Block's letter of 22 October to Mr Puplick, the major issue then outstanding was the car park, noting that Area Health's preferred site was behind KGV rather than the previously designated site. It envisaged the lodgement of new development and building applications with the consent of Area Health.
243 At the meeting on 8 November, Mr Puplick advised Mr Block and Mr Klinger of the SUPH proposal. By letter of the same date, Mr Puplick reminded Mr Block that Area Health had in place a capital works programme for RPAH including the resolution of outstanding car parking problems on the site.
244 Mr Block wrote to Mr Puplick on 12 November. He stated that Macquarie had the financial capacity and support from financiers to implement the project immediately. Various matters relating to the car park were proposed. He stated Macquarie's recognition of the "major capital works planning process", and its willingness to review how the complex and car park could "… best be integrated into the revised site planning for Royal Prince Alfred Hospital as required in the Heads of Agreement".
He indicated that previous agreement on other outstanding issues provided the basis for concluding all necessary agreements between the parties.
245 The memorandum of understanding of 18 November recorded agreement in relation to the 10 matters for incorporation in the relevant document. It was agreed that Macquarie would lodge new development and building applications for a 200 bed hospital in accordance with the timetable. It also recognised Area Health's independent need for a car park on the RPAH campus which was to be operational before work commenced on the public hospital redevelopment.
246 In her letter of 27 November to Dr Wenkart, Dr Horvath advised that the documents would be sent to him on the basis that "… (they) will cover all the matters that Macquarie has raised in the arbitration and otherwise, and that everything is then governed by those documents which will replace the Heads of Agreement".
247 Dr Wenkart's letter to Dr Horvath of 29 November noted that further negotiations had taken place on 28 and 29 November. In consideration of an extension of time to 10.00am 30 November to submit the signed agreements to Area Health he recorded Macquarie's acceptance of the extent of the amendments drafted by Area Health's solicitor, and his agreement not to request any further amendments.
248 In their letters of 30 November to Dr Horvath and to Mr Puplick respectively, Dr Wenkart and Mr Block referred to adjustments made to a number of provisions of the hospital lease. Mr Block explained his objection to the inclusion of the word "Rent" in cl 23.5 of the hospital lease. He said:
"At the Macquarie Board meeting today, during which I reviewed the documents, I noted a one word change which took place AFTER the deadline. I consider this a major fundamental issue with NO ADVERSE affects on CSAHS but an absolutely debilitating burden on Macquarie. I refer to clause 23.5 of the Hospital Lease 12/809663 where rent has been added. This permits overt competition by CSAHS supporting another private hospital initiative. This prevents Macquarie readily concluding funding negotiations with its bankers. Clearly this is a core issue.
I refuse to sign the documents without this being corrected to the position demanded by CSAHS at its deadline. I request your support in accepting this correction for the vital reasons given. It would reflect your and my efforts to establish a genuine expression of cooperation and good faith in helping finalise all matters and put the difficult past behind."