MK and JA Roche Pty Limited & Ors v Metro Edgley Pty Limited & Anor

"I am instructed to reply to your letter of 24 May 2004.

My client maintains its position, set out in Roche's letter of 21 May 2004, that the Development Contract and Fitout Deed have been automatically rescinded.

My client disputes the assertions of fact and law contained in your letter of 24 May 2004. In particular, my client denies that any conversation or discussion which might have constituted notification of an extension, or acceptance of such notification, took place as alleged or at all.

Nothing which my client has done or failed to do has had the consequence that the conditions precedent have been satisfied (or may be taken to have been) when, as a matter of fact, they clearly have not. None of its rights have been waived.

So far as the notice (you purport to give by way of your letter of 24 May 2003) is concerned, it is ineffective on the proper construction of the Development Contract and the Fitout Deed.

This letter is not to be taken as exhaustive and my client reserves its right to deal with all matters in the appropriate forum and at the appropriate time.

Please return the deposit of $2million to Roche as previously requested."

Letter of 1 June 2004 - Metro Edgley to Roche · By letter dated 1 June 2004 Metro Edgley wrote to Roche as follows:

"WATERFRONT BRASSERIE DEVELOPMENT CONTRACT - EXTENSION OF CONDITIONS PRECEDENT SATISFACTION DATE

We refer to the Waterfront Brasserie Development Contract, Luna Park between Metro, Roche, the Guarantors and Multiplex dated 28 September 2003 ("Development Contract").

We hereby notify Roche and the Guarantors that the date in clause 2A(b) of the Development Contract, which by a notice dated 18 December 2004 and by agreement on 2 March 2004 has been cumulatively extended from 31 December 2004 to 30 June 2004, is further extended to 30 September 2004.

Words or expressions used in this letter beginning with a capital letter and not defined in this letter have the same meaning as is given to those words or expression in the Development Contract." Roche's submissions 24 Roche has submitted that: · Clause 2A(b) provides that if the conditions are not satisfied by the relevant deadline the contract is deemed to be automatically rescinded. · No notice to that effect is required for the rescission to be effective; · A condition precedent is either performed or it is not. There is no doctrine of substantial performance of a condition precedent: Tri-Continental Corporation Limited v HDFI Limited (1990) 21 NSWLR 689 especially at 705D; · It follows that if any one of the conditions precedent is not fully satisfied by the deadline, the agreement is at an end; · Upon the proper construction of the Development Contract and the Fitout deed, Metro Edgley could not give notice extending the period for fulfilment of the conditions precedent after the expiry of the deadline; · As at 18 December 2003 that deadline was 31 March 2004 and it was still the deadline at the end of the day on 31 March 2004 when the conditions precedent remained unsatisfied. That being the only deadline and the conditions not being satisfied, and the agreement providing for automatic termination, it came to an end. · The competing construction would allow the Developer to give a subsequent notice extending the deadline after the applicable deadline had come and gone. It would have to be based on the argument that because the provision gives the Developer the right to notify on more than one occasion up to the Sunset Date, it can give such notice at any time up to the Sunset Date, irrespective of whether an earlier nominated deadline had passed without satisfaction of the conditions; · That construction is untenable because the parties would be left in a state of uncertainty in effect giving the Developer an option to re-enliven an agreement which had terminated and would also make the earlier deadline notification meaningless. Put another way, it could nominate a deadline which would not be met and then later nominate another deadline after expiry of the first which means that its first nomination had no effect; · Moreover the purpose of enabling more than one notice of extension was to allow such notices to be given so as to keep on extending the deadline whilst the provision (that is Clause 2A) was on foot. The issues concerning the deposit 25 The defendants contend that even if the plaintiffs be successful the deposit is not repayable. 26 The plaintiffs have contended that the submission is untenable because: · there has been a failure of consideration or condition; · if there is no express term [which is the contention], then there is clearly an implied term that entitles a refund; · retention of the deposit would be unconscionable and the defendants would be unjustly enriched if permitted to retain it. Discharge of the guarantees 27 The plaintiffs contend that the principal obligation has been purportedly varied without the consent of the Guarantors so that they are not bound and their guarantees are discharged. The central issues of fact 28 The central issues of fact concern whether or not Metro Edgley gave any and if so which notifications to the plaintiffs that the Clause 2A (b) date was further extended to 30 June 2004 29 The defendants/cross claimants contend for a series of alternatives. The convenient course is to recite a non-exhaustive overview of those alternatives in an Appendix "A" to the Judgment. Dealing with the threshold question - The proper construction of clause 2A (b) of the Development Contract - Automatic rescission? 30 The threshold point taken by the defendants raises only issues of principle, the proposition being that notwithstanding the words "deemed to be automatically rescinded" appearing within clause 2A (b) of the Development Contract, upon the proper construction of that clause, Roche had an election to terminate or not to terminate the contract in the event that the conditions precedent be not fulfilled by the relevant date, or the relevant date as extended, and that no such election was never communicated by Roche to the developer. 31 Both parties addressed closely on the proper construction of this clause. The convenient course is to deal with this issue directly. 32 There is of course no doubt but that the meaning and effect of a contractual provision will depend on the particular words of the contract. 33 The area which falls for consideration presently has been the subject of consideration both in the United Kingdom and in Australia over a reasonably extended period. 34 In New Zealand Shipping Co Ltd v Societe` des Ateliers et Chantiers de France [1919] AC 1 Lord Atkinson [at 9] put the matter as follows:

"It is undoubtedly competent for the two parties to a contract to stipulate by a clause in it that the contract shall be void upon the happening of an event over which neither of the parties shall have any control, cannot bring about, prevent or retard. For instance, they may stipulate that if rain should fall on the thirtieth day after the date of the contract, the contract should be void. Then if rain did fall on that day the contract would be put an end to by this event, whether the parties so desire or not. Of course, they might during the currency of the contract rescind it and enter into a new one, or on its avoidance immediately enter into a new contract. But if the stipulation be that the contract shall be void on the happening of an event which one or either of them can by his own act or omission bring about, then the party, who by his own act or omission brings that event about, cannot be permitted either to insist upon the stipulation himself or to compel the other party, who is blameless, to insist upon it, because to permit the blameable party to do either would be to permit him to take advantage of his own wrong, in the one case directly, and in the other case indirectly in a roundabout way, but in either way putting an end to the contract." 35 Lord Finlay LC (at 6) said:

"It is a principle of law that no one can in such case take advantage of the existence of a state of things which he himself produced"; and that is the approach to be perceived throughout Lord Finlay's speech. 36 Lord Shaw (at 12) first of all emphasised that: "??the conduct or situation of the party treating the contract as void shall not have been the means whereby the event which gives rise to the G condition has been brought about. What I have ventured last to express appears to me to be sound in principle and to be a better and broader expression of the principle than a reference to either party's own wrong or a party's own default, for without either definite wrong or default the action, or even the situation, of one of the parties may be sufficient to produce the condition."" 37 His Lordship then went on to observe (at 12-13) that:

"When a contract describes an event or events which may happen, and declares that on the occurrence of any of these the contract shall become void, ?." That contract is voidable "at the instance of" the innocent party that is to say the party "who has not by his own wrong or default brought about the event". 38 Lord Wrenbury (at 15) summed up his view in this way:

"??The rule is that in a contract 'void' is to be read 'voidable', if the result of reading it as 'void' would be to enable a party to avail himself of his own wrong to defeat his contract." 39 In Suttor v Gundowda (1950) 81 CLR 418 Latham CJ, Williams and Fullagar JJ [at 441 having cited the above passage from the speech of Lord Atkinson put the matter as follows:

"Where the event in question is one which cannot occur without default on the part of one party to the contract, the position is clear. The provision is then construed as making the contract not void but voidable: only the party who is not in default can avoid it, and he may please himself whether he does so or not. In the present case the happening of the event (not obtaining the Treasurer's consent) may be brought about by failure on the part of either party to take certain necessary steps (provision of particulars by the vendor or making of application by the purchaser) to obtain the Treasurer's consent, or it may be brought about without any default on the part of either party. In fact, although there was some argument to the contrary, it was, we think, brought about without any default on the part of either party. Such a case is perhaps not quite so clear as the simpler case where the event cannot occur without default on one side or the other. But we are of opinion that the New Zealand Shipping case [1919] AC 1 requires the same construction to be given to the contract in both classes of case. The provision in question is to be construed as making the contract not void but voidable." 40 The conditions precedent provided for in clause 2A (a) of the Development Contract include events which may be brought about by failure on the part of either party to take particular steps or which may be brought about without any default on the part of either party. 41 Subject then to the overriding principle that every case must depend upon the particular words of the contract used it would appear that the reasoning adopted by Latham CJ, Williams and Fullagar JJ in Suttor would require to presently be applied in which event the so-called "automatic rescission" provision presently under examination would require to be construed as making the contract not void but voidable. 42 Concerning the overriding principle it should be noted that in Sandra Investments v Booth (1983) 153 CLR 153: · Gibbs J made the point that it was trite that all cases of the type there before the court required to depend upon the particular words of the contract in question. · Wilson J said: "The important consideration which is fatal to the vendor is that any construction of the contract which would give to both parties the right to avoid it on failure of the condition requiring local authority approval of the subdivision is ousted by express conferral on the purchaser alone of an option to cancel the contract. There is simply no room, consistently with the wording of the 2nd sentence of clause 2 4, for the operation of the principles based on the voidability of the contract that are embodied in the decisions of this Court in Suttor v Gundowda and Gange v Sullivan". 43 There has been made particular focus by both parties on the decision of the New South Wales Court of Appeal in Rudi's Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568. Samuels JA with whose reasons Priestley and McHugh JJA agreed, expressed the view that in Suttor, Latham CJ, Williams and Fullagar JJ and had taken the principles enunciated or affirmed in New Zealand Shipping Company a step further:

"It is somewhat doubtful, if I may say so, whether New Zealand Shipping Co does require the identical construction to be given to contracts encompassing such different consequences. After all, an event which cannot occur without the default of one or other of the parties is quite distinct in character from one which can. In the second case it is true that default may cause or contribute to the event. But in that case the innocent party's position may be protected by precluding the party in default from taking advantage of his own wrong. There is every reason to support that doctrine but none that I can perceive which requires what may amount to defeat of the parties' intentions, without any default by either of them. In Suttor (see at 421) the provision concerning the Treasurer's consent, so far as the report goes, was that "in the event of the consent of the Treasurer not being obtained within B two months from the date hereof ??this contract shall be deemed to be cancelled ?". No doubt their Honours were perfectly right to infer that it would have been necessary to apply for that consent; but there does not seem to have been any express provision as to which of the parties was to make the application." 44 Samuels JA went on to distinguish the case there before the court:

"In the present case the matter is otherwise because the deed, by cl 7, specifies: "The Vendor shall apply for the consents referred to in cl 5 and shall C diligently pursue such applications and shall pay all costs and fees other than those of the Purchaser and its solicitor in respect thereof. The Purchaser and its nominee shall promptly join in any such application and all parties shall do all such acts and things sign such documents and furnish all such information and materials as shall be necessary to obtain such consents." Hence, in the present case the parties have stipulated details ignored in Suttor , and failure by the vendor to apply or the purchaser to co-operate might render the contract voidable. Here therefore there is express provision by which the contract might be avoided, not because the consents were not forthcoming, but because the parties, or one of them, had not fulfilled the contractual obligation to apply, or support an application, for them. The agreement in my view contemplates the refusal of any consent only as an event occurring after the parties had done what they were required to do to obtain it; or, possibly, following breach and waiver by the party not in default. Thus the agreement having expressly provided for the making of the applications for consent, by that means exhausted the parties' intervention in the process. The language of the deed strongly suggests that the parties intended refusal of consent to work automatic termination. In cl 6 the stipulation is that the deed "shall be null and void" in the contemplated event.

There are provisions elsewhere in the deed enabling a party to "rescind this Deed" so that there is a deliberate terminological distinction between F rescission, which obviously requires the act of a party, and the passive "null and void". Clause 35 contains even more explicit language, namely: "This Deed shall be null and void and of no effect." It goes on to provide what is then to happen, and to invoke certain other provisions of the deed; and to require the parties "promptly and diligently" to do everything that may be necessary to restore them respectively to the positions they were in prior to entering into the instrument.

I cannot think that the Court in Suttor intended to lay down the proposition that parties could not stipulate for automatic termination of a contract save upon the occurrence of an event which, objectively, lay beyond their control. Effect must be conceded to the parties' intention. In the present case the parties by assigning detailed roles to each other in the making of the application, plainly relinquished the possibility of exerting influence upon the adjudicator's response to their applications. Accordingly, the grant or refund of consent must be regarded as beyond their control. It is difficult to imagine language which more strongly suggests that it was the parties' intention that the agreement should terminate automatically upon the happening of the stated event. Provided that the principle preventing a blameworthy party from taking advantage of his default is observed, there can be no difficulty in the present case in giving effect to what, to my mind, was the parties' deliberately manifested intention." 45 My own view is that the provisions of the Development Contract presently under consideration may again be distinguished from the particular provisions of the Deed of Sale under consideration in Rudi's Enterprises. Clause 2a (c) imposes only an obligation upon Roche to furnish particular information to Metro Edgley. However in Rudi's Enterprises the relevant provision in clause 7 expressly provided details by which both parties were obliged to carry out the acts necessary on each of their behalf in the endeavour to procure the subject consents. This is no minor matter as it seems to me because the reasoning in Rudi's Enterprises rested upon the express provisions of the Deed having exhausted the parties intervention in the particular process. As explained in the reasons given by Samuels JA, "the agreement contemplated the refusal of any consent only as an event occurring after each of the parties had done what they were required to do to obtain it; or, possibly, following breach and waiver by the party not in default". 46 The absence of an express provision assigning a detailed role to the Developer in terms of what it had to do [in relation to playing such part as may be appropriate in acting or co-operating in some particular way so as to ensure that certain of the conditions precedent were likely to be fulfilled or would be fulfilled] means that one would have to be forced back to questions of implied terms of cooperation. However the field of discourse opened by the reasoning taken in Rudi's Enterprises appears to be concerned with the express provisions of the instrument under consideration. 47 In those circumstances it seems to me that one falls back to the reasoning applied in Suttor. And notwithstanding:

(i) the fact that the Development Contract does include references [as in the Deposit clause 5 (d)] reflecting that the draftsperson was able to draw a distinction between rescission pursuant to a right of rescission and automatic rescission;

(ii) the use of the words " and of no force and effect" to be found in clause 2A (b);

in my view the so-called automatic rescission provision where engaged is properly construed not as making the contract void but as making the Contract voidable. 48 For those reasons notification of the avoidance was necessary. The 21 May 2004 Letter 49 In my view the 21 May 2004 letter from Roche to Metro Edgley was clearly written on the view that the so-called automatic rescission clause had, as at 31 March 2004, effected an automatic cancellation of the Development Contract. The letter seems to be on all fours with the letter written in Suttor by the defendant's solicitors to the plaintiff's solicitors on 15 January 1948 [described at 81 CLR page 442]. That letter apparently advised that "the consent of the Treasurer was not obtained within the period of two months of the date of the contract and therefore the contract is no longer effective after 20 December 1947". Latham CJ, Williams and Fullagar JJ found that the letter was obviously written on the view that the particular clause had effected an automatic cancellation of the contract when the Treasurer had not consented by 20 December 1947. The second of the defendant's solicitors letters purporting to cancel the contract was only written after the consent in writing of the Treasurer to the transfer had been obtained. Even had it been written earlier, it would not have effected the cancellation.*[see Note at end of Judgment] 50 For those reasons the 21 May letter cannot be taken to have effected an avoidance of the Development Contract [nor as pleaded, an election to rescind the Development Contract]. Waiver: the use of the term 51 This is not an occasion where it is necessary for a detailed jurisprudential analysis of the concept of 'waiver' which "has often been regarded as a flexible term used with different or shifting meanings and has been criticised as a vague": Carter on Contract, LexisNexis Butterworths 2002 [07-180] [cases cited in footnotes 2,3,4,5 and 6]. One is dealing with waiver regarded as a species of election in terms of conduct waiving the right to avoid the Development Contract [or electing against exercise of that right]. The affirmation was by reason of Roche conducting itself in a fashion which was justifiable only on the footing that an election had been made to affirm the contract. That conduct was adverse to the Developer and is appropriately regarded as having been unequivocal in its effect. By that conduct Roche induced the Developer to believe that performance of the contract was insisted upon: cf Sargent v ASL Developments Limited [1974] 131 CLR 634 at 658 per Mason J. 52 It is of course quite plain that:

"[w]here election is in question between contracting parties and … the contract itself confers the inconsistent rights there can be no question whether a party had knowledge of his choice of rights. He is deemed to know the terms of his own contract and the rights it confers, at all events he cannot take advantage of his own ignorance…; moreover he must take his contract as bearing whatever meaning the court will assign to it when it is called upon to interpret it, he is bound 'by the interpretation which a court of law may put upon the language of the instrument'.."

Sargent per Stephen J at 645. [ Borda v Burgess [2003] NSWSC 1171 at [64]-[66] per Young CJ in Eq]. 53 Of course the concept of waiver of a right is sufficiently wide to embrace not only the giving up of one right in favour of another, but also conduct which makes it unfair, inequitable and unconscionable for the party to insist on a right previously held. The proven facts presently before the court equally justify a finding in favour of the Developer reached under the rubric of waiver meaning 'estoppel'. 54 There is absolutely no doubt but that both parties continued between 31 March 2004 and 21 May 2004 to conduct themselves as if the contract was still on foot. So much was conceded by Mr Michael Roche [transcript 279, 280, 321] and by Mr William Roche. The precise concession by Mr William Roche was an agreement that:

"[F]rom a person who was dealing with the building end of things: from 31 March until 21 May everyone - that is, everyone at Multiplex and everyone at the Roches - proceeded as if the contract was alive and well. [Transcript 361] 55 It is unnecessary to chronicle the other evidence before the court establishing this conduct by both parties. It suffices to note that the evidence given by Mr Accordo in his affidavit of 15 July 2004 and confirmed under cross-examination [and in part dealt with in the re-examination] clearly established the carrying out of work which related directly to the Roche fitout following 31 March 2004. 56 In those circumstances Roche had at the least by 21 May 2004, affirmed the Development Contract, hence waiving any anterior entitlement it may otherwise have had to avoid the Contract. Conclusion 57 What then is the correct analysis in terms of the present status of the Development Contract? 58 To my mind the following represents the correct analysis in the particular circumstances: · Roche having had an entitlement on or after 31 March 2004 to avoid the Development Contract, failed to exercise that entitlement; · That entitlement may have continued for a [presumably short] period following 31 March 1994 depending upon whether or not, during that period Roche moved outside simply keeping its options open as by conduct affirming the Contract; · Roche had at the least by 21 May 2004 affirmed the Development Contract hence waiving any anterior entitlement it may otherwise have had to avoid the Contract; · As it happens Roche never even purported to avoid the Contract; · Metro-Edgley [by letter dated 1 June 2004] purported to extend the date for satisfaction of the conditions precedent to 30 September 2004; · Notwithstanding that the 1 June 2004 purported extension of the relevant date advanced the incorrect contention that the relevant date had, by agreement of 2 March 2004, been extended to 30 June 2004, the 1 June 2004 letter constituted a valid extension of the date for satisfaction of the conditions precedent to 30 September 2004. 59 In those circumstances Roche is shown to have waived such anterior entitlement as it may have had to avoid the Contract on the basis of the failure by Metro-Edgley to extend the date by notice in writing on or prior to 31 March 2004 60 In the result the date referred to in clause 2A (b) of the Development Contract has been extended to 30 September 2004 and it is appropriate for the Court to declare accordingly. 61 The above analysis holds good notwithstanding that upon the proper construction of the so-called automatic termination provision, the right [on more than one occasion up to the Sunset Date, to notify an extension of the date by which the Contract was to be deemed automatically rescinded] could only be exercised prior to the expiration of an earlier nominated deadline. 62 These findings likely require the suit to be dismissed. The way forward 63 In the circumstances where the plaintiffs may seek to appeal against the approach taken in the above reasons it is likely appropriate for the court to treat with certain of the remaining issues particularly where findings of fact require to be made. 64 Accordingly, I proceed directly to the disputed issues of particular relevance. Dealing with the evidence 65 Whilst there were a number of witnesses called on the defendants disparate alternative pleaded cases, this is not a case in which it is necessary to examine more than a small amount of the voluminous documentary evidence. Nor is it necessary to do more than to examine the evidence given by the witnesses for the purpose of determining very limited factual issues. The meeting of 2 March 2004 The evidence given by the Roche Brothers 66 Each of Messrs Michael Christopher and William Roche gave evidence denying absolutely that there was any discussion at all at the meeting of 2 March 2004 regarding an extension of time of the conditions precedent. Each of Messrs Michael and Christopher Roche swore in their affidavits that if that topic had been raised, they would have considered it to be an important matter and would have made notes accordingly. Mr William Roche under cross-examination swore that he could say with absolute confidence that there was no statement that Multiplex was extending the time under the clause until the end of June [Transcript 344]. Mr Christopher Roche had taken some notes of the meeting in his diary and one of the reasons why he was confident that nothing was said about extending the conditions precedent on that date was because he had no note of this in his diary. He swore that if Mr O'Regan had said that the time for the satisfaction of the conditions precedent was being extended he would have written that statement down as he would have thought the matter important. [Transcript 327]. 67 Mr Michael Roche had a file note of the meeting. This includes no reference to the time extension question. His evidence under cross-examination included:

"Q. Isn't this the fact of what happened on 2 March: Mr O'Regan did say to you words to the effect, "We are extending the time under the condition precedent clause until the end of June," and that, of course, was something that was of no particular moment to you because you fully expected there to be such an extension? A. No, that's incorrect.

Q. In other words, it wasn't important to you at all? A. That's incorrect.

Q. Because you were just about to have discussions about all sorts of things that were going to happen after 31 March? A. We were to discuss things that were going to happen after 31 March; yes, that's correct.

Q. So you just shrugged your shoulders and said, "Well, of course you are", and moved onto to important matters, which were the licence and the POPE licence? A. That's incorrect.

Q. Your evidence when you confidently assert that nothing at all was said about the conditions precedent provision is false, isn't it? A. That's incorrect.

Q. If it is not false, you have simply forgotten it because it was something that just didn't have any impact on you at the time? A. That's incorrect." [Transcript 305-306] The evidence given by the defendants' witnesses Evidence of Mr O'Regan 68 Mr O'Regan was aware at the time that he went into the meeting, that in terms of the December 2003 extension notice, the deadline for the satisfaction of the conditions precedent was to expire on 31 March. [Transcript 102-103] His evidence was that before he went into the meeting he intended to inform Roche that Multiplex was going to exercise its right to extend [Transcript 105.35]. His evidence was that the extension of the conditions precedent was a principal matter which was going to be discussed. [Transcript 107.24]. His evidence was that before the meeting he had discussed with Mr Boonzaaier and Mr Yeo that he was going to advise Roche that the period/deadline was being extended [Transcript 108-109]. 69 His affidavit evidence included:

"I said words to the following effect: "Initially the Liquor Licence was to be a sub-licence of the section 18.4(g) licence. However, as a result of advice from Michael Roche, following discussions with Roche's accountant, the sub-licensing of the existing section 18.4(g) licence will not be acceptable to Roche and we are now pursuing a Governor's Licence for the Waterfront Brasserie. It is anticipated that the Governor's Licence will be lodged early next week and that on this basis it will not be possible to satisfy the conditions precedent and have the Liquor Licence procured by the end of March. We are therefore extending the date for satisfaction of the conditions precedent for a further three months to June."

Michael Roche and I then said words to the following effect: Michael Roche: "We understand that. When do you expect to achieve the Liquor Licence?"

Dennis O'Regan: "Our expectation would be that due to the Project having strong support from the Government we should have a licence within two months if all proceeds well. It is my understanding from recent Governor Licence applications, such as that at Walsh Bay with the Lyric Theatre, that these types of licences can be obtained within six weeks of filing the original application. We are entitled to extend the date to December but are confident that we can satisfy the conditions precedent prior to June."

Michael Roche: "What is your expectation for access to the base building to allow fitout to commence."

Dennis O'Regan: "We expect the base building works to be complete by the first half of May and we are targeting late April."" 70 Under cross-examination his evidence included:

"Q. You tell his Honour, do you, that you said words which you understood were a direct notification to Roche that the right was thereby being exercised? A. Yeah, I certainly confirmed to Michael and his brothers that we were extending the date under the - the CP date a further three months." [Transcript 108] "Q. And the minute you told Mr Roche, as you say you did, that "We are extending the period", you understood, Mr O'Regan, that you had done so? A. Yes." [Transcript 110]

Q. I'm sorry, do you say to his Honour that you said to Mr Roche or the meeting words to the effect that "We are hereby extending the condition precedent date until the end of June 2004"? A. Yes, words to that effect. [Transcript 119]

Q. You tell his Honour that your view was, was it, that you had exercised the right which the contract had given you? A. Yes. [Transcript 110] Evidence given by Mr Yeo 71 Mr Yeo gave relevant affidavit evidence as follows:

"At the commencement of the meeting, Dennis O'Regan recapped recent events with respect to the Liquor Licence and said words to the effect of: "Based on earlier advice from the Minister's office both Luna Park Sydney and Roche went down the path of sub-licensing the section 18.4(g) licence. However, Michael then advised Multiplex that Roche's accountant had reservations from a financing point of view. We had similar feedback and based on further discussions with the Minister's office the advice was to apply for a Governor's licence to which Roche agreed."

Michael Roche and Dennis O'Regan then had a conversation at that meeting to the following effect: Michael Roche: "How long will it take?"

Dennis O'Regan: "It is not a short process and in a sense a function of the government delivering the outcome. Key people in government are aware and supportive of this application. For this reason we have to extend the agreement for three months. Metro could even extend to the sunset date but we are working to a tight deadline and so at this time only extend for three months."

I observed that Chris Roche and William Roche nodded in agreement." 72 It is to be noted that although Mr O'Regan in his affidavit had said that he used words to the effect of: "We are therefore extending the date…", if these had been the precise words used they are ambiguous. Had the words used been "we are hereby extending…" the matter would have been clearer. As so very much depends upon precisely what was said, it seems to me appropriate to approach the evidence given by Mr O'Regan upon the basis that his best recollection was that set out in the affidavit. He does not state that Mr Michael Roche said "fine". As note above Mr Yeo gives evidence that that is what then occurred and that Messrs Christopher and William Roche nodded in agreement. 73 There is a material difference between the wording used by Mr Yeo in his affidavit as compared to the wording used by Mr O'Regan. Mr Yeo says that the words were to the effect that for the reason given "we have to extend the agreement…". These words are clearly ambiguous, if they are to be taken to denote as close as may be his recollection of the precise words which were used, and if said, certainly may have been properly interpreted as indicating an intention to thereafter formally in writing [as per the terms of the contract] proceed to so extend the agreement. Evidence of Mr Boonzaaier 74 Likewise the evidence given by Mr Boonzaaier in his affidavit, upon the assumption that albeit his reference to the statements being "words to the effect of", throws up the very same point [again the words which he has set out, if they are to be taken to denote as close as may be, his recollection of the precise words which were used, are clearly ambiguous and certainly may, if said, have been properly interpreted as indicating an intention to thereafter formally in writing [as per the terms of the contract] proceed to so extend the agreement]. 75 The relevant portion of his affidavit was in the following terms:

"Dennis O'Regan led the discussions. In relation to the Liquor Licence he informed those present that we were pursuing an application for a Governor's Licence that would be submitted shortly and said words to the effect of: "In view of your accountant's comments and our legal advice we will not be pursuing an application for a sub-licence under the current section 18.4(g) licence and will be pursuing a Governor's Licence instead. We have prepared the draft application which includes input from you. We are confident that the licence will be approved by mid to late May. Due to the delay in obtaining the Liquor Licence we will have to extend the date in the Development Contract. We have already extended it to 31 March and we are entitled to extend it until the end of the year. However, we are hoping to resolve the Liquor Licence, as well as the other outstanding issues by late May or in June, so we are now only extending until 30 June. Depending on progress with the Liquor Licence and other outstanding issues we may have to extend it again." In response Michael Roche said words to the effect of: "That's fine". Christopher Roche and William Roche also nodded and said words to the effect of: "That's okay". At some stage during the meeting Michael Roche also said words to the effect of: "Can you provide us with a letter outlining the proposed Liquor Licence for us to give to our financiers"." Mr Yeo under cross-examination 76 Under cross-examination Mr Yeo was asked to repeat what had been said. His evidence included:

"Q. Who at the meeting raised the question of extending the period? A. Dennis O'Regan.

Q. What did he say? A. He said words to the effect that given the time it would have required to do - to secure the Governor's licence, we needed more time, so - I'm really struggling with what - given the time taken to process the Governor's licence, we needed more time and it's quite likely that it will exceed the 31 March date and, therefore, we need an extension. He further said that we could actually extend it to December 2004, but in this instance we were only extending it to 31 June - 30 June, sorry.

Q. Is that what he said? A. Words to the effect…

Q. So is this the position, Mr Yeo, as you understood it, that Mr O'Regan said, "We need more time and we're going to extend it"? A. No, he said words to the effect that the process of Governor's licence is a lengthy process.

Q. Yes? A. Whilst the government is committed to doing it quickly, there's no guarantee that we could have got it done by 31 March, and, therefore --

Q. Therefore he's going to extend the time? A. That's correct. [Transcript 173] 77 Here again this acceptance of the notion that Mr O'Regan was "going to extend the time", raises the very same ambiguity to which I have already referred. Dealing with the issue 78 This is one of those cases where the court can only decide on the balance of probabilities aided by the whole of the evidence. There is not a great deal that came forward in terms of a proper foundation for an attack of the credit of any of the witnesses called by either party. Whilst a number of attacks upon the credit of each of the material witnesses called by the opposing parties were mounted on disparate grounds, none of them was of sufficient weight to enable a positive finding on the critical issue. The onus 79 At the end of the day the onus of proving that Mr O'Regan had said words to the effect that Multiplex was at that moment [or words reflecting the notion "hereby"] extending the date for satisfaction of the conditions precedent, rests upon the defendants. In my view the defendants have not established on the balance of probabilities that words to this effect were said. 80 It is particularly difficult to reach a finding of fact in terms of whether anything at all was said on the day regarding an extension of time of the conditions precedent. There are cases where the Court simply is unable, even on the balance of probabilities, to reach a finding of fact one way or the other as between two groups of parties, each swearing by its witnesses to what amounts to a 180 degree diametrically opposite version of the events. This is one of those cases. The matter therefore falls to be decided by looking at which party bears the onus of proving the particular facts. Here that onus rests upon the defendants and has not been discharged. 81 However even if the court had been in a position, which it is not, to accept one or more of the versions given by Messrs O'Regan, Mr Yeo or Mr Boonzaaier on the balance of probabilities, I would have had great difficulty in accepting from their evidence that what had been communicated was sufficiently precise, unambiguous and unequivocal [so as to reflect a statement that the developer would not still proceed to formally give the written notice which was required to be given by the terms of clause]. In short it would have been necessary to be quite clear as by using the words "hereby", or even better, as by stating "we here and now extend [the time] and take it that you will not require the formal written extension to be given". Travelling further into the pleaded issues The way forward 82 It is common ground that the proceedings received special expedition for commercial reasons. 83 Having dealt with the threshold issue of principle and with the central issues of fact it does not seem necessary or appropriate for the Court to proceed further with any of the pleaded issues. It would seem likely that the judgment will lead to consensual short minutes of order. 84 The convenient course is to give the parties an opportunity to take instructions on whether or not consensual short minutes of order can now come forward although of course costs may have to be argued. 85 In any event the appropriate way forward is to invite the parties to indicate whether any and if so which further findings of fact or law are sought on any outstanding matter. In the unlikely event that the Court is persuaded that some particular additional findings are necessary those findings can be handed down in a short supplementary judgment. I certify that paragraphs 1 - 85 and Appendix "A" are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 18 August 2004

      Susan Piggott
      Associate

18 August 2004 Revised 27 August 2004 Note: As to the last two sentences of paragraph 49, see MK & JA Roche & Ors v Metro Edgley Pty Limited & Anor [2004] NSWSC 780

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