Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation trading... [2026] NSWSC 791 | Case summary

Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation trading... [2026] NSWSC 791 | Case summary | Zoe

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2026-07-09

Before

Brereton J

Catchwords

COMMERCIAL – unconscionable conduct – agreement for lease – where plaintiff is a special purpose vehicle without substantial assets – where defendant is a State-owned corporation – where plaintiff asserts it was unconscionable within the meaning of s 21 of the Australian Consumer Law for defendant to negotiate terms into the agreement for lease that were not reasonably necessary to protect its legitimate interests and to subsequently terminate the agreement for lease on the non-satisfaction of the conditions precedent – where plaintiff asserts it was not possible to satisfy conditions precedent – no allegations of dishonesty made – where defendant acted reasonably and responsibility – no unconscionable conduct COMMERCIAL – where alleged lost opportunity – causation and quantum – where plaintiff’s causation case advanced in multiple and inconsistent ways – where counterfactual analysis required plaintiff to prove on balance of probabilities that facility would be constructed and lease granted – where shifting and inadequately pleaded counterfactual – whether agreement would have been lawfully terminated in any event – where expert evidence considered on counterfactual – where failure to establish causal connection between alleged conduct and loss of opportunity – whether lost opportunity had non‑negligible value – no compensable lost opportunity – causation not established COMMERCIAL – evidence – expert evidence – global objections to expert evidence – where multiple experts retained by same party communicated directly and exchanged draft reports contrary to retainer directions – whether expert evidence opinion evidence under s 79 of the Evidence Act 1995 (NSW) – whether probative value of expert evidence outweighed by unfair prejudice and should be excluded under s 135 of the Evidence Act 1995 (NSW) – where danger of unfair prejudice did not substantially outweigh probative value and was capable of amelioration by disclosure and cross‑examination – discretion to exclude not exercised – legal professional privilege – where solicitor-expert communications privileged – where privilege waived by inconsistency through distribution of privileged communications among experts and election to rely on their evidence – where waiver confined to expert communications – disclosure ordered

Source

Original judgment source is linked above.

Catchwords

COMMERCIAL – unconscionable conduct – agreement for lease – where plaintiff is a special purpose vehicle without substantial assets – where defendant is a State-owned corporation – where plaintiff asserts it was unconscionable within the meaning of s 21 of the Australian Consumer Law for defendant to negotiate terms into the agreement for lease that were not reasonably necessary to protect its legitimate interests and to subsequently terminate the agreement for lease on the non-satisfaction of the conditions precedent – where plaintiff asserts it was not possible to satisfy conditions precedent – no allegations of dishonesty made – where defendant acted reasonably and responsibility – no unconscionable conduct COMMERCIAL – where alleged lost opportunity – causation and quantum – where plaintiff’s causation case advanced in multiple and inconsistent ways – where counterfactual analysis required plaintiff to prove on balance of probabilities that facility would be constructed and lease granted – where shifting and inadequately pleaded counterfactual – whether agreement would have been lawfully terminated in any event – where expert evidence considered on counterfactual – where failure to establish causal connection between alleged conduct and loss of opportunity – whether lost opportunity had non‑negligible value – no compensable lost opportunity – causation not established COMMERCIAL – evidence – expert evidence – global objections to expert evidence – where multiple experts retained by same party communicated directly and exchanged draft reports contrary to retainer directions – whether expert evidence opinion evidence under s 79 of the Evidence Act 1995 (NSW) – whether probative value of expert evidence outweighed by unfair prejudice and should be excluded under s 135 of the Evidence Act 1995 (NSW) – where danger of unfair prejudice did not substantially outweigh probative value and was capable of amelioration by disclosure and cross‑examination – discretion to exclude not exercised – legal professional privilege – where solicitor-expert communications privileged – where privilege waived by inconsistency through distribution of privileged communications among experts and election to rely on their evidence – where waiver confined to expert communications – disclosure ordered

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation trading as Port Authority of New South Wales [2026] NSWSC 791

Hearing dates: 11 – 14, 18 – 22 August, 1 – 4, 8 – 11, 15 – 19, 22 September, 4 – 7 November 2025

Date of orders: 09 July 2026

Decision date: 09 July 2026

Jurisdiction: Equity - Commercial List

Before: Brereton J

Decision: The Amended Summons is dismissed

Catchwords: COMMERCIAL – unconscionable conduct – agreement for lease – where plaintiff is a special purpose vehicle without substantial assets – where defendant is a State-owned corporation – where plaintiff asserts it was unconscionable within the meaning of s 21 of the Australian Consumer Law for defendant to negotiate terms into the agreement for lease that were not reasonably necessary to protect its legitimate interests and to subsequently terminate the agreement for lease on the non-satisfaction of the conditions precedent – where plaintiff asserts it was not possible to satisfy conditions precedent – no allegations of dishonesty made – where defendant acted reasonably and responsibility – no unconscionable conduct
COMMERCIAL – where alleged lost opportunity – causation and quantum – where plaintiff’s causation case advanced in multiple and inconsistent ways – where counterfactual analysis required plaintiff to prove on balance of probabilities that facility would be constructed and lease granted – where shifting and inadequately pleaded counterfactual – whether agreement would have been lawfully terminated in any event – where expert evidence considered on counterfactual – where failure to establish causal connection between alleged conduct and loss of opportunity – whether lost opportunity had non‑negligible value – no compensable lost opportunity – causation not established
COMMERCIAL – evidence – expert evidence – global objections to expert evidence – where multiple experts retained by same party communicated directly and exchanged draft reports contrary to retainer directions – whether expert evidence opinion evidence under s 79 of the Evidence Act 1995 (NSW) – whether probative value of expert evidence outweighed by unfair prejudice and should be excluded under s 135 of the Evidence Act 1995 (NSW) – where danger of unfair prejudice did not substantially outweigh probative value and was capable of amelioration by disclosure and cross‑examination – discretion to exclude not exercised – legal professional privilege – where solicitor-expert communications privileged – where privilege waived by inconsistency through distribution of privileged communications among experts and election to rely on their evidence – where waiver confined to expert communications – disclosure ordered

Parties

Applicant/Plaintiff:

Metro Environmental Logistics Pty Ltd

Respondent/Defendant:

Newcastle Port Corporation trading as Port Authority of New South Wales

Legislation Cited (18)

Evidence Act 1995(NSW)

Cited:** Aboriginal Heritage Act 1975(Tas)

Australian Consumer Law Environmental Management and Pollution Control Act 1994(Tas)

Land Use Planning and Approvals Act 1993(Tas)

Mineral Resources Development Act 1995(Tas)

Ports and Maritime Administration Act 1995(NSW)

State Owned Corporations Act 1989(NSW)

Threatened Species Protection Act 1995(Tas)

Trade Practices Act 1974(Cth)

Uniform Civil Procedure Rules 2005(NSW)

Maritime Administration Act 1995

Practices Act 1974

Resources Development Act 1995

Management and Pollution Control Act 1994

Use Planning and Approvals Act 1993

Protection and Biodiversity Conservation Act 1999

Cases Cited: AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd (2025) 310 FCR 1; [2025] FCAFC 86
Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 285 FCR 133; [2021] FCAFC 40
Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18
Australian Securities and Investments Commission v Rich [2005] NSWCA 152; 54 ACSR 326
Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18
Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27
Bunge SA v Nidera BV (2015) 3 All ER 1082; [2015] UKSC 43
Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd (2011) 192 FCR 445; [2011] FCAFC 55
Cessnock City Council v 123 259 932 Pty Ltd (2024) 281 CLR 39; [2024] HCA 17
Cobram Laundry Services Pty Ltd v Murray Goulburn Co-Operative Co Ltd [2000] VSC 353
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49
Daynes v I-MED Central Queensland Pty Ltd; I-MED Central Queensland Pty Ltd v Daynes [2025] NSWCA 150
Dingwall v Commonwealth of Australia (1992) 39 FCR 521
DSHE Holdings Ltd (Receivers and Managers) (in liq) v Potts; HSBC Bank Ltd v Abboud; Potts v National Australia Bank Ltd [2022] NSWCA 165; 405 ALR 70
Epic Games Inc v Apple Inc [2025] FCA 900
Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67
Grant v Downs (1976) 135 CLR 674
Hancock v Rinehart (Privilege) [2016] NSWSC 12
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54
IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14
In the matter of Global Advanced Metals Pty Ltd [2019] NSWSC 1545
Jenyns v Public Curator (Qld) (1953) 90 CLR 113; [1953] St R Qd 225
Kizbeau v W G & B Pty Ltd (1995) 184 CLR 281; [1995] HCA 4
Lavarack v Woods of Colchester Ltd [1967] 1 QB 278
Lawrance Edward Stewart v The Australian and New Zealand Banking Group Limited [2020] NSWSC 1787
Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369; 422 ALR 507
Lewis v Australian Capital Territory (2020) 271 CLR 192; [2020] HCA 26
Lindsay-Owen v HWL Ebsworth Lawyers [2023] NSWSC 68
Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66
Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120
New Cap Reinsurance Corporation Ltd (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258
Pacific National (Act) Ltd v Queensland Rail [2006] FCA 91
Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50
Port Macquarie-Hastings Council v Diveva Pty Limited [2017] NSWCA 97
Productivity Partners Pty Ltd (t/as Captain Cook College) v Australian Competition and Consumer Commission (2024) 281 CLR 338; [2024] HCA 27
Recovery Partners GP Ltd v Rukdadze [2025] UKSC 10; [2026] AC 209
Richmond Valley Council v JLT Risk Solutions Pty Ltd [2022] NSWSC 1761
Roads Corporation v Love [2010] VSC 253
Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4
Setka v Dalton (No 2) (Legal Professional Privilege) [2021] VSC 604
Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357
Singtel Optus Pty Ltd v Weston (2011) 81 NSWLR 526; [2011] NSWSC 1083
Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193; [2005] HCA 58
Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1; [2022] HCA 6
Swiss Re International SE v David Simpson [2018] NSWSC 233; 354 ALR 607
The Juliana (1822) 2 Dods 504; 165 ER 1560
Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333
Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631; [2018] FCAFC 155
Yong v Westpac Banking Corporation [2025] FCA 816

Courts are not to search for acceptable community standards at large, but rather are to discern standards of acceptable conduct from the statute and the unwritten law: AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd (2025) 310 FCR 1; [2025] FCAFC 86 at [122]-[130] (Moshinsky, Bromwich and Anderson JJ). See also ASIC v Kobelt at [153] (Nettle and Gordon JJ). Conduct is to be assessed by reference to the statutory norm of conscience. This requires an evaluative judgment.
The values that inform the standard of conscience fixed by the statutory prohibition include certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made, and the protection of those whose vulnerability places them in a position that calls for a just legal system to protect them, especially from those who would victimise, predate or take advantage: Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50 at [296] (Allsop CJ), affirmed in Kobelt at [14] (Kiefel CJ and Bell J) and in Productivity Partners at [100]-[101] (Gordon J); [303] (Steward J); [314]-[323] (Gleeson J); [340] (Beech-Jones J).
The word "unconscionable" bears its ordinary meaning, being conduct that objectively answers the description of being against conscience: Kobelt at [14] (Kiefel CJ and Bell J); [92] (Gageler J); [119] (Keane J), and Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 285 FCR 133; [2021] FCAFC 40 at [87] (Allsop CJ, Besanko and McKerracher JJ). It is not synonymous with “unreasonable”, “unfair”, “harsh” or “unjust”.
An allegation of unconscionable conduct is a serious allegation: Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631; [2018] FCAFC 155 at [155] (Allsop CJ, Middleton and Mortimer JJ) and Productivity Partners at [61] (Gageler CJ and Jagot J); [322] (Gleeson J). Unconscionable conduct warrants censure for the purpose of deterrence by the imposition of a civil penalty. Being penal in character tends against too loose or diffuse a construction: Quantum Housing at [88], citing Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193; [2005] HCA 58 at [45] (Gleeson CJ, Gummow, Hayne and Heydon JJ). That assists in recognising an element of seriousness of the finding and the quality of the departure from the relevant standards of conduct that is required. In Unique International College, the Full Court observed (at [155]):

MEL was incorporated as a special purpose vehicle on 8 November 2010. The purpose was to exploit what MEL referred to as the “Opportunity” to ship sand in large ships to a facility to be built at Glebe Island from Tasmania, for sale principally to the construction industry for the manufacture of concrete. That opportunity was identified by Mr Anthony Ellis, who was and remains a director of MEL.
Mr Ellis was conscious of an approaching shortage of construction sand in Sydney. He appreciated that Glebe Island was centrally located to the relevant supply chain and enjoyed a deep-water commercial wharfage. He had liaised with geologists from Mineral Resources Tasmania to identify prospective sand deposits in north-east Tasmania.
MEL initiated communications with Port Authority in around 2010. Port Authority is and was a statutory State-owned corporation established under s 20A of the State Owned Corporations Act 1989 (NSW) and s 6 of the Ports and Maritime Administration Act 1995 (NSW). It is relevantly the owner of land and port facilities, including at Glebe Island.
MEL submitted a formal application and cash flow projections to Port Authority concerning the prospective leasing of land at Glebe Island for the purpose of bulk sand importation in February and April 2011. This was the beginning of what MEL described as 8 years of collaboration between MEL and Port Authority to pursue the “Opportunity”.
In May 2012, the Minister for Planning and Infrastructure announced that a taskforce called the Bays Precinct Taskforce would be reconvened to provide the NSW Government with strategic advice on land use issues within a precinct that included important waterways and foreshore land, known as the Bays Precinct. Glebe Island was part of this precinct. In August 2012, the Bays Precinct Taskforce released a report which recommended that Glebe Island continue to be used for commercial port purposes, including bulk trade. It recommended that new lease periods be limited to a maximum of 30 years. The report described Glebe Island to be of "state significance because of the deep water commercial wharfage with landside support under public ownership" and recorded that "these are the last remaining lands in Sydney Harbour capable of serving a wide variety of cargo, trading and industrial maritime needs". It also stated that "significant demand for cement and aggregates are expected to be driven by the demand for concrete to supply infrastructure and development in Sydney".
On 30 April 2013, Port Authority issued an invitation for request for proposals from persons seeking to lease land at Glebe Island for commercial use, for a maximum period of 30 years. MEL submitted a response dated 6 June 2013, proposing that Port Authority grant MEL a 30-year lease. The response indicated that MEL proposed to build a facility at Glebe Island at a cost of up to $8,000,000-9,000,000, to be used for the importation of sand in bulk from Tasmania for use in the manufacture of concrete. Discussions between MEL and Port Authority ensued. MEL provided Port Authority with information about potential sand deposits in Tasmania, as well as potential customers in Sydney. By 4 February 2014, management at Port Authority was recommending to its board that it should authorise and approve a lease for land at Glebe Island to MEL.
MEL's initial plans had been to secure sand from Tasmania from a location known as Lost Farm, located in the Bridport area in north-east Tasmania. The land was owned by Mr Richard Sattler. On 2 March 2013, Mr Sattler and a company called North East Tasmanian Sands Pty Ltd (NETS), entered into a heads of agreement. NETS had a connection with MEL: two of its directors (Mr Ellis and Mr Richard Warfield) were also directors and shareholders of MEL. NETS agreed to pay Mr Sattler's costs associated with his application for a mining lease at the Lost Farm site. The parties contemplated entry into a project management agreement, by which NETS would undertake sand farming at the Lost Farm site pursuant to the anticipated mining lease.
A mining lease for Lost Farm was granted to Mr Sattler on 3 December 2014 by the Tasmanian Government. On 19 December 2014, NETS, Mr Sattler and a related entity called SHM Pty Ltd (SHM) entered into a mining lease agreement in relation to Lost Farm. By that agreement, NETS was to fund, establish and operate a quarry, in return for a licence fee and royalties being paid to Mr Sattler.
Another potential deposit of sand was located at Rushy Lagoon at Ringarooma Bay, also in north-east Tasmania. A company called North Scottsdale Resources Pty Ltd (NSR) was granted a mining exploration licence in respect of the Rushy Lagoon deposit on 13 February 2015. Mr Ellis was the sole director of NSR. It was beneficially owned by Mr Ellis, Mr Warfield and Mr Sattler.
On 30 March 2015, MEL and Port Authority entered into a non-binding heads of agreement concerning the lease of land at Glebe Island for 30 years, anticipating that MEL would construct a facility and use the premises to receive, store and dispatch bulk sand that would be brought to the premises by sea. MEL agreed to pay Port Authority's associated legal costs, up to $15,000.
During 2014 and 2015, MEL retained various consultants. By August 2015, MEL had provided Port Authority with architectural plans, as well as air quality and noise reports.
A hurdle emerged in the second half of 2015, delaying the plans of MEL and Port Authority. In October 2015, a NSW Government agency, known as UrbanGrowth NSW, published a transformation plan that proposed that Glebe Island be developed into a technology and innovation hub. This plan was perceived by Port Authority and MEL as a threat to the ongoing use of Glebe Island as a commercial port. The proposed lease to MEL did not proceed at that time because UrbanGrowth NSW's plan created uncertainty over the NSW Government's support for the operation of the port. Port Authority withheld landowner's consent for MEL to commence the planning approval process.
MEL was active in lobbying the NSW Government in late 2015 and throughout 2016, to seek to persuade it to retain Glebe Island for use as a commercial port, principally for the supply of aggregates to support the construction industry. MEL retained lobbying consultants for that purpose.
By about August 2016, Infrastructure NSW (another NSW Government body) became involved in the Glebe Island decision-making process and undertook a review of the proposals for Glebe Island. Infrastructure NSW concluded that it was possible to integrate an innovation district with port and bulk construction material operations.

By about the middle of 2017, Infrastructure NSW concluded that Glebe Island should continue to be used for the importation of bulk materials for the production of concrete for at least 20 years. Infrastructure NSW advised MEL of this conclusion on 1 August 2017. It also advised MEL that the NSW Government had endorsed the findings and recommendations in full. There was a perception from at least some within Port Authority that MEL's lobbying efforts as "the voice of the supply chain" were "highly impactful".
Following and in response to Infrastructure NSW's recommendations, Port Authority began to explore the development of a multi-user bulk construction material terminal at Glebe Island. This was a change in plans because previously it was contemplated that MEL would construct a facility for its sole use.
A noting paper for the Port Authority board meeting on 27 June 2017 recorded that management intended to present a business case for capital investment in a multi-user terminal in the 3rd quarter of 2017, to expedite the commencement of the importation of sand and aggregates for the concrete batching industry. The noting paper recorded that MEL was one of two "highly prospective initial users". The noting paper also recorded that MEL had requested that Port Authority execute a non-binding heads of agreement that reflected the intention to build a multi-user terminal and offer MEL use of part of the terminal. It outlined the engagement between Port Authority and MEL over the previous two years. It also noted that management had considered options that were agnostic as to whether MEL was the sand importer and recorded that other entities had sought to engage with Port Authority about sand importation activities. The noting paper was endorsed by Mr Grant Gilfillan, who was the chief executive officer and a board member of Port Authority. Mr Gilfillan gave evidence in the proceedings but was not required for cross-examination. He was the only board member of Port Authority to give evidence.
Mr Gilfillan signed a ministerial briefing paper on 5 July 2017 which advanced Port Authority's case for the strategic retention of the Glebe Island port to supply efficient maritime logistics to the concrete industry. The paper stated:

On about 6 July 2017, MEL and Port Authority executed a second non-binding heads of agreement. This heads of agreement contemplated that a section of a multi-user facility to be constructed by Port Authority would be leased to MEL for 10 years. This was a significant departure from the first non-binding heads of agreement, which contemplated that MEL would construct a facility on land that it leased from Port Authority for 30 years. The second heads of agreement estimated that the cost of constructing the multi-user facility would be $12,300,000 and provided for a minimum throughput of 605,000 tonnes of sand by year 2 of operations. By the time of this heads of agreement, MEL's expenses on the project were approaching $1,500,000.
Planning work continued. Management within Port Authority worked on a business case and kept the board updated about its progress. The board was given a detailed written update in September 2017. Among other things, the paper recorded that under one of the three options being considered, MEL was "the intended initial user of three out of five bays (or 60%) of the proposed multi-user facility". Under this option, it was proposed that a second operator for the remainder of the capacity would be secured by an expression of interest (EOI) process.
As the business case developed, different views were expressed by senior members of Port Authority's management team. For instance, in early October 2017, the chief financial officer, Mr Lawrence Ho, expressed some comments that challenged aspects of the business case. Mr Joseph James (who was an executive general manger and closely involved in developing the business case) responded, including by a remark that he thought that the transaction needed "to be viewed primarily through a strategic lens, rather than a commercial one". Port Authority adduced evidence from Mr James. He was not required for cross-examination. Mr Ho was not a witness.
There were many meetings and communications between MEL and Port Authority. At all of the important meetings, Mr Arthur Psaltis attended for MEL. Mr Psaltis was initially a financial consultant for MEL and NETS but became a director of both companies on 20 April 2015. He was a director of NETS until 17 October 2017. Mr Psaltis gave evidence and was cross-examined. Mr Ellis attended some of the meetings. Mr Ellis was also a witness and was briefly cross-examined. Various persons attended the meetings on behalf of Port Authority. Up until around mid-2018, the principal officers attending meetings for Port Authority were Mr James and Mr Mike Baudinette. Mr Baudinette was a general manager at Port Authority. He gave evidence and was cross-examined.
At a meeting on 17 October 2017 between Mr Psaltis, Mr James, Mr Baudinette and Mr Stephen Massoud (a senior property manager at Port Authority), MEL was told that Port Authority intended to issue an EOI for two of the five bays at the multi-user facility. MEL understood that there was a risk that a sand importer could occupy the remaining space but assessed the risk as low. Mr Psaltis advised Port Authority at the meeting that there had been some difficulties with the sand deposit at Lost Farm and that a short-term alternative may need to be considered. Mr James advised Mr Psaltis that it had been Port Authority's intention that MEL would control a deposit in Tasmania and it was not offering MEL a logistics contract. Mr James said he would have "a coronary" if MEL was asking to be a logistics provider and said that it would be a "moral hazard". Mr James's evidence was that if MEL was to be an operator between suppliers and customers, it would be a change to the basis upon which Port Authority had engaged with MEL and would give rise to probity issues, because the opportunity had not been offered to other logistics companies.
In late October 2017, the business case for the Glebe Island multi-user facility was completed and submitted to Port Authority's board for consideration. The executive summary included the following:

The business case referred to the non-binding heads of agreement between Port Authority and MEL and noted that the agreement included the concept of "terminal rent", which was intended to enable Port Authority to recover 60% of its capital investment and operational costs, assuming that Port Authority would be recovering its capital investment at its internal weighted average cost of capital of approximately 7%.
The proposal was considered at a Port Authority board meeting on 31 October 2017. The directors asked whether management was comfortable not taking the proposal to market. Mr James responded, including by remarking that MEL was the only party following the request for proposal in 2013 and that a proposed lease to MEL in 2015 was put "on hold" due to the uncertainty surrounding Glebe Island. Mr James was concerned about delay and the risk that MEL would withdraw. The minutes recorded that he said: "the Port Authority has had a long relationship with MEL, who has been continually engaged, and there is some sense of obligation". Mr James considered the risk to Port Authority in not taking the proposal to market to be minimal. Mr Ho commented that the cost of capital at 7% may not be valid because it was at its lowest level at that time.
Subject to renegotiating the cost of capital to allow for any increases and seeking a solution if the market demand was for more than two additional bays, the board resolved to: (a) approve capital investment on a multi-user terminal with a budget of $10,000,000; (b) approve going to tender for a design and construct contractor; and (c) note the intent to negotiate: (i) an agreement for lease with MEL consistent with the non-binding heads of agreement (subject to renegotiation of the cost of capital), and (ii) with other prospective users through an EOI process in relation to the take-up of the remaining capacity in the multi-user terminal. The minutes recorded that there was an intent to seek final board approval before commencing the construction stage.
At about the same time, MEL was facing some significant challenges. It needed additional funding and was taking steps to secure additional capital. It made some unsuccessful attempts. At a MEL board meeting attended by Mr Ellis and Mr Psaltis on 3 November 2017, it was noted that the company did not have funds to carry on its business and it was resolved that the company must not incur any further liabilities. It was agreed that MEL could not continue to negotiate with Port Authority and that MEL should inform Port Authority by no later than 10 November 2017 as to whether it was sufficiently funded to continue with the negotiations. On 14 November 2017, Mr Sattler and SHM terminated the mining access agreement with NETS.
Mr Psaltis, Mr James, Mr Baudinette and Mr Massoud met on 29 November 2017. Mr Psaltis was informed about the outcome of the board meeting of Port Authority held on 31 October 2017. It does not appear that Port Authority was informed about whether MEL was sufficiently funded. Mr Psaltis's evidence in chief was that he informed the officers from Port Authority that the mining access arrangements for the sand at Lost Farm had been terminated, that MEL was looking instead to obtain sand from Rushy Lagoon and that as a "Plan B" it proposed as an interim measure to bring sand from Stockton by barge. Port Authority submitted that Mr Psaltis confirmed under cross-examination that he did not tell Port Authority about Rushy Lagoon at the meeting. His contemporaneous note did not specifically refer to Rushy Lagoon. The matter was not squarely addressed in cross-examination. It is not controversial that at this meeting MEL informed the officers from Port Authority that the mining access arrangements for the sand at Lost Farm had been terminated. Having conveyed that information, it is likely, and I find, that Mr Psaltis also said that MEL was looking instead to obtain sand from Rushy Lagoon.

In about late 2017, Port Authority and MEL began to negotiate the terms of an agreement for lease. A draft agreement for lease was discussed at a meeting between Port Authority and MEL on 6 December 2017.
Port Authority (Mr Baudinette and Mr Massoud) and MEL (Mr Psaltis, Mr Ellis and Mr Malcolm Bersten, MEL's lawyer at the time) met on 28 February 2018. It appears that by this time there had been a recapitalisation at MEL. Port Authority was advised that MEL was ready to consider debt finance. MEL impressed upon Port Authority the commercial imperative of securing a binding agreement for lease because MEL was unable to move forward with commercial contracts without one. MEL's representatives were shown and taken through a draft of the proposed EOI document in relation to the multi-user facility. They had an opportunity to review the document. Mr Psaltis accepted in cross-examination that Port Authority was being very transparent. Mr Psaltis understood that the document would be addressed to potential end users of sand and that it did not mention the number of bays that were to be the subject of any EOI. MEL's representatives indicated that they understood Port Authority's need to call for expressions of interest and were comfortable for the document to go out. They reiterated the need for an agreement for lease. Mr Psaltis said that executing the agreement for lease prior to the release of the EOI was critical.
In March 2018, MEL continued to press for a binding agreement for lease, explaining this was necessary for it to complete negotiations with supply and offtake counterparties. It welcomed discussion with Port Authority about the form of the conditions precedent, which it accepted would form part of the agreement. Mr Psaltis wrote in an email to Mr Baudinette and Mr James on 7 March 2018 that the industry "is not confident that tenure for bulk sand as [sic] Glebe Island is a reality" because too many milestones had been missed. The agreement for lease was seen by MEL as an antidote.
Shortly afterwards, Port Authority and MEL had detailed communications about the intent and content of the conditions precedent. Mr Baudinette wrote to Mr Ellis and Mr Psaltis on 12 March 2018 identifying the key factors that would be critical to gaining board approval to construct the facility. They were: (1) that MEL has a binding supply arrangement for the sand (recognising that MEL was working on a primary and long term supply arrangement and also a secondary and likely shorter term arrangement); (2) that MEL provide a level of confidence in relation to sales and off-take arrangements; (3) that MEL provide documentation attesting to sufficient project funding; and (4) that MEL provide a degree of certainty in relation to operational readiness. Mr Baudinette also indicated that there would be conditions precedent that Port Authority obtains planning approvals and board authority to construct the facility. Mr Baudinette said that he recognised that MEL wanted a higher degree of certainty in the form of a binding agreement for lease but at the same time, Port Authority needed to have an acceptable degree of risk in order to justify construction of the facility. He noted that the agreement for lease would need to include reasonable flexibility for both parties in relation to the capacity of the facility that was to be used by MEL, noting that MEL could work "on notionally 60% of the capacity" but with flexibility to allow for uncertainty about MEL's volume requirements and the possibility of oversubscription for the remaining capacity.
Mr Psaltis responded on 13 March 2018, indicating MEL's broad agreement but raised a few matters by way of comment and query. In relation to the supply of sand, he stated that MEL "will have two strategies here - Tasmania and Newcastle". MEL pressed for an agreement for lease to be executed in April 2018.
Mr Psaltis's response caused some concern within Port Authority. Mr Baudinette's view at the time was that he was pretty sure that MEL would fail. The idea of barging sand from Newcastle (being sand mined at Stockton, which is near Newcastle) was new and was not Port Authority's preference. Mr Baudinette had commercial concerns. He also had probity concerns arising from the proposal to barge sand from Newcastle. Mr Massoud was concerned that MEL would demand an agreement for lease by April and that Port Authority would accede. He was concerned that MEL would fail to meet the conditions of the agreement, but that Port Authority would be held hostage to MEL. He thought that Port Authority would be too conservative and not aggressive enough to fulfil the State's best interest "in cutting MEL loose". Mr Baudinette (who was more senior and experienced that Mr Massoud) had a different view in some respects because he considered that Port Authority's position could be protected by the conditions precedent process.
MEL submitted that this evidence shows that Port Authority was already planning to cut ties with MEL and intended to rely on onerous conditions precedent to do so. I do not accept this submission. The submission suggests that the whole agreement for lease was, from Port Authority's perspective, a charade that gave Port Authority a pre-text to bring the relationship between Port Authority and MEL to an end. There is no basis to conclude that anyone at Port Authority at any time saw the agreement for lease as charade or ruse to allow Port Authority to rid itself of MEL. That would have been dishonest. MEL opened and closed its case orally on the basis that it did not allege that anyone at Port Authority had been dishonest. I accept that in March 2018, Mr Baudinette was deeply concerned about MEL's ability to show itself to be a viable counterparty and his view was that the conditions precedent to be included in an agreement for lease would provide an important mechanism for Port Authority to be able to protect itself against the risk that MEL would not be a viable or suitable counterparty. That was a reasonable and responsible position to take.
By March 2018, the anticipated construction costs for the multi-user facility had increased from $12,300,000 to more than $18,000,000. That was conveyed to MEL in late March 2018. Mr Psaltis contemplated that this could mean that the terminal rent would be higher.

In early April 2018, Mr Baudinette advised Mr Ellis and Mr Psaltis that an issue had come up that needed to be worked through, which related to "the importance of the Tasmania source still being the primary goal". Mr Baudinette acknowledged that to be up and running quickly, MEL may start with a supply of sand from Newcastle, but that to maintain a continuity of the process, it was important that the deal reflect the intention of importation of sand in large ship loads from Tasmania. This was seen as a probity concern; departure from the original intention could upset the propriety of Port Authority dealing directly with MEL to the exclusion of others. Mr Psaltis responded noting that "MEL and NETS have never lost sight of the Tasmanian sand export objective", and that it remained "the core objective for MEL and NETS".
During April 2018, Port Authority obtained probity advice from Mr Warwick Smith of Procure Group Pty Ltd. The advice concerned questions about how to deal with MEL and how to conduct the proposed EOI process. In the briefing for the probity advisor it was noted that "MEL could argue we have a 'process contract'". While MEL submitted in the proceedings that some steps taken by Port Authority were influenced by a view held by at least some within Port Authority that there may have been a process contract between Port Authority and MEL, it was not part of MEL's case that there ever was such a contract. MEL did not sue on a process contract. Nor did it submit that there was a process contract at any time.
The thrust of the probity advice, dated 23 April 2018, was that Port Authority could allocate space to MEL in the proposed facility because the situation facing MEL had been brought about as a result of decisions made by Port Authority or the Government. It was noted that MEL's original proposal was to supply sand from Tasmania in shipments of 30,000 to 40,000 tonnes, but that changed circumstances meant that the current proposed source was Stockton, which in turn meant shipments of 7,000 to 10,000 tonnes. The advice observed that the 2013 EOI (to which only MEL responded) did not stipulate a source of supply and so it was not a probity concern that the current proposed source was Stockton. It noted that a condition in the agreement for lease that shipments of 30,000 to 40,000 tonnes be supplied in the longer term would provide continuity with the 2013 EOI. As to the proposed EOI for the multi-user facility, the advice was that the call could record that one operator would be allocated space of an approximate size and the balance would be open to interested operators, with all operators subject to same conditions and costs. There was advice that to ensure the EOI process was conducted fairly, entry into the agreement for lease should be postponed until after the call for expressions of interest was published and communicated to potential respondents. It recommended a delay of 2 or 3 days.
Officers from Port Authority were communicating with MEL about the outcome of a meeting with the "probity guy", even before the formal probity advice was released. At a meeting on 19 April 2018, MEL was informed about the disclosure that would be required in the EOI process and that: "EOI and AFL will occur around the same time EOI first but AFL execution will be in days thereafter" (taken from Mr Psaltis's meeting notes). Mr Psaltis's unchallenged evidence was that during this meeting he told Port Authority that the EOI should be released after MEL had a chance to satisfy the conditions precedent in the agreement for lease, and that if this did not occur it would potentially be an unmanageable and fatal risk for MEL. He did not say in his evidence that Port Authority agreed to that timing.

Mr Psaltis's evidence was that he understood from this email that MEL would be guaranteed the space in the facility that it could demonstrate it required on the date of the conditions precedent and that if it required additional space, it could participate in the EOI process, which would occur after the time provided for MEL to satisfy the conditions precedent. That is, he understood that the EOI process would only occur after MEL had an opportunity to satisfy the conditions precedent. He was not challenged on this evidence and I accept that Mr Psaltis had this understanding. MEL submitted that this was why Mr Psaltis stopped complaining about the timing of the release of the EOI. He understood that Port Authority had acceded to his request that the call for expressions of interest be made only after MEL had been given the opportunity to satisfy the conditions precedent that would be included in the agreement for lease.
Mr Baudinette's evidence, also unchallenged, was that Mr Psaltis misunderstood the email. Mr Baudinette's evidence was that the call for expressions of interest and the agreement for lease would be made at about the same time (with the EOI going out just before entry into the agreement for lease) and that MEL could pursue space at the facility under both the agreement for lease and under the EOI process; with both occurring simultaneously. He considered that it was feasible that MEL would secure space under an agreement for lease and secure additional space under the EOI process. That is, MEL would be getting space under the agreement for lease and, if MEL anticipated that the agreement for lease might not result in a sufficient allocation, then MEL should also express interest through the EOI process, which could result in additional space being allocated to MEL.
While the contents of Mr Baudinette's email of 9 May 2018 were understood by Mr Psaltis as a commitment that the agreement for lease conditions precedent process would relevantly expire prior to the release of the call for expressions of interest, I do not accept that Mr Baudinette intended to convey that message. Nor do I accept that his email, viewed objectively, unambiguously expressed that message. A fair reading of the email is that if at the time the EOI was released, whenever that was, MEL thought that it would need more space than it would secure under the agreement for lease, it could apply for additional space pursuant to an expression for interest. In context, it would be reasonable to expect (at least in May 2018) that even if the agreement for lease was executed at about the time of the release of the call for expressions of interest, the space allocated under the agreement for lease would be known well before any allocation under the EOI process. It was conceivable that MEL could secure bays under the agreement for lease and subsequently secure additional bays through an EOI, which would be a longer process.
Looked at objectively, I do not accept that by Mr Baudinette's email of 9 May 2018, Port Authority stated that it had changed its mind about the timing of the call for expressions of interest. It was only on 19 April 2018 that Mr Psaltis had been told that Port Authority expected that the agreement for lease would be executed within days after the release of the call for expressions of interest. Something much clearer was required before Mr Psaltis could reasonably proceed on the basis that Port Authority had reversed its position.
The officers from Port Authority were conscious that there was an array of considerations at play, some in tension with others. Many of the issues were considered in some detail in a commercial update of 18 June 2018 that Mr Baudinette prepared for Mr James. It is clear that issues of probity were being taken seriously by Port Authority. Mr Baudinette was concerned to address the commercial needs of MEL and to be fair to any respondent in the EOI process, while also advancing the commercial objectives of Port Authority. He recognised that MEL "is still working on its Tasmania supply" but noted that the uncertainty about the future of Glebe Island had "impacted MEL's program". Mr Baudinette noted that MEL was developing an "interim/alternative supply chain based on barging sand from Stockton" and that Port Authority needed to shift MEL from an expectation of an allocation of 60% of the space at the facility, which was based on the supply of sand from Tasmania, to a commitment of space based on the supply chain to be used by MEL. He recorded that this would ensure that Port Authority could "balance any implied process obligation to ensure MEL has an allocation with the need to contemporaneously test the market and offer opportunity to other entities", as well as to allow efficient and flexible allocation of space and to minimise exposure to MEL as a single project-based entity.
There was nothing inappropriate in Port Authority seeking to "shift MEL from an expectation of an allocation of 60% of the storage capacity" at the facility. That is because the change in MEL's plans concerning the supply of sand (with the potential for smaller barges to ship sand) meant that MEL might require less space at the multi-user facility. The contemplated allocation of three bays was based on shipping sand from Tasmania in large ships, which would likely require more storage space at the facility on Glebe Island compared with shipping sand in barges from Newcastle. Port Authority was concerned to ensure that MEL was not allocated more space than it required, having regard to the new supply plans. The contemplated shift in expectation was driven by the change in MEL’s plans about the source of sand.
The terms of the commercial update also contemplated that the agreement for lease and the call for expressions of interest would be made at about the same time (with the EOI to be released in the week ending 6 July 2018 and the board to approve entry into the agreement for lease during July). The update contemplated that MEL could secure space under the agreement for lease provisions and also apply for space under an EOI "for future operations". This is consistent with Mr Baudinette's evidence that he did not intend to convey to Mr Psaltis by his email of 9 May 2018 that MEL would be given an opportunity to satisfy any conditions precedent before there was a call for expressions of interest. None of the internal Port Authority documents suggest that any of its officers contemplated that MEL would be given that opportunity.
The update also recorded that Port Authority was intending to grant MEL's request for an agreement for lease as: (a) it was not unreasonable to do so; (b) it had probity advice that supported the request; and (c) "it minimises any future claim from MEL in relation to possible frustration of a 'process contract'". While MEL drew specific attention to the third of these reasons, I do not read anything in it that is adverse to Port Authority. It was not ultimately suggested by MEL that Port Authority executed the agreement for lease in bad faith as some device to ward off a process contract suit. Recognising the possibility of a process contract, entry into an agreement for lease was a reasonable step to take to put into place a proper process. I consider this to be evidence that Port Authority was striving to act with probity in its dealings with MEL. It was not using the agreement for lease as a sham to seek to evade allegations of a lack of probity.
Port Authority's board met on 26 June 2018. The board approved an increase in the project budget as well as entry into a design and construct agreement for the facility. It was noted that the contract conferred a right in favour of Port Authority to terminate the contract after the design stage and that board approval would be sought prior to the commencement of construction. The board noted management's intention to "release an EOI request" to identify potential users of the facility and that management intended to seek approval to enter into an agreement for lease with MEL by circular resolution prior to the next board meeting.
Port Authority entered into a design and construct contract with Ahrens Group Pty Ltd in July 2018, in accordance with the board's approval.

MEL and Port Authority met on 26 October 2018. Mr Psaltis indicated that he considered a rent of $192 psm may be acceptable to MEL's shareholders. Mr Psaltis, in an email following the meeting, noted that the upper end of the range discussed was $243 psm, which was a number he thought he would struggle to get support for within MEL.
By an email dated 27 October 2018, Mr Ho expressed reservations about Mr Psaltis "being upfront with his numbers". Mr Ho was not a supporter of MEL. He was concerned, among other things, with the prospect that MEL would "not hesitate" to pack "their bag" and "leave without a second thought" to its business relationship with Port Authority. His view was that Mr Psaltis conveniently forgot that MEL had "fabricated their business case on importing sand from Tasmania starting from 2013 and up to when we signed the HoA". He was concerned to "mitigate MEL's default risk".
Mr Gilfillan forwarded Mr Ho's email to Mr Dunn, who responded that it was "a big call to say someone lacks integrity" and that he did not see anything "too terrible" in the actions of Mr Psaltis. Mr Gilfillan responded to Mr Dunn by noting: "We started this journey years ago with MEL and rightly or wrongly we have been in essentially a partnership with them with the main goal being to secure [Glebe Island] as a port for the long term". He also said: "Recently we have changed our position and sought a 10% after tax return on the investment plus the investment number has more than doubled. Not surprising they feel the game has completely changed". Mr Gilfillan remarked that Mr Ho was not wrong, but his approach was not very effective. He concluded his email by stating: "I know [Mr Milner] will get this right and he will listen carefully to all the issues". These communications all occurred on 27 October 2018.
Mr Gilfillan also sought Mr Milner’s views about the integrity of Mr Ellis and Mr Psaltis. Mr Milner expressed his views as follows: "Definitely entrepreneurial - some of their behaviour has been questionable, however I am not yet convinced their intentions are bad… we just need to treat with caution". Mr Gilfillan responded: "They would understandably be stressed by the significant rise in our expectation so may be feeling a bit desperate. Notwithstanding the merits or otherwise of what [Mr James] may have said or done, we have a degree of responsibility in this".
Mr Gilfillan exchanged other emails with Mr Milner and Mr Ho at this time with comments on the negotiations with MEL. He made remarks such as: "Find the rate that keeps them interested", "Honour all the commitments we have made to them" and "If they were to walk away or even plead their case with our Minister, it would impact our credibility…"
What emerges from the internal communications is that Port Authority recognised that it had changed its position in the negotiations with MEL. Mr Ho was taking a "hard-nosed" position and was sceptical about MEL. Mr Gilfillan and Mr Dunn were more sympathetic to MEL and to what was seen as the importance of the transaction. Mr Milner was being entrusted to negotiate a path through the competing considerations and issues. Mr Gilfillan was confident that Mr Milner would "get this right".
I have captured some of the internal communications among the senior executives of Port Authority during this period. There were others, but I have endeavoured to reveal the tenor of the positions being taken. I do not consider that the internal Port Authority communications reflect adversely on Port Authority. Within Port Authority, views differed about MEL and the attractiveness of the commercial arrangements that were being contemplated. That is unsurprising and unremarkable. At one end of the spectrum, the chief financial officer, Mr Ho, was unimpressed by MEL and had reservations about the prospect of a successful transaction eventuating with MEL. The most senior officers (the chairman and chief executive officer) had more sympathy for MEL's position and were looking to negotiate a position with MEL that was reasonable to both parties.
On about 29 October 2018, Mr Gilfillan, Mr Ho, Mr Milner and Mr Robinson agreed on a terminal rent of $200 psm. This was much lower than the figure that had been proposed just over a fortnight earlier.
Ms Georgia Koutsandrea had responsibility within Port Authority for creating various financial models for the proposed multi-user facility. She was a witness and was cross-examined. She first prepared a financial model to accompany the business case in about September or October 2017. It was updated over time. She undertook some modelling on about 29 October 2018. That modelling made various assumptions, including a terminal rent of $200 psm, total capital expenditure of $28,100,000 and a discount rate of 10% post-tax. The model yielded a return on assets of 10% and a net present value of $4,300,000.
In an email to Mr Callaghan of 29 October 2018, Ms Koutsandrea said she had some concerns about the return on assets analysis that "informed" the terminal rent of $200 psm. Her evidence was that she considered this analysis to be inappropriate to appraise the project as it only concerned the book value of the asset. Her view was that the terminal rent of $200 psm produced a positive return on assets but was not sufficient to recover Port Authority's capital expenditure. Her evidence was that to recover the capital expenditure, terminal rent had to be about $398 psm.
MEL criticised the assumptions made by Ms Koutsandrea, and hence the conclusions. It submitted that the capital expenditure assumption of $28,100,000 and the discount rate of 10% were too high. The attack on the capital expenditure did not go very far. MEL submitted that the estimate of $23,500,000 for construction costs was too high given that the board approved a budget of $22,330,000 in July 2018 (including a 10% contingency) and that in April 2020 (i.e. after the October 2018 modelling) a model was prepared assuming construction costs of $19,580,000. Neither of these matters indicate that Ms Koutsandrea's modelling was defective. The capital expenditure assumptions were explained in contemporaneous documents and were not undermined by any cross-examination of Mr Callaghan or Ms Koutsandrea.
As to the discount rate, MEL observed that in October 2017, Port Authority’s board had approved a business case based on a discount rate of 7%, subject to an increase in Port Authority's own cost of capital. There was evidence that Port Authority's cost of capital had not increased. Mr Gilfillan's evidence was that he could not recall the board formally adopting a discount rate of 10% but, to the best of his recollection, the board explored whether 10% should be used to reflect the increased cost and risk. I do not consider that the discount rate of 10% is undermined in any material way by the observation that over a year earlier, the board had approved a discount rate of 7% (at a time when the project was expected to be much less costly). There is a respectable argument (which was Mr Ho's position all along) that a discount rate of 7% (and even 10%) was generous to MEL because it, in effect, gave to MEL the benefit of Port Authority's ability to access capital at a lower cost relative to MEL. I do not accept that the modelling was inappropriate or flawed for the reasons advanced by MEL.
Mr Callaghan's evidence was that the terminal rent of $200 psm represented a discount (of at least 45%) to the rent that would have been payable under the second heads of agreement, adjusted for the increased capital cost and assuming a 7% return. His evidence was that he considered, in November 2018, that the discount meant that there was increased risk to Port Authority in recovering a return on its capital, which heightened the significance of the conditions precedent as a mechanism to protect Port Authority's interests.
Port Authority’s board met on 30 October 2018. Management recommended that the board approve the execution of the agreement for lease. The board paper provided a history of the dealings with MEL. Three options were canvassed. The first was to approve the agreement for lease with terminal rent of $200 psm. The second was to approve the agreement for lease without a specific terminal rent. The third was to reject the agreement for lease. Management recommended option 1. The paper recorded that a financial analysis revealed a net present value of $4,300,000, based on likely capital expenditure and an “appropriate” return on investment of 10%. The paper included a risk analysis, which commenced:

Notwithstanding the commercial agreement about the terminal rent, negotiations over the terms of the agreement for lease, including the conditions precedent, continued throughout November 2018.
On 9 November 2018, Port Authority circulated a version of the agreement for lease which included "example required documents" as part of the conditions precedent. Mr Psaltis responded on the same day, expressing concern about "reinventing the wheel". He raised issues about condition precedent 1 (source of sand) and 4 (funding).
There were meetings between officers of Port Authority and MEL on 12 and 13 November 2018, which appear to have addressed Mr Psaltis's concerns. A further version of the agreement for lease was circulated on 13 November 2018. MEL's new lawyer (Mr Paul Chapman) proposed further amendments to those conditions precedent on 14 November 2018. There were further negotiations.
On 28 November 2018, Mr Robinson told Mr Psaltis that Port Authority had rejected some of MEL's latest proposed changes and that Port Authority had determined that there should be no further changes. Notwithstanding that communication, on 30 November 2018, following further discussions, Port Authority propounded an agreement for lease with more changes, reflecting concessions to MEL.
MEL placed some weight on an email from Mr John Taylor to Mr Milner of 29 November 2018. Mr Taylor was a consultant to Port Authority. His email stated that he did not think that the "Agreement" was fair to MEL and that he believed that MEL was likely to claim that it was not fair and reasonable and that he suspected MEL would "instigate some kind of legal action". Port Authority relied on evidence from Mr Taylor which was to the effect that at the time of sending the email, he did not fully comprehend the background to the negotiations between Port Authority and MEL and did not have a full appreciation of all of the issues being raised. His evidence was that it was not his function to evaluate MEL as a possible user of the multi-user facility and that he did not need to have a view on MEL's viability. Mr Taylor was not required for cross-examination. In light of Mr Taylor's evidence, I place no weight on his email to Mr Milner - it was a view expressed by a consultant who was not versed in all the facts.
On 3 December 2018, Mr Psaltis wrote to Port Authority concerning the most recent draft of the agreement for lease. He indicated that MEL needed to register formally its disquiet about the latest amendments which, he said, "materially depart from the principles that we agreed in the Heads of Agreement signed last June". He raised four substantive issues. Three of those issues concerned the conditions precedent. He stated that the latest amendments were materially adverse to MEL and breached the spirit of the negotiations which had continued to be eroded since the project team was replaced in July 2018. He commented that "what we have now is a document that is setting MEL up for failure and we don't understand why".
There was a meeting between officers of Port Authority and MEL on 3 December 2018. There is evidence that Mr Milner advised MEL that the EOI would be released on 10 December 2018. There was no protest by MEL.
At Port Authority's board meeting on 4 December 2018, the board was informed that the agreement for lease with MEL was yet to be executed. It was also informed that the EOI would be released on Monday, 10 December 2018. Mr Gilfillan's report for the 4 December 2018 board meeting (although dated 16 November 2018) included the following remarks:

Mr Gilfillan’s evidence was that he formed the belief in the period leading up to the entry into the agreement for lease that MEL might not be able to deliver due to the absence of a source of supply, and that the viability of the company was perhaps questionable.
There was another meeting between officers of MEL and Port Authority on 5 December 2018. There was no complaint at this meeting about the timing of the release of the EOI. Mr Psaltis's notes of the meeting record the following: "Agreed all changes to our email of 3-12-18". His diary entry for the day recorded that Port Authority had "agreed to all our adjustments" and that they "now have a document that is 100% negotiated". He described it as "a big milestone". Mr Psaltis, Mr Ellis and Mr Chapman celebrated afterwards at the Lord Nelson Hotel.
Two days later, on 7 December 2018, Mr Milner circulated to officers of Port Authority, including Mr Gilfillan, what he described as a finalised version of the agreement for lease, which he believed "all parties should be satisfied with". The email also stated: "[a]lthough we have removed some of the prescriptive nature of a few of these CPs, the process was useful in us putting a 'shot across the bow' and managing MEL's expectations of how we will be assessing them before entering into a Lease". He also recorded that "MEL is aware that the EOI will go out to the market on Monday, so I believe they will now be rushing to sign the AFL and wanting us to execute as early as Monday".
MEL submitted that this email reveals that Port Authority understood that it had issued a warning shot and placed pressure on MEL to execute the agreement for lease. MEL submitted that the pressure worked, because it executed the agreement for lease on that day, 7 December 2018. I do not see anything remarkable about the use of the expression “shot across the bow”. It can be understood in a colloquial sense as a warning shot. It was Port Authority advising, or warning, MEL that it intended to assess MEL's satisfaction of the conditions precedent with rigour, and that MEL should not anticipate that Port Authority would be lenient in the assessment of the satisfaction of the conditions. This strikes me as Port Authority being transparent with MEL; making it clear that MEL should not assume that the conditions precedent would be taken lightly. Port Authority was entitled to convey to MEL on 5 December 2018 that Port Authority intended to require MEL to satisfy the conditions precedent that had been negotiated. The internal reference to a “shot across the bow” has colour but is unremarkable.
Port Authority released the EOI on 10 December 2018. Port Authority executed the agreement for lease on 14 December 2018.

MEL submitted that it was in a vulnerable position at the time of entry into the agreement for lease.
The observation that a person is "vulnerable" says something at a high level of abstraction. In considering whether MEL is vulnerable in a relevant sense it is necessary to address the circumstances that would render MEL unable properly to protect its own interests, rendering it at risk that Port Authority could take advantage of it.
MEL's vulnerability was argued to have arisen from various circumstances.
By December 2018, MEL had been pursuing for some 8 years what it considered to be an opportunity to ship construction sand from Tasmania in large ships to a facility to be built at Glebe Island. In order to realise that opportunity, MEL had no choice but to come to an agreement with Port Authority, as the owner of the land on which any facility was to be constructed. A commercial party who wishes to acquire a service from another company and which can only be acquired from that other company is, in a sense, vulnerable, because there is no real opportunity for competitive tension. Port Authority was in effect a monopsonist. Realistically, the only 'person' who could supply a facility to be used for shipping sand into Sydney from Tasmania was Port Authority.
MEL knew from the beginning that the only way it could pursue the opportunity was by coming to an agreement with Port Authority. It was always exposed to the possibility that MEL and Port Authority would be unable to come to an agreement on commercial terms. Until the parties reached an agreement, there was a risk that there would be no agreement. If there was no agreement and MEL had to abandon the opportunity, it would not recover the money expended to pursue the opportunity. MEL was, in one sense, vulnerable in the period before the parties formalised their relationship by means of a contract. A contract is the usual mechanism by which parties to a commercial transaction allocate risk. Until a contract was made, MEL was bearing risks that had not been allocated by agreement and was bearing the risk that no agreement would be reached. This form of vulnerability is an ordinary incident of commercial negotiations.
MEL was in a commercially vulnerable position because at no time had Port Authority committed to building a facility at Glebe Island. Port Authority had made it clear at all times that it reserved the right to decide not to proceed to construction. As MEL put it, it was "completely exposed to Port Authority's decision as to whether or not to proceed with the construction of the multi-user facility". While MEL was in a commercially vulnerable position, it was a vulnerability that it was aware of at every moment in time, including before it had spent a cent.
By the time the agreement for lease was made, MEL had invested approximately $2,700,000 to advance the opportunity. Mr Psaltis's evidence was that he believed that MEL was left with no choice but to accept the terms of the agreement for lease or walk away from the project. I will come to the terms of the agreement in more detail, but it is important to recognise a number of things. First, the contract had been negotiated over many months, with many points being yielded in MEL's favour. Second, MEL had expert and experienced commercial assistance (mainly through Mr Psaltis) and had legal representation. Third, in a case where MEL contended that it stood to make hundreds of millions of dollars in profits, an investment of $2,700,000 is modest. Fourth, it is an unremarkable feature of many commercial negotiations that either or both parties must choose between executing a contract or walking away. MEL did not have to enter into the agreement. If it declined to do so, its investment would likely have been lost. But the investment was always made without a guarantee of a return. The $2,700,000 was a sunk cost. It would have been irrational for MEL to proceed with the project merely because the money had been spent.
MEL expended money and effort from 2011 through to December 2018 in the belief that the decision-makers at Port Authority were keen to maintain Glebe Island as a working port and were working in good faith with MEL to seek to come to a commercial agreement. I am satisfied that this belief was well-founded. While different officers within Port Authority had different views about MEL and the way an agreement should have been structured, at all times leading up to the entry into the agreement for lease, Port Authority was striving to deal with MEL in a reasonable and fair manner with a genuine desire to develop a facility at Glebe Island that would see MEL as a tenant, shipping sand from Tasmania. Port Authority wanted MEL to succeed and shared the vision of using Glebe Island as a working port to import sand in bulk from Tasmania. Port Authority was not merely going through the motions with MEL. It too was investing time and money with no guarantee of return.
MEL submitted that Port Authority's "apparent motivation" by June 2018 for negotiating and finalising an agreement for lease was to minimise any future claim from MEL and balance any process contract obligations potentially owed to MEL with Port Authority's desire to test the market for the entire multi-user facility. I reject this submission. At least some officers within Port Authority were conscious of the possibility of process contract obligations owed to MEL. However, that consciousness was a factor in Port Authority striving to be fair in its dealings with MEL. Port Authority's motivation for negotiating and finalising an agreement for lease with MEL was to achieve a lease with MEL by which it was genuinely hoped that MEL would be a tenant of the facility and would ship construction sand to supply to the Sydney market.
Relevant officers within Port Authority were conscious that the viability of the facility was of critical importance to Port Authority, which meant that it would have to at least secure other tenants besides MEL, and possibly tenants instead of MEL, and that it would have to deal with those prospective tenants with probity. In my view, Port Authority could have been criticised if it failed to test, in some fashion, the market for the multi-user facility, whether it be for the whole or part of the facility. Port Authority was considering whether to spend over $20,000,000 to construct the facility. It had to be reasonably satisfied that the investment was appropriate, including against the possibility that the proposed lease to MEL would fail. The interests and obligations of Port Authority are addressed in more detail below.
MEL's commercial position was weakened by reason of delays and changes in the project. There were certainly delays occasioned by shifts in Government policy. Changes in policy resulted in a major shift in 2017, when Port Authority decided to implement a business case in favour of the construction of a multi-user facility by Port Authority, rather than permitting MEL to construct a facility for its own use. Without the delays, it is possible (although it is highly speculative) that MEL would have been able to secure sand from Lost Farm. That source of sand was lost in about November 2017. MEL became more vulnerable once Lost Farm was lost. That was a major set-back. It was more vulnerable because MEL's ability to advance and establish a viable business was diminished. While the Government, including Port Authority, had responsibility for delays, there was no wrongdoing. Delays (including because of shifts in Government policy) are an incident of the real world. Port Authority also made concessions to MEL because of the delays.
Prior to entry into the agreement for lease, MEL had no legal or equitable rights in respect of Glebe Island. It had no relevant legal interests to protect. It had a commercial interest in seeking to come to a legal arrangement with Port Authority to enable it to be able to exploit the perceived business opportunity of importing sand from Tasmania to Glebe Island. Prior to entry into the agreement for lease, and even afterwards, it was free to abandon the opportunity if it wished to do so.
In terms of relative bargaining positions (see s 22(1)(a) of the Australian Consumer Law), it is reasonable to say that Port Authority had the superior position. It owned the only land that MEL could use to exploit its opportunity. MEL could only proceed with the opportunity if it came to an agreement with Port Authority, a State-owned corporation. This gave Port Authority bargaining power. However, MEL was not without bargaining power. Port Authority was anxious for Glebe Island to continue to be used as a commercial port. It was strongly attracted to the port being used to import sand to support the construction industry in Sydney. MEL was seen as an opportunity for Port Authority to secure a tenant that would be able to import large amounts of sand from Tasmania. Port Authority had also invested significant time and effort in working towards its own objectives with MEL. The most senior officers within Port Authority were anxious to come to an agreement with MEL. Mr Gilfillan told the board before the 4 December 2018 board meeting that the "worst outcome" would be for MEL to "walk away". MEL was not without commercial leverage in dealing with Port Authority.
MEL also contended that it was vulnerable because of the issue of the EOI at same time that the parties entered into the agreement for lease. I address this further below, because it is mainly relevant to the period after entry into the agreement for lease.

There is some complexity surrounding the first condition precedent. The proposition that Port Authority imposed a 2-year deadline to bring sand from Tasmania is overly simplistic and does not properly reflect the dealings between the parties.
Condition precedent 1(a)(i) required MEL to satisfy Port Authority that it had secured rights to mine or extract sand that would reasonably be expected to result in sand being efficiently shipped within 2 years following the execution of the deed in sufficient quantities likely to enable MEL to meet to the Minimum Throughput requirements in the Lease from the 2nd Lease Year. The condition includes qualifying words, such as "reasonably be expected" and "likely". It is not phrased in absolute terms.
As to timing, the Lease annexed to the agreement for lease specified throughput requirements from the 2nd Lease Year onwards. The Lease provided for a Minimum Throughput of 0 tonnes in the 1st Lease Year. In the 2nd Lease Year, the Minimum Throughput was 605,000 tonnes. The Minimum Throughput requirements increased thereafter, up to 950,000 tonnes in the 10th Lease Year.
The condition precedent required MEL to satisfy Port Authority, in qualified ways, that within 2 years of execution of the agreement for lease, sand could be available from Tasmania to meet the throughput requirements running from the end of year 1 of the Lease for the next year. The agreement for lease contemplated that the Lease would commence once the facility was constructed. The timing in the condition precedent is consistent with an expectation that the facility would be constructed not sooner than 1 year after the execution of the agreement for lease. In those circumstances, the condition precedent would give Port Authority some comfort that MEL would be able to ship sand from Tasmania in sufficient quantities to meet the Minimum Throughput requirements in the Lease.
Condition precedent 1(a)(ii), which needs to be read with 1(b), was introduced during negotiations late in 2018. The form of agreement for lease that was circulated among the parties on 27 June 2018 included a condition precedent similar to 1(a) as it appears in the final form of the agreement (although it referred to the Minimum Throughput for the 2nd Lease Year only) but nothing like 1(a)(ii) or 1(b). From July to September 2018, MEL was pressing for execution of the agreement on the basis that the parties had "agreed all the terms". It appears that condition precedents 1(a)(ii) and 1(b) were introduced on 30 November 2018 following meetings between the parties. The additions were to the benefit of MEL.
Mr Psaltis's email of 3 December 2018 said the following about condition precedent 1:

Mr Psaltis's note of the 5 December 2018 meeting, after recording "Agreed all changes to our email of 3-12-18", goes on to record: "No need to bring EL to production < 2 yrs". It is unclear whether this reflects a statement that there would be an amendment to reflect this agreement, or whether it was explained that the wording of the agreement for lease as drafted did not require MEL to show that an exploration licence could result in production in under 2 years.
There was no change to the wording of the agreement for lease. MEL now complains about that and relies on it as a part of the circumstances which, it contends, demonstrate unconscionability. However, it is significant that MEL, although legally represented, made no complaint before the agreement for lease was executed. Neither Mr Psaltis nor Mr Ellis gave evidence that the executed form of the agreement for lease failed to give effect to their intentions or that they made any mistake as to the content of the terms of the agreement for lease. Nor was there any contemporaneous evidence following entry into the agreement for lease that the document failed to give effect to the agreement of the parties. MEL made no complaint about what it contended was a failure to incorporate an agreed amendment until submissions were made in these proceedings in 2025.
The wording of condition precedent 1(a)(ii) is not clear. It is certainly capable of being read as relevantly requiring MEL to satisfy Port Authority that it has secured an exploration licence in relation to sand in Tasmania and the site "might" be capable of being subject to a mining lease or right to extract sand in sufficient quantities to meet the requirements in condition precedent 1(a)(i), which included the 2-year period. That seems to me to be the most natural reading of the provision. However, this did not impose a 2-year deadline to bring sand from Tasmania. Rather, it contemplated that such production “might” occur. MEL would have to provide a higher level of satisfaction about sand being supplied from an "alternate" source under 1(b), which could be from a location outside of Tasmania.
MEL's contention that Port Authority engaged in unconscionable conduct because it imposed a 2-year deadline to bring sand in from Tasmania when it knew that MEL needed 3 years to do so runs into a series of hurdles. First, it is not correct that Port Authority imposed a 2-year deadline to bring in sand from Tasmania. On no reading of the agreement for lease was that a requirement. Second, the wording of condition precedent 1 is properly seen as the product of negotiation - it was not imposed on MEL. Parts of the condition were introduced relatively late and benefited MEL, because the changes introduced an alternative means of meeting the first condition precedent. MEL had earlier urged Port Authority to execute the agreement for lease before condition precedents 1(a)(ii) and 1(b) were introduced. Third, the condition was not capricious or unreasonable. It was intended, and did, serve to meet Port Authority's legitimate interest in satisfying itself that MEL would be likely to be able to have access to sand, including from Tasmania, in sufficient volumes to meet the minimum throughput requirements in the Lease. Fourth, the mere fact that MEL said it needed 3 years would not have made it unconscionable for Port Authority to insist on 2 years.
MEL submitted that Port Authority's commercial interests were protected because by the 2nd year of the Lease, MEL was obliged to meet minimum throughput requirements and the revenue to be generated for Port Authority was guaranteed by MEL and supported by bank guarantees. I do not accept this submission. Port Authority was legitimately interested not merely in revenue. It was interested in the facility being used to import sand to service the construction industry in Sydney. It was legitimately interested in the question of whether MEL would be in a position to import sand efficiently when the facility (if it was built) was completed. An empty or underutilised facility would not have been in Port Authority’s interests, even if it was receiving full rent. Port Authority also had a legitimate interest in having sand imported in large volumes from Tasmania. That was expected to be the most efficient way to utilise the port facilities and serve the construction industry in Sydney. Port Authority could reasonably seek to have sand imported from Tasmania at the facility as soon as possible after the facility was constructed.
Port Authority had a strong statutory and commercial interest in the success of the development of a multi-user facility at Glebe Island. The proposed facility was to cost upwards of $20,000,000 and was to deploy scarce port facilities. The success of the multi-user facility project depended upon ensuring that once the facility was built, it yielded a financial return to Port Authority and provided the anticipated benefits to the supply chain in the building industry. Port Authority was properly and keenly interested in obtaining a reasonable level of satisfaction that MEL would be able to supply sand from the multi-user facility at levels that would justify constructing the facility and giving MEL occupation of it.
Section 22(1)(b) of the Australian Consumer Law requires me to have regard to whether, as a result of any conduct on the part of Port Authority, MEL was required to comply with conditions that were not reasonably necessary for the protection of Port Authority's legitimate interests. In doing so, it is appropriate to take into account that the agreement for lease was the product of detailed negotiations between reasonably sophisticated parties. As a general observation, where a contract is the product of lengthy negotiations between reasonably sophisticated parties, it would be an intolerable intrusion into the freedom of contract, and the benefit of certainty in commercial dealings, for a court to test conditions precedent by reference to a searching test of reasonable necessity. Generally, parties in a negotiation are free to negotiate terms that they perceive to be in their interests and are free to decline to enter into an agreement if they wish. As a starting point, it is up to the parties to look after themselves and to identify and advance their own interests.
The first condition precedent cannot in any sense be said to be alien to the obvious interest of Port Authority in seeking comfort that MEL would be a successful tenant of a multi-user facility. The precise manner in which Port Authority sought to achieve that comfort should properly be left to Port Authority and the negotiating process. The insertion of the first (or any) condition precedent would not amount to unconscionable conduct merely because it is possible to conceive an alternatively drafted condition precedent that would also have protected Port Authority, but with greater leniency to MEL.
MEL submitted that while Mr Gilfillan gave evidence about Port Authority's obligations as a State-owned corporation, he did not suggest that this, or any condition precedent, was reasonably necessary to protect Port Authority's interests. That is readily explicable and unsurprising, because the task of negotiating and formulating the conditions precedent was a matter in the hands of senior executives of Port Authority below the level of chief executive officer. Moreover, where there is no suggestion of dishonesty, the assessment of the conditions precedent is best undertaken objectively, having regard to the contemporaneous documents and circumstances. Little assistance is to be gained from almost certainly reconstructed evidence, or ex post justification, from officers trying to explain their thought processes from some 6 or 7 years ago.

MEL contended that the requirement that it demonstrate, by February 2019, that it had binding transport arrangements in place for a then unknown "Trading Date" and demonstrate that those arrangements were reasonably likely to allow it to meet its monetary payment obligations to Port Authority for the entire term, were not necessary to protect Port Authority's legitimate commercial interests. MEL contended that it was required to enter into a binding transport contract before Port Authority had itself committed to build the multi-user facility or grant a lease. MEL contended that it "was impossible (or near impossible) for MEL to meet this condition precedent".
There was very little complaint by MEL about this condition precedent prior to entry into the agreement for lease. The form of condition precedent 2 was in close to final form by June 2018. The highpoint of any concern expressed by MEL came in an email dated 13 June 2018 from Mr Psaltis to Mr James and Mr Baudinette. This email, identified as 1 of 8 "main points", that MEL did not have anything on which it could base any supply or delivery arrangements with any certainty, "which will make import and off take agreements difficult to finish". There is no evidence that MEL agitated the issue again in the 6 months leading up to entry into the agreement for lease.
Port Authority submitted that it had an interest in there being binding contracts, given that transport companies would be bringing sand in bulk into the Port of Sydney and mooring up to infrastructure owned by Port Authority. Port Authority submitted that the efficient supply of sand into a busy harbour, and to a (hopefully) busy multi-user facility was well within its ordinary business interests.
The evidence supports the conclusion that at the time of the entry into the agreement for lease, none of the relevant officers from either Port Authority or MEL considered that it would be impossible, or near impossible, for MEL to satisfy condition precedent 2. The condition was the subject of negotiation between commercial parties. While Mr Psaltis had indicated in June 2018 that import agreements would be difficult to finish, the condition was not the subject of particular or protracted complaint by MEL in the lead up to the execution of the agreement for lease.
MEL's submission that the condition was either impossible, or nearly impossible, to meet is significantly undermined by the fact that it was able to provide executed transportation contracts in connection with the supply of sand from Stockton. Moreover, there is no reason why binding agreements with transport companies could not have included terms that would protect MEL in circumstances where Port Authority ultimately decided not to proceed with construction of the multi-user facility. For example, a contract could have included a condition that the multi-user facility was constructed.
I accept that the relevant officers from Port Authority contemplated that condition precedent 2 served to provide a foundation to enable Port Authority to come to an informed and considered decision about whether to construct the multi-user facility with MEL as a tenant. I do not accept that Port Authority's commercial interests were wholly protected by the minimum throughput requirements in the Lease. That is because the prospect of minimum throughput requirements in the Lease did not provide an adequate basis, by itself, for Port Authority to be reasonably satisfied that the construction of the facility would be a sound financial decision. Port Authority was entitled to obtain evidence that the minimum throughput requirements would be met by MEL before it made a decision to proceed with construction. Moreover, as noted already, Port Authority's interests were not merely financial; it had an interest in the multi-user facility being used to import sand.
It may be the case; indeed, it is likely to be the case, that, at the time of entry into the agreement for lease, MEL was never going to be able to satisfy condition precedent 2. While that may, objectively, have been the position (informed with the benefit of hindsight), that is not what was contemplated by the parties at the time they agreed to the condition. The condition was not inserted by Port Authority as a deliberate mechanism to set MEL up to fail, and to provide Port Authority with a means to extract itself from its relationship with MEL. Rather, the condition was included in the agreement for lease in good faith. There was good faith on the part of Port Authority because its officers genuinely considered that the condition served the legitimate interests of Port Authority. There was good faith on the part of MEL, because its officers considered that the condition was reasonable and that MEL could reasonably expect to be able to satisfy it.

I accept Port Authority's submission that the required example documents added nothing of substance to condition precedent 3. It is clear that the kinds of documents identified in the required example documents were of the variety that would be required to satisfy condition precedent 3, the terms of which had been substantially agreed some 6 months prior to entry into the agreement for lease.
The condition precedent served Port Authority's legitimate interests of being satisfied that MEL would be in a position to perform its obligations under the Lease and could reasonably be expected to be a successful tenant of the multi-user facility, thus providing an efficient supply of sand to the construction industry in Sydney.
While I accept that it was Mr Psaltis's opinion that MEL had no real choice but to accept what he referred to as the "customer contracts requirement", the opinion needs to be put into its proper context. At the time of entry into the agreement for lease, no one from MEL suggested to Port Authority that condition precedent 3, or the relevant example required documents, were unreasonable, or that MEL would not be able to meet the condition. There was no suggestion that Port Authority deliberately held anything back, such as the example required documents, until the last moment (or at all) in order to place MEL in a position whereby it had no commercial choice other than to agree to the new requirements.
MEL did not and could not reasonably expect Port Authority to abandon or soften the condition precedent. MEL did have a choice. It could have walked away from the project. That would likely have seen the loss of any opportunity to earn sufficient revenue to recoup the $2,000,000 that had been spent to date. But, as I have said, that is the nature of preliminary expenditure in the course of investigating and developing a business opportunity. Most serious business opportunities will require preliminary expenditure to ascertain whether the opportunity is viable.
If hindsight teaches us that MEL was never going to be able to fulfill the condition precedent, it does not mean that it was unconscionable to include it as a proper protection of Port Authority’s interests.

MEL again submitted that this condition precedent was not necessary to protect Port Authority's legitimate commercial interests and that, at the time of the agreement for lease, it would be impossible for MEL to satisfy the condition precedent. MEL submitted that it could not provide a cash flow analysis to be certified by an assurance report without having concluded, or nearly concluded, contracts for the supply, transport and sale of sand. MEL submitted that given that it would be impossible to put those contracts in place, it would similarly be impossible to provide the required assurance report.
When Mr Psaltis identified "four substantive issues" in his email of 3 December 2018, he stated that it was unreasonable for MEL to be required to have its debt facility in place 12 months out from commencement. He stated that "at best" MEL could get an indicative letter of offer. At the time this email was sent, the draft form of the agreement for lease proposed, in relation to debt funding, that MEL provide copies of "binding agreements with or at least a letter of approval issued by" MEL's financier. The wording was amended in the final form of the agreement for lease to refer to copies of "binding agreements with or at least an indicative letter of offer issued by" MEL's financier. That is, the issue that was raised by MEL just prior to entry into the agreement for lease in relation to condition precedent 4 was accommodated by Port Authority.
MEL was a special purpose vehicle without substantial, or any, assets of its own. MEL and Port Authority had agreed to enter into a lease that would require MEL to have adequate funding to enable it to be in a position to perform its obligations under that lease, and to be in a position to conduct a reasonably substantial business (importing hundreds of thousands of tonnes of sand per annum and paying rent in the millions of dollars per annum). It was within the legitimate commercial interests of Port Authority to attain a high level of satisfaction, before deciding whether to construct the facility and before entering into the Lease, that MEL would be able to secure funding that would be sufficient to enable it to comply with its obligations under the Lease.
Once again, with the benefit of hindsight, it might be said that as at the date of entry into the agreement for lease, MEL was never going to be able to satisfy condition precedent 4. However, neither of the parties to the agreement for lease contemplated at the time of entry into the agreement for lease that MEL would not be able to satisfy the condition precedent. Looking at the matter objectively, an entity in the position of Port Authority would be acting reasonably and responsibly in taking steps to ensure that it could be satisfied that the proposed tenant would have the financial capacity to meet its obligations under the proposed Lease.

MEL relied on the call for expressions of interest on 10 December 2018 as part of the circumstances that meant that the decision by Port Authority to terminate the agreement for lease was unconscionable.
I have already explained that in April 2018, MEL was informed that "EOI and AFL will occur around the same time EOI first but AFL execution will be in days thereafter". MEL told Port Authority that it was not happy about this timing because it would undermine MEL's negotiations with prospective customers. There was a miscommunication between Mr Psaltis and Mr Baudinette in May 2018. Mr Psaltis understood that the EOI would only occur after MEL had an opportunity to satisfy the conditions precedent (effectively reversing what had been said in April 2018). Mr Baudinette did not intend to convey any change in Port Authority's position and, looking at the matter objectively, his communication with Mr Psaltis did not make clear that there was any change.
When MEL was informed on 3 December 2018 that the EOI would be released on 10 December 2018, there was no complaint by MEL about the timing. Nor did MEL not complain about the timing of the EOI in the period leading up to the execution of the agreement for lease.
On 14 December 2018, Mr Callaghan issued what appears to be a broadcast email noting that the initial registration process for the EOI had been extended to 11 January 2019. Mr Ellis received a copy of the email and forwarded it to Mr Psaltis with a comment that this made matters "much more difficult". Mr Psaltis responded to Mr Ellis noting: "I don't see why - Why do you say that?". In answer, Mr Ellis stated that it may give Holcim (a concrete supplier) more time to make a decision. This suggests that at least Mr Psaltis was not initially troubled by the timing of the EOI. It explains why he did not complain about the timing in the period immediately prior to entry into the agreement for lease.
In early March 2019, after MEL had submitted documentation to seek to satisfy the conditions precedent, Mr Psaltis told Mr Gilfillan and Mr Milner that Holcim had recently turned from being MEL's potential partner to being "completely against" MEL. He said that once the EOI was released, all communication with MEL's potential customers effectively ceased. Mr Psaltis’ unchallenged evidence was that Mr Gilfillan expressed surprise and commented that he did not think that the EOI would have any impact on MEL.
MEL submitted that even if Port Authority had not been aware in December 2018 that the EOI could interfere with MEL's efforts to satisfy the conditions precedent, it did know, before terminating the agreement for lease, that the process had frustrated MEL's ability to satisfy at least one of the conditions precedent, yet Port Authority did not alter its course. MEL submitted that this was a relevant circumstance in support of its allegation that Port Authority's termination of the agreement for lease was unconscionable.
The timing of the EOI flowed from the probity advice received by Port Authority in April 2018. MEL contended that Port Authority could not rely on the probity advice about timing because Port Authority did not follow the advice and did not clarify the advice. The probity advice addressed questions about how to deal fairly with the rights of MEL and how to conduct the proposed EOI in a manner that gave a fair opportunity to interested parties. The analysis in the advice is not detailed or overly sophisticated. It runs for a little over one page. The advice about timing was that there should perhaps be a delay of 2 or 3 days from the release of an EOI and the entry into an agreement for lease, to ensure that MEL's approach to potential clients did not undermine the integrity of the EOI and cause confusion in the market. The advice does not explain why the probity advisor contemplated that MEL's approach to potential clients could undermine the integrity of the EOI or cause confusion. However, it is clear that this part of the advice was focused on a concern to conduct the EOI in a manner that was fair to interested parties who may wish to express interest.
MEL's submission about the departure from the probity advice was not a complaint about departure from the advice about timing. Rather, it concerned the advice about the opportunity to be afforded by the EOI. The advice was that fairness in the EOI process could be achieved by stating that space of an approximate size would be allocated to one operator and the balance would be open to all interested operators. At the time, the intention of Port Authority was to allocate 3 of 5 bays in the facility to MEL. When Port Authority released the invitation for expressions of interest on 10 December 2018, it was not confined to 2 of the 5 bays in the facility. However, the invitation disclosed that Port Authority had entered into an agreement for lease with MEL to allocate MEL an area within the multi-user facility based on its assessed operational needs. It recorded that the agreement for lease included conditions precedent. This is a departure from what was contemplated by the probity advisor. However, it is not a significant departure. The invitation was explicit in stating that there was an agreement for lease to allocate space to MEL and it was clear that the invitation concerned any part of the facility that was not allocated to MEL. The invitation did not invite open competition with MEL for space at the facility. It was clear that, subject to conditions precedent, space at the facility would be allocated to MEL on the basis of its needs.
A draft of the EOI invitation was sent to the probity advisor (Mr Vic Baueris of Procure Group) for comment in October 2018. The draft did not specify any area to be allocated to MEL. The probity advisor asked whether there could be an indication of the area required by MEL. Mr Callaghan responded that MEL had significant conditions precedent which, if satisfied, would determine if they had the commercial ability "for say 60% of the facility", which would not be known until at least mid to late December 2018. He said that Port Authority needed to understand if there were other proponents who may have sufficient capacity demands in order to make the project viable in the event MEL fails to satisfy the conditions precedent. The probity advisor responded, noting that he was comfortable with the rationale and was happy to proceed.
MEL was critical of Port Authority's approach to probity. It contended that ad hoc communications with the probity advisor were not adequate, and Port Authority should have obtained a fresh, considered advice. I do not accept this submission. There is no reason to suppose that the probity advisor did not give due consideration to probity matters before responding to Mr Callaghan. It is clear that the probity advisor gave careful consideration to the wording of the EOI invitation. MEL did not lead any evidence that suggested that if Port Authority had sought further formal advice that a different answer would have been given.
Nor do I discern any flaw in Mr Callaghan's reasons for the decision not to specify that the EOI invitation extended only to 2 bays (or some other precise amount that was not contemplated to be allocated to MEL). As I have explained, the proposed allocation of 60% of the facility to MEL was made on the basis that MEL would be shipping sand in large ships from Tasmania from the commencement of the period of any lease. It was only after that potential fell away and it was contemplated that, initially, sand might be transported by MEL to Glebe Island from Newcastle using barges, that the parties recognised that MEL might require less than 60% of the multi-user facility, and that a process was required to identify the amount of space required by MEL. In those circumstances, an EOI that stated that 3 of 5 bays were to be allocated to MEL would have been disingenuous and misleading.
The evidence indicates that officers of Port Authority were conscious that Port Authority, as a State-owned corporation, was required to adhere to proper processes and was bound by probity guidelines. That required fair dealing not just with MEL, but with any other proponents who might be interested in occupying a multi-user facility at Glebe Island. There was no evidence that anyone at Port Authority failed to take issues of probity seriously or failed to act conscientiously with respect to probity.

The Initial CP Sunset Date was 15 February 2019. MEL submitted documents to Port Authority between 15 and 28 February 2019 to seek to support the satisfaction of the conditions precedent. MEL did not make any general requests for time to be extended. MEL did note that in relation to the alternate sand part of condition precedent 1, it was seeking to "conclude more detailed binding agreements as soon as possible" and that in relation to the debt funding component of condition precedent 4, there had been insufficient time for the National Australia Bank to provide an indicative offer and that the bank had "requested more time".
The documents submitted by MEL were considered by a "CP Assessment Panel" and afterwards by a "CP Review Panel". The members of the CP Assessment Panel (Mr Robinson, Mr Callaghan and Ms Ingrid Emery) and the CP Review Panel (Mr Milner and Mr Ho) signed an assessment report on 15 March 2019. The CP Assessment Panel reviewed all of the material submitted by MEL. It concluded that MEL had failed to satisfy each of the relevant conditions precedent, being conditions precedent 1 to 5. That conclusion was endorsed by the CP Review Panel.
The assessment report provided a detailed consideration of the material provided by MEL against the conditions precedent. Without being exhaustive, among the conclusions made by the CP Assessment Panel were the following:
the underlying exploration licence relating to Rushy Lagoon would cease on 13 February 2020, which was insufficient to enable MEL to meet the minimum throughput required to be achieved in the 2nd Lease Year;
there was very low and insufficient detail of loading, logistics and infrastructure project delivery;
the independent accounting report was not in accordance with the required auditing standards;
various agreements supplied by MEL were non-binding; and
the shareholder agreement provided to support the equity funding component of condition precedent 4 had only been signed by 1 of 9 shareholders, and referred to Bridport (i.e. Lost Farm) as the source of supply, which was not the source of supply contemplated by any other document.
The assessment report acknowledged that the terms of the agreement for lease gave Port Authority an opportunity to seek further documentation or information from MEL if deemed necessary. The report concluded that the assessment panel was of the view that "any additional information would have to be fundamentally different to, or in significantly greater detail than the information already provided to alter the initial view of the Assessment Panel". It also stated that the documents that had been provided "contained a significant lack of quality, completeness and inconsistency towards demonstrating ability of MEL to satisfy tenant obligations within the AFL and Lease".
MEL submitted that it emerged from the cross-examination of Mr Callaghan that Port Authority ultimately assessed the documents provided by MEL against criteria that were extraneous to the conditions precedent and without informing MEL about the content of the criteria. I do not accept that this reflects what emerged from the cross-examination. The report of the assessment panel indicates that the assessment panel undertook a careful analysis of the material provided by MEL against each condition precedent. Nothing in Mr Callaghan's cross-examination suggested that Port Authority erected and applied different conditions.
Mr Callaghan gave evidence that Port Authority did not "land everything on the comparison to example documents” and referred to the principles of the conditions precedent. He referred to "the principles of strategic intent". The effect of his evidence was that the example documents identified in the agreement for lease were not determinative of whether or not a condition precedent was satisfied. That does no more than mirror the terms of clause 2.3 of the agreement for lease, which included the statement that: "For the avoidance of doubt, provision of the Example Required Documents will not of itself constitute satisfaction of a Tenant Condition Precedent". I do not read anything nefarious into Mr Callaghan's reference to "strategic intent". It does no more than recognise the reality that the conditions precedent served a purpose and that it would have been wrong to do no more than to have regard to the example documents in a purely mechanical way. Rather, it was necessary to consider the body of the conditions precedent, including because they served the important purpose of protecting the interests of Port Authority. The purpose (or strategic intent) of the conditions precedent was to enable Port Authority to achieve an adequate level of satisfaction that it should invest in the construction of the multi-user facility on the basis that MEL was likely to be able to take space in the facility as a successful tenant, which meant, in general terms, that it could pay the rent and also ship and sell the necessary quantity of sand.
MEL took issue in various ways with Port Authority's assessment that the underlying exploration licence relating to Rushy Lagoon was scheduled to cease on 13 February 2020, which was said to be insufficient to enable MEL to meet the minimum throughput required to be achieved in the 2nd Lease Year. MEL submitted that this demonstrated that Port Authority applied a criterion that was different to, and more onerous than, what was required by condition precedent 1, particularly what was required by condition precedent 1(a)(ii). It submitted that there was no reason not to give MEL the additional year it had requested. It submitted that Port Authority should have sought further information about the exploration licence and noted that the licence did not cease in February 2020, and indeed that it remains on foot.
I do not accept these submissions. The assessment report did not draw conclusions merely on the basis that the underlying exploration licence relating to Rushy Lagoon was scheduled to cease on 13 February 2020. Various other matters were addressed in the detailed assessment which supported the conclusion that the condition was not satisfied. It included, for example, the observation that: "There is also no evidence that MEL coordinated, and NSR lodged, the other three years of the exploration program in accordance with the licence requirements", and further stated that there was no documentation of: (a) the options or plans for when the exploration licence expires; (b) the usual timeframe for obtaining a mining lease in Tasmania; or (c) the time between obtaining a mining lease and commencing shipments to Glebe Island.
MEL did not demonstrate that if Port Authority had asked for further information, all these matters could or would have been satisfactorily addressed. At the time of the assessment, the exploration licence did expire in February 2020 (an extension to February 2021 was granted on 6 April 2020). I do not consider that Port Authority can be criticised for failing to take the initiative to obtain extra information from MEL about the exploration licence. It has not been demonstrated that there was additional information available that was material. I do not consider that it was unreasonable for Port Authority to decline to allow MEL more time.

MEL’s case is that it was unconscionable for Port Authority to negotiate into the agreement for lease terms that were not reasonably necessary to protect its legitimate interests, and then to terminate the agreement for lease relying on those clauses and to cease all dealings with MEL.
It is not MEL’s case that it had satisfied the conditions precedent and that Port Authority wrongly concluded that MEL had failed to do so. There was no suggestion that, as a matter of contract, the agreement for lease was not validly terminated in accordance with the terms of the agreement. Nor is it MEL’s case that it had information available to it that could have been given to Port Authority, and which Port Authority should have requested, which would have satisfied Port Authority that the conditions precedent were satisfied. Rather, MEL’s contention is that it was not possible for MEL to satisfy the conditions precedent, which is one of the reasons why MEL contends that it was unconscionable for Port Authority to rely on the non-satisfaction of the conditions precedent as the basis for terminating the agreement for lease.
I have addressed in some detail the circumstances giving rise to the terms of the agreement for lease, including the conditions precedent. In summary, the agreement for lease was the product of lengthy negotiations between relevantly sophisticated parties who both had the benefit of legal advice. Port Authority may be seen to have had the stronger bargaining position, but MEL was not without bargaining power. Port Authority had legitimate interests to protect, including the public interest in having decisions made that were financially prudent and advanced the interests of the State.
The officers of Port Authority were mindful that Port Authority was required to deal with MEL in a manner that reflected high standards of probity, and they endeavoured to do so. They were also mindful of the need to deal with other potential occupants of the multi-user facility with probity, and that is what they set out to do. I have rejected the submission that Port Authority failed to deal with MEL with probity. The circumstances leading up to the entry into the agreement for lease reveal that the officers of Port Authority were motivated to ensure that any investment of taxpayer funds to build a multi-user facility at Glebe Island would be a proper way to spend those funds and would produce a facility that served the construction industry, and hence the people of NSW. In seeking to achieve those ends, Port Authority dealt fairly and honestly with MEL. At times those dealings may have been robust. Conduct is not unconscionable merely because it is robust. Port Authority did not, merely because it was a government body, become obliged to submit to MEL. On the contrary, submission would have been a dereliction of Port Authority's statutory duties.
I accept that it is theoretically possible that Port Authority's conduct in terminating the agreement for lease rather than keeping it on foot and engaging with MEL could be unconscionable conduct in contravention of s 21 of the Australian Consumer Law, even though the termination was in accordance with the terms of the agreement for lease. Port Authority submitted that termination in accordance with the terms of the contract is not an 'unfair tactic', citing Pacific National (Act) Ltd v Queensland Rail [2006] FCA 91 at [925]-[934] and Epic Games Inc v Apple Inc [2025] FCA 900 at [6285]-[6286], [6296]. Those authorities do not go that far. Those cases reveal that every case will depend on its own circumstances but also reveal that conduct is not lightly found to be unconscionable.
The mere fact that a contracting party exercises a right that it has under the terms of a contract does not preclude a conclusion that the exercise of the right was unconscionable. But the circumstances would usually need to be quite striking before it could be said that what is otherwise a lawful exercise of contractual rights, in a closely negotiated agreement between sophisticated parties, becomes unlawful because the exercise of those rights is unconscionable. That would tend to deprive commercial transactions of certainty, which would undermine one of the values that is recognised in the Australian Consumer Law. However, it is possible, for example, that some new state of affairs coming about after entry into a contract is of such significance that it would be unconscionable for one party to exercise its contractual rights.
In this case, Port Authority's conduct in terminating the agreement for lease and cutting off dealings with MEL was not unconscionable. Port Authority did not take advantage of any superior bargaining position or exploit any vulnerability on MEL's part or make use of any unfair tactics. While different officers within Port Authority had different views about MEL and the development of the venture, as might be expected, there is no proper basis to conclude that anyone was conducting themselves in bad faith or with a view to trick MEL. There is no suggestion that any person was dishonest.
Port Authority and MEL were engaged together for many years leading up to the entry into the agreement for lease and through to the termination of that agreement in an effort to develop and exploit their own business and strategic opportunities. Each had their separate goals but hoped that each could achieve its own goals through a business venture between them. In the end, the proposal to build and construct the multi-user facility at Glebe Island with MEL as the anchor tenant, importing significant quantities of sand into Sydney, failed. Of course, in the world of commerce, business proposals often fail. There is rarely, if ever, a guarantee of success.
The officers at Port Authority were charged with making decisions and taking steps to advance the legitimate interests of Port Authority. It was necessary for them to make judgments about what to do in complex commercial circumstances. That includes the decision that was ultimately made to terminate the agreement for lease. To come to a conclusion that the conduct was unconscionable, it is not enough for me to conclude that another outcome would have been fairer or that it would have been more reasonable for Port Authority to have conducted itself differently. A finding of unconscionable conduct is a strong finding that requires me to be satisfied that the (notional) conscience of Port Authority should have been so affected as to compel it to have refrained from acting as it did in terminating the contract.
If (as I have found) it was not unconscionable for Port Authority to negotiate the conditions precedent into the agreement for lease, there was nothing that arose after entry into the agreement that meant that it was unconscionable for Port Authority to terminate the agreement based on MEL’s failure to satisfy the conditions precedent.
MEL relied on evidence from Mr Psaltis to the effect that the issue of the EOI by Port Authority a few days prior to entry into the agreement for lease had a devastating impact on MEL’s ability to secure agreements with potential customers. Mr Psaltis’s evidence was that he explained the impact of the EOI on MEL to Mr Gilfillan and Mr Milner, and that Mr Gilfillan had expressed surprise. The fact that Port Authority was informed after entry into the agreement for lease but prior to termination that the timing of the EOI had impacted negatively on MEL’s ability to meet one of the conditions precedent (concerning sales or offtake agreements) does not mean that it was unconscionable for Port Authority to rely on non-satisfaction of that condition precedent (among others) in terminating the agreement for lease. As I have explained, the timing of the EOI process was driven by probity advice received by Port Authority. There were sound reasons for the timing. The fact that the timing created difficulties for MEL does not mean that it was unconscionable for Port Authority to exercise its contractual rights arising from MEL’s failure to satisfy the relevant condition precedent.
MEL contended that Port Authority treated MEL differently to persons who responded to the call for expressions of interest and referred specifically to Austrak Resources Pty Ltd (Austrak), a proposed ‘anchor’ tenant of the facility. This was the allegation that was said to invoke s 22(1)(f) of the Australian Consumer Law, on the basis that it was said that Port Authority's conduct towards MEL was not consistent with Port Authority's conduct in similar transactions between Port Authority and other like customers.
The circumstances surrounding Port Authority's dealings with Austrak, and other persons who responded to the EOI, are addressed in more detail below in my consideration of causation. It is apparent that no other entity can properly be described as a customer "like" MEL. Port Authority's dealing with Austrak came later in time and arose in a different context (including by reason of the termination of the agreement for lease).
On MEL's case, the conduct on the part of Port Authority in terminating the agreement for lease on 18 March 2019 was either unconscionable conduct on that day or it was not. Events that took place after 18 March 2019 could not render the conduct unconscionable if it was not unconscionable on 18 March 2019. The events after 18 March 2019 can only be relevant if they shed light upon circumstances existing as at 18 March 2019. The termination of the agreement for lease brought about a significant shift in what Port Authority had in mind for the development at Glebe Island. Up until that time, Port Authority had been advancing a project that contemplated that MEL would be the anchor tenant of the multi-user facility. It is necessary to exercise caution when considering the dealings between Port Authority and other parties after 18 March 2019 as a basis to conclude that Port Authority acted unconscionably on 18 March 2019 when it terminated the agreement for lease.
As I explain below, nothing material can be discerned from Port Authority's dealings with Austrak, or anyone else, that provides any insight into the character of Port Authority's conduct towards MEL. The change in circumstances, including the differences between MEL and Austrak, mean that it is unproductive to engage in a minute analysis of perceived differences in how Port Authority's conduct towards MEL differed from its conduct towards Austrak. As things turned out, Port Authority imposed timing deadlines upon Austrak which Austrak could not satisfy, and that transaction failed too.
For all these reasons, I do not accept that any of the impugned conduct of Port Authority was unconscionable. I have evaluated all of the circumstances. That includes that Port Authority was in the stronger bargaining position (see s 22(1)(a)). I have considered the conditions precedent and the legitimate interests that they served (s 22(1)(b)). There were no unfair tactics (see s 22(1)(d)). There were no similar transactions that shed light on the quality of Port Authority’s conduct (see s 22(1)(f)). My overall evaluation of Port Authority’s conduct is that it was reasonable and responsible. The conduct falls well short of conduct that can properly be denounced as unconscionable.
It follows that MEL’s claim fails.

MEL advanced a case based on an alleged loss of opportunity. The case was poorly articulated in the Further Amended Commercial List Statement. MEL alleged that it had suffered loss or damage by reason of Port Authority’s unconscionable conduct and provided particulars that read: “MEL has lost the opportunity to make profits of at least approximately $100,000,000”. The Further Amended Commercial List Statement does not identify with any precision the events that would have occurred if Port Authority had not engaged in the alleged unconscionable conduct (the counterfactual). It does not expose with any precision the causal link between the wrongdoing and the loss it claims by way of damages. The way that MEL put its causation case evolved during the trial and, to some extent, remained unclear at the end of the trial. This drew sharp complaint from Port Authority.
The Further Amended Commercial List Statement included an alternative claim for “wasted expenditure of approximately $2,500,000”, as well as “additional costs of approximately $1,800,000”. MEL made no attempt at trial to advance this alternative case. Port Authority expressly proceeded, without demur from MEL, on the basis that this claim had been abandoned. I take the wasted expenditure and additional cost case as abandoned.
At a very general level, it was common ground that MEL was required to prove that it was more probable than not that the wrongful conduct caused it to lose an opportunity of some value. This was MEL’s burden on causation. If causation was established, it was agreed that MEL’s loss was to be assessed by reference to the prospects of success of the opportunity, taking into account and weighing the probabilities and possibilities. This is the assessment of quantum. The parties agreed about this distinction between causation and quantum. However, there were significant departures about the proper application of principle in this case. The line between causation and quantum can be difficult: see Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120 at [28]-[30] (Allsop CJ, Mansfield and Siopis JJ). The line was not bright in this case.
Although it is not stated expressly in the Further Amended Commercial List Statement, MEL submitted, and I accept, that the document, read as a whole, discloses that MEL’s case was that if Port Authority had not engaged in the alleged wrongful conduct, Port Authority would have proceeded to construct the multi-user facility and the parties would have entered into the Lease. The pleading does not articulate the circumstances in which the facility would have been constructed and the Lease would have been granted.
MEL’s opening written submissions contended that Port Authority’s unconscionable conduct caused MEL to lose the “Business Opportunity”. That opportunity was expressed to involve MEL shipping construction sand in large ships (of circa 40,000 tonnes capacity) to Glebe Island from Tasmania. The sand was to be sold principally to the construction industry, for the manufacture of concrete, from a facility to be built at Glebe Island. Those submissions did not address, with any specificity, the causal link between the alleged wrongdoing and the lost opportunity. Nor was the subject addressed in MEL’s oral opening submissions.
There was some evidence filed and served from which a case on causation could be gleaned, at least to some extent. Mr Ellis stated in an affidavit (relevantly admitted only as to his belief) that “if MEL had been granted a lease at the multi-user facility in around February 2019” he would have caused NSR to take certain steps. This suggested that MEL’s case could have been that a lease would have been entered into in February 2019. In closing oral submissions in reply, it was submitted by MEL that Mr Ellis obviously did not mean to refer to entering into a lease in February 2019, “because everybody knew that the lease would come after construction”. It was suggested that he may have intended to refer to February 2020, or some other year. Other parts of Mr Ellis’s evidence proceeded on the basis that MEL would have imported sand from about January 2020 from Stockton (i.e. through Newcastle) and Moreton Bay in Queensland. This suggests a lease commencing in early 2020. Mr Ellis was given an opportunity to correct anything in his affidavit evidence when he was called to give oral evidence but confirmed that his affidavits were correct. The tension and imprecision in his affidavit evidence was not addressed in his evidence in chief.
At a pre-trial directions hearing, MEL informed the Court (and Port Authority) that its case on loss was reflected in the expert reports of Mr Terence Potter and Mr Dugald Gray. Mr Potter is a forensic accountant. He was asked to assume that MEL’s fit-out of the multi-user facility would be completed in September 2019 and that the sale of sand from the facility would commence in February 2020. Mr Potter’s report proceeded on the basis that sand imported from Moreton Bay would be available for sale from early 2020, and from Rushy Lagoon from March 2022. Mr Gray is an engineer with experience in quarrying, among other things. He was asked to give an opinion about the amount of sand that MEL could have sold into the greater Sydney market, and the prices that could have been achieved, from January 2020 to March 2022. Although the position was far from clear, based on this material, Port Authority would have been justified in anticipating that MEL’s case was that the multi-user facility would have been constructed and a lease entered into by early 2020, with sand initially to come from Moreton Bay, or perhaps from Stockton, and then from Rushy Lagoon from early 2022.
By its opening written submissions, MEL abandoned any case on the basis that sand would have been procured from Moreton Bay. The prospect of sand from Stockton was not mentioned and had clearly been abandoned too. That left a lacuna: it was not clear what was to occur in the period before sand from Rushy Lagoon became available. For reasons developed below, the collapse of any contention that sand would be available from Moreton Bay or Stockton dealt a blow to MEL’s case on causation.
MEL’s case on causation was not properly exposed in opening written or oral submissions. At an early point in the hearing, MEL was directed to provide a written explanation about how it put its case on causation. MEL provided a document outlining its causation case on day 6 of the hearing, midway through the cross-examination of Port Authority’s lay witnesses. A further and more detailed note on causation was provided after day 9, which was after the lay witnesses had been cross-examined but before there was any cross-examination of experts.
As will be seen, MEL’s causation case continued to evolve, or was changed, by the time of closing submissions. Port Authority did not acquiesce to the evolution. At a general level, what remained consistent from the opening submissions through to the end of the trial was the contention that the opportunity lost by MEL was the opportunity to make profits by selling sand from the multi-user facility. There was less consistency about the circumstances that were said to have occasioned that loss.

When MEL took steps to expose its causation case during the trial, it expressly accepted that it had to prove on the balance of probabilities that Port Authority would have constructed the multi-user facility.
MEL contended that by around December 2021, or alternatively November 2022, NSR would have obtained the necessary approvals for the Rushy Lagoon mine and obtained approval for the funding necessary for its operations. It contended that from that time, the only prospective anchor tenant for the multi-user facility would have been MEL.
MEL pointed out that in the real world, Port Authority made a decision to construct the multi-user facility and construction commenced in August 2020. In the real world (as explained below) construction was paused in October 2020. MEL contended that in the counterfactual world, where the agreement for lease was not terminated, Port Authority would not have paused construction in October 2020.
MEL contended that it could have been in a position to commence the sale of sand suitable for use in the Sydney construction industry by around October 2022, or alternatively, September 2023. MEL contended that it would have been an anchor tenant on the terms of the Lease. It contended that this result would have been likely given Port Authority’s strategic imperatives and desire to complete the building of the facility, and given that MEL would be the only prospective anchor tenant (to occupy the facility with other prospective tenants for the balance of the facility). I will refer to this as MEL’s second causation case.
On this case, first articulated during the trial, MEL contended that in both the real world and the counterfactual one, Port Authority would have commenced building the multi-user facility in August 2020. So far as construction of the facility is concerned, on this case, the real and counterfactual worlds depart in October 2020: in the real world, construction was paused in October 2020; in the counterfactual world, construction would have continued.
This case was also advanced by MEL in its written closing submissions in chief when dealing with the subject of causation. MEL contended that it made out its causation case because the evidence supported the following key conclusions:

In Sellars, the opportunity came from entry into the Pagini agreement. In order to prove that the wrongful conduct caused some loss, the applicants had to prove that they would have entered into the agreement if there had been no wrongdoing. The opportunities flowing from entry into the agreement had value and resulted in an award of damages, even though it was more likely than not that the opportunities would not have yielded the hoped for benefits.
In Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18, French CJ, Kiefel and Keane JJ explained (at [39]) that an opportunity will have value where there is a substantial, and not merely speculative, prospect that a benefit will be acquired or a detriment avoided. Their Honours went on to observe (at [41]) that the onus of proving causation of loss is not discharged by a finding that there was more than a negligible chance, or even a substantial chance, that the outcome would be favourable. The plaintiff was required to prove that it was more probable than not that they would have received a valuable opportunity.
Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27 was another case concerning a claim for loss or damage under s 82 of the Trade Practices Act arising from misleading or deceptive conduct in contravention of s 52. Bell, Keane and Nettle JJ observed (at [28]) that the claimants in such a case generally bore the legal burden of establishing “the existence and amount of the loss or damage” that they suffered by the wrongful conduct. The distinction between the “existence” of loss or damage and the “amount” can be seen to reflect the different concepts of causation and quantum.
Their Honours continued (at [29]) to say that while a claimant “bears the legal burden of establishing the amount of its loss or damage, the nature and circumstances of the wrongdoer’s conduct may support an inference or presumption that shifts the evidentiary burden”. Their Honours went on to address two “presumptions” that were considered by Brennan J in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54. The first is that in a case where a claimant seeks reliance damages for the accepted repudiation of a contract, damages are assessed on the basis of a rebuttable presumption that the net benefits to which the claimant would have been entitled under the contract would have been sufficient to cover the expenditure incurred pursuant to the contract. As to the second “presumption”, their Honours said this (at [29], footnote omitted):

Given that MEL’s claim was for an alleged lost opportunity, this case is different to Amann Aviation and Cessnock City Council, where the claims were for wasted expenditure rather than for loss of profits. If the facilitation principle that is explained in Cessnock City Council applies by analogy in the context of MEL’s claim for damages under s 236 of the Australian Consumer Law, it operates to permit MEL to prove the existence of the valuable opportunity by showing a real (more than negligible) possibility that the opportunity, if it was not lost, would have produced a favourable outcome for MEL. MEL still had to prove on the balance of probabilities that the wrong caused the loss of the opportunity.
There can be disagreement about whether a claim is properly framed as one based on a lost opportunity at all. For example, in Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357, which concerned the breach and termination of a service agreement, Hammerschlag J concluded (at [54]) that the claim was wrongly characterised as one for a loss of opportunity. Allsop P and Beazley JA disagreed. Allsop P observed that the task in that case was “to identify and characterise what, in substance, was promised and what has been denied by the breach of contract”: Silverbrook at [2] (Allsop P). His Honour accepted (at [3]) that there was a promise to set up a process yielding “a contractual opportunity or chance of obtaining bonuses”. That was the opportunity that was denied.
By way of contrast, in Daynes v I-MED Central Queensland Pty Ltd; I-MED Central Queensland Pty Ltd v Daynes [2025] NSWCA 150 a contract gave Dr Daynes a right (at his election) to continuing indefinite employment, subject to the right of his employer (I-MED) to terminate without cause on 3 months’ notice. Bell CJ (Leeming and Free JJA agreeing) concluded (at [150]) that this was not a promise of an opportunity or a chance to obtain a benefit that was lost upon the wrongful termination of the contract. Their Honours distinguished Guthrie v News Ltd (2010) 27 VR 196; [2010] VSC 196, which involved a claimed loss of an opportunity to have a contract renewed.
In a very general sense, every case involving a civil wrong involves a loss of opportunity. It is the opportunity to enjoy what would have flowed had there been no wrongdoing. However, most cases are not expressly considered by reference to the principles associated with loss of opportunity. Many of the loss of opportunity authorities, and the principles that flow in terms of causation and quantum, emerge from cases where a plaintiff can point to a specific commercial venture or activity that the plaintiff wished to pursue with a view to making profits, which, by reason of wrongdoing, was unable to be pursued. In those cases, causation requires proof on the balance of probabilities that the wrong caused the loss of an opportunity of value, but in that exercise it is sufficient to show that the opportunity had value by reference to the possibilities. Once causation is established, the assessment of the quantum of loss is a matter of informed estimation, taking into account the possibilities. It can be seen that the ‘possibilities’ are relevant to causation (ascertaining whether the lost opportunity had some value) and to quantum (the assessment of the value of the lost opportunity).
In any loss of opportunity case, the task of determining what would or might have occurred absent the wrongful conduct requires counterfactual analysis. This requires consideration of what Port Authority would have done and what MEL would have done. The inquiry is hypothetical in nature and proceeds by drawing inferences from known facts to find the counterfactual position on the balance of probabilities: see Lewis v Australian Capital Territory (2020) 271 CLR 192; [2020] HCA 26 at [35] (Gageler J). The relevant known facts include the things that have occurred subsequent to the alleged wrongdoing: see Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [89]-[90] (Handley JA). That is because the steps actually taken by Port Authority and MEL in the real world are likely to provide valuable evidence from which inferences can be drawn about how they would have acted if Port Authority did not engage in the conduct that is said to be unconscionable.
MEL submitted that, generally, counterfactual analysis is approached from the perspective of doing as little violence to the known facts as possible: see Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369; 422 ALR 507 at [974] (Lee J). I would not frame the counterfactual analysis in those terms. I accept that the counterfactual scenario to be constructed proceeds on the hypothesis that the wrongdoer’s conduct is changed to the minimum extent necessary to achieve compliance with lawful conduct: see Recovery Partners GP Ltd v Rukdadze [2025] UKSC 10; [2026] AC 209 at [163] (Lord Leggatt).
As MEL recognised, determining whether there has been a causal connection involves “not an examination of what did happen, but an assessment of what would or might have occurred, but which could no longer occur (because of the contraventions)”: Maritime Union of Australia v Fair Work Ombudsman at [28]. The known facts may help to inform what would or might have occurred, but it is necessary to keep firmly in mind that the task is a hypothetical one. That task cannot be constrained by the known facts in fear of doing violence to them. As the counterfactual necessarily departs from the real world, the known facts become of less evidentiary significance.
All of this leads to the proposition that it is important for a plaintiff who alleges that wrongdoing deprived it of an opportunity, to identify with precision: (a) the opportunity that was lost; and (b) the factual basis supporting the contention that the alleged wrong caused it to lose that opportunity. That was not done in the Further Amended Commercial List Statement. As pleaded, the claim was simply that MEL lost the opportunity to make profits of at least approximately $100,000,000. As I have already observed, the link between the alleged wrongdoing and the loss of opportunity was not exposed in the Further Amended Commercial List Statement.

Although this case is not one of an alleged breach of contract, it arises in the context of a contract. The thrust of MEL’s allegation of wrongdoing is that Port Authority terminated the agreement for lease by relying unconscionably on certain conditions precedent. As a matter of substance, the case is not far removed from one where the agreement for lease was terminated in response to a repudiation by Port Authority. In a conventional contract case, this would give rise to a claim for what is often called loss of bargain damages: see J W Carter, Carter’s Breach of Contract (3rd ed, 2024, J W Carter Publishing) at [13-02]. The lost bargain would be the loss of the conscientious operation of the agreement for lease. Framed this way, MEL would have the onus of establishing, on the balance of probabilities, the value of the bargain had it not been terminated. The assessment of the value would take into account the possibility of events that would render the bargain less valuable: see Berry at [37]. That would include taking into account actual events that occurred after the termination: Bunge SA v Nidera BV (2015) 3 All ER 1082; [2015] UKSC 43 at [20]-[21] (Lord Sumption). It is not merely permissible to take into account matters that post-date a contravention of s 21 of the Australian Consumer Law when assessing damages under s 236; it is often necessary to do so: see Kizbeau v W G & B Pty Ltd (1995) 184 CLR 281; [1995] HCA 4 at 291-296 (Brennan, Deane Dawson, Gaudron and McHugh JJ) and HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 at [38]-[40] (Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ).
On this analysis, the agreement for lease, simply put, was a bargain by which the Lease would be granted to MEL on the satisfaction of various conditions. The agreement for lease conferred the prospect of the Lease. On MEL’s case, Port Authority could not in good conscience insist on MEL satisfying various conditions according to their terms. That is, lawful performance of the agreement did not entitle Port Authority to rely on the conditions precedent to terminate the agreement in March 2019. However, the prospect of the grant of the Lease remained conditional, including upon Port Authority giving notice to the builder to proceed with construction of the multi-user facility.
In my view, the most satisfactory way to conceptualise MEL’s loss (assuming there was wrongful conduct) would have been the loss of the benefit of the lawful performance of the agreement for lease. Conceptualised that way, the focus would be on the value of that bargain or agreement. When considering that matter, it would be necessary to consider the prospect of MEL making profits as a tenant of the facility.
I do not consider that it accurately captures the reality to say that Port Authority promised MEL an opportunity to sell sand profitably from the facility at Glebe Island. But that is how the case was framed. The opportunity that MEL contends to have lost by reason of Port Authority’s wrongful conduct is the opportunity to sell sand profitably from the facility at Glebe Island. While I have reservations about whether the case is properly framed in this fashion, I will deal with the case as so framed.
Applying the principles emerging from Sellars, Badenach, Berry and Cessnock City Council, in order to establish that the alleged wrongful conduct caused MEL to lose the opportunity to sell sand profitably from the facility at Glebe Island, MEL must establish two things. First, it must prove on the balance of probabilities that Port Authority would have constructed the facility and that the parties would have entered into the Lease. This is required to prove that the wrong caused MEL to lose the opportunity. Secondly, MEL must also prove, to the same standard, that the opportunity to sell sand from the facility had some non-negligible value. In proving that the opportunity had some value, MEL’s task is facilitated because it is sufficient to show that there was a non-negligible chance that, as a tenant of the facility, it would have made profits by selling sand. Thus, for example, if (assuming wrongdoing) MEL proves that there was a 40% chance that, as a tenant of the facility, it would have made profits, it was denied an opportunity of value.
If MEL proves on the balance of probabilities that, absent the alleged wrongdoing, Port Authority would have built the multi-user facility and the parties would have entered into the Lease, those matters are to be taken as established. At the stage of assessing quantum, there is no discounting to accommodate the possibility that Port Authority would not have built the multi-user facility or the possibility that the parties would not have entered into the Lease. The opportunity to be valued is the opportunity to sell sand profitably as a tenant from the facility. The prospect of being a tenant in the facility is not part of the opportunity to be valued. On this analysis, Port Authority would cause the relevant opportunity to be lost by failing to grant MEL the Lease.
MEL accepted that, on its case, it had to prove on the balance of probabilities that Port Authority would have constructed the multi-user facility. As to the Lease, MEL submitted that either it would have been a tenant or that it lost a valuable chance to be a tenant. There was no suggestion from MEL that there would or could have been a lease on terms that were different to those in the Lease. MEL submitted that it would have been a tenant pursuant to the Lease.
MEL could only be a tenant if and when the facility was built. For the purposes of causation, it is difficult to see a conceptual distinction between the construction of the facility and the entry into the Lease. If, as MEL accepted, it had to prove on the balance of probabilities that Port Authority would have constructed the facility, it would also be necessary for MEL to prove on the balance of probabilities that Port Authority would have granted, and MEL would have taken, the Lease. The opportunity or chance (those concepts were treated as being equivalent) that was said to have been lost was the opportunity to sell sand profitably from the facility. That opportunity depended on there being both a facility and a lease.
It is commonly the case, where a person sues for a loss of opportunity, that the same body of evidence may be relevant both to causation and quantum: Lindsay-Owen v HWL Ebsworth Lawyers [2023] NSWSC 68 at [44] (Harrison J). That is true here. The same evidence informs aspects of causation as well as quantum because the prospect that MEL would be in a position to sell sand profitably is relevant to:
whether the facility would have been built (a causation issue);
whether the opportunity to sell sand had some value (a causation issue); and
the actual value of that opportunity (a quantum issue).

In DSHE Holdings Ltd (Receivers and Managers) (in liq*) v Potts; HSBC Bank Ltd v Abboud; Potts v National Australia Bank Ltd* [2022] NSWCA 165; 405 ALR 70, Leeming and Kirk JJA and Basten AJA held (at [313]) that there is no fixed rule of law that requires the approach proposed by Gageler and Edelman JJ in Berry to be adopted in every case of misleading or deceptive conduct. Nor could it be required in every case of unconscionable conduct. It will always depend on the circumstances.
MEL did not plead all the material facts on which it relied to constitute the statutory cause of action, because it did not plead any material facts concerning the counterfactual on which it relied to establish the requisite causal link between the identified loss or damage and the alleged unconscionable conduct. While, strictly speaking, the Further Amended Commercial List Statement is not a pleading, it is still necessary for a party to articulate its case with precision in order to fulfill the requirements of procedural fairness: Swiss Re International SE v David Simpson [2018] NSWSC 233; 354 ALR 607 at [34]-[35] (Hammerschlag J); Lawrance Edward Stewart v The Australian and New Zealand Banking Group Limited [2020] NSWSC 1787 at [18]-[19] (Hammerschlag J). MEL was obliged to provide Port Authority with a direct and unambiguous identification of the material facts upon which it relied to establish causation: see Richmond Valley Council v JLT Risk Solutions Pty Ltd [2022] NSWSC 1761 at [130] (Williams J). The Further Amended Commercial List Statement did not do that.
Nor was MEL’s case (at least as it was put at trial) clearly exposed by the evidence that it filed in support of its case. As I have already observed, based on the evidence filed, and what was said during pre-trial directions, Port Authority would have been justified in proceeding on the basis that MEL’s case was that the multi-user facility would have been constructed and a lease entered into by early 2020, with sand to come from Moreton Bay or Stockton in the first instance and then from Rushy Lagoon from early 2022.
It was MEL’s responsibility to fulfill its obligation to disclose its case. However, Port Authority did not seek further particulars or press MEL to articulate the material facts which supported the causal link between the alleged wrongdoing and the lost opportunity. The causation case articulated in the Further Amended Commercial List Statement could hardly have been more general. This means that none of the various versions of the causation case that have been advanced were inconsistent with the pleading. This is not a case where the plaintiff sought to advance a case that was inconsistent with its pleading. Rather, the problem was that the Further Amended Commercial List Statement did not identify the relevant material facts with any precision. That failure was obvious. Port Authority could have insisted, well before the trial commenced, that MEL properly articulate its case. Its failure to do so rendered its complaints about MEL’s failure to particularise its causation case less worthy of sympathy.
When pleading a counterfactual, there will always be limits to how specific a plaintiff (or defendant) can be. That is because the factual permutations in the counterfactual world are almost infinite. I would not suggest, for example, that MEL would be required to identify the precise day on which Port Authority would have finished construction of the multi-user facility. Some leeway is appropriate when propounding a counterfactual world; how much will depend on the circumstances.
In this case, the Further Amended Commercial List Statement should have at least addressed the following matters, including as to timing:

The conduct that is alleged to have caused loss was, at its heart, the conduct of Port Authority in relying on conditions precedent, that went further than was necessary to protect Port Authority’s legitimate interests, to terminate the agreement for lease and cease to continue to engage with MEL. MEL did not contend that it was unconscionable for Port Authority to include some conditions precedent to protect its legitimate interests. Nor did it allege that it was unconscionable for Port Authority to fail to build the multi-user facility and to fail to grant the Lease to MEL. MEL did not articulate in clear terms the line between conduct that was unconscionable and conduct that would not have been unconscionable. That makes the counterfactual analysis even harder.
There is force in Port Authority’s contention that it would be denied procedural fairness if the Court allowed MEL to advance the causation cases that it propounded at trial. It was not until after the trial started, and after MEL’s witnesses had been cross-examined, that MEL propounded the case that Port Authority would have commenced construction of the facility in August 2020, and continued construction (rather than suspend) in October 2020. On this (second) case, the counterfactual enquiry focusses on a decision to be made by Port Authority in about October 2020. This requires an assessment of the position that MEL and NSR would likely have been in at that time. The denial of procedural fairness would be most serious in respect of the case that construction of the facility would have been suspended in October 2020 before resuming in November 2022 and being completed in about May 2024. That (third) causation case first emerged in the shadows of MEL’s closing written submissions and really only emerged as the way MEL principally propounded its case in its closing written submissions in reply. On this case, the counterfactual enquiry focusses on a decision to be made by Port Authority in about November 2022 and the (counterfactual) status of MEL and NSR’s activities at that time.
MEL submitted that on the subject of whether or not Port Authority would have constructed the facility, the exact timing could only be identified once Port Authority had completed its disclosure in the proceedings, which was late. It did not admit any prejudice to Port Authority, but contended that any prejudice was caused by Port Authority’s late disclosure.
MEL identified 44 documents which were said to have been disclosed late and to be “obviously relevant to the decisions Port Authority would have made regarding the construction and tenancy of the multi-user facility”. Of those documents, 5 were produced (on time) in September 2021 and a further 15 were produced up to 17 days late but were produced before the hearing commenced. Another 11 were produced during the hearing in response to a notice to produce but in circumstances where a request for discovery of the documents had earlier been rejected by the Court. The notice to produce was served after the beginning of the hearing and documents were produced on a without admissions basis. It cannot properly be said that these documents were discovered late. There were 10 documents that should have been produced before the hearing but were not. Having regard to how those documents were deployed by MEL in its closing submissions, the information disclosed by those documents was relatively inconsequential or had been the subject of disclosure in other documents.
The failure by Port Authority to produce documents on time is not a proper basis to permit MEL to advance its new causation cases, being its second and third causation cases. It is also significant that MEL relied on the late production to justify the late articulation of its second causation case. MEL did not rely on late production to explain why the third causation case only emerged in closing submissions.
While there is force in Port Authority’s contention that MEL was too late in advancing the second and, in particular, the third causation case, I am able to conclude based on the evidence that both cases would have failed if I had otherwise been satisfied that Port Authority had engaged in conduct that was unconscionable. If MEL had succeeded on liability, it would have failed to establish that the wrongdoing caused any loss.

Termination of the agreement for lease did not mark the end of Port Authority’s plans to build the multi-user facility.
The call for expressions of interest to occupy the multi-user facility closed on 31 January 2019. Port Authority received 11 responses, although 2 were found to be non-conforming and were eliminated.
At the time of termination of the agreement for lease on 15 March 2019, Port Authority contemplated that the multi-user facility would be constructed and that the 5 bays would be leased to one or more operators selected through the EOI process. It was envisaged that prospective tenants would enter into agreements for lease before Port Authority committed to construction, which was then expected to be put to the board in June 2019. Port Authority’s March 2019 business plan included capital expenditure of approximately $20,700,000 for the multi-user facility.
Port Authority evaluated the conforming EOI responses. On 26 March 2019, the members of an evaluation panel and a review panel recommended that 5 entities progress to the next stage, being Boral, Holcim, Hanson, Hy-Tec and Tas Quarries. The proposed next stage was a request for proposal.
By 17 June 2019, the initial design of the multi-user facility was 30% complete. Design work was paused pending input from prospective tenants.
In September 2019, Port Authority produced a report that updated the supply chain analysis that had been undertaken in late 2017. The report concluded that the marine supply chain between Tasmania and Glebe Island presented a competitive supply chain option relative to a number of road transport alternatives. It concluded that the multi-user facility was still attractive to the industry.
Port Authority issued a request for proposal to the 5 shortlisted prospective tenants on 28 October 2019. The request disclosed that the agreement for lease with MEL had been terminated and no space had been awarded to MEL. Proposals were received from each of the prospective tenants. The closing date for proposals was extended because of challenges being faced to meet the request for proposal within the timeframe, including in gaining binding agreements with suppliers.
Port Authority produced an interim evaluation report on 16 January 2020. By that time, Austrak had acquired all of the assets of Tas Quarries, as well as other assets, and had effectively taken the place of Tas Quarries in the request for proposal process. The report recommended that further detailed discussions take place with Austrak, Boral and Holcim. Negotiations with those entities ensued.
In April 2020, Port Authority produced an updated business case for the multi-user facility. The business case was informed by the “market testing activities” undertaken in connection with the 2018 EOI and the 2019 request for proposal. Those activities were seen as producing strong industry proponents for the facility. In addition, Port Authority took into account what it described as “extensive consultation” in 2019 and 2020 with “key project stakeholders”, including government and industry participants. The plan recommended that Port Authority be authorised to proceed with finalising the design of the facility, to commence construction and then enter into leases on terms similar to the positions advanced in the non-binding request for proposal submissions. This was said to best utilise “Glebe Island as a strategically important asset for the importation of bulk construction materials to support construction in inner Sydney, in a manner consistent with the NSW Government’s strategic intent as well as Port Authority’s goal to improve asset utilisation”. The plan went on to say: “It is imperative that Port Authority facilitates sand and aggregates importation as it underpins its strategic case for retaining Glebe Island as a port facility”.
On 29 April 2020, Port Authority’s board approved construction of the multi-user facility and capital investment of $22,330,000 (and also up to $4,470,000 for visual amenity treatment). Port Authority was satisfied that there had been sufficient evidence of commercial interest to justify the investment, even though the proponents had been unwilling to make binding commitments (apparently because of uncertainty of the flow of traffic from a number of infrastructure projects at Glebe Island). The project team expressed confidence in achieving agreement on binding bids from the shortlisted proponents. Port Authority management also pointed out that the project had strong support from NSW Treasury because of the prospect that the project would provide economic stimulus at a time when many businesses were enduring significant financial impacts from the COVID-19 crisis. The board members agreed that the information provided to the board indicated that “the economic viability of the project was supported”.
Commencing in about mid-June 2020, Port Authority conducted negotiations with Austrak about the form of an agreement for lease. The negotiations included matters concerning conditions precedent as to funding, rights to materials, tenant approvals and rights to supply.
Port Authority gave notice to Ahrens to commence the contracted works in relation to the multi-user facility on 31 July 2020. Construction commenced in August 2020.
At about the same time that construction commenced, both Holcim (on 22 July 2020) and Boral (on 11 September 2020) withdrew from the request for proposal process. The chief executive officer’s report to the October 2020 meeting of Port Authority’s board reported that both cited the uncertainty associated with COVID-19 as a contributing factor to their decision. This meant that the only entity that was in negotiations with Port Authority for occupation of the multi-user facility as an anchor tenant was Austrak.
MEL submitted that the draft conditions precedent being negotiated with Austrak at this time were more lenient than those included in its agreement for lease, including as to timing. Port Authority disputed this. I do not consider that it is fruitful to attempt to engage in a close comparison of the conditions precedent. Draft conditions precedent being discussed with Austrak from June 2020 provides scant insight about whether the conditions precedent in the agreement for lease made with MEL in December 2018 reflected unconscionable conduct on the part of Port Authority. The commercial circumstances by the time of the negotiations with Austrak 2020 had altered. Port Authority had been through a failed negotiation with MEL as well as the EOI and request for proposal process. A decision had been made to construct the facility, in part motivated by the NSW Government’s desire to stimulate economic activity in response to the contracting impact of COVID-19. Negotiations with Austrak were conducted against the backdrop of a decision to build the facility.
Discussions with Austrak revealed that the design of the multi-user facility did not align with Austrak’s requirements. On 7 October 2020, construction was paused to allow for a redesign period.
The final evaluation report of tenants for the multi-user facility was issued on 9 October 2020. The tender evaluation committee recommended that a contract finalisation process with Austrak, to achieve a contract for a tenancy in the multi-user facility, be continued. Although the report recognised that Austrak was the only remaining prospective anchor tenant, it weighed the proposals of each of the 5 entities from who a request for proposal was made. Austrak was ranked first.
The Austrak proposal was considered to have various positive features, as well as risks. The positives included:

In February 2021, Port Authority was contemplating that construction of the facility would resume in April 2021. Operations were expected to start in the first half of 2022, with Austrak as the anchor tenant.
Construction did not resume as expected.
In the first half of 2021, Austrak was having grave difficulties securing a sand export licence from the Tasmanian Government. On 23 June 2021, Austrak advised Port Authority that with the exception of one mining lease that had already been granted (at Saltwood), the indications were that the majority of tenements were further than 12 to 18 months away. Austrak asked for 60 to 90 days to increase the permitted extraction from Saltwood, to a level that would satisfy minimum throughput requirements. Port Authority responded by indicating that it was unable to accept lengthy delays to the project but stated that it was prepared, on strict conditions, to consider offering “a further short window” to Austrak to secure an increase in the permitted extraction limits from the Saltwood mine.
Austrak did not take up the opportunity to use the short window that was offered. It withdrew from negotiations on 12 July 2021.
Having lost the only entity with whom Port Authority was negotiating to occupy all or part of the facility as an anchor tenant, Port Authority decided in about October 2021 to go back to the open market. About 12 months later, on 24 October 2022, Port Authority went back to the open market by releasing another EOI. Expressions of interest were sought for persons to either lease the whole site and construct their own facility or to occupy bays within a 5-bay facility to be constructed by Port Authority. The proposed lease term was until at least 31 December 2037. Meanwhile, construction of the facility was kept on hold.
There were three respondents to the 2022 EOI: Colas, Gypsum Resources and Cement Australia. Colas proposed to occupy 4 of the 5 bays of the facility to import sand and aggregate. It sought a tenancy of at least 20 years with an option to extend for a further 15 years. Neither Gypsum Resources nor Cement Australia (who had each previously expressed interest in a single bay in the earlier EOI process) specified how many bays were sought. An evaluation report dated March 2023 ranked Colas first. All three respondents were invited to proceed to the next stage of the process, which was a closed request for lease proposal process.
By September 2023, Port Authority was anticipating that: (a) the request for lease proposals would close in January 2024; (b) an agreement for lease would be completed in March or April 2024; (c) construction of the facility would take a maximum of 18 months and would be completed by the end of 2026; and (d) operations and the lease would commence at the end of 2026.
Gypsum Resources did not respond to the request for lease proposal. Cement Australia’s response was non-compliant and was not evaluated. Colas submitted a response. An evaluation report dated June 2024 recommended proceeding to negotiation with Colas.
The evidence did not disclose what has happened since that date.

(a) on about 4 March 2019, Cultural Heritage Management Australia provided NSR with an Aboriginal heritage assessment report; (b) in August 2019, Mr Ellis approached CSL to obtain pricing to freight sand from Bell Bay in Tasmania to Hong Kong and to Port Kembla; (c) on about 8 October 2019, Geochempet Services Pty Limited provided NSR with a petrographic report on the quality of the sand at Rushy Lagoon; (d) in around December 2019, NSR applied to Mineral Resources Tasmania for an extension of the mining exploration licence and on 6 April 2020, NSR was granted an extension of the term of the mining exploration licence until 12 February 2021; (e) in around June 2020, NSR secured an access agreement with the landowner of Rushy Lagoon for NSR to access Rushy Lagoon; (f) on around 15 March 2021, NSR was granted a further extension of the term of the mining exploration licence until 10 February 2022; (g) NSR engaged Tasmanian Drilling Services Pty Limited to perform drilling works at Rushy Lagoon; (h) NSR engaged Tasman Geotechnics Pty Limited to conduct a geotechnical investigation of the total volume of sand and recoverable material at Rushy Lagoon and received the report on about 28 June 2021; (i) NSR engaged Boral (through Tasman Geotechnics) to conduct further sample testing of the sand at Rushy Lagoon and obtained a geotechnical investigation report and a mortar bar report; (j) NSR engaged Woolcott Surveys & East Coast Surveying to perform land surveying and mapping of Rushy Lagoon, which involved determining the precise level of boreholes drilled at the site; (k) NSR engaged Tasman Geotechnics to prepare preliminary mining plans, and received preliminary mining plans in September 2021 and updated mining plans in November 2021; (l) on 13 October 2021, NSR submitted a mining lease application to Mineral Resources Tasmania; (m) NSR engaged North Barker Ecosystem Services Pty Ltd to conduct a flora and fauna investigation of Rushy Lagoon, and obtained a report dated 16 December 2021; (n) in January 2022, a draft notice of intent was submitted to Tasmania’s Environmental Protection Authority (EPA) (leading to meetings with the EPA Assessment Section during which concerns were expressed, the main concern being the proximity of part of the proposed mine to a ‘RAMSAR’ reserve); (o) on around 7 February 2022, NSR applied to Mineral Resources Tasmania for a further extension of the application for a mining exploration lease; (p) in around February 2022, Mr Ellis was exploring prices to ship sand to Singapore and Hong Kong and prepared a spreadsheet to estimate shipping costs from Rushy Lagoon to various locations based on use of a CSL vessel; (q) NSR procured a report dated 18 July 2022 from GBG Australia Pty Limited that investigated sub-bottom profiling, in order to determine the location of the bed rock to assist with design of a jetty; (r) NSR engaged Marine Solutions Tasmania Pty Limited to perform a marine ecological assessment of the sand extraction and offshore sea loading facility at Rushy Lagoon and to conduct a bathymetry study and marine ecological assessment report, and received a report dated July 2022; (s) NSR engaged Tasman Geotechnics to conduct mortar bar testing on the sand available to mine at Rushy Lagoon and received a report dated 12 August 2022; (t) in September 2022, NSR was exploring prices to freight sand to Singapore; (u) on 17 October 2022, NSR was granted a variation of the area in the application for the mining exploration lease; (v) in around March 2023, NSR engaged BlueSphere Environmental Pty Ltd to establish a groundwater monitoring program and perform hydraulic testing of selected water bore installations; (w) on 14 November 2023, NSR lodged an application with Mineral Resources Tasmania to vary the area of the mining lease application; (x) North Barker conducted additional surveys and prepared a draft further natural values assessment dated 20 March 2024; (y) BlueSphere prepared a draft hydrology report in around April 2024 (with further amendments in July 2024); (z) NSR obtained an Aboriginal heritage assessment report from Cultural Heritage dated 30 April 2024; (a) on 20 May 2024, Aboriginal Heritage Tasmania provided its advice in response to Aboriginal heritage assessment report, which included advice that the report conformed with the Aboriginal Heritage Standards and Procedures; and (b) NSR has obtained engineering borehole logs from Tasman Geotechnics of samples taken from the site at Rushy Lagoon between 27 February 2024 and 5 March 2024.

On MEL’s case (on either its second or third causation cases), condition precedent 6 would not have been satisfied by the sunset date in the counterfactual world. That is because MEL does not contend that Port Authority would have obtained base building approval or given the builder notice to proceed by the sunset date. This means that by no later than 14 December 2019 (12 months from the date of the agreement for lease), either party would have had the right to terminate the agreement. The date would have been earlier if Port Authority had exercised its right to bring the sunset date forward.
Port Authority submitted that it would have exercised its right to terminate the agreement for lease. MEL submitted that the Court should not entertain this submission because it was for Port Authority to plead (and prove) any counterfactual it relied on. I accept that (consistently with the reasons of Gageler and Edelman JJ in Berry) it was desirable for Port Authority to have pleaded (in the sense of identifying the material facts in its Commercial List Response) any counterfactual it wished to advance in response to MEL’s case on causation. However, if I acceded to MEL’s submission that Port Authority should not be permitted to contend that it would have lawfully terminated the agreement for lease, I would likewise decline to entertain MEL’s second and third causation cases for the same reason. MEL cannot have it both ways. Where there was a failure on the part of MEL to plead the counterfactual that it wished to propound, MEL cannot reasonably complain that Port Authority failed to plead a responsive counterfactual. There may also be something to be said for the proposition that it was for MEL to plead and prove that Port Authority would not have exercised its right to terminate the agreement: see Daynes at [151].
On MEL’s case, Port Authority would not have exercised its right to terminate the agreement for lease once the sunset date arrived (no later than 14 December 2019 unless the date was extended). That would mean that the agreement for lease would continue (putting aside the other conditions precedent, and assuming MEL did not exercise its right of termination). In this counterfactual scenario, condition precedent 6 could not be satisfied until about 31 July 2020, when Port Authority gave notice to the builder to proceed with construction of the facility. Once Port Authority believed the condition had been satisfied, it was required to notify MEL and the condition would be taken to be satisfied.
It is difficult to conceive a world where Port Authority would have declined to exercise its right to terminate before condition precedent 6 was satisfied. If the agreement for lease was on foot when condition 6 was satisfied (and still putting to one side all other conditions precedent), the satisfaction of condition precedent 6 would compel Port Authority to take steps to endeavour to achieve completion within 12 months and by no later than 18 months (see cl 4.1). If the agreement for lease was not terminated, and if in this world Port Authority gave notice to the builder to proceed with construction of the facility in July 2020 (as it did in the real world), cl 2.4 of the agreement for lease would have been triggered. That would have imposed obligations on Port Authority to proceed with construction and to make a determination under cl 2.8 of the agreement for lease. The Lease would be expected to commence at about the time of practical completion (cl 11).
As at 31 July 2020, Port Authority was in negotiations with Austrak to take a significant part of the facility and also remained in negotiations with Boral. There would have been no commercial sense for Port Authority to place itself in a position, as at 31 July 2020, whereby it would be compelled to endeavour to complete construction by August 2021 (or by no later than February 2022) and then grant the Lease to MEL as an anchor tenant, to occupy the facility from the time of completion. That is because, as at 31 July 2020, it could not reasonably have been expected that MEL would be in a position to import sand to the facility until May 2024.
As at 31 July 2020, Mr Ellis and Mr Psaltis may been labouring under the view that obtaining sand from Stockton or Moreton Bay was still a possibility. MEL has abandoned any case based on that possibility. The counterfactual analysis should not proceed on the hypothesis that sand would be available from Stockton or Moreton Bay in circumstances where MEL no longer advances any contention that sand would have been available from either source. The analysis should proceed on the basis that in the counterfactual world, the parties would have learned what is now accepted to be true: that sand would not be available from Stockton or Moreton Bay.
Termination of the agreement for lease would not mean that Port Authority was cutting off its nose to spite its face: see Port Macquarie-Hastings Council v Diveva Pty Limited [2017] NSWCA 97 at [88] (Payne JA; Beazley ACJ and Simpson JA agreeing) and Lavarack v Woods of Colchester Ltd [1967] 1 QB 278 at 295-296 (Diplock LJ). On the case now advanced by MEL (with no sand from Stockton or Moreton Bay), as at 31 July 2020, MEL was not a viable tenant of a facility newly constructed in August 2021 or February 2022. Termination of the agreement for lease would have been the most obvious and rational course for Port Authority to take.
It would have been a commercial disaster for MEL if condition precedent 6 was satisfied and Port Authority insisted on its rights under the agreement for lease. That would likely have resulted in MEL being obliged to pay millions of dollars in rent but without any revenue being generated. In reality, if Port Authority did not terminate the agreement for lease once the sunset date for condition precedent 6 expired, it is highly likely that MEL would have exercised its right to do so, in order to save itself from insolvency.
If Port Authority did not engage in the conduct that is said to have been unconscionable, it is highly likely that the agreement for lease would nonetheless have been terminated, by either Port Authority or MEL, at some time before condition precedent 6 was satisfied (and most likely well before that date). On that basis, MEL’s causation case (however put) fails. The impugned conduct did not cause MEL to lose any opportunity because it would have lost it in any event.

As I have explained, when MEL articulated its (second) causation case during the hearing, the counterfactual advanced was that Port Authority would not have paused construction in October 2020. It was contended that there would have been no pause, including because Port Authority had MEL as an anchor tenant or prospective anchor tenant.
In the real world, construction was paused in October 2020 in order to undertake some redesign work to accommodate the needs of Austrak, who was at that time the only prospective anchor tenant. On MEL’s second causation case, there was no accommodation of any redesign for Austrak. Rather, Port Authority would have continued construction in October 2020.
There is a fundamental difficulty with this case. Construction of the facility began in August 2020. It was expected to take 12 to 18 months to construct the facility. That means that in October 2020, the facility would have been expected to be completed sometime between August 2021 to February 2022. In MEL’s counterfactual world, in October 2020 NSR would still have been working to prepare approvals. On the case advanced at trial, actual approvals would reasonably be expected to be more than 2 years away (November 2022) and MEL would likely be in a position to sell sand from the facility from May 2024.
It is farfetched to contemplate that Port Authority would, in a counterfactual world, have determined in October 2020 that it should proceed with construction of the facility. If construction continued, Port Authority would be expected to finish construction by February 2022 at the latest, which was more than 2 years before MEL would have been in a position to actually use the facility. It would have been inconsistent with all of Port Authority’s actual conduct and with its strategic objectives for it to continue build a facility only for it to lie idle (or largely so) for 2 years. Even if MEL agreed to pay rent for over 2 years before it could generate revenue (which is inconceivable), Port Authority is unlikely to have been willing to build a facility only for it to be largely unused.
The case that construction would have commenced in August 2020 and continued in October 2020 plainly cannot succeed. Factually, that case collapsed when MEL abandoned any argument based on sand supplied from Stockton or Moreton Bay. That is because sand was not going to be available from Rushy Lagoon until May 2024 and it is not realistic to suppose that that prospect would have been sufficient to cause Port Authority to continue to construct the facility in October 2020.
In the following sections, I consider in some detail the question of whether Port Authority would have made a decision in November 2022 to resume construction of the facility. It will be seen that the considerations that show why Port Authority would not have made that decision also serve to show that there is no reasonable prospect that Port Authority, in a counterfactual world where there was no (assumed) unconscionable conduct, would have made a decision in October 2020 to continue to construct the facility, rather than to suspend construction.

The difficulty with MEL’s second causation case may lie behind the pivot in its closing written submissions in reply to rely squarely on the third causation case. MEL’s third causation case involved a decision by Port Authority to suspend construction in October 2020 and a further decision to resume construction in about November 2022. I understand that this case proceeded on the basis that by October 2020, construction of the facility had commenced with a view that Austrak would occupy at least 80% of the facility, with Boral and Holcim having pulled out of the EOI process. It proceeded on the basis that construction was suspended to undertake redesign work to accommodate Austrak’s requirements. I understand that, on this case, Austrak pulled out of the negotiations, as it did in the real world, in July 2021. Presumably, on this case, by November 2022, Port Authority would have been sufficiently confident that MEL would be a viable tenant with the ability to import sand from May 2024, that it would have decided that construction should resume in November 2022, and Port Authority would have granted to MEL the Lease. On this case, the facility is completed just as MEL is ready to start selling sand, coming from Rushy Lagoon, in May 2024.
MEL never articulated with any clarity how, in the counterfactual world, Port Authority and MEL would have engaged with one another up to November 2022, when Port Authority would have resumed the construction. In oral submissions in reply, it was submitted for MEL that there would be every reason to expect Port Authority and MEL to engage in ordinary dealings with each other, consistent with the agreement for lease being on foot, but with Port Authority making the inquiries it did make, or conducting the process that it did conduct, in relation to the EOI. How those “ordinary dealings” would or might have played out was not explored.
I am not satisfied that MEL established on the balance of probabilities that, in the counterfactual world, Port Authority would have resumed construction of the facility in November 2022 and that it would have granted the Lease to MEL (with occupation to commence in May 2024). For reasons I have given, I have concluded that if the impugned conduct had not occurred, it is likely that Port Authority or MEL would have lawfully terminated the agreement for lease before the sunset date. For reasons given below, I am also satisfied that even if the agreement for lease was not terminated before the sunset date, Port Authority would not have resumed construction in November 2022. In the counterfactual world, as in the real one, the facility would not have been constructed and there would be no Lease.
I accept that in November 2022, Port Authority remained interested in building a facility at Glebe Island and would likely have been enthusiastic about a viable prospect of sand coming into the facility from Tasmania. However, the conduct of Port Authority in the real world (and putting aside the alleged unconscionable conduct), indicates that it would not have resumed construction in November 2022 without being satisfied that MEL was a viable tenant. I have concluded that it is highly unlikely that MEL would ever have been able to provide that level of satisfaction.
On MEL’s third causation case, the agreement for lease is not terminated before condition 6 is satisfied, construction of the facility commences in August 2020, is suspended in October 2020, and is resumed in November 2022. This directs attention to how the world would have looked in November 2022. That would inform any decision by Port Authority to resume construction. Various matters would have informed any decision to resume construction. Many of the matters are interrelated. They include: (a) whether the relevant approvals to mine and import sand had been secured; (b) whether MEL could demonstrate that NSR could secure the funding necessary to build the mine infrastructure at Rushy Lagoon; (c) whether it could reasonably be expected that the Rushy Lagoon resource was a reasonable source of supply; and (d) whether MEL could demonstrate a viable business case. I address each of these matters below.

I have outlined the steps that NSR has taken towards obtaining the approvals. None has yet been obtained. NSR has no operating activities that generate revenue and has relied on external funding to take steps towards obtaining the approvals necessary to establish and operate a sand quarry at Rushy Lagoon. Mr Ellis has not had the means to fund NSR. Funding has come from Mr Luke Deane, a director of MEL and NSR, who has also been funding the proceedings. Mr Deane stopped providing funding to NSR in about April 2024. NSR is not in a position to pay the consultants to perform the necessary work to obtain the approvals, and some consultants have not been paid for past work and have refused to undertake further work. This means that NSR does not currently have the funding to take the necessary further steps to secure the approvals. Nevertheless, MEL contended that if there had been no unconscionable conduct, NSR would have obtained all the approvals by November 2022.
There was expert evidence about the approvals required and the likely time required to secure approvals.
MEL relied on the expert evidence of Mr John Miedecke, who is a civil engineer with post-graduate qualifications in natural resources and environmental studies. He has decades of experience in obtaining approvals for mining and other projects, in Tasmania and elsewhere. Mr Miedecke is not an independent expert. He has been engaged by NSR as a paid consultant since late 2021. His roles for NSR have included supervising a consulting team for the Rushy Lagoon project, commissioning and reviewing the studies and reports prepared by other consultants for the progression of the proposed project and relevant approvals and preparing the draft notice of intent to the EPA. He has acted on NSR’s behalf in meetings with the EPA and Mineral Resources Tasmania.
Mr Miedecke’s evidence was principally directed to the question of the likelihood and timing of NSR obtaining the necessary approvals to mine sand from Rushy Lagoon. It was a forward-looking exercise from March 2025 (the time of his second report). His conclusion was that it is “likely” that NSR will secure the necessary approvals and that on a “best-case”, the approvals could be secured in 13 months.
There are some difficulties with Mr Miedecke’s evidence that diminishes its utility. His evidence concerns the prospect of NSR securing approval from March 2025 in light of information known to him as at March 2025. For example, he took into account information about the size of the resource that was obtained in 2023 as well as drilling results provided to NSR in 2023 and 2024. His written expert evidence does not address the issue of whether NSR could have obtained approvals if it took steps to obtain approvals in 2020, or how long it would have taken to obtain approvals if applications were made in 2020. An opinion in March 2025 about the likelihood of an approval does not prove that, in a counterfactual world, approvals would have been likely and taken the same amount of time if an application was made in 2020. The proper counterfactual analysis requires identification of information that would have been at hand in the counterfactual world and an assessment of what the approval process would have looked like between 2020 and 2022. Mr Miedecke’s written evidence did not address this counterfactual.
Mr Miedecke’s opinion was that as at March 2025, it was “very likely” that NSR would obtain a mining lease because it would be able to satisfy the requirements of the Mineral Resources Development Act. At all relevant times, s 78A(1) of the Mineral Resources Development Act provided as follows:

During the course of cross-examination, Mr Miedecke volunteered some evidence that suggested that his opinion about the likelihood of obtaining a mining lease would be the same for earlier times. That evidence was vague and was not responsive to the question that was put to him. It suggested that he was an advocate for NSR. I am not prepared to place any weight on this volunteered evidence.
Mr Miedecke’s evidence was that NSR did not have “an appropriate mining plan”, but he was confident that one could be prepared. He recognised that the mining plan would only be able to be finalised upon the completion of further presently ongoing tests, assessments and environmental studies. Tests are required to obtain a hydrology report. There needs to be further assessment of drilling results.
As to the requirement that an applicant satisfy the Minister that it is likely to have sufficient financial and technical resources to carry out the mining plan, Mr Miedecke’s evidence was that the sort of information Mineral Resources Tasmania usually requires are expressions of interest from potential investors such as banks or equity investors, or a stated intention to list the company on the stock exchange. His evidence was that Mineral Resources Tasmania will usually want to be satisfied that an applicant can obtain the necessary funding to fund the capital expenditure and operating expenditure for the mine.
Mr Miedecke relied on the fact that NSR has engaged Dr Samuel Lackey to prepare a Joint Ore Reserves Committee (known as JORC) report and feasibility studies for the mine, and that “Dr Lackey considers that the project is very attractive for potential investors”. I will return to Dr Lackey’s evidence. For reasons given below, I am not satisfied that Dr Lackey’s opinions about the attractiveness of the investment are reliable.
Mr Miedecke also gave evidence that the exploration licence access agreement between NSR and MEL “would have been of significant support” to NSR’s application for a mining lease, “assuming NSR could also demonstrate that Port Authority was in support of MEL’s Project”. This language suggests that Mr Miedecke was contemplating a counterfactual world, not the real world looking forward from March 2025. That is because he uses the past tense and contemplates a world where Port Authority supported MEL. In the counterfactual world advanced by MEL, it would be put too highly to say that Port Authority was in support of MEL’s project – all that could be said is that Port Authority had not terminated its dealings with MEL, but that it remained uncertain (at the time approval was being sought) whether Port Authority would grant a lease to MEL.
Port Authority relied on expert evidence from Dr Richard Barnes on the issue of the sufficiency of NSR’s financial resources to carry out a mining plan. Dr Barnes is a town planner, ecologist and environmental scientist. Dr Barnes’s opinion was that Mr Miedecke understated the information that would be required to satisfy the Minister that an applicant is likely to have sufficient financial resources to carry out a mining plan. The value of his opinions was also diminished because he too was addressing the information that was required as at March 2025. He gave some evidence that the “bar” had been raised in the “last couple of years”, which means that his evidence does not go far in addressing the likelihood that NSR would have secured a mining lease by November 2022 if it had pressed an application in a counterfactual world.
Although there were various areas of disagreement between Mr Miedecke and Dr Barnes, at its heart the difference between them was that Dr Barnes’s evidence was that NSR has not provided material to Mineral Resources Tasmania that demonstrated sufficient financial resources to carry out a mining plan, while Mr Miedecke considered that NSR would be able to do so, including by identifying and putting forward a significant third party investor. He relied on Dr Lackey’s view that such an investor could be secured.
I do not accept that Mr Miedeke’s evidence provides a sufficient foundation to establish that NSR could have provided material to Mineral Resources Tasmania that demonstrated sufficient financial resources to carry out a mining plan. But I also do not accept that Dr Barnes’s evidence established that NSR could not have done so, because he did not address that counterfactual question.
As to the various other approvals, Port Authority relied on expert evidence from Ms Emma Riley, who is a town planner with extensive experience working as a planner in Tasmania. Her evidence focussed principally on approvals under the Environmental Management and Pollution Control Act and the Land Use Planning and Approvals Act. Mr Miedecke responded to her evidence.
The evidence from Ms Riley and Mr Miedecke (including their joint report) does not directly address the counterfactual now advanced by MEL, which involves the contention that NSR would have made all of the necessary applications for approvals by around November 2020. The timing could be important. For instance, if the jetty proposed by NSR was to be built on an actively mobile landform (which has not been formally established), it runs into the difficulty that the State Coastal Policy 1996 (Tas) prohibits the development of the jetty. But there is evidence that this law was, erroneously, not being applied in 2022. This means that a planning hurdle NSR may face now would not have existed in 2022. Although the counterfactual is not addressed, it is clear from the evidence of Ms Riley and Mr Miedecke that the approval process that NSR would have faced from 2020 was complex and involved many steps.
Ms Riley’s evidence was that a reasonable but still optimistic real-world timeframe to navigate the approval process through to the issue of permits would be over 2 years (not including any specific permits required under the Threatened Species Protection Act 1995 (Tas) or the Aboriginal Heritage Act 1975 (Tas). On a best-case scenario, her opinion was that approval under State and Commonwealth legislation would be 1 year and 7 months (assuming no requests for further information, stop-clock periods, limited public interest in the application and no planning appeals). Mr Miedecke’s evidence was that on a best-case scenario, approval could be achieved in around 13 months.
Ms Riley and Mr Miedecke agreed that if the EPA did not prioritise the approval process, a fair estimate of the approval process was around 2 years. Ms Riley’s evidence was that in her experience, the EPA did not prioritise one project over another. Mr Miedecke accepted that there was no formal process by which the EPA expedited a project, but considered that a project such as Rushy Lagoon might be assigned to a more experienced officer who would have the ability to move the approval forward more expeditiously than a less experienced officer.
Having regard to the evidence of Ms Riley and Mr Miedecke, I conclude that if NSR had pressed ahead and made all of the necessary applications by November 2020, there was a reasonable chance that the approvals would have been granted by November 2022. On a fair estimate, the approvals would have been obtained. It is possible, if everything went as smoothly as possible, that the approvals would have been granted comfortably by November 2022. However, there was certainly a real risk, given the complexity of the process and the number of impediments that could arise, that the approvals would not have been granted by November 2022.
NSR could only have obtained the necessary approvals earlier, in the counterfactual world, if it had the means and will to pursue the approvals earlier than it did in the real world.
Mr Ellis’s evidence was that it was his belief that if the agreement for lease had not been terminated by Port Authority, he would have caused the steps necessary for the commencement of the export of sand by sea by NSR to be undertaken much sooner than has occurred since the termination of the agreement for lease. His evidence was that he believed that NSR would have been in a position to do so because it would have had the funding for the preliminary costs provided by MEL. He gave evidence (in an affidavit made on 16 November 2022) that it was his belief that NSR would have been in a position to commence the export of sand from Rushy Lagoon within 36 months of Port Authority's preliminary notification being provided to MEL under cl 2.8(3) of the agreement for lease. Under the agreement for lease, that notification is to be given on satisfaction of all of the conditions precedent. Mr Ellis also gave evidence (in an affidavit of 8 February 2024) that he would have caused NSR to undertake steps if MEL was granted a lease in February 2019 (although, as I have said, MEL contended that this was an obvious error and suggested that Mr Ellis may have intended to refer to February 2020, or some other year).
The result is that there was no clear evidence from Mr Ellis about what NSR would have done. I do not consider this to be conclusive against MEL, or even of any real weight, given the limited utility of hypothetical evidence from Mr Ellis about what NSR would have done in 2019 or 2020: see Daynes at [163].
I place weight on the objective evidence. The exploration licence access agreement between MEL and NSR made on 11 February 2019 provided, in broad terms, that MEL was engaged to fund and carry out exploration of the Rushy Lagoon site and would fund the cost of obtaining a mining licence and the other approvals. In return, MEL would have the exclusive right to sell and dispose of sand mined from the site. This means that as a matter of commercial reality, decisions about moving forward to secure the relevant approvals rested with, and would be funded, by MEL. The recitals recorded that the parties contemplated that the facility would be constructed, that there would be a lease granted to MEL and the lease would commence in about August 2020. (It is obvious now that the prospect, in February 2019, that sand would be available from Rushy Lagoon to enable MEL to meet the contemplated minimum required throughput amounts under a lease to commence in August 2020, was nil.)
It is easy to see that MEL would have been highly motivated to press on with the exploration and development of Rushy Lagoon if the conditions precedent in the agreement for lease were satisfied and Port Authority made a preliminary determination under cl 2.8(3) of the agreement for lease, allocating 3 bays to MEL. At that point, MEL would be confident that the facility would be constructed and that it would be a tenant, and it would expect to have lease obligations, including significant payments of rent, within 12 to 18 months. The commercial imperatives would be more muted before any notification.
In the counterfactual world (on the third causation case), MEL would remain uncertain that the facility would be constructed and that it would be a tenant until November 2022. MEL would have had an incentive to provide funding to NSR to prepare the necessary approvals. That is because MEL’s prospects of securing a lease would be enhanced if it could demonstrate to Port Authority that Rushy Lagoon was a viable source of sand. Nevertheless, in the counterfactual world, until November 2022 there was a substantial risk that money spent by MEL for the development of Rushy Lagoon would be lost because of the uncertainty that the facility would be constructed and MEL would be a tenant. Up until the time Austrak pulled out on 12 July 2021, MEL faced the real prospect that it would not be granted any space in the facility, because the space would go to another tenant. Additionally, after construction was paused, there was a real prospect that construction would not be resumed.
There was not much evidence from which a conclusion can be drawn about MEL’s likely ability to obtain funding to pay the costs to be incurred in order for NSR to obtain a mining lease and for other approvals. In November 2018, a rights issue by MEL raised $297,000, with a view of meeting MEL’s operating costs between October 2018 and February 2019. MEL contemplated a capital raising program, with a view to raising $2,500,000 during 2019. Mr Psaltis’s evidence was that he did not have specific commitments from MEL’s shareholders but that, absent investments from prospective customers, he expected that previous investors “would have contributed those funds if MEL had been granted a lease for space at the multi-user facility”.
One of the previous investors was Mr Deane, who made investments through two companies. Mr Deane gave evidence in the proceedings but was not cross-examined. He did not give evidence about his financial position as at 2019 or as to his willingness to provide additional funding in 2019, or through to 2022. Mr Psaltis’s evidence about his expectations as to investment “if MEL had been granted a lease”, highlights that the position may well have been different if MEL had not been granted a lease, but there was merely a prospect that a lease would be secured at some unidentified time. There is a real chance that MEL would not have secured the funding necessary to enable it to have NSR proceed more quickly with the approval process for Rushy Lagoon.
Weighing these matters together, I conclude: (a) MEL has not established that it is more probable than not that NSR would have secured a mining lease by November 2022; (b) there is a reasonable chance that NSR would have been able to obtain the other necessary approvals (assuming it moved promptly to seek them) but that was uncertain; and (c) MEL has not established that NSR would have had the financial ability to seek to obtain any approvals more quickly in the counterfactual world compared with the real world.

If MEL was to import sand from Rushy Lagoon, it would be necessary first for NSR to construct a mine and obtain the associated infrastructure. On any view, the amount required to undertake that work was substantial, certainly relative to the amounts that had been invested by NSR or MEL. The amount required was well beyond the means of MEL or NSR and it was always going to be necessary to secure fresh funding to be able to meet the investment costs.
The principal evidence relied on by MEL to support the contention that NSR would have been able to secure funding came from Dr Lackey. He has a PhD in mining engineering as well as a Master of Business Administration and over 50 years’ professional experience working in the mining and infrastructure investment industry. He is not an independent expert. He was engaged as a consultant to NSR in about March 2021 to assist with the Rushy Lagoon project and has spent around 370 hours undertaking that work. At times during his cross-examination, I formed the view that he was giving evidence as an advocate for NSR and MEL rather than purely impartial evidence. He appeared generally to perceive that his role in the proceedings was to support and advance MEL’s case. For example, he accepted that during the conclave with Mr David Bolton (an expert for Port Authority), he drew on his background knowledge to seek to advance MEL’s position in the proceedings. His lack of impartiality diminished the utility of his evidence.
Dr Lackey gave evidence on various topics. He prepared joint reports with 3 experts retained by Port Authority: Mr Andrea de Cian, Mr Bolton and Mr Don Reed (each of whom are experts in different fields). A key topic of evidence from Dr Lackey concerned his opinions about the likelihood of NSR obtaining funding in order to construct a sand mine at Rushy Lagoon. Based on four scenarios that were put to him, he considered that the project would have been “very attractive” or “highly attractive” to an investor in 2022 and that NSR would have been “highly likely” or “very likely” to obtain investment.
Even apart from a lack of impartiality, there were difficulties with Dr Lackey’s evidence which had the consequence that his evidence as to funding did not assist MEL in any meaningful way. In short, Dr Lackey addressed questions that did not correspond with the correct counterfactual and he made assumptions that were not made good on the evidence. His opinions about funding in 2022 relied on information that would not have been available in 2022, including borehole logs from 2023 and 2024. It is possible that in a counterfactual world, this information would have been obtained earlier than it was in the real world. But this is speculative.
The question of funding is important. Examining this question leads to consideration of evidence about various topics, because they feed into the analysis about funding.
The first three scenarios addressed by Dr Lackey all involved an instructed assumption that NSR commenced exporting sand in around 2022. His opinion in respect of those scenarios depended on that assumption. The assumption was not made out because MEL now accepts that NSR would not have been in a position to commence exporting sand until May 2024.
Scenarios 1 to 3 also assume that the capital expenditure required to commence and maintain sand mine production was $48,000,000. MEL did not adduce admissible evidence to support that assumption. In closing submissions, MEL contended that a conservative estimate of the required capital expenditure, as at January 2022, was just under $70,000,000. This amount is materially higher than the figure used in Dr Lackey’s modelling. His modelling was highly sensitive to his assumption about capital expenditure. This, by itself, means that his views arising from these scenarios do not provide a foundation for a conclusion that funding could have been obtained.
The estimate of $70,000,000 was said to be drawn from the expert evidence of Mr John Gardiner and Mr John Goulding, as well as the evidence of Mr Ellis. Mr Gardiner was called by MEL. He has formal qualifications as a civil engineer and has extensive experience in the operation of quarries, particularly sand quarries. He has provided advice and assistance to MEL and NSR on an ad hoc basis from about 2019, and continues to provide consulting services to NSR. Mr Goulding was called by Port Authority. He has been involved in the sand dredging and quarrying industry for about 40 years. Mr Gardiner and Mr Goulding were able to come to a considerable amount of agreement, and where they disagreed they accepted that the other view was a respectable one. I found their evidence to be helpful.
The evidence of Mr Gardiner and Mr Goulding only supported some of the amounts that lay behind the $70,000,000. Port Authority relied on evidence from Mr Neil Gray, an expert accountant. Based on material provided to him, he calculated the required capital expenditure to be approximately $72,500,000 (if 1 dredge was used) or $82,800,000 (if 2 dredges were used, which is what Mr Ellis had planned). There was no challenge to this evidence.
There were other items that formed part of the $70,000,000 which were not addressed by Mr Gardiner and Mr Goulding and which may have affected the reliability of the figure as an estimate of the capital expenditure required for NSR to be ready to export sand. The $70,000,000 included $12,000,000 for the cost of an offshore loading jetty. This was Mr Ellis’s estimate of what would be spent by NSR; it was not evidence of the amount that would be required to construct a jetty. Mr Bolton (who has lengthy experience as an executive of and consultant to major concrete manufacturers) gave evidence that there was a lot that was not known about the necessary capital investment, which, he said, would be a concern to any investor. It was his evidence that the potential cost of the jetty by itself could be over $100,000,000. There was very little evidence to support the $12,000,000 estimate and I accept that there is a significant risk that it understated the true amount that would have been required, possibly by a considerable amount.
The $70,000,000 also included $10,200,000 for a transfer vessel. This figure was derived from some evidence from Mr Ellis about the cost of a vessel and from Mr Craig Boulton (an independent naval architect called by MEL) about the costs of modifying a particular vessel. A difficulty with this evidence was that it was based on a particular vessel that was available for sale prior to October 2021 but not afterwards. The vessel would not have been available in 2022 at the time NSR would have been looking to raise capital. The consequence is that there was no satisfactory evidence about the availability and cost of securing a vessel in 2022, including the costs to make appropriate modifications and have the vessel transferred to Tasmania. There was some disagreement between Mr Boulton and Mr David Lyons (an expert called by Port Authority) about the cost to modify the “Identified Barge”. I take from this evidence that the cost to modify a vessel will depend on the particular vessel and involves approximation. This highlights the importance of either identifying a particular vessel, or recognising that the cost of a vessel cannot be predicted with precision.
All this leads to the conclusion that the assumption that the capital expenditure required was $48,000,000 was not established and was shown to significantly understate, by at least $20,000,000, the likely requirement. It also demonstrates that the necessary capital expenditure would have been difficult to estimate with precision and confidence in 2022.
Scenarios 1 to 3 required Dr Lackey to assume that the operational expenditure required for the mine was in the range of $6 to $8 per tonne of sand plus an additional $1.20 per tonne for “capex maintenance”. Dr Lackey took the midpoint of $7 and added the assumed $1.20 to arrive at a figure of $8.20 per tonne for his modelling.
There was support for the estimate of $8 per tonne for land-side operations from the evidence of Mr Goulding (with which Mr Gardiner agreed). However, they agreed that on top of the $8, an allowance ($1.30 per tonne) was required for dealing with waste, which they expected to be 30% of the dredged material. There was evidence (from Mr Rodney Huntley and Mr Dugald Gray) suggesting that the figure of 30% is an underestimate because it is based on a Tasman Geotechnics report that does not account for various matters, such as layers of clay within the resource. Mr Goulding’s estimate also excluded access fees, royalties, operational costs for the wharf and transfer vessel and all overhead personnel. It was not possible on the evidence to obtain an estimate about these additional costs. Mr Goulding and Mr Gardiner also agreed that estimates about operating costs were provisional pending the formulation of a final mine plan. There was some evidence from Mr Bolton and Mr Reed (an expert geologist called by Port Authority) indicating that operational costs could be expected to be in the range of $14 to $17 per tonne. Neither of these experts were as qualified as Mr Gardiner and Mr Goulding to provide evidence about the likely operating expenditure. Putting these matters together, I accept it is likely that the figure for operational expenditure used by Dr Lackey in his modelling for scenarios 1 to 3 ($7 per tonne) materially understated the true likely operational expenditure that would be required.
There is another matter that leads to the conclusion that there was likely to be uncertainty in 2022 in the counterfactual about the likely capital expenditure to construct a mine and operating expenditure to run it. It was common ground between Mr Gardiner and Mr Huntley (a geologist and geotechnical engineer called by Port Authority) that a key issue at Rushy Lagoon that still has not been addressed with any certainty concerns water balance. They contemplated that the possibility that fluctuation of water levels would mean that water discharge or water importation licences would be required, which “is a cost and potentially a very significant one”.
Dr Lackey gave an opinion about the attractiveness of an investment in 2022. However, for scenarios 1 to 3, any investment was required well prior to 2022 (around 18 months) in order to provide NSR with the funds necessary to construct the mine infrastructure as well as acquire plant and equipment (including a jetty and transfer vehicle). That is, Dr Lackey was addressing an investment at a time that was too late if sand was to be ready for exporting in 2022. This is another reason why Dr Lackey’s opinions, arising in relation to scenarios 1 to 3, did not advance MEL’s case.
Scenario 4 differed from scenarios 1 to 3 in that it assumed that NSR commenced exporting sand in around 2024. It assumed that capital expenditure was $65,000,000 and operational expenditure was $18.50 per tonne. These assumptions more closely align with the evidence that was given at trial. However, scenario 4 also involves 2 further assumptions that materially depart from the case MEL now advances. First, scenario 4 contemplated that 1,500,000 tonnes of sand is sold annually for 25 years. But MEL’s case proceeded on the basis that the annual volume of sand exceeded 1,500,000 tonnes by year 2 and would reach well in excess of 3,000,000 tonnes per annum. Second, scenario 4 assumes the price that NSR sells sand to MEL was initially $22.50 per tonne. However, MEL’s case now is that the starting price of sand sold by NSR to MEL would be no more than $15 per tonne.
The issue of the potential selling price to MEL is an important matter. Mr Ellis gave evidence that he anticipated that NSR would have sold sand to MEL for $15 per tonne (excluding shipping costs) in the first year of operations, which he contemplated to be in 2022. That figure was derived on an estimate for capital expenditure of $40,000,000 and operational expenditure in the range of $6 to $8 per tonne. He considered that NSR would make a reasonable profit on that basis. He did not give direct evidence about pricing if the true capital expenditure cost was closer to $70,000,000 and if operational expenditure was likely to be somewhere above $10 per tonne, and perhaps as high as around $17 per tonne or thereabouts. Obviously enough, given that the funding for capital expenditure would have to be raised externally, it may be expected that any external funder would wish to be satisfied that NSR would generate sufficient earnings to justify the investment. The evidence did not disclose the pricing levels from NSR that would be sufficient to justify a capital investment of around $70,000,000.
While Mr Ellis gave evidence about pricing levels necessary for NSR to generate a profit, Mr Psaltis gave evidence about the prices that MEL would be prepared to pay so that MEL would generate a profit. He had a model prepared for the purpose of ascertaining the price to be paid by MEL for sand from Rushy Lagoon. He estimated that assuming a price of $10.50 per tonne, MEL’s investors would earn an internal rate of return of 28.30%. His evidence was that his position in relation to the price of Rushy Lagoon sand would have been a starting price of no more than $10.50 per tonne. It is apparent that Mr Psaltis’s model was (not surprisingly) sensitive to the price of sand. At a price of $11.50 per tonne, the internal rate of return would drop to 25.63%.
It is correct, as MEL submitted, that Mr Ellis did not unequivocally state that he considered that NSR would never have accepted a cent less than $15 per tonne. Nor does Mr Psaltis unequivocally state that he would never have agreed to MEL paying a cent more than $10.50 per tonne. But Mr Ellis did not give evidence that he contemplated NSR charging less than $15 per tonne and nor did Mr Psaltis give evidence that he contemplated MEL paying more than $10.50 per tonne. The gap is significant. The gap would have to be larger if Mr Ellis’s calculations were based on projected capital expenditure of nearly $70,000,000, rather than $48,000,000.
On the basis of this evidence, two important conclusions can be drawn. First, a sale price of $22.50 is not one that MEL would likely have agreed to pay. Second, and more significantly, on the evidence there is no realistic prospect that NSR and MEL would have come to an agreement about price before NSR undertook any significant capital expenditure on the mine because there was no demonstrated price range that would enable both entities to conduct profitable operations. This has important consequences, to which I will return.
Given that $22.50 per tonne was not shown to be a price that MEL would have been willing to pay, being more than double the price that Mr Psaltis used to model a reasonable return for MEL’s investors, and given the assumed sales volumes, Dr Lackey’s opinions based on scenario 4 do not assist.
Even putting aside the difficulties with the assumptions lying behind scenarios 1 to 4, there were further difficulties with Dr Lackey’s evidence and his conclusion that NSR would have been an attractive investment for a funder.
Dr Lackey’s analysis proceeded on the basis of a hurdle rate of a 13% return, pre-tax. He drew on a paper issued by the Reserve Bank of Australia that, he said, indicated that “to achieve the likelihood on investment a project should have an internal Rate of Return exceeding a Hurdle Rate of between 10% to 13%.” However, the paper makes it clear that hurdle rates will be variable and subjective. The paper does not suggest that 13% is a figure that can properly be used in a mechanical way to determine whether an investment in NSR should be made. The paper indicates that hurdle rates used by the companies that were surveyed vary widely, from a little less than 10% to up to 30%. The paper also refers to returns on a post-tax basis, which further indicates that Dr Lackey’s reliance on the paper was misplaced. I did not consider Dr Lackey’s evidence about hurdle rates to be helpful.
Port Authority relied on expert evidence from Mr de Cian, who is an accountant with expertise in providing valuations for financial reporting, including to provide advice on the merits of a proposed transaction. He has experience in the mining sector. Mr de Cian disagreed with Dr Lackey’s opinion that NSR would be able to raise the necessary funding in 2022. His reasons, by way of summary, were as follows:

MEL made serious, general attacks to the credit of Mr Reed, Mr Huntley and (to a lesser extent) Mr Bolton. Port Authority attacked the credit of Mr Gray. I address these matters below. For reasons I will come to, I treated Mr Reed and Mr Huntley’s evidence with caution to account for a risk that they did not have the appropriate degree of impartiality. There was a part of Mr Gray’s evidence in cross-examination that suggested some unwillingness on his part to make reasonable concessions. I will deal with that below.
The number of expert witnesses and the complexity of the evidence was a reflection of the number of scientific and engineering matters that were relevant to the path to the viable extraction of sand from Rushy Lagoon. Given the conclusions I have otherwise reached, it is unnecessary for me to deal in any detail with the many and often highly technical issues that emerged from this evidence.
At the time the agreement for lease was terminated in March 2019, there had been some preliminary investigations of the site at Rushy Lagoon, conducted pursuant to an exploration licence. No one suggested that enough was known to draw any conclusion about whether the resource would provide sand to meet MEL’s requirements. There was the potential for Rushy Lagoon to provide sand to meet MEL’s needs. The access agreement between MEL and NSR made on 11 February 2019 contemplated exploration of the Rushy Lagoon site. That exploration had not occurred before the agreement for lease was terminated.
Mr van Koeverden’s first report drew some conclusions based on geotechnical investigations conducted in June 2021. He concluded that the results represented an unprocessed sand material that would need to be screened and washed prior to use as construction fine sand. He considered that sand could be produced that was suitable for the manufacture of construction concrete and mortars in the greater Sydney region. In response, Mr Mahaffey and Mr Reed expressed the view, in effect, that the June 2021 testing was not sufficient to show that Rushy Lagoon could produce suitable sand and that further testing was required. In reply, Mr van Koeverden maintained that the Rushy Lagoon resource could be processed to produce a construction fine sand, notwithstanding that final product testing was not available. He recognised, however, that use of the Rushy Lagoon sand may require changes in concrete mix designs.
Mr van Koeverden expressed his views without the benefit of geotechnical information that was generated in 2023 and 2024, being the draft engineering borehole logs dated June 2023 from Tasman Geotechnics, a Boral sieve analysis report of August 2023 and Tasman Geotechnics borehole logs from drilling in February and March 2024. During cross-examination, Mr van Koeverden (who by then had seen the 2023 and 2024 results) agreed that lack of homogeneity within a sand deposit increases the complexity of extraction, processing and achieving consistent sand in bulk for use in concrete. He maintained that the presence of dune sand was a favourable thing but said that there would have to be further testing and validation to conclude that the sand was suitable for use in concrete.
Mr Gardiner’s view was that there was no additional need for testing. He considered that the testing has shown that there is considerable variability and that a mine plan can be prepared on the basis of that variability, and that the mine plan and equipment choices would allow for and accommodate that variability. Mr Gray also considered that there has been sufficient drilling and testing for a mine plan to be developed (after a resource model was made available).
Mr Mahaffey, Mr Reed and Mr Huntley considered that the 2023 and 2024 data undermined the prospect that Rushy Lagoon was a viable source of sand, essentially because the testing highlighted the variable nature of the sand deposits. Mr Mahaffey expressed the view that “the uniformity of the material is poor for a commercial sand source”. Mr Huntley expressed similar views.
Mr Reed’s view, expressed generally, was that there was still a substantial shortfall in knowledge about the geological make-up of the Rushy Lagoon resource but that the current information cast serious doubt on the proposition that the site was commercially viable. His evidence was that while the site could be dredged, “I don’t believe you can achieve anywhere near a commercially viable yield”.
Mr Reed came under strong attack, with the suggestion that he was motivated to do what he could to advance Port Authority’s case. For the most part, the detail of his underlying reasoning was left untouched. For reasons developed in more detail below, I do not accept that Mr Reed set about deliberately to take every position he could to favour Port Authority. I do not accept that he set about to flout his obligations as an independent expert. I do consider that he may subconsciously have approached his evidence with a tendency to favour Port Authority. The same is true of Mr Huntley. I would say the same about Mr Miedecke and Mr Gray, save that their subconscious tendency was to favour MEL.
Overall, on the issue of suitability, my principal conclusions are as follows. As at March 2019, when the agreement for lease was terminated, Rushy Lagoon was a prospective source of sand but there had not been enough investigation to determine with any confidence that it was capable of producing sand to meet MEL’s requirements. MEL had the benefit of an access agreement which contemplated further exploration of the site. The June 2021 test results did not indicate that the site was unsuitable. They suggested that there was variability, but were sufficiently positive to justify further investigation. The 2023 and 2024 results indicated that the variability in the site is significant (and more than was suggested by the 2021 results). Views can legitimately differ about whether further testing was necessary or desirable. It is not possible today to say that the site is capable of producing the volume of sand that would have been required by MEL on a commercial basis. That could not be done without a mine plan, at the least. I accept that the evidence indicates that the resource includes a significant amount of sand that could be mined and used for construction in the greater Sydney region, but there remains a great deal of uncertainty about whether that sand is capable of being won in a cost-effective manner.
The underlying character of the resource at Rushy Lagoon is the same in the real and counterfactual worlds: what lies below the ground does not change. In the counterfactual world, there is the prospect that testing and planning occurs earlier than it did in the real world. The exploration contemplated by the access agreement of February 2019 did not proceed with the speed that might otherwise have occurred if the agreement for lease was not terminated. At best for MEL, I cannot proceed on any basis other than that, in the counterfactual world, the parties would have learned by November 2022 what they know now about the resource. It may be that there would have been further investigations in the counterfactual world than have been undertaken to date. But there is no basis to think that those investigations would have revealed the site as being either more or less suitable than is currently known. That is, the hypothetical additional testing was as likely to produce bad news as good news.
This means that in the counterfactual world, MEL was unlikely to have been in a position to demonstrate to Port Authority that the parties could be confident that Rushy Lagoon was a resource capable of supplying sand to MEL on a commercially sustainable basis. I accept that MEL would have been able to assemble experts who would have been willing to offer opinions that the resource appeared to be viable. But I also accept that advisors to Port Authority (and also to MEL) may have expressed a more pessimistic view. That would mirror the differences in opinions advanced by experts in this case. The likely position in the counterfactual world is that the viability of the resource was uncertain.

The evidence concerning the viability of MEL’s business in the counterfactual world focussed on the price that MEL would pay NSR for sand, the price that MEL could achieve when selling sand in Sydney and the cost to ship sand to Sydney. I have already addressed the first of these matters. I will now turn to the other two matters.
The prices that MEL would or may have achieved for sand sold in the greater Sydney region is relevant for a number of reasons. Most fundamentally, it informs the likely profit (or loss) from MEL’s business. This, in turn, informs questions about whether MEL was likely to proceed with the project, whether NSR and MEL could secure funding, whether Port Authority would have recommenced construction, and the quantum of any profit that would have been generated by MEL if the project had proceeded.
The price that MEL would be likely to be able to charge can reasonably be expected to reflect an interplay between supply and demand. One of the important motivating circumstances that was encouraging Port Authority to build a multi-user facility in the first place was an anticipated shortage of construction fine sand for the construction industry in Sydney. A shortage of sand may be expected to result in an increase in price, to enable supply to match demand. With higher prices, suppliers can look to more expensive and alternative sources of sand and still make profits.
One of the topics addressed by Mr van Koeverden, Mr Chandler and Mr Mahaffey concerned the move over time by concrete suppliers to shift away from natural fine sand (which was the product MEL was proposing to import and sell) towards manufactured sand (a sand produced from the crushing, screening and combining of quarry materials) in their concrete mixes. Mr van Koeverden gave evidence that the percentage of manufactured sand now being used within concretes in the greater Sydney Region is, on average, 23-34%. Mr Chandler considers that the range is 45-50%. Mr Mahaffey’s opinion is that the figure is about 50%. I do not have to resolve the difference of opinion. The use of manufactured sand varies among suppliers and reflects in part the significant investments that have and are being made in facilities than can produce manufactured sand. Technological improvements in the manufacture of sand continue to shift concrete mixes in favour of the manufactured product. It was not suggested that manufactured sand will replace natural fine sand, at least in the near future (although there is evidence from Mr Mahaffey that it is a long-term goal of concrete manufacturers). Nevertheless, it indicates that innovation and technological improvements can serve to lessen the dependency of suppliers on natural fine sand. This can be reasonably expected to have consequences for the pricing of construction fine sand.
On the subject of the expected pricing of construction fine sand, MEL relied on the evidence of Mr Gray. Port Authority relied on evidence from Dr Daniel Bunting, who is an economist with expertise in construction and forecasting. They both gave detailed evidence about their estimates of the price of natural fine sand over the period from financial years 2023 to 2041. The differences in their opinions were stark.
Mr Gray’s opinion was that the gate price that MEL could achieve for financial year 2023 was $51 per tonne and that would increase by 6% per annum until financial year 2031 (to $81.14 per tonne), and would thereafter increase by at least the consumer price index. Dr Bunting’s opinion was that the gate prices for natural fine sand for financial year 2023 would be $28.06 per tonne (or $35.08 if there were supply issues). He forecast that the price would rise to $33.85 (or $42.32 with supply issues). He contemplated that for the following 10 years, to 2034, the prices would rise at 1% per annum. Dr Bunting did not consider that the consumer price index reflects the range and weighting of costs faced by sand miners. Both witnesses undertook a considerable amount of complex analysis to derive these figures, including assumptions and analysis about anticipated supply and demand. No one pretended, however, that the forecasting could provide anything like certainty about future outcomes.
Mr Neil Gray (Port Authority’s accounting expert) expressed the opinion that the only scenarios where MEL could have suffered a loss (because it was denied the opportunity to make profits) were those based on the prices forecast by Mr Dugald Gray. That was not contradicted by Mr Potter and was not the subject of cross-examination. Dr Lackey and Mr Potter both took Mr Dugald Gray’s opinions about future pricing as assumptions in the formulation of their opinions. This means that his opinions about pricing were a key part of MEL’s case.
It is unnecessary for me to make detailed findings about all of the different ways that Mr Dugald Gray and Dr Bunting derived their forecasts. I accept Port Authority’s submission that there is a major flaw in Mr Dugald Gray’s analysis about pricing, which undermines his whole analysis.
Mr Dugald Gray’s first report (dated 23 December 2023) expressed the opinion that gate prices for quarries supplying natural fine sand in bulk to external customers will increase by at least 7% per annum on average over the next few years. He expected those price increases to be driven by the loss of industry capacity because of depletion of dune sand reserves and increasing transport costs. Mr Gray revised that figure to 6% after reviewing some further documents, including a report from Mr van Koeverden, which caused Mr Gray to revise downwards his predictions about the usage rates of natural fine sand (arising from additional reserves becoming available and from the replacement of natural sand by engineered sand). His shift to 6% was not based on a revision of the modelling in his first report. Rather, it was based on his review of the pricing signals to three Holcim concrete plants. The Holcim data reflected historical pricing signals; it did not reflect any forecasting. The revision to Mr Gray’s opinions about pricing were not provided by way of a supplementary report. They emerged in a joint report with Dr Bunting, prepared after the trial had commenced. The process of reasoning, in broad terms, involved Mr Gray concluding that the 7% needed to be reduced because of the new information about demand from Mr van Koeverden and making a judgment that a reduction to 6% was appropriate given some historical Holcim pricing information.
It remained true that Mr Gray’s opinions about pricing into the future were highly dependent on his view that there is going to be a shortfall in sand supply. He predicted a shortfall of 37,000,000 tonnes of natural fine sand over the period to 2041. That shortfall drove the relatively high annual price increases, of 6%, that he predicted up to 2031. However, his analysis assumed that there would be no sand supplied by MEL.
There was an error in Mr Gray’s counterfactual analysis. His forecast about the prices that MEL could achieve if it had been selling sand were based on an assumption that MEL would not be selling sand. If MEL had been selling sand at the volumes anticipated by Mr Gray, then there would not have been the shortfall in sand supply that drove his views about future pricing – if anything, there may have been a small excess of supply, on Mr Gray’s analysis, if MEL had entered the market as a supplier of sand. Mr Gray forecasted that MEL could supply 39,000,000 tonnes of natural fine sand over the period to 2041. By the end of the forecast period, the total excess accumulates to 2,000,000 tonnes. MEL submitted that there was no oversupply, at least in the first 10 years, and that there is only oversupply in 2041. I do not accept that submission reflects Mr Gray’s evidence. The important point, which Mr Gray accepted during the course of cross-examination, is that supply by MEL “solves the shortfall problem”.
When Mr Gray was confronted with the observation that he made forecasts about prices that MEL could achieve while assuming that MEL was not selling sand, he made some effort to defend his conclusions. Those efforts were not compelling, and he was, in my view, seeking to defend an obviously flawed conclusion that he appreciated was significant to MEL’s case. He appeared to lose objectivity and was unwilling, at least initially, to engage with the significance of the point in an impartial manner. His evidence on this subject became defensive and inconsistent. For example, in answering one question he began by saying that “MEL could achieve their prices” and then softened to “I’m not sure that MEL couldn’t achieve those prices”.
MEL submitted that the effect of Mr Gray’s evidence was that while MEL was filling a shortfall, it could charge the prices as predicted by Mr Gray because it faced no competition in respect of the sale of that sand. This seems to me to defy economic and commercial logic. If MEL had entered the marketplace, it would have been competing on price with other suppliers. MEL would not have the luxury of waiting for its competitors to make their agreements and then sell to the balance of the market as a monopolist. But that is the effect of MEL’s submission. It is hard to conceive that entry by MEL with sale volumes that would fill any shortfall in supply would not have a significant impact on market dynamics, including pricing. That conclusion is supported by Dr Bunting’s evidence.
At the end of the concurrent evidence given by Mr Gray and Dr Bunting, Mr Gray said that if he had his time over he would have modelled MEL’s supply contribution to the supply curve and would have considered what the competitor reaction might be. He said that he would have considered the impact of MEL’s supply on the price increases that would be expected in the market.
I accept that the market dynamics of entry by MEL could be complicated. The market is oligopolistic and it would be wrong to assume that the market would have operated as if there was perfect competition. However, I am satisfied that Mr Gray’s opinions about pricing can be given no weight. His opinions about the prices that MEL could achieve if it was in the market rested on an assumption that MEL’s supply would not be in the market. His opinions were based on an assumed shortage of supply in the market which would have been eliminated, or significantly reduced, by MEL if it had entered the market.
MEL made detailed submissions attacking the evidence of Dr Bunting. In rejecting Mr Gray’s opinions, it does not follow that I accept Dr Bunting’s conclusions about pricing. It is not necessary for me to engage with all of the criticisms of Dr Bunting’s evidence. That is because, without Mr Gray’s evidence on pricing there is no evidence of a viable business case for MEL. I note that Dr Bunting accepted that it would have been better for him to use more data to identify the pricing at the start of the relevant period.
Mr Gray’s analysis on pricing looks forward from the time of his evidence. It takes into account matters right through to 2025. Those matters include spiking in prices between 2020 and 2023. Dr Bunting attributed the spiking to the effects of the war in Ukraine and the COVID-19 pandemic. Given that, on MEL’s third causation case, the time of Port Authority’s decision to recommence construction is November 2022, that is the time that MEL and Port Authority would be considering whether MEL had a viable business case, including by reference to future pricing. The question of pricing looking forward from November 2022 was not addressed by Mr Gray. However, it seems unlikely that Port Authority (or MEL) would have undertaken any forecasts of the prices that MEL could achieve in the market using an assumption that MEL was not in the market.
Dr Bunting provided opinions about the costs that would be incurred to ship sand from Rushy Lagoon to Sydney. Those costs were taken into account by Dr Bunting when coming to the conclusion that MEL would have made losses, not profits, from the conduct of its proposed business activities. MEL did not adduce any expert evidence on this subject. It relied on evidence from Mr Ellis, some documentary evidence, and attacked Dr Bunting’s evidence. The differences between Dr Bunting’s forecasts about shipping costs and those of Mr Ellis were substantial. The difference in 2024 was around $20 per tonne and it widened to around $25 per tonne by 2041.
Dr Bunting’s evidence about shipping costs was undermined by evidence about prices that CSL had proposed in draft term sheets to Austrak. CSL proposed terms that appeared to involve shipping costs that were significantly lower than those projected by Dr Bunting. There was a debate between the parties about whether the CSL draft terms included fuel. Dr Bunting acknowledged that the rates in the term sheets were well below his projections but queried whether something was missing from them, and raised fuel as a possibility. My reading of the term sheets suggests that fuel was included, but there was an adjustment that would be made depending on whether the actual cost of fuel to CSL was different to the base price used by CSL in the term sheet.
While this tends to undermine Dr Bunting’s evidence about shipping costs, it does not go so far as to enable me to conclude that the shipping costs used by MEL in its case (reflected as assumptions in Mr Potter’s calculations of loss) can be accepted. I am not prepared to draw conclusions about the costs to ship sand from Rushy Lagoon to Glebe Island based on a small number of draft term sheets provided to a different company. The result is that there is considerable uncertainty about the likely shipping costs. There is the potential that they could be as high as those predicted by Dr Bunting but also the real possibility that his projections overstate the true likely costs.
The cost to ship sand from Tasmania to Glebe Island would be a substantial part of the cost of the supply of sand. The evidence does not permit me to conclude that MEL would have been able to ship sand at a cost that would permit its business to produce profits.
Given all these matters, I have concluded that it is highly unlikely that, in the counterfactual world, MEL would have had a viable business case.

Mr Potter explained that the preferred method to address risks such as these would be to identify alternative scenarios, based on different risks coming to pass, and then to prepare cashflows for the alternative scenarios. Loss can be derived from some probabilistic comparison of the scenarios. His evidence was that this approach is generally superior to adjusting the discount rate to reflect risk. Mr Neil Gray expressed the view that a problem with merely adjusting the discount rate is that the analysis will produce a positive number, which is a problem when plausible scenarios, as in this case, would result in a business that is not viable.
Mr Potter was not asked to make any loss calculations based on alternative assumptions. He did not undertake any comparison of cashflows depending on alternative scenarios. This meant that there was no quantitative evidence from MEL that accommodated the serious risks that were identified by Mr Potter. This substantially lessens the utility of the results of Mr Potter’s discounted cash flow analysis. I do not mean any criticism of Mr Potter. His analysis and conclusions were largely the product of his instructions. As I have indicated already, there was some consideration of alternative scenarios by Mr Neil Gray, which suggested that the viability of MEL’s business was heavily dependent on the accuracy of Mr Dugald Gray’s estimates of MEL’s sales volumes and pricing.
As at March 2019, MEL’s path to profits was sketchy. It depended on Port Authority proceeding to construct the multi-user facility and not making a lawful decision to terminate the agreement for lease. It depended on MEL being able to secure sand at a price that would enable it to import sand at sufficient volumes and at a cost that would enable it to generate profits. Additionally, MEL’s opportunity to make profits was not risk-free. The opportunity to make profits was coupled with the risk of losses. Before generating profits, MEL would incur expenditure, including costs to identify a suitable resource and in completing the tenant’s works at the multi-user facility. In seeking to determine whether the opportunity to make profits had some value, it is necessary to take into account that in seeking to exploit the opportunity, MEL would incur costs, and that expenditure was at risk.
Even without the benefit of hindsight, the value of MEL’s opportunity in March 2019 was so uncertain, speculative and risky that I cannot conclude that it had any value.
Hindsight confirms the position. Hindsight tells us many things that demonstrate that the opportunity had no value. We now know:

Putting these things together, as at March 2019, the opportunity to make profits was so speculative and so fraught with risk, that it had no value. This is a case where the curial procedures of the Court have demonstrated that the prospect of profits was remote and speculative. The evidence indicates that the strong likelihood is that the business opportunity would have failed and a loss incurred. There is no real chance that MEL would have made profits. It is impossible to put a positive value on MEL’s opportunity to make profits: see Amann Aviation at 125-126 (Deane J). If a wise commercial person in MEL’s shoes knew in March 2019 what has been established by the evidence in this case, the commercially rational thing to do would have been to abandon the project. Costs already sunk would be lost but a rational businessperson would only look forward, and would conclude that further expenditure was irrational. The expectations of Mr Psaltis of profits being generated by MEL reflects wishful thinking, for which damages are not awarded: see Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd (2011) 192 FCR 445; [2011] FCAFC 55 at [167] (Keane CJ, Lander and Besanko JJ).
If I had concluded that Port Authority’s conduct was unconscionable, I would not have concluded that MEL’s opportunity in March 2019 to make profits had any value. The lost profits produced by Mr Potter’s discounted cashflow analysis was the product of assumptions that have either been tempered by MEL, or shown to be flawed, or otherwise are unlikely to reflect the counterfactual world.
Stepping back and considering the language and purpose of s 236 of the Australian Consumer Law, the opprobrium that would attach to conduct on the part of Port Authority would not warrant holding Port Authority responsible for depriving MEL of an opportunity to make profits, when the likelihood of profits was remote and the likelihood of losses, if MEL proceeded, was significant.
I do not need to say anything further on the issue of quantum. I do not propose to embark on the question of quantum on the hypothesis that I am wrong about both liability and causation. Having regard to my conclusions, that would be an artificial exercise.

During the course of the trial, MEL took a global objection to the expert reports prepared by Mr Reed, Mr Huntley and Mr Bolton. MEL contended that the evidence should be excluded either or both because: (a) the evidence was not opinion evidence admissible pursuant to s 79 of the Evidence Act 1995 (NSW); and (b) the probative value of the evidence was outweighed by its prejudicial effect and should be excluded under s 135 of the Evidence Act. In very general terms, MEL contended that Mr Reed, Mr Huntley and Mr Bolton had collaborated before producing various reports, and in connection with expert conclaves, in such a way that it was not possible to determine which parts of their evidence were wholly or substantially the product of their own specialised knowledge.
Subpoenas were issued to each of Mr Reed, Mr Huntley and Mr Bolton on 21 August 2025, as well as to Mr Goulding on 1 September 2025. The subpoenas required production of notes of conversations and email communications with other experts retained by Port Authority in these proceedings. Documents were produced in answer to the subpoenas. Port Authority asserted that legal professional privilege attached to various parts of some of those documents. Documents were also produced by Port Authority in answer to a notice to produce served by MEL on 31 August 2025. Port Authority contended that parts of those documents were also subject to legal professional privilege. By notice of motion filed on 9 September 2025, MEL challenged some of the claims for legal professional privilege advanced by Port Authority.
MEL’s global challenge to the evidence of Mr Reed, Mr Huntley and Mr Bolton was heard, in the midst of the trial, on a voir dire, together with its challenge to the claims for legal professional privilege. MEL relied on documents produced on subpoena by Mr Reed, Mr Huntley, Mr Bolton and Mr Goulding and documents produced by Port Authority in answer to the notice to produce in support of its global objection. Port Authority relied on affidavit evidence given by each of Mr Reed, Mr Huntley and Mr Bolton on the global objection and affidavit evidence from Mr Alistair Little (a partner of HWL Ebsworth Lawyers and the solicitor on the record for Port Authority), in support of its privilege claims. All four witnesses were cross-examined on the voir dire. Although documents were produced by Mr Goulding, MEL did not take a global objection to his evidence.

As I have noted, in respect of the documents produced in answer to a subpoena, the question of privilege was to be resolved by reference to the common law, not the Evidence Act. In respect of those documents, Mr Little misstated the true basis of Port Authority’s privilege claim. MEL accepted that it was appropriate to proceed on the basis that the privilege claim was made by reference to the common law.
Privilege is not conclusively established by resort to verbal formula or ritual concerning the communication over which privilege is claimed: Grant v Downs (1976) 135 CLR 674 at 689 (Stephen, Mason and Murphy JJ); Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67 at [52] (Gleeson CJ, Gaudron and Gummow JJ). Mr Little’s evidence went beyond formula and ritual. He provided a specific description of each document and made it clear that, subject to some exceptions to which I will come, in each case the claim for privilege concerned a communication to or from a solicitor from HWL Ebsworth. Mr Little’s evidence was admitted without objection and he was not challenged on any specific claim for privilege.
The evidence that is necessary and sufficient to establish privilege will depend on the circumstances: see Setka v Dalton (No 2) (Legal Professional Privilege) [2021] VSC 604 at [73]ff (Daly AsJ). Where there is litigation on foot and the communication lies between a solicitor retained on the matter and an independent expert also retained, relatively less evidence is likely to be required to establish privilege compared, for example, with a communication between executives within a company who are not lawyers. Likewise, it will generally not take a great deal to establish that the file notes of a solicitor are privileged.
Nearly all of the relevant communications the subject of claims for privilege in this case concern communications with a solicitor or solicitors acting for Port Authority in these proceedings. That is true of all of the documents produced on subpoena by Mr Reed, Mr Huntley and Mr Bolton. Some of the documents produced in answer to the notice to produce were file notes made by solicitors employed by HWL Ebsworth who are part of the team of solicitors acting for Port Authority.
In most cases, the claims for privilege only extended to part of a communication or part of a chain of communications. The unredacted parts of the documents provided context for the claims for privilege. Given that context, where available, and with the support of Mr Little’s evidence, I was satisfied that, subject to questions of waiver, Port Authority had established that all of the challenged communications (or documents) were privileged.

The documents produced on subpoena by Mr Reed, Mr Huntley, Mr Bolton and Mr Goulding indicated that Mr Reed, Mr Huntley and Mr Bolton did not comply with the direction in their respective retainers. There were extensive communications, both written and orally, between Mr Reed and Mr Huntley. There were also communications, but to a lesser extent, between Mr Reed and Mr Bolton and between Mr Huntley and Mr Bolton. There were also communications between all three. It is apparent that the communications among these experts concerned the evidence that they would give in these proceedings. For example, draft expert reports were exchanged for comment. Mr Little gave evidence that he was not aware that the experts were communicating with one another in these ways and recognised that these kinds of communications were inconsistent with what he regarded to be appropriate practice and gave rise to a risk of inappropriate collaboration.
Subject to a few exceptions, the communications that were the subject of challenge by MEL all involved, in one form or another, communications passing between two or more of Mr Reed, Mr Huntley, Mr Bolton and Mr Goulding – all of whom are experts who prepared reports that Port Authority wished to rely upon in the proceedings. In some instances, there were communications between HWL Ebsworth and one of these experts that were forwarded or passed on in some way by that expert to one or more of the other experts. For example, on several occasions, Mr Reed forwarded a communication of his with HWL Ebsworth to either or both Mr Huntley or Mr Bolton on the basis that it was “FYI (in confidence)”.
By way of further example, on 29 April 2025, Mr Huntley sent an email to a solicitor at HWL Ebsworth, the contents of which were claimed to be privileged. I was satisfied that Mr Huntley included Mr Reed as a recipient of this email on a blind copy basis. Mr Huntley accepted that it was “absolutely” a possibility. Certainly, Mr Huntley sent the email to Mr Reed because Mr Reed sent a response to Mr Huntley on the same email chain, notwithstanding that there was no intermediate forwarding email. The absence of a forwarding email to Mr Reed, and absent some other explanation from Mr Huntley, indicated that Mr Reed was blind copied.
In other cases, there were communications between more than one of the experts and HWL Ebsworth. For example, on 15 May 2025, Mr Huntley sent an email to Mr Reed, Mr Bolton and a solicitor from HWL Ebsworth. The email suggests that the attachment appears to be a document with a title “Geological Observations”, but privilege was claimed over the whole attachment (as well as the subject line of the emails).
The privilege in the relevant communications was afforded to Port Authority. The privilege conferred an immunity from compulsory production of documents that would disclose client-solicitor communications made for the dominant purpose of giving or obtaining legal advice or the provision of legal services: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49 at [9] (Gleeson CJ, Gaudron, Gummow and Hayne JJ). At common law, the person entitled to the benefit of the privilege may waive it, either expressly or impliedly: Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 at [28]-[29] (Gleeson CJ, Gaudron, Gummow and Callinan JJ). Waiver will occur by conduct that is inconsistent with the maintenance of confidentiality, which can be informed, where necessary, by considerations of fairness.
Port Authority did not waive privilege merely because one expert, without authority, disclosed a communication to another expert. Nor did it occur merely because there was a confidential communication between solicitors for Port Authority and more than one expert. Those occurrences, by themselves, did not involve conduct by Port Authority that was inconsistent with the maintenance of confidentiality.
The conduct that gave rise to a waiver was the indication by Port Authority that it was calling at the trial evidence from each of Mr Reed, Mr Huntley and Mr Bolton. As witnesses, MEL would be entitled to test their evidence, including by reference to the formation of their opinions, the application of their specialised knowledge and their independence. Mr Reed, Mr Huntley and Mr Bolton had been conferring among themselves about the evidence in these proceedings, often without the knowledge of the solicitors for Port Authority. There was a basis for MEL to suggest, as a possibility, that the communications between these experts meant or indicated that their impartiality may have been compromised and that the opinions they expressed (including in joint expert reports) may not have been entirely the product of their own specialised knowledge.
One example makes the point. On 16 June 2025, Mr Reed sent an email to the solicitors for Port Authority. Privilege was claimed over that communication. A few minutes after his initial email to the solicitors for Port Authority, Mr Reed forwarded his email to Mr Huntley and Mr Bolton, stating “FYI (in confidence) - I expect we will all be talking soon in relation to Dugald’s [presumably a reference to Mr Dugald Gray] latest piece of wisdom”. Mr Reed’s email was sent shortly after Mr Gray’s third report was served. I inferred that Mr Reed provided some remarks to the solicitors for Port Authority concerning Mr Gray’s third report. In passing on those remarks to Mr Huntley and Mr Bolton, there was a risk that Mr Reed infected the opinions of either or both Mr Huntley and Mr Bolton.
I was satisfied that it would be inconsistent for Port Authority to call evidence from Mr Reed, Mr Huntley and Mr Bolton, and at the same time continue to assert confidentiality in any of the communications among those experts. Port Authority could not consistently call these witnesses as independent experts and at the same time deprive MEL of the opportunity to scrutinise communications among these experts, where those communications were relevant to their evidence in these proceedings. The communications between these experts had the potential to bear upon the admissibility and reliability of their evidence. The circumstances in this case were similar to those arising in Roads Corporation v Love [2010] VSC 253, see especially at [26] (Vickery J). See also Cobram Laundry Services Pty Ltd v Murray Goulburn Co-Operative Co Ltd [2000] VSC 353 at [58] (Warren J).
Port Authority relied on the decision of White J in New Cap Reinsurance Corporation Ltd (in liq*) v Renaissance Reinsurance Ltd* [2007] NSWSC 258. White J considered the question of whether there was a waiver by providing privileged communications to an independent expert for the purposes of preparing a report. His Honour accepted that privilege was not waived merely by providing privileged communications to an expert; there had to be an indication that the documents were used in the preparation of the evidentiary document in a way that could be said to influence the content of that document (citing Dingwall v Commonwealth of Australia (1992) 39 FCR 521 at 524 per Foster J). His Honour held (at [53]):

The question of whether there has been an inconsistency giving rise to a waiver of privilege is often highly fact dependent. There is a danger in taking observations or conclusions in one case and elevating them to more general statements of principle. The question of waiver that arose in New Cap concerned waiver, by service of a final report, of documents provided to the expert. It did not concern undisclosed communications among experts retained by one party and the risk that independence had been compromised, or a risk that a witness’s views had been influenced or infected by an undisclosed communication with another expert in the proceedings.
Port Authority could have avoided the disclosure of the privileged communications by electing not to rely on the expert reports of Mr Reed, Mr Huntley and Mr Bolton. But having made the choice to rely on the evidence of those witnesses, Port Authority could not at the same time withhold from scrutiny the undisclosed communications between the experts concerning the preparation of their reports, or their participation in conclaves with MEL’s experts. Questions of privilege may involve the striking of a balance: see New Cap at [48]. However, the touchstone when there is a suggestion of waiver is inconsistency. The character of the communications among the experts in the circumstances of this case led me to the conclusion that there was inconsistency.
I rejected MEL’s challenge to the privilege claims asserted over several documents produced by Port Authority in answer to the notice to produce (in respect of which the Evidence Act, not the common law, applied). Those documents were file notes prepared by solicitors at HWL Ebsworth and an email that a solicitor at HWL Ebsworth sent to herself. I was not prepared to conclude that privilege in those documents had been waived pursuant to s 122 of the Evidence Act. That is because they were not communications with or among the relevant experts. I was not satisfied that MEL had established that there was inconsistency in Port Authority maintaining their confidentiality claims regarding those documents.
Following my ruling on the privilege claims, MEL was given access to the communications the subject of my ruling. MEL and Port Authority then made further submissions on the global objection. MEL relied on some of the communications which had been disclosed following my ruling on waiver.
The communications that were disclosed following my ruling confirmed the relevance of the communications to questions about the admissibility and reliability of the evidence of Mr Reed, Mr Huntley and Mr Bolton. For instance, the communication of 16 June 2025 from Mr Reed to Port Authority’s solicitors that he forwarded “in confidence” to Mr Huntley and Mr Bolton (referred to above) did include commentary on Mr Gray’s evidence, including remarks such as “Mr Gray is neither a geologist or competent person (as per the JORC Code)” and “Rod [Huntley] is absolutely correct in noting that the report is full of errors and totally refutable and/or out of context statements. These errors will need to be highlighted in Joint Expert Reporting…” The email chain also included an email from Mr Huntley to a solicitor at HWL Ebsworth, which somehow went to Mr Reed (most likely by way of blind copy), which described Mr Gray’s report as “waffle” and suggested that Mr Reed may be best to respond but observed that Mr Gray’s response was one of “obfuscation and supposed justification without actually having completed any work whatsoever”.

Port Authority sought to rely on two reports from Mr Reed. In the first report dated 18 September 2024, Mr Reed answered 22 questions in a report of some 78 pages, excluding annexures. The report addressed matters about the viability of sand supply for MEL from Rushy Lagoon, Stockton and Moreton Bay. The report proffered an opinion about whether MEL could have satisfied the relevant tenant conditions precedent. It also addressed issues concerning the likely supply volumes and prices that could have been expected had MEL been able to import sand into Sydney, which was responsive to evidence in a report from Mr Gray dated 23 December 2023, served by MEL. Mr Reed’s second report, dated 20 May 2025, addressed new information from drill logs and gradings relating to Rushy Lagoon and responded to matters raised in reports served by MEL from Mr van Koeverden, Mr Gardiner and Dr Lackey. The report was directed at the character and viability of Rushy Lagoon as a source of sand that would have been available to MEL. The report is 53 pages, excluding annexures. As I have noted earlier, Mr Reed met in conclave and produced joint reports with the following experts: Mr Gray, Mr van Koeverden, Mr Gardiner and Dr Lackey. Although Mr Reed’s reports did not only deal with Rushy Lagoon, that was their primary focus. Much of his evidence was, as one would expect, technical. Much of it was directed towards supporting the general proposition that too little was known about the resource at Rushy Lagoon in order for anyone to conclude that it was a viable sand source, such that the project could reasonably be expected to attract the funding necessary to move forward.
Port Authority served two reports from Mr Huntley. The first report was dated 12 September 2024 and comprised 32 pages, excluding annexures. It was concerned with various matters, including the problems that MEL would have faced in attempting to secure sand from Moreton Bay. Given that MEL abandoned any case relying on Moreton Bay as a source of sand, the content of the report had no real relevance. The only relevance of Mr Huntley’s first report was that MEL’s decision to abandon Moreton Bay, as a potential source of sand, was made after the report was served. For present purposes, this report can be put to one side. Mr Huntley’s second report was dated 19 May 2025. In that report, Mr Huntley responded to reports served by MEL from Mr van Koeverden, Mr Gardiner and Mr Miedecke. The 32-page report (excluding annexures) also provided a resource assessment model using various drilling results and gradings. Mr Huntley joined in producing joint reports following conclaves with Mr Gardiner and Mr Gray.
Port Authority served a report from Mr Bolton dated 19 May 2025. His report was 44 pages in length, excluding annexures. The report ultimately proffered the opinion that, based on the information available, a potential funder would be highly unlikely to fund a project such as Rushy Lagoon. Mr Bolton met and prepared a joint report with Dr Lackey.
The reports of Mr Reed, Mr Huntley and Mr Bolton all concerned the fundamental question of whether Rushy Lagoon would have provided a viable source of sand in the counterfactual world. There was some overlap in the evidence given by each of Mr Reed, Mr Huntley and Mr Bolton. There was some overlap in expertise, especially between Mr Reed and Mr Huntley. However, I was satisfied that each of them addressed specific matters in their reports that were not covered by any other expert called by Port Authority and which, if accepted, could have been important evidence in Port Authority’s defence, and could have provided a foundation for concluding that MEL had suffered no loss, or substantially less loss than it claimed to have suffered.
I was conscious that the evidence of Mr Reed, Mr Huntley and Mr Bolton was not the only evidence relied on by Port Authority in seeking to rebut MEL’s claim as to the value of the alleged lost opportunity. In addition, as has been made clear, Port Authority also relied on expert evidence from Mr Chandler, Mr Mahaffey, Mr Lyons, Dr Barnes, Ms Riley, Mr Goulding, Dr Bunting, Mr de Cian and Mr Neil Gray. It certainly could not have been said that without the evidence of Mr Reed, Mr Huntley and Mr Bolton, Port Authority would have no expert evidence directed towards the general question of the value of the alleged lost opportunity. None of those other experts retained by Port Authority shared the expertise of Mr Reed, Mr Huntley or Mr Bolton, although that is not to say that there was a clear division in the topics addressed in the expert reports.
In my assessment of the probative value of the challenged evidence, I considered the evidence on the assumption that the evidence from the expert witnesses was accepted by the Court. I took the evidence at its highest. This was consistent with the observation in IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14 at [49]-[50] (French CJ, Kiefel, Bell and Keane JJ). On this basis, I assessed that the evidence of each of Mr Reed, Mr Huntley and Mr Bolton was not so critical to Port Authority’s defence in that Port Authority would necessarily fail without it, or would not be able to rebut MEL’s case on damages, but that in each case the evidence nevertheless served as an important aspect of that defence. The evidence could have been critical to Port Authority’s defence (although, as it turned out, it was not). I accepted that the probative value of the evidence of each of these experts for Port Authority was high.
MEL submitted that the probative value of the evidence was very low because the Court could not determine with any certainty that the opinions properly reflected the application of Mr Reed’s, Mr Huntley’s and Mr Bolton’s own specialised knowledge, uninfluenced by the other two experts. I did not proceed on the basis that it was appropriate to consider the probative value of the evidence on this basis. Rather, the matters identified by MEL became relevant in considering any unfair prejudice and the weighing exercise required by s 135 of the Evidence Act.

For the most part, Mr Reed’s practice is to be deprecated. Where a party has retained a number of expert witnesses, it is generally inappropriate for those experts to identify and discuss “relevant issues”. It is not for the experts to agree among themselves who will address particular topics. They should not be appraising one another of key findings and conclusions as they develop their opinions. The experts may see these practices as driving efficiency, including because of the time, inconvenience and difficulty of otherwise dealing only with the solicitors (who do not share their expertise). But the risk of experts conferring among themselves is that their evidence can be easily tainted, and can be rendered inadmissible or otherwise of diminished weight. The risk was demonstrated in this case.
Mr Reed’s practice included sharing draft expert reports. There was sharing of draft reports between Mr Reed, Mr Huntley and Mr Bolton. Views may differ about whether this practice is appropriate. In Love, Vickery J observed (at [40]) that it “has been common in Australia across many fields of practice for expert witnesses to prepare draft reports and for those drafts to be exchanged between experts where the opinion of one expert depends upon information to be provided by others”. To some extent, the exchange of draft reports between Mr Reed, Mr Huntley and Mr Bolton could be explained on this basis. Mr Reed’s second report disclosed that he drew on some resource modelling undertaken by Mr Huntley. However, draft reports were also exchanged between these experts for the more general purpose of seeking comment.
I am not familiar with the practice described by Vickery J in Love and would not encourage it. Where the opinion of one expert depends on information from another, it is generally desirable for the second expert to finalise his or her report before it is provided to the first expert. Better still, assumptions derived from the report of the second expert can be provided to the first expert. If there is some reason to be uncertain about the information that is required or can be provided, it is best resolved by communications through the relevant solicitors, rather than by direct communications between experts. If that is impractical because of the complexity or difficulty of the subject matter, any necessary communications between experts should be moderated by a solicitor and it should be assumed that the communications will be open to scrutiny by the opposing side in the litigation.
The communications between Mr Reed, Mr Huntley and Mr Bolton variously included: the exchange of draft reports, requests to review draft reports, provision of information for consideration, comments on how an expert proposed to approach a conclave with a witness relied on by MEL, communications during a conclave, disrespectful remarks about other experts being called in the proceedings and telephone conversations (with little to no record of what was said).
I appreciated that the contents of oral conversations were, in almost all instances, not recorded or available for scrutiny. Nevertheless, based on the written communications, the contents of the reports and the cross-examination of each expert on the voir dire, I was satisfied that each expert’s reports reflected the views that were held by that expert and in each case were wholly or substantially based on that expert’s own specialised knowledge. There was very little evidence indicating that one expert’s comments were reflected in another expert’s report. The most tangible evidence of such a change was Mr Huntley taking up Mr Reed’s suggestion to add the word “theoretically” in one paragraph of his report. When read in context, it was not a significant change and was consistent with the rest of the paragraph. The addition of the word merely (slightly) clarified the sentence – it did not involve a change of opinion. I was satisfied that the opinions met the threshold requirement imposed by s 79 of the Evidence Act.
The difficulty that flowed from the collaboration between Mr Reed, Mr Huntley and Mr Bolton was more subtle and perhaps more pernicious. It was the risk of the loss of objectivity, being a loss that is difficult to self-diagnose and appreciate. Where experts for one party feel free to converse among themselves, there is a real risk that they will come to identify as members of a team that has been assembled to ‘win’ the case for the party who engaged them. There is a risk that opinions will be reinforced and hardened, and a loss of a willingness or ability to engage in an independent and open-minded way with views expressed by experts from the ‘opposite team’.
The risk of this kind of bias will always arise when an expert is retained and paid by one party. Solicitors dealing with an expert have a heavy burden to avoid taking any steps that might dampen the independence of an expert that has been retained (see generally: Hugh Stowe, “Preparing expert witnesses – a (continuing) search for ethical boundaries”, Bar News: The Journal of the NSW Bar Association, 2018 Spring). The risk of loss of impartial independence is exacerbated when experts retained by one party talk freely together about their evidence.
It is proper and appropriate for an expert to inform those retaining him or her that there are limitations in his or her expertise and that he or she would be assisted by some opinions formed by another expert. An economist, for example, may be assisted by the views of an econometrician in the preparation of his or her evidence. Mr Reed may have been assisted by some geotechnical modelling that was beyond his expertise. Where this arises, it is best done through the solicitors. The problem in this case was that Mr Reed saw it as his role to assemble a team and to make sure that the teamwork was effective and efficient. That was not his role. His efforts compromised the experts’ independence.
The communications between Mr Reed, Mr Huntley and Mr Bolton suggested that there was an absence of a proper sense of detachment from the outcome of the case, particularly from Mr Reed and Mr Huntley. Mr Reed spoke naturally when giving evidence of he and Mr Huntley working together as a “team” for Port Authority. He used the analogy of a medical team. A medical team works to bring about a successful result for its patient. In a similar vein, in communications with solicitors for Port Authority, both Mr Reed and Mr Huntley spoke of matters that supported “our case”. When experts regard themselves as part of a team working for a party, it is easy for their opinions to be infected by bias, usually unconscious, in favour of outcomes that will help the team to win. A desired result can infect the reasoning process.
Some concrete examples of, in particular, Mr Huntley appearing to lose a proper sense of his role as an independent expert arose in the context of the conclaves with Mr Gray. Some exchanges, all occurring on 22 July 2025, included the following:

MEL made detailed submissions in closing submissions about the credibility of Mr Reed and Mr Huntley as well as the reliability and weight to be given to their opinions, and to those of Mr Bolton. Strong criticisms were levelled at Mr Reed and Mr Huntley by MEL. It was submitted that they were not credible witnesses and that the Court should not accept their evidence. MEL did not make the same criticisms of Mr Bolton. MEL did not invite the Court to criticise Mr Bolton. It submitted that he was an inexperienced expert witness and was led by Mr Reed and Mr Huntley (who were both much more experienced as witnesses) to engage with them. MEL nevertheless submitted that the risk of infection from Mr Reed and Mr Huntley meant that less weight should be placed on his opinions.
During the cross-examination of Mr Huntley in the substantive hearing, there were further examples of conduct that can be criticised. In a draft of the joint report with Mr Gray, there was a section dealing with the estimated volume of construction fine sand at Rushy Lagoon. The draft stated that there were no areas of agreement. Under the heading “Areas of Disagreement” there was a section setting out Mr Gray’s views. The draft recorded volumes of construction fine sand at Rushy Lagoon. In a subsequent draft, Mr Huntley inserted the words “DG guesses” (i.e. Dugald Gray guesses). Mr Huntley did not specifically draw that change to Mr Gray’s attention. Mr Gray missed the change and those words were included in the final joint report. Mr Gray’s evidence was that he should have picked up the change and that the reference to “guesses” was incorrect, because he did not guess, rather he made calculations. I accept that it was disrespectful and inappropriate for Mr Huntley to attribute to Mr Gray a process of guesswork and not specifically draw that to his attention.
Having regard to the evidence on the voir dire (which was relevantly tendered in the substantive proceedings) and the cross-examination of Mr Reed and Mr Huntley, there was a reason to approach their evidence with an appreciation that their opinions may reflect a bias towards Port Authority because each of them appeared to have lost some impartiality. However, an opinion from a person who has some bias is not necessarily invalid or wrong. The value of the opinions will depend on the quality of the reasoning and any competing opinions. The weight of the evidence depends on a range of considerations. I do not accept that I should decline to take account of any of the opinions expressed by Mr Reed or Mr Huntley (or Mr Bolton) because they lacked credibility.
There were very few instances where MEL submitted that a particular opinion proffered by Mr Reed or Mr Huntley should be rejected because the reasoning process was flawed and reflected some underlying bias. They both demonstrated expertise in their respective fields and revealed a reasoning process which supported their opinions.
In hindsight, it turned out that my conclusions in this case did not turn on the evidence of Mr Reed, Mr Huntley or Mr Bolton. While I have made some mention of their evidence in my reasoning on the merits, all of their evidence was consistent with and confirmatory of other evidence adduced. None of their evidence would have changed the result of this case.

Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation trading as Port Authority of New South Wales

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment

Parties

Legislation Cited (18)

JUDGMENT

A Did Port Authority engage in conduct that was unconscionable?

(a) The legal principles

(b) The facts leading up to the entry into the agreement for lease

(i) The early days (2010-2016)

(ii) New plans (2017)

(iii) The start of negotiations of the agreement for lease (late 2017 to early 2018)

(iv) Probity advice (April 2018)

(v) Further negotiations (April to July 2018)

(vi) New negotiators (July to August 2018)

(vii) Negotiations about rent (October to November 2018)

(viii) Final negotiation of terms (November to December 2018)

(c) The agreement for lease

(d) Was MEL in a vulnerable position at the time of entry into the agreement for lease?

(e) Port Authority’s interests

(f) The conditions precedent

(i) The first condition precedent

(ii) The second condition precedent

(iii) The third condition precedent

(iv) The fourth condition precedent

(v) The fifth condition precedent

(vi) The sixth condition precedent

(g) Did the agreement for lease make MEL more vulnerable?

(h) The call for expressions of interest

(i**)** MEL’s efforts to satisfy the conditions precedent

(j) Termination of the agreement for lease

(k) Port Authority did not engage in conduct that was unconscionable

B Causation and Quantum

(a) MEL’s case on causation

(i) MEL’s first causation case

(ii) MEL’s second causation case

(iii) MEL’s third causation case

(iv) The causation case, or cases, that were pressed

(b) Legal principles on causation

(c) Framing the case

(d) Port Authority’s pleading point

(e) Real world events post-termination of the agreement for lease

(f) Steps taken in the real world by Port Authority following termination

(g) MEL and NSR’s activities in the real world

(h) Would the agreement for lease have been terminated?

(i) The case that construction would not have been suspended in October 2020 – the second causation case

(j) The case that construction would have been suspended in October 2020 and resumed in November 2022 – the third causation case

(i) Would MEL have obtained the necessary approvals by November 2022?

(ii) Funding of capital expenditure

(iii) The suitability of sand from Rushy Lagoon

(iv) Whether MEL could demonstrate a viable business case

(k) Conclusion on whether any alleged wrongdoing caused a loss of opportunity

(l) Did the opportunity have any value?

C The global objection to Port Authority’s evidence of Mr Reed, Mr Huntley and Mr Bolton

(a) The privilege claims

(i) Port Authority established that the communications were privileged

(ii) MEL established that privilege was waived

(b) The global objection

(i) Probative value

(ii) The danger that the evidence might be unfairly prejudicial

(c) The weight to be given to the evidence of Mr Reed, Mr Huntley and Mr Bolton

Orders

Amendments

06 August 2026

Cases Cited (70)

(i) MEL’s efforts to satisfy the conditions precedent