Plaintiff v Defendants

ESTOPPEL - Estoppel by representation - Elements of equitable estoppel - Whether there was a clear and unambiguous representation - Necessary for a plaintiff to establish that, but for the assumption or expectation, it would not have acted as it did - Whether change of position established.

1 By amended writ and further amended statement of claim both filed 4 December 2020, the plaintiff ('Australasia Development')[1] claims from the defendants the sum of $5,980,000 pursuant to a Joint Venture Development and Unitholders Agreement dated 30 August 2011 ('the JV Agreement'),[2] between:

(f) QOD Constructions Pty Ltd ('QOD Constructions'),

(39 Hearn Street, Rescom Mortgages, QOD Property and QOD Constructions are hereafter referred to collectively as the 'non-AD parties').

2 The JV Agreement related to the proposed subdivision and development of two lots of land with a total area of 92.56 hectares known as Lots 1 and 2 on Plan of Subdivision No. 635245C, more particularly described in Certificate of Title Volume 11186 Folios 319 and 320 at Baranduda, Wodonga ('the Property').

3 With respect to each of the parties to the JV Agreement:

(a) Glenwood Estate was the trustee of the Glenwood Unit Trust ('the Trust'), which had entered into two contracts of sale, both on 29 September 2010, for the purchase of the Property.

(i) was the holder of 250 of the 1,000 issued units in the Trust;

(ii) provided development finance of $2 million to Glenwood Estate for the purposes of purchasing the Property; and

(iii) was a wholly owned subsidiary of a Malaysian publicly listed property development company known as Eupe Corporation Berhad ('Eupe').

The directors of Australasia Development were Mr Huck Lee Beh ('Mr Beh'), who was also the group managing director of Eupe, and Ms Chee Fun Yeong (also known as Lisa Yeong) ('Ms Yeong').

(c) 39 Hearn Street was the holder of 360 units in the Trust, and was associated with the fourth defendant ('Mr Matthews') and Mr Christos Batzios (formerly the fifth defendant prior to being deleted as a party by the amended writ).

(d) QOD Property and QOD Constructions were the holders of a total of 390 units in the Trust, and were associated with Mr Lou Garita ('Mr Garita').

4 At or about the time of entry into the JV Agreement, the directors of Glenwood Estate were:

(b) Mr Batzios who was appointed on 22 February 2011;

(c) Mr Matthews who was appointed on 22 February 2011;

(d) Mr Beh who was appointed on 5 January 2012; and

(a) Mr Beh and Ms Yeong as directors of Australasia Development;

(b) Mr Matthews and Mr Garita as directors of Glenwood Estate;

(c) Mr Matthews and Mr Batzios as directors of 39 Hearn Street;

(d) Mr Garita as a director of QOD Property and as the sole director of QOD Constructions; and

(e) Mr Mathews as the sole director of Rescom Mortgages.

6 The recitals to the JV Agreement record, in summary, the following:

(a) The establishment of the Trust with Glenwood Estate as the trustee.

(b) The unitholders, by reference to the Schedule, being Australasia Development, 39 Hearn Street, QOD Property and QOD Constructions.

(c) The trustee will hold the Property and the Development (as defined in paragraph 7(i) below) on behalf of the unitholders.

(d) The Project Concept Summary and the Project Forecast, which are attached as appendices to and form part of the JV Agreement, have been prepared by QOD Property and Rescom Mortgages.

(e) The trustee, with the consent of the unitholders, wishes to engage QOD Property and Rescom Mortgages to provide project management services and development procurement services on the terms and conditions set out in the JV Agreement.

7 The terms of the JV Agreement relevantly include the following:

Where any provision of this Agreement is inconsistent with the provisions of the Constitution, the Trust Deed or the Project Summary this Agreement shall prevail to the extent of the inconsistency.

The Trustee will, during the currency of this Agreement, undertake the Development as trustee of the Trust and will not carry on any other business or other activities in its own right unless approved by the Board.

(c) Clause 4 is headed 'The Development' and provides:

4.1 The parties have entered into this Agreement specifically for the purpose of regulating the management of the Development in the manner set out in this Agreement and setting out the rights of each of the parties. It is the intention of the parties to develop the Property in accordance with the Project Concept Summary (as amended by agreement from time to time).

4.2 The parties have approved the Profit Forecast for the Development as set out and annexed as Appendix 4 ('the Profit Forecast').

4.3 The parties (other than [Australasia Development]) represent and warrant that the net profit of the Development shall be at least $24,000,000 (therefore, [Australasia Development's] 25% share of the net profit shall be at least $6,000,000), and the actual net profit or the warranted net profit (whichever is the higher) shall be paid to [Australasia Development] on or before 15 September 2018. The Directors of the Trustee, other than the Directors appointed by [Australasia Development], jointly and severally guarantee [Australasia Development] to pay [Australasia Development's] share of the said represented and warranted net profit in the event the actual net profit is lower than the represented and warranted net profit of $24,000,000 and/or the [Australasia Development's] said share of actual net profit or warranted net profit (whichever is the higher) is not paid to [Australasia Development] on or before 15 September 2018. This will continue to be binding even if the Guarantors has ceased to be the Directors of the Trustee at any time during the duration of the project.

4.4 The parties (other than [Australasia Development]) represents and warrants that the Development shall be completed on or before 15 September 2018 ('the Completion Date') For clarity, the Completion Date can only be varied in accordance with Clause 17.7 of this Agreement.

(d) Clause 5 provides for the project management services to be undertaken by QOD Property.

(e) Clause 6 provides for QOD Property to call for tenders for the construction of the Development (as defined in sub-paragraph (i) below).

(f) Clause 7 provides for project management fees to be paid to QOD Property equal to 2% of the actual retail sale proceeds of the Development (as defined in sub-paragraph (i) below), which amount will be adjusted once all of the lots are sold.

(g) Clause 8 provides for the development procurement services to be undertaken by Rescom Mortgages.

(h) Clause 9 is headed 'Development Finance' and includes the following provisions:

(i) Clause 9.1 provides that the unitholders acknowledge that the trustee must raise substantial borrowings in order to fund the total cost of the Development (as defined in sub-paragraph (i) below). It also provides that Australasia Development agrees to lend the trustee $2 million ('the Loan Amount'), secured by a second ranking mortgage over the Property. The Loan Amount is to bear interest at a rate of 2% per annum above the cash rate published by the Reserve Bank of Australia.

(ii) Clause 9.1.4 provides for repayment of the Loan Amount as per the Profit Forecast, as follows:

(1) sale of Stage 1 (lots 1 to 50) as nil, noting that the first mortgagee will receive net sale proceeds;

(2) sale of Stages 2 and 3 (lots 51 to 109) as $826,000;

(3) sale of Stages 4 and 5 (lots 110 to 191) as $1,148,000; and

(4) the balance owing (if any) to be repaid from cash at bank contemporaneously with settlement of the sale of the last lot in Stages 4 and 5.

(i) Clause 37 relevantly contains the following definition of 'Development', which is adopted in these reasons:

'Development' means the development of the Property by construction of approximately 900 residential allotments, Retirement Village Land Neighbourhood Centre Land and the nominated Medium Density and Integrated Housing Sites, obtaining town planning and building permits for the subdivision of the Property, selling the Lots and or dwellings on the open market and distributing the profits to the Unitholders in accordance with the terms of the Unit Trust Deed and this Agreement and the Project Concept Summary;

8 A number of documents are attached as appendices to the JV Agreement, including the following:

9 The Project Concept Summary provides that Lot 1 comprises 55.60 hectares and Lot 2 comprises 36.96 hectares. It includes the following information:

(d) The anticipated residential design outcome for the project would comprise a total of approximately 970 housing allotments, encompassing approximately:

together with a neighbourhood activity centre and a retirement village.

(e) A master plan had been accepted in principle by the City of Wodonga with the Stage 1 planning permit being approved on 9 May 2011, providing for 47 lots.

(f) QOD Property would act as development and project manager and provide project management services. Rescom Mortgages would provide project procurement services, including project finance, insurance, conveyancing and assisting with home sales.

(g) Marketing of the residential lots in Stage 1 had commenced with construction of civil works commencing between August to November 2011 for Stage 1 and a display village precinct.

(h) It was anticipated that the project would progress with the sale of between 100 and 150 lots and/or dwellings per annum.

10 The Profit Forecast projected that the total cost of the Development, based on 901 typical housing lots, 62 dwellings and the commercial site, would be $81,684,784 with a gross margin of $40,435,698.

11 Under the terms of the executed Deed of Indemnity & Guarantee, Mr Matthews, Mr Batzios and Mr Garita guaranteed to Australasia Development the performance by Glenwood Estate of the terms of the JV Agreement. The recital to the Deed provides that the guarantee and indemnity was provided in consideration of Australasia Development entering into the JV Agreement and lending the Loan Amount to Glenwood Estate at the request of Mr Matthews, Mr Batzios and Mr Garita.

12 On or about 29 September 2010, Glenwood Estate entered into contracts of sale of real estate with Albury-Wodonga Development Corporation ('AWDC') for the purchase of the Property, as follows:

(a) Lot 1, being the land described in Certificate of Title Volume 11186 Folio 319, for a price of $6 million with a deposit of $300,000 on signing, $900,000 on 25 June 2011 and settlement on 25 June 2012; and

(b) Lot 2, being the land described in Certificate of Title Volume 11186 Folio 320, for a price of $4 million with a deposit of $200,000 on signing and settlement on 25 June 2011.

13 In or about December 2010, Glenwood Estate paid to AWDC:

(a) $300,000 by way of deposit in respect of the contract of sale for the purchase of Lot 1; and

(b) $200,000 by way of deposit in respect of the contract of sale for the purchase of Lot 2.

14 In or about February 2011, AWDC and Glenwood Estate entered into an agreement to give effect to a boundary realignment between Lots 1 and 2, to allow the boundary of Lot 2 to be altered 'to provide access to the site from Baranduda Boulevard, construction of the display home precinct and development of further stages from initial Stage 1 rollout'. After the realignment, Lot 1 (as varied) became known as Lot 11 and Lot 2 (as varied) became known as Lot 12.

15 On 9 May 2011, the planning permit for Stage 1 of the Development was approved. It comprised 47 residential lots, situated on part of Lot 12. Stages 2 to 6 were to comprise over 350 lots, situated on the balance of Lot 12. The balance of the Development was to be situated on Lot 11 and was in excess of 600 lots (over approximately 18 further stages), a neighbourhood shopping centre, townhouses and a retirement village.

16 At a date prior to November 2011, the contract of sale for Lot 2 (Lot 12) was rescinded by AWDC; and, in or about December 2011, the contract of sale for Lot 1 (Lot 11) was rescinded by AWDC.[3]

17 In or about November 2011, the JV Agreement was executed.

18 In or about December 2011, AWDC and Glenwood Estate entered into fresh contracts of sale:

(a) for Lot 12, for a purchase price of $3,966,779.90 plus GST ('the Lot 12 Contract'); and

(b) for Lot 11, for a purchase price of $5,370,079.10 plus GST ('the Lot 11 Contract') with a deposit of $9,291.30 and the balance due at settlement on 1 June 2012.

(a) Australasia Development advanced the Loan Amount to Glenwood Estate;

(b) Glenwood Estate completed the Lot 12 Contract, and became the registered proprietor of that land subject to a first ranking registered mortgage to Australia and New Zealand Banking Group Ltd ('the ANZ Bank'); and

(c) Glenwood Estate commenced selling blocks of land from Stage 1.

20 Sales of the blocks of land in Stage 1 were slower than projected, which affected Glenwood Estate's ability to settle Lot 11. By the Project Update dated 30 May 2012, it was reported as follows:

Settlement of Lot 11

We have requested an extension to settlement of Lot 11 for 90 days to enable the settlement of contracts within Stage 1 to be completed prior to the settlement of Lot 11. The Vendor has not formally agreed to this extension at this time however we are confident that an extension can be negotiated.

21 AWDC did not extend the settlement date for the sale of Lot 11 and rescinded the Lot 11 Contract on 19 June 2012. However, by letter dated 28 June 2012, the solicitor for AWDC confirmed an agreement with Glenwood Estate with respect to Lot 11, the terms of which were as follows:

(a) AWDC would not market or sell Lot 11 until after 16 October 2012.

(b) If Glenwood Estate could satisfy AWDC that it was ready, willing and able to complete the purchase of Lot 11 by no later than 16 October 2012, AWDC would sell Lot 11 to Glenwood Estate:

(i) at the same purchase price as under the rescinded contract; and

(ii) with penalty interest from 2 June 2012 less 10/11ths of the deposit forfeited under the rescinded contract.

22 By 'Loan Summary' dated 24 October 2012, Mr Batzios, on behalf of Glenwood Estate, proposed that:

(a) the ANZ Bank would advance $5,824,000 to complete the purchase of Lot 11; and

(b) Glenwood Estate would clear its present debt of $4.92 million from the sales of Stage 1 (which were expected to occur by the end of 2012).

Mr Matthews' evidence about the response of the ANZ Bank was as follows:

To the best of my recollection, the proposal Mr Batzios prepared was put to ANZ. However, the feedback we received from the Bank was it was unlikely to approve the proposal, especially in light of the slow sales and delays with the construction of stage 1.

23 At around this time, Mr Matthews, Mr Garita and Mr Batzios had discussions about whether Glenwood Estate should proceed with the acquisition of Lot 11 at all. In particular, the Development proposal had been prepared on the basis that Glenwood Estate would sell between 100 to 150 lots per year. After almost a year, only 50 sales had been achieved in Stage 1. They discussed the fact that, if the acquisition of Lot 11 proceeded, there would be more than 700 additional lots to sell, which at the current rates of sales, could take 20 years to complete.

24 In late November and early December 2012, Mr Matthews had discussions with Ms Yeong about not proceeding with the acquisition of Lot 11 and the consequences of that decision.

25 On or about 5 December 2012, there was a telephone conversation between Ms Yeong and Mr Beh ('the December Conversation'). The two versions of the conversation are, in summary, as follows:

(a) Mr Beh said the substance of the conversation was that:

(i) Mr Beh agreed that it was in the best interests not to proceed with the acquisition of Lot 11;

(ii) Mr Beh said: 'Well, we have a profit guarantee clause still. At the end of the day, as long as our portion of profit doesn't drop below six million I'm actually quite okay'; and

(b) Ms Yeong said the substance of the conversation was that:

(i) Ms Yeong told Mr Beh that sales of Stage 1 were still very slow;

(ii) Mr Beh said: 'We might actually have to review ... the profit guarantee'; and

(iii) Mr Beh highlighted that the securing of the Loan Amount was the priority.

26 Mr Matthews gave evidence that, after the December Conversation, Ms Yeong said to him words to the effect that: 'Mr Beh had told her that Glenwood should not proceed with Lot 11 and as a consequence, we would adjust the terms agreed in the JV Agreement'.

27 On 6 December 2012, there was a meeting of Glenwood Estate's directors attended by Mr Garita, Mr Batzios, Ms Yeong and Mr Matthews. At the meeting, it was decided not to proceed with the acquisition of Lot 11. Notes of the meeting prepared by Mr Batszios record: 'Lot 12: feasibility only to be done ... impact considering not proceeding with Lot 11?'

28 By email of 27 December 2012 to Mr Garita and Mr Matthews, Ms Yeong, on behalf of Australasia Development, stated:

As our group is preparing for audit and announcement, kindly update in brief on the following:

• Stage 1 civil work status, percentage completion and expected completion date

• Stage 1 latest presales status

• Stage 1 latest subdivision status

• Expected date for Stage 1 titles

• Amended forecast figures for the project due to non-acquisition of Lot 11

• Any other updates.[4]

29 On 2 January 2013, there was a meeting between Mr Beh, Ms Yeong and Mr Matthews in Malaysia ('the January Conversation') in the VIP Room at the Cinta Sayang Resort, which is owned by Eupe.

30 Prior to the meeting, Mr Matthews had a telephone discussion with Mr Garita, who made the following notes with respect to the discussion:

Glenwood Numbers and Details

Brad Meeting with Beh shortly

Lisa discussed with Beh

Suggested return of capital in June 2013

Renegotiate Deal for Balance of site

Other Investors wear the Loss In relation to forgoing the Lot 11 Deposit

Rework details

Note We are in breach of the deal

Must get out of $6M Gtee for AD

Must be reasonable I response

Suggested

$1M return by July 31

$1M Return by Oct 31

Remove Gtee and Balance of Notes

Remove 2nd Mortgage on repayment of $2M.

31 The evidence of the January Conversation given by the three participants is, in summary, as follows:

(a) Mr Beh gave evidence that there was no discussion about the $6 million profit guarantee or any other variations to the JV Agreement. He did not recall any discussion about the other unitholders taking the burden of the forfeited deposit.

(i) There was a discussion about the non-acquisition of Lot 11 because 'we all knew that ... we need the cash flow from Stage 1 ... as part of the ... money for acquisition for ... Lot 11'.

(i) The conversation touched on 'the repayment of loan of [Australasia Development] as is the priority of ... Mr Beh'.

(ii) Mr Matthews said that the 'guaranteed profit' may need to be reviewed and Mr Beh agreed.

(iii) 'I think we also ... talk [sic] about ... some sort of a deed of variation ... to the JV Agreement [because] now the guaranteed profit ... would be a different figure for [Australasia Development]'.

(iv) Mr Beh asked Mr Matthews to come back with a feasibility because otherwise 'we couldn't ... review the figure, and the future ... of the overall development'.

(i) Mr Beh said that he thought that the figures were too optimistic and that he understood that it was better that we didn't go ahead with Lot 11.

(ii) Mr Matthews said that 'if we don't do lot 11 which I don't think we should, and the opportunity wasn't there to do it ...we would look at repay [sic] the AD loan quicker'.

(iii) Mr Matthews said that the deposit paid for Lot 11 wouldn't affect the 'AD portion of the profit' and that the unitholders other than Australasia Development would wear the cost of the loss of the deposit that was paid to AWDC.

(iv) Mr Matthews said that they would do an updated feasibility and then 'let's see where we sit on that'.

(v) Mr Beh said that the $6 million guarantee was 'not to be expected' because it was no longer the same development that we were building.

(vi) Mr Beh said that they were going to look at the status of the profit of $6 million after an updated feasibility was to be given and that 'there was no expectation of $6 million being the same figure'.

32 By email of 3 January 2013 at 1:48 pm to Mr Batzios and Mr Garita, with the subject line 'meeting with Beh and Lisa', Mr Matthews stated:

got agreement in principal [sic] subject to provision of an undated feaso [sic] on Lot 12 only to the following

1. AD release us (by variation to agreement) from the guaranteed $6m minimum profit share

b) we repay AD $1m by august 2013 and $1m by oct 2013

1. the forfeit AWC deposit comes from our 75% share of the profit and doesn't effect [sic] AD profit share (this isn't as bad as it sounds when you do the actual numbers)

33 Mr Matthews' evidence was that this email substantially reflected the terms of what was agreed during the January Conversation. However, he said that, with respect to the proposed repayments of $1 million by August 2013 and $1 million by October 2013, the conversation was only that the repayments would be accelerated and '[w]e didn't speak of a specific number. This [email] was me putting pressure on my partners to say this is what we've got to do to get this deal done'.

34 By email of 3 January 2013 at 3:30 pm to Mr Matthews and Mr Batzios, Mr Garita replied to the email of 1:48 pm, relevantly stating:

Good News on the variation agreement

In relation to the other comments I will finalise the proposed feasibility for Lot 12 over the next few days and issue to you for comment

We can also draw up a draft variation document in due course

35 By email of 3 January 2013 at 4:28 pm to Mr Garita and Mr Batzios, Mr Matthews replied, relevantly stating:

Yep he (beh) is very reasonable and a big picture type ... still wants to diversify out of malaysia and sees us as a partner ... have no reason to disbelieve him

Feaso [sic] yep leave with you

36 By April 2013, Mr Beh was provided with a document titled 'Glenwood Land Sales Feasibility' and dated 26 January 2013, which showed a projected gross margin from the development of Lot 12 only at $14,083,634.

37 There was no further discussion with respect to the guaranteed profit, or the variation of the JV Agreement, until 7 March 2019 when Mr Beh told Ms Yeong that Australasia Development would pursue litigation against Glenwood Estate with respect to the guaranteed profit.

38 By letter of demand dated 12 June 2019, the solicitors for Australasia Development demanded repayment of the balance of the Loan Amount (then, $1.05 million) plus interest, together with the guaranteed profit in the sum of $6 million.

39 There is no dispute that the Loan Amount was repaid in 2020. Further, the claim under the guarantee against Mr Batzios was settled for $20,000, which amount was acknowledged as received in reduction of the claim in this proceeding.

40 Australasia Development claims $5,980,000, being the balance of the guaranteed profit under the JV Agreement (after the deduction of $20,000 paid by Mr Batzios).

41 The defendants contend that they are not liable to pay the guaranteed profit under the JV Agreement for the following reasons:

(a) On a proper construction of the JV Agreement, the obligation to pay the guaranteed profit under clause 4.3 was subject to there being no fundamental change to the scope of the Development ('the Construction Point').[5]

(b) The JV Agreement was expressly varied by the December Conversation and/or the January Conversation, by which the parties agreed to release Glenwood Estate from its liability under clause 4.3 ('the Release Agreement').

(c) Australasia Development was estopped from relying upon clause 4.3 by reason of its representations in the December Conversation and/or the January Conversation that it would release Glenwood Estate from its liability under clause 4.3 ('Estoppel').

42 The defendants submitted that, on a proper construction of the JV Agreement, the obligation to pay the guaranteed profit under clause 4.3 was subject to there being no fundamental change to the scope of the Development. The agreement by all unitholders to the definition of Development being amended to exclude the acquisition and development of Lot 11 was such a fundamental variation that it discharged the obligation in clause 4.3. In support of this construction, counsel submitted as follows:

(1) the scope of the Development to be undertaken by Glenwood had changed and accordingly, the definition of 'Development' had been varied;

(2) the property that was the subject of the 'Development' had changed and accordingly, the definition of 'Property' had been varied;

(3) the Project Concept Summary that comprised Appendix 2 and the Profit Forecast that comprised Appendix 4 no longer formed part of the JV Agreement because they no longer reflected the 'Development' to be undertaken;

(4) as a consequence of paragraph (3), clause 4.2 no longer formed part of the agreement; and

(5) the parties were discharged from their obligations under the profit guarantee provided for in clause 4.3 of the JV Agreement because properly construed, clause 4.3 was in fact a warranty given in in respect of the 'Development', which the parties had agreed would no longer proceed.

43 Australasia Development submitted that, as a matter of construction, the obligation in clause 4.3 to pay the guaranteed profit was not subject to there being no fundamental amendment to the Development, for the following reasons:

(a) Properly understood, by the January Conversation, Australasia Development agreed to waive an obligation of the defendants to acquire and develop Lot 11, and there was no variation to the JV Agreement.

(b) If there was a variation to the JV Agreement, it was an agreement to amend the definition of Development and nothing more.

(c) The variation to release the defendants from their obligations to pay the guaranteed profit, without any enforceable obligation to pay a substitute guaranteed sum, would not be commercially sensible.

44 To determine the meaning of the terms of a commercial contract, the Court will ask the question: 'What would a reasonable businessperson have understood those terms to mean?'.[6] For the purpose of answering that question, 'the reasonable businessperson [is] placed in the position of the parties',[7] and the Court applies the following principles:

(a) The terms are construed objectively and the subjective intentions of the parties are irrelevant.[8]

(b) The objective approach requires reference to not only the text and the ordinary meaning, but also:

(i) the context, being the entire text of the contract including matters referred to in the text of the contract; and

These matters will ordinarily be identified by reference to the contract alone.[9]

(c) If, after completion of this process, the language used in the contract 'is ambiguous or susceptible of more than one meaning', then evidence of surrounding extraneous circumstances is admissible to assist in the interpretation of the contract.[10]

(d) Surrounding circumstances are 'events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating'.[11]

45 Assuming that the parties to the JV Agreement agreed to vary the Development by removing the proposed acquisition and development of Lot 11, it can be accepted that such variation represented a fundamental change to the JV Agreement. However, in my opinion, there is no basis to conclude that a reasonable businessperson in the position of the parties, at the time of entering into the JV Agreement, would have understood that the profit guarantee in clause 4.3 of the JV Agreement was conditional on there being no fundamental change to the Development, for the following reasons:

(a) A plain reading of the JV Agreement includes no reference to the obligation imposed by clause 4.3 being:

(i) subject to there being no fundamental amendment to the definition of Development; or

(ii) discharged on a fundamental change to the Development.

(b) A reasonable businessperson would infer that the commercial purpose of the profit guarantee in clause 4.3 was to provide certainty to Australasia Development in the very circumstance that there was a fundamental change to the Development, such that the profit was reduced from $40,435,698 as projected in the Profit Forecast, to an amount of less than $24 million. Such a substantial downgrade of profit from that projected would almost certainly be the result of a fundamental change to the Development. To interpret the JV Agreement as discharging the profit guarantee in such circumstances would defeat the very commercial purpose of clause 4.3.

46 Accordingly, I do not consider that, on a proper construction, clause 4.3 was conditioned on there being no fundamental change to the Development, nor was the profit guarantee subject to being discharged in the event of a fundamental change.

47 Neither do I consider that the agreement not to proceed with the acquisition of Lot 11 could be construed as a termination of the JV Agreement and the entry into a fresh contract to develop Lot 12 without reference to the terms of the JV Agreement. The defendants' own submission was that the variation agreement was a variation to the definition of 'Development' in the JV Agreement, and there was no evidence of an agreement to terminate the JV Agreement and form a fresh contract.

48 The defendants submitted that, by the December Conversation between Ms Yeong and Mr Beh and/or the January Conversation between Mr Beh, Ms Yeong and Mr Matthews, it was agreed that the JV Agreement was varied:

(b) to release the obligation to pay the guaranteed sum of $6 million.

49 The defendants contended that the variation agreement fell in the category known as the fourth limb of Masters v Cameron, being that the parties intended by the agreement to immediately release the obligation to a profit guarantee fee of $6 million while contemplating a further contract in substitution of the variation agreement containing, by consent, additional terms including:

(a) the accelerated repayment of the Loan Amount; and

(b) a substitute guaranteed profit sum based on the revised feasibility.

50 In support of this contention, the defendants submitted as follows:

(a) The agreement by Mr Beh to the proposal not to proceed with the acquisition and development of Lot 11 indisputably arises from the December Conversation and the January Conversation.

(b) The Lot 11 variation was a fundamental change to the Development.

(c) In consideration of Australasia Development agreeing to vary the JV Agreement, the non-AD parties agreed they would wear the cost of the forfeited deposit for Lot 11.

(d) On the evidence of the December Conversation and the January Conversation, the Court should accept that it was expressly agreed that the profit guarantee was to be released, although the parties also contemplated that the revised profit guarantee might be subsequently agreed after the feasibility analysis had been circulated.

(e) Once the updated feasibility had been prepared, it was for Australasia Development to propose the new profit guarantee and it made no commercial sense for the existing clause 4.3 to be made part of the agreement because, as Mr Beh said, for the JV Agreement to 'make sense', the parties needed to agree on a new figure.

51 The defendants also relied upon the matters referred to in (1)-(5) of paragraph 42 above in support of this contention.

52 Australasia Development submitted that, even if the Court accepts the evidence of the defendants about the December Conversation and the January Conversation, such evidence does not satisfy the requirements for the formation of a contract to vary the JV Agreement, for the following reasons:

(a) Clause 23 of the JV Agreement requires that any variation to that agreement be in writing. It is accepted that such clause does not preclude an oral variation, but the fact that nothing was put in writing points to the parties not intending to amend the terms of the JV Agreement.

(b) The evidence of the December Conversation and the January Conversation does not even give rise to an 'agreement to agree' to release the defendants from paying the guaranteed profit. The agreement was only to 'continue discussions off the back of that'.

Principles relating to the variation of a contract

53 The principles relating to the variation of a contract can be stated as follows.

(a) An existing contract cannot be varied unilaterally; and can only be varied by the parties to the existing contract entering into a subsequent contract.[12]

(b) Parties may enter into a binding subsequent contract to vary an existing contract by an oral or implied agreement, despite the fact that the existing contract provides that it may only be amended in writing.[13]

(c) In ascertaining whether the parties have entered into the subsequent contract and its terms, the Court will employ the ordinary rules governing contract formation,[14] including the following:

(i) The Court ascertains objectively whether there was an intention to create contractual relations by asking what each party, by words and conduct, would have led a reasonable person in the position of the other party to believe.[15]

(ii) The circumstances that are properly taken into account 'are so varied as to preclude the formation of any prescriptive rules'.[16]

(iii) Communications between the parties should be interpreted by reference to the surrounding circumstances, including the existing relationship between the parties.[17] With respect to the variation of contracts by persons in an ongoing business relationship, in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd, Finn J observed:

The need frequently arises in relational contracts of significant duration to adjust terms to accommodate changed or unforeseen circumstances. For that reason it is common for such contracts to make express provision for variation. Nonetheless, and notwithstanding their contract, parties in an ongoing business relationship equally commonly 'regulate their relationships in accordance with what they consider is fair and reasonable or commercially necessary at particular points in time rather than by reference to a priori rights and duties arising under a contract'.[18]

(iv) Post-contractual conduct is inadmissible for the purpose of construing the terms of the contract;[19] but the parties' subsequent communications may be relevant for the purpose of determining whether the parties intended to enter into a binding contract.[20]

(v) The principles derived from Masters v Cameron are also applicable to contracts of variation. In that case, the plurality of the High Court said that:

Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes.[21]

The High Court identified the three categories as follows:[22]

(1) The parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound, but propose to have the terms restated in a form which will be fuller or more precise but not different in effect.

(2) The parties have completely agreed upon all the terms of their bargain and intend no departure from the terms, but have made performance of one or more of the terms conditional upon the execution of a formal document.

(3) The intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. In these circumstances, no binding agreement arises.

54 The defendants in fact relied upon what has become known as the 'fourth category'. By way of variation to the first category, McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd suggested the fourth category arises when the parties intend to be bound immediately by the terms on which they have agreed while expecting to make a further contract in substitution for the first contract containing, by consent, additional terms.[23]

55 This fourth category has been accepted in many subsequent cases,[24] and was confirmed on appeal.[25] However, the Court of Appeal did not appear to adopt the nomenclature of an additional category. Rather, McHugh JA said as follows:

[T]he 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 the surrounding circumstances.[26] 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.[27]

56 The concept of a fourth category has also been the subject of some criticism,[28] and 'the ... classifications are no longer, if ever they were, applied as strict categories into which such cases must fall'.[29] I adopt the approach of Giles JA in Tasman Capital Pty Ltd v Sinclair, who observed that the '[c]ategorisation does not greatly contribute to the decision in the particular case',[30] because the decisive issue is whether or not the parties intended to be contractually bound.[31]

Alleged variation agreement arising from the January Conversation

57 As noted above, the defendants contended that, by the January Conversation, Australasia Development, Glenwood Estate and the non-AD parties entered into a binding contract to vary the JV Agreement by:

(a) amending the definition of Development by excluding the acquisition and development of Lot 11; and

(b) Australasia Development releasing Glenwood Estate and the non-AD parties from the profit guarantee in clause 4.3.

58 Australasia Development conceded that, at the very least, it acceded to the proposal not to proceed with the acquisition and development of Lot 11, although it submitted that this was simply a waiver of the obligation at the request of Mr Matthews, rather than a variation to the JV Agreement.

59 Critically in issue in this proceeding, Australasia Development denied that, by the January Conversation, the parties to the JV Agreement agreed to vary that agreement by releasing the obligation to pay the profit guarantee.

60 The determination of whether an oral agreement was reached some years ago and, if so, on what terms is often difficult.[32] As Spigelman CJ explained in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd:

[T]he subject matter and the concomitant terms of the [oral] contract must be inferred from a combination of surrounding circumstances including conversations, documents and conduct none of which provide a definitive form of words. The issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?[33]

61 I reject the evidence of Mr Beh that there was no discussion about the $6 million profit guarantee during the January Conversation. Although, given the effluxion of time, I accept that he may simply have forgotten the substance of the conversation, I consider it more likely that it was discussed for the following reasons:

(a) It is inherently likely that the non-AD parties would have been concerned to negotiate a variation to the profit guarantee given the decision not to proceed with the acquisition and development of Lot 11.

(b) Mr Garita's note of the telephone discussion he had with Mr Matthews prior to the 2 January 2013 meeting specifically notes:

(c) The email of 3 January 2013 from Mr Matthews to Mr Batzios and Mr Garita, the day following the meeting, refers to the 'agreement in principal [sic]' for the release of the profit guarantee.

62 I accept that it is likely that Mr Beh made a statement with respect to the profit guarantee. Mr Matthews and Ms Yeong both gave evidence about the conversation to similar effect that, after an updated feasibility was provided:

(a) Mr Beh was 'going to look at' the profit guarantee of $6 million (Mr Matthews' evidence); and

(b) Mr Beh agreed with Mr Matthews that the guaranteed profit may need to be reviewed (Ms Yeong's evidence).

63 I do not consider that such statements by Mr Beh would have led a reasonable person in the position of the other parties to believe that he was intending to enter into a legally binding contract to release the profit guarantee, for the following reasons:

(a) A statement that one is prepared to 'review' or 'look at' is, in terms, a reference to consider or negotiate in the future and is inconsistent with a current intention to be immediately bound to any position. In this case, the fact that Mr Beh's statement related to something that might occur in the future is supported by the fact that such a 'review' or 'look at' would occur after the provision of an updated feasibility.

(b) The proposition that a reasonable person in the position of Mr Matthews would believe that Mr Beh was finally and immediately binding himself to the release of the profit guarantee in the hope, but without any commitment from the non-AD parties, that he could achieve some lower profit guarantee after provision of the updated feasibility is commercially fanciful. At its height, a reasonable person in the position of Mr Matthews might believe that Mr Beh was saying that he would favourably consider negotiating a reduction in the amount of the profit guarantee after the updated feasibility, but such a negotiation did not occur.

(c) Mr Matthews' email of 3 January 2013 refers to an 'agreement in principal [sic] subject to provision of an updated feaso [sic]'. The fact that Mr Matthews recorded the agreement as being in principle is not determinative,[34] but in my opinion, the use of the expression does not support the proposition that the parties had reached a final and binding agreement with respect to the release of the profit guarantee.[35]

(d) A legally binding variation to the JV Agreement between Australasia Development on the one hand, and Glenwood Estate and the non-AD parties on the other, would have required Mr Matthews to be authorised to enter into such an agreement on behalf of Glenwood Estate and the non-AD parties. The absence of any evidence of a discussion about Mr Matthews being an authorised representative is indicative of there being no intention to reach a final and binding agreement at the 2 January 2013 meeting. In fact, Mr Matthews' evidence was that, at the 2 January 2013 meeting, he did not have authority to bind the non-AD parties. He gave evidence that he inserted the proposed repayment timetable for the Loan Amount as part of the in-principle agreement in the email of 3 January 2013 (although that timetable had not been discussed at the meeting) because he was 'putting pressure on [his] partners to say this is what we've got to do to get this deal done'.

(e) The subsequent conduct of the parties gives no support to a finding that the parties had intended to enter into a binding variation agreement. In particular, after the meeting on 2 January 2013, the parties did not:

(i) prepare a written variation to the JV Agreement;

(ii) negotiate or effect an early repayment of the Loan Amount; or

(iii) negotiate a new profit guarantee after provision of the feasibility update.

64 Accordingly, I find that Australasia Development, Glenwood Estate and the non-AD parties did not enter into a binding contract to release Glenwood Estate and the non-AD parties from the profit guarantee in clause 4.3 of the JV Agreement by the January Conversation.

Alleged variation agreement arising from the December Conversation

65 The defendants also pressed an argument that Australasia Development, Glenwood Estate and the non-AD parties entered into a binding contract to release Glenwood Estate and the non-AD parties from the profit guarantee in clause 4.3 of the JV Agreement by the December Conversation.

66 The December Conversation between Mr Beh and Ms Yeong, and the subsequent conversation between Ms Yeong and Mr Matthews, occurred nearly nine years ago. There is no contemporaneous record of the conversations. Having observed the witnesses, I am not affirmatively persuaded that any of them have a recollection of the substance of the conversations. Unsurprisingly given the lapse of time, I consider all three witnesses could only reconstruct the conversations around the fact that, at about this time, the decision was made not to proceed with Lot 11, and this was communicated to Mr Beh as a unitholder.

67 Taking the evidence at its height for the defendants, Mr Beh's alleged statement that 'we might actually have to review ... the profit guarantee', does not objectively demonstrate an intention for Australasia Development to be contractually bound to a release of the profit guarantee.

68 Further, I do not accept that Ms Yeong communicated to Mr Matthews anything other than what she was told by Mr Beh. Even if I was to accept Mr Matthews' evidence that Ms Yeong said Mr Beh told her that, as a consequence of not proceeding with Lot 11, 'we would adjust the terms agreed in the JV Agreement', I do not consider that such a statement could demonstrate an intention to be contractually bound to release the profit guarantee.

69 The weakness of the defendants' contention that a contractually enforceable variation arose from the December Conversation is further underlined by the following facts:

(a) In Mr Garita's note of the telephone conversation with Mr Matthews prior to the 2 January 2013 meeting, he notes: 'Must get out of $6M Gtee for AD'. This is not consistent with there being a completed agreement for the release of the guarantee arising out of the December Conversation.

(b) At no time after the December Conversation, and in particular at the 2 January 2013 meeting, was it stated by any party that there was an existing agreement to release the profit guarantee.

(c) If Mr Beh's statement could be construed as an offer to release the profit guarantee, capable of being legally binding on acceptance, there is no evidence that acceptance by the non-AD parties was ever communicated.

70 Accordingly, I find that Australasia Development, Glenwood Estate and the non-AD parties did not enter into a binding contract to release Glenwood Estate and the non-AD parties from the profit guarantee in clause 4.3 of the JV Agreement by the December Conversation.

71 The defendants submitted that Australasia Development was estopped from denying that it had released Glenwood Estate and the other parties to the JV Agreement from their obligations under clause 4.3 of the JV Agreement for the following reasons:

(a) By the December Conversation and the January Conversation, Australasia Development had represented that it would release Glenwood Estate and the other parties to the JV Agreement from their obligations under clause 4.3 of the JV Agreement.

(b) The defendants had been induced to act to their detriment in deciding not to proceed with the purchase of Lot 11 in the sense that the representation was a significant factor the defendants took into account when deciding whether to act as they did.

72 The defendants contended that the Court should find that the defendants had acted to their detriment, for the following reasons:

(a) Mr Matthews was not desperate to get out of the obligation to develop Lot 11, but rather had regard to the fact that the development of Lot 11 might take 12 to 15 years rather than four to five years as projected.

(b) Mr Matthews gave evidence that Glenwood Estate could have purchased Lot 11 up to about 2016, when it was sold to a third party.

(c) Mr Matthews' evidence was that Glenwood Estate had the capacity to purchase Lot 11 through the equity in the existing lots in Lot 12.

(d) The Court should infer that, if Mr Matthews had understood Australasia Development was going to insist on receiving the guaranteed profit, he would have taken steps to cause Glenwood Estate to purchase Lot 11 because only then could the Development generate significantly greater profit, enabling it to meet the $6 million payment obligation.

73 Australasia Development submitted that the defendants had failed to establish a promissory estoppel, for the following reasons:

(a) There was no clear representation. Properly considered in context, Australasia Development merely acceded to the defendants' request for permission to abandon the proposal to acquire and develop Lot 11.

(b) The statements made by Mr Beh did not induce the defendants to act to their detriment by not purchasing and developing Lot 11 because, on the evidence, at no time prior to Lot 11 being sold to a third party in 2016, was it considered by the defendants to be commercially advantageous to develop Lot 11.

(c) The defendants did not act on the basis of the alleged variation agreement. In particular, there was no acceleration of the repayment of the Loan Amount or the negotiation of a substitute guaranteed profit after the updated feasibility was prepared. Neither was there evidence that the defendants assumed liability for the forfeited deposit.

(d) The decision to abandon Lot 11 was made before the relevant conversations.

(e) The evidence of Mr Matthews established that the change of position by Glenwood Estate in not acquiring and developing Lot 11 was in fact advantageous.

(f) As guarantor, Mr Matthews' claim for estoppel was particularly weak because there was no evidence as to what he would have done to procure Glenwood Estate to purchase Lot 11.

74 The various categories of estoppel all serve the 'fundamental purpose, namely "protection against the detriment which would flow from a party's change of position if the assumption (or expectation) that led to it were deserted"'.[36]

75 In Giumelli v Giumelli, the plurality stated that the 'well recognised variety' of equitable estoppel was founded in an 'assumption ... which had been induced by representations upon which there had been detrimental reliance by the plaintiff'.[37] Further, because the 'fundamental purpose' of equitable estoppel is to 'protect the plaintiff from the detriment which would flow from the defendant's change of position if the defendant were to be permitted to resile from his or her promise, the relief granted may require ... the performance of the promise and the performance of the expectation generated by the promise.'[38]

76 In Grundt v Great Boulder Pty Gold Mines Ltd, Dixon J explained the principle upon which estoppel in pais is founded as follows:

[T]he law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. ... [providing] [t]hat other ... [has] so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption.[39]

77 Dixon J acknowledged that this was a very general statement; but said that 'it is the basis of the rules governing estoppel' and that '[t]hose rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another'.[40]

78 Grundt's case concerned an estoppel at common law, but Dixon J's analysis has been held by the High Court to be applicable to promissory estoppel,[41] and equitable estoppel.[42] In Walsh v Walsh, Meagher JA also held that this analysis extended to equitable claims for promissory and proprietary estoppels stating:

The action or abstaining from action in reliance upon the assumption or expectation encouraged is what invites the intervention of equity ... and the detriment that makes the estoppel enforceable is that which 'would flow from the change of position if the assumption were deserted that led to it'.

Although that statement [of Dixon J in Grundt's case at 674] was made in relation to common law estoppel, it has been held to apply equally to promissory and proprietary estoppels.[43]

79 The elements which plaintiffs must prove to found a claim for estoppel in equity have been set out in various ways.[44] After considering these authorities, in my opinion, whether the necessary elements of estoppel have been established in this case can be determined by answering the following questions:

(a) Question 1: Did the defendants assume or expect that a state of affairs or a particular legal relationship existed, or would exist?

(b) Question 2: Did Australasia Development play a part in the adoption of the assumption or expectation?

(c) Question 3: Have the defendants changed their position to their detriment on the basis of the assumption or expectation?

(d) Question 4: Is Australasia Development's departure from the assumption or expectation unconscientious in all the circumstances, including:

(i) the part played by Australasia Development in the adoption of the assumption or expectation;

(iv) the proportionality of such cure to the terms and character of the part played by Australasia Development in the adoption of the assumption or expectation; and

(v) the conformity with good conscience of keeping a party to the relevant assumption or expectation?[45]

80 With respect to playing a part in the adoption of the assumption or expectation, where a party relies on a representation, promise or assurance to found an estoppel, it is necessary to establish that:

(a) the representation, promise or assurance was clear; and

(b) the language used was precise and unambiguous.[46]

81 As was explained by the plurality in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd:

This does not mean that the words used may not be open to different constructions, but rather that they must be able to be understood in a particular sense by the person to whom the words are addressed. The sense in which they may be understood provides the basis for the assumption or expectation upon which the person to whom they are addressed acts. The words must be capable of misleading a reasonable person in the way that the person relying on the estoppel claims he or she has been misled.[47]

82 With respect to the change of position, it is not necessary that the conduct of the party to be estopped was the sole inducement operating on the mind of the claimant.[48] Rather, the question is whether the conduct of the party to be estopped:

so that it would be unconscionable for the representor thereafter to enforce their strict legal rights.[49]

83 With respect to detriment, the following general propositions apply:

(a) The detriment, which is sufficient to found a claim in estoppel, has been variously described as real,[50] significant,[51] material and substantial.[52] It does not need to be quantifiable in the same way as an award of damages.[53] As was explained by the plurality in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd:

Detriment has not been considered to be a narrow or technical concept in connection with estoppel. So long as it is substantial, it need not consist of expenditure of money or other quantifiable financial detriment, as Robert Walker LJ observed in Gillett v Holt. His Lordship went on to say that the requirement of detriment must be approached as 'part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances'.[54]

(a) The detriment is that which flows from the change of position in reliance on the assumption or expectation. The relevant detriment is not that which flows from the non-fulfilment of the promise or assurance,[55] although that may be the appropriate relief if the estoppel is established.[56]

(b) The representation (in the case of equitable estoppel) or assumption (in the case of conventional estoppel) must be a cause of the plaintiff acting to its detriment and 'it is necessary for a person claiming the benefit of a conventional estoppel to demonstrate that he or she would have acted differently but for the agreed assumption'.[57] As was explained by Gageler J in Sidhu, '[t]here can be no real detriment if the party asserting the estoppel would have been in the same position in any event'.[58] As he explained:

To establish that the belief to which she was induced by the appellant's representations was a contributing cause to the course of action or inaction which she took, the respondent needed to establish more than that she had the belief and took the belief into account when she acted or refrained from acting. She needed to establish that having the belief and taking the belief into account made a difference to her taking the course of action or inaction: that she would not have so acted or refrained from acting if she did not have the belief.[59]

On the basis of this statement and statements by the plurality in Sidhu,[60] the New South Wales Court of Appeal in Miller Heiman Pty Ltd v Sales Principles Pty Ltd concluded that it was necessary for a plaintiff to establish that, but for the assumption or expectation, it would not have acted as it did.[61]

(a) I am mindful of the debate about whether it is incumbent on the claimant to prove that, but for the conduct of the party to be estopped, he or she would have acted differently.[62] In E Co v Q,[63] Ward CJ in Eq, after a detailed consideration of the relevant authorities, found there was no inconsistency between a 'contributing cause' test and a 'but for' test, and concluded:

On this view, it is necessary for each of the plaintiffs to establish, on the balance of probabilities, that the relevant assumption was a 'contributing cause' to this or its course of action or inaction in the sense that he or it would have acted differently but for that (actively or passively encouraged) assumption.[64]

With respect, I agree with and would adopt her Honour's reasoning and conclusion.

(b) Detriment is not limited to the expenditure of money or other financial costs.[65] The detriment may well result from personal, non-financial consequences.

(c) The time for judging the issue of detriment is the moment when the person who is giving the assurance seeks to go back on it.[66]

84 With respect to the appropriate relief, although the relevant detriment is measured by reference to the established change of position, 'the relief granted may require the taking of active steps by the defendant including the performance of the promise and the performance of the expectation generated by the promise'.[67] However, this is not always the case. As was stated by the plurality in Sidhu:

The requirements of good conscience may mean that in some cases the value of the promise may not be the just measure of relief. In The Commonwealth v Verwayen, Deane J noted that:

There could be circumstances in which the potential damage to an allegedly estopped party was disproportionately greater than any detriment which would be sustained by the other party to an extent that good conscience could not reasonably be seen as precluding a departure from the assumed state of affairs if adequate compensation were made or offered by the allegedly estopped party for any detriment sustained by the other party.

If the respondent had been induced to make a relatively small, readily quantifiable monetary outlay on the faith of the appellant's assurances, then it might not be unconscionable for the appellant to resile from his promises to the respondent on condition that he reimburse her for her outlay.[68]

85 Although the plurality in Sidhu noted there may be cases where it would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption, their Honours identified the proper approach as follows:

While it is true to say that 'the court, as a court of conscience, goes no further than is necessary to prevent unconscionable conduct', where the unconscionable conduct consists of resiling from a promise or assurance which has induced conduct to the other party's detriment, the relief which is necessary in this sense is usually that which reflects the value of the promise.[69]

86 With respect to the elements referred to in paragraph 79 above:

Did the defendants assume or expect that the state of affairs or a particular legal relationship existed, or would exist?

87 In my opinion, the defendants did not assume or expect that Australasia Development had bound itself to release the profit guarantee, for the following reasons:

(a) Neither Mr Matthews nor Ms Yeong gave such evidence.

(b) In my opinion, Mr Matthews' evidence about the email of 3 January 2013 demonstrates that, after the 2 January 2013 meeting, he well knew that Mr Beh had not committed to a variation of the JV Agreement. This is consistent with his evidence that the email contained a suggestion to the other non-AD parties for an accelerated repayment timetable, to which they had not yet agreed, because he was 'putting pressure on [his] partners to say this is what we've got to do to get this deal done'.

(c) For reasons stated in paragraph 63(a) above, I would not infer that Mr Matthews or Ms Yeong made the relevant assumption or expectation because, on their own evidence, Mr Beh spoke only:

(i) of a 'review' or 'to look at' the profit guarantee; and

(ii) of doing so after the provision of the updated feasibility.

Did Australasia Development play a part in the adoption of the assumption or expectation?

88 The defendants contended that Australasia Development played a part by the making of the representations at the 2 January 2013 meeting.

89 For reasons previously expressed, in my opinion, the statements made by Mr Beh on behalf of Australasia Development at the 2 January 2013 meeting could not be described as a clear, precise or unambiguous statement that Australasia Development would release the profit guarantee, particularly in circumstances (as contended for by the defendants) where there would be no present entitlement to a replacement guarantee.

90 It is difficult to imagine the circumstances where an agreement to 'review' or 'look at' a provision in a contract would be capable of conveying to a reasonable person that the representor was committing to an immediate abandonment or release of the obligation under the provision.

91 In my opinion, a stronger argument was rejected in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd, where the High Court considered an estoppel claim based on a statement made to tenants in the course of negotiations for their leases, to the effect that the tenants would be 'looked after at renewal time'. The Court rejected the claim and the plurality stated:

The statement that the tenants would be 'looked after at renewal time' is not capable of conveying to a reasonable person that the tenants would be offered a further lease.[70]

Have the defendants changed their position to their detriment on the basis of the assumption or expectation?

92 In my opinion, the defendants have failed to prove that they changed their position to their detriment on the basis of an assumption or expectation arising from the representations, for the following reasons:

(a) Neither Mr Matthews nor Ms Yeong gave evidence that they were influenced by the representations in deciding not to proceed with the purchase of Lot 11.

(b) The decision not to proceed with the purchase of Lot 11 was first made on 6 December 2012, prior to the 2 January 2013 meeting.

(c) The evidence of Mr Matthews was that, from 2013 to 2019, he never had a view that Glenwood Estate should buy Lot 11, although it was available to purchase up until 2016. The defendants submitted that 'Mr Matthews did not seek to revive the opportunity to purchase Lot 11 because he understood that AD was no longer seeking to recover the guaranteed profit of $6 million'. However, Mr Matthews did not give that evidence.

(d) I do not accept that Glenwood Estate has established that it had the financial capacity to purchase Lot 11. The evidence was that the ANZ Bank had not accepted a proposal to finance the acquisition. The only evidence relating to capacity was that, under cross-examination, Mr Matthews said that Glenwood Estate had equity in the site. His relevant evidence as to capacity was as follows:

We had bought land at around $25,000 per lot as farmland. We had it rezoned so there's a value increase. We then did the works. There's another big value increase. So the land that we had bought for $20,000, $25,000 per lot and we spent around 45 to $50,000 per lot we were then selling for between $120 to $130,000 per lot just on average. So for 60 or 70 lots, would have given us enough cash to own the balance of the land unencumbered and then to be able to sit down with different banks, not just the ANZ to say, right here we go, we've not added value. What was farmland is now house land.

I am not satisfied on the basis of this generalised evidence that Glenwood Estate could have raised the necessary funds to purchase Lot 11.

(e) The evidence was that, on or about 6 December 2012, the non-AD parties decided that it was not in Glenwood Estate's interests to proceed with the purchase of Lot 11. There was no evidence that the position changed at any time prior to when Lot 11 was sold to a third party in 2016. In the circumstances, the defendants failed to prove that, if Glenwood Estate had decided to proceed with the purchase of Lot 11 at any time prior to 2016, it would have been in a superior position. In other words, there was no evidence that by not reviving the purchase of Lot 11, Glenwood Estate or the non-AD parties acted to their detriment.

93 Accordingly, the defendants' claim based on estoppel must fail.

94 I propose to enter judgment for Australasia Development and order that the defendants pay the plaintiff the sum of $5,980,000.

95 I will hear the parties with respect to the question of interest and costs.

[1] On occasion, Australasia Development is referred to as 'AD' in quotations.

[2] In fact, the JV Agreement was not actually signed until November 2011.

[3] From this point forward, I refer to the relevant lots only as 'Lot 11' and 'Lot 12'.

[5] The defendants eschewed any argument based on an implied term.

[6] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] (French CJ, Hayne, Crennan and Kiefel JJ); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104, 116 [47] (French CJ, Nettle and Gordon JJ) ('Mount Bruce').

[7] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544, 551 [16] (Kiefel, Bell and Gordon JJ) ('Ecosse').

[9] Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95, [45]-[47] (Santamaria, Ferguson and McLeish JJA); Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 116 [46]-[48] (French CJ, Nettle and Gordon JJ), 132 [109] (Kiefel and Keane JJ).

[10] Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352 (Mason J). Known as the 'true rule', the proposition that ambiguity is a precondition to consideration of surrounding circumstances is controversial. My reasons for adopting the stated view are set out in Siemens Gamesa Renewable Energy Pty Ltd v Bulgana Wind Farm Pty Ltd [2020] VSC 126, [89]-[109].

[11] Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 117 [50] (French CJ, Nettle and Gordon JJ).

[12] Frontlink Pty Ltd v Feldman [2017] VSCA 319, [31] (Osborn, Whelan and Kyrou JJA), citing NC Seddon and MP Ellinghaus, Cheshire and Fifoot's Law of Contract (Lexis Nexis, 9th ed, 2008) [223]. See also Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93, 144 (Taylor J).

[13] Liebe v Molloy [1906] HCA 67; (1906) 4 CLR 347; Commonwealth of Australia v Crothall Hospital Services (Aust) Ltd [1981] FCA 117; (1981) 36 ALR 567, 576-7 (Ellicott J, with whom Blackburn and Deane JJ agreed); GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1, 61 [217] (Finn J); Re Rapsey, Australasian Mortgage Finance Ltd (Admins Apptd) [2021] FCA 189, [44] (Nicholas J).

[14] Frontlink Pty Ltd v Feldman [2017] VSCA 319, [31] (Osborn, Whelan and Kyrou JJA), citing NC Seddon and MP Ellinghaus, Cheshire and Fifoot's Law of Contract (Lexis Nexis, 9th ed, 2008) [223].

[15] Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147, [131] (Maxwell ACJ, Whelan and Kyrou JJA), citing Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313; (2015) 90 NSWLR 605, 616 [64]-[65] (Beazley P, with whom Bathurst CJ and Meagher JA agreed).

[16] Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, 105 [25] (Gaudron, McHugh, Hayne and Callinan JJ).

[17] GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1, 64 [228] (Finn J), quoting Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251, 9255 (McLelland J).

[18] [2003] FCA 50; (2003) 128 FCR 1, 64 [230], quoting Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11,110, 11,117 (McHugh JA).

[19] FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] VicRp 76; [1993] 2 VR 343, 350 (Brooking J).

[20] Queensland Phosphate Pty Ltd v Korda [2017] VSCA 269, [37] (Tate, Beach JJA and Sifris AJA).

[21] [1954] HCA 72; (1954) 91 CLR 353, 360 (Dixon CJ, McTiernan and Kitto JJ).

[23] (1986) 40 NSWLR 622, 628, quoting Sinclair, Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310, 317 (Knox CJ, Rich and Dixon JJ).

[24] See, eg, Tern Minerals NL v Kalbara Mining NL (1990) 3 WAR 486, 494-5 (Ipp J); Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101, 110 [24] (Ipp J, with whom Pidgeon J agreed); Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44, [86]-[88] (Handley AJA).

[25] GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634-5 (McHugh JA, with whom Kirby P and Glass JA agreed).

[26] Ibid 634, citing Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629, 638; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, 332-4, 337.

[27] GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634.

[28] See Elisabeth Peden, J W Carter and G J Tolhurst, 'When Three Just Isn't Enough: the Fourth Category of the "Subject to Contract" Cases' (2004) 20 Journal of Contract Law 156, 156, where the learned authors say: 'While the recent cases do, of course, acknowledge that intention is fundamental, we are troubled by the mechanistic idea - implicit in the cases - that everything depends on categories. Everything does indeed depend on categories, but not on the ability to create new categories to meet specific fact situations.' The learned authors conclude that the second category, the scope of which is often misunderstood or underestimated, together with the first, are capable of capturing scenarios thought otherwise to fall within the purported fourth category: at 165-6.

[29] Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313; (2015) 90 NSWLR 605, 617 [69] (Beazley P, with whom Bathurst CJ and Meagher JA agreed) (citations omitted).

[30] [2008] NSWCA 248, [26] (with whom McColl JA and Young CJ in Eq agreed), a decision reported in [2008] NSWCA 248; (2008) 75 NSWLR 1, but the relevant passage is not included in that report.

[31] The leading statement to this effect is given by McHugh JA in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634. Subsequent decisions have confirmed that an inquiry as to intention, to be objectively determined, is the decisive issue: see Cooma Clothing Pty Ltd v Create Invest Develop Pty Ltd [2013] VSCA 106; (2013) 46 VR 447, 460 [40] (Nettle and Neave JJA); Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147, [147] (Maxwell ACJ, Whelan and Kyrou JJA); Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313; (2015) 90 NSWLR 605, 617 [69] (Beazley P, with whom Bathurst CJ and Meagher JA agreed); Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2015) 329 ALR 1, 110 [702], 111 [712] (Edelman J).

[32] See, eg, Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd [2017] NSWSC 1171, [235] (Slattery J).

[33] [2008] NSWCA 193, [7].

[34] J D Heydon, Heydon on Contract (Thomson Reuters, 2019) 132 [4.280].

[35] Black v Australand Holdings Pty Ltd (Supreme Court of New South Wales, Einstein J, 27 August 1998) 61.

[36] The Commonwealth v Verwayen (1990) 170 CLR 394, 409 (Mason CJ), quoting Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 419 (Brennan J) ('Waltons Stores'), and quoted with approval in Sidhu v Van Dyke (2014) 251 CLR 505, 511 [1] (French CJ, Kiefel, Bell and Keane JJ) ('Sidhu').

[37] [1999] HCA 10; (1999) 196 CLR 101, 112 [6] (Gleeson CJ, McHugh, Gummow and Callinan JJ).

[38] Sidhu (2014) 251 CLR 505, 529 [82] (French CJ, Kiefel, Bell and Keane JJ), citing Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101, 112 [6], 123-5 [40]-[48].

[39] [1937] HCA 58; (1937) 59 CLR 641, 674 ('Grundt's case'). Estoppel in pais includes both common law conventional estoppel and those recognised in equity including estoppel by representation, proprietary estoppel and estoppel by acquiescence or encouragement: Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406, 430 (Mason and Deane JJ).

[40] Grundt's case [1937] HCA 58; (1937) 59 CLR 641, 674.

[41] Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406, 437 (Mason and Deane JJ).

[42] Sidhu (2014) 251 CLR 505, 528-9 [80]-[81] (French CJ, Kiefel, Bell and Keane JJ).

[43] [2012] NSWCA 57, [13] (citations omitted). See also Donis v Donis [2007] VSCA 89; (2007) 19 VR 577, 593-4 [54] (Nettle JA, with whom Maxwell AJC and Ashley JA agreed), quoting with approval the statement of Robert Walker LJ in Gillett v Holt [2001] Ch 210, 233. Many of these authorities were endorsed by Handley AJA (with whom Allsop P and Giles JA agreed) in Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483, 491 [43].

[44] See, eg, Waltons Stores (1988) 164 CLR 387, 404 (Mason CJ and Wilson J); The Commonwealth v Verwayen (1990) 170 CLR 394, 445 (Deane J); Grundt's case [1937] HCA 58; (1937) 59 CLR 641, 674-5 (Dixon J); Thompson v Palmer (1933) 49 CLR 547 (Dixon J). In particular, the formulation by Brennan J in Waltons Stores (1988) 164 CLR 387, 428-9 has been widely applied, including by Ginnane J in Moala v Free Wesleyan Church (Ruling No 4) [2017] VSC 635, [53] and Hargrave J in Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2007] VSC 40, [108]. An appeal from Hargrave J's decision was allowed, but the Court of Appeal also adopted Brennan J's elements in Waltons Stores: see [2008] VSCA 86; (2008) 66 ACSR 325, 342 [125] (Dodds-Streeton JA, with whom Ashley JA and Forrest AJA agreed). In Bullhead Pty Ltd v Brickmakers Place Pty Ltd [2017] VSC 206, [184] Sifris J considered Brennan J's elements to be a 'useful starting point, although not universally accepted, but sufficient for present purposes'. This aspect was not disturbed on appeal: [2018] VSCA 316; (2018) 58 VR 91 (Kyrou, McLeish and Hargrave JJA).

[45] Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483, 485 [3] (Allsop P).

[46] Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1, 16 [35] (French CJ, Kiefel and Bell JJ).

[48] Sidhu (2014) 251 CLR 505, 526 [71] (French CJ, Kiefel, Bell and Keane JJ).

[51] The Commonwealth v Verwayen (1990) 170 CLR 394, 442 (Deane J).[52] Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560, 600 [88] (Hayne, Crennan, Kiefel, Bell and Keane JJ), 622-3 [150] (Gageler J).

[54] Ibid 600 [88] (Hayne, Crennan, Kiefel, Bell and Keane JJ).

[55] Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483, 491 [41]-[42] (Handley AJA, with whom Allsop P and Giles JA agreed).

[56] See paragraphs [84] and [85] below.

[57] Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106; (2017) 94 NSWLR 500, 510 [49] (Macfarlan JA, with whom McColl JA and Sackville AJA agreed). See also Q (A Pseudonym) v E Co (A Pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469, 492 [88] (Meagher JA, with whom Leeming and Payne JJA agreed).

[58] Sidhu (2014) 251 CLR 505, 531 [92].

[60] Ibid 525 [67], 528 [78] (French CJ, Kiefel, Bell and Keane JJ).

[61] [2017] NSWCA 106; (2017) 94 NSWLR 500, 510 [45]-[49] (Macfarlan JA, with whom McColl JA and Sackville AJA agreed).

[62] See, eg, Mineralogy v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2015) 329 ALR 1, 121-4 [770]-[779] (Edelman J); K Handley, 'Recent Cases: Estoppel' (2017) 91 Australian Law Journal 812.

[63] [2018] NSWSC 442, [1039]-[1072].

[64] Ibid [1056] (citations omitted).

[65] Walsh v Walsh [2012] NSWCA 57, [14] (Meagher JA, with whom Macfarlan and Barrett JJA agreed).

[66] Gillett v Holt [2001] Ch 210, 232 (Robert Walker LJ, with whom Waller and Beldam LJJ agreed); DHJPM Pty Ltd v Blackthorn Resources Ltd [2011] NSWCA 348; (2011) 83 NSWLR 728, 746-7 [72]-[73] (Meagher JA, with whom Macfarlan JA agreed).

[67] Sidhu (2014) 251 CLR 505, 529 [82] (French CJ, Kiefel, Bell and Keane JJ), citing Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101, 112 [6], 123-5 [40]-[48] (Gleeson CJ, McHugh, Gummow and Callinan JJ).

[68] Sidhu (2014) 251 CLR 505, 529 [83]-[84] (citations omitted).

[69] Ibid 530 [85] (citations omitted).

[70] [2016] HCA 26; (2016) 260 CLR 1, 16 [35] (French CJ, Kiefel and Bell JJ).