OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120 | Case summary

OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120 | Case summary | Zoe

[3]

Earlier leases of the Premises to OXS

OXS took possession of the Premises in December 1996 following an assignment of lease of the Premises pursuant to a deed dated 4 December 1996. Since then, OXS had been the lessee, except for a small period in which it had surrendered the lease following a fire at the Premises in 1997. It is unnecessary to refer to the detail of the earlier leases, which his Honour set out at [5] - [12], other than to note three matters.
First, when OXS originally took possession of the premises, it obtained a six-month extension of the term of the existing five-year lease due to expire on 30 September 1997, by a variation of lease dated 4 December 1996 between the Sydney Cove Redevelopment Authority and OXS. The deed of variation was registered. At the same time, pursuant to a deed of licence between OXS and Sydney Cove Redevelopment Authority, OXS was granted a licence to use the courtyard adjoining the restaurant. The permitted use under the licence was specified as "a courtyard forming part of the Restaurant, for the consumption, but not the preparation, of food and liquor to patrons of the Restaurant".
Secondly, after OXS surrendered its lease in July 1997 to allow the Sydney Cove Redevelopment Authority to conduct repairs to the Premises following the fire, it did so on terms that it would be granted a new 10 year lease with a 5 year option conditional on OXS conducting all the works necessary to fit out the Premises again for use as a restaurant and bar. The terms of that agreement were recorded in an agreement for lease dated 14 April 1998, which attached a proposed form of lease as an annexure to that agreement.
Thirdly, following the refurbishment works carried out by OXS in 1999, OXS entered into a registered lease with SHFA on 4 February 2001 (the 1999 lease). The 1999 lease provided for a commencement date of 1 July 1999, a terminating date of 30 June 2009 and 5 year option to renew, with alternating CPI and market rent reviews each year and provision for turnover rent. Following the exercise of its option to renew in 1999, OXS entered into a further registered lease with SHFA on 4 March 2010 (the 2009 lease). The 2009 lease provided for a commencement date of 1 July 2009, a terminating date of 30 June 2014, alternating CPI and market rent reviews each year and also made provision for turnover rent.
During 2010, OXS undertook substantial maintenance and upgrade works at the Premises at a cost of about $300,000. It was at this time that the name of the restaurant was changed to "Appetito".
It is necessary at this point to refer to certain lease policies which were issued by SHFA in 2008 and 2009, as they provide the context for what occurred later in 2010 and early 2011.

[4]

SHFA - lease expiry and renegotiation policies - 2008 and 2009

In June 2008, SHFA's board approved a Lease Expiry Policy, following the issue of certain guidelines by the Independent Commission Against Corruption (ICAC) in May 2006 for managing risks in direct negotiations. That policy emphasised that there was no automatic right for any existing tenant to have their lease renewed and provided that, for retail leases, SHFA would not consider a lease renewal any earlier than 12 months before the existing lease expiry date, or as stipulated by the Retail Leases Act.
On 9 June 2009 in response to approaches by a number of lessees in The Rocks who sought to renegotiate their existing leases, SHFA issued the Rocks Lease Renegotiation Policy. The Policy, which was expressed to have effect until 30 September 2010, set out the principles and key criteria for direct negotiations with existing lessees. The Policy stated that SHFA retained absolute discretion in determining whether it would renegotiate a lease with an existing lessee. Appendix A to the Policy was a form of Request to Renegotiate an Existing Lease in the Rocks. It seems that on 30 June 2009 SHFA received such a request signed by the solicitor for OXS. SHFA informed OXS by letter dated 7 July 2010 that it had considered the expression of interest by OXS in renegotiating its existing lease in response to the Rocks Lease Renegotiation Policy, but decided not to renegotiate OXS's existing lease at that time. However, SHFA indicated that it was willing to consider OXS's existing lease under the Lease Expiry Policy "at the appropriate time". The "appropriate time" was a reference to the 12 months before the lease expiry date.
In late 2010 or early 2011, a meeting took place between Mr Karl Kazal, Mr Charif Kazal and Mr Watkins (Mr Karl Kazal is the sole director of OXS). There was some conflict in the evidence as to the precise terms of the discussion. Ultimately nothing turns upon this. In response to a request by Mr Karl Kazal for a longer term for the lease, Mr Watkins invited Mr Kazal to put a proposal to SHFA.

[5]

OXS's request for an extension of the 2009 lease

On 28 January 2011, Mr Karl Kazal wrote to Mr Watkins requesting an extension of the 2009 lease by 10 years with an option to renew for a further 5 years. Mr Watkins raised internally within SHFA a different proposal, namely, extending OXS's lease for an additional 7 years from the date its current lease expired on 30 June 2014, being equivalent to a further 10 years from 1 July 2011. Mr Watkins suggested this possibility to Ms Garrick (SHFA's General Manager) and Mr Robert Noble (SHFA's Manager, Property and Leasing). Ms Garrick was opposed to this course. She sought external legal advice to seek to persuade Mr Watkins not to proceed with such a proposal. Ms Garrick's view was that it was not appropriate to extend the lease to OXS without going to the market or to open tender.
On 15 February 2011, SHFA received advice from its external solicitors recommending against the grant of a new lease to OXS. The advice also recommended that SHFA allow that lease to expire and then test the market. Mr Watkins accepted in his evidence that he was advised of the substance of that advice, although he disputed receiving a copy of it.
Mr Watkins gave evidence that following receipt of the letter from OXS on 28 January 2011 requesting a 10-year extension of the lease, he met with Minister Kelly. In this meeting he discussed a number of issues, including that he had met with representatives of OXS and discussed issues of concern in relation to the Premises. Mr Watkins' affidavit recorded that the following conversation took place: Watkins: "… I have met with the representatives of OXS and discussed the issues of concern. I also discussed the issues with the executives of SHFA and believe the outstanding matters can be resolved by the offer of a new 10 year lease on commercial terms and subject to resolution of some matters of concern to SHFA. That will give OXS 7 years from the end of its current lease." Minister Kelly: "Yes, proceed."
Mr Watkins did not, however, specify the date of that meeting in his affidavit.
Mr Watkins' evidence was that he told Ms Garrick about this meeting with Minister Kelly and the substance of what was discussed. Ms Garrick conceded in cross-examination that such a conversation may have occurred but she could not remember it happening.

[8]

23 August 2011 SHFA letter

On 23 August 2011, SHFA sent a letter to OXS which stated that, following a review of the leasing file for the Premises, the Minister "has indicated he will not consent to the proposed new lease". The letter continued: Accordingly the Authority must now withdraw its offer and the current lease will continue until its expiry in June 2014.
His Honour did not accept OXS's characterisation of this letter as part of a "false and misleading charade that the Minister was to blame" for the withdrawal of the "offer" made in the 23 February letter. Rather, his Honour found that the letter was "at best" imprecise, because while the Minister had not been asked to and had not indicated that he would not consent to the proposed lease, he had been asked to note, and had noted, SHFA's intention to withdraw the "offer" of the lease: at [37].
On 15 September 2011, the solicitor for OXS responded to SHFA by letter asserting that the February 2011 correspondence constituted "an Agreement For Lease which is enforceable by my client". The letter also asserted that OXS "has acted to its detriment in furtherance of the D/A condition attaching to that agreement".
In an email sent on behalf of Mr Karl Kazal to SHFA dated 21 September 2011, Mr Kazal asserted that, on the basis of "the letter extending our tenure for a further period of 10 years, we undertook further expenditure which we cannot expect to recover over the shorter term of our current lease." The email continued: We find it astonishing that an agreement can be reached for a further term, we then expend significant sums on the property based on that agreement and now SHFA purports to walk away from that agreed position.
His Honour found that OXS had spent approximately $14,000 after the date of SHFA's February letter, although it had previously spent a much more substantial amount in the order of $300,000 in 2010 before that letter had been received. His Honour observed that the reference in the email to "SHFA purports to walk away" suggested that Mr Kazal understood that SHFA had altered its previous position by that time, and the position taken by Mr Kazal in that email was not wholly consistent with the position he took in evidence (that he understood SHFA continued to support the lease although the Minister did not): at [40].

[10]

2 August 2012 SHFA letter

In mid-2012, OXS engaged a third party to approach the Minister to ascertain why Ministerial consent had been withdrawn. Following OXS's approach to the Minister through an intermediary, SHFA sent a letter to OXS dated 2 August 2012 which stated that:

in mid-2011, the Minister indicated that he would not consent to the proposed new lease;
the existing lease would continue until its expiry in June 2014;
a DA for outdoor seating at the rear of the premises in Nurses Walk had not been lodged with the City at Sydney, in spite of this space being operated daily, and requested that OXS advise the Authority in writing within 14 days of how it would address this matter;
should a DA be approved, OXS would need to enter into discussions with the Authority for an outdoor seating licence; and
the Authority would not enter into any negotiations for a new lease until the outstanding matter of outdoor seating has had been resolved.

His Honour did not accept Mr Kazal's evidence of his understanding that the 2 August 2012 letter caused him to believe that SHFA supported a new lease: at [42].
On 29 August 2012, SHFA sent a letter to OXS advising that any proposed new lease of the Premises would be assessed in accordance with the Lease Expiry Policy which required substantial capital expenditure on premises for extended lease terms of up to 10 years to be considered. A copy of the policy was attached. The letter reiterated that SHFA would not enter into any negotiations for a new lease until the outstanding matter of outdoor seating had been resolved.
In August 2012, OXS re-engaged BBC Planners to prepare a development application for the outdoor seating area. It is unnecessary to refer to the detail relating to this application. It is sufficient to note that on 4 October 2012, Mr Kazal delivered the development application to SHFA and requested that SHFA "urgently sign the landowner's Consent and return the application urgently". In mid-October 2012, SHFA gave notice of amendments that it required to the outdoor seating plan. Mr Shillito, from BBC Planners, requested a survey plan of the area from OXS. None was provided. The process continued from late November 2012 and into the first half of 2013. On 30 May 2013 the signed development application was lodged with City of Sydney Council and development consent was issued on 23 September 2013.
On 25 November 2013, SHFA and OXS entered into a new deed of licence in respect of the courtyard. This provided by cl 8 that the licence was interdependent with OXS's occupation of the Premises.
On 20 December 2013, the solicitors for SHFA sent a letter to OXS advising that SHFA did not propose to offer a renewal of the lease. The letter stated that the 2009 lease would expire on 30 June 2014 and OXS should vacate the Premises by that date. OXS has been holding over in the Premises since the expiry of the 2009 lease pending the determination of these proceedings.

[11]

Issues on appeal

The amended notice of appeal filed 9 January 2015 contained 26 grounds of appeal, some of which are connected. The grounds which were pressed may be conveniently grouped into three parts, generally along the lines adopted by Counsel for OXS in oral argument.
First, there are questions relating to whether there was a concluded agreement for lease and whether specific performance is available, or alternatively, the measure of damages, if a contract is established (grounds 1 - 4, 9, 11 and 26).
Secondly, and related to the first issue of a concluded agreement, there are questions relating to the requirement for ministerial consent for a lease, including the effect of non-compliance if consent is required but not given before any agreement for lease is entered into (grounds 6, 7, 8 and 10). Counsel for OXS accepted that the ministerial consent issues only arose if OXS successfully established on the first issue that there was a concluded contract.
Thirdly, there are questions relating to the claims for misleading or deceptive conduct (which failed before the primary judge), and causation of loss. OXS asserted that it lost the opportunity to sell the business at the Premises in 2011 (grounds 13-17). Related to these questions are challenges to a number of factual findings concerning the evidence of Mr Karl Kazal and Mr Noble (grounds 21-25). There is also a challenge to his Honour's decision not to make a declaration in accordance with his finding that SHFA's 23 August 2011 letter was misleading or deceptive (ground 12).
OXS did not press its grounds of appeal relating to estoppel (ground 20) and unconscionability (grounds 18 and 19) if the appeal failed on the misleading or deceptive conduct grounds (relating to SHFA's letters of 23 August 2011 and 2 August 2012 - grounds 15 and 16, which were the subject of oral argument). Nor did OXS press ground 5, which asserted that the Premises were not situated on "core land". That concession was properly made having regard to the way in which OXS had conducted its case at trial.

[13]

The primary judge's reasons

The primary judge recorded (at [52] - [53]) the parties' competing contentions as to whether the exchange of the February correspondence gave rise to a concluded agreement, as OXS contended, within the first or fourth class of cases in Masters v Cameron, or as SHFA contended, no more than an invitation to treat within the third class of cases in Masters v Cameron (at 360) (see also Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 (McLelland J, as his Honour then was), affirmed in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634-635).
His Honour accepted that there were matters capable of supporting each of the competing positions: at [54]. He noted that the term "offer" was not used in the February letter in isolation but as part of the phrase "prepared to offer", and in the context of the three identified conditions: at [54]. He referred to Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd [1995] NSWCA 166; 7 BPR 14,551 at [14,570], where Kirby P emphasised that the relevant question is how the words are to be interpreted in their context and, in the light of the correspondence, viewed as a whole. His Honour also referred to ANZ Banking Group Ltd v Ciavarella [2003] NSWCA 304 at [33], where this Court held that the words "prepared to offer" had effect, in their context, as a contractual offer. He distinguished the use of the words "prepared to offer" in the present case, reasoning (at [54]): Nonetheless, it seems to me that the words 'prepared to offer' in the February 2011 letter, in the context of the specified conditions that are to be satisfied in the future and the lack of specificity of the terms of the proposed agreement, are to be distinguished from the word 'offer' standing alone and contemplate that an offer, in the contractual sense, would be made at a future date, once the relevant conditions were complied with.
At [56] his Honour found that no agreement had been reached between the parties as to the amount of the "prevailing market rent" referred to in the February letter and that no mechanism had been agreed to resolve any dispute about that question. He continued (at [56]): In my view, the number of issues that had not been addressed between the parties, including matters such as any special terms of the lease; the amount of the initial rent payable or the mechanism by which it was to be determined; the turnover rent provisions and the terms of the rent review provisions is one factor suggesting that the parties did not intend the February 2011 letter to have binding effect, particularly where (as I will note below in respect of the question of certainty) the reference to 'commercial terms' was not sufficiently precise to resolve those questions.
At [57] his Honour characterised the three conditions in the February letter as also supporting the view that SHFA was indicating what it was "prepared" to do, that is, make an offer after those conditions were satisfied, rather than intend to be immediately bound. He observed that the contrary view would have the result that SHFA was immediately bound to an agreement for lease on the terms of that letter, unless or until a fuller document was executed, even though the February letter did not in terms impose any obligation on OXS to satisfy the stated conditions within any specified time and, even if it had done so, it would have left SHFA to a claim for damages that might be difficult or impossible to establish for any failure to do so. That result, in his Honour's view, would have been inconsistent with the circumstances then known to both parties, including that SHFA had expressed continuing concerns as to OXS's use of the outdoor area without a development application or licence.

[14]

Submissions

OXS's primary submission is that his Honour did not consider whether the February 2011 correspondence gave rise to an immediately binding agreement of the type described as the fourth category of Masters v Cameron.
OXS further submitted that his Honour erred in distinguishing the words "prepared to offer" from the word "offer" standing alone. OXS submitted that those words contemplated an immediate offer. OXS complained that his Honour's construction of the words "prepared to offer" in the February letter was inconsistent with the interpretation given to similar words in ANZ v Ciavarella.
OXS referred to the commercial context of the February correspondence, being a proposed extension of a lease on the same conditions, and submitted that his Honour gave insufficient weight to that context, including the dealings between Mr Kazal and Mr Watkins, the discussions between Mr Watkins and Minister Kelly, the authority of Mr Watkins as CEO of SHFA, and that SHFA had never challenged OXS's unequivocal acceptance of the February 2011 letter.
OXS also submitted that his Honour failed to take into account the subsequent conduct of the parties which evidenced the existence of a binding agreement for lease: Brambles v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153 at [25]. Reference was made by OXS to the communications concerning the outdoor seating licence, the steps taken by OXS to obtain that licence, OXS refraining from selling the restaurant business and SHFA's omission to inform OXS of any issue with the agreement until its asserted repudiation by letter on 23 August 2011. Further, OXS submitted that the terms of SHFA's letter withdrawing the offer were said to be consistent with SHFA's view that an offer had been made.
OXS submitted that his Honour erred in finding that the term 'commercial terms' in the February letter lacked precision and that this was either an indication that the parties did not immediately intend to be bound or, alternatively, a reason why the agreement for lease would fail for lack of certainty.
There is no issue as to the relevant principles; the dispute concerns the application of well-established principles to the facts. It is desirable, however, to say something briefly about those principles.

[15]

Relevant principles

First, it is necessary to bear in mind the distinction between the issues of contractual intention on the one hand and completeness or uncertainty on the other hand. Thus, whether parties intend to make a concluded contract and intend to be bound immediately by their communications, or whether they only intend to be bound once a more formal agreement has been executed, is a separate issue to the question of completeness or uncertainty; that is, whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548. Nonetheless, the two questions are often related because similar evidence is usually looked at when determining each. An intention to be bound will be less likely to be found "the more numerous and significant the areas in respect of which the parties have failed to reach agreement" are: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd at 548 (Gleeson CJ).
Secondly, the High Court in Masters v Cameron at 360 explained that cases of the present type may belong to one of three classes: 1. Where the parties have reached final agreement on the terms of their contract and agree to be immediately bound but wish to restate those terms in a fuller or more precise way in a formal document; 2. Where the parties have reached final agreement on all the terms and intend not to depart in any way from them but the performance of some part of the contract is made conditional on the execution of a formal contract; 3. Where the parties intend there not to be a concluded contract unless and until a formal document is executed.
Thirdly, it is well-accepted, as McLelland J explained in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd at 628, that there is a so-called fourth class of case additional to the three mentioned in Masters v Cameron, as recognised by Knox CJ, Rich J and Dixon J in Sinclair, Scott & Co v Naughton [1929] HCA 34; 43 CLR 310 at 317, namely, "one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms."
As mentioned above at [57], this Court affirmed McLelland J's decision in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd. Importantly, McHugh JA said (at 634): [The] decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of surrounding circumstances …. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction. Even when a document recording the terms of the parties' agreement specifically refers to the execution of a formal contract, the parties may be immediately bound. [citations omitted]
Fourthly, it has been said that where the contract in question is of a commercial nature, the Court should adopt a commercial approach so that everything that can be done is done to give effect to an agreement which business people would assume would be fulfilled: Custom Credit Corporation Ltd v Cenepro Pty Ltd (NSWCA, 7 August 1991) (Kirby P, Mahoney JA agreeing). Nonetheless, "taking a realistic approach does not mean abandoning contractual principles altogether so that the Court will not go to unacceptable lengths to do what, in truth, the parties should have done for themselves": Corpers (No 664) Pty Ltd v NZI Securities Australia Ltd [1989] ANZ Conv R 548 at 554 (Young J, as his Honour then was).

[16]

Application of the principles to the present case

The primary judge expressly referred (at [52]) to OXS's contention that the agreement for lease formed by the exchange of correspondence fell within the first or fourth class of case in Masters v Cameron as explained in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd. Each of those classes involves an intention to be immediately bound. The reasons given by his Honour make clear that his finding that there was no intention to be immediately bound covered both of those classes of case. There is no merit in OXS's contention that his Honour did not consider the so-called fourth class of case identified by the High Court in Sinclair, Scott & Co v Naughton. Ground 4 should be rejected.
Contrary to grounds 2 and 3, his Honour did consider whether the use of the words "prepared to offer" in the context of the February letter was inconsistent with a contractual offer. As already mentioned, his Honour distinguished ANZ v Ciavarella, where the words "prepared to offer" were held, in context, to reflect an intention to be bound immediately for the reasons given at [54] (set out in [58] above). There is no error in his Honour's reasoning.
Unlike the context of the use of the words "prepared to offer" in ANZ v Ciavarella, here the context supported the opposite conclusion. The commercial context and prior dealings of the parties strongly pointed to the parties only intending to be bound by the terms of a formal lease in registrable form. A formal written contract offered advantages to both parties as against a less formal exchange of correspondence, having regard to the subject matter of the contract (a lease of land and a licence of the outdoor area) and the character of SHFA as lessor (being a statutory authority which required ministerial consent to lease the land for longer than 5 years). All previous leases of the Premises were recorded in formal documents executed by the parties in registrable form containing a full expression of their contractual intention. In my view, it is inherently unlikely that the parties intended to bind themselves by an informal consensus in the February correspondence.
Further, the lack of specificity of the terms of the proposed agreement was a significant factor which supported his Honour's conclusion that there was no intention to be immediately bound. The matters that had been left for later agreement were significant and included any special terms, the initial rent, turnover rent and rent review provisions. OXS sought to overcome this difficulty by pointing to the commercial background from 1998 onwards in which the parties renewed earlier leases on similar terms.
However, the language of the February letter did not refer to the 'same terms' - it used the words 'commercial terms'. It is not to the point that OXS and SHFA were each commercial parties used to negotiating on the terms of earlier leases. The reference to 'commercial terms' was significant. These words reserved for SHFA the possibility of proposing terms other than the same terms of the existing lease, particularly in relation to crucial matters such as rent (a market rate), rent reviews and turnover rent.
It should be accepted, as the primary judge found, that the words 'commercial terms' involved a lack of precision which indicated that the parties were not intending to be immediately bound. That SHFA used such broad language was consistent with SHFA wanting to leave the terms of any future lease to be decided later after further negotiation. Similarly, OXS's request that it be provided with a draft of the new lease 'for review' indicated that it reserved for itself the right to require changes to any draft lease submitted by SHFA.
There is a further matter which points to the conclusion that the parties did not intend to be bound by any informal consensus. The February letter concluded by inviting OXS to telephone Mr Noble of SHFA. That points to the prospect that further significant discussion was to take place before the parties intended to be bound by any agreement.
Pan American World Airways Inc v Commonwealth of Australia (1977) 7 BPR 15,145 involved an occupier of space at the international terminal at Sydney Kingsford Smith Airport. This Court (Moffitt P, Reynolds and Samuels JJA) found that it was plain that the parties ultimately intended to execute a formal deed of lease and (unlike the present case) that they had come to an agreement on all the terms upon which the owner should grant, and the other party should take, a lease of the premises. The Court held that the case fell within the third class of cases in Masters v Cameron because neither party intended to bind itself save upon execution of a formal lease.
The Court referred to aspects of both the subject matter and surrounding circumstances material to this question. These included the status of the parties (a leading international air carrier and a department of the Commonwealth Government) and that they were negotiating a lease of a not inconsiderable area at a substantial rent. The Court accepted that it was legitimate in approaching the construction of the parties' correspondence which "contained phrases and expressions of doubtful significance" (adopting the language of Lord Greene MR in Clifton v Palumbo [1944] 2 All ER 497 at 449) to bear in mind the probability of the parties contemplating the consummation of a final and enforceable bargain short of the execution of the formal document which they both proposed to sign. Nevertheless, the Court continued by observing (at [97629]): "The subject matter of a contract or the character of its parties or of a party may be such that a formal written contract offers such advantages as against a less formal agreement that, when it appears that the parties in fact contemplated the execution of a formal contract, it is inherently unlikely that they mutually intended to bind themselves by some earlier informal consensus. The disadvantages of having to depend upon the uncertainties inherent in informality, providing as they do fertile fields for dispute as to the existence of the contract or as to its terms where the rights of the parties have to be spelt out of conversations or correspondence or both, may assume substantial significance in some classes of contract or for some types of parties. This usually will be true of complex transactions such as a major construction project or a leasing transaction, such as the present one, involving provisions for change of areas leased and of conditions as to rent and otherwise during the term. It will also usually be true of a party whose operations are administered by a complex of persons and departments with different levels of authority, as in the case of governments, governmental bodies or large corporations. The practice of such bodies of entering into contracts of any substance by way of a formal contract is itself no formality. While an officer of the body of corporation may have substantial authority, including express authority to negotiate the terms of the contract and, arguably, by reason of his rank, implied authority to contract, the making of the contract by the formality contemplated may repose in more senior officers or a Minister the ultimate control of and the responsibility for the transaction and at the same time give the contract and its terms the certainty and notoriety desirable for its sure implementation. Hence, in such cases, it will not ordinarily be reasonable to infer that the parties, while contemplating a formal contract, intend to bind themselves prior to its execution."
SHFA submitted that the present case is closer to Pan American World Airways Inc v Commonwealth of Australia than ANZ v Ciavarella. I agree. Here, the status of the parties, in particular SHFA as a statutory authority, the practice of the parties entering into earlier contracts by way of formal leases in registrable form, and the disadvantage to both parties inherent in informality, particularly with respect to the critical commercial terms of a new lease which had been left to be negotiated in the future (including the initial rent, turnover rent and rent review provisions, and the unresolved terms of OXS's use of the outdoor area), all point to the parties not intending to bind themselves before a formal contract.
Finally, the reliance by OXS on post-contractual conduct by SHFA as evidence of the fact of an agreement for lease is misplaced. None of the matters identified by OXS are of a character that necessarily leads to the inference of there being a binding agreement. They are equally referable to OXS attempting to put itself in an eligible position to receive an offer of a new lease from SHFA upon satisfaction of the conditions stated in the February 2011 letter.
I conclude that OXS has not demonstrated error in his Honour's finding that the parties did not intend to enter into a binding agreement for lease in terms of the February correspondence.

[17]

The primary judge's reasons

The primary judge addressed the issue of uncertainty as an additional reason why there was no concluded contract. He recorded OXS's contention (at [58]) that there was no necessity for the February 2011 correspondence "to descend into levels of detail about esoteric terms and conditions" because the parties were commercial persons who had dealt with each other in respect of the Premises on the same terms for 15 years and that there was no evidence to suggest the existing lease was not on commercial terms.
His Honour identified two difficulties with this contention. The first is that the premise of OXS's case was that a proposal for a lease on 'commercial terms' was an offer for a lease on the terms of the 2009 lease, amended to commence in 2014. His Honour rejected this premise, finding that SHFA could have - but did not - offer to grant a lease on the same terms as the 2009 lease, except as to starting date and term, and further that OXS's purported acceptance, as mentioned above, appeared to reserve a right to comment on the terms of the proposed new lease: at [59].
The second and related difficulty is that the range of terms which may properly be described as 'commercial terms' is wide, and that even if a proposal to offer a lease on 'commercial terms' was intended to have contractual effect, his Honour found that it would not be possible to determine that any lease in particular satisfied that requirement to the exclusion of an equally commercially reasonable but different lease: at [60].
His Honour illustrated this second difficulty with three examples. One concerned the provision of the bank guarantee for rent (at [60]), the second concerned the appointment of a head chef (at [61]) and the third concerned turnover rent and rent reviews (at [61]). The significance of these examples, in his Honour's view, was that a range of possible negotiated outcomes on any of these issues may have been a contract on 'commercial terms'.
His Honour accepted that the Court should construe contracts made by business persons fairly and broadly without being too astute or subtle in finding defects, but should not make a contract for the parties: at [62]. Reference was made to Hillas & Co Ltd v Arcos Ltd [1932] All ER 494; 147 LT 503 at 515. His Honour considered that the reference to 'commercial terms' in the February letter had difficulties similar to those in cases where the clause not yet agreed could take many forms, and any change of terms could significantly alter the content of the contract: at [63]. His Honour identified the problem in the present case as being whether it is possible to identify the particular terms of a particular agreement from the range of possible terms that might constitute 'commercial terms': at [64].
His Honour concluded (at [65]): It seems to me that the lack of precision in the term 'commercial terms' is another indication that the parties did not immediately intend to be bound by the February 2011 letter and its purported acceptance by OXS. If, contrary to my view, that letter would otherwise have had immediately binding effect, it would fail for lack of certainty. [Emphasis added]

[19]

Consideration

Contrary to OXS's submissions, the primary judge expressly recognised the principle that courts should ordinarily seek to uphold contracts. As already indicated, his Honour referred (at [62]) to the expression of this principle in Hillas & Co Ltd v Arcos Ltd. Importantly however, his Honour noted the observation in Hillas & Co Ltd v Arcos Ltd that the Court cannot: … go outside the words [the parties] have used, except in so far as there are appropriate implications of law, as for instance, the implication of what is just and reasonable to be ascertained by the Court as a matter of machinery where the contractual intention is clear but the contract is silent on some detail.
The authorities recognise that there are various kinds of uncertainty; Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 134-136 (Kirby P). As Mahoney JA explained in Custom Credit Corporation Ltd v Cenepro Pty Ltd, a contract may be uncertain because there has been no agreement at all, that is, there is merely an agreement "to agree", citing Masters v Cameron. It may be uncertain because the agreement arrived at leaves undetermined one of the terms which the law requires specifically to be agreed in order that the contract is valid and enforceable. It may be that one of the terms of the agreement may contain words so vague as to be relevantly meaningless or one of the terms of the contract may assume something that does not in fact exist.
In the present case, the attack upon the certainty of the February 2011 correspondence as a contract was primarily directed to the use of the expression 'commercial terms'. The type of uncertainty alleged to affect the (assumed) agreement for lease was that the agreement was incomplete. Reference has already been made above (at [75] - [77]) to his Honour's acceptance of the proposition that the February 2011 correspondence was incomplete due to the uncertainty of its terms as affecting an intention to contract. In addition to the matters already referred to, the following observations can be made.
Undoubtedly an important contextual circumstance surrounding the February 2011 correspondence is the fact that there was an existing lease in place between the parties and that there had been earlier leases as well. Nonetheless, OXS's argument that 'commercial terms' must have meant "existing terms", ignored two matters. The first is that it should be accepted, as SHFA contended, that there is a genuine range of possibilities in a leasing transaction that could all be described as "commercial". The second is, as already mentioned, that the February letter did not refer to the "same terms" which no doubt could have been used if SHFA intended to offer a new lease upon the "existing terms".
Contrary to OXS's contention at trial, the matters upon which agreement had not been reached in the February 2011 correspondence could not be fairly described as simply a level of detail about esoteric terms and conditions. Here, the matters left for future agreement included an essential term (price), there being neither agreement as to the initial rent, nor agreement on critical terms such as turnover rent and rent reviews. These matters were reserved for future determination by SHFA and OXS: cf Thorby v Goldberg [1964] HCA 41; 112 CLR 597 at 605 (Kitto J).
The present case is not one where the parties understood that their correspondence merely provided the possibility of agreement on 'commercial terms' but, if no agreement could be reached, that aspect of the agreement for lease simply disappeared. Nor is it a case where the generality and lack of precision in the reference to 'commercial terms' can be overcome by resort to either machinery (in the form of some kind of arbitration or valuation) or a formula to resolve the postponed terms. Nor is it possible for a court to simply choose between two equally arguable but mutually exclusive "normal commercial terms".
As his Honour observed (at [64]), the problem in the present case was not whether a particular agreement meets the description of "normal commercial terms", but whether it is possible in this case to reason in the opposite direction by identifying particular terms of a particular agreement from the range of possible terms that might constitute "commercial terms". Contrary to OXS's submission, his Honour's approach was neither narrow nor pedantic and did not seek to find difficulty when none existed. His Honour correctly recognised the lack of precision in the phrase 'commercial terms'.
In my view, no error has been shown in his Honour's conclusion that if the February letter would otherwise have had immediate binding effect, it would fail for lack of certainty.
It follows that OXS has failed to establish that there was a concluded contract and grounds 1, 2, 3 and 4 should be rejected.

[21]

Issue 2: Ministerial consent

The next issue raised on appeal is whether ministerial consent was given to any lease agreement between SHFA and OXS for the purpose of s 19(3) of the SHFA Act. It is appropriate to set out the terms of s 19 in full: 19 Disposal of core land (1) The Authority has no power to sell or exchange core land, or to otherwise dispose of the fee simple estate in core land, except by way of surrender to the Crown or except as provided by subsection (2). (2) The Authority may, with the consent of, and subject to any conditions imposed by, the Minister: (a) mortgage, or grant a charge over, core land, or (b) exchange core land for land within the foreshore area that adjoins or is adjacent to the core land to be exchanged, or (c) in respect of a road that is core land: (i) in the case of a public road, consent to an order being made under the Roads Act 1993 to transfer the road to another roads authority, or (ii) in the case of a road that is not a public road, transfer the road to the Sydney City Council. (3) The Authority may, with the consent of the Minister and subject to such conditions as the Minister thinks fit, lease or grant licences in respect of core land and grant easements or rights-of-way over core land. (4) This section does not require the Authority to obtain the consent of the Minister to a lease or licence for a term that, together with the term of any further lease or licence that may be granted under an option in respect of it, does not exceed 5 years. (5) A lease or licence granted under this section must not have a term that, together with the term of any further lease or licence that may be granted under an option in respect of it, exceeds 99 years. [Emphasis added]
His Honour noted that the ministerial consent issue raised several questions. The first was a factual and legal issue, namely whether the relevant Minister had in fact consented to SHFA's entry into the lease agreement in a manner that satisfied the requirement under s 19 of the SHFA Act. If not, then a further issue arose as to whether the entry into any lease agreement by SHFA (assuming, contrary to his Honour's view, such a lease agreement would otherwise have been effective in contract) was valid notwithstanding the lack of such consent; and whether SHFA is now bound, by any implied term in any lease agreement, to seek such consent from the current Minister: at [72].
In summary, his Honour found that: 1. Ministerial consent was not given (or at least was not effectively given) for the purposes of s 19 of the SHFA Act to the entry into a lease agreement with OXS in the February letter: at [79]. OXS challenges this finding by ground 10. 2. Section 19(3) of the SHFA Act required ministerial consent prior to the entry into an agreement for lease: at [71] and [84]. OXS challenges this construction of s 19(3) by grounds 6 and 7. 3. There is no basis for an implied term, either in fact or law, of any lease agreement, that SHFA would take all reasonable steps to obtain ministerial consent as OXS contended: at [86] - [87]. OXS challenges these findings by ground 8. 4. SHFA did not breach any implied term of an agreement for lease, since the February letter and OXS's purported acceptance of it did not have immediately binding effect, and if that finding were incorrect, the alleged agreement was not sufficiently certain to have contractual effect: at [92]. OXS challenges this finding by ground 11.
As already indicated, the appeal grounds directed to the ministerial consent issue only arise if OXS successfully established a concluded agreement for lease. Nevertheless, it is appropriate that I deal with these grounds in compliance with Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1 at [12] because the matters have been argued and are of importance to both parties.

[23]

The primary judge's reasons

The primary judge observed (at [74]) that elements of Mr Watkins' evidence were confusing or unsatisfactory. His Honour noted that Mr Watkins did not identify clearly when it was that he met with the Minister and he was unclear as to whether he made a firm proposal to the Minister to offer a lease, or only made a decision to offer a lease after meeting with the Minister and a discussion with Ms Garrick. His Honour considered that it was unclear whether no more than "in principle" approval had been given to a possible course of action rather than to the terms of an offer of lease that had not yet been formulated. His Honour concluded that OXS had not established that the Minister had in fact consented to the proposal for the purposes of s 19 of the SHFA Act.
His Honour gave three additional reasons for that conclusion. The first was that it was unlikely that the Minister would have orally consented to a lease when: (a) the substantive terms had not been disclosed to him; (b) his conversation with Mr Watkins was brief; (c) he had been informed that SHFA had received legal advice recommending that it not enter into that lease (as to which his Honour found Mr Watkins' recollection in cross-examination likely to be mistaken); and, (d) if he had been informed of the substance of that advice it would have made him even less likely to give consent: at [75].
The second reason was that the information that would be necessary to give such consent was not provided to Minister Kelly. This carried an inference that the relevant dealing between Mr Watkins and the Minister merely involved conveying information, or seeking an approval of a possible course of action, rather than seeking or giving consent to a lease under s 19 of the SHFA Act: at [76].
The third reason was that his Honour rejected the submission by OXS that Mr Watkins had discussed with Minister Kelly the "essential terms he was proposing". His Honour observed that those terms did not include key terms of the lease (which had not been discussed with OXS) such as the actual rent to be paid or the amount of the guarantees to be given. His Honour also rejected the submission by OXS that SHFA used lease memoranda to incorporate usual terms and conditions, because this failed to have regard to the fact that a schedule to the relevant lease dealt with variable conditions, including the rent payable and the amount of the guarantees to be given.
His Honour concluded (at [79]) that: For these reasons, I find that ministerial consent was not given, or at least was not effectively given, for the purposes of s 19 of the SHFA Act to the entry into a lease agreement with OXS by the February 2011 letter.

[25]

Consideration

The primary judge had the very considerable advantage of seeing Mr Watkins give his oral evidence and was therefore able to bring to bear aspects of judgment and appraisal that are simply unavailable to this Court: Fox v Percy [2003] HCA 22; 214 CLR 118 at [23]. In addition to finding Mr Watkins' evidence both confusing and unsatisfactory in parts, his Honour did not accept (at [75]) Mr Watkins' evidence in cross-examination that he had raised the application of the ICAC Guidelines and SHFA's lease policy with the Minister, as this matter had not been addressed in his affidavit evidence. This was relevant to whether Mr Watkins was seeking merely an indication that the Minister had no objection in principle to Mr Watkins taking the proposed course, rather than an oral approval for the grant of a lease in terms to be agreed.
His Honour carefully assessed Mr Watkins' evidence before concluding that no evidence of ministerial consent in any satisfactory or relevant form had been demonstrated. OXS placed great emphasis on Mr Watkins' evidence (set out at [29] above), that the Minister responded to him, "Yes, proceed", as signifying ministerial consent to the alleged agreement for lease. However, as the summary of his Honour's detailed reasons (set out at [105]-[113] above) amply demonstrates, even accepting that the discussion with Minister Kelly was in the terms asserted by Mr Watkins, the Minister's response could not, in the circumstances, constitute consent for the purposes of s 19 of the SHFA Act.
Importantly, as his Honour observed (at [76]), Mr Watkins did not, on his own account, advise Minister Kelly of the proposed content of the 'commercial terms' of the lease or of the nature of the "matters of concern to SHFA" or how they were to be resolved. His Honour correctly recognised that these would be relevant matters to the Ministers' decision of whether to approve a proposed lease. In addition, as his Honour also observed (at [76]), Mr Watkins did not, on his own account, advise Minister Kelly that what was being sought was not merely an indication that the Minister had no objection in principle to Mr Watkins taking the proposed course, but an oral approval for the grant of a lease on terms that had yet to be agreed with OXS for the purposes of s 19 of the SHFA Act. The contrast between Mr Watkins' discussion with Minister Kelly and another occasion to which his Honour referred, when SHFA requested ministerial consent for the variation of another lease involving the Kazal Group, was stark. On that occasion, the Minister was provided with a summary of the proposed lease and licence terms which referred to the permitted use; the amount of the base rent to be charged; the building area and rate per square metre; the provision for rent reviews and turnover rent; and the provision for bank guarantee. His Honour correctly observed that those matters were plainly key terms of the lease. There was no error in his Honour's finding (at [76]) that it was highly unlikely that the Minister would understand that he was being asked to grant consent to a lease, for the purposes of s 19 of the SHFA Act, or would purport to do so, when he had been provided with none of this information by Mr Watkins in respect of the Premises.
In my view, ground 10 has not been made out.

[26]

Whether consent was required prior to entering into an agreement for lease (grounds 6 and 7)

Having found that Ministerial consent was not given, his Honour turned (at [80]) to the issue of whether the entry into any lease agreement by SHFA was valid, notwithstanding the lack of consent for the purposes of s 19 of the SHFA Act. The stated premise of this question assumed, contrary to his Honour's conclusion, that a lease agreement would otherwise have been effective in contract.
His Honour noted that this question turned on the proper construction to be given to s 19 and observed that the principles to be adopted are well established. Reference was made (at [80]) to Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [78]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 at [47]; and Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503; at [39].
His Honour accepted that the language of s 19(3) did not specify when ministerial consent for the grant of a lease is to be obtained. He considered that the section must be interpreted so as to give effect to the Ministers' ability to impose conditions on the grant of a lease: at [80]. He also accepted that there was substantial force in the proposition as advanced by SHFA, that the phrase "with the consent of the Minister" in s 19(3) contemplates that the consent exists at the point of entry into the relevant lease: at [81].
His Honour found that s 19(3) applies to an agreement for lease: at [71]. He considered that the contrary view would be inconsistent with the statutory purpose of the section. This, according to his Honour, was to impose ministerial control on the alienation of "core land" held by SHFA. His Honour also had regard to authorities where a similar view had been taken in respect of similar issues arising from a requirement for consent under s 20 of the Town Planning and Development Act 1928 (WA) (Town Planning and Development Act). Reference was made to Glass v Ralph [1966] WAR 91; 13 LGRA 90 at 94-95; Wilson International Pty Ltd v International House Pty Ltd [1983] WAR 243; (1981) 52 LGRA 216 at 225.
At [82], his Honour referred to Butts v O'Dwyer [1952] HCA 74; 87 CLR 267 which OXS relied upon for the proposition that ministerial consent is not required prior to the entry into an agreement for lease and that the necessary consent may be obtained after the entry into that agreement. His Honour distinguished Butts v O'Dwyer. First, he noted that there is nothing in s 19 of the SHFA Act that contemplates that an agreement for lease might take effect without the relevant consent, albeit subject to any reservation as to its validity pending such consent: at [83]. Secondly, he drew a distinction between s 272(2) of the Crown Lands Consolidation Act 1913 (NSW) (the provision in issue in Butts v O'Dwyer) and s 19 of the SHFA Act. His Honour noted that the former did not provide for the Minister to impose conditions on such consent, and further did not raise the issue as to how such conditions could be imposed if the agreement bound the parties prior to the Minister's grant of any conditional consent. By contrast, his Honour observed that s 19 of the SHFA Act permits the Minister to impose or require conditions, and this would be difficult or impossible to do - without breach of a lease or an agreement for lease - after that lease or lease agreement was granted by SHFA on terms that did not include such conditions: at [83].
At [84], his Honour referred to other authorities relied upon by OXS in support of its contention that ministerial consent was not required prior to an agreement for lease: Hill End Gold Ltd v First Tiffany Resource Corporation [2010] NSWSC 375 (Hill End Gold); and Taluja v Australian International Academy of Education Ltd [2011] NSWCA 416 (Taluja). His Honour found that none of these cases were of assistance as they dealt with different factual circumstances.

[27]

Submissions

In written submissions, OXS contended that the primary judge erred by putting a gloss on s 19 to the effect that a lease or an agreement for lease could only be entered into by SHFA if ministerial consent had first been given in respect of the relevant agreement. OXS relied upon Butts v O'Dwyer as an example supporting the proposition that, in some cases, ministerial consent need not act as a prerequisite to granting a lease.
In oral argument, OXS narrowed its submission to confine the scope of the term "lease" in s 19 to legal leases, thus precluding the application of s 19 to agreements for lease which could, on this basis, be entered without ministerial consent. OXS submitted that this distinction had been overlooked by his Honour (at [83]) when observing that it would be difficult or impossible for the Minister to impose or require conditions after an agreement for lease had been reached. OXS further submitted that this suggested difficulty did not arise once it was appreciated that an implied term of any agreement for lease would be that it was subject to the consent of the Minister, which would include any conditions imposed by the Minister.
OXS emphasised that it had not made the concession referred to by the primary judge (at [71]) that s 19(3) applied to an agreement for lease. Counsel for SHFA accepted in this Court that the question of whether s 19(3) applies to an agreement for lease was a live issue at trial.
OXS referred to the well-recognised distinction between an agreement for lease and a lease and submitted that s 19(3), which requires ministerial consent to a lease, rather than an agreement for lease, supports the contention that an agreement for lease includes an implied term that SHFA do all that was reasonable to obtain ministerial consent.
SHFA sought to uphold his Honour's construction of s 19(3) (that it applies to an agreement for lease). Nonetheless, counsel for SHFA accepted in oral argument that if an agreement for lease was subject to ministerial consent, there would not be any claim for damages against SHFA if ministerial consent was refused.

[28]

Consideration

The question of construction is whether the requirement for ministerial consent in s 19(3) applies to an agreement for lease. It should be immediately observed in deference to his Honour's reasons that the focus of argument in this Court was directed to a matter which his Honour thought had been conceded by OXS, but it is now common ground that no such concession was made by OXS at trial. Accordingly, if s 19(3) does not apply to an agreement for lease, this would affect much of his Honour's reasoning on the ministerial consent issues.
The starting point is the terms of the statute. A number of observations can be made in relation to the requirement for ministerial consent under s 19 of the SHFA Act. The first is that the word "lease" is not defined in the SHFA Act, and this is the source of much of the difficulty with this aspect of this appeal.
The parties advanced two possible meanings of the word "lease". One, favoured by OXS, is the ordinary concept of a lease at law as understood under the general law of real property. The other, favoured by SHFA, is that lease includes an "agreement for lease" which contemplates that an estate will be conveyed by some further act at some future time. This is often referred to as an equitable lease which will have identical terms to, but is distinct from, a legal lease. However, as will be seen, this label requires some elaboration and qualification since the equitable interest is commensurate with what a court of equity would decree to enforce the contract either by way of specific performance, injunction or otherwise: Chan v Cresdon Pty Ltd [1989] HCA 63; 168 CLR 242 at 252-253. Neither party embraced a third possible meaning of "lease", being the physical document executed by the parties as a "lease": see the observations of Leeming JA concerning the meaning of "lease" in the context of the Retail Leases Act 1994 (NSW) in Pyrmont Point Pty Ltd v Westacott [2016] NSWCA 33 at [58] - [59].
The language used in s 19(3), "may lease or grant licences", does not expressly include an "agreement for lease", and is consistent with the ordinary meaning of the word "lease" referring to a legal lease. However, that alone is not determinative. Regard must be had to the context and the purpose of the requirement for ministerial consent. The context of the reference to "lease" in s 19(3) is a restriction or limitation placed on the power of SHFA to dispose of "core land". Relevantly, "SHFA may … lease or grant licences …" for a term exceeding five years, only with ministerial consent and subject to such conditions as the Minister thinks fit. A relevant feature of a lease of "core land" for any term exceeding three years, being land under the Real Property Act 1900 (NSW), is that it cannot be created without a registered instrument: Real Property Act, s 53. It can be seen that the requirement for ministerial consent for certain leases under s 19(3) only arises in relation to leases which also require registration. What seems to matter under s 19(3) is the disposition of "core land" by the grant of the leasehold estate without ministerial consent. Against this it may be said that leases of "core land" with a term of five years or less, but exceeding three years, also require registration, but not ministerial consent under s 19(3). Nonetheless, that leases of "core land" which require ministerial consent under s 19(3) (those with a term exceeding five years) also require registration, provides some support for OXS's proposed construction of s 19(3).
The Explanatory Note to the Sydney Harbour Foreshore Authority Bill 1998 does not shed any light on the matter, nor does the relevant second reading speech (NSW Legislative Assembly, Parliamentary Debates (Hansard) 28 October 1998 at 9293).
Contrary to SHFA's argument, I do not discern an intention in the text of s 19 of the SHFA Act to displace the ordinary meaning of "lease" in s 19(3) as a leasehold estate at law. This construction does not result in an agreement for lease not being subject to such conditions as the Minister may impose if consent is given. In the absence of an express term to that effect in any agreement for lease (in respect of "core land"), there would be an implied term of any agreement for lease to the same effect. There would be no difficulty implying such a term in the context of the requirement for ministerial consent on such terms as the Minister may impose. In Taluja (at [80]-[81]), this Court (Young JA, Beazley and Macfarlan JJA agreeing) approved the reasoning of the trial judge that, where a lease was not void by reason of a breach of a statutory provision, a term was to be implied that a party would take all reasonable steps to have the relevant lease registered. Here the relevant implied term (that the agreement for lease is subject to ministerial consent, including such conditions as the Minister may impose) would operate at the anterior point of obtaining ministerial consent.
The construction of s 19(3) advanced above does not cause difficulty in terms of exposing SHFA to possible breach of an agreement for lease in the event that ministerial consent were not obtained (assuming that SHFA did all that was reasonable to obtain such consent from the Minister). In the absence of ministerial consent to any agreement for lease, the consequence would be that a court of equity would not enforce the agreement for lease by way of an order for specific performance or injunction or otherwise. So much is clear from Brown v Heffer [1967] HCA 40; 116 CLR 344 at 350, which the Court drew to the parties' attention in oral argument.
Brown v Heffer involved a contract for sale of two pastoral leases entered into by the testator after the date of his will which gave the property in the leases to the respondent. The contract provided that if the Minister's consent to the transfer of the property to the purchaser was required the vendor should, at his own expense, make application for such consent and use his best endeavours to obtain the same as soon as possible. The purchaser was obliged to join in such application as might be necessary. The contract further provided that if the Minister's consent to transfer was refused the agreement should be rescinded and cancelled and the deposit refunded in full. The property was sold subject to the provisions of the Closer Settlements (Amendment Conversion) Act 1943 (NSW) which, in the circumstances, required ministerial consent to the transfer or other dealing. The Minister gave his consent to the proposed transfers, but in the meantime the testator had died. The question was whether the gift of the leases to the respondent under the will was adeemed and the proceeds of sale fell into the residue which was given under the will to the appellant.
The High Court (Barwick CJ, McTiernan, Kitto and Owen JJ) held (at 350) that where a contract for sale of land was subject to obtaining the consent of the relevant minister to the transfer, "until the consent has been obtained the purchaser's interest, being 'commensurate only with what would be decreed to him', does not extend to ownership of the land and the interest of the vendor is not yet converted into a right to receive money in place of the land". The High Court continued (at 350): In the present case it is clear that the contracts for the sale of the settlement purchase leases, though absolute in so far as they bound the parties to do what was necessary for obtaining the Ministers' consent, were inchoate in so far as they provided for sale and transfer. Not until after the testator's death, consent was obtained so that transfers having legal operation could be made did any contract of sale emerge from the inchoate stage.
Accordingly, the High Court concluded (at 350) that the land had not been converted into money under the principles of equity during the testator's lifetime, and was still the testator's to dispose of at his death, although it was still bound by a contract under which, if the Minister's consent should later be obtained, the respondent as devisee would receive only the purchase money.
Windeyer J agreed (at 351) with the plurality, that if ministerial consent is required for a transaction to be valid and effective, and such consent is finally and conclusively refused, the transaction is at an end. His Honour noted various expressions used in the cases to explain how that result was achieved - that the transaction never became "operative" or "binding", and that it "goes off", or that it "never emerged from the inchoate stage". His Honour observed that, strictly speaking, it is the provisions of the relevant statute which, apart from the agreement of the parties, would have rendered the transaction nugatory if the Minister had refused consent. He added that whether the result of a refusal of consent is best expressed as that the transaction never became effective or that it ceased to have effect may depend upon the words of the particular statute and also on the words the parties used if they had not left the need for consent to implication.
It may be accepted that there are some factual differences between Brown v Heffer and the present case, notably the express provisions dealing with obtaining ministerial consent and the stated consequence if that condition was not fulfilled. Nonetheless, the case is instructive. Applying the analysis in Brown v Heffer to the present case, if the Minister refused consent to an agreement for lease in respect of "core land", the contract never emerges from its inchoate stage, and the proposed tenant cannot obtain an order for specific performance nor damages (absent any special terms of the agreement), since the contingent condition of the contract is left unfulfilled. Accepting that s 19(3) of the SHFA Act does not apply to an agreement for lease does not create any difficulty for the minister in terms of giving consent subject to conditions or, alternatively, the agreement coming to an end if ministerial consent is refused.
Travinto Nominees Pty Ltd v Vlattas [1973] HCA 14; 129 CLR 1, on which SHFA relied, is distinguishable from the present case. That case involved s 88B of the Industrial Arbitration Act 1940 (NSW) which provided in subs (3)(b) that where a contract to which the section applied was entered into without the approval of the commission or the committee or contrary to any condition contained in any such approval, the contract shall be void. Under s 88B(1)(d), the relevant contract included any contract under which a person "leases or agrees to lease to any other person any premises" for a specified purpose. The High Court held that the consent of the commission or the committee must be obtained before the agreement to lease or the lease is made or entered (Barwick CJ at 16, McTiernan, Menzies and Stephen JJ agreeing; Gibbs J at 37 to the same effect). That conclusion is unsurprising given the express language of the relevant provision which there included agreements for lease. That is not the present case.
It only remains to deal with the two Western Australian cases referred to by his Honour and relied upon by SHFA. Both cases concerned s 20 of the Town Planning and Development Act 1928 (WA). At the time of the first case, Glass v Ralph, s 20 of the Town Planning and Development Act prohibited a person, without the consent of the Town Planning Board, from, amongst other things, "selling" land except as a lot or lots. The provision also used the expression "convey". D'Arcy J noted (at 94) that the relevant provision made use of the expressions "convey" and "sell". His Honour referred to the inference that where different expressions are used, difference in meaning is intended. His Honour considered that the context precluded departure from the inference. This was because the nature of the provision did not suggest that the word "sell" was limited in meaning to "convey" or "transfer". Rather, the word "sell" had its ordinary meaning and was intended to extend to an agreement to sell land. The reasoning and conclusion in Glass v Ralph is distinguishable from the present case, where no other part of the text suggests that "lease" includes an agreement for lease.
Wilson International Pty Ltd v International House Pty Ltd involved the question whether the word "lease" in s 20(1)(a) of the Town Planning and Development Act extended to an executory agreement to grant a lease for a term exceeding the prescribed term. Smith J held (at 225) that the word "lease" in the context of s 20(1)(a) did not have a meaning which is more restrictive than the meaning that had been attributed to the word "sell" in that section for many years. His Honour considered that the meaning to be given to the word "lease" in s 20(1)(a) was resolved when s 20B was amended in 1969 in a manner which expressly recognised that an agreement to lease is within the scope of the prohibition the subject of s 20(1)(a). The express language of s 20B referred to "… an agreement to sell or … to lease … any portion of a lot". In my view, this case provides no assistance since the construction arrived at reflected the different and particular terms of the statute under consideration, which expressly contemplated that a "lease" included an agreement for lease.
In light of the conclusion reached above (that s 19(3) applies to a lease at law), it is unnecessary to deal with OXS's alternative argument that ministerial consent could be given after the grant of a legal lease. It is sufficient to note that, in my view, this argument was properly rejected by his Honour. There is no warrant by reference to either the context or subject matter of s 19 to suppose that the effect of non-compliance with the statutory requirement is other than an invalid legal lease.
Accordingly, if, contrary to my view, there was a concluded contract, OXS would have made out grounds 6 and 7.

[29]

Implied term (grounds 8 and 11)

Having concluded that ministerial consent was required before SHFA entered into a lease or an agreement for lease, his Honour addressed (at [85]) the further issue as to whether SHFA is bound, by any implied term in any lease agreement, to now seek such consent from the current Minister. Again, his Honour dealt with this issue on the assumption, conversely to his conclusion, that there was a lease agreement binding in contract.
His Honour noted (at [85]) that OXS relied in its pleading on a term implied in law and fact of an agreement for a lease said to arise from the February letter that: In the event that Mr Kelly or any other person with Ministerial responsibility for [SHFA] had not yet given consent to the entry of a new lease in the terms of the [February letter] (which is denied), [SHFA] would take all prompt and reasonable steps to obtain such consent.
His Honour also noted (at [86]) that OXS relied on an implied term (in law) that SHFA would do all that was reasonable to obtain ministerial consent.
His Honour rejected the implication of a term in law, distinguishing Butts v O'Dwyer, on which OXS relied. There (at 280), the plurality treated the relevant agreement as a concluded agreement (subject to a condition that it is not to become effective unless the Minister's consent had been obtained), which gave rise to "an obligation on the part of the person giving the transfer to do all that was reasonable on his part to the end that the Minister's consent might be obtained". His Honour observed that s 272(2) of the Crown Lands Consolidation Act (the provision in issue in Butts v O'Dwyer) expressly contemplated that a transfer could take place without the Minister's consent, although it would not be valid at that point. This left open the possibility that consent could later be obtained, providing the basis for an implication that the person giving the transfer should do all that was reasonable on his or her part to obtain that consent.
By contrast, his Honour found that in the present case there was no basis for the implication of a term that SHFA would do all that was reasonable on its part to obtain ministerial consent because, on his Honour's construction, s 19 of the SHFA Act did not authorise the entry into a lease or lease agreement without prior consent. His Honour observed that there would then be no utility in an implied requirement for SHFA to obtain subsequent consent to such an agreement which would not cure that lack of authority.
His Honour also rejected the implication of a term in fact because it did not satisfy several of the requirements set out by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977)180 CLR 266 (BP Refinery) at 282-283, as approved by the High Court in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337 at 347. In particular, his Honour considered that the suggested term was neither reasonable, nor equitable, nor so obvious that it went without saying in that SHFA should be required to take steps to obtain consent which it does not consider that the Minister would properly give. His Honour reasoned that such a requirement would substantially interfere with the relationship between SHFA and the Minister, who ought to be entitled to assume that SHFA would only seek consent for a lease which it properly considered should be given: at [87].

[32]

Issue 3: Misleading and deceptive conduct

At trial, OXS relied upon seven pleaded representations by SHFA which were alleged to be misleading or deceptive in contravention of s 18 of the Australian Consumer Law or s 62D of the Retail Leases Act. It is convenient to adopt his Honour's shorthand description of the alleged representations in the principal judgment. The representations, some of which are connected, fall into four categories.
The first is that OXS and SHFA had entered into a binding lease agreement and SHFA would act accordingly (Binding Lease Representation). This representation was alleged to flow from the combination of the written communications in February 2011 and the absence of any relevant qualification by SHFA up until 23 August 2011. The misleading conduct relied upon a positive representation and on a failure to disclose.
The second is that a formal lease in registrable form would be provided as soon as OXS organised the outdoor seating licence. This representation was alleged to have been made by Mr Robert Noble to Mr Karl Kazal during telephone conversations between March and August 2011 (the First Provision of Registrable Form Lease Representation). The representation was also alleged to have been made by Mr Noble to Mr Karl Kazal and Mr Charif Kazal during a meeting in a coffee shop at The Rocks in early August 2011 (the Second Provision of Registrable Form Lease Representation).
The third is that the Minister had indicated that he would not consent to a new lease in terms of the SHFA offer (the Ministerial Decision Representation and the Further Ministerial Decision Representation). These representations were alleged to arise from SHFA's 23 August 2011 and 2 August 2012 letters.
The fourth is that once the outdoor seating licence had been obtained, SHFA would enter into negotiations with OXS for a new lease (the New Lease Negotiation Representation). This representation was alleged to be contained in the 2 August 2012 letter.
There is no challenge to his Honour's finding that the alleged seventh representation, that a new lease would be provided to OXS by SHFA once OXS obtained development consent approval for the use of the outdoor area (the New Lease Forthcoming Representation), was not established: at [125]. This representation was allegedly made by Mr Noble on behalf of SHFA to Mr Kazal and Mr Max Ireland of OXS in late 2012 or early 2013.
In oral argument, OXS's submissions focused on the third and fourth representations. Although OXS did not abandon its written submissions directed to the first and second representations (CA tcpt at 2, lines 24-27), no oral argument was advanced seeking to establish these representations.
It is convenient to address the third and fourth representations together.

[33]

Ministerial Decision Representation, Further Ministerial Decision Representation and New Lease Negotiation Representation (grounds 15, 16 and 17)

The primary judge found that SHFA's 23 August 2011 letter was misleading or deceptive because the Minister had not in fact indicated that he would not consent to a new lease in terms of the SHFA "offer" in the February letter. The 23 August 2011 letter attributed a position to the Minister which he had not adopted and which was in substance SHFA's position: at [115]. His Honour further found that the 2 August 2012 letter was misleading or deceptive for the same reasons: at [117]. No complaint is made by OXS in relation to these findings.
OXS's complaint on appeal concerns his Honour's rejection of its further submission that these two letters were also misleading or deceptive because they failed to disclose that the intention of senior employees of SHFA at the time was to proceed to an open tender of the Premises at the end of the term of the current lease. Although a failure to disclose case was not expressly pleaded by OXS, it seems that no objection was taken by SHFA at trial to the passing references to this contention in OXS's written closing submissions, and again in oral closing submissions. In its written closing submissions, OXS contended that the cross-examination of Ms Garrick "seemed" to establish "the consensus in the organisation" that the Premises would go out to open tender at the expiry of the lease. The case advanced by OXS was that the Ministerial Consent Representation, coupled with the failure to disclose SHFA's intention to "test the market" upon expiry of the lease, made Mr Kazal think that he might obtain Ministerial approval for an extension of the lease or another new lease at the end of 30 June 2014.
Whilst noting that a failure to disclose case was not expressly pleaded, his Honour proceeded to consider OXS's claim based on the failure to inform it of SHFA's intention to "test the market" upon expiry of the lease.

[34]

2 August 2011 letter

In relation to the 23 August 2011 letter, signed by Ms Garrick, SHFA's General Manager, his Honour gave the following reasons (at [116]): OXS also refers to Ms Garrick's acceptance in cross-examination that a failure to inform a tenant that it anticipated that there would be an open tender process at the end of the lease term could well influence how the tenant improved the property, and that SHFA did not inform OXS that the Premises would go out to an open tender process (T209). The former proposition is plainly correct, as a matter of possibility, but it does not establish that OXS in fact was influenced by that matter. The second proposition is also correct, but Ms Garrick's evidence, which I accept, was that SHFA had, unsurprisingly, not reached any concluded view as to that matter in 2011, three years before the expiry of the lease and long before the period in which negotiations for any renewal of the lease would occur in accordance with SHFA's policy. Any intention of particular staff of SHFA at that point could be no more than highly tentative, three years prior to the expiry of the lease, and any statement that SHFA made as to that matter would have had to be so qualified by the prospect that political, policy or market changes in the next three years might lead it to take a different course that it would have conveyed no useful or reliable information to OXS. It does not seem to me that SHFA's silence as to that matter at that point was misleading or deceptive or likely to deceive in the circumstances.
OXS challenges the finding that SHFA's silence as to proceeding to an open tender of the Premises at the end of the current lease was not misleading or deceptive (ground 15). OXS also challenges the finding that the views of current employees of SHFA at the time of the 23 August 2011 letter on whether SHFA would proceed to an open tender at the end of the current lease in 2014 were highly tentative (ground 17). OXS contends that this finding was in error and failed to take into account that those employees had given firm instructions to the solicitors for SHFA to that effect in February 2011. In oral submissions, OXS repeated its submissions at trial that there was a "consensus" in SHFA in August 2011 favouring "testing the market" at the end of the lease.

[35]

2 August 2012 letter

The 2 August 2012 letter was signed by Ms Catherine Gallagher, SHFA's Acting General Manager, and relevantly stated: The Authority will not enter into negotiations for a new lease until the outstanding matter of outdoor seating has been resolved.
His Honour found that this sentence of the letter did not contain a representation that there will be further negotiations, and rather simply said there will be no such negotiations until OXS had addressed the outdoor seating area problem: at [118]. His Honour added that he did not accept that the alleged representation was false. He found that SHFA had not made up its mind, in 2011, as to the position it would adopt when the lease expired in 2014: at [119].
OXS challenges the failure by his Honour to find that this letter was misleading or deceptive (ground 16), because it conveyed the New Lease Negotiation Representation (see [163] above). OXS contended that this representation was false because SHFA had already decided prior to 23 August 2011 that it would not enter into negotiations for a new lease and would engage in an open tender process. In oral submissions, OXS contended that his Honour had failed to deal with its contention that this aspect of the 2 August 2012 letter was misleading.
In its written submissions, SHFA took the position that OXS's failure to disclose case seemed to go beyond the pleaded case, and that OXS should not be permitted to raise this point on appeal. This submission was not pressed in oral argument.
SHFA further submitted that the corporate mind of SHFA is not located in or established by reference to the staff of SHFA, nor even an aggregation of the views of the staff of SHFA, such as Mr Noble or Ms Garrick. It was emphasised that Mr Haddad was at all material times the CEO of SHFA following the departure of Mr Watkins in March 2011. Reference was made to the cross-examination of Ms Garrick where she gave evidence that she did not recall discussing with Mr Haddad what SHFA staff members had said on the topic of SHFA testing the market on expiry of the lease and that she did not discuss this issue with Mr Haddad in 2011. It was submitted that there was no cogent evidence that SHFA, in 2011, had made up its corporate mind as to what it would do on expiry of the lease in 2014.

[36]

Consideration

Whether conduct is misleading or deceptive or likely to mislead or deceive requires consideration of the impugned conduct viewed as a whole. The question is whether the conduct has a tendency to lead a person into error: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at [25] (French CJ). The Chief Justice observed (at [25]), in the context of commercial negotiations between individuals, that the characterisation: ….involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person or class of persons. The test is necessarily objective. [Footnotes omitted].
The question of whether silence is misleading is normally answered by asking whether the person alleged to be misled or deceived had a reasonable expectation of disclosure. The relevant principles extracted largely from Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357 (BMW Australia) were summarised in the following terms by Sackville AJA in Fabcot Pty Ltd & Anor v Port Macquarie-Hastings Council [2011] NSWCA 167 at [209], which were cited with approval by Barrett JA (Bathurst CJ and Beazley P agreeing) in Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 at [192] (citations omitted): (iii) The question in a case of alleged misleading or deceptive conduct as a result of non-disclosure is whether in the light of all relevant circumstances, there has been conduct which is misleading or deceptive . . .While the circumstances in which silence can be characterised as misleading or deceptive cannot be exhaustively defined, unless they give rise to a reasonable expectation that if some relevant fact exists it will be disclosed, mere silence will not support the inference that the fact does exist . (iv) In commercial dealings between individual entities, the characterisation of conduct must be undertaken by reference to circumstances and context. The relevant circumstances include the knowledge of the person who claims to have been misled and any common assumptions or practices established between the parties or in the particular activity or business in which they are engaged. (v) The language of reasonable expectation is not statutory but is an aid to characterising non-disclosure as misleading or deceptive. The judgment as to whether there is such a reasonable expectation is objective. (vi) The invocation of a reasonable expectation that if a fact exists it will be disclosed, directs attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs, or high moral expectations that exceed the requirements of the general law or of the prohibition imposed by [s 42 of the Fair Trading Act]. (vi) In general, [s 42 of the Fair Trading Act] does not require a party to commercial negotiations to volunteer information which will assist the decision-making of the other party. A fortiori, s 42 does not require a party to volunteer information in order to avoid the careless disregard of its own interests of a party of equal bargaining power and competence.
The summary by Sackville AJA in relation to s 42 of the Fair Trading Act 1987 (NSW) applies equally to claims based on s 18 of the Australian Consumer Law and s 62D of the Retail Leases Act.

[37]

23 August 2011 letter

The relevant terms of SHFA's 23 August 2011 letter are set out above at [38]. OXS's misleading conduct case was based on a reasonable expectation of disclosure in August 2011 of what SHFA would do on expiry of the lease in 2014. The premise of OXS's non-disclosure case is that SHFA intended to "test the market" on expiry of the lease in 2014. OXS relied on two matters to establish this premise. The first was an email attaching legal advice and draft letters prepared by the solicitors for SHFA dated 15 February 2011. This was said to provide confirmation that that the senior employees of SHFA had given "firm" instructions to the solicitors for SHFA in February 2011 that SHFA intended to proceed to an open tender at the end of the current lease. The second matter was the evidence given by Ms Garrick in cross-examination as to her view on this issue and whether her view was shared by other senior employees of SHFA. In my view, OXS failed to establish the premise of its non-disclosure case.
First, the February advice given by SHFA's solicitors does not establish that SHFA held a "firm" intention in February 2011 to proceed to open tender on expiry of the lease in 2014. What the documents reveal is that the solicitors for SHFA had recommended that a statement to this effect be included in SHFA's letter to OXS responding to OXS's request for an extension of the existing lease. Importantly, however, Mr Watkins, the then CEO of SHFA, did not accept this advice. Ms Garrick acknowledged in cross-examination that, as Mr Watkins was her superior, it was pointless for her to express any disagreement with his decision at that time.
Secondly, the state of mind to be attributed to SHFA in August 2011 is not to be found in those employees who sought and obtained advice as to how to respond to OXS's request in February 2011 for an extension of the existing lease. The legal advice and the views of Ms Garrick were communicated to Mr Watkins in February 2011. He disagreed with that view and proceeded to respond to OXS in terms of the February 2011 letter. It is not to the point that this remained Ms Garrick's personal position, or that of Mr Noble, after February 2011. Furthermore, by the time of the 23 August 2011 letter, Mr Haddad was the CEO of SHFA.
OXS did not direct any submissions to the important question of whose state of mind is to be attributed to SHFA and the circumstances in which the knowledge of multiple agents and employees can be aggregated to justify a finding as to the state of mind of a company or organisation: Krakowski v Eurolynx Pty Ltd [1995] HCA 68; 183 CLR 563 at 582-583; and see the discussion in Westpac Banking Corporation v The Bell Group Ltd (in Liq) (No 3) [2012] WASCA 157; 44 WAR 1 at [2178]-[2191] (Drummond AJA), in particular, referring to the statement of Wootten J in Dunlop v Woollahra Municipal Council [1975] 2 NSWLR 446 at 485. Nor did OXS address the related question of different intentions between individuals within a company, or as in this case, a statutory authority such as SHFA, with different levels of responsibility and authority.
OXS's case at trial was based on the proposition that there was the "consensus" within SHFA, which included Mr Haddad, the then CEO of SHFA, that SHFA would "test the market" on expiry of the lease in 2014. It is appropriate to proceed on the basis that OXS's non-disclosure case depended upon establishing that this was Mr Haddad's view in August 2011.
Ms Garrick gave evidence that she discussed and agreed with Mr Haddad the contents of the 23 August 2011 letter before it was sent to OXS. She did not recall agreeing to omit anything from that letter. Ms Garrick initially agreed with the cross-examiner's proposition that Mr Haddad had expressed the view, in August and September 2011, that he "anticipated that SHFA would test the market in due course when the lease expiry came up", but immediately qualified her answer. Ms Garrick said that she discussed the Premises with Mr Haddad, but did not recall him actually using the words "SHFA would seek to test the market when the lease came up to expiry". A little later, Ms Garrick gave evidence that she did not recall discussing with Mr Haddad the views of SHFA staff members concerning "testing the market". When pressed on whether there was any discussion with Mr Haddad directed towards SHFA "testing the market" she responded that they did not discuss that matter in 2011, and denied that she was given instruction on that matter by Mr Haddad. Mr Haddad did not give evidence at the hearing.
On a fair reading of the whole of Ms Garrick's evidence, OXS failed to establish that Mr Haddad held the view in August 2011 that SHFA would "test the market" on expiry of the lease in 2014. Nor has OXS demonstrated any error in his Honour's finding that SHFA had not reached any concluded view as to that matter in August 2011.
Aside from the difficulty that OXS failed to establish the premise of its non-disclosure case, there are further difficulties with the matters relied upon by OXS as giving rise to a reasonable expectation of disclosure. The first related to the 23 August 2011 letter which OXS argued left open, at least inferentially, the possibility of a negotiated position in the last 12 months of the lease. The second related to the terms of the Lease Expiry Policy which stated that SHFA, ordinarily, would not consider a retail lease renewal more than 12 months before the existing lease expiry date. OXS contended that the Policy had been sent to Mr Kazal "at some time during these events". In my view, neither of these matters gave rise to reasonable expectation of disclosure.
First, the 23 August 2011 letter did not say anything about the possibility of lease renewal negotiations in the last 12 months of the current lease. The subject matter of the letter was that the Minister would not consent to the proposed new lease referred to in SHFA's February letter. The "possibility" of lease renewal negotiations could not be reasonably inferred from the words used in SHFA's 23 August 2011 letter.
Secondly, the Policy document was, relevantly, sent to Mr Kazal a year later as an enclosure to SHFA's letter of 29 August 2012. Moreover, it was accepted by OXS that Mr Kazal's evidence was that he did not read the Policy document.
Thirdly, as his Honour correctly observed, any intention of particular staff of SHFA in August 2011 could be no more than highly tentative, having regard to the possibility of political, policy or market changes that could occur in the three years preceding 2014. So much was accepted by counsel for OXS in this Court, who fairly acknowledged that the senior employees of SHFA were not bound by any views they held in August 2011, and that it was possible that a different view might be adopted by senior employees when the lease came to an end. This tells strongly against any reasonable expectation of disclosure in 2011 of the views of any particular staff of SHFA on that topic, particularly in circumstances where, as his Honour found, SHFA had not reached a concluded view as to that matter at that point of time.
In my view, there was no error in his Honour's finding (at [116]), that SHFA's silence as to that matter was not misleading or deceptive or likely to deceive in the circumstances.

[42]

Consideration

As to whether SHFA held a view on the question of whether the agreement was binding, none of the three matters relied upon by OXS, either alone or taken together, cast doubt upon his Honour's finding that SHFA had no view (or at least no concluded view) as to whether OXS's purported acceptance of the 'offer' in the 23 February 2011 letter was legally effective.
First, as his Honour found, the fact that SHFA later sought legal advice as to that question was significant, because that conduct was inconsistent with SHFA having a concluded view as to the legal character of the February 2011 correspondence.
Secondly, it is not surprising that SHFA did not take issue with OXS's 'acceptance' letter of 28 February 2011. OXS's 28 February 2011 letter contemplated further negotiations as to the 'commercial terms' of the new lease and that OXS would be provided with the opportunity to 'review' the new lease. OXS did not assert in that letter that the parties were already bound by an enforceable legal agreement for lease.
Thirdly, the fact that there were subsequent communications between the parties in relation to the outdoor seating licence says nothing about whether SHFA held a view as to the legal character of the February 2011 correspondence. The formalisation of the outdoor seating licence was a condition which needed to be satisfied before SHFA was prepared to consider offering a new ten year lease. The fact of those communications is unremarkable.
There is a further matter to be considered. His Honour's conclusion that it was not misleading or deceptive for SHFA not to express any view as to the legal character of the February correspondence does not rest solely on the finding that SHFA held no view (or no concluded view) on that question. His Honour also found that SHFA's conduct was not misleading or deceptive in circumstances where each party had access to legal advisers and OXS did not have any reason to think that it could look to SHFA for advice as to that legal question: at [97]. There is no challenge to this finding. Nor did OXS point to any other circumstances giving rise to a reasonable expectation of disclosure that if SHFA held the view that there was any issue with the formation of a binding and valid agreement for lease, it would be disclosed to OXS: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 40-41, citing Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 46-054 at 53,195 (French J); Traderight (NSW) Pty Ltd v Bank of Queensland Ltd at [189] -[192].
It needs to be emphasised that "as a general proposition, s 52 of the Trade Practices Act 1974 (Cth) does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party": BMW Australia at [22] (French CJ and Kiefel J). This statement applies equally to s 18 of the Australian Consumer Law.
Here, the parties were negotiating the terms of the extension of the 2009 lease at arm's length. As in BMW Australia, "the parties were experienced in their respective fields": at [91] (Heydon, Crennan and Bell JJ). They each had the assistance of legal advisers. Even if, contrary to his Honour's finding, SHFA held the view that there was no concluded agreement for lease, the failure to disclose its knowledge as to the legal character of the February 2011 correspondence would not, in my view, be correctly characterised as misleading.
Further, and importantly on the issue of reliance, OXS did not challenge his Honour's findings (at [98]) that Mr Kazal's evidence was not directed to the pleaded representation (as to whether he understood SHFA to have represented that the exchange of correspondence was a binding lease) and that to the extent that Mr Kazal made an assumption about Ministerial Consent, it was not a reasonable assumption to make in the circumstances (at [99]).
OXS's second contention, that the state of mind of SHFA is irrelevant where the misleading conduct is a result of non-disclosure, involves a misunderstanding of the authorities to which reference was made by OXS (see [205] above). It can be accepted that Fraser v NRMA Holdings Ltd is authority for the proposition that a contravention of s 52 (and likewise s 18 of the Australian Consumer Law) may occur without knowledge or fault on the part of the corporation, and notwithstanding the exercise of reasonable care. That does not mean, however, that the knowledge of the alleged contravenor is not relevant.
The correct position is that the knowledge of the person whose failure to disclose is alleged to be misleading or deceptive will be relevant, but not necessarily decisive as to whether the non-disclosure is misleading. Thus in BMW Australia, the knowledge of the insurance broker, Miller, that the policy was not cancellable, was relevant to whether Miller's conduct in failing to disclose its knowledge of the policy to BMW was correctly characterised as misleading.
Further, as SHFA correctly points out, his Honour did not treat the Binding Lease Representation as an allegation of "mere non-disclosure" and involving the question of whether SHFA's conduct was undertaken other than inadvertently: see s 2(2)(c)(i) of the Australian Consumer Law. His Honour considered this representation on a wider basis, having regard to the pleaded conduct of SHFA in respect of the February 2011 letter and OXS's purported acceptance of it (at [96]). Whether SHFA held a view (or a concluded view) as to the legal character of the February 2011 correspondence was clearly relevant to whether its conduct in failing to disclose its alleged knowledge on that issue is correctly characterised as misleading.
In my view, ground 23 has not been made out.

[49]

Failure to make a declaration (ground 12)

OXS complains by ground 12 that his Honour failed to make a declaration that the conduct of SHFA in relation to its 23 August 2011 letter was misleading and deceptive. His Honour dealt with this issue at [4] to [6] of his reasons in the relief judgment.
At [4], his Honour set out, relevantly, the terms of the declarations sought by OXS in its statement of claim. By par 9 of the claims for relief, OXS sought "[a] declaration that SHFA, in trade or commerce, engaged in misleading and deceptive conduct or conduct likely to mislead or deceive, in contravention of section 18 of the Australian Consumer Law". OXS sought a declaration in similar terms in par 13 of the claims for relief, with respect to the alleged contravention of section 62D of the Retail Leases Act.
At [6], his Honour noted that the declarations sought by OXS were in general terms and without reference to the particular findings in the principal judgment. His Honour accepted that a declaration should not be made where, as in the present case, it would merely be prefatory to an order for damages. Reference was made to Attorney-General (NSW); Ex rel Corporate Affairs v Australian Softwood Forests Pty Ltd (1979) 2 NSWLR 73 at 76, and PW Young, C Croft and ML Smith, On Equity (2009, Lawbook Co) at 1084.
His Honour also accepted that there was no utility in a declaration which did not relate to particular conduct undertaken at a particular time in particular circumstances so as to resolve any particular dispute between the parties. His Honour added that the findings he had made were sufficiently set out in the principal judgment and would not fairly be reflected by declarations of the generality sought by OXS.
OXS contended that his Honour's refusal to make the declarations sought on the ground of "no utility" does not withstand scrutiny, because the findings of misleading and deceptive conduct could have been readily the subject of declarations either in independent declarations, or by reference to the findings of misleading and deceptive conduct.
OXS further contended that it was appropriate that the declarations of misleading and deceptive conduct be made because questions of liability (and costs) were being determined separately from damages, and to mark the Court's disapproval of a public authority engaging in misleading and deceptive conduct towards its lessee. Reference was made to Tobacco Institute of Australia Ltd v The Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 100 (Sheppard J).

[51]

Issue 4: Causation - loss of opportunity claim (grounds 13 and 14)

OXS claimed that as a result of SHFA's misleading and deceptive conduct, it lost the opportunity to sell the restaurant business within the three years remaining on its lease, in circumstances where the business will be rendered worthless if OXS fails to obtain specific performance of the alleged agreement for lease. His Honour rejected this claim.
At [132], his Honour set out Mr Kazal's evidence that, if he had known in August 2011 that SHFA were "intent on not granting a new lease" beyond the term of the 2009 lease: I could have caused OXS in 2011 to sell the business conducted at the Premises, as OXS then still had three years remaining under the [2009 Lease]. OXS has now lost the opportunity to do so by being misled by SHFA as to the basis for refusing to continue with the grant of a new lease. [Emphasis added]
His Honour found that the premise of Mr Kazal's evidence was not established, since SHFA had not taken a position in August 2011 that amounted to a concluded position that it was not "intent on granting a new lease" and would not, for example, negotiate a new lease in the year prior to expiry in accordance with its Lease Expiry Policy: at [132]. In addition, his Honour observed that Mr Kazal's evidence did not extend to what Mr Kazal would have done, as distinct from asserting that he "could have" initiated by way of a sale process. This was significant because his Honour accepted that there was a substantial inconsistency between Mr Kazal's evidence as to a sale of the business and his insistence that he believed that he had an enforceable lease and that Minister Kelly had given consent: at [132].
His Honour did not accept that OXS would have sought to sell the business had it been informed by SHFA in the 23 August 2011 letter that it did not support the grant of a new lease at the expiry of the 2009 lease: at [134]. His Honour reasoned that the history of OXS's dealings with SHFA indicated that OXS was ready to assert its position in respect of disputed issues (such as the use of the courtyard and turnover rent payable in respect of the premises). Further, his Honour found that had SHFA advised that it did not support the grant of a new lease at that time, OXS would have done then what it had subsequently done, namely, assert that it had a legally binding lease agreement arising out of the February 2011 correspondence; seek to intervene with the Minister to bring about the grant of a new lease; and then assert its claim by proceedings of the present character. Accordingly, his Honour found that the Ministerial Decision Representation and the Further Ministerial Decision Representation were not causative of any loss that may have been suffered: at [134].
OXS did not take issue with his Honour's approach that the loss of opportunity to sell the business was in the nature of a loss of opportunity claim: at [135]. Nor did OXS challenge his Honour's summary of the applicable principles by reference to his own decision in Re Colorado Products Pty Ltd.
OXS contended, by ground 13, that his Honour erred in finding that OXS had not established it lost an opportunity to sell the restaurant business in 2011 by reason of the misleading and deceptive conduct of SHFA in the 23 August 2011 letter, and the further misleading and deceptive conduct which his Honour ought to have found. The latter conduct may be disregarded in view of the conclusions above (that OXS's further claims of misleading or deceptive conduct by SHFA have not been established).
By ground 14, OXS complained that his Honour erred in taking into account an alleged absence of evidence that the business "could" have been sold in 2011, when that finding involved matters not before the court on a split trial of liability and damages. It should be noted here that the reference in ground 14 to the absence of evidence that the business "could" have been sold in 2011 seems to be an error. Ground 14 should be read as intending to refer to an absence of evidence that the business "would" have been sold in 2011.

[52]

Relevant principles - loss of opportunity claims

In Malec v JC Hutton Pty Ltd [1990] HCA 20; 169 CLR 638 at 639-640 and 642-643, the High Court drew a distinction, in assessing damages, between proof of historical facts - what has happened - and, proof of future possibilities and past hypothetical situations. The High Court held that the civil standard of proof (on the balance of probabilities) applies to the first category of facts, but not to the second, for the purpose of assessing damages.
The context in Malec was the assessment of damages in tort for loss of earning capacity. The same principle applies in the assessment of damages for loss of profits as a consequence of a breach of contract: The Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64 at 88, 104, 116-126; and of contravention of the Trade Practices Act: Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 (Sellars) at 349-355. See Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 (Fightvision) at [139].
The approach to past hypothetical situations on causation of loss, as distinct from assessment of damages, was considered by this Court in Daniels v Anderson (1995) 37 NSWLR 438 at 527-531. Importantly, as Clarke and Sheller JJA (Powell JA agreeing on this point) explained (at 528-529), the High Court held in Sellars (at 353) that the principles stated in Malec did not apply to the issue of causation where the issue turns on what the plaintiff would have done. In that context, proof on the balance of probabilities applies, notwithstanding that the question is hypothetical: Sellars at 353. On the other hand, damages for the deprivation of a commercial opportunity are to be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued: Sellars at 355.
The High Court concluded in Sellars (at 355), on the issue of causation, that ordinarily the plaintiff must prove on the balance of probabilities that he or she has sustained some loss or damage. Where the plaintiff shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value is to be ascertained by reference to the degree of probabilities or possibilities.
Applying what the High Court said in Sellars (at 353 and 355), Clarke and Sheller JJA said in Daniels v Anderson (at 530) that: [The] issue of causation is to be approached upon the basis of proof upon the balance of probabilities with the qualification that an assessment of whether the chance which is said to have been lost had a value is to be made upon the possibilities or probabilities of the case.
Daniels v Anderson was an auditor's negligence case. The issue of causation involved whether the directors would have acted to avert the loss if properly informed by the auditor. The critical questions were identified (at 539A) as whether AWA established that the directors would, if properly informed of the true facts concerning the foreign exchange operation conducted by the manager employed by AWA, have taken the steps set out in their statements and, if so, whether there was a chance that AWA would thereby have avoided or mitigated its losses. This was required to be established on the balance of probabilities. On the other hand, the value of the opportunity (not being negligible) was to be ascertained by reference to the degree of possibilities or probabilities of avoiding the relevant financial detriment.
In Fightvision, a breach of contract case, a boxing promoter claimed damages for the loss of opportunity to make profits if Mr Tszyu had boxed professional in bouts promoted or co-promoted by Fightvision for a two-year period. The assessment of damages for loss of the commercial opportunity of promoting or co-promoting fights in which Mr Tszyu participated was assessed according to the degree of possibility or probability of such bouts occurring and bringing earnings as claimed: at [140].
In Heenan v Di Sisto and Ors [2008] NSWCA 25, a solicitor's negligence case, the respondent-clients lost the chance, which would have arisen through advice, to make contracts for the sale of two properties interdependent. In order to establish causation, the clients had to prove on the balance of probabilities that, if properly advised, they would have instructed the appellant-solicitor to do so: at [31]. On the other hand, whether the purchaser would have agreed, and whether it would have completed the contracts, was part of the valuation of the loss of chance to be ascertained by reference to the degree of probabilities or possibilities of obtaining the relevant financial advantage: at [33].

[53]

Application of principles to the present case

As mentioned, the present case involved a split trial on liability and the assessment of damages. Accordingly, it was incumbent on OXS to establish, on the issue of causation, that had OXS been informed in August 2011 that SHFA did not (at least at that time) support the grant of a new lease (rather than the Minister having indicated he would not consent to it), OXS would have initiated a sale of the business. Sellars also requires that OXS establish, on causation, that the loss of that commercial opportunity had some value (not being a negligible value). His Honour did not need to address that latter question, since the claim by OXS failed because of an absence of evidence of what OXS would have done.
On the other hand, the issue of whether a third party would have agreed to buy the business from OXS, and whether a purchaser would have completed that transaction, which would have required obtaining an assignment of the 2009 lease with SHFA's prior consent as required under cl 2.9 of the 2009 lease, was a matter for the assessment of damage if liability was established. In the present case, that was to occur after the issue of liability had been determined. That assessment, if required to be made, would be approached according to the degree of possibilities and probability rather than on the balance of probabilities.
It follows that the complaint in ground 14 should be rejected. His Honour did not err in taking into account on the issue of causation the absence of evidence that the business "could" (or more accurately "would") have been sold after August 2011 in the sense that OXS would have initiated a sale of the business.
Turning to ground 13, counsel for OXS accepted in oral argument, consistently with Daniels v Anderson, that OXS needed to establish on causation that OXS would have sold the business had it been told in the 23 August 2011 letter that SHFA did not support the grant of a new lease.
In its written submissions, OXS contended that Mr Kazal gave evidence that this is what OXS "would" have done. This submission does not accurately reflect Mr Kazal's evidence (set out at [246] above). As his Honour correctly noted, Mr Kazal's evidence did not extend to what he would have done had he been told in August 2011 that SHFA did not support the grant of a new lease.
It can be accepted that such evidence, if it had been given, may be far from conclusive, even from a completely honest witness, because it may be the result of unconscious reconstruction affected by the wisdom of hindsight. Nonetheless, it would have been admissible: Tanna v Deutsche Bank (Asia) AG [1997] ANZ Conv R 588 (Hodgson J).
The failure of Mr Kazal to give evidence of that type means that OXS's case on causation depended entirely on inferences from his other evidence and the circumstances. His Honour's approach to the absence of evidence from Mr Kazal was entirely consistent with that of the authorities.
In oral submissions, OXS took the position that, as a matter of common sense, an inference should be drawn that Mr Kazal would have initiated a sale of the business in August 2011, had he known that SHFA did not support the grant of a new lease. His Honour was not prepared to draw such an inference from Mr Kazal's evidence and the objective circumstances. Reference has already been made to his Honour's reasons (at [134]) for not drawing such an inference. His Honour carefully considered the objective indicators of what OXS would have done in August 2011, had it known that SHFA did not support a new lease. These included the past dealings between OXS and SHFA and what OXS had subsequently done after August 2011 by way of asserting its rights to a legally binding agreement, seeking the intervention of the Minister and asserting its claim in legal proceedings. OXS has not demonstrated that the contrary inference should have been drawn by his Honour.
In my view, grounds 13 and 14 have not been made out.

[55]

Issue 6: Costs

The primary judge rejected OXS's claim for a Bullock order against SHFA in respect of the Minister's costs for the reasons given at [13] to [18] of the costs judgment. His Honour found, contrary to OXS's submissions, that the documents filed and served by the Minister made clear, at least by 20 March 2014, that the Minister's position was that he had made no decision, and that position was very likely to be well founded: at [17] costs judgment.
His Honour found that OXS took upon itself the risk of continuing the proceedings against the Minister, when it was not only plain the Minister's position was that he had made no such decision, but where that was also OXS's position in the proceedings. Accordingly, his Honour concluded that there was not a proper basis to shift the costs of that risk from OXS to SHFA: at [18] costs judgment.
Although none of the grounds of appeal alleged error with respect to his Honour's decision as to costs, OXS contended in its written submissions that his Honour erred in his costs judgment in failing to make a Bullock order requiring SHFA to indemnify OXS for the costs it had been ordered to pay to the Minister. The basis for the Bullock order claimed by OXS is the contention that it was the misleading or deceptive conduct of SHFA "that falsely led OXS to believe that the Minister had made an adverse decision - a position SHFA did not finally abandon until its closing submissions at first instance".
No oral submissions were directed to this contention on appeal. In written submissions, OXS simply referred to its written submissions at trial, which extended over 9 pages. No attempt was made in this court to identify error in his Honour's discretionary decision.
Unsurprisingly, SHFA objected to OXS raising this point on appeal. SHFA also submitted that, in any event, no error by his Honour had been demonstrated.
A discretionary judgment as to costs can only be overturned in limited circumstances. If OXS were permitted to raise this issue on appeal, the question would have been whether his Honour erred in the exercise of his discretion in making the costs order that he did. That would have required OXS to identify an error in the House v The King sense ([1936] HCA 40; 55 CLR 499 at 505).
Significantly, OXS did not apply to amend its notice of appeal in the face of SHFA's objection to OXS seeking to raise this point. Nor did OXS advance any submissions directed to identifying error in the House v The King sense, which was the relevant question on appeal. In my view, OXS should not be permitted to raise this point on appeal, not having done so by way of a relevant appeal ground and written submissions directed to this issue.

[56]

Conclusion and orders

The appeal by OXS has failed. There is no reason for departing from the general rule that costs should follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1. Accordingly, the orders which I would propose are as follows: 1. Appeal dismissed. 2. Appellant to pay the respondent's costs of the appeal.
LEEMING JA: I have had the very considerable advantage of reading Gleeson JA's judgment in draft. I agree with the orders proposed by his Honour, and, subject to one matter, with his Honour's reasons.
I respectfully disagree with the conclusion Gleeson JA has reached in relation to grounds 6 and 7. Unlike his Honour, I consider that the prohibition in s 19(3) applies to agreements to grant a lease for a term exceeding five years. Since that disagreement can have no bearing on the outcome of the appeal, I will indicate my reasons more briefly than would otherwise be the case.
Section 19 is reproduced in full at [103]. I agree with Gleeson JA that the starting point is the statutory text. One thing which emerges clearly from the reasoning in Butts v O'Dwyer is that a close attention to the particular statute is necessary.
Although as Gleeson JA observes there is no definition of "lease" in the Act, it is clear from the identical treatment of leases and licences in subs (3) and (4) that what the statute regards as important for present purposes is not so much whether a right of occupation is contractual or proprietary, but its length. Understandably enough, this statute, like many others, puts to one side the distinction between lease and licence and focusses attention on the practical question: in what circumstances can SHFA, acting unilaterally, give long term rights (ie, with a duration exceeding five years) for the occupation of core land.
That of itself suggests that the prohibition applies not only to long term legal leases, and long term licences, but also promises to grant a long term lease. If a grant of a legal lease for more than five years requires consent, and the making of a promise to occupy for more than five years requires consent, it would seem natural for the making of a promise to give a legal lease to require consent.
I do not regard that construction as amounting to a strained reading of the subsections. The prohibition is upon long term leases and licences in their generality, which is apt to include a prohibition upon long term equitable leases.
I also do not regard the authorities to which the Court was taken as being determinative. Those authorities deal with statutes imposing a prohibition upon a dealing by a private party. In contrast, s 19 imposes a prohibition upon a statutory corporation with limited powers, and at least in part is directed to questions of power. Thus subs (1) unequivocally denies to SHFA power to sell, exchange or otherwise dispose of core land, save as is provided by subs (2). Subsection (2) provides that SHFA may, in certain circumstances, mortgage or grant a charge over core land, or exchange land. Subsection (3) provides that SHFA may, in certain circumstances, lease or grant licences in respect of core land, and grant easements or rights-of-way over core land. Although I acknowledge that the position is not free from doubt, because the word "may" is arguably directed to a qualified permission, as opposed to a qualified conferral of power, I prefer the view that subsections (2) and (3) are also directed to the power of SHFA. I reach that conclusion because "may" in subsection (2) is expressed to be an exception to the absence of power in subsection (1), and because it is natural to read subsections (2) and (3) (which follow one another and commence with materially identical words) in the same way.
SHFA is a statutory corporation whose powers of dealing with property are limited by the Act and by the general provisions of s 50 of the Interpretation Act 1987 (NSW). Those considerations distinguish s 19 from the more common category of legislative prohibition, where the owner of property has power to deal with it, and statute imposes a qualified prohibition upon the owner so doing. The recurring issue, seen in the authorities on which both parties relied, is the legal consequence of the owner performing an act which is within the owner's power but contrary to the qualified prohibition in the statute. In my view, quite different considerations apply when the prohibition is addressed to a single person, namely, the body corporate which is created by the statute which plainly possesses more limited powers.
Against this construction, it was submitted that such a construction would see the Minister involved in the minutiae of negotiations, as SHFA and a prospective tenant went back and forth on the particular clauses of a draft lease. The appellant submitted that it would be "impractical, uncommercial and unrealistic", because "every negotiation of every term of every lease requiring consent would have to be consented to by the Minister before the lease could be progressed". If that were so, that would point to a narrower construction of the prohibition. But I cannot agree with the submission. I see no reason why the Minister could not grant conditional consent in broader terms. For example, the Minister could direct that in relation to any lease of between five and 20 years' duration in a commercially zoned area of core land, all leases granted by SHFA must contain particular covenants (including, say, minimum rental per square metre), but otherwise leave a deal of discretion in SHFA. That is to say, I see no reason why the provisions conferring powers of direction and control upon the Minister need be read as excluding general directions and consents by the Minister given to SHFA in advance of the final negotiations of any particular lease. Of course, that is not to say that the Minister could not exercise his or her powers more narrowly if he or she so chose.
In short, although the Act makes it clear that SHFA is subject to the control and direction of the Minister, there is no reason why the Minister might not choose to exercise that power of control and direction in quite general terms.
For those reasons, I consider that the primary judge was correct to proceed on the basis that s 19 applied to agreements to lease.

Parties

Applicant/Plaintiff:

OXS Pty Ltd

Respondent/Defendant:

Sydney Harbour Foreshore Authority

Legislation Cited (16)

Australian Consumer Law (Competition and Consumer Act 2010(Cth)

Closer Settlement Amendment (Conversion) Act 1943(NSW)

Crown Lands Consolidation Act 1913(NSW)s 272(2)

Industrial Arbitration Act 1940(NSW)s 88B

Sydney Harbour Foreshore Authority Act 1988(NSW)ss 5, 10, 12(2), 19, 28, 29, 30, Sch

Town Planning and Development Act 1928(WA)s 20

Trade Practices Act 1974(Cth)s 52

Minister (Sydney Harbour Foreshore Authority Act 1988(NSW)s 12(2)

Sydney Harbour Foreshore Authority Act 1998(NSW)

Closer Settlements (Amendment Conversion) Act 1943(NSW)

Fair Trading Act 1987(NSW)

Real Property Act 1900(NSW)

Retail Leases Act 1994(NSW)ss 62B, 62D

Supreme Court Act 1970(NSW)s 69

Uniform Civil Procedure Rules 2005(NSW)r 42.1

Interpretation Act 1987(NSW)

Cases Cited (65)

l Arbitration Act 1940 (NSW) s 88B Real Property Act 1900 (NSW), s 53 Retail Leases Act 1994 (NSW) ss 62B, 62D Supreme Court Act 1970 (NSW) s 69 Sydney Harbour Foreshore Authority Act 1988 (NSW) ss 5, 10, 12(2), 19, 28, 29, 30, Sch 5 cl 13 Town Planning and Development Act 1928 (WA) s 20 Trade Practices Act 1974 (Cth) s 52 Uniform Civil Procedure Rules 2005 (NSW) r 42.1 Cases Cited: Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 ANZ Banking Group Ltd v Ciavarella [2003] NSWCA 304 Attorney -General (NSW); Ex rel Corporate Affairs v Australian Softwood Forests Pty Ltd (1979) 2 NSWLR 73 Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Australis Media Holdings Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 Banque Commerciale S.A., En Liquidation v Akhil Holdings Ltd [1990] HCA 11;169 CLR 279 Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977)180 CLR 266 Brambles v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Brown v Heffer [1967] HCA 40; 116 CLR 344 Butts v O'Dwyer [1952] HCA 74; 87 CLR 267 Byrne v Australian Airlines Ltd [1995] HCA 24; 185 CLR 410 Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 Chan v Cresdon Pty Ltd [1989] HCA 63; 168 CLR 242 Clifton v Palumbo [1944] 2 All ER 497 Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337 Corpers (No 664) Pty Ltd v NZI Securities Australia Ltd [1989] ANZ Conv R 548 Craig v Silverbrook & Ors [2013] NSWSC 1687 Custom Credit Corporation Ltd v Cenepro Pty Ltd (NSWCA, 7 August 1991) Daniels v Anderson (1995) 37 NSWLR 438 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Dunlop v Woollahra Municipal Council [1975] 2 NSWLR 446 Fabcot Pty Ltd & Anor v Port Macquarie-Hastings Council [2011] NSWCA 167 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 Fox v Percy [2003] HCA 22; 214 CLR 118 Fraser v NRMA Holdings Ltd (1995) 55 FCR 452; 127 ALR 543 Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd [1995] NSWCA 166; 7 BPR 14,551 Glass v Ralph [1966] WAR 91; 13 LGRA 90 G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 Heenan v Di Sisto & Ors [2008] NSWCA 25 Helmoss Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 Hillas & Co Ltd v Arcos Ltd [1932] All ER 494; 147 LT 503 Hill End Gold Ltd v First Tiffany Resource Corporation [2010] NSWSC 375 House v The King [1936] HCA 40; 55 CLR 499 Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) 46-054 Krakowski v Eurolynx Pty Ltd [1995] HCA 68; 183 CLR 563 Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1 Malec v JC Hutton Pty Ltd [1990] HCA 20; 169 CLR 638 Masters v Cameron [1954] HCA 72; 91 CLR 353 McGraddie v McGraddie [2013] UKSC 58; 1 WLR 2477 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357 OXS Pty Ltd v Sydney Harbour Foreshore Authority and Minister for Planning and Environment [2014] NSWSC 1174 OXS Pty Ltd v Sydney Harbour Foreshore Authority and Minister for Planning and Environment [2014] NSWSC 1284 OXS Pty Ltd v Sydney Harbour Foreshore Authority and Minister for Planning and Environment [2014] NSWSC 1702 Pan American World Airways Inc v Commonwealth of Australia (1977) 7 BPR 15,145 Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 Pyrmont Point Pty Ltd v Westacott [2016] NSWCA 33 Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 Rivers v Bondi Junction-Waverley RSL (1986) 5 NSWLR 362 Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 Sinclair, Scott & Co v Naughton [1929] HCA 34; 43 CLR 310 Taluja v Australian International Academy of Education Ltd [2011] NSWCA 416 Tanna v Deutsche Bank (Asia) AG [1997] ANZ Conv R 588 The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) HCA 54; 174 CLR 64 Thorby v Goldberg [1964] HCA 41; 112 CLR 597 Tobacco Institute of Australia Ltd v The Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 Travinto Nominees Pty Ltd v Vlattas [1973] HCA 14; 129 CLR 1 Westpac Banking Corporation v The Bell Group Ltd (in Liq) (No 3) [2012] WASCA 157; 44 WAR 1 Wilson International Pty Ltd v International House Pty Ltd [1983] WAR 243; (1981) 52 LGRA 216 Texts Cited: PW Young, C Croft and ML Smith, On Equity (2009, Lawbook Co) NSW Legislative Assembly, Parliamentary Debates (Hansard) 28 October 1998 at 9293 Category: Principal judgment Parties: OXS Pty Ltd (Appellant) Sydney Harbour Foreshore Authority (Respondent) Representation: Counsel: G Inatey SC with A Zahra (Appellant) M Cashion SC with R Carruthers (Respondent)

Cited By (26)

191 Bells Pty Ltd v WJ & HL Crittle Pty Ltd

Abdalla v Viewdaze Pty Ltd

Attorney-General (NSW) (Ex rel Corporate Affairs Commission) v Australian Softwood Forests Pty Ltd

Australia and New Zealand Banking Group Limited v James

Banque Commerciale SA (En Liquidation) v Akhil Holdings Limited

Bayside Council v V Corp Constructions Pty Ltd

Catholic Metropolitan Cemeteries Trust v Attorney General of New South Wales

Cirrus Real Time Processing Systems Pty Limited v Hawker Pacific Pty Ltd

Issue 2: Held, per Gleeson JA (Leeming JA agreeing at [279], Macfarlan JA not deciding) 4 Ministerial consent: The appeal grounds relating to this issue did not strictly arise since OXS had failed to establish that it had a concluded agreement for lease. Nonetheless, these grounds should be dealt with since the matters have been argued and were of importance to both parties: [106]. Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1 Held, per Gleeson JA (Macfarlan and Leeming JJA agreeing at [1] and [279], respectively): 5 There was no error in the primary judge's factual finding that it was highly unlikely that the Minister would have understood that he was being asked to grant consent to a lease for the purposes of s 19 of the SHFA Act. This was based on the circumstances, including Mr Watkins' failure to either advise the Minister of the proposed content of the lease or indicate that he sought oral approval to grant it on unknown terms, and the departure from past practice, in which requests for ministerial consent contained key terms and details of the proposed lease: [115] - [118]. Held, per Gleeson JA (Macfarlan JA not deciding) 6 The prohibition in s 19(3) of the SHFA Act upon the grant of a lease for a term exceeding five years without Ministerial consent only applies to legal leases. There is no intention in the text of s 19 of the SHFA Act to displace the ordinary meaning of "lease" in s 19(3) as a leasehold estate at law. In the absence of express terms, it would be an implied term of an agreement for lease that it would be subject to Ministerial consent, including such conditions as the Minister may impose. Further, it would be implied that the parties would do all that was reasonable to obtain Ministerial consent. Without consent, a court of equity would not enforce an agreement for lease for a term exceeding five years by way of an order for specific performance or injunction or otherwise because the contract would not emerge from its inchoate stage, the contingent condition being unfulfilled. As 19(3) applies to a lease at law, it is unnecessary to deal with the argument that ministerial consent could be given after the grant of a legal lease: [130] - [146]. Chan v Cresdon Pty Ltd (1989) 168 CLR 242; Pyrmont Point Pty Ltd v Westacott [2016] NSWCA 33; Taluja v Australian International Academy of Education Ltd [2011] NSWCA 416; Brown v Heffer (1967) 116 CLR 344; Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1; Glass v Ralph (1966) WAR 91; Wilson International Pty Ltd v International House Pty Ltd (1981) 52 LGRA 216 7 Implied term: Following the conclusion that s 19(3) only applies to a legal lease and not to an agreement for lease, the (assumed) agreement for lease would contain an implied term that SHFA would do all that was reasonable to obtain ministerial consent, and that a formal lease would be subject to consent being granted and to such conditions as the Minister may impose: [156] - [157]. BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977)180 CLR 266; Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] 149 CLR 337; Australis Media Holdings Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104; Byrne v Australian Airlines Ltd [1995] HCA 24; 185 CLR 410 Held, per Leeming JA (Macfarlan JA not deciding): 8 In addition to its application to legal leases for a term exceeding five years, the prohibition in s 19(3) of the SHFA Act applies to agreements to grant a lease for a term exceeding five years. The prohibition is upon long term leases and licences in their generality, which is apt to include a prohibition upon long term equitable leases. There is no reason why the provisions conferring powers of direction and control upon the Minister need be read as excluding general directions and consents by the Minister given to SHFA in advance of the final negotiations of any particular lease: [280], [284], [287].

Issue 3 Held, per Gleeson JA (Macfarlan and Leeming JJA agreeing at [1] and [279], respectively): 9 Misleading and deceptive conduct: The question of whether silence is misleading is normally answered by asking whether the person alleged to be misled or deceived had a reasonable expectation of disclosure. Non-disclosure by SHFA of its alleged decision to proceed to open tender on expiry of the lease in 2014 was not established as no error was demonstrated in the primary judge's finding that SHFA had not reached a concluded view in 2011 as to whether it would test the market on expiry of OXS's lease in 2014. Nor was it misleading or deceptive for SHFA not to express any view as to the legal character of the February correspondence given that each party had access to legal advisors and OXS did not have any reason to think that it could look to SHFA for advice: [177]-[216]. Campbell v Backoffice Investments Pty Ltd [2009] 238 CLR 304; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; Fabcot Pty Ltd & Anor v Port Macquarie-Hastings Council [2011] NSWCA 167; Traderight (NSW) Pty Ltd v Bank of Queensland [2015] NSWCA 94; Krakowski v Eurolynx Pty Ltd (1995) 183 CLR 563; Westpac Banking Corporation v The Bell Group Ltd (in Liq) (No 3) [2012] WASCA 157 10 As a general proposition, s 52 of the Trade Practices Act 1974 (Cth) and s 18 of the Australian Consumer Law do not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. The parties were at arms-length, experienced in their respective fields and had legal advice: [212]. 11 A contravention of s 52 (and likewise s18 of the Australian Consumer Law) may occur without knowledge or fault on the part of the corporation, and notwithstanding the exercise of reasonable care. The knowledge of the person whose failure to disclose is alleged to be misleading will be relevant, but not necessarily decisive: [216]. Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 46-054; Traderight (NSW) Pty Ltd v Bank of Queensland [2015] NSWCA 94; Fraser v NRMA Holdings Ltd (1995) 127 ALR 543; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 12 In the assessment of the credit of witnesses in cases where a judge is faced with a stark choice between irreconcilable accounts, the Court considers what is consistent with the probabilities as they emerged from the objective evidence: [225]-[227]. McGraddie v McGraddie & Anor [2013] UKSC 58; [2013] 1 WLR 2477; Craig v Silverbrook & Ors [2013] NSWSC 1687; Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 13 Failure to make a declaration: The power to grant declaratory relief is discretionary and a plaintiff does not have an automatic right to a declaration because he can point to a failure by the defendant to comply with some requirement: [242]. 14 There was no error shown in the primary judge's refusal to make declarations and consideration that they were merely prefatory to consequential orders such as damages: [245]. Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564; Rivers v Bondi Junction Waverley RSL (1986) 5 NSWLR 362 15 Causation - loss of opportunity: To establish causation in its loss of opportunity claim, it was necessary for OXS to demonstrate that OXS would have sold the business and that the loss of that commercial opportunity had some value (not being a negligible value). Evidence of what OXS would have done had it known the true position may be far from conclusive, even if from a completely honest witness, because it may be the result of unconscious reconstruction affected by the wisdom of hindsight. Nonetheless, such evidence would, if given, have been admissible: [261]-[266]. Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473; Tanna v Deutsche Bank (Asia) AG [1997] ANZ Conv R 588 16 The primary judge did not err in not drawing an inference that Mr Kazal would have initiated a sale of the restaurant business in August 2011 had he known that SHFA did not support the grant of a new lease given the evidence from OXS was as to what Mr Kazal could, rather than would have done. Such an inference would also be inconsistent with the objective indicators of what OXS would have done had it known that SHFA did not support a new lease, including the past dealings between the parties and, after 2011, OXS's assertion of its rights to a legally binding agreement, its seeking the Minister's intervention and its pursuit of its claim through legal proceedings: [268]. 17 Costs: There was no error in the House v King sense in the primary judge's finding that there is no basis to make a Bullock order requiring SHFA to indemnify OXS for the costs it had been ordered to pay to the Minister: [272] - [278]. House v The King (1936) 55 CLR 499

OXS Pty Ltd v Sydney Harbour Foreshore Authority

At a glance

Court

Decision date

Before

Source

Judgment (57 paragraphs)

Parties

Legislation Cited (16)

Cases Cited (65)

Cited By (26)