Makeig v Batterham

LEGISLATION CITED : Fair Trading Act 1987 Partnership Act 1892

AB v R [2001] NSWCCA 496 Abigroup Contractors Pty Limited v Sydney Catchment Authority (No 3) (2005) 67 NSWLR 341 Azzi and Ors v Volvo Car Australia Pty Limited [2007] NSWSC 319 B Seppelt & Sons Limited v Commissioner for Main Roads (1975) 1 BPR 9,147 Badeley v Consolidated Bank (1888) 34 Ch D 238 Banque Brussels Lambert SA v Australian National Industries (1989) 21 NSWLR 502 Barrier Wharfs Limited v W Scott Feat 668, 669, 672 Bective Station Pty Limited v AWB (Australia) Limited [2006] FCA 1596 Birtchnell v Equity Trustees, Executors and Agency Co Limited (1929) 42 CLR 384 BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153 Branir Pty Ltd v Owston Nominees (No 2) Pty Limited (2001) 117 FCR 424 Brisbane City Council v Group Projects Pty Limited (1979) 145 CLR 143 Burger King Corporation v Hungry Jacks Pty Limited (2001) 69 NSWLR 558 Byrne v Australian Airlines Limited (1995) 185 CLR 410 Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 Chan v Zacharia (1984) 154 CLR 178 Clancy v Salentia Pty Limited [2000] NSWCA 248 Commercial Banking Company of Sydney Limited v R H Brown & Co (1972) 126 CLR 337 Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 D F Lyons v Commonwealth Bank of Australia (1991) 28 FCR 597 Davies v Littlejohn (1923) 34 CLR 174 DTR Nominees Pty Limited v Mona Homes Pty Limited & anor (1977) 138 CLR 423 Edwards v Skyways [1964] 1 All ER 494 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Film Bars Pty Limited v Pacific Film Laboratories Pty Limited (1979) 1 BPR 9,251 Gate Gourmet Australia Pty Ltd (In Liq) v Gate Gourmet Holding AG [2004] NSWSC 149 Gould v Vaggelas (1985) 157 CLR 225 Helmos Enterprises Pty Limited v Jaylor Pty Limited [2005] NSWCA 235 Hewett v Court (1983) 149 CLR 639 Hill v Rose [1990] VR 129 Howard Smith & Co Limited v Varawa (1907) 5 CLR 68 In re Young: Ex parte Jones [1896] 2 QB 484 CASES CITED : Jacara Pty Limited v Perpetual Trustees W A Limited (2000) 106 FCR 3 Jainran Pty Limited v Boyana Pty Limited [2008] NSWSC 468 Koompahtoo Local Aboriginal Land Council v Sandpine Pty Limited (2007) 233 CLR 115 Langridge v Levy (1837) 2 M & w 519; 150 ER 863 Lombok Pty Limited v Supetina Pty Limited (1987) 14 FCR 226 Mackay v Dick (1881) 6 App Cas 257 Malec v J C Hutton Pty Limited (1990) 169 CLR 638 March v E & M H Stramore (1991) 171 CLR 506 McDonald v Dennys Lascelles Limited (1933) 48 CLR 457 Milner v Delita Pty Limited (1985) 61 ALR 557 Morris v Morris [1982] 1 NSWLR 61 O'Keefe v Taylor Estates Co Limited [1916] SR Qd 301 Overlook Management BV v Foxtel Management Pty Limited [2002] NSWSC 17 Park v Brothers (2005) 222 ALR 421 Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 CLR 191 Peek v Gurney (1873) LR 6 HL 377 Pirt Biotechnologies Pty Limited v Pirtferm Limited [2001] WASCA 96 Progressive Mailing House v Tabali Pty Limited (1985) 157 CLR 17 Redglove Projects Pty Limited v Ngunnawal Local Aboriginal Land Council & Anor (1005) 12 BPR 23,381 Redgrave v Hurd (1881) 20 Ch D 1 Ricochet Pty Limited v Equity Trustees Executor & Agency Co Limited (1993) 41 FCR 229 Schindler Lifts Australia Pty Limited v Debelak (1989) 89 ALR 275 Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Limited (1979) 144 CLR 596 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Shevill v The Builders Licensing Board (1982) 149 CLR 620 Smith v Kay (1859) 7 HLC 750; 11 ER 299 Stephenson Nominees Pty Limited v Official Receiver (1987) 16 FCR 536 Sutton v A J Thompson Pty Limited (1987) 73 CLR 233 United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1 Upper Hunter County District Council v Australian Chilling and Freezing Co Limited (1968) 118 CLR 429 Waltons Stores (International) Limited v Maher (1988) 164 CLR 387 Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Limited (1936) 54 CLR 361 Woodar Investment Development Limited v Wimpey Construction UK Limited [1980] 1 All ER 571 Zhang v VP302 SPV Pty Limited [2009] NSWSC 73

Burns, Fiona "The Equitable Lien Rediscovered, A Carter on Contracts Fisher & Lightwood Law of Mortgage 2nd Australian Edition Halsbury's Laws of Australia TEXTS CITED : Heydon, Trade Practices Law 11.590 Lindley and Banks on Partnership para 5-25 Sykes, The Law of Securities, 5th ed Remedy for the 21st Century", [2002] UNSWLJ 1

Peter John Makeig (Plaintiff) PARTIES : Brian Batterham (First Defendant) Batterham's Bus Lines Pty Limited (Second Defendant)

COUNSEL : Mr G A Sirtes SC with him Ms J Chambers (Plaintiff) Mr F Lever SC with him Mr G Graham (Defendants)

SOLICITORS : Somerville & Co (Plaintiff) Emery Partners (Defendants)

• 156 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4373/07 PETER JOHN MAKEIG V BRIAN BATTERHAM & ANOR JUDGMENT 1 In these proceedings the plaintiff, Mr Peter Makeig, seeks declaratory and other relief in relation to a project concerning the development of two parcels of land in Kitchener, those being a parcel of land (the "Batterham Land") which is owned by the first defendant, Mr Brian Batterham, and an adjacent parcel of land (the "Vowles Land") which was (at the time the project commenced) owned by a Mr and Mrs Vowles, who are not involved in these proceedings. Introduction 2 Mr Makeig alleges that in March 2005 he and the defendants (Mr Batterham and a company associated with him, Batterham's Bus Lines Pty Limited ("BBL"), together, "the Batterhams") entered into an unincorporated joint venture in relation to the two parcels of land, the express terms of which are to be found in a document signed on 25 March 2005. I propose for convenience to refer to that document signed on 25 March 2005 in these reasons as the "Kitchener Project Agreement", by reference to its main heading. 3 Mr Makeig alleges that by their conduct the Batterhams have breached fiduciary obligations owed to him and have invalidly purported to terminate the agreement constituting the said joint venture thereby repudiating that agreement. 4 On 9 January 2007, lawyers acting for the Batterhams (Emery Partners) wrote to Mr Makeig notifying him that Mr Batterham considered the Kitchener Project Agreement to be terminated and withdrawing all authority for Mr Makeig to act on Mr Batterham's behalf as "Project Consultant" or in any other capacity. That position appears to have been predicated on the assertion that Mr Makeig's "continued breaches" of the Kitchener Project Agreement constituted a repudiation by him of the agreement. 5 Subsequently, BBL nominated a third party (JPG 58 Pty Limited ("JPG")) as the grantee of the option then held by BBL to acquire the Vowles Land. (According to Mr Makeig, this option had been held by BBL on behalf of, or for the common benefit of, the Batterhams and Mr Makeig.) The option was exercised, and the Vowles Land acquired, by JPG in June 2007. 6 In March 2007, as part of the arrangement pursuant to which BBL had agreed to nominate JPG as grantee of the Vowles Land option, the Batterhams entered into a Deed of Call Option with JPG ("March Deed of Call Option") giving JPG an option to call for the transfer of the Batterham Land. That Deed was superseded in November 2007 by a Deed of Put and Call Option entered into between the same parties ("JPG Deed"), for the first time giving to Mr Batterham a put option (exercisable if JPG does not exercise its call option) to require JPG to purchase the Batterham Land. 7 If the call option is exercised by JPG within the Call Option Exercise Period (which expires on 14 November 2012) or the put option is exercised by Mr Batterham within the Put Option Exercise Period (15 November 2012 - 14 February 2013), then a contract for the sale to JPG of the Batterham Land will come into effect for a purchase price of $7,616,500 plus GST. 8 Over the period from 12 March 2007 to 15 April 2009, Mr Batterham has received sums totalling almost $900,000 by way of call option fees (comprised of $100,000 under the March 2007 Deed and $500,000 under the JPG Deed, a loan of $200,000 (acknowledged as part of the Previous Call Option Fee as defined in the JPG Deed) and part payments of the first annual instalment of the Further Call Option Fee, as defined in the JPG Deed as varied in November 2008), together with an amount referable to GST on part or all of those amounts. Mr Batterham is entitled to further annual instalments (each of $200,000) of the Further Call Option Fee for the three years from 15 November 2009 up to November 2011 (assuming the call option is not exercised before then) with the prospect that up to a total of $1.7 million will have been paid to Mr Batterham as at the expiry of the Call Option Exercise period. 9 Those payments are to be treated as pre-payment of the purchase price and/or deposit, respectively, under any contract for sale coming into existence on the exercise of either option. If neither option is exercised those amounts (including the $200,000 originally described as a loan) will become the absolute property of Mr Batterham. The contract for sale is not conditional on the rezoning of the Batterham/Vowles Lands or grant of any development approval in relation thereto. 10 Mr Makeig, who it is not disputed has expended a sum of $122,335.60 in relation to the project (and, though the extent of this is disputed, his time in connection with the project), has received nothing. (As a further or alternative claim to his claim for damages in contract or in equity, Mr Makeig seeks recovery of this amount on a quantum meruit basis.) 11 By their letter dated 9 January 2007 in which they notified in effect of the termination of the Kitchener Project Agreement, Emery Partners conveyed an offer of reimbursement, should the project proceed to "fruition", of Mr Makeig's out-of-pocket expenses and "reasonable" costs for acting on Mr Batterham's behalf. It would seem, from the submissions made in these proceedings for the Batterhams (and from Mr Batterham's explanation at T 565), that "fruition" is contended to mean completion of the sale of both the Batterham/Vowles Lands at a combined price in excess of at least $1.5 million, which has not yet occurred (and which Mr Lever has impressed upon me, in the context of his submission that any benefits obtained to date by Mr Batterham under the alleged agreement are illusory, may not in fact occur at all). That offer has not been accepted. Defence 12 The Batterhams deny that the Kitchener Project Agreement (which Mr Batterham accepts he signed) is of force or effect in law and say that it was not intended to create any binding legal relationship. 13 Alternatively, the Batterhams say that, to the extent that the Kitchener Project Agreement is of any legal effect, its execution by Mr Batterham was procured by misrepresentations (and/or fraudulent misrepresentations) made by Mr Makeig to Mr Batterham on and prior to 25 March 2005. 14 While it was further alleged that the Kitchener Project Agreement did not reflect the true nature of a previous oral agreement conceded by the Batterhams to have been made between the parties (to the effect that Mr Makeig was engaged as a project consultant to assist with a rezoning application to Cessnock City Council ("the Council") in respect of the Batterham Land), no application has been made to rectify the Kitchener Project Agreement. To the extent that any submissions were made in relation to this allegation, I understood them to be to the effect that, while Mr Batterham did not deny there to be some arrangement in place, it was not to be found in the document upon which he was being sued (T 637). Such a stance is, of course, inconsistent with the assertions contained in the open letter of 9 January 2007 from Emery Partners. 15 In answer to the whole of the statement of claim, the Batterhams allege that if the Kitchener Project Agreement is found to constitute a binding agreement between the parties, then Mr Makeig breached a fundamental provision of the agreement by failing to pay certain specified amounts to the Council and to various consultants in a timely manner or at all and/or failed to pay option fees due in respect of the Vowles Land and that (together with other alleged repudiatory conduct) these breaches evinced an intention by Mr Makeig not to be bound by the Kitchener Project Agreement, he thereby repudiating it. Those allegations of breach also form part of the basis of the cross-claim brought against Mr Makeig (by Mr Batterham alone, not the Batterhams jointly) for loss and damage. 16 It was previously alleged, in answer to the whole of the statement of claim, that it was not maintainable by reason of the fact that an agreement had been made following a mediation of the parties' disputes which was in full and final settlement of all outstanding disputes between the parties. This allegation was struck out by consent on 24 February 2009 at the commencement of the hearing and no reliance was placed in the submissions on any document prepared for the purpose of that mediation. Cross-claim 17 By way of cross-claim, Mr Batterham alleges that, in breach of both s 42 and s 44 of the Fair Trading Act 1987, in or about December 2003 Mr Makeig made a number of false and misleading representations to Mr Batterham as to Mr Makeig's professional or project development experience and competence, including his training, experience and capacity (financial or otherwise) to act as a project development consultant (or, in the case of the claim in respect of s 44, as to the standard, quality, grade or characteristics of the services he was offering and his professional status or affiliation as an architect). 18 It is alleged that in reliance upon each of the representations Mr Batterham agreed to engage Mr Makeig as a project consultant for the purposes of assisting with a rezoning application for Batterham Land and signed the Kitchener Project Agreement. 19 The loss and damages allegedly suffered as a result by Mr Batterham as a result of this conduct are said to be any liability (to Mr Makeig) arising because of his entry into the Kitchener Project Agreement. When the hearing commenced, the cross-claim was amended by leave to seek, by way of principal relief, an order pursuant to s 72 of the Fair Trading Act that the Kitchener Project Agreement be declared void and/or varied insofar as it requires Mr Batterham to make any payments to Mr Makeig or to hold any property or any money on trust for Mr Makeig. 20 A claim is made for damages in respect of the failure by Mr Makeig to pay the amounts allegedly due under clause 4 (para 9B and 10 of the Amended Cross-Claim and Cross-Summons). A claim for loss and damage is brought, further and in the alternative, on the basis of the allegation that Mr Makeig's purported performance of his work as a development consultant was "so unprofessional and incompetent that the progress of the rezoning application was impaired". As these claims are for breach of contract, they will not be maintainable if the Kitchener Project Agreement is either of no legal force (as the Batterhams contend) or declared void ab initio (as they ask the court to do). Issues 21 The issues in dispute between the parties may broadly be summarized as follows:

(i) Whether the Kitchener Project Agreement is binding; (ii) Alternatively, whether the Batterhams are estopped from denying the existence of a binding agreement on the terms of the Kitchener Project Agreement or otherwise from denying an obligation to account to Mr Makeig for part of any net profits realized from the on-sale of the project; (iii) Assuming the Kitchener Project Agreement is binding (or the Batterhams are estopped from denying that it is), whether either Mr Makeig or Mr Batterham has breached or repudiated the Kitchener Project Agreement; and, if so, the consequences of that breach/repudiation; (iv) Whether the Batterhams owe to Mr Makeig fiduciary obligations pursuant to an unincorporated joint venture arising from the Kitchener Project Agreement or by reason of the relationship (partnership or otherwise) between the parties; (v) Whether the Kitchener Project Agreement was entered into by Mr Batterham in reliance on any false or misleading representations by Mr Makeig; (vi) What relief, if any, is appropriate in all the circumstances.

Summary of findings 22 For the reasons set out below, my findings on each of the above issues are as follows:

(i) there was a binding and enforceable agreement on the terms of the Kitchener Project Agreement; it included an implied term to co-operate in the achievement of the object of the parties' undertaking (ie the on-sale of the project lands whether before or after obtaining development approval for residential development of the two parcels of land);

(ii) had the Kitchener Project Agreement not been binding, the Batterhams would nevertheless be estopped from denying such an agreement or an obligation to account to Mr Makeig for 7/18ths of any net profit realised (after deduction of the sum of $1.5 million) from the on-sale of the said parcels of land;

(iii) Mr Makeig breached the Kitchener Project Agreement in one instance, (failure to pay an invoice from Harper Somers O'Sullivan in a timely manner) causing no loss to Mr Batterham, but did not thereby repudiate (in the sense of renounce) the Kitchener Project Agreement; conversely, by letter of 9 January 2007 Mr Batterham wrongfully repudiated the Kitchener Project Agreement giving rise to a claim against him for damages for loss of bargain;

(iv) there was a joint venture/partnership between Messrs Batterham and Makeig, under which Mr Batterham owed fiduciary obligations to Mr Makeig, including a duty not to arrogate to himself the whole of the net profits of the project following its termination;

(v) Mr Makeig impliedly represented to Mr Batterham (and thereby engaged in misleading and deceptive conduct) in early 2004 that he was a semi-retired architect but no loss was occasioned by reason of that representation; and, in particular, the Kitchener Project Agreement was not entered into in reliance on that or any false or misleading representation by Mr Makeig;

(vi) In the circumstances, the Batterhams are liable for loss of bargain damages in respect of the wrongful repudiation of the Kitchener Project Agreement; alternatively for equitable damages (in the same amount) to compensate Mr Makeig for breach of a fiduciary obligation not to exclude Mr Makeig from the opportunity to benefit from the on-sale of the "project" after the termination of their joint venture; or alternatively are obliged to account for the agreed share of net profit to be realised from the project and hold the benefits or proceeds under or pursuant to the JPG Deed on constructive trust for Mr Makeig to the extent of the agreed share. 23 Mr Makeig may therefore elect between: · An order for damages calculated by reference to the loss of opportunity to participate in the benefits likely to flow from the JPG Deed, which I assess at $2,081,309 (being 7/18ths of $6,116,500 - that figure representing $7,616,500 less $1.5 million, discounted by 12.5%, and rounded down to the nearest dollar); or · A declaration that Mr Batterham holds on constructive trust for Mr Makeig 7/18ths (after deduction of the sum of $1.5 million) of the benefits and/or proceeds of the JPG Deed or any moneys received pursuant to the JPG Deed.

Facts · Commencement of the Project 24 Mr Makeig describes himself (and the Kitchener Project Agreement carries a footer to that effect) as a project development consultant. 25 Mr Makeig first met Mr Batterham in late December 2003. The meeting came about after Mr Batterham's son (Mr David Batterham) had carried out certain renovation work at Mr Makeig's property in Cessnock and seems to have been facilitated by or at the suggestion of Mr David Batterham. There is a dispute (as to which I say more later) as to whether Mr Makeig told Mr David Batterham (during the course of discussions between them while Mr David Batterham was carrying out work on the Makeig property) that Mr Makeig was an architect. What is not disputed, however, is that Mr Makeig told Mr David Batterham that he had had a lot of involvement with property development with great success in the past.

26 At that time, Mr Batterham was interested in pursuing an idea for the residential development of the Batterham Land, which he had previously attempted unsuccessfully to progress. While Mr Batterham resisted the suggestion put to him in cross-examination that his earlier property development attempt had been unsuccessful, and asserted that substantial progress had been made in that regard prior to any involvement by Mr Makeig in the project, as at December 2003 it seems no steps were actively being taken by Mr Batterham to rezone or develop the Batterham Land. 27 At their first meeting on 30 December 2003, Mr Makeig and Mr Batterham discussed the proposed making by Mr Batterham of a development application for the purpose of having the Batterham Land rezoned from 1(a) Rural "A" zoning to a zoning which would permit the subdivision and development of the Batterham Land for residential use. They discussed a proposal that Mr Makeig would project manage that development application. Mr Batterham alleges that it was in this conversation that he asked Mr Makeig if he was an architect and that Mr Makeig responded that he was "semi-retired". Mr Makeig adamantly denies this but admits that there was a discussion as to his previous work experience on property development matters. 28 Mr Makeig gave evidence that an oral agreement was reached with Mr Batterham in late December 2003 (presumably, therefore, at this first meeting with Mr Batterham) pursuant to which Mr Makeig would project manage the proposed development application on a success fee basis and would pay all of the expenses of the project in return for 30% of the improved value of the land. 29 A further meeting took place between Mr Makeig and Mr Batterham on the site of the Batterham Land on 2 January 2004, during which Mr Makeig says that Mr Batterham asked whether he was an architect and to which Mr Makeig says that he responded to the effect that he was not a registered architect (and gave some detail as to an earlier dispute he had had with the Architects Board in Queensland). Mr Batterham, in turn, adamantly denies that Mr Makeig told him at this stage that he was not a registered architect or about his earlier difficulties with the Architects Board. 30 Mr Batterham says he was told that Mr Makeig was not really a qualified architect for the first time in May 2005, two months after the Kitchener Project Agreement was signed; the run-in with the Architects Board being disclosed, on Mr Batterham's account, in a separate conversation in October 2005.

31 An arrangement of some kind was clearly reached between the two at or about that time, pursuant to which Mr Makeig was to play a role in seeking rezoning and/or development approval for the Batterham Land, since on 7 January 2004 Mr Batterham sent a letter to a number of authorities, including the Council (Ex H p 1), authorizing Mr Makeig to act on his behalf in respect of "any matter relating to property development" at the Batterham Land. Thereafter, Mr Makeig took various steps to progress the making of a rezoning application, including obtaining information from the Council, seeking to arrange a Development Panel Conference with the Council, seeking quotations from various consultants and preparing notes for a critique of the basis on which the property was then zoned. 32 On 7 June 2004, Mr Makeig wrote to Mr Batterham and his son David Batterham, referring to an agreement the week before "to prepare a suitable working agreement which will be the basis for taking the project to completion". Senior Counsel for the Batterhams, Mr Lever SC, places considerable weight on this letter as setting out what Mr Makeig understood to be the substance of the arrangement recorded in the later signed document. 33 It would seem from this letter that Mr Makeig accepted that there was no concluded agreement at that stage as to the basis on which Mr Makeig was assisting Mr Batterham in the project, unless the letter was referring to a working agreement which was to supersede the alleged oral agreement of late December 2003. However, ultimately, nothing turns on this. 34 The letter set out two possibilities in relation to the project - namely to onsell with the benefit of a development approval "without a single sod being turned" or to remain with the project to completion (ie subdivision). It also explained the various alternative bases on which Mr Makeig said he had worked "professionally over the last decade or two" (including on a "do and charge" or "fixed fee" basis). Relevantly, it outlined the basis on which Mr Makeig said he had offered his services to clients being "a form of Joint Venture" under which Mr Makeig provided certain services and undertook to pay "authority fees and Land and Environment Court fees when that becomes necessary" and no cost burden fell upon the proprietor other than a "known Success Fee" payable "only if and when" the "required outcome" was obtained. 35 It is to be noted from this letter that Mr Makeig, at least, did not apparently consider charging on a success fee basis as something incompatible with entry into a joint venture. Nor need that be so. Mr Batterham, on the other hand, in giving evidence in the witness box seems to have regarded the two as mutually exclusive. 36 It is also to be noted from this correspondence that the kind of "success fee" joint venture there referred to did not contemplate the joint venturers sharing any necessary fees to local authorities or to the Land and Environment Court, fees of this kind in the past being said to have been borne by Mr Makeig and not the proprietor. 37 The status of this letter is open to debate. Mr Lever submits, in effect, that it was Mr Makeig's offer as to the basis on which he would provide services to Mr Batterham. However, the letter should in my view be read (consistently with its terms) as a self-promotional explanation of the way in which Mr Makeig was suggesting their relationship could proceed, without being an offer in its terms capable of acceptance so as to give rise to a binding contract. Again, nothing seems to turn on this, as there is nothing to suggest Mr Batterham accepted the success fee arrangement referred to in his letter (indeed his accountant advised him as to various matters which the parties should address in any joint venture). It may, however, be relevant in considering what, if any, continuing force as at March 2005 any earlier representation (as to Mr Makeig being an architect or otherwise) would have had. Further, insofar as it contemplated the possibility of the parties' project proceeding to completion, it makes Mr Batterham's later protestations as to the financial folly of such a course somewhat hollow. 38 In July 2004, Mr Batterham consulted his accountant, Mr David Williamson, about a possible joint venture arrangement in relation to the development of the Batterham Land. Mr Williamson (who curiously maintained the view in the witness box that an agreement was only binding if drafted by a solicitor) gave evidence that the proposed joint venture discussed on that occasion was one relating not just to the rezoning of the land but also to its subsequent development, subdivision and sale. Mr Williamson's notes of this meeting indicate that he, at least, contemplated that the proposed joint venturers would be in partnership with each other. By letter dated 8 July 2004 to Mr Batterham, Mr Williamson recommended the establishment of a separate joint venture entity for this purpose and made various suggestions as to the terms of an appropriate agreement. In so doing he used the terminology of partnership. It does not appear that the parties acted on those suggestions (although Mr Makeig later suggested that his December 2004 draft document had addressed them). 39 It appears that no further steps were taken to document the basis on which Mr Makeig and Mr Batterham were proceeding with the project until late December 2004, notwithstanding that further steps were taken in relation to the retention of consultants and progress of the project in the interim. (While it might seem surprising that Mr Makeig would have been continuing to provide services in relation to the project without a clear agreement as to the basis on which he would be rewarded or recompensed for his efforts, this seems to be consistent with his later willingness to rely on oral assurances from Council - as to reimbursement out of s 94 contributions - without pressing for this immediately to be recorded in writing.) 40 A draft document was prepared by Mr Makeig, headed "Kitchener Project Financial Arrangements between the Partners" and forwarded to Mr Batterham on or about 29 December 2004. That draft was not signed and it is not suggested that it was, or ever became, binding on the parties. 41 The preparation of this document appears to have been precipitated by a decision taken about this time by Mr Makeig and Mr Batterham "to incorporate" the Vowles Land into the "Kitchener project". That said, the parties did not address (at least in any written document) in any detail the mechanics by which that land was to be "incorporated" into the project. This is the subject of much criticism by Mr Lever in considering whether the Kitchener Project Agreement was binding. 42 It appears that when the idea of incorporating the Vowles Land as part of any residential development of the Batterham Land was first considered, Mr and Mrs Vowles may have been approached to join in the joint venture. Mr Makeig prepared some documents, for discussion with Mr Batterham, as to potential profit sharing for the Vowles development which suggest that participation by the Vowles was a possibility. (By reference to those documents it would seem that Mr Batterham had an early opportunity to familiarize himself with Mr Makeig's ideas as to the way in which project profit-sharing of this kind might take place.) The Vowles did not join in any such joint venture, but were in due course willing to sell their land. Evidence was given by Mr Kyle Davis, a real estate agent with Jurd's Real Estate, acting for the Vowles on the proposed sale. Mr Makeig was involved in the negotiations (according to him, on both his and Mr Batterham's behalf) with Mr Davis in respect of the proposed purchase of the Vowles Land and negotiated a reduction in the sale price sought by the Vowles for their land. 43 On 24 December 2004, BBL entered into an option agreement with Mr and Mrs Vowles (annexure D to the affidavit of Mr Batterham affirmed 11 June 2008) under which BBL was granted a call option to purchase the Vowles land for the sum of $1.35 million. There is a dispute between the parties as to the circumstances in which the option agreement for the Vowles Land came to be entered into solely in the name of BBL. Mr Makeig says that he agreed to Mr Batterham's request that, for tax reasons, the option be acquired solely in the name of BBL. Mrs Makeig gave evidence to the same effect. There was no evidence as to the tax purpose which may have been served by such a device. For the reasons set out later it is not necessary to determine the factual disputes as to why the option was granted to BBL. 44 Mr Makeig says (which is denied) that the Batterhams (or, more precisely, BBL) held the Vowles option on behalf of him and the Batterhams jointly. Mr Batterham seems to accept that the Vowles Land (or the option held in respect of the Vowles Land) was to form part of the overall project, and was to be held for the common benefit of he and Mr Makeig, at least insofar as they were to share in any increased value derived therefrom (T 424.46), although the mechanics of how that was to be effected were unclear. What Mr Batterham adamantly denies is that the benefit of the option (or the rights under the Vowles option agreement) was to be held by BBL on trust as to 50% for Mr Makeig. 45 Under the Vowles option agreement, payment of a "Call Option Fee" of $13,500 was required for the initial call exercise period of 18 months. BBL had the ability to extend the option exercise period for a further six months to December 2006, on payment of a further $5,000, described as an "Additional Call Option Fee". 46 When writing to Mr Batterham some time later (on 7 March 2006 - Ex A p 151) Mr Makeig said (in a letter to which Mr Batterham did not respond): We entered the [Vowles] Option-Contract in December 2004, written up in your name alone. You were to hold the property for our common benefit. We agreed jointly to promote the development of the property and that the proceeds were to be shared equally between us. 47 Mr Batterham contends that this was not the case but did not respond to Mr Makeig's letter. In cross-examination, Mr Batterham said of his failure to correct the misapprehension by Mr Makeig in this regard: You respond to people's presumptions, you start an argument. Lots of things you [by which I assume he means he] just let go through to the keeper. It was - he had a 50/50 share of any increased value over $1.35 million (T 423). 48 Like the suggestion in March 2006 that they might together develop the property, Mr Batterham seems to have thought there was no point arguing with Mr Makeig and simply let this "roll over" (T 426). Significantly, Mr Batterham said: I hoped that the property [Vowles Land] would eventually sell and he [Makeig] would get his share and that would be the end of it (T426).

Unfortunately, only part of what Mr Batterham hoped for has transpired. While the Vowles Land has now indeed been sold, Mr Batterham is denying an entitlement on the part of Mr Makeig to the share Mr Batterham apparently recognized back in early 2006 that Mr Makeig would expect out of such a sale. 49 Mr Makeig's 7 March 2006 letter to Mr Batterham went on to say: We paid an option fee of $13,500. You paid 50% and I paid 50%.

50 In fact, however, Mr Makeig had paid the whole of the initial Vowles Call Option Fee (of $13,500) in two instalments on 8 November 2004 and 24 December 2004, respectively, but Mr Batterham subsequently (on about 9 June 2005) repaid to Mr Makeig (at the latter's request), half of the amount of $13,500 which had been paid by Mr Makeig in respect of the initial option fee. Mr Makeig says that, in paying the whole option fee up front, he was "staking" Mr Batterham's half share until Mr Batterham could afford it (T 298.29). Mr Batterham asserts that Mr Makeig was liable for the full share but that he agreed to Mr Makeig's request to reimburse half of the option fee because it would help out Mr Makeig financially; and that this was to be adjusted later (T 577.1; 578.35). This factual dispute becomes relevant only insofar as the stance adopted by Mr Makeig in relation to the option fees is relied upon as repudiatory conduct by the Batterhams. 51 In Mr Lever's written submissions (though not pleaded in the Second Amended Defence or Amended Cross-Claim), it is contended that s 54A of the Conveyancing Act 1919 (NSW) defeats any claim by Mr Makeig that BBL held an interest (ie in the option) over the Vowles Land for his benefit. 52 Even apart from the fact that this was not pleaded by way of defence to Mr Makeig's claim, no claim to an interest in the Vowles Land has been made by Mr Makeig. Rather, what he asserts (as made clear in the submissions in reply made by Senior Counsel for Mr Makeig, Mr Sirtes SC) is that BBL was obliged under the Kitchener Project Agreement to contribute or make available (for the purpose of the joint venture or "project") to him and Mr Batterham, jointly, the benefit of the Vowles option, so as to facilitate the on-sale of the "project". This seems to accord with Mr Batterham's understanding of the position (T 429), namely that the Vowles option was to have been for their common benefit "in the sense that if we made a profit or increased value of land he [Mr Makeig] would share in it". (And I refer also to T 433 where Mr Batterham accepts that the common benefit in which they were to share was as to an on-sale of the Vowles Land above $1.35 million.)

53 Going back to the December draft document, while Mr Lever submitted that neither the December draft document nor the covering letter with which it was sent made mention of a "partnership" or "joint venture" arrangement, the header to the draft document itself suggests that what Mr Makeig was putting forward was a document to govern the financial arrangements between the two gentlemen as "partners". 54 Mr Lever points out that this was a rather one-sided document (in Mr Lever's words, "not a bad deal if you can get away with it") in that it allocated no value to either the Batterham or Vowles Lands and provided no obligation on the part of Mr Makeig to perform any services or provide any funds; but, on the other hand, provided for Mr Makeig to receive one third of the value of the Batterham Land above $1.5 million and half of the value of the Vowles Land (without Mr Makeig having any express obligation to contribute to the purchase price of the Vowles Land). It was suggested by Mr Lever that the letter, under cover of which this document was sent, was in many respects intentionally misleading insofar as it suggested that it had addressed and covered the issues which had been raised by Mr Williamson. 55 A number of things may be said about the submissions made by Mr Lever in this regard. 56 First, insofar as the ultimate profit share for the Batterham Land was calculated on any net profit or value above $1.5 million, there does seem to have been an implicit acknowledgement in this document (and allocation to Mr Batterham) of the value of the provision by Mr Batterham of his own land to the project. 57 Secondly, even though the allocation of value for the Vowles Land (or the question of any contribution of Mr Makeig's services or funds to the purchase of the Vowles Land) is not directly addressed in the 29 December 2004 draft agreement, the proposed appointment of profit share in respect of the value derived from the respective parcels of land (one third for the Batterham Land above the $1.5 million floor and 50/50 for the Vowles Land) indicates that it was anticipated that there be a different basis for the arrangement relating to the Vowles Land from that applicable in respect of the Batterham Land (and one which appears broadly consistent with the parties making an equal contribution in relation to the former). 58 Thirdly, and more to the point, the parties did not enter into an agreement on the basis of this 29 December 2004 document. However one-sided its terms may have been, this seems to me to be irrelevant to the issues at hand, save perhaps to note that there may be some (albeit unlikely to be great) significance in the fact that the document which the parties did ultimately sign was differently headed (this time described as an "Agreement", ie not simply as a "financial arrangements" document) but at the same time omitted reference to them as "partners". 59 Finally, in relation to the submission that Mr Makeig had engaged in intentionally misleading or deceptive conduct in suggesting to Mr Batterham that he had incorporated the recommendations of Mr Williamson into the draft agreement (a matter not put to Mr Makeig in cross-examination and not pleaded in the Second Amended Defence or Amended Cross-Claim), what Mr Makeig's letter in fact asserts is that the "relevant contents" of Mr Williamson's letter of 8 July 2004 are "fully addressed and covered". That appears to import an assessment of relevance on Mr Makeig's part. If he genuinely thought that one or more of the issues identified in Mr Williamson's letter were not relevant (in light of the discussions between the parties or otherwise), and so did not address them, then I have difficulty seeing how this letter would be misleading in saying that it had fully addressed "relevant" contents. Moreover, at the conclusion of the draft document it appears to incorporate by reference the arrangements set out in Mr Williamson's correspondence at least insofar as they are not consistent with the draft. In any event, other than perhaps as to credit, this criticism of Mr Makeig's conduct does not seem to go to any issue before me. 60 On 28 February 2005, Mr Makeig wrote to Mr Batterham attaching another draft agreement, in which he said he had incorporated certain enumerated suggestions of Mr Williamson. That letter states: Distribution of net profit has been referred to and reference has been made to what costs of the project are to be accounted for. We should however bear in mind that if some new, unexpected costs turn up outside those already dealt with, then payment for such should be subject to discussion between us.

This is language which Mr Lever submits is hardly that of a concluded agreement. Again, this is on one view beside the point when the question is whether the later Kitchener Project Agreement is binding. However, the response to this letter was relied upon by Mr Makeig as evidence of a separate agreement or understanding between the parties in relation to the basis on which payment to Council of lodgment fees later in the course of the project should be made. The 28 February letter certainly proceeds (unlike the 7 June 2004 letter) on the basis that the financial arrangements thereby proposed were not intended to address all project costs which might therefore become payable (though the description of costs not "already dealt with" as being "new, unexpected" costs leaves open a question as to whether any later, but expected, Council's fees would have fallen within any separate arrangement of the kind contemplated by this letter). 61 On 1 March 2005, Mr Batterham wrote a letter to Mr Makeig in response to the 28 February letter in which, among other things, he said that if in the worst case scenario "our project" does not get up, he (Mr Batterham) would be forced in due course to sell his property and would not wish to see Mr Makeig out of pocket. He wrote that: [I] give you my word that upon sale I would reimburse you for whatever expenses you incurred (less your own time) in the project … 62 The letter also noted the possibility (which Mr Batterham in the witness box says he only accepted was the case because he was relying on what he was (incorrectly) told by Mr Makeig) that the Council: … may charge a large application fee and I suggested and agreed that due to lack of funds on my behalf you may have to pay the fee, but I have no problem with this cost being a charge against the project and being reimbursed in full to you.

63 While Mr Batterham asserts that this understanding was incorrect, it does seem to be what was foreshadowed in the Council's own correspondence (Ex A pp 8-12) namely that there would be four phases of "Category C" rezoning fees as well as, possibly, a separate LES fee. 64 Relevantly, the 1 March letter also suggested that the parties might in due course consider the possibility of developing the property themselves (something later criticized by Mr Batterham as financial folly or fantasy on Mr Makeig's part) and, even more to the point, the letter was said by Mr Batterham to be written "in the spirit of clarification and certainty between partners". 65 Subsequently, a revised draft agreement dated 5 March 2005 was prepared by Mr Makeig. That document, signed on 25 March 2005, is the document I have defined as the Kitchener Project Agreement. 66 Before turning to the terms of the Kitchener Project Agreement, I should note that the first obstacle encountered in relation to the proposed rezoning lay in the fact that the Batterham Land was within what was referred to as the "Kitchener Precinct" and this precinct had not been included (due to the Rural Fire Service's bushfire concerns) in a City Wide Settlement Strategy ("CWSS") approved by the Council on 10 December 2003. This, it was accepted, precluded any individual (or "spot") rezoning for (and hence any residential development of) the Batterham Land. 67 In other words, any individual or "spot" rezoning of the Batterham (or Vowles) Land would not be possible while the Kitchener Precinct remained outside the CWSS. That this was the case was confirmed by a letter dated 16 September 2004 (Ex A p 34) in which the Department of Infrastructure Planning and Natural Resources ("DIPNR") advised the Council's General Manager that there was not sufficient justification to allow for consideration of individual rezonings of land around the Kitchener village and hence that for any individual rezoning to occur a strategic assessment of the entire Kitchener village and environs would need to be carried out to assess the various development scenarios which might be possible around the village, including consideration of strategic issues such as bushfire protection. It was DIPNR's stated view that as the strategic assessment would be carried out over the entire village and surrounds it would be most appropriate for Council to resource and manage the project. 68 It is not clear to me precisely when Mr Makeig and Mr Batterham became aware of this obstacle to the rezoning contemplated by the project. However, Mr Makeig certainly had a copy of the DIPNR letter within a month of its issue (since he forwarded it to a town planning consultant, Mr Ian Glendinning, in October 2004). That is consistent with Mr Makeig's recollection that he and Mr Batterham learnt about this obstacle about eight months into the project (that being his explanation for the relatively small initial estimate he gave as to the costs and time likely to be incurred to achieve a rezoning). 69 Mr Makeig accepts that he was aware, prior to the entry into the Kitchener Project Agreement in 2005, that unless that whole Kitchener Precinct was rezoned it would not be possible to procure the rezoning of the Batterham/Vowles Land (T 206.30; 206.36; 356.12) and he gave evidence as to the extent of the work he understood would be required to achieve this (T 206.21). Mr Lever submits that the obligation undertaken by Mr Makeig to pay "all consultants'" costs must be construed in this context as including Council's costs of resourcing and managing the project. · Kitchener Project Agreement 70 The Kitchener Project Agreement (drafted by Mr Makeig without the benefit of any legal advice and, significantly in my view, headed "Kitchener Project Agreement" "Financial Arrangements between the Parties") in its terms sets out the agreement between the parties to certain "Propositions" in the context of an "Undertaking" (or joint venture) between them, the purpose of that undertaking being to do all things necessary to achieve "Development Approval" for this "project". 71 There is nothing in the Kitchener Project Agreement (or in the earlier correspondence between the parties to which I was taken) which suggests that Mr Makeig is an architect or was agreeing to provide services of the kind for which professional qualification as an architect would be necessary. 72 Clause 1 of the Kitchener Project Agreement identified the parties. The "Project Site" (clause 3) was defined as comprising both the Batterham Land and the Vowles Land. 73 Clause 2 of the Kitchener Project Agreement was as follows: 2). PURPOSE OF UNDERTAKING ... to do all things necessary to achieve Development Approval for the project, all details of which will be agreed to by the Parties. On or before the achievement of Development Approval, it is the intention of the Parties to onsell the project, including the benefits of the Option [Vowles Option Agreement] described in Para 3), to a developer or other suitable entity for execution. The Sales Price will be subject to the agreement of both Parties. 74 On the face of the document, it would seem that clauses 2 and 3 have the function normally performed by the recitals to a deed or an agreement, since they record or acknowledge matters relating to the understanding or intention of the parties on the basis of which their agreement is to proceed and, relevantly, the balance of the clauses (4 to 12) are preceded by the words, in bold type face, "The Following Propositions are Agreed …". The juxtaposition of these clauses, it seems to me, is relevant in construing the document as a whole. 75 Mr Lever submits that the court cannot enforce an "intention" and that the document leaves uncertain or incomplete a number of essential terms. I consider the question of certainty below. However, if the Kitchener Project Agreement is read, not as a document purporting to govern all the terms on which the parties were to carry out their underlying joint venture, but rather (as on its face it seems to be) as a document setting out the parties' agreement to the way in which the financial arrangements between them were to operate, then much of Mr Lever's criticism of the document in this regard seems to fall away. 76 Clause 4 of the Kitchener Project Agreement provided: 4). PROJECT COSTS TO ACHIEVE D.A. ... PM [Mr Makeig] to undertake the management of the project. [Mr Makeig] agrees to pay all Consultants costs and other costs ancillary to consultant's [sic] services in a timely manner. [Mr Makeig] agreed to pay and has paid costs relating to the incorporation of [the Vowles Land], comprising the Option Fee, the land clearing costs and the survey fees. All professional work required to achieve the above results will be carried out by [Mr Makeig] in a timely manner. 77 Clause 4, significantly, is the only clause which in its terms imposes any obligation on either party in relation to what is to be done to carry out their joint undertaking. Clauses 5 to 12 all deal with how the "net profit" or "net project profit" is to be calculated and distributed or apportioned between the parties. It seems to me to be clear on the face of the agreement that it is intended to detail the financial arrangements between the parties and that the precise way in which the joint venture was to be progressed was a matter to be dealt with between them, outside the scope of the Kitchener Project Agreement. In other words, the parties had between them an understanding as to their intention to achieve the rezoning/development of the project lands and all this agreement was purporting to do was to set out how, if an "on-sale" of the project was achieved (before or after any development approval was obtained), they would share the net profits thereby realized from the project. (This is consistent with Mr Batterham's recognition in his 1 March letter that it was necessary for the parties to draw a "line in the sand", ie a price below which they would not sell, although ultimately they did not do so.) 78 Clause 6 of the Kitchener Project Agreement provided that: 6). COSTS … the following project cost commitments are agreed for respective allocation, prior to the distribution of the net profit to the parties … Value [Batterham Land] $1,500,000 existing land value will be credited to BB [Mr Batterham]. 79 As I understand it, in the calculation (and prior to the distribution) of any "net profit", Mr Batterham was to be paid or credited the sum of $1.5 million on account of his contribution of the Batterham Land to the project. The "net profit" of the project was defined in clause 10 as the remainder of the project sale price after deduction of the $1.5 million contribution in respect of the Batterham Land. The net profit was to be distributed in the proportion 11/18ths to Mr Batterham and 7/18ths to Mr Makeig (clause 12). The evidence from Mr Makeig (reinforced by a number of the clauses in the agreement) was that those fractions were calculated on the basis of an amalgamation of a 50% share as between himself and Mr Batterham of the net profit in relation to the Vowles Land (the Vowles Land itself being treated as representing one third of the overall project) and a lesser share (the equivalent of one-third) for himself in relation to the net profit in respect of the Batterham Land (which was treated as the other two thirds of the overall project). Although the profit share formula was described as "convoluted" by Mr Lever, it seems to me to have its own internal logic or consistency (half of a third plus a third of two thirds equalling seven eighteenths). 80 The term "Development Approval", as used in clause 2 (and to which I understand the initials "D.A." to refer in clause 4), is not defined in the Kitchener Project Agreement. There is an issue between the parties as to what is comprised by that term. 81 In Mr Lever's submission, "development approval" includes rezoning, subdivision of the lands and subsequent development approval (since he contends that all those events, plus sale of the project lands, are pre-conditions under the agreement to the realization of any net profit). (This is notwithstanding his primary submission that the Kitchener Project Agreement itself is not binding and that what was agreed between the parties was simply that Mr Makeig project manage the "rezoning" application in return for a success fee.) 82 Mr Sirtes, on the other hand, contends that, having regard to the whole of the Kitchener Project Agreement and its commercial context, by the words "Development Approval" the parties simply meant the rezoning of the lands. 83 I do not accept that the concept of achieving "Development Approval" for the project was restricted to achieving the rezoning of the relevant lands (even though that was clearly the first step for any residential development of the properties). Insofar as Mr Makeig seems to have contemplated that a profit could be made by selling the project with the benefit of a development approval, in the ordinary course that surely would encompass more than a mere change to the zoning of land (namely, approval to some form of sub-division or development of the land). What the parties were exploring during 2004-2006 was a means by which the properties could be sold for the purpose of a residential development. In that context I would construe "development approval" as extending beyond mere rezoning. 84 However, it does not necessarily follow, from that, that successful fruition or completion of the project would occur only after each of rezoning, subdivision, development approval and sale had taken place. The parties clearly contemplated (and Mr Batterham accepted in the witness box - T 565) that the project could be on-sold prior to subdivision or physical re-development of the lands. On such a sale, the project would clearly have come to fruition (whether successful or otherwise presumably being in each party's view dependent on the price so realised). · The Project 85 There is a dispute between Mr Makeig and Mr Batterham as to whether or not considerable effort was expended (as Mr Makeig says it was) by Mr Makeig in managing the project from late 2003. However, there is no dispute that Mr Makeig expended at least some time and effort (and $122,335.60 of his own funds) on the project. Mr Batterham, in his evidence in the witness box, asserted on more than one occasion that Mr Makeig should in fact have paid a lot more than that (T 461.14, T 566, T 574). 86 Mr Batterham said that any amounts paid by Mr Makeig were "sunk costs" (T 565.6-25) in the sense that Mr Makeig would be entitled to recoup his investment in the project only if there was an on-sale of the project land at a sufficient price. If the project did not proceed to that stage, for whatever reason, then in Mr Batterham's words, Mr Makeig would have "done his money" (T 565). 87 While the exact time at which Mr Makeig accrued rights in relation to a share in any future profits in the project is a matter of dispute between the parties, it was no doubt for the very reason that Mr Makeig had an interest in recovering his own cost outlay for the project that the Kitchener Project Agreement provided for the "Sales Price" of the lands to be the subject of consultation and agreement between the parties.

88 As noted, the first step necessary to achieve rezoning of the Batterham (and, for that matter, the Vowles) Land was the re-incorporation of the "Kitchener Precinct" (which included both the Batterham and Vowles Lands) into the CWSS. There is no doubt that Mr Makeig took steps to achieve this (including his attendance at a Council meeting on 17 March 2004 at which he pressed Mr Batterham's case and argued for the reconsideration of the Rural Fire Service report which had raised concerns leading to the exclusion of the precinct from the CWSS). Mr Makeig commissioned (and paid) a number of consultants for the purpose of preparing the necessary submissions or application to the Council, including Marshall Scott Surveyors, Glendinning Minto & Associates, Building Code and Bushfire Hazard Solutions, Ecotone Ecological Consultants Pty Limited and Douglas Partners. 89 On 17 November 2004 a resolution was passed by the Council's Strategic and Community Services Committee (Ex H p 259A) adopting a report in relation to the CWSS which noted that "For Council to further consider [sic] land rezoning around Kitchener" a strategic and comprehensive assessment of planning issues in the totality of the 1(a) Rural 'A' zone surrounding the village needs to occur. 90 The Committee's resolution, consistent with the said report, was that any planning assessment undertaken for the Kitchener Precinct outlined in that report should be the subject of "full cost recovery" to Council. Mr Makeig's understanding, at the time, of what was comprised by the concept of "full cost recovery to Council" appears to be set out in his letter dated 3 December 2004 to Ian Glendinning, of Glendinning Minto, town planners, namely "that the costs we shoulder beyond the costs for our own site, shall be subject to discounting against Section 94 Contributions". (Relevantly, and contrary to Mr Sirtes' argument as to the meaning of "Development Approval", I note that this letter was headed "Rezoning/Subdivision".) 91 In April 2005 the Kitchener Strategic Assessment Report (Ex L) was lodged with the Council. The report was prepared by Glendinning Minto on the instructions of Mr Makeig who had retained Glendinning Minto for that purpose. Mr Glendinning was called to give evidence by Mr Batterham during the hearing. I found his evidence to be balanced and helpful, among other things in explaining the processes involved in relation to the levies for s 94 contributions on a residential development project of the kind contemplated on the rezoning of the Kitchener Precinct from rural to residential. 92 On 4 May 2005, the Council resolved to amend the CWSS to include the Kitchener Precinct. Mr Makeig was informed of this by letter dated 9 May 2005 (Ex A 126-127; 128). 93 A Master Plan was then required by Council to be prepared for the whole of the Kitchener Precinct. For that purpose Mr Makeig re-engaged most of the consultants who had been involved in the preparation of the Kitchener Strategic Assessment Report, including Glendinning Minto. 94 On 13 May 2005, a senior Council officer, Mr Bo Moshage, wrote to Mr Makeig as to the various studies which the Council required and as to the Council fees that would be payable (in the sum of about $90,000 - consistent with the advice earlier given by Ms Julie Wells, a Land Use Planning Director/Manager with the Council - Ex A page 8). Mr Moshage indicated that the cost of preparation of the studies might be able to be recouped out of development contributions received by Council in due course. (Mr Makeig's desire to have this documented in a written agreement subsequently provoked much dissension in the relationship between him and Mr Batterham.) 95 In December 2005, the Kitchener Master Plan (prepared by Glendinning Minto) was lodged with the Council. At or about that time Mr Makeig paid to the Council the sum of $31,250 (this amount being included within his total outlay of around $122,000 referred to above). Mr Makeig says he did so on account of the rezoning application and lodgement fees in connection with the Kitchener Master Plan. Certainly, this payment would appear to represent the first tranche of the fees foreshadowed in Mr Moshage's letter, although, as I discuss below, Mr Lever contends otherwise. 96 In about January 2006, Mr Batterham met with Mr Moshage who advised that the Department of Planning (formerly DIPNR) required a Local Environment Study ("LES") to be prepared under the direct control of the Council and therefore that it would not be necessary for Mr Makeig and Mr Batterham to do so. (Up until then, it would seem that the costs of preparation for the rezoning in terms of consultants' fees were still being borne by Mr Makeig/Mr Batterham and not the Council - notwithstanding DIPNR's earlier advice that the Council should resource and manage the project.) 97 In effect, this means that as at January 2006 the Council was taking over the work required to complete the Kitchener Precinct rezoning. Mr Batterham conceded as much in cross-examination (T 449.15-21), accepting that thereafter Mr Makeig did not have to appoint consultants, and did not have much else to do in terms of the management of the LES at that stage, as that was being done by Council and there was nothing else Mr Makeig should then have been doing: saying, "It had been taken out of his hands". Indeed, Mr Batterham said he was at a loss to know what else Mr Makeig would have been doing at this stage (T 449). 98 Notwithstanding this concession, Mr Batterham appears as at late 2006/early 2007 (and again when he was cross-examined) to have taken issue with what he saw as the period of "hiatus" from about April 2006 in which he said (contrary to the acknowledgement as to the effect of the Council's actions in taking over the project) that Mr Makeig had not been doing anything to engage consultants (T 436; T 438). 99 Mr Batterham suggested at one stage in the witness box that there were a number of things which Mr Makeig should have been doing during 2006 to be ready to proceed when (and if) the Kitchener Master Plan was accepted (T 450). Mr Batterham said that from mid 2005 Mr Makeig had not arranged various surveys or reports - traffic, water retention, hydrology, anthropology, additional flora and fauna reports (T 451). Yet he had accepted (T 451.40) that this work was the very work which had been taken over by the Council. This was not a matter of which he complained to Mr Makeig, nor a basis on which he sought to terminate the agreement, nor was this the subject of any criticism by Mr Glendinning or any suggestion that it gave rise to delay in completion of the rezoning. Mr Batterham's complaint in this regard is further contradicted by his stated concern in December 2006 that Mr Makeig not continue to incur expenditure (without his approval) for the project as a rezoning was imminent. 100 On 2 March 2006, Mr Makeig wrote to Mr Batterham regarding the likely need to extend the time period for exercise of the option provided under the Vowles' Option Agreement. The Vowles' call option was duly extended by six months to December 2006 and the $5,000 extension fee (or "Additional Call Option Fee" as provided for under the Vowles Option Agreement) was paid as to 50% by Mr Batterham and as to 50% by Mr Makeig. Mr Batterham made no complaint as to the 50/50 payment split of the additional option fees at that time.

101 It is apparent from the correspondence from Mr Batterham to each of Mr and Mrs Makeig, respectively, (in particular I refer to the letters dated 28 November 2006 and 2 December 2006, being Annexures G & H to Mr Batterham's 11 June 2008 affidavit) that by late 2006 there was a considerable degree of tension in the relationship between Mr Makeig and Mr Batterham. While Mr Sirtes invites me to conclude that this was a "concoction", being contradicted by Mr Batterham's acknowledgement that Mr Makeig was the "main driving force" behind the project and his exhortations to Mr Makeig to get back on board with the project, I do not believe such a conclusion should be drawn, even though this correspondence coincided with a recognition on Mr Batterham's part that by December 2006 considerable value had been added (notionally at least) to the lands and there was something now of value to purchasers. 102 Further fees were payable to the Council in relation to the rezoning application in or around late 2006. An amount of $36,500 was paid by Mr Batterham on 28 November 2006 as well as an amount of $16,000 on 8 December 2006. These are amounts which Mr Lever characterises not as Category C rezoning fees but rather as consultants' fees and which Mr Batterham claims Mr Makeig was obliged, and refused, to pay under the Kitchener Project Agreement. Mr Makeig denies he was obliged to pay these amounts under the terms of that agreement but also denies that he refused to pay them. While Mr Makeig admitted in the witness box that he was, in effect, holding off from paying these fees until (or in the hope that) the Council entered into an agreement confirming what had earlier been promised in respect of cost reimbursement out of funds generated in due course from s 94 contributions in respect of the development of land within the Kitchener Precinct (T 393), he also said that he "probably" would have paid them had his bluff been called and he asserted that Mr Batterham had paid these fees before they were in fact due. 103 Contributing to (and I consider causing most of) the tension between Mr Batterham and Mr Makeig in late 2006 was the suggestion (which Mr and Mrs Makeig say, but Mr Batterham denies, was relayed to Mr Makeig in about September 2006 by Mr Batterham) to the effect that Mr Makeig and Mr Batterham might be able to claim from the Council an amount referable to their own personal time and services in achieving the rezoning of the Kitchener Precinct (on the basis that the rezoning would be of benefit to other land owners in the precinct and might generate significant revenue for the Council). 104 According to Mr Makeig, Mr Batterham said that this had been suggested to him by a retired female solicitor friend. Mrs Makeig supports this version of events (though I hesitate to place much weight on this because it would seem that Mrs Makeig may not directly have been a party to that conversation, though being, she says, in the "area" where she could hear the general "discussion" that took place (T 132; T 165), and therefore her understanding of these events might well have been influenced by what was presumably relayed to her by her husband). 105 Mr Batterham denies this and, indeed, denies knowing any retired female solicitor friend (T 398). He says he considered the suggestion to be bizarre. He did, however, refer in the witness box to a suggestion which he said had been made to him by a friend who was a developer working on a vintage resort development at Cessnock (in the context of a discussion as to the extension of a water pipeline to the resort from Cessnock), to the effect that if physical things like infrastructure were put into the project (such as sewer extensions) it would be possible to seek to recoup those costs from the Council (T 399; T 536). Mr Batterham's understanding of what his friend had said was to the effect "so if you invest money in that you would claim every cent of it". Significantly, Mr Batterham thought he may have spoken about this in general terms to Mr Makeig (T 536). 106 This seems to me to be the likeliest source of the not dissimilar proposal being pressed by Mr Makeig in late 2006 (albeit that proposal not relating to reimbursement for the cost of any physical infrastructure). Mr Makeig readily accepted that he had never heard of a situation in which such an arrangement had been reached before (T 375) and I suspect that if it had been Mr Makeig's idea he would have raised it at a much earlier time (since he was clearly keen to obtain whatever reimbursement he could from the Council). I therefore think it likely, even though nothing turns on this, that the genesis of the idea which caused so much dissension between the two gentlemen was something said in the first place by Mr Batterham. 107 Whether or not he had initially raised the suggestion, Mr Batterham certainly reacted very negatively in late December 2006 to the prospect of Mr Makeig pursuing any such course of action. Mrs Makeig described a very emotional discussion with him in late November 2006 in relation to this issue (T 146). At the same time, there is no doubt that, for his part, Mr Makeig was very keen to pursue such an arrangement if one could be struck with the Council. 108 It was submitted by Mr Sirtes that I should see the concerns expressed by Mr Batterham as illusory and concocted, particularly as there was no reference to any such concern in that Emery Partners' letter of 9 January 2007 and since, during December 2006, Mr Batterham was pressing for Mr Makeig to continue to provide services for the project. 109 On 2 December 2006 Mr Batterham wrote to Mr Makeig asking him "please keep your side of the agreement" and confirming his own intention to do so. 110 By late 2006, steps were being taken by Mr Batterham to ascertain interest from potential purchasers of the project lands. In early December 2006, a meeting took place with Mr David Mingay, a representative of a company named Daracon. Mr Batterham saw this meeting as important and "required" Mr Makeig to be there (letter dated 2 December 2006). Mr Batterham was apparently still keen to involve Mr Makeig in the project, notwithstanding that he says by about this time he had lost faith and trust in Mr Makeig (and, indeed, he accepted in the witness box that by then he considered Mr Makeig to be a conman, antagonistic, arrogant, aggressive, incompetent and "a loose cannon" (T 545)). 111 Mr Batterham said that he made the decision after a meeting on 13 December 2006 that he could no longer work with Mr Makeig (T 544). However, he did not communicate that to Mr Makeig at this time (on the contrary, urging Mr Makeig to continue to provide assistance for the project). 112 Mr Batterham requested Mr Makeig's attendance at a Council meeting in December 2006 (though there was some confusion as to whether this was the one at which the Kitchener Precinct LES was handed over - that being, in Mr Batterham's view, the most wonderful day for which he now says he falsely flattered Mr Makeig as being the "main driving force" - or a subsequent meeting).

113 On 18 December 2006 there was a meeting between Mr Makeig, Mr Batterham and a property developer (Mr Keith Johnson) in respect of the potential sale to JPG, or a company in Mr Johnson's group of companies, of the Batterham Land and the Vowles Land. 114 On 24 December 2006, Mr Batterham and the Makeigs shared a Christmas lunch together. 115 While the conduct of Mr Batterham over this period was demonstrably inconsistent, I place some weight on the fact that Mr Batterham (who exhibited an unwillingness to confront Mr Makeig on other issues during the project) was writing in very agitated (and emotional) terms and making very serious allegations (of fraud) against Mr Makeig. He became quite heated in the witness box when he explained how it was that he perceived such a fraud to have been suggested. I accept that this concern was genuine, albeit that his perception that Mr Makeig was intending to perpetrate a fraud may well have been unfounded. I also accept that Mr and Mrs Makeig did not understand the basis for Mr Batterham's concern in this regard and regarded his conduct in late 2006 when he raised this issue as very strange (T 153/154). 116 I accept as a matter of fact that by late 2006 Mr Batterham was very concerned that the way in which Mr Makeig was proposing that this suggestion be taken up would involve fraudulent or dishonest conduct on the part of one or both of them and that he was anxious that nothing should happen (including the pursuit of this proposal) at that stage to derail the project. It follows that I do not accept Mr Sirtes' submission that the expression of this concern by Mr Batterham was a concoction. · Termination of the Kitchener Project Agreement 117 By January 2007, Mrs Makeig considered that Mr Batterham had taken some very strange action: she says he had refused to meet or speak with them and they had been unable to make communication with him (T 154). Mr Makeig sent to Mr Batterham an agenda on 2 January 2007 for a proposed meeting on 9 January 2007 to discuss various matters in relation to the project. Mr Lever describes this as an "aggressive" agenda and says its very issue amounted to repudiatory conduct. Mr Batterham refused to attend the meeting. 118 On 9 January 2007, Mr Makeig was accused of various breaches of the Kitchener Project Agreement and was notified that Mr Batterham considered it to be at an end. The Emery Partners' letter included the following (which was said to be an open offer still on the table during the hearing): As you are aware, this project was at all times speculative. Should the project proceed to fruition then our client will, of course, repay all of your out of pocket expenses as well as payment of your reasonable costs in acting on his behalf to date. We would be most grateful if you would provide us with an itemised accounting of any such costs in due course. 119 The alleged breaches of the agreement comprised the following:

(i) failure by Mr Makeig to pay the two amounts paid by Mr Batterham in late 2006 to Cessnock City Council (totalling $52,500);

(ii) failure to pay an amount of $1,500 invoiced by Marshall Scott Surveyors (external consultants appointed, as it turns out, by Mr Batterham); and no longer asserted by Mr Batterham to be a breach by Mr Makeig;

(iii) failure to pay the full amounts due in respect of the Vowles Option and Additional Option fees (rather than a half share of those fees) (a shortfall in total of $7,000);

(iv) failure to pay Harper Somers O'Sullivan Engineers "fully" for their services; and

(v) failure to pay "in a timely manner" an amount of approximately $4,329.38 invoiced by Ecotone Ecological Consultants Pty Limited ("Ecotone") (an external consultant retained by Mr Makeig). 120 It was said that these "continued breaches" constituted a repudiation of the agreement which (by inference, if not expressly) the Batterhams by this letter accepted as bringing the agreement to an end. Insofar as the termination of the agreement resulted from an acceptance by Mr Batterham of what is said to be the alleged repudiation by Mr Makeig, it would seem that the sense in which repudiation is here used is that of "renunciation", as also in paragraphs 9E, 9F, 9I and 9J of the Second Amended Defence. However, insofar as 9B of the Second Amended Defence pleads clause 4 as a "fundamental provision" it may be that the Batterhams are also relying on repudiation in the alternative sense referred to in Koompahtoo Local Aboriginal Land Council v Sandpine Pty Limited (2007) 233 CLR 115 as termination for breach of an essential term (or intermediate term the breach of which goes to the root of the contract). 121 The motivation for Mr Batterham's termination of the Kitchener Project Agreement was put in issue (as going both to his credit and to the alleged breach of fiduciary duty). It was said that Mr Batterham, having by then appreciated (as he accepts he did) that there was then an increased value of the lands, sought to terminate the agreement and take for himself the benefit of that increased value to the exclusion of Mr Makeig. 122 Mr Batterham, whose evidence was generally given in a quiet low key manner became quite heated on this issue. He said, "It was a gathering storm. He painted me into a corner. I had no option … My mind was travelling towards that point with no return, despite every effort" (T 495), saying "it was a momentous decision that I had been forced into" (T 494) and one which he says he delayed "as humanly as possible" (T 494). 123 Mr Batterham concedes it was an upsetting time, and he says that he had grown weary of the project (and I would infer weary of dealing with Mr Makeig). He considered that he had exhibited the patience of Job with Mr Makeig. However, no one forced Mr Batterham to the decision to terminate the relationship and no prior notice of his intention do so was given to Mr Makeig. Much of the "gathering storm" seems to have been in Mr Batterham's mind, ie in his own perception of events. 124 The heart of the reason given by Mr Batterham for Mr Batterham's termination, as I see it, comes in his explanation (not expressed in the 9 January letter) as to why he did not attend the 9 January meeting. "You have got to understand this. The project was mine. For Mr Makeig to receive that money I would have to say to the Council I have paid this man $450,000 as a bona fide consultant … the project was mine. I would have to suggest I paid him the money" (T 498). Significantly, in the course of that rather emotional response Mr Batterham twice conceded that there was an agreement between him and Mr Makeig: "They [the $450,000 fees] were at the heart of our agreement … It [the agenda] was aggressive and denied almost everything in our agreement" (my emphasis) (T 498). 125 Mr Batterham went on to say: "The justification [for termination] was we had come to the end of the road. There was no conciliation. There was no rationale. If I had kept him on I would have to argue with him about that payment to Harper. He was even querying that in his letters … [And then again, despite the concessions I have noted above]. He had not employed anyone from middle 2005" (T 499). 126 I accept that the real impetus for the termination of Mr Makeig's agreement or services was that Mr Batterham felt he was unable any longer to work with Mr Makeig and, rightly or wrongly, had lost faith and confidence in him. I therefore cannot accept the overarching submission put by Mr Sirtes that the so-called $450,000 Council issue (which I discuss below) was not a matter of great concern to Mr Batterham. · Steps taken after termination of the Kitchener Project Agreement 127 A mere two weeks after the termination of the Kitchener Project Agreement, Mr Johnson by letter dated 23 January 2007 wrote to Mr Batterham putting forward two alternative options for the purchase of the Batterham and Vowles Lands (at a price of either $8 million or $11 million, depending on when Mr Batterham wished the purchase to be completed). 128 Mr Batterham obtained advice in February 2007 from his accountant in relation to the proposed sale of the project lands to JPG. Interestingly, Mr Williamson's notes of that meeting contain what can only sensibly be read as calculations of the net profit share to which Mr Makeig might be entitled (or might claim), since "PM 7/18th" could not logically refer to anything else (Ex D).

129 On 12 March 2007, the Batterhams and JPG signed the Deed of Agreement in respect of the Vowles' Option Agreement and Mr Batterham granted a first registered mortgage to JPG over the Batterham Land to support the required funding for JPG to acquire the Vowles Land (out of which a sum of approximately $1 million) was to be made available to Mr Batterham; there was a suggestion (Ex C, email of 15 June 2007 from David Batterham to financiers) that this could be used by him if it were necessary for a payment to be made to Mr Makeig but Mr Batterham denied this (T 414). At the same time, Mr Batterham and JPG signed the March Deed of Call Option in respect of the Batterham Land, which was conditional on the rezoning of the Batterham Land. Mr Batterham received a payment of $200,000 from JPG pursuant to these arrangements. 130 JPG exercised the option over the Vowles Land in June 2007. According to the settlement adjustment sheet (Ex C) for the Vowles Land, at this time Mr Batterham received a $100,000 payment out of the sale proceedings. JPG's bank valuation at the time it sought funding for the acquisition had placed a value on the Vowles land (as part of an acquisition of both parcels of land, ie assuming the Batterham Land was also acquired) of $2.53 million. If this represented the potential increase in value of the Vowles Land by reason of "incorporation" in the project, there would have been a notional profit (to be shared 50/50 in accordance with the Kitchener Project Agreement terms) of approximately $1.2 million. 131 There was cross-examination of Mr Batterham, going to his credit, as to the provision contained in the JPG documentation (clause 1.4 of the JPG Deed) to the effect that BBL would be repaid $38,500 by way of option fees paid by it in relation to the Vowles Land (when it is conceded that Mr Makeig paid half those fees). Ultimately, Mr Batterham did not receive any payment of this kind from JPG (as the earlier Vowles' option fees were forfeited to the Vowles, JPG had to pay the full purchase price without deduction of earlier option fees and there was a waiver of clause 1.4 in that regard). 132 However, Mr Batterham's willingness to enter into an agreement falsely asserting that BBL had paid amounts which he knew it had not (something which he said was due to his solicitor's advice that he could recover those amounts and he not being in a position to argue with her - T 402) did not reflect well on him. That said, there were also matters emerging in the evidence (such as the many inconsistencies in his evidence as to his property expertise) which did not reflect well on Mr Makeig. Ultimately, I think it is unnecessary to make any findings on credit on these issues.

133 Subsequently, on 15 November 2007, the Batterhams, JPG and Keith Johnson signed the JPG Deed in respect of the Batterham Land (replacing the Deed of Agreement in relation to the Vowles Land, the March Deed of Call Option and the mortgage in force at that time) under which Mr Batterham received a further payment of $500,000 from JPG and became entitled to annual instalments (of $200,000 each) payable on each of the four anniversaries of the date of the JPG Deed (assuming the call option was not exercised by the respective anniversary dates). 134 On 13 November 2008 there was a variation of the JPG Deed whereby the payment by JPG of the first instalment of the Further Call Option Fee (due on 15 November 2008) was thereafter to be paid by equal monthly instalments in arrears. Mr Lever relies on this (and Mr Batterham's explanation of the basis on which the amendment was requested) for his submissions as to the unlikelihood of either of the JPG options being exercised. I do not consider that I can draw from a desire by JPG (for financial reasons or otherwise) to pay the first of the four annual sums by instalments in arrears an inability in perhaps three years' time to complete a purchase of the Batterham Land. Nor does it preclude Mr Batterham from exercising his put option.

135 It appears that the rezoning of the Batterham Land (and the Vowles Land) is now imminent ("home and hosed" in Mr Batterham's words). In February 2009, the Council resolved to adopt a Development Control Plan and to re-exhibit the Draft Section 94 Contributions Plan. Subject to something unforeseen arising, Mr Glendinning considered it likely in the ordinary course that the rezoning would soon be approved. Nevertheless it is said that there is doubt (confirmed by JPG's chief executive officer) as to whether JPG (in the current financial climate) will exercise its option to acquire the Batterham Land, although it has until 14 November 2012 to do so (and if it does not, Mr Batterham has the right to exercise his put option at that stage). Issues

(i) Did the Kitchener Project Agreement constitute a binding legal agreement? (and, if so, what were the relevant terms of that agreement?) · Is there a binding agreement? 136 A number of issues were raised by the Batterhams in denying the contractual force of the Kitchener Project Agreement. Was the consideration illusory? 137 In the Batterhams' defence to the claim, it is alleged that the consideration offered by Mr Makeig in the negotiations which took place between Mr Makeig and Mr Batterham leading up to this agreement was illusory. 138 Ordinarily, consideration will be said to be illusory (leaving aside circumstances where there is a promise to do something illegal, or binding only as a matter of honour, or which is already the subject of a contractual duty) where the performance of the promise in question is wholly discretionary or where it is so uncertain that it would be impossible to enforce (see, generally, Carter on Contracts paras 06-310 - 06-330). 139 Broadly, this defence is based on the assertion that Mr Makeig did not have the relevant experience, capacity or funds to be able to comply with his obligations. I deal with these matters in more detail when considering the cross-claim. However, for the present purposes do not accept that submission for the following reasons. 140 There was much cross-examination of Mr Makeig in relation to the assertions made by him of his project development experience. Mr Makeig conceded, in effect, that he had only limited experience in the rezoning of rural land (referring to one development in the Blue Mountains and another in Cherrybrook, the details of which were very vague). However, it is by no means clear to me that the project management processes or skills required for the rezoning of rural land would differ in any material way from those necessary for other kinds of rezoning (and there was no evidence to that effect). There was evidence that Mr Makeig had been involved in various property applications to Ku-ring-gai Council over a period of years. (It is not suggested that Mr Makeig misrepresented that the developments in which he was involved were of any particular size or complexity.) 141 Performance of Mr Makeig's obligations did not require him to hold formal qualifications as an architect, so as to render any promise by him (in the absence of those qualifications) a promise to do something illegal. Mr Batterham conceded that he did not need architectural services to be provided and neither before nor since Mr Makeig's involvement had he retained architects for the project (T 489). 142 As to Mr Makeig's capacity (in terms of availability) or funds to manage the project, the fact that Mr Makeig was involved in a number of projects at the same time does not necessarily establish any lack of capacity to perform his obligations in respect of the project and there was evidence that Mr Makeig had funds available by way of overdraft from which he could draw to meet his financial obligations under the agreement (T 337). By the time of entry into the Kitchener Project Agreement it seems the likely funds required would have been more extensive than thought in 2004. However, the fact that Mr Makeig expended significant amounts on the project belies the suggestion that at the time of entry into the agreement his promise to do so was illusory. 143 The Batterhams have not established that Mr Makeig was so lacking in ability, time or funds as to deprive his contractual promise to perform the obligations of any objective value. 144 If (as is contended) Mr Makeig was in breach of one or more of his obligations under the Kitchener Project Agreement, then a claim for damages would lie. The assertion of such a breach does not support a conclusion that the promise by Mr Makeig to do the things provided for under that agreement was illusory at the time the contract was made. 145 Nor, in my view, can the promises by Mr Makeig to undertake the management of the project and to pay consultants' costs be said to be so vague or uncertain as to be unenforceable. Clause 4 of the Kitchener Project Agreement makes it clear that Mr Makeig agreed he was to undertake the management of the project and to pay all consultants' costs and other costs ancillary to consultants' services. Mr Lever conceded that at least these obligations on Mr Makeig's part were "relatively" clearly stated. I see no basis on which to find that promises of that kind amounted to illusory consideration on Mr Makeig's part. The fact that there may be a dispute as to the ambit of the promise to pay consultants' costs does not make the consideration illusory. 146 While I accept that the "consideration" in relation to payment of the Vowles option fees would be illusory if (as I consider) it was descriptive and not prescriptive in substance, the other obligations which are acknowledged in clause 4 on the part of Mr Makeig are sufficient consideration to support the agreement. Intention 147 Mr Sirtes submits that the Kitchener Project Agreement is commercial in its nature and that there is no evidence to rebut a presumption thereby arising that the parties intended legally to be bound thereby (relying upon Banque Brussels Lambert SA v Australian National Industries (1989) 21 NSWLR 502). 148 While I consider that there is little doubt the parties intended to be bound by the Kitchener Project Agreement, which they signed, I note that in the High Court in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 the utility of using the language of presumptions in the context of considering intention to create legal relations has been doubted. There, Gaudron, McHugh, Hayne and Callinan JJ said (at 106): At best, the use of that language [of presumptions] does no more than invite attention to identifying the party who bears the onus of proof. In this case, where issue was joined about the existence of a legally binding contract between the parties, there could be no doubt that it was for the appellant to demonstrate that there was such a contract. Reference to presumptions may serve only to distract attention from that more basic and important proposition.

149 Similarly, Einstein J in Gate Gourmet Australia Pty Limited (In Liq) v Gate Gourmet Holding AG [2004] NSWSC 149 rejected the suggestion that intention to create legal relations was a matter for presumption (at [213]):

Rather, the court is simply looking in terms of the objective approach, to identify whether or not there was the requisite intent to contract in any given context. The context in a matter of a commercial communication is materially different to the context, for example, in a matter of a domestic communication. Applying the objective approach the high probability is that a commercial communication will generally be seen to have been intended to be regarded as a relatively formal matter both by the sender as well as by the recipient. I refer also to the view expressed by Murray J, with whom Ipp and Owen JJ agreed, in Pirt Biotechnologies Pty Limited v Pirtferm Limited [2001] WASCA 96 at [21], questioning the correctness of Megaw LJ's formulation in Edwards v Skyways [1964] 1 All ER 494 at 500 (which Rogers CJ in Comm D had applied in Banque Brussels Lambert SA ). but accepting that the "onus may be readily discharged in the case of commercial negotiations where agreement on important matters might readily persuade the court that a contract was made" ( cf Helmos Enterprises Pty Limited v Jaylor Pty Limited [2005] NSWCA 235, per Young CJ in Eq, as his Honour then was, with whom Stein AJA agreed). 150 In light of what was said by their Honours in Ermogenous I do not consider that any presumption of intention should be made. Nevertheless, I do not think it can here seriously be contended that the parties did not objectively intend to be bound by their signed written agreement. The Kitchener Project Agreement was signed by Mr Batterham on 25 March 2005, it was apparently thought sufficiently important for his son subsequently to witness his signature. It sets out the parties' apparent agreement as to the terms which were to govern the financial aspects of the project entered into between them, a matter of undoubted import to the parties. The execution page is formal in its terms (expressly providing for the benefit to enure to the parties' executors and assigns). By contrast with the December 2004 draft document, the Kitchener Project Agreement is expressly headed as an "Agreement". 151 Mr Batterham described himself as a keen businessman. He gave evidence of his experience as a senior public servant and later Councillor on the Council. He accepted that he had entered into other commercial agreements in the past. It cannot be the case that, when signing a document headed "Agreement", which set out how profits which the parties must have hoped would be not insignificant were to be shared, and having it formally witnessed by his son, Mr Batterham would objectively be seen as not intending to be bound thereby. Subsequent conduct 152 As Heydon JA, as his Honour then was, noted in Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153 at [25], post-contractual conduct is admissible on the question whether a contract was formed (citing Howard Smith & Co Limited v Varawa (1907) 5 CLR 68 at 77; Barrier Wharfs Limited v W Scott Fell & Co Limited (1908) 5 CLR 647 at 668, 669, 672; B Seppelt & Sons Limited v Commissioner for Main Roads (1975) 1 BPR 9,147 at 9,149, 9,154-9,156; Film Bars Pty Limited v Pacific Film Laboratories Pty Limited (1979) 1 BPR 9,251 at 9,255). 153 Mr Batterham conducted himself throughout the period from March 2005 to January 2007 as if there were a binding agreement on foot between the parties. He provided Mr Makeig with project updates and consulted with him during the course of the agreement. He expected Mr Makeig to pay costs for consultants in accordance with the agreement. Mr Batterham says he involved Mr Makeig in matters such as the Vowles Land (forwarding a copy of Ex A p 153 for Mr Makeig's information) as a matter of courtesy (T 420) and assumed that Mr Makeig would pay (at least) half the fees for extension of the Vowles option in 2006 without any discussion as to the split (T 420). Mr Makeig was the only person (other than perhaps his son) to whom he had earlier showed the Vowles Option agreement, again he says as a matter of courtesy to show his bona fides (T 422). 154 Mr Batterham accepted that if the project had not been terminated Mr Makeig would have been consulted about the sale price and, indeed, he invited Mr Makeig to attend the meeting with Mr David Mingay of Daracon (a prospective purchaser) on the basis that: Well he was still in the agreement . You know, while he was in the agreement until I had formally dismissed him, I didn't think it proper that I should exclude him. (my emphasis) (T 545) 155 This cannot be seen otherwise than as an acknowledgement that there was an agreement on foot between the parties. As I apprehend his submissions, Mr Lever would say that this is no more than an acknowledgement that there was an agreement of some kind in place, not that it was as set out in the document signed on 25 March 2005. 156 Most tellingly, however, when Mr Batterham consulted his lawyers in January 2007 and gave instructions for them to issue the letter of 9 January 2007 formally terminating the arrangements he had with Mr Makeig, they did so on the basis that Mr Makeig had breached obligations owed to their client under an agreement which they said they were "instructed" was entered into on 5 March 2005 entitled "Kitchener Project Agreement". If there were no binding agreement between the parties this would have been unnecessary. Nowhere in the letter of 9 January 2007 is it said that the termination is without prejudice to a contention that there was no binding agreement on foot to terminate. The notion that what was being terminated was a "document" makes no sense. 157 Further, the letter relied, as one of the allegations of breach, on an obligation to pay full option fees (for the Vowles Land) which can only have been thought to have arisen under the Kitchener Project Agreement. When Mr Batterham sought to explain the incorrect inclusion of one of the allegations of breach (in relation to Marshall Scott's fees) he made it clear that what he was trying to do was itemise all the things Mr Makeig had done wrong under the agreement (T 417 1.20). In so doing he apparently had regard to the Kitchener Project Agreement. Insofar as the "agreement" was one which he considered encompassed obligations in relation to the Vowles Option fees, then the agreement so acknowledged must have been the Kitchener Project Agreement. 158 The indignation (expressed somewhat heatedly in the witness box in contrast to the restrained manner in which he gave his evidence generally) by Mr Batterham at his perception of Mr Makeig's breaches, in particular his repeated assertion that Mr Makeig "should have been paid a lot more" than he did (in relation to the consultants' fees) and his references to "our agreement", is inconsistent with Mr Batterham not accepting that there was an agreement on foot between the parties. That agreement can only be the one he signed, namely the Kitchener Project Agreement. Uncertainty 159 It was submitted by Mr Lever that the Kitchener Project Agreement, "with all its vagaries and matters upon which no agreement has been reached" was no more than an arrangement to share any increased value of the Batterham and Vowles Lands if (and only if) they were rezoned, subdivided, made the subject of a successful development approval and sold. (While it is accepted that the rezoning is now imminent there is no suggestion that any subdivision or development approval is imminent.) Leaving the time at which the "increased value" was to be shared, it is hard not to see this as an acceptance that there was a binding agreement on foot, the only dispute being as to the identification of its terms. 160 What are the perceived vagaries? As I understand Mr Lever's submissions in this regard, these relate mainly to the way in which the Vowles Land was to be incorporated as part of the project. It is said (correctly) that the Kitchener Project Agreement makes no provision for the actual acquisition of the Vowles Land (simply providing that it is to form part of the project and noting that BBL was, as it had by then already done, to enter into an option to purchase the land). 161 A further perceived vagary is said to relate to the calculation of net profit based on the project sale price. Net profit is defined as "the remainder of the project sale price, after the costs deductions set out Para 6". It is submitted for the Batterhams that there cannot be a net profit for distribution to the parties until the project is sold and the project sale price is paid. 162 No defence based on uncertainty was pleaded (as clearly should have been the case had such a defence been pressed - Branir Pty Limited v Owston Nominees (No 2) Pty Limited (2001) 117 FCR 424 at 530 per Allsop J as his Honour then was and with whom Drummond and Mansfield JJ agreed). Nevertheless, in his written submissions in reply, Mr Lever seems to go further than simply criticising the vagueness of the document from the perspective of any argument based on formation of contractual intent and articulates for the first time what is in effect a defence based on uncertainty - namely that the express terms of the Kitchener Project Agreement leave essential arrangements to be agreed to by the parties - those being "all details" of the development approval and the price at which the project is to be on-sold to a developer. Mr Lever contends that there was no more than an expression of (an unenforceable) "intention" to onsell the project. 163 Objection was quite understandably raised by Mr Sirtes to the fact that no such defence was pleaded. As will be seen, I am of the view that such a defence does not succeed. Had an application been made to amend the defence in order formally to raise such a further defence, I would nevertheless have allowed the application - on the basis that the issues as to uncertainty were before the court in any event as a matter of construction of the contract and I do not consider such an amendment would have raised procedural or substantive unfairness to Mr Makeig at that stage. In any event, this issue does not arise given the view I have formed that the agreement is sufficiently certain to be enforceable. 164 Attention was drawn by Mr Lever to those parts of the Kitchener Project Agreement which leave matters to be agreed to by the parties (such as the requirement in clause 2 that the parties do all things necessary to achieve development approval for the project "all details of which will be agreed to by the parties" and the vagueness of the time at which it is the stated intention of the parties to onsell the project, including the benefits of the option) as matters tending against there being a concluded agreement. 165 Mr Lever points to the concessions made by Mr Makeig in the witness box as to matters not dealt with in the written agreement or which Mr Makeig accepted were not "as clear" as they "ought to have been" (T 302.5; T 346.47; T 294.40; T 298.27; T 311.30; T 346.7 and T 386.22). 166 It was submitted by Mr Lever that the vagueness of the document was such that I should not conclude it to be (at its highest) any more than a "success fee arrangement" between the parties. 167 I do not accept that the matters adverted to by Mr Lever render the agreement reached between the parties insufficiently certain to be enforceable, nor do I consider that they are productive of sufficient uncertainty to lead to the conclusion that there was no common agreement on all the essential terms of the parties' working relationship for the project or no intention to be bound thereby. 168 I note that a narrow or pedantic approach to the construction of commercial contracts in resolving seeming ambiguities was eschewed by Barwick CJ in Upper Hunter County District Council v Australian Chilling and Freezing Co Limited (1968) 118 CLR 429 at 436-7. 169 By reference to the stated purpose of their undertaking, the parties were acting on the basis of an understanding that each would do all things necessary to achieve development approval, even if there was no direct statement of a contractual obligation to carry out each of the particular steps necessary to do so. The fact that the details of those steps might fall to be agreed between the parties from time to time during the course of the project does not render the Kitchener Project Agreement merely an agreement to agree; nor (with the implication of a duty of good faith, which I discuss later) would the need for agreement on matters relating to the application for development approval render the overall project agreement unworkable. In this regard, not surprisingly, the parties were binding themselves to a consultation process (where necessary) in relation to the steps to be achieved with regard to the desired development approval. 170 Importantly, what they had agreed and what they had set out in the Kitchener Project Agreement, were the financial arrangements between them, recording that Mr Makeig was to provide his project management services in a timely manner for the project and his agreement to pay the fees provided for in the Kitchener Project Agreement; and that Mr Batterham was to contribute his land (and the benefit of the Vowles option held by BBL) to that venture, and that if and when the "project" was on-sold there would be an apportionment of "net profit" between the parties. In principle this seems to me to be eminently workable. As to the particular areas of uncertainty highlighted by Mr Lever, I comment as follows. Need for agreement on sale price or timing of sale 171 The need for agreement to be reached on any ultimate sale price (or as to the time of any on-sale), would seem to me to be unsurprising given that both parties had an interest in achieving the best sales price but might differ as to how, and the best time at which, that would be achieved. Mr Makeig had an interest in seeing that any ultimate sale price would, so far as possible, enable him to recoup his "sunk cost" in the project. Hence, the need for both parties to reach agreement on those matters. 172 For the mutual implication of a duty of good faith in those circumstances, Mr Sirtes relies upon Mackay v Dick (1881) 6 App Cas 257 at 263. I discuss this in more detail in answer to issue (iv) below. Nevertheless, for present purposes I consider that there would be, as a matter of construction of the agreement, at least a duty to co-operate in achieving the objective of an on-sale at a price sufficient to enable both parties to recoup their investment in the project. Mr Batterham, in his handwritten letter of 1 March 2005, had been careful to point to the need to have a line drawn in the sand, ie a price below which the parties would not sell, for this very reason. What would have been the case had the parties eventually failed to reach agreement on those matters is a moot point, as events have transpired.

Vowles option 173 As to how the Vowles Land was intended formally to be incorporated in the project, and how its purchase was ultimately (if at all) to be funded, again I do not consider that the lack of specificity as to those matters deprives the Kitchener Project Agreement of contractual force. 174 At the time the agreement was entered into (in March 2005) it would appear that what was contemplated was that steps would be taken to achieve the rezoning of the Batterham Land (which, by then, the parties realised would involve the need for the whole Kitchener Precinct, including the Vowles Land, to be rezoned) and for a development approval to be obtained. Either then or, relevantly, before the time at which development approval was obtained, the "project" (ie the Batterham Land "with the benefit of" the Vowles' option) was to be on-sold. 175 In other words, on its face the Kitchener Project Agreement appears to contemplate that a purchaser would be sought to acquire not only the Batterham Land but also (as JPG ultimately did) to take an assignment of the Vowles option (if the option had not by then already have been exercised) or the Vowles Land itself (if the option had been exercised by then). 176 Included in what the parties seemingly contemplated, therefore, was what Mr Batterham eventually succeeded in doing: to assign (or allow a purchaser in some way to take) the benefit of the Vowles option agreement as part of a transaction whereby the Batterham Land was also sold, so as to realise the benefit of any increase in value of the incorporation of the Vowles Land in the project, without the need for BBL (or either of Mr Batterham or Mr Makeig) to outlay the purchase price for acquisition of the Vowles Land. This would explain both the absence of any mechanism in the Kitchener Project Agreement for the actual exercise of the option and the absence of provision in clause 6 for the way which any contribution by one or more of the parties to the purchase price was to be recognised in calculating the net project profit. 177 In other words, if what was being on-sold was the benefit of the option, then the questions as to who was to acquire the Vowles Land or as to how the purchase price was to be funded would not have arisen. 178 That this was the contemplation of the parties is supported by the reaction of Mr Batterham in the witness box to the suggestion made by Mr Makeig in his letter of 7 March 2006 that they might together exercise the Vowles option and purchase the Vowles Land if a purchaser had not been found for the "project" by December 2006 (when the Option period was to expire). He saw this as "unrealistic" fantasy (T 431) and, like any suggestion that he and Mr Batterham might themselves have carried out the overall residential development of the two parcels of land, as "financial folly" (T 424.46). 179 Mr Batterham's reaction to that suggestion gives a very clear indication that what he and Mr Makeig had in mind was to achieve a rezoning of the two parcels of land so as to enable them to be on-sold (as a package) with the benefit of the rezoning in place (and perhaps even with the benefit of actual development approval) but without a "sod being turned" (to use Mr Makeig's words). 180 For that purpose it was not necessary that the parties themselves first acquire the Vowles Land, as long as they were in a position to cause it to be transferred to the eventual purchaser (as they were by assignment or by the exercise of a right of nomination in respect of the Vowles Call Option). 181 Mr Lever's submissions themselves concede that Mr Makeig's 7 March letter was "totally consistent" with Mr Batterham's understanding of the relationship "based on the sharing of any increased value in the project which included the statement by Mr Makeig that 'we agreed jointly to promote the development of the [Vowles] property and that the proceeds were to be shared equally between us.'" 182 This was not a venture for the joint development (after its acquisition) of the Vowles Land. It was a venture for the joint promotion of such a development by a third party purchaser. There is, in my view, a significant difference between the two concepts. 183 Mr Sirtes submits, parenthetically, that if the option had been exercised before the on-sale to a third party, it is obvious that BBL would have had to have paid the purchase price, as the beneficiary of the option (or, perhaps more precisely, as the party entitled to the contractual right to exercise the option). 184 Nevertheless, the Kitchener Project Agreement imposes no obligation on BBL to exercise that option (the "incorporation" of the Vowles Land simply being an assumed basis of the net profit calculation). In those circumstances, if the project, or underlying venture, had remained on foot between the Batterhams and Mr Makeig when the time came for exercise or expiry of the Vowles option, then its exercise or otherwise would presumably have been a matter for consultation between the parties. A decision not to exercise (or failure to agree upon who was to exercise) the Vowles option at that stage may well have led to the frustration or impossibility of further performance of the Kitchener Project Agreement, since in that case the net project calculation would be predicated on something which had not eventuated. However, that does not lead to the conclusion that the agreement, or the net profit formula, as it stood in 2005 was too uncertain to be enforceable. Lack of specificity re apportionment of costs 185 Another reason why it is submitted for the Batterhams that the Kitchener Project Agreement did not constitute a concluded agreement was that it was silent as to the payment of costs (other than the costs specified in clause 4) if the parties were ever to lodge a development application with the Council. (This seems to run counter to the submission that the Council lodgement fees which were in fact paid fell within clause 4 unless the distinction drawn between them is that fees for lodgement of a development application in due course would not have been used to reimburse consultants - as to which there was no evidence.) 186 Insofar as achievement of a development approval was the stated purpose of the undertaking in which the parties were involved (and I consider that such a concept potentially extended beyond any mere rezoning) does a failure to address who was to pay any subsequent development application fee to the Council mean that one of the essential terms of that undertaking is missing so as to render the whole agreement unworkable and unenforceable? I think not. 187 The parties agreed jointly to pursue the undertaking. It might perhaps be open to infer that, unless otherwise specified, they had agreed to bear the future costs of that undertaking in the proportions that mirrored their respective profit share out of the project. Whether or not such an inference can properly be drawn seems to me to be unnecessary to determine, if (as I consider is the proper way in which to construe the Kitchener Project Agreement) this was in substance simply an agreement as to how to apportion the anticipated profits of an undertaking or venture being undertaken by the parties (the precise details of that undertaking being a matter for agreement in good faith between the parties as the project or undertaking progressed). 188 The failure to specify precisely how some of the later project costs might be borne as between the parties (or indeed whether the project should continue beyond certain stages) might in due course have led to the failure of the project (if at a later stage the parties in good faith did not agree on the way forward) but that does not deprive the initial agreement of contractual force. 189 In this regard, I find it significant that the agreement was headed as an agreement "as to the financial arrangements between the parties" and that the parties contemplated that they might onsell the "project" at a time before development approval was achieved (and perhaps even before a development application was lodged). 190 The question as to how future development application fees payable to the Council (if any) were to be split in the future (being one of perhaps many matters of detail the parties contemplated might have to be agreed between them during the course of the project and, it would seem, being one of the matters which (as per the correspondence of 1 March 2005) they turned their minds to but did not consider it necessary to address in their written agreement at that stage) does not lead me to conclude that the Kitchener Project Agreement was of no force or effect or was not intended to be binding.

· Relevant terms 191 For the reasons set out above, I find that the Kitchener Project Agreement did constitute a binding legal agreement. The question then is what were the relevant terms of the agreement? 192 The express terms of the agreement on which Mr Makeig relies, and which Mr Sirtes submits on an objective and reasonable reading the Kitchener Project Agreement contains, include the agreement as to the purpose of the joint undertaking, namely that the parties "will do all things necessary to obtain development approval". Mr Sirtes contends that this obliged the parties to do all things necessary to obtain the rezoning of the Batterham/Vowles Land so as to enable the joint venture lands to be subdivided and sold (see paragraph 6 Amended Statement of Claim). 193 Reliance is also placed on an implied term of good faith (paragraph 7 Amended Statement of Claim), such implication said to arise both at law (on the basis that it is said the parties, as joint venturers and/or fiduciaries, owe mutual obligations of good faith, citing in this regard United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1 at 10) and as a matter of fact (in order to give business efficacy to a contract founded on the mutual confidence that they would act for joint advantage only - BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266; see also Burger King Corporation v Hungry Jacks Pty Limited (2001) 69 NSWLR 558). Express term 194 As to the express term relied upon, while I read clause 2 as having the function, in effect, of a recital, I note that it does on its face record the parties' understanding of their joint venture which would seem to me to constitute an implicit (if not express) acknowledgement of the obligation on both their parts to act as contended for by Mr Sirtes. (However, I do not read achievement of "development approval" as limited to the rezoning itself and so I would not accept the qualification sought to be put on clause 2 in that regard.) 195 It seems to me clear that the parties, having entered into an agreement acknowledging in its terms that the purpose of their undertaking was to do all things necessary to obtain development approval, they were bound to do so. Implied term 196 As to the implied term which is relied upon, I consider that at the very least there was an obligation on both parties to do all things reasonably necessary to achieve the carrying out of their joint undertaking. 197 In Mackay v Dick, Lord Blackburn noted that: I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.

198 Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ adopted this characterisation in Park v Brothers (2005) 222 ALR 421, referring to the general principle of construction recognised by Mason J in Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Limited (1979) 144 CLR 596 at 607-608, according to which parties are taken to agree to do all that is reasonably necessary to secure performance of their contract.

199 In Byrne v Australian Airlines Limited (1995) 185 CLR 410 McHugh and Gummow JJ, discussing the distinction between characterisation in terms of construction or implication, said that: Some implied terms are perhaps more usefully identified as rules of construction applied to the express terms of the contract, particularly to the written terms thereof. Thus, in Secured Income Real Estate (1979) 144 CLR 596 at 607-608, Mason J described as a "rule of construction" the proposition of Lord Blackburn in Mackay v Dick (1881) 6 App Cas 251 at 263.

… [T]he more modern and better view is that these rules of construction are not rules of law so much as terms implied, in the sense of attributed to the contractual intent of the parties, unless the contrary appears on a proper construction of their bargain ( Cheall v Association of Professional Executive Clerical and Computer Staff [1983] 2 AC 180 at 188-189; Thompson v ASDA-MFI Group Plc [1988] Ch 241 at 266). There is force in the suggestion that what now would be classified as terms implied by law in particular classes of case had their origin as implications based on the intention of the parties, but thereafter became so much a part of the common understanding as to be imported into all transactions of the particular description. 200 The fact that Mr Makeig was committing himself to the devotion of what might be considerable time and resources to this project (in circumstances where unless the project succeeded this would be "sunk cost" (to use Mr Batterham's words) or, for that matter, "sunk time"; where the project was clearly commercial in nature; and where Mr Batterham stood to gain a considerable benefit from Mr Makeig's efforts (if successful) at no financial risk to himself), may well also give rise to the implication of a duty of good faith on the part of the Batterhams, though I note that this is an area in which doubts have been raised as to whether a duty of the kind considered in Burger King Corp v Hungry Jack's Pty Limited; Overlook Management BV v Foxtel Management Pty Limited [2002] NSWSC 17 should be implied into commercial contracts and as to its scope. 201 In light of the finding of an implied term of the kind considered in Mackay v Dick it is not necessary to enter into the debate on whether a wider implied duty of good faith should be implied in this case otherwise than by reference to any fiduciary obligation. 202 I should note that it was submitted for the Batterhams that entry into the Vowles option was a significant financial risk (for BBL). I do not see where any such "significant financial risk" arises, unless it is suggested by the Batterhams or Mr Makeig (and I did not understand this to be the case) that the Batterhams were in some way obliged (viz-a-viz Mr Makeig) in due course to exercise the option to purchase the Vowles Land. It would in my view have been open to BBL to decide (after consultation with Mr Makeig) that it did not wish to commit its funds towards the actual acquisition of the Vowles Land and then it would have been a matter for Mr Batterham and Mr Makeig to determine whether there was some other way in which the Vowles Land acquisition could be funded. As it transpired, this issue did not arise, as Mr Batterham effectively took the matter out of Mr Makeig's hands. 203 Would an obligation of good faith otherwise be implied as a matter of law? This raises the question as to the characterisation of the relationship between the parties, which Mr Sirtes submits is that of joint venturers/partners and whether, if the characterisation of the relationship is that of joint venturers but not partners, this is the kind of case in which such a joint venture gave rise to fiduciary obligations. 204 In response to that, Mr Lever relied heavily on the fact that, notwithstanding the advice sought from and/or given by Mr Batterham's accountant as to a proposed joint venture - specifically the desirability to form a special purpose joint venture vehicle, there is no reference in the Kitchener Project Agreement to a joint venture as such. Mr Lever argues that a reference provided ("happily" according to Mr Batterham) by Mr Batterham in August 2005 (Ex A p 137) gives the clearest indication that there was no partnership or joint venture, in that Mr Batterham there describes the agreement as a "success fee" agreement. Much was made of the "success fee" nature of the arrangements. Mr Batterham's understanding, at least as expressed in the witness box, seemed to be that a "success fee" arrangement was akin to the engagement of a consultant and inconsistent with there being a joint venture or partnership. 205 However, it does not seem to me that the description of this agreement as a "success fee" arrangement is necessarily inconsistent with the relationship between the parties amounting to a joint venture (or, for that matter, a partnership) or as giving rise to fiduciary obligations, including a duty of good faith. 206 This was clearly a joint project. Although Mr Batterham in the witness box became somewhat heated when describing this proprietorially as his project, "You have got to understand this. The project was mine … the project was mine" (T 498), in correspondence throughout the period he did refer to it as "our project" at least in responding to Mr Makeig's letter of 1 March 2005 and in the witness box he referred to "our agreement". The fact that it was a project initiated by Mr Batterham is not to the point if, as seems to have been the case, it became a project in which both were engaged. 207 What Mr Batterham accepts that he did was to retain or engage Mr Makeig as a project development consultant in order to manage the project. However, this was not an arrangement whereby Mr Batterham simply retained the services of a consultant for a fixed or hourly fee. He accepts that he agreed to pay Mr Makeig a success fee, calculated on a formula by reference to the increase in value of the lands the subject of the project. That, of itself, could in my view still properly be described as a joint venture, but what puts it beyond doubt I think is that Mr Makeig was not simply providing his project management services to Mr Batterham (or for the "project"), and potentially deriving a "success fee" or share in the increased value as a result, he was also funding at least part of the costs of the project. 208 In my view this arrangement is properly to be characterised as a joint venture (giving rise at the very least to an implied obligation of co-operation, if not also a duty of good faith) and the fact that the parties did not use that term does not warrant a finding otherwise. 209 The parties were clearly engaged in a commercial undertaking or project with a view to achieving an increased value for the two parcels of land which they notionally treated as having been incorporated in that project and to sharing in that increased value. Each party was making a contribution to that project (in terms of assets, from Mr Batterham's perspective, and costs/skills, from Mr Makeig's perspective). Other terms 210 Apart from the contractual terms I have discussed above, there was a live dispute as to the content and scope of the obligations assumed by Mr Makeig under clause 4 of the Kitchener Project Agreement in relation to the payment of consultants' fees and other costs. This is relevant to various of the allegations made against Mr Makeig of breach of the agreement, and thence to the assertion that he repudiated the agreement. Accordingly, I address the construction of this particular clause later in these reasons. (ii) Equitable Estoppel 211 Mr Makeig also makes a claim in equitable estoppel, to the effect that the Batterhams are estopped in equity from denying him the rights and entitlements under the Kitchener Project Agreement. 212 The estoppel is said to arise from the making of certain representations by Mr Batterham to Mr Makeig during the period from 2004 to 2006 (on which Mr Makeig says he acted in expending time, energy and funds for the project), namely that Mr Batterham considered himself bound by the terms of the Kitchener Project Agreement and would (if Mr Makeig carried out his obligations under the agreement) fulfil his end of the bargain by agreeing a sale price for the Batterham/Vowles Lands with Mr Makeig and sharing the net profit in the profits in the proportion 61%/39%. Reliance is placed on Waltons Stores (International) Limited v Maher (1988) 164 CLR 387 per Brennan J at 428-429. 213 At the very least, by signing the Kitchener Project Agreement on 25 March 2005, I consider that Mr Batterham represented that he was entering into an agreement to the effect contained therein and, insofar as it contained promises or obligations on his part, must have been representing to Mr Makeig that he regarded himself as bound thereby. 214 Mr Batterham's conduct throughout the period 2005-2006 reinforces that representation. He communicated with Mr Makeig in relation to the extension of the Vowles Option, he communicated with Mr Makeig in relation to the project, he allowed Mr Makeig to expend substantial moneys on the project (and criticised him for failure or lateness in so doing). Even as late as December 2006 he was asking Mr Makeig to attend meetings in relation to the project (with Council and with prospective purchasers), although it is hard to see this conduct alone as giving rise to an equitable estoppel in the absence of detrimental reliance thereon. 215 Mr Batterham seemed anxious to avoid confrontation with Mr Makeig (perhaps worn down by that prospect, if the alleged difficulties of dealing with Mr Makeig have substance). Nevertheless, he accepted that, by not contesting matters put to him by Mr Makeig (or any wrong assumptions or misapprehensions of which he was aware on the part of Mr Makeig), he was permitting Mr Makeig to proceed with the project and to incur costs on Mr Batterham's behalf in the belief that those assumptions/apprehensions were correct. 216 Similarly, Mr Batterham accepted that he was willing to engage in false flattery (T 438:48-50) or false communications with Mr Makeig in early December 2006 (Ex A 163) in order to induce Mr Makeig to "join the mainstream of the project again" Mr Batterham wrote to Mrs Makeig on 2 December 2006 (at a time when he was pressing Mr Makeig to join him to meet with prospective purchasers (T 433.20-24) and to attend meetings at the Council), stating: I fully intend to keep my side of the bargain and I would expect nothing less your end … If you live up to your contract you may spend $200,000 and please realise that the house that you receive alone is worth more than double that amount. On top of that you have your agreed percentage of the sale of over 300 lots of land. 217 While it is not clear that Mr Makeig did (or had any realistic opportunity before termination of the arrangements to do) anything in detrimental reliance on such a representation made to him in early December 2006 (apart from meeting with the prospective purchasers that month), it does clearly involve an acknowledgement by Mr Batterham that there was an agreement on foot, pursuant to which Mr Makeig was to be entitled at some stage to an agreed percentage of the proceeds of sale of the (on this assumption re-developed) lands. (Interestingly, the reference to sale of over "300 lots of land" seems at odds with Mr Batterham's assertion that it was never contemplated that there be any physical redevelopment of the lands, unless he was there simply contemplating achieving sub-division approval for 300 lots before sale.) 218 Given the entry by Mr Batterham into the Kitchener Project Agreement and his conduct in accordance with that agreement from 2004 to 2006, had I not found the Kitchener Project Agreement to be of binding force and effect, I would have had little doubt that Mr Batterham was estopped from denying that he was bound by it and from denying Mr Makeig any benefits of the project which would have flowed from the agreement had it been binding. (iii) Has there been a breach/repudiation of the Kitchener Project Agreement? 219 It is submitted by Mr Sirtes that the purported termination by Mr Batterham on 9 January 2007 of the Kitchener Project Agreement was ineffective (as there were no valid grounds on which Mr Batterham could terminate it) and that, even if one or more of the alleged breaches was or were made out, nevertheless none of the terms was an essential term (or an intermediate term the breach of which went to the root of the contract) so as to confer on Mr Batterham any right to terminate the agreement (Koompahtoo). 220 In that regard I should note that it is not clear that the Batterhams have sought to effect (or to justify) the termination on the basis of any of the particular breaches per se notwithstanding that the Second Amended Defence pleads that clause 4 was a fundamental provision of any agreement which is found to have been constituted by the Kitchener Project Agreement. Rather, I understand the sense in which repudiation to be used in the pleadings is that of renunciation. In case I am wrong in this, however, I have considered whether repudiation in either sense has been made out on the facts.

221 It is further submitted by Mr Sirtes that even if the termination was lawful, Mr Makeig has accrued rights under the Kitchener Project Agreement (unaffected by any later termination of that agreement by Mr Batterham), namely the right to receive performance by Mr Batterham of a contractual obligation (that being to distribute to him 39% of the net profit from the on-sale of the lands). It is said that this right was acquired unconditionally by reason of Mr Makeig's performance of his obligations under the Kitchener Project Agreement - McDonald v Dennys Lascelles Limited (1933) 48 CLR 457 (at 467-477). · Accrued Rights? 222 I consider below whether any allegation of breach has been sustained and whether, if so or otherwise, there was a repudiation by Mr Makeig of the Kitchener Project Agreement. First, however, I consider the accrued rights submission, which, as a matter of legal analysis, Mr Sirtes conceded was not without its difficulties. 223 It is clear that, as noted by Young CJ in Eq (as his Honour then was) in Redglove Projects Pty Limited v Ngunnawal Local Aboriginal Land Council & Anor (1005) 12 BPR 23,381, in the absence of agreement to the contrary the effect of termination of a contract (whether for breach or frustration or non-fulfilment of a contingent condition of performance) is that it operates prospectively so that accrued rights are not discharged (his Honour there referring to Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Limited (1936) 54 CLR 361 at 379). 224 In the Westralian case, Dixon and Evatt JJ noted that on termination of a contract (under an express provision making it terminable) the question whether or not an inchoate liability became enforceable was governed by the intention of the parties. 225 Latham CJ in Westralian (though dissenting in the result) noted that where a contract conferred a right on a party on the happening of a specified event and the contract had been determined before that specified event happened, then, as a matter of reasoning supported by principle, the right which has not yet accrued will never come into existence. "A party endeavouring to enforce the obligation would fail because he was not able to prove that, while this contract was still alive, all the facts necessary to support his claim had come into existence" (at 370). 226 Here, I am not satisfied that under the Kitchener Project Agreement any right to participate in the net profits of on on-sale of the project was to accrue prior to a time when there was such a sale (at which time the existence of any net profits could presumably be determined). Up until that point it seems to me that at best Mr Makeig had a contractual expectation of (or perhaps a contingent right to) a share in profits. 227 Mr Sirtes explained the argument, in his oral submissions, as being that an accrued right arose once there was a decision to sell and submitted that I should infer that as at 9 January 2007 the parties had decided to sell. 228 There was, of course, no agreement between the parties at that stage for the sale to JPG or indeed to any other entity. Mr Makeig was aware that Mr Batterham was speaking to prospective purchasers at that time, and indeed was party to some of those discussions, but after 24 December 2006 any "decision" to sell can only have been one made unilaterally by Mr Batterham as he does not appear to have been in communication with Mr Makeig at that stage. 229 Given the findings I make below it is not necessary for me to determine whether Mr Makeig had any accrued rights as at January 2007. Nevertheless, as this was argued before me I note that I am of the view that the performance (whether competent or otherwise) of Mr Makeig's obligations up to the time of the purported termination of the contract in January 2007 did not give rise at that stage to any accrued right. The contractual right to receive a distribution from the proceeds of on-sale would have accrued only at such time as there had been an on-sale of the project. That did not occur, at the earliest, until March 2007 when the March Call Option Deed was executed. 230 Therefore, had the agreement been lawfully terminated by the Batterhams, I would have held that no right to receive profits had at that stage accrued to Mr Makeig (although there would still then have been an argument as to whether the Batterhams owed fiduciary obligations which prevented them from taking the full benefit of the subject matter of the joint project at that stage and, in any event, the Batterhams may at that stage have had to account for Mr Makeig's share of the partnership "property" ie the value represented by the work carried out with a view to achieving the project completion). 231 I turn then to the principal question whether Mr Makeig breached and/or repudiated the Agreement. · Alleged Breaches 232 The alleged breaches (pleaded in paragraph 9D of the Second Amended Defence) also form part of the particulars of the alleged repudiatory conduct, but are supplemented in that regard by reference to the so-called "$450,000 issue", which was not alleged by way of breach of the agreement. I consider the alleged breaches by Mr Makeig in turn, noting that the Batterhams no longer press the breach of contract alleged in paragraph 9D(b) of the Second Amended Defence. Failure to pay Council fees - (para 9D(a) Second Amended Defence) 233 Mr Batterham made payment of two sets of Council's fees in November/December 2006, those being (according to the Council) for lodgement fees and Public Exhibition fees (in connection with the LES). They were the second and third tranches of the fees earlier foreshadowed by Mr Moshage. They were broadly described as such in Emery Partners' letter of 9 January 2007. Mr Batterham says that he asked Mr Makeig to pay them and, when it was clear that Mr Makeig would not do so, he made the payments himself. Mr Batterham concedes that he did not later ask Mr Makeig to reimburse him for those amounts (at least prior to amending his pleadings to cross-claim for damages in respect of those fees). He regarded any such request as pointless. 234 Mr Makeig says that he was not obliged to pay the fees but maintains that he had not refused to do so. Rather, he describes this as his "poker hand". He was maintaining the stance, viz a viz Mr Batterham, that he would not pay the fees unless his request for a written agreement from Council (for reimbursement of consultants' fees and also, it would seem, in respect of the $450,000 issue) was progressed. (This conduct is said by Mr Lever to amount to "unclean hands" so as to disentitle Mr Makeig to obtain any equitable relief.) 235 Failure or a refusal to pay the two sets of Council's fees could only be a breach of clause 4 of the Kitchener Project Agreement if the obligation to pay consultants' fees (or costs ancillary thereto) included Council's fees. 236 Clause 4, relevantly, provided that Mr Makeig: agrees to pay all Consultants costs and other costs ancillary to consultant's services in a timely manner. (my emphasis) 237 The first issue of construction which has arisen in the context of this clause, is whether Mr Makeig was obliged, under that part of the clause extracted above (which I will refer to as the "Consultants' costs liability"), to pay fees rendered by the Council in late 2006 (totalling approximately $52,000) in connection with the lodgement of the LES required for the purposes of the rezoning application. 238 There was much scope for confusion or misunderstanding between Mr Makeig and Mr Batterham as to characterisation of the moneys payable to the Council because of the course which the project took (though no fault of the parties to the Kitchener Project Agreement). 239 By the time of entry into the Kitchener Project Agreement it was clearly understood that in order to achieve the rezoning of the Batterham Land it would be necessary to obtain rezoning of the whole Kitchener Precinct. In those circumstances, the obligation to pay "all Consultants costs and other costs ancillary to the consultant's costs in a timely manner" must have included consultants' costs or ancillary costs not only in relation to the rezoning of the Batterham Land (referred to in the course of the hearing as "spot rezoning") but also of the necessary preliminary steps (which I understand to be the preparation of an LES or LEP in order to effect the rezoning of the whole of the precinct). I do not understand Mr Makeig to contend otherwise. 240 In other words, properly construed, the obligation in clause 4 must have extended to payment of consultants' costs or fees irrespective of whether they were retained in relation to a so-called "spot" rezoning or in relation to the much wider rezoning application 241 However, that conclusion does not determine this issue in Mr Batterham's favour. 242 The question is whether or not the lodgement fees payable to the Council in late 2006 were "Consultants costs" or "costs ancillary to consultant's services". 243 It was contended by Mr Lever that they were, because of the fact that it was known that Council would be applying the fees paid to it towards the payment (or reimbursement) of consultants' fees for consultants directly retained by Council. I do not understand Mr Makeig to deny knowledge that, after mid 2006, the Council was paying the consultants it had directly retained. 244 However, in my view, it is not apt to describe an obligation to pay Council lodgement or other fees for a Category C rezoning (as those fees were clearly described both in the initial advices from the Council as to what fees would or might be payable and in the receipts issued by the Council) as payment of consultants' costs, even if what the Council proposed to do with the moneys so received (as the parties well realised) was to pay (or to reimburse itself for any earlier payment by it to) consultants directly retained by the Council. Nor can Council's fees of this kind be regarded as "ancillary" to the provision of consultants' services. I note the relevant Oxford English Dictionary definitions of "ancillary" as subservient or subordinate or as designating services that provide support to central services. I can see no sense in which the Council's fees could be said to bear such a relationship to consultants' services. 245 Reliance was placed by Mr Makeig on the position set out in Mr Batterham's letter of 1 March 2005 (in the context of the possibility that the Council might charge a large application fee) that "due to lack of funds on my behalf you may have to pay the fee but I have no problem with this cost being a charge against the project and being a reimbursement in full to you." 246 Although that letter predated the signed written agreement, it does indicate an understanding on Mr Batterham's part that there was a distinction between consultants' fees per se and lodgement or application fees (even though Mr Batterham, in the witness box, did not accept that they were two separate categories of fee and said that what Mr Makeig had told him, namely that on top of paying all the consultants' fees there would or could be an additional lodgement fee of $90,000, was incorrect). Moreover, it makes it clear that Mr Batterham at least at that stage was not anticipating that Mr Makeig would be obliged to pay up front the whole of the Council application fees and that he, Mr Batterham, would be prepared also to contribute to them. Mr Batterham sought to explain this as based on a misunderstanding by Mr Makeig as to the way Council intended to charge for the project. That may be the case but it does put what happened later in some context. 247 For his part, Mr Lever placed much reliance on the earlier 7 June 2004 letter as indicating that Mr Makeig well knew he was agreeing to assume responsibility for payment of all costs referable to the project and that "consultants" should be construed with that in mind. I accept that the 7 June letter contemplated payment of all fees (of whatever kind). However, that is not what clause 4 of the Kitchener Project Agreement says in its terms and, given the various iterations of the proposed financial arrangements between the parties, I do not accept that it is permissible to construe clause 4 by reference to what was said in a much earlier document (and one which was never, as far as I can see, accepted in its terms) even if the document could be said (which I doubt) to have been capable on acceptance of giving rise to a binding agreement. 248 The Council itself treated the payments made by both Mr Makeig and Mr Batterham as referable to a Category C rezoning application (Ex J). Mr Batterham's suggestion in the witness box that the Council did not have the ability as an accounting matter to record payments by reference to reimbursement of consultants' fees (T 454) seems to fly in the face of the description of Council's fees given by Mr Moshage in May 2005 (Ex A 132.1) (comprising $30,000 as a rezoning lodgement fee; $35,000 as a fee payable after Council's resolution to prepare the draft LEP; $15,000 prior to exhibition of the plan; and $10,000 thereafter once the Council proceeds to gazettal). With minor increases, each of those phased fees was in due course charged by the Council. I cannot accept the submission (put to me admirably forcefully by Mr Lever) that the four tranches of fees paid to the Council (the time and amount of which seems to have accorded with the four phases of fees described as Category C rezoning fees) were nevertheless a separate fee payable in connection with the LES. There seems to me nothing to suggest that the fees so paid were not exactly what the Council said they were (and what the Council itself described as rezoning fees). 249 In any event, whether or not these were Category C rezoning or a separate LES lodgement fee seems to me to be beside the point. In neither case can they easily be seen as falling with the description "Consultants Costs". 250 The debate in relation to consultants' fees was clouded by reference to the issue as to what was meant by the indication given by one of the Council officers (Mr Bo Moshage) in or about August 2004 (and repeated in about September 2005) that if Mr Batterham and Mr Makeig proceeded to effect the rezoning of the precinct, the Council would be likely to agree to reimburse to them part or all of the consultants' fees at some later stage, out of funds generated by reason of s 94 contributions. 251 There does not seem to be any real dispute that a statement to that effect was made by Mr Moshage on one or more occasion. Thereafter, it would seem that Mr Makeig was pressing to have that agreement recorded in writing and that Mr Batterham was resisting this, because he considered it would cause him some embarrassment (Mr Batterham having previously been a Councillor and apparently not wishing to suggest he doubted the word of the Council officers). Mrs Makeig gave evidence that Mr Batterham's response to her query as to this issue in late November 2006 was that it was "not necessary". Mr Batterham was prepared to trust Mr Moshage (and/or the General Manager of the Council, Mr Bernie Mortomore) to act in accordance with what had been said. 252 Leaving aside for the moment what became the rather vexed issue (the $450,000 issue) between the parties of Mr Makeig's desire to seek payments (or reimbursements) by Council in respect of his (and Mr Batterham's) personal services for the precinct rezoning, I cannot see that as a matter of construction of clause 4 the consultants' costs liability extends to liability for payment of lodgement or application fees to Council in respect of the rezoning application for the Kitchener Precinct or any subsequent development application in relation to the Batterham/Vowles Lands, nor could they be said to be costs "ancillary to consultant's services". 253 Council did not in its records describe these as other than rezoning fees. The fact that the Council might have used such revenue to pay external consultants retained by it in relation to the Kitchener Master Plan or LES seems to me to be irrelevant. It surely cannot have been the case that the parties intended that whether or not Mr Makeig was personally liable to pay certain costs (Council fees) would depend on what the recipient (the Council) was going to do with them. That would produce an uncertain and potentially arbitrary result. 254 Mr Lever asked, rhetorically, who was to pay the Council fees if not Mr Makeig? The difficulty with rhetorical questions is that one is tempted to proffer an answer. In this case, however, it seems to me that whether or not there is an answer to that question is beside the point. There may have been many aspects of the underlying joint venture or undertaking which required resolution by consultation and agreement in good faith between the parties and which, failing agreement, might have caused the project to fail (or to be frustrated). Certainly, Mr Makeig conceded that it was essential, if the rezoning were to succeed, for the Council fees to be paid and that, if pressed, he "probably" would have paid them. This does not mean he was obliged to do so or had admitted that he was so obliged. 255 The reality of the matter (fortunately for Mr Makeig as it turned out) seems to be that the Council (rather than leaving the parties to the election they had made to run the rezoning process at their own cost and then to seek reimbursement out of s 94 contributions, which seems to have been one of the two available modes of proceeding as understood and explained with some force by Mr Batterham in the witness box) decided (not in late 2004, when DIPNR first wrote to it, but some time later in early 2006 - whether under perceived pressure at that stage from DIPNR; or to avoid any accusation of impropriety in the process; or otherwise) that it was incumbent on the Council itself to take over (and thereafter retain directly the consultants necessary to progress) the precinct rezoning process. 256 By mid 2006, the retention of consultants (and consequential liability for payment for consultants) was metaphorically taken out of Mr Makeig's hands. That does not provide a basis on which now to rewrite the parties' contract so as to impose on Mr Makeig a liability for which it did not in terms provide. 257 This occurrence might have given rise to an interesting argument as to frustration of contract, perhaps if it were suggested that the whole performance of this contact became something fundamentally different from that which had been contemplated (though, unlike the situation in the Brisbane City Council v Group Projects Pty Limited (1979) 145 CLR 143, this change, it would seem, rendered the contract less onerous for at least one of the parties (Mr Makeig) to perform). Certainly, I discerned a flavour (from Mr Batterham's indignation in the witness box) that he regarded it as unfair that Mr Makeig should obtain some form of windfall if permitted to share in the increased value of the Lands without having expended as much as might have otherwise been the case but for the Council's intervention. However, such an argument was neither pleaded nor argued before me. 258 The amounts paid by Mr Batterham in November and December 2005 were phase 2 and 3 lodgement fees (Annexures A and B to affidavit of Mr Batterham sworn 1 December 2008). Mr Makeig had no obligation under the agreement to pay them and is not in breach as a result of the fact that he did not. 259 If, as I consider to be the case, the Council lodgement fees were not covered by clause 4, then it was in due course for the parties to reach agreement as to how they should be borne. Mr Makeig appears to have assumed (T 333/334) that they would be shared in proportions reflective of their profit share in the project. If that were to be the case, his actions were consistent with that. However, whether or not that was ultimately agreed by Mr Batterham, Mr Makeig's actions in not tendering payment of the Council's fees in December 2006 were neither a breach of clause 4 nor a repudiation of the Kitchener Project Agreement. Failure to pay surveyors fees - (para 9D(b) Second Amended Defence) 260 This relates to an invoice addressed and issued to Mr Batterham by Marshall Scott Surveyors, being a firm of surveyors that Mr Batterham himself retained for the project. Mr Batterham accepted in cross-examination that the invoice was never sent to Mr Makeig and that Mr Makeig never had the opportunity to pay it. Mr Batterham accepted that Mr Makeig was unaware of the invoice on 9 January 2007 and said, "it should have been in there [the 9 January 2007 letter, ie as an allegation of breach]." 261 This claim was doomed to failure at the outset. Failure to pay a consultant's invoice cannot have possibly amounted to a breach by Mr Makeig of the Kitchener Project Agreement, if Mr Makeig was not at the relevant time aware of the invoice. It was withdrawn as an allegation of breach (and an allegation of repudiatory conduct) on the making of written submissions by Mr Lever at the close of the evidence. Failure to pay "full" Vowles option fees - (para 9D(c) Second Amended Defence) 262 The second issue of construction arising in respect of clause 4 is whether Mr Makeig was obliged, under that part of the clause extracted below (which I will refer to as the "Vowles' fee liability") to pay the whole of the option fees for the Vowles' Land (including fees payable to extend the option period, those being the Additional Call Option Fee provided for under the Vowles' Option Agreement and a later extension fee not provided for expressly under that agreement); and, indeed, whether the Vowles' fee liability was prescriptive at all or, rather, simply recorded an agreement which had been reached and which had, as at 25 March 2005, already been performed, ie it was no more than descriptive of the position. 263 Clause 4, after addressing the payment of consultants' costs and other costs ancillary to consultants' services, went on to say that Mr Makeig: Agreed to pay and has paid costs relating to the incorporation of [the Vowles Land] …, comprising the Option Fee, the land clearing costs and the survey fees. (my emphasis). 264 The construction of this part of clause 4 seems to me more problematic. 265 First, there is a question as to what, if any, significance can be attached to the change in tense ("agreed to pay and has paid") in this part of the clause from that used ("agrees to pay") in the earlier part of the clause dealing with the consultants' costs liability. 266 Had the clause been drafted or reviewed by legal representatives acting for the respective parties then it might perhaps be easier to conclude that the change in tense was intentional (not because of any inherent superiority in the drafting by lawyers of agreements as such, but because it might have been expected that each party's legal representatives would pay a close eye to the detail of the language in which their clients' respective obligations were expressed). However, despite Mr Williamson's recommendation, no lawyers were retained to review the draft agreement. 267 It is not disputed that as at 25 March 2005 (and as at 5 March 2005 when the Kitchener Project Agreement was drafted), the "Option Fee" (as defined in the Vowles Option Agreement) had been paid by Mr Makeig (T 295.45-296.4; 309.43-47; 417.48 and 418.20); as had survey fees of $3,300 and land clearing fees of $2,640 in relation to the Vowles Land (Ex J pp 4, 6-8 and 10). There is therefore no awkwardness occasioned by reading this part of the clause purely as descriptive of the situation as it was as at 25 March 2005 (and not as imposing any ongoing obligation on Mr Makeig's part). (Mr Batterham accepts that the clause was a correct statement of the position in that regard (T 417), though I did not understand this to be any acceptance of the construction contended for by Mr Makeig.) 268 If (as seems to me to be the case) the ordinary grammatical meaning of the words "agreed to pay and has paid" (contrasted with the words "agrees to pay") is to acknowledge both the fact that Mr Makeig had agreed to pay certain costs and that he had done so, (such that no further obligation was imposed on Mr Makeig in that regard) then it might be thought that there was no purpose to be served in including this part in clause 4, as it would have no meaningful work to do. 269 As Mr Lever pointed out, there is nothing in the Kitchener Project Agreement which deals with the apportionment of costs as between the parties in relation to the Vowles Land. Nevertheless, it may have been considered prudent by the parties to record what the state of play was in respect of Mr Makeig's contribution of costs relating to the incorporation of the Vowles Land into the project (particularly if, as Mr Makeig says is the case, and as Mr Batterham's subsequent conduct appears to confirm, the parties were to share the costs as well as the profits, if any, of the increase in value referable to the Vowles Land, on a 50/50 basis). 270 Secondly, the term Option Fee is not defined. Of some relevance, in determining the prescriptive or otherwise content of this part of the clause, may be the ambit of the term "Option Fee". Under the Vowles Option Agreement, this term is defined as being the sum of $13,500. The amount payable if there were to be an extension of the Call Option Period was a separate fee defined as the "Additional Call Option Fee". If "Option Fee" in clause 4 relates only to the option fee which by then had already been paid, then the case for construction of clause 4 as descriptive in this regard must be strengthened. 271 It was submitted by Mr Lever that the mechanism by which the call exercise period could be extended made it clear that the Additional Call Option Fee (of $5,000) was a component of the Option Fee. I do not accept that submission. The Vowles' Option agreement provided for separate fees each for a separate purpose (albeit both relating to the option) - one way the price payable for the grant of the option; the other the price payable if the grantee wished to have a further six months in which to consider whether to exercise the option. 272 By contrast with the reference to consultants' costs ("all Consultants costs"), this part of clause 4 does not say "all" costs relating to the incorporation into the project of the Vowles Land, nor does it say "all option fees" or "all amounts payable by way of option fee". Moreover, the Kitchener Project Agreement (clause 3) notes that an additional fee would be payable to extend the Option exercise period and the reference to "additional fee" is not used as a capitalised term (or brought expressly within the Option Fee which clause 4 says has been paid by Mr Makeig). There is no doubt that, as a matter of fact, no additional fee was paid until June 2006. On the face of the document, there is no reason to rewrite the clause in order to expand the reference to a paid option fee to include further (unpaid) additional option fees above and beyond the "Option Fee" which Mr Makeig had paid as at 25 March 2005. 273 Mr Makeig's evidence (which I did not understand ultimately to be challenged in this regard, although there was some issue taken by Mr Lever as to his credit on this point) was that he did not have a copy of the Vowles Option Agreement when he drafted the Kitchener Project Agreement and had only seen an earlier draft (on which he commented) for a couple of nights before it was signed by BBL. I find it difficult to accept that, when drafting the document which became the Kitchener Project Agreement some two or three months later, Mr Makeig intended a capitalised reference to "the Option Fee", referred to in the past tense, to include other fees (not even described in the Vowles Option Agreement as the Option Fee) payable under the Vowles Option Agreement, even if those fees also related to the option. 274 It is submitted that I should also take into account, as part of the matrix of facts at the time of execution of the Kitchener Project Agreement, the fact that both Mr Batterham and Mr Makeig agreed in the witness box that it was their expectation or hope that the rezoning would be completed before the expiration of the Call Option Period (T 294.25-31; 418.36-47). I think little, if any, weight can be placed on this, given that the parties presumably accepted that the agreement should cover whatever the position might turn out to be in relation to the rezoning. Mr Batterham, for his part, says that it was his sincere hope when he entered into the Kitchener Project Agreement that no future option fees would be payable because the process would be complete over the 18 month period "but [I] was not overly optimistic" (T 419). 275 On balance I find it significant that the wording of this part of clause 4 refers to a single "Option Fee" (and not to all option fees, unlike "all consultants" costs); that there was no attempt in the Kitchener Project Agreement to incorporate all contributions in relation to the Vowles Land, and that there is a clear contrast between the language (particularly the tense) in which the earlier consultants' costs liability is framed as opposed to the later Vowles' fee liability. 276 I construe the Vowles' fee liability, in accordance with the ordinary grammatical meaning of the words used, to mean that the parties were thereby recording that Mr Makeig had agreed to pay and had paid the option fee of $13,500 payable under the Vowles Option Agreement (as well as certain survey and land clearing costs relating to the Vowles Land) and not as imposing an obligation on Mr Makeig to pay any further option fees that might have become payable including any Additional Call Option Fees under the Vowles Option Agreement. In other words I construe the words as descriptive not prescriptive. 277 Even, if I am wrong in that construction, and Mr Makeig was in breach by not tendering the full Additional Call Option Fee in mid 2006, I am not satisfied that such a breach in the circumstances amounted to a repudiation (in the sense of renunciation) by Mr Makeig of the Kitchener Project Agreement. I accept that Mr Makeig genuinely believed that the arrangements between him and Mr Batterham did not oblige him to pay the full amount of any additional option fees. Therefore, on this hypothesis, any breach was based on a mistaken construction of the contract. Further, it was one apparently shared or acquiesced in by Mr Batterham (who conceded in cross-examination that he had assumed that Mr Makeig would want a 50/50 split and had raised not a skerrick of complaint as to this arrangement (T 419)). 278 Insofar as complaint is made as to the refund of half the initial payment, which the parties recorded Mr Makeig as having agreed to pay and as having paid, it cannot seriously be contended that Mr Batterham (having voluntarily acceded to or gone "along with" a request to repay it whatever the basis for that request) (T 418; T 422) can now rely on it as either a breach of the agreement or renunciation thereof. Failure to pay engineering consultants' fees - (para 9D(d) Second Amended Defence) 279 The evidence discloses that Mr Makeig had not paid in full amounts claimed by Harper Somers O'Sullivan, a consulting firm retained by him to provide engineering services in relation to the project until after default judgment was entered for the amount claimed - and, even then, only did so by way of instalments. 280 Mr Makeig clearly held very strong views that no amount was owing (T 83.15-27). Mr Ian Murphy of Harper Somers O'Sullivan, who was called to give evidence by Mr Batterham, accepted in cross-examination that (regardless of what Mr Murphy thought about those views) Mr Makeig had expressed to him certain views as to why the fees were not payable in full. 281 Ultimately, Mr Makeig was sued for the outstanding sum of $2,400; default judgment was entered against him; and he elected to pay by instalments. 282 Did Mr Makeig fail to pay the invoice in a timely manner? It was put to me that clause 4 did not oblige Mr Makeig blindly and submissively to pay all consultants' costs if he held views that they were (for example) excessive or otherwise not owing; that he had every entitlement to spend his money judiciously (particularly as it was a sunk cost); and that he was, in effect, entitled to dispute the magnitude of fees claimed if he disagreed that the work in question had in fact been undertaken or was necessary or thought it had been uneconomically performed. 283 I accept in principle that clause 4 could not oblige Mr Makeig to pay invoices without reference to their validity or reasonableness. To use an extreme example he could not be liable to pay invoices falsely issued by consultants or grossly inflated invoices which could not on any view be sustained by the consultants. It must have been open to Mr Makeig to dispute consultants' fees (at least if that dispute was raised bona fide). Nevertheless, in this instance, whatever the genuineness of Mr Makeig's initial dispute as to the Harper fees, he did not pursue that dispute; default judgment was entered against him and he paid the judgment debt by instalments (since he conceded he was in no hurry to pay a debt which he did not accept had merit (T 341.40)). I therefore have real doubts as to whether it could be said that Mr Makeig had complied, in this instance, with his obligation to pay consultants' costs "in a timely manner". The invoice was rendered on 14 December 2005 (Ex A p 144). Default judgment was entered on 22 December 2006. The debt was then paid by instalments. 284 What does "in a timely manner" mean? It must, I think, mean reasonably promptly in all the circumstances. Mr Batterham accepted that the same standards should apply in relation to the payment of invoices by Mr Makeig as he accepted for himself. That raises an interesting issue, since Mr Batterham was perfectly prepared to accept Mr Mortomore's offer to defer payments by the Council to "as late as possible" as they came across his desk (T 547). 285 However, whatever Mr Batterham's own conduct, I consider that the failure to pay the Harper Somers O'Sullivan invoice in full as soon as or as soon as reasonably practicable after Mr Makeig decided no longer to contest the debt, whatever the reason he chose not to contest it, cannot be said to be payment in a timely manner. On balance I consider Mr Makeig to have breached clause 4 in this instance. No damage was shown to have been suffered by the Batterhams as a result of that breach. Whether any other consequences (in terms of alleged repudiation) might flow from that breach, I consider later. Failure to pay Ecotone - (para 9D(e) Second Amended Defence) 286 Ecotone was retained as a consultant to provide ecological consulting services for the project. There was a dispute as to the fees claimed by Ecotone. It was contributed to by reason of confusion by Mr Makeig as to the basis on which Ecotone had tendered for a number of different tasks. Mr Makeig considered that he was being overcharged. He subsequently accepted (and communicated this to Ecotone) that he had made a mistake and said he believed he owed Ecotone further funds (Ex 1 at 691-692) and suggested a meeting or discussion to resolve the issue. A number of invoices were rendered by Ecotone of which, as at May 2005, an amount of $4,329.38 (attributed to the last of the invoices) was outstanding. 287 Mr Wilson, an environmental consultant from Ecotone, swore two affidavits and gave evidence in the proceedings. He did so at the request of Mr Batterham's lawyers, after he had contacted Mr Batterham to see if the latter could assist him obtaining payment. 288 Mr Makeig can perhaps be forgiven for disputing the basis of the fees charged by Ecotone since Mr Wilson was himself also apparently confused to some extent. Mr Wilson, in his first affidavit, affirmed on 2 July 2008, deposed that his firm had prepared "the required impact assessment and issued an account in respect of that". Mr Wilson, in his second affidavit, affirmed on 4 March 2009, (referring to his earlier "sworn" affidavit, by which I assume he was referring to the one he had earlier affirmed), corrected this statement to acknowledge that there was never actually a report prepared for the Batterham Land. 289 Although Mr Wilson referred in his second affidavit to a number of phone calls following up the outstanding amount, and accepts that he had at least one telephone conversation with Mr Makeig in relation to the fees outstanding in about April 2006, it was not until cross-examination that he acknowledged that a suggestion had been made by Mr Makeig to him in relation to resolving the issue of the alleged debt. In the witness box Mr Wilson said that Mr Makeig had suggested that more work might come his way for future jobs "you know, we might be able to get some further work out of him in the future if we just sort of left this outstanding amount" (T 512). He described this as a "carrot" held out to Ecotone to forget about the outstanding (apparently disputed) account. Mr Wilson gave evidence that this was never formalised. He appears to have been prepared to allow a bit of time to pass to see if further work would eventuate. He accepts that he did not tell Mr Makeig he was unhappy with that proposal (T 515). When no other work "turned up", Mr Wilson decided he was not happy with the "arrangement" (T 512). Mr Wilson says he then pressed for payment of his account. However, there is no evidence, other than the assertion made by him for the first time in the witness box, that he pressed for payment at that stage from Mr Makeig (as opposed to contacting Mr Batterham for payment) (T 512.19-32; 512.44 - 513.3). 290 I am not in a position to determine how much, if any, of the outstanding claim was properly due. The respective quotations were for set amounts for at least two of the tasks (although the latter quote seemed to suggest it was an upper limit and that actual costs might be less because of synergies between the two tasks). The third quotation was not for a fixed sum but apparently on a "do and charge" basis. I have no information as to precisely what was done or the basis on which it was charged. I accept that Mr Makeig was bona fide in taking issue with the accounts. 291 Interestingly, perhaps, although Mr Batterham eventually paid the outstanding amount in full (with an annotation on the cheque butt dated 2 December 2008 "should have been paid by the conman") he did not do so when he first learnt (in January 2007) that the Ecotone account had not been paid, nor did he do so after it was made apparent to him by Mr Wilson that any earlier arrangement to sort out the debt (of the kind which he says Mr Makeig had told him was in place) had failed to eventuate. The account was not paid until December 2008, after Mr Wilson had sworn an affidavit in the proceedings at the request of Mr Batterham's solicitor. 292 In light of the explanation given by Mr Makeig as to his concern that there was an overcharge and the tacit "understanding" apparently reached with Mr Wilson on the telephone to the effect that Mr Wilson might be prepared not immediately to press for the full amount claimed (in the hope or expectation of more work coming to him), and in the absence of any cogent evidence of a subsequent later claim for payment I am not satisfied on the evidence before me that there was a breach by Mr Makeig of clause 4 in this instance. General allegation of failure to perform 293 It was submitted by Mr Lever that Mr Makeig had failed "miserably" in the performance of all three obligations imposed on him by clause 4. I have considered above the alleged breach in relation to the payment of disputed consultants' costs (and Council's fees) and the full Vowles Land Option Fees. The third area in which it is said that Mr Makeig failed miserably to perform was in managing the project. 294 This seems to be a criticism based largely on the time taken in achieving rezoning (something largely, if not wholly, attributable to the obstacle posed by the need to incorporate the whole of the Kitchener Precinct into the CWSS). 295 The "hiatus" or delay in Mr Makeig engaging consultants to progress the project from mid 2006 when the Council took over the project (at which time Mr Batterham conceded there was nothing for Mr Makeig to do) and late December 2006 (when the LES was finally handed over to Council - this being the first time since mid 2006 that one might reasonably have expected Mr Makeig to resume an active project management role in terms of retaining consultants for the next stage of the project), cannot be said to amount to a failure on Mr Makeig's part to perform his obligations (even though it was repeatedly invoked by Mr Batterham as an example of Mr Makeig's failure to perform his obligations). 296 Although Mr Glendinning expressed surprise at the length of time taken from December 2006 for the rezoning to be gazetted (something which I understand by the date of the hearing was imminent and, but for any unforeseen event, was expected shortly thereafter to happen), it does not appear that any such delay could fairly be attributed to Mr Makeig (he having been summarily dismissed from the project in January 2007). 297 The manner in which Mr Makeig dealt with Council staff was also criticised. Evidence was given by Ms Juliet Grant (a town planner then working with Mr Glendinning) that he was rude and "condescending" in his communications, although she was unable to recall any specific examples of the treatment of which she complained. Mr Glendinning acknowledged that Mr Makeig's manner could be difficult and said he had received complaints from others dealing with him, but seems to have no trouble himself working with Mr Makeig. The manner in which Mr Makeig referred in his correspondence to Ms Wells (whom he criticised in no uncertain terms) supports the view that he could be condescending and harsh at least in his treatment of those whose competence he queried (and perhaps also of those with whom he simply disagreed). 298 Mr Makeig seems (even on what may be the limited evidentiary material before me in this regard) to have been a party (whether as plaintiff or defendant) to a surprisingly large number of litigious matters over the last few years - with Harper Somers O'Sullivan, with Mr Vandescheur (to whom I refer shortly in these reasons), and with Mrs Tucchen (a former client who sat in court closely observing the conduct of this hearing), even apart from the various the Land and Environment Court matters to which he referred. Nevertheless I cannot draw from that (or from his somewhat testy manner on occasion in the witness box) any inference that he was difficult (or so difficult) to deal with in project development matters such as to have (by his manner alone) breached the Kitchener Project Agreement. 299 In that regard, I note that Mr Batterham had at the start of the project been told that Mr Makeig had a particular "methodology" of dealing with councils (which seems to have involved not accepting "no" for an answer) and had not cavilled with this either then or when, early in the project, Mr Makeig had stridently criticised the competence of Ms Wells on the Council's staff. Mr Batterham (in August 2005) had in fact praised Mr Makeig's "forceful nature" when "happily" giving a reference for him in the Vandescheur proceedings. 300 In terms of the success of Mr Makeig's project management, up to August 2005 at least, Mr Batterham had no complaints and thought the project was progressing well; by December 2006 the project was sufficiently advanced that there was interest in the project from more than one potential purchaser; and by 23 January 2007 Mr Batterham had been offered a price for the "project" which he accepts exceeded his expectations. Mr Batterham described Mr Makeig in December 2006 as the "main driving force" behind the imminent rezoning and even though he now asserts that this was a knowingly false statement (inconsistent with his earlier acceptance in the witness box that what he wrote could be taken as the truth) and no more than "flattery", I consider it more likely that Mr Batterham did believe that Mr Makeig deserved credit for the progress of the project. 301 Mr Sirtes submits (and I accept) that the position of the project as at January 2007 was hardly a sign of a miserable failure of project management skills (whether or not Mr Batterham has yet realised the full financial benefit under the JPG arrangements). While that may beg the question of who was in fact responsible for the results achieved, at the very least it is inconsistent with Mr Makeig having impeded the progress of the project. 302 Whether or not Mr Makeig was (as he may well have been) a difficult, rude or condescending person to deal with (as asserted, without any particularity by reference to actual events, by Ms Grant)), and whether he was arrogant, aggressive or antagonistic, as was Mr Batterham's view by late 2006, this of itself does not amount to a breach of the Kitchener Project Agreement. Others, such as Mr Glendinning, apparently remain prepared to work with Mr Makeig (and Mr Glendinning was quick to concede that he does not work with or for people for whom he is not comfortable to work). There was certainly no basis on which I could form the view that Mr Makeig's manner (however difficult it may have been) had caused any impediment to the project. 303 Although not relied upon as a breach per se, there was also criticism of Mr Makeig's conduct in pressing Council for a written agreement in relation to the reimbursement of consultants' costs out of later s 94 contributions. Mr Glendinning was firm in his view that the Council would have had authority at that stage to enter into an agreement to that effect (even if such an agreement might have been couched in a conditional fashion). However, whether or not Council would have power to do so seems to me to be beside the point. It is difficult to see how there could have been any breach on Mr Makeig's part of the Kitchener Project Agreement simply by reason of the fact that Mr Makeig suggested (and/or even regularly pressed) Mr Batterham to have such an agreement recorded in writing. 304 Nor does it seem to me that there is any real basis to suggest that the fact that Mr Makeig was pressing to do so in any way actually impeded the progress of the project. Mrs Makeig gave evidence that in a meeting with Mr Batterham on 24 November 2006 he explained that he trusted Mr Mortomore and told her "You will embarrass me if we press them [Council] for a written agreement" (T 162). This is consistent with the trust which Mr Makeig recalls Mr Batterham having expressed as to the Council honouring its earlier promises. It does not suggest that the project would in any way have been prejudiced had a request been made that the arrangement be put in writing. · Repudiation 305 In Koompahtoo, their Honours Gleeson CJ, Gummow, Heydon and Crennan JJ, noted (at 135) that the term "repudiation" may be used in different senses: that of "renunciation" of one's obligations under the contract and that where there is a breach justifying termination: First it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. Secondly, it may refer to any breach of contract which justifies termination by the other party. (footnotes omitted) 306 In the second situation (breach) what must be found is either a breach of an essential term, or a serious breach "going to the root of the contract" of an intermediate term, being a breach which deprives the innocent party of the benefit under the agreement. 307 In Koompahtoo whether a contractual term is an essential or non-essential term, is described (at 137) as an objective test: The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered in to the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor. 308 Mr Lever relied upon Mason J's description in Progressive Mailing House v Tabali Pty Limited (1985) 157 CLR 17 at 33, - citing Shevill v The Builders Licensing Board (1982) 149 CLR 620 at 625-626 as to how repudiation is to be made out: What needs to be established in order to constitute a repudiation is that the party evinces an intention no longer to be bound by the contract or that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way. 309 He accepted that repudiation must satisfy the test of seriousness and that it was a question of fact whether the promiser was unready and unwilling to perform its contractual obligations. 310 In considering any breaches of clause 4, and insofar as Mr Lever may be asserting repudiation in the sense of termination for breach (rather than renunciation as I have understood his submissions), I am of the view that while the obligation on Mr Makeig's part to pay consultants' costs (and other costs ancillary to consultants' services) would have the necessary quality of essentiality, I do not see the obligation to pay those costs "in a timely manner" as having that same quality. In other words, while a failure or blanket refusal to pay consultants' fees properly due in respect of the project would in my view have amounted to breach of an essential term of the parties' agreement, giving rise to a right to terminate for breach, I am not satisfied delay in payment of itself would give rise to a right of termination. Alleged repudiation by Mr Makeig 311 Each of the breaches considered above was particularised as the alleged repudiatory conduct by Mr Makeig, together with the so-called "$450,000 issue".

$450,000 issue 312 Where the relationship between the parties appears really to have soured was with the perception by Mr Batterham in late 2006 that, so far as Mr Makeig was enthusiastically adopting and/or pressing a suggestion that Council might reimburse (or might pay to the "partnership"), an amount in respect of the time expended by each of Mr Batterham (in lobbying) and Mr Makeig (in project managing) in relation to the project, this involved an element of fraud. 313 This issue (referred to as the $450,000 issue) did not seem to me logically to relate to the question of documenting the earlier oral agreement in relation to a reimbursement (out of s 94 contributions later received by Council) of consultants' costs borne by Mr Makeig and/or Mr Batterham. Up until late 2006, there is no evidence of any discussion between Mr Makeig and Mr Batterham to the effect that either would charge or make a claim on the Council for his own time in pursuing the rezoning of the precinct. Therefore any earlier comments by Council in relation to the reimbursement to Messrs Makeig and Batterham of consultants' costs out of s 94 contributions must logically have referred to (and must have been understood by Mr Makeig and Mr Batterham to mean) the cost of external consultants retained by Mr Makeig (or by Mr Batterham) in relation to the project and not to the costs of Mr Makeig or Mr Batterham personally. 314 However, I note that in the witness box Mr Makeig did not accept that there was a distinction between the two potential agreements. Rather, Mr Makeig appeared to conflate the two which, he said, "in total" "coalesced" (T 388). In other words Mr Makeig seems to have thought that his oral "agreement" with Mr Moshage (which he had for some time sought to have put in writing) could extend to that which might perhaps loosely be described as payment of a claim he or Mr Batterham might make for their own personal efforts in relation to the project and not just to reimbursement of external consultants' fees paid by them (even though at the time of the initial discussions with Mr Moshage, the idea of payment for Mr Makeig/Mr Batterham's own time on the project does not seem to have been in contemplation). 315 What Mr Batterham was clearly agitated about (both in late 2006, as can be discerned from his correspondence, and in the witness box) was the suggestion that he participate in a fraud. Although it was not clear from the correspondence which passed between the parties as to what constituted this perceived fraud, it does seem to me to be clear from the evidence given by Mr Batterham in the witness box (T 498.42) that the fraud he perceived he was being asked to countenance was the suggestion that an account (a false account) should be rendered by Mr Batterham to the Council which, in its terms, would represent that Mr Batterham had been charged (and perhaps had paid) a certain amount (at hourly rates) for Mr Makeig's services in respect of the project, which would not have been the truth. 316 It is by no means clear that this was what Mr Makeig was in fact putting forward for discussion in late 2006. 317 What Mr Makeig says is that in late 2006 he put forward some figures to Mr Batterham for discussion purposes as to what would be a reasonable amount to put to the Council by way of payment by Council (to the "partnership") in recognition of the services which had been provided by each of Mr Makeig and Mr Batterham to the rezoning of the whole of the Kitchener Precinct (calculated, it would seem, either by reference to some proportion of the profit it was considered Council might make out of the rezoning of the land, if subsequently developed for residential lots or by postulating what might have been charged had such work been carried out on an hourly basis by Mr Makeig). 318 There was a document of some kind (typed by Mrs Makeig) (and it is accepted by Mr Makeig (T 377/378) that there may have been two versions of this document, one with a lesser amount, although Mrs Makeig did not recall typing two) that included figures purporting to be hourly rates. Mr Batterham considered that this was an account or invoice and said that one version of this came to a sum of $450,000. No such document was produced by any of the parties so it is impossible to know precisely what is said in terms of it representing a draft account or invoice or otherwise. However, Mr Lever points to the preparation of a document in the form of an account as showing Mr Makeig's intention to press a fraudulent claim on the Council (presumably insofar as it would have represented that a fee had been charged by Mr Makeig to Mr Batterham). 319 Whether or not the $450,000 proposed claim on the Council was calculated on a notional hourly fee basis or otherwise, I cannot attribute to Mr Makeig an intention to commit fraud when it seems to me equally possible that a claim for payment by the Council could conceivably have been framed in a way which did not involve any false representation that Mr Batterham had been charged or had paid any moneys to Mr Makeig, however calculated. 320 What is clear, from the agenda prepared by Mr Makeig (and again typed by Mrs Makeig) for a proposed meeting (which Mr Batterham chose not to attend) on 9 January 2007, is that Mr Makeig was proposing that there be a discussion about a number of issues - including his wish for there to be a written agreement recording the Council's position in relation to reimbursement out of s 94 contributions and the suggestion that he and Mr Batterham could obtain a payment of some kind for their services in obtaining the rezoning of the Kitchener Precinct. 321 Mr Lever submits that the preparation and forwarding of the agenda (Ex F) itself amounted to repudiatory conduct, in that item 10 repeated the suggestion that the joint venture should "claim" half a million or so dollars out of the anticipated windfall Council would received from s 94 contributions. I cannot accept that simply issuing an agenda (which Mr Makeig does not dispute he did on 2 January 2007), noting this as an item for discussion, can be said to amount to repudiatory conduct. 322 Pressing Mr Batterham to discuss this issue is, to my mind, the opposite of conduct indicating an intention on the part of Mr Makeig not to abide by his contract; rather, it is consistent with an understanding by Mr Makeig that Mr Batterham's concurrence would be necessary for any such claim to be made on the Council. (The fact that Mr Batterham was clearly weary of debating this issue is not to the point.) 323 The mere fact that Mr Makeig was pressing for Mr Batterham to make a claim of this kind would not seem to me to amount to any breach of the Kitchener Project Agreement. It was suggested by Mr Batterham's counsel that this could have impeded the progress of the project (and that certainly appears to have been Mr Batterham's main concern at the relevant time). 324 If, however, as was put to and accepted by Mr Batterham in cross-examination, his own consent would have been necessary to make any such application (and would never have been forthcoming), then the mere fact that Mr Makeig was pressing him to provide that consent does not seem to me to be something which, from a practical point of view, could ever have impeded the progress of the project (and hence could not have amounted to a breach of the Kitchener Project Agreement). 325 There was an accusation by Mr Batterham in the witness box that Mr Makeig was "sulking" and not prepared to continue to provide his services to the project until a claim of this kind was made. That conduct could conceivably in due course have impeded the project but there is insufficient evidence that the matter was at that point in January 2007 or that there was any anticipatory breach by Mr Makeig at that stage (although he did not attend a Council meeting, either for or following the Master Plan hand-over meeting, apparently seen by Mr Batterham as important in December 2006). 326 I should add that I see no basis for the assertion by Mr Makeig (T 385) that the suggestion put to him by Mr Batterham (as attributed to his unidentified friend), in relation to the $450,000 issue was simply a way of trying to "set up" Mr Makeig (ie to induce him to pursue a course of action which Mr Batterham would later rely on to terminate the agreement). 327 However, nor is there evidence to suggest that this was Mr Makeig's own proposal. Mr Makeig was not aware of any such proposal having been made before in his dealings with Councils. If he had been, presumably he would have suggested it upfront or at least earlier than late 2006. Given the broad similarity with Mr Batterham's account of his friend's suggestion in relation to the laying of a pipeline to the vintage resort, I suspect that Mr Batterham conveyed this to Mr Makeig as an anecdote or comment and that Mr Makeig extrapolated from that to reach the proposal (which he then enthusiastically pursued) that he and Mr Batterham should recover an amount in recognition of their services to the rezoning of the precinct as a whole. Other alleged repudiatory conduct 328 None of the breaches alleged by Mr Batterham has been established, other than the failure of Mr Makeig to pay Harper Somers O'Sullivan in a timely manner (and, if I am wrong in my construction of the Vowles' fee liability, the non-payment of the full amount of the option fees on the extension of the Call Option exercise period). 329 The Harper Somers breach was minor (as, for that matter (and though no such breach was ultimately made out), would have been any breach occasioned by delay in paying the Ecotone account while that account was admittedly the subject of dispute with Ecotone and/or while there was a tacit agreement that it be "forgotten" for some time) and can hardly be said to evince an intention by Mr Makeig not to comply with the Kitchener Project Agreement. In this regard I do not accept the submission of Mr Lever that Mr Makeig could be in breach of clause 4 (viz a viz Mr Batterham) even if he had come to a consensual arrangement for the postponement or compromise of an account rendered by a third party consultant. 330 In relation to the Vowles' option agreement, Mr Makeig paid or tendered half of each such extension fee paid (there being a payment of $10,000 on 15 June 2006, payment of $5,000 on 15 December 2006 and payment of $5,000 on 15 March 2007). It is submitted against Mr Makeig that he misrepresented his obligation under the Kitchener Project Agreement to pay all the Vowles' option fees. 331 Mr Lever submits that the admission by Mr Makeig that all Vowles option fees were to be paid 50% each (T 295.15) was a clear repudiation of his obligations. I do not consider that the Kitchener Project Agreement, properly construed, imposed such an obligation nor do I understand Mr Makeig's conduct (or his letters of 7 March 2006 or 12 January 2007) to amount to any admission in that regard. 332 Even if, as is asserted by him, Mr Batterham (by refunding half the initial fee) simply agreed to make arrangements to help fund the payments (with an adjustment to be made later from the proceeds of sale of the project properties), the fact that Mr Makeig asked for such assistance (and that it was proffered) cannot then form the basis for an allegation of breach or repudiation by Mr Makeig. 333 As to the Council's fees, Mr Makeig's evidence was that he would only have been prepared to pay the $52,500 Council fees if Council gave him a written contract later to reimburse the money paid to the Council (T 386.7; 392.35). He referred to this as his poker hand and suggested that if his poker hand was called he might eventually have paid those fees. He appears to have regarded withholding of the lodgement fees, which were admittedly payable - though not necessarily by him personally - to the Council in late 2006, as legitimate leverage to force the Council to confirm in writing what Mr Moshage had earlier promised in relation to reimbursement of consultants' fees out of s 94 contributions (including, on Mr Batterham's version of the conversation, moneys which Mr Makeig wished to claim for his own services). Although this does not reflect well on his business practices it does not amount to repudiation if (as I have found) Mr Makeig had no obligation to pay such fees under the Kitchener Project Agreement anyway. 334 I therefore do not find there to have been any repudiatory conduct by Mr Makeig, either in the sense of renunciation of the agreement or breach of a term which would give rise to a right of termination on the part of the Batterhams. Alleged repudiation by Mr Batterham 335 By contrast, the action of the Batterhams in terminating the Kitchener Project Agreement (in fact in denying that the agreement was of legal force and effect) and in proceeding to nominate JPG to exercise the Vowles Call Option has in my view clearly repudiated the agreement. 336 There was, as at January 2007, no basis on which the Batterhams were entitled summarily (ie without reasonable notice) to terminate the Kitchener Project Agreement. 337 Of course, the whole issue as to pressure by Mr Makeig to claim reimbursements from Council could well (and seems in fact to) have led to a lack of trust and confidence on the part of Mr Batterham in Mr Makeig. Whether or not that was based on an unfounded apprehension about prejudice being caused to the project by Mr Makeig pushing the $450,000 issue (and/or Mr Makeig's desire to press for a written agreement for a contribution by the Council to the external consultants costs of rezoning), it might be thought that if there was a fundamental lack of trust and confidence between the parties by late 2006, this would, I think, have entitled Mr Batterham to bring the arrangements between him and Mr Makeig to an end, whatever the position in relation to alleged breaches of the contract. 338 Certainly, if the arrangement had simply been that of a partnership or unincorporated joint venture, then in the absence of a written agreement I would have thought that reasonable notice would have been all that was necessary to bring the relationship to an end and that a genuine lack of trust and confidence in one's joint venture partner or fellow participant would be a bona fide basis for so doing (whether or not the reason proffered for the lack of confidence was something which might be thought reasonably to have warranted such a failure in confidence). Thus the lack of trust clearly felt by Mr Batterham in late 2006 would be precisely the kind of situation in which such an arrangement could properly be brought to an end. 339 Whether, as a matter of contract, the Kitchener Project Agreement could have been terminated on reasonable notice was not argued before me. However, it would seem to me that as this was an agreement for an ongoing project with no fixed term, there would be an implied entitlement to terminate on reasonable notice. 340 There would then of course be a question as to what use could be made by Mr Batterham (for his own benefit) of opportunities arising as a consequence of work which had previously done by the two parties under the Kitchener Project Agreement in the context of the said "joint venture" (or in partnership if there be one) between them. 341 However, that was not what happened in this instance. Here, the Batterhams purported to exercise a right at common law to accept what they contended was Mr Makeig's renunciation of the agreement. In that regard, I have found no such renunciation. 342 Wrongful termination of an agreement will ordinarily, as a matter of law, amount to repudiation thereof (unless, perhaps, it could be said that the wrongful termination was bona fide and reliance could be placed on those cases where wrongful termination pursuant to a mistaken construction of the contract (or in the exercise of an express contractual right which nonetheless is not applicable) has been said not to amount to a repudiation (DTR Nominees Pty Limited v Mona Homes Pty Limited & anor (1977) 138 CLR 423; Woodar Investment Development Limited v Wimpey Construction UK Limited [1980] 1 All ER 571). It seems that the exceptions referred to above will follow only where the party was bona fide mistakenly relying on the contract (and hence could not be said to have renounced or abandoned it, or refused to perform the contract in accordance with its terms) (see for example, Lombok Pty Limited v Supetina Pty Limited (1987) 14 FCR 226). 343 It may be inferred that Mr Batterham acted with the benefit of legal advice (since the letter of termination was issued by his lawyers) and I do not doubt his bona fides. Batterham's evidence (T 499.37) shows that by January 2007 he had made up his mind that he could no longer work with Mr Makeig - it would seem for personality reasons: He was questioning the very heart of the whole operation in t his final letter, after months of trying to talk reason to this man, to trying flattery to trying conciliation, to trying everything, and he comes back at one minute to midnight as far as sacking him, with this demanding bullying letter [2 January 2007 letter]. 344 Even so, it is said that bona fides is irrelevant where what has occurred amounts to a serious breach of contract, inconsistent with the continuation of the contract, or seriously prejudicial to the promisor (Halsbury's Laws of Australia para 110-9306 and cases cited ffn 13-15). 345 Here, the termination of the contract was followed by almost immediate entry into contractual arrangements disposing of the benefit of the subject matter of the project (albeit to some extent not yet finalised) which must be seriously prejudicial to Mr Makeig and inconsistent with the future continuance of the contract. 346 The second and third aspects of Mr Batterham's conduct which are said to be repudiatory (causing JPG to be nominated to exercise the call option for pecuniary benefit without consent of Mr Makeig and failure to have the net profit of any dealing concerning the Batterham/Vowles Lands) and said to be breaches of clause 2 and clauses 2, 9, 11 and 12 respectively, flow from the wrongful termination of the Kitchener Project Agreement. 347 In light of the seriousness of the prejudice suffered by Mr Makeig on that wrongful termination, and the actions taken by Mr Batterham consequent upon that termination, I consider that repudiation by Mr Batterham has been made out. 348 I am not satisfied that there was any breach of the implied duty of good faith independent of that repudiation. In other words, had it been necessary (in order to found the claim for repudiation or otherwise) to determine whether Mr Batterham's termination of the Kitchener Project Agreement constituted breach of an implied duty of good faith, I would have been of the view that if (as I consider to be the case) Mr Batterham had acted in the belief (wrong though that would have been) that the alleged failures set forth in Emery Partners' letter of 9 January 2007 entitled him to terminate the Kitchener Project Agreement, then by so doing he was not separately in breach of an implied duty of good faith. 349 I was invited to conclude that the conduct of Mr Batterham was avaricious and designed to arrogate to himself the benefits which, as at 9 January 2007, seemed likely to flow from the project (given the interest apparently shown by potential purchasers of the project). However, I do not believe that such a conclusion is warranted. 350 Mr Batterham, though inconsistent in his evidence as to when he made the decision to onsell the project (his earlier affidavit suggesting a later date than must have been the case; something Mr Batterham had corrected before the hearing), was, I thought, genuine in his expression of weariness for the whole rezoning process and of dealing with Makeig. 351 Moreover, having said perhaps he should have "sacked" Mr Makeig 12 months earlier than he did (T 408), nevertheless a number of times in his cross-examination Mr Batterham said, in effect, that he was willing to continue on with his relationship with Mr Makeig "I wouldn't have dismissed him if he had come back on track, paid his arrears, started to reemploy consultants, get the project going again for a hiatus of about 7 or 8 months of inactivity on his behalf" (T 436), (although Mr Batterham concedes that he did not articulate to Mr Makeig anywhere that there were investigations which Mr Makeig should at that time have been pursuing (T 450)). 352 When asked what Mr Makeig should have done he said, "He should have come back, paid his arrears, started to reemploy consultants and get the thing going again" (T 438). Pressed on this issue, Mr Batterham suggested that after 2006 when the Council became involved, Mr Makeig should have taken steps to "pay consultants when their accounts became due. He was supposed to locate consultants to finish the remaining things that had to be done … 3 or 4 or 5 investigations required by Department of Planning that he should have been engaging consultations to do. He hadn't done it. He had reached a full stop" (T450). This is inconsistent with Mr Batterham's letter of 12 December 2006, directing that Mr Makeig not incur expenditure without approval (as their efforts needed to be coordinated). 353 Mr Batterham says that he "gave [Mr Makeig] the opportunity to get back in. He could have got back in if he had paid his arrears, started to reemploy consultants and get it going. That was very tolerant and reasonable all on my part I think." (T 449). If that were so, it was an act of tolerance not communicated in the 9 January 2007 termination letter or in the rather fraught correspondence and exchanges between the parties in December 2006. 354 Nevertheless, Mr Batterham's correspondence with Mr Makeig (falsely flattering though he now says it was) in early December 2006, almost begging Mr Makeig to get back on board (on which he was criticised as to credit), seems to me redolent of a sense of desperation or anxiety to bring this project to an end and to avoid any further confrontation with Mr Makeig, not a contrivance to arrogate to himself the benefits of this project. While Mr Batterham was, perhaps, overstating matters when he claimed to have shown "the patience of Job with this man" (T 545), the reality it seems to me is that rather than seeking to cut Mr Makeig out from any share of any increased value at that stage, Mr Batterham was inviting Mr Makeig to resume an active role and continue to be a part of the project (albeit at the price of the payment of the "arrears" which Mr Batterham believed were due by Mr Makeig at that stage). (iv) Breach of Fiduciary obligations · Joint Venture 355 I have already found that the Kitchener Project Agreement gave rise to a joint venture between the parties, under which each party owed fiduciary obligations to the other. In fact, as submitted by Mr Sirtes, the fiduciary relationship probably commenced at the time Mr Makeig commenced working with Mr Batterham on the Kitchener rezoning project. 356 Reliance is placed on the judgment of Mason, Brennan and Deane JJ in United Dominions Corporation Limited v Brian Pty Limited (at 11-12): A fiduciary relationship can arise and fiduciary duties can exist between parties who have not reached, and who may never reach, agreement upon the consensual terms which are to govern the arrangement between them... Indeed, in such circumstances, the mutual confidence and trust which underlie most consensual fiduciary relationships are likely to be more readily apparent than in the case where mutual rights and obligations have been expressly defined in some formal agreement. Likewise, the relationship between prospective partners or participants in a proposed partnership to carry out a single joint undertaking or endeavour will ordinarily be fiduciary if the prospective partners have reached an informal arrangement to assume such a relationship and have proceeded to take steps involved in its establishment or implementation. 357 The relationship between Mr Makeig and Mr Batterham was clearly predicated on trust and confidence, insofar as Mr Makeig's ability to recover the funds expended by him for the project (dismissed by Mr Batterham as no more than speculative - "if at the end of the day it fell over, he would have done his money cold") or to receive any payment for the time he put into the project was dependent, first, on his efforts producing the result that a prospective purchaser would be keen to acquire the Batterham/Vowles Land (at some stage in the rezoning or development application process) and, secondly, that Mr Batterham (who was the registered proprietor of the Batterham Land and the controlling mind of BBL which held the benefit of the Vowles Option Agreement) would reach agreement with him as to the sale price at a certain point and at a figure sufficient to allow Mr Makeig to recoup his investment of time and money in the project. Mr Makeig therefore bore a considerable risk in the project and was, to that extent at least, in a position of vulnerability viz-a-viz Mr Batterham. 358 As a result of the mutual confidence reposed in each other, each party owed obligations to the other to act in good faith and in the best interests of the joint venture; not to put himself in a position of conflict between duty and interest (other than as contemplated or permitted by the Kitchener Project Agreement) (Birtchnell v Equity Trustees, Executors and Agency Co Limited (1929) 42 CLR 384 per Dixon J at 408); and not to withhold any opportunity of advantage or to use for his own exclusive benefit information, knowledge or resources to which the parties were jointly entitled (Chan v Zacharia (1984) 154 CLR 178 at 199 per Deane J). In Chan, Deane J said: [A] person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest... or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. Any such benefit or gain is held by the fiduciary as constructive trustee. 359 The question then arises as to what use (once, wrongfully or otherwise, the joint venture is terminated) Mr Batterham could make of the opportunities which had arisen from the joint project up to that date. 360 Mr Sirtes submits that any benefit held by Mr Batterham pursuant to the agreements between himself and JPG is held on constructive trust for Mr Makeig and that, having acted in breach of his fiduciary obligations, Mr Batterham is liable for Mr Makeig for equitable damages. Further, an equitable lien (or alternatively an equitable charge) is asserted over the Batterham Land. 361 While I do not accept that Mr Batterham terminated the Kitchener Project Agreement by way of some form of contrivance to take the whole of the profits of the project for himself, and I do not find any separate breach of a duty of good faith by the fact that the agreement was wrongfully terminated by Mr Batterham, nevertheless I have found that Mr Batterham by his conduct wholly shut Mr Makeig out of any share in the ultimate profits of their joint undertaking. The refusal to acknowledge Mr Makeig's entitlements in that regard amounts in my view to breach of Mr Batterham's obligations to account to Mr Makeig for the benefits of their joint venture upon the termination of that joint venture. 362 For the reasons set out below I consider that any equitable damages for this breach would be, in effect, the same as those available by way of common law damages. In relation to the alternative claim for an equitable lien, I comment as follows. Equitable lien/charge 363 In paragraphs 24-26 and 27-28 respectively of the Amended Statement of Claim, Mr Makeig claims an equitable lien, or in the alternative an equitable charge, over the Batterham Land. It appears that this claim is based on the allegation that Mr Makeig has, pursuant to the terms of the Kitchener Project Agreement and/or in reliance upon representations made by Mr Batterham, expended substantial time and $122,355.60 of his own funds, which has facilitated the rezoning of the Kitchener Lands.

364 An equitable charge and an equitable lien vest the same rights of security in the chargee and lienee respectively, the relevant difference being that an equitable lien arises by operation of law, rather than by agreement between the parties. There being no pleading (and no evidence) that there was an agreement that the Batterham Land would be charged to secure the performance of any obligation owed to Mr Makeig, Mr Makeig's claim to an equitable charge fails. 365 An equitable lien, which depends neither upon contract nor possession is said to arise "by operation of law, under a doctrine of equity as 'part of a scheme of equitable adjustment of mutual rights and obligations'", (Gibbs CJ in Hewett v Court (1983) 149 CLR 639 at 645 citing Isaacs J in Davies v Littlejohn (1923) 34 CLR 174 at 185). Deane J in that case noted that it was a right against property arising automatically by implication of equity to secure the discharge of an actual or potential indebtedness (at 663). However, it requires that there be some equitable doctrine applicable to the circumstances to warrant its implication and its implication can be precluded or qualified by express or implied agreement between the parties. 366 As noted in Fisher & Lightwood Law of Mortgage 2nd Australian Edition, the categories of relationship giving rise to an equitable lien by operation of equity are not exhaustive (para 2.22) but it must not be imagined that equity will create some equitable lien whenever it seems there is some unfair conduct (para 2.31). 367 In Hewett v Court, Deane J identified (at 668) the circumstances which he considered sufficient (though not necessarily essential) for the implication, independently of agreement, of an equitable lien between parties in a contractual relationship, those being: … (i) that there be an actual or potential indebtedness on the part of the party who is the owner of the property to the other party arising from a payment or promise of payment either cf consideration in relation to the acquisition of the property or of an expense incurred in relation to it (see Middleton v. Magnay ; Whitbread & Co. Limited. v. Watt ; Combe v. Lord Swaythling ); (ii) that that property (or arguably property including that property: see Pollock, loc. cit.) be specifically identified and appropriated to the performance of the contract (see per Lord Hanworth M.R., In re Wait ); and (iii) that the relationship between the actual or potential indebtedness and the identified and appropriated property be such that the owner would be acting unconscientiously or unfairly if he were to dispose of the property (or, if it be appropriate, more than a particular portion thereof) to a stranger without the consent of the other party or without the actual or potential liability having been discharged. 368 Although considering a different factual situation, the statement of principles therein set out provided a useful background in considering the claim for an equitable lien in this case. 369 In Stephenson Nominees Pty Limited v Official Receiver (1987) 16 FCR 536 at 543, Gummow J, sitting in the Full Court of the Federal Court as his Honour then was, noted that the security given by an equitable lien affords a proprietary remedy, the equitable lien having been described (in the texts there quoted by his Honour) as "an equitable remedy, created by the court, regardless of the intent of the parties, as a remedial device to protect a party against some inequitable loss". 370 I note also that it has been suggested in "The Equitable Lien Rediscovered, A Remedy for the 21st Century", Fiona Burns [2002] UNSWLJ 1, that, since Hewett v Court, the equitable lien has been broadened to become an effective alternative to the constructive trust. 371 It is not clear what obligation the equitable lien sought to be imposed would secure. It seems most likely, given the recital of Mr Makeig's expenditure of time and money in reliance upon representations made by Mr Batterham, that the obligation sought to be secured by such a lien is one of Mr Batterham to repay Mr Makeig for his expenditure of time and money, in circumstances where it would be unconscionable for Mr Batterham to enjoy the improved value of the Batterham Land without holding it subject to such a lien (see generally Morris v Morris [1982] 1 NSWLR 61; Cadorange Pty Limited (in liq) v Tanga Holdings Pty Limited (1990) 20 NSWLR 26; Clancy v Salentia Pty Limited [2000] NSWCA 248). There is no such obligation under the Kitchener Project Agreement. It was accepted by Mr Makeig that costs expended by him on the project were to be "sunk costs". The implication of a lien (where it might arise by operation of law) can be excluded by express or implied agreement between the parties (Hewett v Court per Deane J). 372 Here, the terms of the parties' agreement seem inconsistent with the equitable lien sought. Further, there is no suggestion that Mr Makeig expended his time and money in the belief that he would obtain an interest of some kind in the Batterham Land, (as opposed to a share in net profits), which would ordinarily be necessary to sustain this type of claim. 373 What is said is that it is unconscionable for Mr Batterham to be able to retain the whole of the proceeds of on-sale of the respective Lands, having encouraged Mr Makeig to expend time and funds on the project, and that expenditure having led to the opportunity to derive increased value from the lands. Aside from the contractual claim, it is said that Mr Batterham is in breach of a fiduciary obligation not to arrogate to himself, in those circumstances, the whole of the benefit of the project after the joint venture has been terminated. 374 The equitable lien is sought further or in the alternative to the contractual claim and, reference being made in paragraph 25 of the Amended Statement of Claim to Mr Makeig's performance of the agreement between the parties, it may be that Mr Makeig is pleading that a contractual obligation under the Kitchener Project Agreement is (or ought to be) secured by the equitable lien. However, no specific contractual obligation has been identified either in the Amended Statement of Claim or during the course of submissions. I note that (though the class of cases in which an equitable lien will be found may not be closed) the obligations which did exist under the Kitchener Project Agreement, prior to its termination, would not necessarily sit comfortably with those obligations arising under contract which have in the past been secured by equitable liens (see generally those cases cited by Deane J in Hewett v Court at 667-9 and in Sykes, The Law of Securities, 5th ed). 375 In circumstances where a constructive trust is now only sought over the proceeds of on-sale (not the Batterham Land itself), and where I am minded to make such a declaration, I see no reason to impose an equitable lien over the Batterham Land and I decline to do so. · Partnership 376 A further alternative basis on which Mr Makeig put his claim is that the Kitchener Project Agreement gave rise to a partnership within the meaning of s 1 of the Partnership Act 1892 (NSW), the parties thereto agreeing to carry on a business (or commercial enterprise) in common with a view of profit. Under their agreement each party was to contribute to the enterprise and profits were to be shared. 377 It is alleged that both the Batterham Land and Mr Batterham's interest in the JPG Deed are "property" within the meaning of s 20 of the Partnership Act, on the basis that the land and the right to sell the land were, in essence, the business or product of the partnership. 378 Mr Lever places weight on the fact that in none of the documentation leading up to the Kitchener Project Agreement (nor in that agreement itself) is there any specific reference to a partnership or a joint venture arrangement. I do not think that is correct. I note that the 7 June 2004 letter contemplates the possibility of involvement with a "joint venture developer/partner" if the parties proceeded beyond DA stage and that the December draft document refers to financial arrangements between partners. 379 The fact that the Kitchener Project Agreement does not use the term "partners" or "partnership" would not prevent the agreement being construed as giving rise to such a relationship, although it might perhaps be expected that if Mr Makeig had understood there to be a business partnership, as such, he (as an experienced businessman in the property development industry) would have made reference to that fact. 380 The sharing of profits per se does not give rise to a partnership (either under the Partnership Act s 2(3) or at common law - see Lindley LJ as his Lordship then was in Badeley v Consolidated Bank (1888) 34 Ch D 238), the sharing of profits being only prima facie evidence of a partnership. 381 Nevertheless, at common law an agreement to share profits and losses was said to be "characteristic - if not of the essence of a partnership contract" Lindley and Banks on Partnership para 5-25, citing Lord Lindley's explanation that: … persons engaged in any trade, business, or adventure upon the terms of sharing the profits and losses arising therefrom, are necessarily to some extent partners in that trade, business or adventure. 382 It is said that "so strong may be the influence of partnership where there is a sharing of profits that provision expressly negativing the sharing of losses as to one or more partners is insufficient to displace it" (Lindley and Banks 5.28). There, however, the authors appear to be considering a situation where one or more partners agreed to indemnify the others against losses. Here, there is no indemnity as such. Rather, it seems the parties proceeded on the basis that unless and until the project was successful, any costs expended were "sunk costs", so that it follows each must have agreed to bear his own losses if the project was not ultimately successful. 383 I note the observation in Lindley and Banks para 5-31, to which my attention was drawn by Mr Sirtes, to the effect that it may not be easy to determine whether there is a partnership in cases where one party contributes assets and the other his or her skills, but that in all cases it is a question of discerning the parties' intention (citing In re Young: Ex parte Jones [1896] 2 QB 484). 384 Mr Batterham was keen, in the witness box, to stress that holding the benefit of the Vowles option was not "financial partnering" - he saw it apparently as simply holding on to the option with a view to an on-sale above $1.35 million (T 433), something which in one sense he pre-empted by nominating JPG to exercise the option for the base price of $1.35 million. Mr Batterham accepted that the Vowles Land was an ancillary property and said that "we [which in the context can only have meant he and Mr Makeig] decided to take an option out on it" (T 431). 385 Significantly, Mr Batterham had no difficulty with the description of partnership as covering their relationship, provided the word was not qualified by the adjective "business": I would say we were partners in trying to get a joint outcome in something in an endeavour or idea, something of that nature. But not partners in the sense that we were business partners. 386 What he seemed anxious to avoid were the ramifications he supposed would follow from talking about someone as a business partner. He also seemed to think that to enter into a partnership it was necessary that there be a legally binding document (T 563), perhaps gleaned from his discussions with Mr Williamson (whose communications/file notes nevertheless did make reference to a "partner" in the project - see letter dated 8 July 2004 from Mr Williamson - Annexure "B"). 387 Mr Batterham accepted that there was a joint intent to onsell the project (and that Mr Makeig would have had a say in the sale price "if he remained in the project") but insisted that a joint venture partner in his mind was different to a success fee arrangement (T 562). 388 Mr Batterham says he used "partner" in the sense of hoping to achieve a common goal, a satisfactory outcome to the endeavour (T 567). That seems to me to amount to a clear admission of partnership (T 567); (and I refer also to Ex A p 119, his response of 1 March referring to "our project" and signing it as "between partners"). He said this term was used in a colloquial sense (T 566). It nevertheless reflects in my view the substance of the relationship between them - 'he may have spent [$122,000] but he was obliged to spend a lot, lot more." (T 574). "He spent a lot of money he should have spent a lot more" (T 566). 389 As at 12 January 2005, when Mr Batterham met with his accountant to discuss the incorporation of the Vowles Land into the project, having earlier (no doubt) noted Mr Williamson's references in his 8 July 2004 letter to a "partner" in the then proposed development joint venture, there was again apparently a discussion referring to Mr Makeig's involvement in the project along the lines of him being a partner in the project (Mr Williamson noting in his file note reference to a "Partner - Peter"). 390 Although the Kitchener Project Agreement in its terms does not refer to a partnership (and the heading, unlike the December draft, refers to "the parties" and not "the partners"), it appears to be predicated on the Batterham Land and the benefit of the Vowles Option being "incorporated" in some sense into a joint project or joint venture for the shared benefit of both Mr Makeig and Mr Batterham, if it had been necessary I would have found that there was a partnership between Mr Makeig and Mr Batterham arising out of the joint venture undertaken by them and that Mr Batterham had an obligation to account to Mr Makeig for the latter's share of any benefits derived therefrom. 391 That said, given the findings I have made above, it is not necessary to consider this alternative claim in detail, save to note that Mr Makeig relies upon the existence of a partnership to support his claim that Mr Batterham (if not otherwise so obliged) must account to him (pursuant to s 29 of the Partnership Act) for any benefit derived from the transactions and dealings with JPG which involved the use of this partnership property. Cross claim 392 There are in substance two limbs to the cross-claim:

(i) allegations of misleading and deceptive conduct or false representations contrary to s 42 and s 44 of the Fair Trading Act .

(ii) allegations of breach of contract (relying on the alleged failures set out in the 9 January 2007 termination letter) and/or of unprofessional or incompetent work by Mr Makeig which it is said impaired the progress of the rezoning application. 393 The loss and damage allegedly incurred as a result of the misleading and deceptive conduct/false representations is said to be the loss Mr Batterham will suffer if found to be liable to Mr Makeig pursuant to the Kitchener Project Agreement. It is pleaded that, but for the contravening conduct, Mr Batterham would not have entered into the Kitchener Project Agreement nor assumed any liability under it (paragraph 9C Amended Cross-Claim filed 24 February 2009). 394 Mr Sirtes submits this reasoning is misconceived because, absent entry into the Kitchener Project Agreement, Makeig would not have worked on the rezoning project and Mr Batterham would not have been in the position he is now "to enjoy his present good fortune". Mr Sirtes submits that the Kitchener Project Agreement represents an opportunity that Mr Makeig created, not a loss that he caused. While Mr Lever disputes the existence of any such good fortune, Mr Batterham has in fact been placed in a position where he stands to benefit from what seems to be the imminent success of the rezoning application at the very least in the form of the sums already realised out of the effective assignment of the Vowles option and the call option granted in respect of the Batterham Land. 395 I was invited, in effect, summarily to dismiss Mr Batterham's claim under section 72 of the Fair Trading Act on the grounds that such a claim must fail for two reasons. 396 First, on the basis that Mr Batterham has not suffered and is not likely to suffer any loss or damage by reason of Mr Makeig's conduct and/or Mr Batterham's execution of the Kitchener Project Agreement. It is said that Mr Batterham instead has been considerably enriched. Mr Sirtes submits that a contractual obligation to share profits does not amount to loss in circumstances where there would be no profit at all but for the conduct of Mr Makeig. As I understand this submission, it is that Mr Batterham (by pleading the loss suffered by him as any liability he would otherwise have to Mr Makeig) is asking to be put in the position in which he would have been had he not entered into the Kitchener Project Agreement at all. Ordinarily, if relief of that kind were to be granted Mr Batterham would be required at the same time to account for any benefits obtained thereunder. 397 Secondly, it is said that there is insufficient evidence for the Court to be satisfied that Mr Batterham's loss or damage was suffered "by" the conduct of Mr Makeig in contravention of sections 42 or 44. It is noted that BBL is not a party to the cross-claim. As I understand this submission, it is inviting a rejection of Mr Batterham's claim that he relied on Mr Makeig's "credentials" when entering into the Kitchener Project Agreement. It is said by Mr Sirtes that as no one else was offering to bear the costs of a rezoning application and to work on the project at no upfront cost to Mr Batterham, he had nothing to lose and he has suffered no loss. I consider the question of reliance below. 398 I do not accept that the Fair Trading Act claims can be summarily dismissed, although I accept that the reasoning underlying the manner in which it is said that loss and damage has been suffered is somewhat circular. I turn, therefore, to the fifth main issue identified at the outset of these reasons, namely whether there was misleading and deceptive conduct on the part of Mr Makeig. (v) Misleading and Deceptive conduct 399 It is alleged that Mr Makeig represented to Mr Batterham the following:

(iii) that he had obtained extensive experience in development work whilst working for the late Harry Seidler;

(iv) that he had the training, experience and capacity to act as a development consultant;

(v) that he had the financial capacity to act as a development consultant including being able to engage consultants and pay such consultants during the course of a development; and

(vi) that he had the requisite professional experience and competence to advise the Batterhams of the length of time and costs involved in the rezoning application and any subsequent development application. 400 While no particulars are given of the alleged breach of s 44 of the Fair Trading Act, it would seem that the conduct alleged by way of false representation as to services and the like adopt the substance of the above allegations. 401 Mr Sirtes submits that, to the extent that any of the six alleged representations was made, the court should not be satisfied that it was false or that it was relied upon by Mr Batterham. · Representations (i) and (iii) - experience as project consultant/project development experience with Harry Seidler. 402 As these alleged representations are similar in thrust, I deal with them together. Mr Makeig does not deny having told Mr Batterham that he was an experienced project consultant and that he had worked for Harry Seidler. What Mr Makeig does not admit is that he represented he had extensive experience in development by reason of the fact of his work with Mr Seidler. 403 Mr Makeig admits that he discussed with Mr Batterham on both 30 December 2003 and 2 January 2004 his professional experience. He says that on 30 December he told Mr Batterham about his work with Councils in other areas and his "qualifications" for doing the jobs Mr Batterham was interested in him doing (T 193; T 194). By qualifications, he seems to mean his professional or work experience. (In that regard I do not accept that "professional" in modern parlance denotes something relating to what might once have been considered to be a "profession" it seems to me that many callings not previously seen as "professions" are now given that label. I consider that "professional" could as readily have been understood by Mr Batterham to relate to the work done by a project development consultant as an architect.) 404 Mr Makeig's first affidavit, sworn 4 April 2008, sets out what he described as his professional background and, at least for the early part of that account, there does not seem to be any real dispute that it is factually correct. 405 Mr Makeig admits that he has no formal qualifications as a project development consultant. He commenced an engineering/architecture degree in 1946. After three years, without completing his degree, he went to work for Harry Seidler from 1949 to 1952, and then worked in the building industry for some years. Mr Makeig does not assert any project development experience prior to 1989. Thereafter, he says he was self-employed as a project development consultant. It is broadly at this point that the Batterhams dispute the truth of what Mr Makeig has deposed to in his affidavit. 406 Mr Makeig swore that from 1989 he "would have undertaken approximately two to three such [project development consultancy] projects per year" mostly in the Ku-ring-gai Council area. 407 Mr Makeig's evidence as to the projects he undertook over that period was contradictory and confused, to say the least. In all Mr Makeig swore four affidavits in relation to his experience as a project development consultant since 1989. The first of those (his affidavit sworn 1 September 2008) was riddled with errors not merely of a typographical kind (such as wrong street numbers, duplicated entries for some of the same work and misdescription of the nature of earlier development projects - whether for dual occupancy or subdivision, etc (T 266)) but also of a more substantial kind (such as asserting that he was involved in four successful Land and Environment Court hearings on one project on the Pacific Highway in Pymble (T 225.38) when, as he accepted in cross-examination, one of the four "proceedings" was no more than a threat to commence proceedings (T 226.30) and that two of the other three hearings were losses (T 227.50 - 229.15)). His evidence was manifestly unreliable in this regard. 408 Mr Makeig ultimately accepted that his sworn affidavit evidence was "a little careless of truth" (T 234.22), blaming this on the fact that he had not reviewed or retained all his records. He was also inclined to blame the "terminology" used ("my terminology was correct but you've corrected my terminology" - T 285) or to assert that what was contained in his affidavit "roughly" represented what he had done. So, for example, when conceding that he had not prepared or lodged a rezoning or development application for one property (as he had sworn he did) he said "in rough terms that roughly what I did so. It wasn't precisely technically so but it was the precise parallel with those words" (T 196 and, similarly see T 228, T 229). He sought to explain some of the inconsistencies in his evidence as due to different definitions being adopted ("it depends what definition of preparation is" - T 267). Again, I found this part of his evidence highly unsatisfactory. 409 It may be one thing for Mr Makeig, without reference (or careful reference) to his archived records, to muddle or confuse street numbers of properties with which he had been involved or even, perhaps, to misdescribe the nature of his interest in property (option v ownership) (T 240). It is quite another matter to attribute success to a non-existent court proceeding (conceded at T 226) or to court proceedings which seem, on any view of the matter, to have been clearly unsuccessful (matters conceded at T 228-229; 230; 232) or to assert that a matter was still before Council when clearly it was not (T 278/279). 410 The impression I was left with was that Mr Makeig, due to carelessness or otherwise, tended to put a favourable gloss on what he had done; just as he tended to overstate his involvement in matters where he said he had "prepared" DA applications but conceded that in so saying he meant rather that he had prepared the way for such development applications to be prepared by others. 411 Mr Lever noted that Mr Makeig had produced no invoices, accounts or claims for payment in respect of the nine properties specified in his affidavit (the subject of a notice to produce served prior to the commencement of the hearing) which were relied upon by Mr Makeig as evidence of his project development experience. The absence of such documentation appears to be relied upon to gainsay the assertion by Mr Makeig that he was an experienced project development consultant. However, Mr Makeig's explanation (that his financial records were archived or unable to be retrieved) on its face is not implausible and I would not, based on the lack of financial records, reject Mr Makeig's evidence of project development experience. 412 Mr Lever submits that, taken at its highest, the evidence as to Mr Makeig's involvement with properties owned by third parties from 1990 to 2005 involved four dual occupancies and one subdivision of a suburban allotment with some limited involvement in three to five subdivision applications and, prior to that, some experience with land over which he or his wife had an option (misdescribed by Mr Makeig as ownership) in Wahroonga. That, however, may in my view, be sufficient for Mr Makeig broadly to describe himself as an experienced project development consultant. 413 Moreover, insofar as Mr Makeig told Mr Batterham at their first couple of meetings that he was an "experienced project development consultant", the evidence of Mr Glendinning corroborates Mr Makeig's own evidence. There is little doubt that for at least ten years Mr Makeig was involved in a consultancy role in various property development matters in the Ku-ring-gai area. There was evidence from Mr Glendinning to the effect that his deals with Mr Makeig were usually small scale single lot proposals - for dual occupancy or removals or additions, the only exception being a development on the Pacific Highway on Pymble Hill. Mr Glendinning's evidence was that Mr Makeig was well known to the Council. From all accounts Mr Makeig was involved (successfully or otherwise) in a number of contests with the Council over property development applications. (This in part seems to be the source of some of the criticism of Mr Makeig's personal style.) 414 I find that the representation that Mr Makeig was an experienced project consultant was true. 415 As to the relationship with Harry Seidler, I am not satisfied that Mr Makeig represented that he had obtained extensive experience in development work while working with Harry Seidler. I think it more likely that Mr Batterham conflated in his mind the two statements - first, that Mr Makeig was an experienced project consultant and, secondly, that he had worked with Harry Seidler. Even with Mr Makeig's propensity to put a favourable gloss on his achievements it seems highly unlikely that Mr Makeig would have attributed the gaining of "extensive" development experience from a three year stint with the late Mr Seidler over 50 years ago. At its highest it seems likely that (when referring to Mr Seidler) Mr Makeig was engaging in some "name dropping", perhaps to big-note himself, and I consider that a reasonable observer would have taken such a statement in that context. I note in this regard the observation of Barrett J in Overlook v Foxtel [2002] NSWSC 17 (noting that in some authorities including Schindler Lifts Australia Pty Limited v Debelak (1989) 89 ALR 275 latitude is allowed in commercial dealing by way of puffery) that: The reality is that a certain amount of hyperbole is permissible and to be expected in business without attracting legal sanctions. 416 I see any comment by Mr Makeig in relation to Mr Makeig's experience gleaned from work with Mr Seidler in that context. · Representation (ii) - architect

417 Much of the focus on the misrepresentation claims related to the allegation that Mr Makeig had represented to Mr Batterham that he was an architect (or a semi-retired architect), carrying with it (it is said) an implied representation that he had the qualifications necessary for registration as an architect. The significance of that term, according to Mr Lever, is that it gave Mr Makeig a "veneer of professional training and experience, particularly when dealing with Councils on development applications". 418 Mr David Batterham gave evidence that Mr Makeig told him that he was an architect during a conversation when he (Mr David Batterham) was working on the Makeig property (T 596). Mr Makeig denies this. 419 Even if this had been said to Mr David Batterham it would not amount to a representation to Mr Batterham unless Mr Makeig knew (or contemplated) that the representation was being passed on to him and took no steps to correct it. 420 In Commercial Banking Company of Sydney Limited v R H Brown & Co (1972) 126 CLR 337 a representation was found where information was obviously sought by third parties and the parties contemplated that the information would be passed on to them. What must be shown is an intention or contemplation that the representation be passed on to the third party and be acted on by that third party (see Langridge v Levy (1837) 2 M & w 519; 150 ER 863 per Parke B). The making of a representation to an agent is not of itself sufficient to ground a finding that the representation was made to the principal (O'Keefe v Taylor Estates Co Limited [1916] SR Qd 301 at 308-9; Peek v Gurney (1873) LR 6 HL 377). 421 There may be some distinction in this regard misrepresentations giving rise to common law actions and those relied upon as breaches of the Fair Trading Act. Nevertheless, Brereton J in Azzi and Ors v Volvo Car Australia Pty Limited [2007] NSWSC 319, adopted fairly similar principles: …[C]ompensation may be recovered under Trade Practices Act, s 82, in respect of a contravention of s 52, by a person who relies on a misrepresentation if the representation was made in circumstances that were calculated to result in its being transmitted to persons including the victim, even though the representor never dealt directly with the victim [ Milner v Delita Pty Limited (1985) 61 ALR 557, 573-4 (Lockhart J); Accredited Aged Care Facilities Pty Limited v Banyan Tree (Australia) Pty Limited [2002] VSC 261, [95] (McDonald J); Emanuele v Chamber of Commerce & Industry SA Incorporated [1994] ANZ ConvR]. 422 His Honour noted that Lockhart J in Milner v Delita explained the basis of liability in such circumstances in terms of an implied intention of the originator that the representation be passed on to others (at 61 ALR 573-4). 423 Whether or not it is necessary, for liability to arise under the Fair Trading Act, for it to be intended or contemplated that representations would be conveyed to a third party, here it seems Mr Makeig was aware of the likelihood that whatever he said about his work experience to Mr David Batterham in late 2003 would be passed on to Mr Batterham. 424 In cross-examination, Mr Makeig said that at first he did not know Mr Batterham or what land he may have (T 349). He said that he had a conversation with Mr David Batterham in which the latter asked him if he would be prepared to help his father. Mr Makeig went on to say that he "presumed" that Mr David Batterham was passing on to his father the information about his "qualifications" (T 350). 425 He can only logically have made such an assumption if, by the time of the relevant discussion about his "qualifications", he was aware that Mr Batterham had some interest in property development of some kind. Further, when coupled with Mr Makeig's recollection that Mr David Batterham was asking if he could help his father, I would infer that Mr Makeig intended (or at least contemplated that it was likely) that any information so passed on should or could be relied upon by Mr Batterham. 426 This would in my view be sufficient to treat a representation made to Mr David Batterham that he was an architect as a representation to his father. 427 Can I be satisfied on the balance of probabilities that Mr Makeig said to Mr David Batterham that he was an architect? Each is adamant as to his version of the relevant conversation. Each has an interest in having his version accepted (albeit in Mr David Batterham's case only indirectly, insofar as it would assist his father's position). 428 Mr David Batterham gave his evidence in a quiet and laconic manner. His answers were relatively short and to the point. Mr Makeig, who was cross-examined over a much longer period, became testy at times and, as noted above, had a tendency to put a gloss on events or (perhaps) to describe things by reference to his own particular "terminology". 429 It seems to me inherently improbable that someone who had been prosecuted in the past for impersonating or holding himself out as an architect (albeit on that occasion by a description on his letterhead) would thereafter boldly make manifestly false assertions as to his status as an architect. 430 Mr Makeig concedes that at some point about this time (he says on 2 January 2004) a conversation as to his status as an architect did take place with Mr Batterham. It is not unreasonable to infer that a question of this kind on Mr Batterham's part would be prompted by his son having described Mr Makeig to Mr Batterham as an architect. However, in circumstances where there was admittedly a discussion between Mr David Batterham and Mr Makeig as to the latter's project development experience, it seems to me equally credible that Mr David Batterham simply assumed that Mr Makeig was an architect and conveyed that assumption to his father. Therefore I do not find that a representation of the second kind alleged was made to Mr Batterham by virtue of any information passed to him by his son. That, however, does not determine this issue. 431 Mr Batterham gave evidence of a conversation he had directly with Mr Makeig (para 28, affidavit affirmed 11 June 2008), in which he said to Mr Makeig words to the effect "So Peter, David tells me you are a retired architect" and Mr Makeig responded "Semi-retired", thus implying that he was both an architect and that he was still in some sense carrying on practice as an architect. Mr Batterham deposes to two further conversations - one in a noisy local café where he says Mr Makeig volunteered to the café owner that he was an architect and one where he says he introduced Mr Makeig to a local councillor (Bob Pynsent) as a semi-retired architect, to which he says there was no demur from Mr Makeig. 432 Mr Batterham was clearly under the impression in mid 2004 that Mr Makeig was or had been an architect. His accountant, Mr Williamson, gave evidence as to a meeting with Mr Batterham on 8 July 2004 when Mr Batterham sought some advice as to a proposed project. Mr Williamson's file note refers to this as a "joint venture project" or "proposal". His notes record the following: "Joint venture - developer from Sydney proposal - architect - experience with subdivision work" 433 There is no suggestion that this was not the very proposal then being the subject of discussion with Mr Makeig. The description "architect" can only have come from Mr Batterham. Mr Williamson had no prior knowledge of Mr Makeig. The note records "J.V. partner gets 1/3 of net profit on each block". Mr Williamson in his affidavit stated that "partner" in his notes was not a record of anything Mr Batterham had said to him but did not suggest that Mr Batterham had demurred from the description of the proposal as a joint venture (as set out in Mr Williamson's 8 July letter to him). I note that by this time it is also apparent that the estimated costs (rather than the $15,000 earlier estimated) were clearly understood by Mr Batterham to be closer to $50,000 but no complaint was raised by him with Mr Makeig at that stage about the inaccuracy of the earlier estimate. 434 Mr Batterham says it was not until May 2005 that Mr Makeig told him he was not an architect, and it was not until October 2005 that he says Mr Makeig told him for the first time of his previous conviction in Queensland (for passing himself off as an architect). Mr Makeig, on the other hand, says that Mr Batterham asked him if he was an architect during their first site meeting in January 2004 and that he replied that he was not a registered architect but that he had spent most of his professional life in the field of planning and architecture. 435 Both parties agree that there was a discussion during the January 2004 meeting as to Mr Makeig's professional or working experience. That is not surprising as Mr Batterham was at that stage interested in obtaining assistance in relation to his proposed residential development. In that context, Mr Lever places reliance on Mr Makeig's concession it was a "wise and reasonable question" of Mr Batterham to ask (T 198.36 - 199.5). 436 Relevantly, Mr Makeig, having first denied that the October 2005 conversation took place "at all", later admitted that a conversation along those lines had taken place but said this was during the 2 January 2004 conversation. Whenever the conversation in fact took place, Mr Makeig concedes that he told Mr Batterham that he had at one time been in trouble in Queensland with the Architects Board for having held himself out as an architect. 437 Mr Makeig frankly admitted in the witness box that he had been convicted of impersonating an architect in 1985 in Bundaberg and volunteered that he had been sentenced to 60 hours' community services (T 374 and earlier). He said that the offence arose because he had been using a letterhead describing himself as offering "architectural and industrial design" services. His evidence was contradictory as to the circumstances in which a conviction was recorded - it was suggested at first that he had contested the charge but then when a record of the conviction was subpoenaed from the local court in Bundaberg, Mr Makeig accepted that he had pleaded guilty "against [his] better judgment". 438 It seems to me unlikely that someone in Mr Makeig's position (having a propensity to emphasise the positive aspects of his work history and to put a favourable gloss on events) would have introduced the topic of a previous conviction in discussion with a prospective client at only his second meeting with that prospective client, whether or not he had been asked at that stage if he was an architect. That does not seem to me to be consistent with the kind of person who sees an unsuccessful court proceeding as a success (because the Council was then prepared to accept a modified development application of some kind) or who sees a threat to go to court as a "successful" court proceeding because the threat produces the desired result (capitulation by the relevant Council). 439 I therefore do not accept that the reference to Mr Makeig's previous run-in with the Architects Board was made in the conversation in January 2004 as Mr Makeig says, rather than in October 2005 as Mr Batterham contends. 440 While it seems to me quite possible that at the outset of the project Mr Batterham and his son might simply have assumed that Mr Makeig was an architect, on the basis of Mr Makeig's description of what he had done as a project development consultant over the years, Mr Makeig does not now deny that Mr Batterham posed the question to him in January 2004 as to whether or not he was an architect. 441 The question is whether or not I am satisfied that (as Mr Batterham asserts) Mr Makeig did not deny in or about January 2004 that he was an architect. 442 In deciding whose version of that conversation is the more likely, Mr Batterham seeks to rely on evidence admitted as tendency evidence - evidence of a Mr Cornelus Vandescheur. Mr Vandescheur was, in 2007, a neighbour of Mr Makeig in Cessnock. He deposed to a conversation with Mr Makeig which took place in a similar context to that of the Batterham/Makeig conversation - namely that Mr Vandescheur was seeking assistance from someone in the context of the proposed development of land he owned in Cessnock. Mr Vandescheur gave evidence that in that conversation Mr Makeig said to him, "I am an architect". Mr Vandescheur was cross-examined as to this conversation. It was put to him, in effect, that he just assumed that Mr Makeig was an architect because of the architectural drawings he had seen or was making this up because there had been a falling out between he and Mr Makeig. (This was denied.) It was accepted that there had been other litigation between Mr Vandescheur and Mr Makeig in relation to a success fee claimed by Mr Makeig for work done by him in the context of the proposed development for Mr Vandescheur. It was for use in those proceedings that Mr Batterham had "happily" provided a reference for Mr Makeig. Ironically, perhaps, Mr Batterham now calls upon Mr Vandescheur to support his assertion that Mr Makeig represented to Mr Batterham that he was an architect. 443 Nothing in the documentation prepared by Mr Makeig in connection with the Batterham project (or, Mr Vandescheur concedes, the Vandescheur project) refers to Mr Makeig as an architect, although there is reference in the latter to the provision of architectural design services. In that regard, Mr Makeig gave evidence to the effect that documents of an "architectural" kind are regularly prepared by persons other than qualified architects (T 222). He said that he prepared architectural documents "all the time". So, I would assume, do design engineers or draftsmen, who similarly may have no qualifications as architects. Mr Makeig sees "architectural" as an adjective describing the character of, say, a drawing (T 222), not as denoting a professional qualification as architect. 444 Mr Lever says the lack of a written description as "architect" is not surprising in light of the Queensland conviction (although it was suggested there may be a different position in that regard in New South Wales, at least in relation to the adjective "architectural"). What I think, conversely, would be equally surprising in light of that conviction would be for Mr Makeig even orally to hold himself out to clients as an architect. 445 I admitted the Vandescheur evidence with misgivings, which I expressed at the time. I noted that evidence of a tendency is not admissible to prove the person had a tendency to act in a particular way unless the court considers it would have significant probative value and the party seeking to adduce had given reasonable notice. 446 I had regard to Sackville J's judgment in Jacara Pty Limited v Perpetual Trustees W A Limited (2000) 106 FCR 3, where his Honour noted that the critical question was whether evidence was relevant to a fact in issue because it showed that a person has or had a tendency to act in a particular way and, if so, was a link in the process of proving that the person did in fact behave in the particular way on the occasion in question. His Honour noted that the Australian Law Reform Commission had considered that it was the behaviour in a similar situation, rather than an inferred characteristic, which justified the admission of tendency evidence. 447 Here, there could be no relevance to Mr Vandescheur's evidence other than as tendency evidence. No notice was given as required by s 97. Although it was submitted that there was sufficient notice deriving from service of the affidavit of Mr Vandescheur itself, I did not accept that this was sufficient notice for the purpose of s 97. Even though in AB v R [2001] NSWCCA 496 the Court of Appeal held that a notice could satisfy the requirements of s 97 by referring to extrinsic documents, I do not read that judgment as authority for the proposition that service of extrinsic documents alone could constitute notice. 448 However, I was prepared to dispense with notice on the basis that it was difficult to see what prejudice would be sustained in circumstances where Mr Makeig was clearly on notice of what Mr Vandescheur was claiming and where Mr Vandescheur was available for cross-examination. 449 As to whether at the time I considered its admissibility I was of the view that the evidence had significant (not substantial) probative value, I took into account the degree of specificity of the conduct, the similarity between the two occasions and the time frame in which the conduct is said to have occurred. Both occasions arose when assistance was sought by neighbouring land owners in relation to proposed property developments and both occurred around the latter part of 2003 or early 2004. While there were dissimilarities - particularly in that Mr Vandescheur asserts that Mr Makeig in effect volunteered the information, whereas Mr Batterham says he raised the question directly with Mr Makeig, on balance I considered the evidence could be said to have significant probative weight and I admitted it over the objection of Mr Sirtes. 450 I also admitted in reply (over objection by Mr Lever) the evidence of Mr and Mrs Taranto (other neighbours in Cessnock for whom Mr Makeig has provided services), to the effect that no such statement had been made to them, again because of the similarity of the situation involving local developments and assistance to neighbours in roughly the same time frame. I did so conscious of the observation expressed by Branson J in Bective Station Pty Limited v AWB (Australia) Limited [2006] FCA 1596 to the effect that evidence of a negative (ie that statements were not said on a particular occasion) could not assist in determining the positive (ie whether on the occasion in question the alleged statements were made), but on the basis that I considered there might be sufficient probative weight in this case where, the evidence relied upon by Mr Batterham was a similarly isolated instance. (There is also, as I apprehend it, some further relevance in that Mr Taranto in his affidavit squarely contradicts matters asserted by Mr Batterham in his affidavit.) 451 Nevertheless, having admitted the evidence of Mr Vandescheur and of Mr and Mrs Taranto, I am of the view that none of that is of real assistance in forming a view as to whether on this particular occasion Mr Makeig said words to Mr Batterham which represented that he was an architect or semi-retired architect. I have regard to the caution expressed by Gummow J in D F Lyons v Commonwealth Bank of Australia (1991) 28 FCR 597 that tendency evidence is circumstantial evidence of a dangerous kind. Mr Vandescheur conceded in cross-examination that the statement "I am an architect" was not asserted baldly. He says Mr Makeig showed him a portfolio of work showing designs of environmental and ecological documents, some newspaper clippings and designs of project (T 369). He said I am not saying he came along and said I am an architect full stop. During the course of a new neighbour coming into a neighbouring property in a country region you have conversations about several times. During the conversations he said he was an architect. He showed me a portfolio of things that he had been working on and had been done in the past, albeit that it was older. [T 370] 452 Mr Vandescheur conceded there was very little conversation in relation to him being an architect. There seems to have been more emphasis on his fees: … he told me he was an architect. He also told me in the scheduling of fees that he didn't work predominantly with scheduling or traditional architects fees anymore, he preferred to be involved in projects … and at one point in time … he told me that he didn't charge as a traditional architect any more, he preferred to be involved with projects. 453 However adamant Mr Vandescheur now appears as to this point, it seems to me quite plausible on the events as described that Mr Vandescheur took from the reference to Mr Makeig not charging as an architect any more, that he was or had been an architect (or charged as such at one time). At best there might be an implied representation to Mr Vandescheur in that context. 454 Whether or not Mr Makeig told Mr Vandescheur (or did not tell Mr and Mrs Taranto) that he was an architect, in my view, makes it no more or less likely that he said it to Mr Batterham in January 2004. Similarly, I place no weight on the rather vague account of the café owner conversation. As to the conversation with Mr Pynsent (who was not called to give evidence) there may be a number of explanations as to why (even assuming it was said in the first place) Mr Makeig may not have wished to correct Mr Batterham - such as a desire not to embarrass or undermine his fellow joint venturer. 455 That leaves me with the contradictory accounts by Mr Batterham and Mr Makeig as to the 2 January 2004 conversation. 456 As noted, it seems to me that there is an inherent improbability in Mr Makeig positively asserting that he was an architect when he had once before been prosecuted for passing himself off as an architect. There was nothing in the work that Mr Batterham was asking Mr Makeig to do which required Mr Makeig to be qualified as an architect and there is nothing in the correspondence which suggests that Mr Batterham was seeking the services of a qualified architect. 457 However, whatever Mr Makeig had said to Mr David Batterham, I accept that Mr Batterham was under the impression when he met with Mr Makeig on 2 January 2004 that the latter was an architect. It makes sense that, in the context of a discussion about Mr Makeig's professional qualifications or experience, this would have been raised. In that context, given Mr Makeig's apparent tendency to gloss over the "technical" details of his experience, I find it likely that, rather than go into chapter and verse about his conviction in Queensland at that stage, Mr Makeig would have focussed on that part of the question as to whether or not he was retired; and therefore that it is by no means unlikely that he would have responded that he was "semi-retired". At its highest, Mr Batterham's account of the conversation conveys an implied representation by Mr Makeig. 458 On balance, I am satisfied that such an implied representation was made. In reaching that conclusion I think it is also relevant that Mr Makeig first denied that the conversation deposed to by Mr Batterham in October 2005 took place at all, justifying that denial on the basis that the discussion took place on a different occasion and on somewhat different terms (T 259), yet not putting forward that other version until Mr Makeig's subsequent affidavit. In circumstances where a conversation of the kind outlined must have taken place at some time (since otherwise it is highly unlikely Mr Batterham would have known of Mr Makeig's run-in with the Architects Board), the contradictory response by Mr Makeig to this is something to take into account in weighing the two versions. 459 What flows from that? Mr Batterham says he relied on this January 2004 representation when (some 14 months later) he signed the Kitchener Project Agreement. 460 Mr Sirtes invites me to conclude that this could not have been the case - in effect because any such representation would have lost "traction" by then, having been superseded or overtaken by the letter of 7 June 2004 which set out details of Mr Makeig's professional background and which contained not one whit of a reference to him being an architect. 461 I note that where a representation is one by its nature calculated to induce someone to enter into a contract then there is authority that an inference that the representation induced entry into the contract can be drawn (see Carter on Contract paragraphs 20-200 and see Redgrave v Hurd (1881) 20 Ch D 1 at 22). However it seems that such a presumption will be stronger in cases of fraud (Smith v Kay (1859) 7 HLC 750; 11 ER 299) and that the drawing of such an inference is by no means automatic. The onus remains on the party alleging inducement to show reliance upon the representation as a matter of fact. 462 Mr Lever relied upon Sutton v A J Thompson Pty Limited (1987) 73 CLR 233 at 240 and Gould v Vaggelas (1985) 157 CLR 225 at 236 for the proposition (summarised in Heydon, Trade Practices Law 11.590) that if a material misrepresentation is made which is calculated to induce the representee to enter a contract and that person in fact does so, then there arises a fair inference that he or she was induced to do so by the representation and that the representation need not be the sole inducement; it is enough if it plays some part. Mr Lever relies on the acceptance by Mr Makeig that this was a "wise" and sensible question for Mr Batterham to ask, as showing that the representation was one calculated to induce entry into the agreement. 463 In Ricochet Pty Limited v Equity Trustees Executor & Agency Co Limited (1993) 41 FCR 229, of Lockhart, Gummow and French JJ considered a proposition which had been put to them that the trial judge was bound to infer, in the absence of contrary evidence, that the appellants had been induced by the representations to enter into the lease. Their Honours said (at 233-234): Gould v Vaggelas lays down no exhaustive rule for the approach to evidence of inducement in misrepresentation cases. In particular, it lays down no rule in claims for damages under s 82 of the Act for contravention of s 52, where the gist of the conduct complained of is the making of misrepresentations. On the question of proof of inducement, the judgment of Wilson J in Gould v Vaggelas makes the point that a combination of factors may, if unanswered, lead to the conclusion that a person was induced by the representation of another to make the relevant decision. Where, for example, it is shown that a false representation has been made which the representor intended should induce the representee to enter into a contract, and where it is shown that the representation is of a kind likely to provide such an inducement and that the representee entered into the contract, then, as Wilson J said (157 CLR at 238; 56 ALR at 48): … common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract. The statement provides a practical guide to the way in which inferences can and should be drawn in such cases. It remains for the tribunal of fact, as his Honour pointed out, to determine, when all the evidence has concluded, whether the misrepresentation in question contributed to the decision to enter the contract. The unremarkable logic of these propositions is more likely to be obscured than illuminated by reference to notions of presumptions of fact or the incidence of the evidentiary onus. 464 I do not accept that Mr Batterham has established reliance as a matter for fact on the representation that Mr Makeig was an architect. 465 First, because there is nothing to indicate in the period from January 2004 to March 2005 that Mr Batterham was looking for the provision of the services of an architect - rather, he seems to accept that what he was looking for was someone with experience in dealing with Councils. Mr Batterham said he accepted that he did not need an architect, he needed "someone familiar with interactions of Council over many decades" (T 489). That seems to me the substance of what Mr Batterham relied upon when entering into the agreement with Mr Mackeig. 466 Secondly, I accept Mr Sirtes' submission that, whatever was impliedly represented in January 2004 as to Mr Makeig's status as a semi-retired architect, the operative force of that representation is likely to have been spent by March 2005 by which time Mr Makeig had more fully described his experience and had made it clear that he was a project development consultant. 467 Thirdly, and significantly, in my view, the assertion that Mr Batterham entered into the agreement in reliance on the implied representation that Mr Makeig was an architect can be tested against what Mr Batterham in fact did when he found out (on his version in May 2005) that Mr Makeig was not an architect. 468 There was no complaint made to Mr Makeig after May 2005 as to Mr Makeig's lack of qualifications. This was not a ground on which Mr Batterham sought to terminate the Kitchener Project Agreement. From May 2005, Mr Batterham continued to accept the provision of services (and payment of moneys to consultants) by Mr Makeig. Even as late as December 2006, when relations were very tense between the parties, Mr Batterham was imploring Mr Makeig to get back on board with the project. Mr Batterham concedes that this was not a matter where he needed the services of an architect; that he left Mr Makeig on the project and allowed him to continue to spend money (asserting that he should have spent a lot, lot more money) after he knew he was not an architect (T 461, 491, 524). 469 During closing oral submissions, after the hearing itself had concluded and after written submissions in reply had been served by both parties, and indeed during the course of Mr Sirtes' final (brief) oral submissions in reply, Mr Lever sought to revisit an evidentiary ruling I had made at the commencement of the hearing; namely to admit paragraphs in the affidavit evidence from Mr David Batterham as to his father's reaction when he learnt that Mr Makeig was not an architect. That evidence was inadmissible in form and was rejected by me. Both Mr David Batterham and Mr Batterham were cross-examined by Mr Sirtes and, had this evidence been read, it no doubt would have been the subject of questioning by him. It was evidence which, had it been thought relevant, might have been sought to be adduced from Mr Batterham himself. 470 I rejected the application as being far too late and prejudicial (due to the lateness of the application) to Mr Makeig. In any event, whatever Mr Batterham's thought processes as to what he should or could do back in May 2005 when he says he discovered Mr Makeig was not an architect, this does not alter the fact that he did not do was to raise this as a cause of complaint with Mr Makeig at any stage until after the contract was terminated. From May 2005 until at least December 2006 he continued, by his conduct and words, to represent to Mr Makeig that if Mr Makeig continued to provide services for the project he would be entitled to a share of profits on the on-sale of the project 471 Finally, in his affidavit of 5 February 2009, Mr Batterham claimed he relied upon Mr Makeig's statement as to his extensive experience dealing with rezoning matters with Councils "together" with his professional qualifications, when he engaged Mr Makeig's services. Again, it seems to me that this highlights what Mr Batterham really relied upon - the fact that in some form of professional role Mr Makeig had had a lot of experience in dealing with Councils. The only matter Mr Batterham could point to, viz a viz the desirability of Mr Makeig being an architect, was that an architect might have better "PR" dealing with Councils (T 491) - a potentially moot point. 472 I am therefore not satisfied that Mr Batterham has established reliance on this representation. 473 If I had been satisfied that this was a matter on which Mr Batterham had relied in signing the Kitchener Project Agreement, what would have been the loss or damage caused as a result? Mr Sirtes points to the fact that. Mr Batterham has, at least partly as a result of Mr Makeig's contributions, achieved a position where his land is likely shortly to be rezoned and he has arrangements now in place under which he stands to make a considerable profit on the land. 474 Issues of causation of loss were considered in the context of s 82 Trade Practices claim by the Court of Appeal in Abigroup Contractors Pty Limited v Sydney Catchment Authority (No 3) (2005) 67 NSWLR 341. There, Beazley JA confirmed that the test of causation requiring the application of the "common law practical or common-sense concept of causation" referred to in March v E & M H Stramore (1991) 171 CLR 506. 475 Even if it could be said that the loss or damage is measured by reference to any amounts for which Mr Batterham might be liable to pay to Mr Makeig, it seems to me that in the exercise of my discretion I should refuse any relief having the effect of setting aside the agreement, unless Mr Batterham could in some way account for the considerable benefits he has obtained as a result. While Mr Lever submits these are illusory, the fact is that Mr Batterham now has the opportunity to realise a substantial profit on his land - the value of that opportunity (or the increased value represented by the land once rezoning occurs) is something which was achieved by reference at least in part to Mr Makeig's contribution to the project. Mr Batterham conceded that, but for Mr Makeig's money, and his efforts, the project would not have got off the ground. Mr Makeig cannot be put back in the position he was in 2004 simply by reimbursement of out of pocket expenses; nor would a quantum meruit valuation be easily carried out at this stage. 476 Insofar as relief is sought to avoid the Kitchener Project Agreement ab initio it is difficult to see why, if such an order were to be made, Mr Batterham should not have to account for the benefits obtained under that Agreement by making available to Mr Makeig the profit share in the expectation of which Mr Makeig became involved in the project, rather than simply repayment of the moneys expended by Mr Makeig. · Representations (iv) (v) and (vi) - training, experience, capacity. 477 The representations alleged in sub-paragraphs (d), (e) and (f) are all denied on the basis that they are devoid of context, ill defined, imprecise and vague. In particular it is said that insofar as they refer to the role of a development consultant or engineer in a "development" this begs the question what was necessary for such a role. While I accept the force of that submission, I consider that by entering into the Kitchener Project Agreement, Mr Makeig must have at least impliedly represented that he had the ability and capacity to undertake what he was promising to do in connection with the joint venture or undertaking the subject of that agreement. In his discussions with Mr Batterham in December 2003/January 2004 and in his correspondence (7 January 2004 letter), he was clearly representing that he had the experience to assist Mr Batterham as a development consultant, and by inference, when he agreed to pay consultants' fees, Mr Makeig must have been representing that he had the financial capacity to do so in connection with the project at least as it was then envisaged. 478 The evidence in my view establishes the truth of any such representations. 479 As to training, Mr Makeig admits he had no formal training but what training is required to be a project development consultant. All that is suggested by the representation alleged is that his experience fitted him for the role. Mr Glendinning's evidence corroborates this. What Mr Makeig was representing was that he had experience in dealing with Councils on project development matters. He did have such experience. The fact that it was not weighted towards the rezoning of rural land does not render a representation of the kind alleged untrue. 480 As to Mr Makeig's experience, I have dealt with that above. 481 As to capacity, there was much debate about what was meant by "capacity" - whether that be in the sense of having time available to work on the project or having the ability or competence successfully to complete the project. 482 I think "capacity" should be read in this context as no more than availability and ability - both of which I am satisfied Mr Makeig's evidence demonstrated that he had. The fact that during the lifetime of this project Mr Makeig was working on other projects is irrelevant. There was nothing to suggest that he represented he would devote himself exclusively to this project. Insofar as Mr Batterham complained of a "hiatus" in which Mr Makeig did nothing, it is not suggested that this was due to lack of time as a result of his commitments to other projects. 483 As to ability, the evidence of Mr Makeig's project management experience shows that he was able or capable of performing services under the agreement. Whether he performed them well, (and whether he was pleasant of difficult to deal with), is quite another matter. 484 As Mr Sirtes submits, a representation that a barrister has the training, experience and capacity to act in litigation proceedings says nothing as to his or her measure of success in such proceedings. It was as a result of debate of this kind during the course of the hearing that an application was made further to amend the Amended Cross-Claim to add a new allegation of misrepresentation - namely "(g) that he [Mr Makeig] had had a lot of involvement with property development with great success in the past". 485 It was put to me that this merely ensured that the particulars of the claim accord with the evidence (that being the unchallenged conversation deposed to by Mr David Batterham in which a statement to that effect was contained). I refused leave to amend on the basis that this conversation was not between Mr Batterham himself and Mr Makeig, so there was an issue as to whether any representation was made to Mr Batterham (as opposed to his son); and in view of the prejudice which was likely to be occasioned to Mr Makeig, who no doubt would have been entitled to adduce evidence as to his past successes had such a pleading been made in the first place. Moreover, the vagueness of such an allegation was a matter of concern. (I also note that any representation of the kind then sought to be introduced into the pleadings would seem to me likely to be seen as within the realms of puffery.) 486 White J in Zhang v VP302 SPV Pty Limited [2009] NSWSC 73 said that: It is sometimes said that puffery falls outside the reach of s 52 of the Trade Practices Act ( Pappas v Soulac Pty Limited (1983) 50 ALR 231 at 234-235; Eighth SRJ Pty Limited v Merity (1997) 7 BPR 15,189 at 205-206), although it is more usual to infer that the plaintiff did not rely on an obvious puff (eg Petty v Penfold Wines Pty Limited (1994) 49 FCR 282). 487 His Honour referred to the comments in Jainran Pty Limited v Boyana Pty Limited [2008] NSWSC 468, of Bryson AJ as to the meaning of "puffery": I do not know of any clear exposition of what is referred to as 'puffery' but its connotation is statements which the hearer to whom they are addressed is not expected to take literally and to treat seriously, obviously so to a reasonable hearer. … A characteristic which is often attributed to puffery is that it is incapable of being proved to be correct or incorrect; Pappas v Soulac (1983) 50 ALR 231 at 238 (Fisher J). It is usually difficult to isolate any real content in such statements - 'The greatest show on earth', 'the best car in its class on the market today', 'leading a new wave of talent' and 'we've already been getting interest in this property'. The expression does not include communications which the recipient is expected to take seriously, even if they are not in highly precise terms. 488 In Zhang, White J was of the view that rather than considering whether the advertisements were puffery, regard should then be had to reasonable members of the class of readers who might be expected to act on the advertisement (citing Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 CLR 191 at 199).

489 As to the representation of financial capacity, it was submitted to me that I should infer that the lack of financial means was what underlay Mr Makeig's refusal to pay Council's fees in late 2006 or the disputed consultants. However, the evidence before me was that Mr Makeig had the benefit of, and was living on a day-to-day basis from, an overdraft facility the undrawn component of which would seem to have been sufficient to meet those amounts.

490 In any event, the truth of any representation as to financial capacity to engage in the project must surely be tested by reference to what it was anticipated at the time would be involved in the project. By March 2005, it would seem that what was apparently contemplated (see 1 March 2005 letter) was the ability to pay consultants fees of some $200,000. There is nothing to suggest Mr Makeig did not have the financial resources to do so (and in fact he has already paid a fair proportion of that amount).

491 Much was made of Mr Makeig's inaccurate estimate of the costs and time likely to be involved in the project when he first discussed it with Mr Batterham ($15,000 and a few months). However, at that stage Mr Makeig was assuming a spot rezoning and that Council's approval was a foregone conclusion (as Mr Batterham said the Councillors were sympathetic to him). I do not think that anything can be made of the fact that, as it turned out, the project became much more substantial in scope and cost much more (nor that, as Ms Grant said, such a spot rezoning was never likely to have been possible). 492 Insofar as Mr Makeig represented that he had extensive experience in development work and in dealings with councils, I am of the view that however difficult he may have been in those dealings and however unsuccessful he may have been in that work, on the evidence he was shown to have had extensive experience. As to his competence, it was suggested that this implied an ability to carry out the work successfully. I do not agree. 493 As to the alleged representations in relation to capacity - these was put on the basis of Mr Makeig's time to do the work, his ability to do the work and his financial capability of so doing. As to the first, the fact that he was acting for three other clients at the same time as Mr Batterham does not seem to me to establish that Mr Makeig had no capacity from a time point of view to carry out the work. The Kitchener Project Agreement did not, in its terms, purport to be an exclusive retainer. It is not suggested that Mr Makeig had insufficient time to devote to the project (although it was said that for a period of time there was an hiatus and he did not do anything). Mr Makeig does appear, in the initial phases of the project, to have played a significant role in arranging the consultants, liaising with them and pushing Council in relation to the issue as to whether the Rural Fire Service submissions had correctly raised issues in relation to the exclusion of Kitchener from CWSS. Whatever other clients he had at the time, they do not appear to have impeded this work. 494 As to the notion that ability equates to or encompasses a notice of success, it does not seem to me that a person who has the qualifications necessary to carry out a particular task can be said not to have had that ability simply because they might carry that task out poorly. It is not suggested that there were any particular qualifications needed to deal with Council or to carry out the project management required for this kind of project (although Mr Batterham suggested that if Mr Makeig had, in fact been an architect, then he might have had a better manner when dealing with Council). However, Mr Makeig made it clear to Mr Batterham at the outset that he regarded what was described by Mr Sirtes as a "crash through or crash" approach as the appropriate way to deal with Council and there was no complaint by Mr Batterham at that stage in relation thereto. 495 As to his financial ability there was evidence of Mr Makeig's overdraft (T 337) from which I would infer that he was capable of meeting at least those financial obligations incurred or likely to be incurred in relation to the project up to the time his involvement was terminated by Mr Batterham. Furthermore, Mr Makeig asserted that insofar as the project has added significant value to the lands, it is likely he could have raised money from conventional sources (just as JPG in fact seems to have done) on the strength of the project (T 339). While it was suggested that the reason for Mr Makeig's failure to meet his alleged obligation to make payments towards the end of December 2002 was financial difficulties on his part, I do not think such an inference should be drawn in circumstances where Mr Makeig at the time was either disputing his obligation to pay the debts (Council fees) or had disputed the charges in question (Harper Somers/Ecotone). Cross-Claims for damages for breach of contract by Mr Makeig 496 The cross-claims for loss and damage arising out of the breach of contract relate to the amounts paid by Mr Batterham to the Council and to consultants allegedly because of Mr Makeig's failure or refusal to do so (with which I have dealt with above) and as to alleged incompetence in performance impeding progress of the rezoning application). 497 Insofar as I have found any breach at all (by reason of the failure in a timely manner to pay the Harper Somers O'Sullivan account) it is apparent that Mr Batterham suffered no loss or damage as a result. 498 As to the alleged impediment to the progress of the rezoning application, I am not satisfied that the evidence establishes that Mr Makeig impeded the progress of the rezoning in any way. The evidence is that he was instrumental in urging the Council to revisit its position relation to the exclusion of the Kitchener Precinct from the CWSS; that as at August 2005, Mr Batterham was happy with the progress of the rezoning; that after January 2006 there was nothing much for Mr Makeig to do until the Council had completed the work require for the LES; that after this happened in December 2006, at most Mr Makeig failed to attend any Council meeting before Mr Batterham terminated the agreement. (vi) Relief sought by Mr Makeig 499 The relief sought by Mr Makeig primarily is an order for damages for Mr Batterham's wrongful repudiation of the Kitchener Project Agreement; a loss of opportunity claim of the kind considered in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 and Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64. It is said that that opportunity should be valued either by reference to the JPG "deal" or by reference to the value of the lands as assessed in early 2007 (on the basis that the evidence shows that Mr Batterham was keen to sell in January 2007 and I can infer from the alacrity with which he proceeded to do so (and the ease with which a purchaser was found for the lands) that a sale would have been affected for approximately $7 million at that time. 500 Alternatively, Mr Makeig seeks an order that the Batterhams account to him for 39% of all proceeds from the sale or other disposition of any interest in the Batterham and/or Vowles Lands, after deduction of the sum of $1.5 million (representing the value attributed by the parties to the Batterham Land); and/or declarations that they hold (as constructive trustee on behalf of Mr Makeig) a 39% interest in the benefit and/or proceeds of the JPG Deed as well as of any proceeds received by Mr Batterham to date pursuant to the JPG Deed or otherwise in connection with either the Batterham Land or the Vowles Land. 501 Claims were made in the alternative for declarations that a partnership exists in unequal shares between Mr Makeig (as to 39%) and the defendants (as to 61%) as to the net proceeds of the Mr Batterham and the Vowles Land; and/or that the Batterham Land and the interest of BBL in the JPG Deed are partnership property of the said partnership within the meaning of the Partnership Act, and an order that the Batterhams account to Mr Makeig for moneys already received by them under the JPG Deed. Claims are put in the alternative for equitable damages and for recovery of the amounts expended by Mr Makeig on a quantum meruit basis. 502 Finally, a claim was made further or in the alternative for an equitable lien (or; in the alternative, an equitable charge over the Batterham Land. 503 The primary relief sought was, nevertheless, for damages by reference to the loss of bargain arising from the Batterhams' repudiation of the Kitchener Project Agreement. 504 Mr Lever submits that there has been no sale; that the fundamental purposes of the agreement have not yet been realised; that all that has happened is that Mr Batterham has entered the JPG Deed for the sale and purchase of the Batterham Land with an option exercise period ending on 15 November 2012; and he says that the reality is that if JPG does not want the deal to go ahead then it will not. 505 However, the Vowles Land has already been sold (for $1.35 million) and not only does Mr Batterham have a contractual entitlement to exercise his put option to require JPG to purchase the Batterham Land, the performance of this obligation is guaranteed personally by Mr Johnson (said by his CEO Mr Mutton to be in effect, an experienced property developer with an eye for a bargain). 506 I turn to the main heads of relief claimed. · Contractual damages 507 At what point would Mr Makeig be entitled to be paid under the Kitchener Project Agreement had it remained on foot? Clearly not until the net project price could be calculated and the proceeds of sale obtained. However, what Mr Makeig has been deprived of is the opportunity to obtain a benefit under the Kitchener Project Agreement. The value of that lost opportunity can be quantified by reference to the benefits Mr Batterham has obtained and is potentially able to obtain. 508 Damages for repudiation are determined by reference to the loss of the benefit of the contract. Where, as here, what is lost is the opportunity to receive a portion of the net profit under the contract, then damages are awarded by reference to the value of the opportunity which has been lost. Reliance was placed on the approach articulated by the High Court in Malec v J C Hutton Pty Limited (1990) 169 CLR 638 that the court must assess the degree of probability that an event would have occurred or might occur and then adjust the award of damages to reflect the degree of probability. 509 Mr Makeig's loss has been calculated at $2,378,638.90 that being 7/18ths of $6,116,500 (which is $7,616,500 less $1.5 million). Alternatively, it is said that the damages could be calculated by reference to the value of the land as at the time of termination (that being $7,000,000 as per a BankWest valuation obtained in January 2007 by JPG), said to represent a conservative valuation of market price on an "as is" basis (although valued in two lots, together with the Vowles Land, as at 12 April 2007). On that alternative basis, the damages claimed amount to $2,145,000 exclusive of GST. 510 In my view, the best evidence of the opportunity of which Mr Makeig has been deprived is to be found in what has in fact happened Mr Batterham has already on-sold the project by entry into the JPG Deed. (I think it is more reliable than proceeding on the basis that a purchaser might have been found in about January 2007 at the price according with the valuation carried out for JPG - there is a big difference between purchasers expressing interest and reaching a concluded agreement for sale.) 511 Under the JPG Deed, Mr Batterham has received, to date, some $900,000 (which, with any other annual instalments of the Further Call Option Fees, will be retained by him if the option is not exercised or will be credited, on the exercise either by JPG of the call option or Mr Batterham of the put option, towards the purchase price) plus GST. If the option is exercised Mr Batterham will receive the balance of the purchase price payable, after taking into account instalments received by him under the JPG arrangements. 512 What Mr Makeig has lost is the opportunity in due course to share in the profits if either the put or call option is exercised (or the opportunities to agree with Mr Batterham for the project to be on-sold to someone else for a perhaps greater benefit) and any opportunity to participate in the advance payments (though this is less clear at least until those payments reach the $1.5 million threshold). 513 There is no certainty that the option will be exercised before 2012 or at all. Mr Mutton, the Chief Executive Officer of JPG, gave evidence that the decision as to whether (and when) the option would be exercised by JPG is a matter which Mr Johnson would make in his absolute discretion. Mr Mutton agreed that JPG had bought the Vowles Land for almost half its value (T 530.4-43) and seemed to accept that the overall transaction had been one which Mr Johnson considered a good deal. He conceded that Mr Johnson, as an experienced property developer, thought this was a good deal, but nevertheless Mr Mutton thought it unlikely as at the date he gave his evidence that the option would be exercised. It would seem that opinion is based on unstated perceptions of the property market and/or the company's performance. Mr Johnson gave no evidence in the proceedings. Mr Mutton's opinion as to whether it is likely that over the next three years Mr Johnson might decide to exercise the option is at best speculative. 514 It seems to me, nevertheless, that the likelihood of JPG exercising the option is really a red herring since, if it did not, it would then be open to Mr Batterham to exercise his corresponding put option. It is submitted by Mr Sirtes that the only conceivable explanation for Mr Batterham deciding not to exercise the Put Option would be if he were to be offered a better price than that achievable under the JPG Deed. It is said that no discount should be placed for that possibility. 515 Of course, another reason Mr Batterham might choose not to exercise the option might be if it would be futile (if, say, in the interim JPG had suffered financial difficulties and was unable or unlikely to be unable to satisfy its obligations under the agreement). The evidence from Mr Mutton was that JPG is a $1 company but presently in no financial difficulties. However, in that regard, it is significant that the obligations of JPG are guaranteed by Mr Johnson. While there was no evidence as to his financial circumstances, Mr Johnson, as an experienced property developer may be unlikely willingly to contemplate the consequences of an unsatisfied call on his guarantee. This makes it less likely in my view that JPG would default in its obligations if the put option were exercised. I think the discount which should be placed on non-exercise of both options (or non-completion of a sale following exercise of either option) should be very low and in that regard I would adopt 10%. 516 Another factor to take into consideration is that Mr Batterham seems to have had an opportunity to elect to sell the lands immediately to JPG, albeit perhaps for a lesser return, or to pursue negotiations with other purchasers. Had Mr Batterham consulted with Mr Makeig in January 2007 as to which option was preferable it may be that they would have agreed to an immediate sale (although it may then have been contingent upon the rezoning.) Mr Batterham arrogated to himself the decision as to how and to whom the project was sold. I think it difficult for Mr Batterham now to say I should not regard that as the opportunity Mr Makeig has lost. 517 I raised the question with Counsel as to whether any award of damages if Mr Makeig if elected to pursue his claim for damages for repudiation should be discounted to represent the net present value of a 7/18ths share (of the purchase price payable by JPG for the Batterham Land ($7.6165 million) less the contribution of $1.5 million in respect of the Batterham Land ($6.1165 million)) as at, say 2013. There was no evidence as to any appropriate discount rate. Moreover, Mr Sirtes pointed to the benefit Mr Batterham has already obtained by receipt of the advance payments from JPG. 518 I have also considered whether a deduction ought be made for any amounts paid after January 2007 to the Council by way of lodgement fees by Mr Batterham to effect the rezoning of the Batterham Land (there being a fourth tranche of Category C rezoning payments due at some stage after termination of the project), although the balance of those fees were only of the order of about $10,000. 519 In the end I place some weight on the fact that Mr Batterham has had the benefit of the advance payments and that a further small discount (to the 10% which reflects the fairly remote (in my view) possibility that the sale might not be completed) of say an additional 2.5% would be sufficient to address any other form of discount or offset required to compensate for factors of the above kind. 520 I would therefore quantify the damages for loss of opportunity at $2,378,638.90, being 7/18ths of $6.1165 million, discounted by a factor of 12.5% (ie discounted to $2,081,309) for the possibility that the options under the JPG Deed might not ultimately be exercised (or, if exercised, may nevertheless not result in the actual payment of the balance of the purchase price) and to reflect any benefit obtained by realising that amount in advance of completion of the sale or for other amounts paid by the Batterhams in connection with the rezoning. I will hear submissions as to any GST payable on or referable to that amount. · Equitable damages 521 The claim for equitable damages would arise (on the findings I have made) only for breach of a fiduciary obligation on Mr Batterham's part (after termination of the agreement/joint venture/partnership) not to arrogate to himself the whole of the value represented by the project. While equitable damages are not limited or influenced by matters such as affect the award of damages at common law, and there is greater flexibility in their award (per Tadgell J in Hill v Rose [1990] VR 129), they are essentially compensatory in nature. In this case I would assess them on the same basis as the contractual damages above. · Partnership account 522 Alternatively, if Mr Makeig wishes to elect for an account of the partnership property I consider that relief would most appropriately lie in a declaration that Mr Batterham holds the benefit and/or proceeds of the JPG Deed, or any funds received pursuant to the JPG Deed, (above the amount of $1.5 million), on constructive trust for Mr Makeig as to a 7/18ths share. · Equitable lien or charge 523 I do not consider it appropriate to impose an equitable lien or charge over the Batterham Land to secure any obligation in relation to the proceeds of on-sale (that being the only partnership property identified) in circumstances where I would be prepared to make a declaration as to a constructive trust. Further steps 524 It is a matter for Mr Makeig now to elect which relief he seeks. 525 I will list the matter for directions as to the form of relief Mr Makeig elects and, if necessary, hear any submissions from the parties on costs. **********

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