Plaintiff v Defendants [2025] VSC 774 | Case summary

I will grant a mandatory injunction that ADCO Group do all things within its power to provide Council with a PCG executed by ADCO Constructions.
When pleading the mandatory injunction, Council pleaded an order for specific performance as an alternative. The parties did not make any separate submissions regarding specific performance. Having determined to make the mandatory injunction, it is unnecessary for me to separately consider whether to make an order for specific performance.

Plaintiff v Defendants [2025] VSC 774 | Case summary | Zoe

[18]

Thus, in order to determine whether a contract was reached between ADCO Constructions and Council, it will be necessary to objectively consider the communications between the parties, having regard to the factual context in which they took place.
ADCO Constructions adds to this, submitting that the magnitude and complexity of the subject matter of the alleged contract will bear upon the likelihood that the parties intended to reach legally binding terms in an informal manner.[72] A binding agreement is made when a reasonable person would believe that, based on their words and behaviour, the parties intended to contract.[73]
ADCO Constructions says that Council alleges the same material term of both alleged contracts - that ADCO Constructions agreed to provide an executed PCG either directly to Council[74] or to ADCO Group.[75] It says that Council relies on the same facts and circumstances for the formation of each of those contracts.
ADCO Constructions makes submissions specific to the principles regarding collateral contracts, whereas Council does not.
ADCO Constructions says that Council's submissions reveal that on either alleged contract, the alleged consideration for ADCO Constructions' purported agreement to provide the PCG is Council's entry into the Construction Contract. The contract asserted by Council must therefore be a collateral contract. There is no 'direct contract'. ADCO Constructions is not a party to the Construction Contract. It is presumed that Council asserts that the consideration given by it is the indirect benefit ADCO Constructions is assumed to derive from the Construction Contract to which its subsidiary is a party. This is a collateral contract.
ADCO Constructions also submits that Council avoids confronting this issue head on; no doubt because it recognises its case does not meet the special requirements applicable to collateral contracts. Those requirements and associated legal principles have been conveniently set out by Einfeld J in SVI Systems Pty Ltd v Best & Less Pty Ltd. Most relevantly, Einfeld J said:[76]

[27]

Although this original expression of apparent authority was confined to an agent's authority to enter into contracts, the underlying principles are relevant, and have been applied, to any conduct that an agent purports to perform on behalf of her or his principal.

The scope of apparent authority therefore fundamentally relies on the representation made by the principal to a third party. Crucially, the representation must be made by the principal or a person to whom the principal has conferred actual authority. Without more, a mere representation by a person purporting to act as an agent as to that person's own authority to act on behalf of a principal is insufficient to establish apparent authority. For apparent authority to exist, the representation itself may be made through words or conduct, expressly or impliedly, or by acquiescence; and it is sufficient that the agent is placed in a position by the principal to allow her or him to give the appearance of authority. However, the scope of apparent authority is at all times limited by the third party's knowledge of limitations imposed on the agent's authority. If the third party knows that the agent is acting in violation of her or his actual authority, apparent authority cannot be established.

For completeness, additional observations may be made in relation to attribution of conduct to a corporation: (1) generally, the principles of attribution are subject to a corporation's constitution, which may define or determine the authority that can be conferred on an agent; and (2) actual authority is conferred by the corporation's constitution or some antecedent act such as a resolution, or by those who have authority and are permitted to delegate this authority.

Actual and apparent authority are not mutually exclusive; it is often the case they will coincide, but they can exist independently and the scope of authority of each may differ. Further, as between 2 corporations within a corporate group, the question of any relationship of principal and agent must be approached applying the relevant principles as the corporations are separate legal entities despite the connection to the same group.

[33]

ADCO Constructions submits that its constitution is of fundamental relevance to the issue of actual authority. As at March 2021, the board of directors of ADCO Constructions comprised several directors. ADCO Constructions' constitution detailed how the company may execute documents and the powers of its directors. Article 60 relevantly stated that ADCO Constructions may execute a document without using a seal if it was signed by (i) two directors or (ii) a director and company secretary or (iii) one director and another person appointed by the directors of the company 'for that purpose'. No one director had the power to enter into a binding contract on behalf of the company. There is nothing unusual about this. In a company with several directors, a director acting individually has no usual authority to bind a company.[84]
ADCO Constructions says that as its constitution plainly establishes, as a director acting individually, Mr McBurnie did not have any actual authority to bind ADCO Constructions to any contract. This finding is not displaced by the fact that Mr McBurnie was corporate legal counsel for ADCO Constructions. The fact that a person is a lawyer does not in and of itself confer implied authority to make a contract on behalf of someone who happens to be a client.[85] Mr McBurnie himself gave unchallenged evidence that he was not authorised to enter into a contract on behalf of ADCO Constructions.
ADCO Constructions says that while Mr McLean was employed by ADCO Constructions and signed some letters that bore a reference to ADCO Constructions, it cannot be inferred from this that he had authority to enter into a contract on behalf of ADCO Constructions. Mr Ridley, an experienced lawyer, accepted under cross-examination that it would have been 'highly unusual' for an employee of ADCO Constructions to have authority to enter into a contract on its behalf guaranteeing the performance of ADCO Group.
ADCO Constructions says that the evidence clearly establishes that Mr McLean had authority to negotiate the Construction Contract. Even if Council can establish that Mr McLean's authority encompassed the negotiation of a contract by ADCO Constructions, the scope of Mr McLean's authority extended only to those negotiations. It is one thing for an employee to have authority to negotiate. It is quite another thing for an employee to have authority to bind the company to a contract (particularly a contract of the kind at issue in these proceedings). There is no evidentiary basis upon which the Court could find that his actual authority extended to entering into a contract on behalf of any ADCO entity, including ADCO Constructions.

[39]

ADCO Constructions says that as to Mr McBurnie's apparent authority, the mere fact of his role as a director of ADCO Constructions and lawyer for the group does not give rise to a representation that Mr McBurnie individually could enter into a contract on behalf of ADCO Constructions. Further, Council called no evidence that any person from Council relied on any representation made by ADCO Constructions that Mr McBurnie had the authority to enter into a contract on its behalf acting alone. In fact, contrary to Council's pleaded case, Mr Ridley (Council's only witness with any direct dealings with Mr McBurnie) accepted under cross-examination that he formed no view one way or the other as to Mr McBurnie's authority. ADCO Constructions says that the Court should find that Mr McBurnie had no actual or apparent authority to enter into a contract on behalf of ADCO Constructions.
ADCO Constructions says that as to Mr McLean's apparent authority, the mere fact of his role as State Pre-Construction Manager does not give rise to a representation that Mr McLean could enter into a contract on behalf of ADCO Constructions. Mr McLean's role was concerned with tender preparation and contract negotiation. While ADCO Constructions says Mr McLean was acting on behalf of ADCO Group in the negotiations, even if the Court were to find that he was acting on behalf of ADCO Constructions, it makes no difference. ADCO Constructions made no representation that Mr McLean could enter into a contract on its behalf. Further, Council called no evidence that it relied on any representation made by ADCO Constructions that Mr McLean had the authority to enter into a contract on its behalf. Mr Ridley (Council's only witness with any direct dealings with Mr McLean) gave evidence that he knew that Mr McLean was not a director of either ADCO Group or ADCO Constructions. He understood Mr McLean was employed by one of the 'ADCO entities' but that he did not know which one. He did not assume Mr McLean had authority to enter into any contract in relation to the provision of the PCG and he would not expect him to have authority to enter into a contract for the PCG.
ADCO Constructions contends that based on the evidence before the Court, there is no foundation for a finding that Mr McLean had actual or apparent authority to enter into any contract on behalf of ADCO Constructions - let alone a contract of the kind relied upon by Council. Reliance on the rule in Jones v Dunkel does not assist Council here - it cannot be used to fill a gap in the evidence.
Insofar as the allegation that ADCO Group had apparent or ostensible authority to enter into a contract with Council on ADCO Constructions' behalf, ADCO Constructions makes the following submissions.
ADCO Group is a subsidiary of ADCO Constructions. Even so, the question of any relationship of principal and agent as between these entities must be approached applying the same principles set out above. This is because the two corporations are separate legal entities despite the connection to the same group.[86]
Council does not contend that ADCO Group had actual authority to enter into a contract on behalf of ADCO Constructions. The only issue is one of apparent authority. As set out above, this requires that Council establish a representation made by ADCO Constructions that ADCO Group could enter into a contract on its behalf and that the representation was acted on by Council.[87]
Taking each of the matters identified by Council at paragraph 322 above, ADCO Constructions submits as follows:

[40]

(a) Tender Submission - the mere fact that ADCO Constructions was the parent company, together with the other content of the Tender Submission, does not give rise to any relevant representation. There is no evidence that Council relied on the Tender Submission in forming the view that ADCO Group could enter into a contract on behalf of ADCO Constructions. Mr Ridley's and Mr Freer's clear evidence was they understood that the Tender Submission was from ADCO Group. Further, it is to be observed that the Tender Submission deleted the requirement for a PCG. Given this, the Tender Submission could not give rise to the requisite representation.

(b) Alleged correspondence from ADCO Constructions - correspondence from Mr McLean variously referred to ADCO Group and ADCO Constructions, sometimes within the same letter. While it may be less than orderly to send letters in this way, it does not bear upon the issues in this proceeding. The letters were concerned with the tender clarifications relating to pricing and clearly concerned ADCO Group's Tender Submission. On any view, they do not give rise to the relevant representation. Further, there is no evidence that Council relied on these letters in forming the view that ADCO Group could enter into a contract on behalf of ADCO Constructions. Indeed, there is no evidence to support a finding that Council relied on the company names used in these letters. As to the correspondence concerning Mr McBurnie, the submissions set out at paragraph 324 applies here as well.

(c) ADCO Constructions' agreement to the Departures Table - while ADCO Constructions does not accept that it approved the Departures Table, even if it did that does not give rise to a representation made by ADCO Constructions to Council. Council had no knowledge of whether ADCO Constructions had or had not approved the Departures Table. Mr Ridley gave evidence that he had assumed, based on prior dealings, that ADCO Constructions would provide the PCG.

(d) 23 March 2021 site meeting - the site meeting concerned the conduct of the Project, which was being undertaken by ADCO Group. The relevant minutes concern the obligation under clause 24.1A of the draft construction contract. Properly understood, the statements made in that meeting were made by ADCO Group and not ADCO Constructions. There was no representation made by ADCO Constructions. Mr Ryan gave evidence that he was representing ADCO Group in the meeting. Further, there was no evidence that Council relied on the statements made in this meeting in forming the view that ADCO Group could enter into a contract on behalf of ADCO Constructions. Council called no evidence from any Council representative that attended the meeting, despite such persons being plainly available. The failure to call Mr Filosa, Ms White and Ms Ho was not explained, and the Court may infer that their evidence would not have assisted Council.

(e) Mr McLean's and Mr McBurnie's involvement in the negotiation - it is not apparent how the involvement of Mr McLean or Mr McBurnie in the contract negotiations could give rise to a relevant representation, particularly in light of Council's case as to their actual or apparent authority. ADCO Constructions otherwise refers to and relies on the submissions above at paragraphs 324 to 326 above.

[45]

Council says that it is apparent from an objective reading of the documents that a binding contract was formed between ADCO Constructions and Council when Council entered into the Construction Contract with ADCO Group. Council's position (or offer) was set out in the Departures Table: 'Council requires a parent company guarantee from ADCO Constructions Pty Ltd. Please confirm that this is agreed'. ADCO Group's response: 'Accepted provided agreement can be reached on other key areas of the contract', was either an offer or counteroffer that ADCO Group would provide a PCG to Council if the parties reached agreement in respect of the remaining terms. Council accepted that offer.
Council contends that those remaining terms were agreed with the McBurnie Email where Mr McBurnie confirmed that 'the documents as drafted are agreed'. ADCO Constructions became bound to deliver the PCG when Council entered into the Construction Contract.
Council submits that the conclusion that ADCO Constructions made a binding contractual promise of the nature alleged is consistent with the surrounding communications. This includes, by way of example, the statement made by Mr McLean shortly before the Construction Contract was executed that 'ADCO Constructions will be providing a guarantee'. The issuing of the Fourth Letter of Intent and the 22 March Register are also consistent with Council's case that ADCO Constructions is contractually bound to deliver it the PCG.
Council says that ADCO Constructions' contention that it is not contractually bound to provide the PCG is at odds with the content of the parties' communications and the context in which they were made.
Further, Council submits that ADCO Constructions was intimately involved in the negotiation of the Construction Contract with Council. An examination of the contemporaneous documents reveals that ADCO Constructions explicitly agreed, either by itself, or through its agent ADCO Group, to provide a PCG by way of security in respect of the Project for Council's benefit. Despite a series of statements in its tender documents about its trustworthiness, including assertions that it would use 'all forms of communication (written, verbal, meetings) to reinforce a cooperative environment and the development of strong and trusting relationships' and 'develop strong and trusting relationships created by effective and regular communication between all stakeholder groups' the defendants chose not to honour that agreement. They now seek to make a virtue of that decision.
Council says that in any event, the representations and commitments given on behalf of ADCO Constructions, either by itself or by those with either actual or ostensible authority, give rise to a direct contractual obligation - or collateral contractual obligation - requiring ADCO Constructions to execute and provide the PCG.
ADCO Constructions says that the first thing for the Court to determine is whether the conduct or statements relied on by Council are capable of conveying the meaning alleged.[88] The second is whether they were promissory or only representational in character.[89] Whether a statement is a promise is determined objectively.[90] In Hospital Products Ltd v United States Surgical Corp,[91] Gibbs CJ explained that a representation made in the course of negotiations may result in an agreement collateral to the main agreement if it can be concluded that the parties intended that the representation be contractually binding.[92] It may be so concluded if the representation has the quality of a contractual promise, as distinct from a mere representation.[93]
ADCO Constructions further says that there was no reliance by Council on any promise by ADCO Constructions to provide the PCG. Council selected ADCO Group as the preferred tenderer in circumstances where ADCO Group did not offer a deed of guarantee as part of its Tender Submission.
ADCO Constructions says that the conduct or statements relied on by Council are not capable of conveying the meaning alleged and were not promissory in nature.
I turn now to the parties' submissions regarding each of the matters referred to in paragraph 288(c) above.

[47]

ADCO Constructions says that Council's case is based on a false premise that the Tender Submission was from ADCO Group and ADCO Constructions. The premise is demonstrably false based on the document itself.
It is plain on the face of the Tender Submission that it was a submission by ADCO Group. The cover letter was issued by ADCO Group. Form 1 of the Tender was titled 'Company Details in Tender Form'. Section 1.1 of Form 1 stated 'The Tenderer shall provide the following company details and also include an outline of the company structure'. The legal entity name was identified as ADCO Constructions (Vic) Pty Ltd. The ABN, ACN, registered office and company name all corresponded with ADCO Group. It was executed by ADCO Group. It was also identified plainly that ADCO Constructions Pty Ltd was a 'parent and/or subsidiary company'.
ADCO Constructions says it is not in dispute that it is the parent company of ADCO Group. Indeed, this is a fact that both Mr Ridley and Mr Freer asserted they knew at the time of considering the tender and/or negotiating the construction contract. ADCO Constructions says that Senior Counsel for Council sought to make something of the fact that the section listing the names and addresses of the directors of ADCO Group omit to identify one of the relevant directors at that time. However, this does not displace the overwhelming evidence that the tender was submitted by ADCO Group. This was further reinforced by Form 2 of the Tender Submission, in which ADCO Group was identified as the tenderer.
ADCO Constructions also refers to Form 4 of the Tender Submission, which was titled 'Compliance Conditions of Contract and Specification'. The table was titled 'Conditions of Contract' and referred to the Tender Contract, stating in the table 'ADCO requested comments/changes'. ADCO Constructions submits that in circumstances where the Tender Submission was submitted by ADCO Group and concerned the Tender Contract, the reference to 'ADCO' in that table, properly understood, could not be a reference to any entity other than ADCO Group. ADCO Constructions was not to be a party to the Construction Contract and the Tender Submission was not made on ADCO Constructions' behalf.
While the financial information included in the Tender Submission may have included a reference to the financial position of ADCO Constructions, ADCO Constructions says that this has no bearing on the question of who the communication - being the Tender Submission - was from. Significantly, Mr Freer and Mr Ridley each gave evidence that they understood the tenderer was ADCO Group.
ADCO Constructions says that as to the inclusion of insurance information which identified ADCO Constructions' trading name to be 'ADCO Constructions', the second defendant says that Mr McBurnie clarified in re-examination that the reference to 'ADCO Constructions' in Form 1 of the Tender was a reference to ADCO Constructions (Vic) Pty Ltd, being ADCO Group's former name.
ADCO Constructions says that most relevantly, the requirement for the PCG under clause 5.6 was proposed by ADCO Group to be deleted. That is, the Tender Submission is not a communication by which ADCO Group or ADCO Constructions agreed to provide the PCG, and the Tender Submission is not capable of giving rise to a binding promise to that effect.

[54]

In relation to the Departures Table, ADCO Constructions says that Council called no evidence from any witness of Turner & Townsend, such as Mr Madden or Mr Veale, concerning this document.
ADCO Constructions says that the purpose of the document was for the parties to the Construction Contract, being ADCO Group and Council, to exchange positions on the draft Construction Contract. This was not a contract to which ADCO Constructions was to be a party.
ADCO Constructions submits that the response by ADCO in the version of the Departures Table sent on 1 October 2020 was plainly not an unequivocal promise on the part of ADCO Constructions to provide a Deed of Guarantee. First, understood in its proper context, it was a statement made by ADCO Group. Second, it was made in the context of negotiations, which negotiations always contemplated the execution of formal documents. Third, it was expressed in a conditional way.
Mr Ridley gave evidence that he understood the Departures Table concerned the proposed departures to the draft Construction Contract and that ADCO Group and Council were to be parties. Mr Ridley also accepted that, in the Departures Table, a distinction was drawn between 'ADCO' and 'ADCO Constructions'. ADCO Constructions submits that it is material that the comment in the Council response column that it required a PCG 'from ADCO Constructions Pty Ltd' was inserted by Council. Mr Ridley's evidence was that he had made an assumption that ADCO Constructions had agreed to provide a PCG on the basis of earlier dealings. ADCO Constructions submits that Council selectively quotes from the cross-examination in its submissions, which submission is reproduced at paragraph 364 above. After saying what is quoted there, Mr Ridley went on to agree that he made an assumption based on earlier dealings.
ADCO Constructions contends that a reasonable person would not construe the Departures Table as giving rise to a promise from ADCO Constructions to provide the PCG, and to the extent that it is relevant, that was not how Mr Ridley construed the document.
As to ADCO Constructions' purported authorisation of the content of the Departures Table, Council relies on the conduct of Mr McBurnie and his review of the draft Construction Contract. ADCO Constructions says that Mr McBurnie gave evidence that he reviewed the Departures Table in his role as corporate counsel. Mr McBurnie was also a director of each of ADCO Group and ADCO Constructions at this time. Mr McBurnie gave evidence that it was not his role to seek approval from ADCO Constructions to include any statement in the Departures Table. Mr McBurnie gave evidence he 'would assume' it was obtained. Importantly, there was no evidence given that it was in fact obtained. Mr McBurnie gave evidence that as a lawyer acting for ADCO Constructions and as a director he was advising that the form of the PCG was acceptable. The fact of Mr McBurnie's approval of the form of the PCG and the terms of the Construction Contract does not change the substance of the nature of the content of the Departures Table in any event. It was a statement made in the context of the negotiation of the Construction Contract, which always contemplated the execution of formal documentation.

[75]

[3] The existence of matters of importance in which the parties have not reached consensus in their informal agreement will render it the less likely that they intended immediately to be bound before the execution of a formal document. Even where the parties have agreed on the "major matters", their subsequent conduct may indicate that they did not intend to be bound until the other issues between them were resolved in a formal document.

[4] In order to determine in what areas the parties were, and were not, in agreement, and what matters they considered necessary in order for an agreement to exist, it is legitimate to examine their subsequent conduct. Where correspondence between the parties after an informal agreement refers to important terms and conditions not mentioned during that informal discussion, it may more readily be inferred that the earlier discussion was simply a preliminary negotiation and not a binding agreement.

[5] Depending on the size, importance and complexity of the subject matter, the less formal the initial agreement, the less likely it will be that it was intended to be legally binding and enforceable. Thus, an oral discussion which contemplates a subsequent formal written agreement is less likely to have been intended to have been immediately binding.

[6] It is necessary in every case to consider the nature and importance of the transaction which the parties contemplate. Where the agreement concerns a large sum, or concerns a significant transaction, it is less likely to have been intended to be presently binding.

...

[8] Where a binding agreement is said to have been formed as a result of correspondence, it is necessary to look at that correspondence as a whole. It is wrong to isolate any part of the correspondence from the rest in order to prove or disprove the existence of a binding agreement. The same approach should be taken to the analysis of words and phrases within the correspondence. Reference to an "agreement" having been reached does not necessarily prove the existence of a presently binding contract. Conversely, references to a "proposed" agreement, and similar expressions, will not necessarily mean that no agreement presently exists. It is a question of how the words are to be interpreted in their context, and in the light of the correspondence, viewed as a whole.

[77]

ADCO Constructions submits that Council cannot establish a relevant intention on the part of ADCO Constructions and Council to be legally bound, for the following reasons.
First, ADCO Constructions and Council were each a sophisticated commercial entity that were legally advised. To the extent it could be said that there were dealings between ADCO Constructions and Council, those dealings were wholly in a commercial context directed at the negotiation of the Construction Contract. The Construction Contract itself was a detailed document running to hundreds of pages, contained a suite of annexures, one of which was a form of deed of guarantee, and concerned a multi-million dollar project.
Second, the subject matter of the alleged contract (including the PCG) is one of much significance. Under the contract alleged with ADCO Constructions, it would execute and deliver the PCG. Under the PCG, if executed, ADCO Constructions guaranteed 'due and punctual performance' by ADCO Group of the performance of the Construction Contract. The PCG creates a principal and independent liability of ADCO Constructions that is not ancillary or collateral to any other obligation. This type of promise has long been recognised as one of special and significant importance.
Third, the parties (to the extent that they were engaged in negotiations) were negotiating the Construction Contract, not any direct contract with an operative term between ADCO Constructions and Council. This was not a circumstance where the focus of the parties was on the negotiation of contractual arrangements between ADCO Constructions and Council. To the contrary, the parties were negotiating a different contract.
Fourth, the Construction Contract contained a form of deed of guarantee, being the form of document that may be executed in due course. The words 'form of' connote that the parties intend that any final deed of guarantee executed may not take that exact form contained in the Construction Contract. This evidences that the parties did not intend to contract until there was any agreement in writing signed by both parties. The recitals to the form of deed of guarantee stated:

[79]

Fifth, there is no evidence of any signed agreement by ADCO Constructions in which it states that it agrees to sign the PCG and in what circumstances.
Sixth, ADCO Constructions submits that Council can point to no clear and unequivocal promise made by ADCO Constructions (as distinct from ADCO Group) to provide the PCG. Further, the terms of contract alleged by Council themselves are uncertain. This is material and weighs against a finding that through the communications relied on by Council the parties intended to be legally bound by any contract.
Further, ADCO Constructions says that Council's conduct after the purported agreement was reached is also informative. At no time prior to receipt of Council's statement of claim in this proceeding filed on 30 January 2025 (which was prepared and served after the originating process had been issued) did Council assert in correspondence or in any other way that it was a party to a contract with ADCO Constructions. The purported agreement was reached on 31 March 2021. Council wrote to ADCO Constructions for the first time on 2 October 2024 and did not at that time assert the existence of any alleged contract between it and ADCO Constructions. Council wrote to ADCO Group on 22 November 2024, enclosing the draft originating process and the supporting affidavit of Mr Freer which did not name ADCO Constructions as a defendant. ADCO Constructions was subsequently served with these proceedings in December 2024.
ADCO Constructions also contends that Council was plainly concerned with ensuring that the Construction Contract with ADCO Group was properly executed and binding. There were numerous discussions and emails exchanged between the parties on the subject (and also internally within the Council and its representatives) and much care was taken to ensure it would be legally binding. Council required the signatories on behalf of ADCO Group to execute separate letters confirming their signatures and intention that those electronic signatures would bind ADCO Group, as well as executing the Construction Contract itself. This is in stark contrast to any purported agreement to sign the PCG. Mr Ridley gave evidence that there was no similar consideration or discussion in respect of any alleged contract between the Council and ADCO Constructions.
An appropriate inference to be drawn is that no contract between the Council and ADCO Constructions was actually in the contemplation of the parties at the time. Mr Ridley gave frank evidence under cross-examination that (i) he had no discussions with Mr McBurnie about the PCG, (ii) he had no discussions with anyone from ADCO Constructions about ADCO Constructions agreeing to provide the PCG, (iii) anything he may have conveyed to Council on the subject was on the basis of assumption, and (iv) he never told anyone at Council that a contract had been entered into between Council and ADCO Constructions.

[98]

ADCO Constructions submits that the decision of Wright v Madden was approved in Irvine v Dowling,[116] and is in conformity with the decision of Ormiston J in Futuretronics International Pty Ltd v Gadzhis.[117]
The alleged breach of contract asserted by Council is no more than the failure by ADCO Constructions to sign the PCG. Following the cases of Wright v Madden, Irvine v Dowling and Futuretronics, that alleged contract must comply with s 126 of the Instruments Act.
To the extent that the alleged contract with ADCO Constructions is said to be in writing and signed by it, Council appears to rely on the Construction Contract itself and the execution of that document.
Section 126 of the Instruments Act has its genesis in s 4 of the Statute of Frauds passed by the English Parliament in 1677, and remains materially unchanged from that provision. As such, the provision has a long history, and a particular interpretive approach has been developed by the courts of England and subsequently Australia concerning the determination of its meaning and application. In construing s 4 of the Statute of Frauds, the English Courts have consistently given emphasis to the intention of the legislature in passing it. The purpose of the provision has been held to be 'precisely to avoid the need to decide which side was telling the truth about whether or not an oral promise had been made and exactly what had been promised'.[118]
Cases concerning s 4 of the Statute of Frauds (like s 126) are frequently directed at what constitutes a signature and by whom it was signed (or in what capacity), as is revealed by the passages of Alonso relied on by Council in its submissions.
However, those cases are ones in which a contract was evidenced in writing and contained an operative provision as against the guarantor.
In this regard, ADCO Constructions submits that the Court of Appeal's decision in Pugwall may be readily distinguished from Council's claim. Pugwall concerned an appeal on whether the sole director, secretary and effective controller of a company, AMI, was liable by reason of a personal guarantee contained in a joint venture agreement. The Court of Appeal held that McKenzie, the guarantor, was a party to the contract in question, separate from AMI.[119] The Court of Appeal further held that the joint venture agreement contained several operative clauses obliging McKenzie to provide the guarantee.[120] The same can be said about Delaney v Purves[121] and Elpis Maritime Co Ltd v Marti Chartering Co Inc.[122] The cases of Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd[123] and Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd[124] were not concerned with a cognate of s 4 of the Statute of Frauds.
In contrast, ADCO Constructions is not a party to the Construction Contract. The Construction Contract contains no operative clause as against ADCO Constructions to do any act. Further, the contract itself contains a form of deed of guarantee that contemplated it would later be the subject of execution by the party to be charged on it. The signatures to the Construction Contract insofar as they constitute evidence against ADCO Constructions of an agreement demonstrate no more than the parties had reached agreement on the form of the deed of guarantee and the parties always intended that document to be separately executed and it would at that time be binding on the parties. There is no prior contract.

[103]

(a) I do not see how it can seriously be suggested that Mr McBurnie's role as legal adviser to companies in the ADCO corporate group, including ADCO Group and ADCO Constructions, can be said to be an office carrying with it the authority to enter into contracts on behalf of the corporate entity to which Mr McBurnie was providing advice. To the extent that Mr McBurnie's role as legal adviser is relied upon by Council as conferring actual authority on him by ADCO Constructions to do so, I reject it;

(b) Similarly, Mr McBurnie's role as Chief Commercial Officer of ADCO Constructions is not an office that carries with it the cloak of actual authority to enter into contracts on behalf of ADCO Constructions. The title suggests a senior role, but nothing more;

(c) Where Mr McBurnie was but one of a number of directors of ADCO Constructions, for him to have actual authority to enter into contracts on behalf of ADCO Constructions Council would need to establish that ADCO Constructions had conferred such authority on a single director. I accept ADCO Constructions' submission that in a company with several directors, a director acting individually has no usual authority to bind a company. Such a proposition is well-established and recognised law. As is pointed out in Ford, Austin & Ramsay's Principles of Corporations Law, in such a company a director's normal power is to bind the company only by joining with other directors in a collective resolution of the board of directors. If a single director is to have power to bind the company as a single director, then they must have that power delegated to them by the appropriate organ.[125] Here, there is no evidence that ADCO Constructions had conferred such power on a single director; and

(d) ADCO Constructions relies heavily on its constitution in respect of Mr McBurnie's alleged actual authority, pointing out the requirements under its constitution as to how it may execute documents. Under its constitution, execution without using a seal requires signing by either two directors, or one director and company secretary, or one director and another person appointed by the directors for that purpose. The constitution goes no further than how a document may be executed. It assists ADCO Constructions' position but it is not determinative of it. I accept Council's point that there is no evidence of it having been made aware of ADCO Constructions' constitution at the time of negotiations, but such provisions of ADCO Constructions' constitution are standard and one would expect that Council would have known or assumed this to be the case insofar as execution of documents was concerned. In any event, the manner of execution of documents required by ADCO Constructions' constitution is not a complete answer in and of itself to the question of Mr McBurnie's actual authority to make a binding promise on behalf of ADCO Constructions by virtue of his position as a director of that company.

[105]

Therefore, neither Mr McBurnie or Mr McLean had actual authority by reason of their office or position to bind ADCO Constructions to a contract with Council.
Council's submissions as to the manner in which Mr McBurnie and/or Mr McLean conducted themselves during the negotiations, set out at paragraph 312 above, raise the question as to which ADCO entity their conduct can be attributed to. While it is more convenient (so as to avoid repetition) to deal with the particular instances in that paragraph raised by Council in section H.10.2 below, it is convenient at this point to deal more generally with the evidence on this point.
Council's submissions and the affidavits it relied upon frequently did not distinguish between ADCO Group and ADCO Constructions. The plaintiff's affidavits were drawn in a way, at times, to blur the lines between ADCO Group and ADCO Constructions; often referring to 'ADCO Group and/or ADCO Constructions' or simply to 'ADCO'. Such drafting served Council's case that it was negotiating with both entities at the same time and contracting with both. The defendants submit, and I accept, that this drafting was self-serving and hardly determinative of the key questions involved in this case. I note that both of the plaintiff's witnesses made appropriate concessions in oral evidence which served to reduce the extent of this blurring of the lines. My approach to this evidence is to look at the actual conduct relied upon to determine whether it was conduct by or on behalf of which entity, rather than to accept how an individual plaintiff witness or Council seeks to characterise it.
Some of the documentary evidence is, to put it bluntly, all over the shop in terms of whether it is ADCO Group, ADCO Constructions or both which is being referred to.
It is clear on the face of the Tender Submission that it is ADCO Group which tendered for the Project and which was to be the contractor if successful with its tender. It is also clear on the face of the Construction Contract that ADCO Group was the contracting entity for that contract.
The documents which are more equivocal are documents such as some of the emails and letters, and some of the ways in which references to one entity or the other were made in some documents. To add to the confusion, at the time of tendering and in the early stage of negotiations, ADCO Group was named ADCO Constructions (Vic).
The ADCO logo does not appear to differentiate between corporate entities. It is displayed below.

[114]

This is supported by Mr McBurnie's evidence, which was that 'ADCO Constructions' was used as a name for the broader group, as a 'global handle' rather than as a company name.
Council placed much emphasis on which entities it thought it was dealing with.
This emphasis comes from Mr Freer's and Mr Ridley's affidavit evidence. I have already commented on the self-serving nature of this evidence at paragraph 452 above. I found their oral evidence to be more convincing than these aspects of their affidavits.
It must be borne in mind that Mr Freer's role in respect of the contract negotiations is very limited. He was involved in evaluating the tenders and making a recommendation to Council regarding the successful tenderer. As noted above, the Tender Evaluation Report refers to ADCO Constructions Pty Ltd as the recommended tenderer. This is clearly an error. In his oral evidence, Mr Freer stated that his recollection was that the Tender Submission was made by 'ADCO Constructions' and that the legal entity was 'ADCO Constructions (Vic) Pty Ltd'. He was not involved in the Contract negotiations at all, although he did have oversight of them.
Mr Ridley's evidence on this is more extensive.
He says that while in the course of the negotiations he never enquired explicitly with Mr McBurnie or Mr McLean as to whether ADCO Group had the authority of ADCO Constructions to agree to the provision of the PCG, it is normal practice in tender reviews to proceed on the presumption that the tenderer tendering for a project has the authority to agree to the provision of such a document from its parent company. If that is not the case, the tenderer will raise the issue when the contract is being negotiated. He also says that he did not have a discussion with Mr McBurnie as to whether ADCO Constructions would provide the PCG, but says Mr McBurnie never made it clear in his dealings with him regarding the Project which entity he was representing. He could not recall telling anyone at Council that there had been a contract entered into between Council and ADCO Constructions.
He deposes that as he had experience dealing directly with ADCO Group and ADCO Constructions on other equivalent projects, he did not consider it necessary to make an enquiry of this nature. This is because he was aware from other earlier Victorian local government aquatic centre projects that ADCO Constructions had agreed to provide a parent company guarantee to secure the performance of ADCO Group and that it ultimately did provide the relevant parent company guarantee in accordance with the requirements of the relevant construction contract.
Mr Ridley testified that he understood that the tender was submitted by ADCO Group, however he says some correspondence provided to him during negotiations referred to ADCO Constructions Pty Ltd. His evidence was that if ADCO were successful in their tender, ADCO Group would be the contracting entity. However, he stated that as is commonly the case in negotiating construction contracts, when there is a group of companies, they will present their experience in a wholistic manner. He asserted that the distinction between the two entities was not that 'sharp' at the time of the contract negotiations - although separate legal entities, ADCO were providing communications that shared their experience, their correspondence and their letterhead.
When pressed by the defendants' senior counsel as to his understanding of the primary entity involved in the negotiations, Mr Ridley said it was ADCO Group. He agreed that ADCO Group was the party negotiating with Council in relation to the Construction Contract, but stated that the experience put forward as part of its expertise and some of the insurance certificates went beyond ADCO Group.
Senior Counsel for the defendants questioned Mr Ridley as to why he did not include reference to Mr McBurnie and Mr Carmont signing the Tender Submission on behalf of ADCO Constructions (Vic) Pty Ltd in his affidavit - which counsel asserted to be 'the most important part of the tender document'. Mr Ridley ably responded by stating:

[116]

Mr Ridley accepted that in his affidavit, he does not refer to the capacity in which Mr McBurnie signed and only stated that 'Cameron McBurnie is recorded as a director and the document is signed by him'. When pointed out to him, Mr Ridley readily conceded that he was incorrect in his affidavit when he asserted that the registered address recorded for 'ADCO' in the Tender Submission was ADCO Constructions' registered address, not ADCO Group's registered address at the time.
Mr McBurnie's evidence was that at all times in respect of the negotiation and execution of the Construction Contract, he acted on behalf of ADCO Group (as the contracting party). ADCO Group was the entity that would be a party to the Construction Contract with the Council for the Project and would ultimately construct the project if agreement was reached. Mr McBurnie deposed that when he was communicating with Mr Ridley in relation to the draft terms of the Construction Contract and its execution, he acted on behalf of ADCO Group and did not act on behalf of ADCO Constructions.
Mr McBurnie deposes that at no time - either prior to or after the execution of the Construction Contract - did he speak or exchange emails with Mr Ridley, or anyone from Council, concerning the provision of a PCG from ADCO Constructions to the Council or to ADCO Group.
Mr McBurnie further deposes that at no time was he authorised to enter into a contract on behalf of ADCO Constructions in respect of the Project. At no time did any representative of the Council ask him if he had authority on behalf of ADCO Constructions to enter into a contract with it.
In my view, none of the evidence described in paragraphs 467 to 476 establishes that Mr McBurnie had actual authority to enter into a contract with Council on behalf of ADCO Constructions.
For the reasons stated in this section, I find that Mr McBurnie and/or Mr McLean did not have the actual authority of ADCO Constructions to enter into a contract with Council on its behalf.

[118]

For the same reasons I expressed above when considering a similar argument in respect of actual authority, I reject Council's reliance on the positions occupied by Mr McBurnie and Mr McLean as giving rise to them having apparent authority.
Council's submission as set out at paragraph 321 cannot be accepted. There is simply no evidence for the submission that ADCO Constructions represented to Council that ADCO Group had the legal right and entitlement to obtain a PCG from ADCO Constructions and provide it to Council. I was not taken to any evidence of this representation or from which it was said such representation could be inferred. The contention that ADCO Group must have such a legal right for it to have promised to provide the executed PCG is hardly sufficient. Therefore, this cannot provide the alleged contextual circumstances for ADCO Group's apparent authority.
Council's submissions as to apparent authority did not clearly differentiate between the alleged apparent authority of Mr McBurnie, Mr McLean and ADCO Group. Rather, it was as if all of the conduct was to be bundled together and then attributed to ADCO Constructions.
ADCO Constructions' submissions, set out at paragraphs 324 to 326 above as to why Mr McBurnie and Mr McLean did not have apparent authority to contract on behalf of ADCO Constructions, are cogent and persuasive. I find that neither Mr McBurnie nor Mr McLean had apparent authority to bind ADCO Constructions to a promise to execute a PCG and provide it to Council, for all of the reasons set out in ADCO Constructions' submissions in the paragraphs referred to. The evidence simply does not establish a relevant representation by ADCO Constructions that either or both of them had authority to enter into a contract on behalf of ADCO Constructions.
I do not accept Council's submissions as to ADCO Group's apparent authority. The matters relied upon by Council at paragraph 322 above, both individually and as a whole, do not establish this apparent authority. In particular:

[119]

(a) ADCO Constructions being identified as the parent company in the Tender Submission, and other references to ADCO Constructions or the corporate group, or features of them, throughout the document do not connote that ADCO Group has apparent authority to contract on behalf of ADCO Constructions;

(b) Further, given that it was ADCO Group's Tender Submission, not ADCO Constructions' document, any representations made in it were made by ADCO Group, not ADCO Constructions. Representations made by the agent do not constitute representations by the principal, and for apparent authority, it is the representation by the principal that the agent has authority which is key. As stated in Cargill (No 28), 'apparent authority arises when there is an appearance or representation of authority to a third party, created by the principal in respect of his or her agent';[126]

(c) I accept ADCO Constructions' submissions in respect of Council's reliance on the Tender Submission (see paragraph 330(a) above);

(d) Correspondence which Council contends as coming from ADCO Constructions does not clearly do so at all. As I have demonstrated at paragraphs 453 to 458 above, and as I have concluded at paragraph 462 above, nothing can be confidently inferred as to whether such correspondence actually emanated from ADCO Constructions or ADCO Group. Rather, each document needs to be looked at as a whole and in its factual context. This is better done in section H.10.2 below, but as will be seen, I do not accept that this was correspondence on behalf of ADCO Constructions;

(e) I accept ADCO Constructions' submissions in respect of Council's reliance on correspondence allegedly from ADCO Constructions (see paragraph 330(b)) above;

(f) I do not accept, for the reasons that will be set out at section H.10.2.2 below, that Mr McLean's email of 1 October 2020 and the attached iteration of the Departures Table is to be construed as ADCO Constructions agreeing to the Departures Table. Even if it had, given Mr McBurnie's evidence that he assumed that Mr Harding had approved the response in the Departures Table for Item 10, Council had no knowledge of that at the relevant time. I do not see how this Departures Table is to be construed as a representation of apparent authority;

(g) Council's submission is that the defendants' failure to call Mr Harding as a witness means that I should draw an inference adverse to ADCO Constructions in respect of Mr McBurnie's evidence described in the preceding sub-paragraph. I take Mr McBurnie's evidence for what it was, that it was his assumption. Council does not explain how Mr McBurnie's evidence on this could give rise to an adverse inference as to the failure to call Mr Harding. Nonetheless, even if Mr Harding did do what Mr McBurnie says he did, and that is approve the response given in the 1 October iteration of the Departures Table, that goes no further than making it an approved response. It would not be, for all the other reasons I have stated when considering the Departures Table (in this and other sections of the judgment), a promise to provide the PCG;

(h) I do not accept Council's characterisation of the 23 March 2021 site meeting as ADCO Constructions giving undertakings that were recorded in the site meeting minutes. First, there is no basis for construing them as undertakings, regardless of who they are said to be from. I think 'undertakings' puts it too highly. Second, and more importantly, I do not accept that the ADCO personnel present at the site meeting, being Mr Ryan, Mr Waters and Mr Nicholls, were there to represent ADCO Constructions. Rather, I find that they were present to represent ADCO Group. Mr Ryan's and Mr Waters' employment contracts were in evidence. Mr Ryan was employed by ADCO Constructions. On the other hand, Mr Waters' letter of employment, dated 15 September 2020, was on ADCO Constructions (Vic) Pty Ltd letterhead. He was being employed in the Melbourne office as Senior Contracts Administrator, the body of the letter refers to 'ADCO', and the letter is signed by Mr Adaikalavan for 'ADCO Constructions Pty Ltd'. There is no evidence to suggest that Council had any knowledge of which ADCO entity employed Mr Ryan, Mr Waters and Mr Nicholls. I infer from all of the evidence that irrespective of which ADCO entity employed these men (or any of the other ADCO people involved in these events, for that matter), they worked on various projects for different entities in the ADCO corporate group. I do not accept that site meeting minutes recording them as being from 'ADCO Constructions', which the evidence establishes were prepared by either Council or Turner & Townsend, means that they should be taken as representing the parent company at the site meetings. I accept ADCO Constructions' submissions on this reliance on the 23 March 2021 site meeting as set out at paragraph 330(d) above; and

(i) Mr McLean's and Mr McBurnie's involvement in the negotiations do not, for reasons already outlined above, carry representations as to their apparent authority.

[123]

Third, it is necessary for Council to establish essential matters such as offer and acceptance. As best as I can understand, Council contends that ADCO Constructions' offer (or counteroffer) was the response on 1 October 2020 in the Departures Table that provision of a PCG from ADCO Constructions was accepted provided agreement can be reached on other key areas of the construction contract, which Council accepted, and where the remaining terms were agreed when Mr McBurnie sent his email on 23 March 2021 confirming that (with exception to three matters irrelevant to this proceeding) the documents as drafted were agreed. The key issue here is, even if this has the requisite promissory character, is it a promise by or on behalf of ADCO Constructions. I will deal with this in more detail below, but I do not accept that it is promissory in character and I do not accept that it was made by or on behalf of ADCO Constructions.
Fourth, the analysis which I am required to undertake is not assisted by Council's failure to clearly articulate and differentiate between the different doctrinal bases for the alleged contract. It contends that either there was a direct contract between ADCO Constructions and Council (whatever that may mean) or a collateral contract. I agree with ADCO Constructions' submission that since the consideration relied upon for both alleged contracts, being that the alleged consideration for ADCO Constructions' agreement to provide the PCG is Council's entry into the Construction Contract with ADCO Group, then the contract with ADCO Constructions asserted by Council must be a collateral contract. That being the case, Council is required to meet the special requirements applicable to collateral contracts (see paragraph 298 above), yet it made no specific submissions on the topic. However, given my findings in respect of the existence of the collateral contract, the special requirements are not determinative.
I turn now to the particular conduct and circumstances relied upon by Council.

[129]

Senior Counsel for the defendants pressed Mr Ridley on the last sentence of the above paragraph, and questioned whether the source of the requirement was clause 5.6 under the Construction Contract. Counsel put to Mr Ridley that clause 5.6 could only give rise to a requirement on the part of ADCO Group as the contracting entity. Mr Ridley responded by asserting that the last sentence of the paragraph above was based on the fact he had had previous dealings with ADCO on other projects where the parent company had provided a PCG. While he agreed that the Departures Table was from ADCO Group, his comment there was because he would previously get the PCG from both entities on previous projects. When pressed by counsel as to the basis of that understanding, Mr Ridley accepted that it was merely an assumption based on previous dealings, contracts and projects, in which his prior experience did not give rise to whatever was required or not in this particular contract.
Mr Ridley's evidence that he had understood that ADCO Constructions had agreed to provide the PCG on the basis of the Departures Table goes no further than to state his belief on the issue, which belief was based on assumptions he made based on prior dealings on other projects and not on anything stated to him in respect of the Project.
Providing the iteration of the Departures Table on 1 October 2020 was done by or on behalf of ADCO Group. I do not accept that the process of exchanging versions of the Departures Table and having other correspondence or conference calls about the content of the construction contract (the Departures Table being the vehicle through which a lot of those discussions were progressed), or the negotiations of the construction contract generally, were done by or on behalf of ADCO Constructions. They were done by or on behalf of ADCO Group.
Further, I do not accept that the 1 October 2020 iteration of the Departures Table can be properly characterised as an offer or counter-offer. It was a position taken during the course of very lengthy and detailed negotiations.
Therefore, the statement in the Departures Table was neither promissory nor made by ADCO Constructions. Even if it could be construed as promissory, it was not a promise made by or on behalf of ADCO Constructions, but was made by or on behalf of ADCO Group.

[132]

Council characterises the McBurnie Email as part of the offer and acceptance of the alleged contract with ADCO Constructions. It is said that the statements in the McBurnie Email that 'That all looks fine' and 'Everything else is in order' subject to various (presently irrelevant) revisions Mr McBurnie proposed to clause 37.1 of the draft Construction Contract were representations that were part of the formation of the alleged contract between Council and ADCO Constructions.
I do not accept this. Rather, I accept ADCO Constructions' submission that the context for the McBurnie Email was that he and Mr Ridley were exchanging communications about the draft Construction Contract as part of ongoing negotiations. I accept that Mr McBurnie's statement that 'the documents as drafted are agreed' was no more than a statement that the form of the Construction Contract and its terms (save for the small number of items specified by Mr McBurnie which are not presently relevant) were settled upon at that point. I agree that it was not a statement of a promise from ADCO Constructions to do anything and it is not capable of conveying the meaning asserted by Council.
Mr McBurnie was participating in these negotiations as corporate counsel, and he was corporate counsel for the whole group. His email signature was Chief Commercial Officer, 'ADCO Constructions'. His evidence was that this usage of 'ADCO Constructions' was as a 'global handle', in other words, a name for the whole group. In my view, to the extent that Mr McBurnie's participation in the negotiations was as corporate counsel for a specific entity, it was for ADCO Group, not ADCO Constructions, since I do not accept that ADCO Constructions was part of the negotiation of the Construction Contract.
One of the documents which was included in the statement 'the documents as drafted are agreed' was the form of the PCG. I do not think that this goes any further than a representation that the form of the PCG was agreed. I think that agreement was as between Council and ADCO Group, but even if the form of it was agreed to on behalf of ADCO Constructions, I do not think that this transforms the statement in the McBurnie Email to a promise by ADCO Constructions to provide the PCG.

[133]

I do not accept that at the site meeting on 23 March 2021, ADCO Constructions and/or ADCO Group made a promise to provide the PCG to Council by 26 March 2021.
For the reasons I have already articulated at paragraph 483(h) above, I do not accept that the 23 March 2021 site meeting was attended by Mr Ryan, Mr Waters and Mr Nicholls on behalf of ADCO Constructions. Rather, I have found that they attended that meeting, and other site meetings for that matter, on behalf of ADCO Group. That is consistent with Mr Ryan's evidence, insofar as his attendance was concerned.
That is a sufficient basis on which to reject that the events at the 23 March site meeting were able to be a promise on behalf of ADCO Constructions.
However, I also find that the statements relied upon from the 23 March site meeting were not promissory in character.
I can only make findings about this on the basis of the site meeting minutes and on Mr Ryan's evidence, since Council did not call any witnesses who were present at that meeting. Mr Ryan's evidence was that the purpose of the site meetings was for ADCO Group to provide an update to Council, Council's architect and Turner & Townsend on the Project and for the parties to work through issues regarding the project as they arose. Further, that someone from Turner & Townsend usually took the minutes. In respect of Item 2.2 of the minutes for the 23 March site meeting, Mr Ryan deposed in his affidavit that he does not recall the discussion of the items in Item 2.2. This is consistent with his oral evidence.
The minutes for the 23 March site meeting do no more at Item 2.2 than record what documents ADCO Group was to provide, in a non-exhaustive way, for site access. Even the completion of the columns as to which individual was to take the relevant step and by when is not a statement that is a promise to do those things. It is nothing more than an action list. Since the only evidence I have as to the matters discussed at the site meeting on 23 March is the minutes, and given that the relevant items in those minutes are not promissory in character, there is no evidence as to what statements or representations were made at the meeting beyond what is in the minutes. Mr Filosa, currently employed by Council but not called to give evidence, attended this meeting and the defendants invite an adverse inference as a result. I infer that Mr Filosa's evidence on this issue would not have assisted Council's case. The defendants invite the same inference from Council's failure to call other persons who were employees of Council at the time and who attended the site meeting, being Ms Maitland, Ms White and Ms Ho. None of those persons are still employees of Council, and so cannot be regarded as being in Council's 'camp' for the purposes of drawing a Jones v Dunkel inference. Despite this, there is still a basis for drawing such an inference since, as the defendants point out, no evidence was adduced by Council as to any attempts it made to have any of these three persons give evidence. In my view, it is appropriate to draw an inference that evidence from Ms Maitland, Ms White and Ms Ho would not have assisted Council's case that a promise to provide the PCG was made at the 23 March site meeting.

[140]

I do not accept that a reasonable person, observing the conduct of the parties, would have concluded that they intended to create legal relations or that they had entered into the alleged contract.
Much emphasis was placed on Council's evidence as to the importance of the PCG to it and that the provision of a PCG was common in situations such as this. In this regard, Mr Ridley deposed that in his experience, it is relatively standard industry practice that where a contracting party is a subsidiary entity, the relevant parent company is typically required by the principal to provide a PCG. It was standard practice for most councils, including this one to require the provision of a PCG when the contracting party is a subsidiary entity. Mr Ridley deposed that the Tender Submission also includes various references to the broader experience and financial viability of the ADCO corporate group. In his experience, it is relatively common in the construction industry for companies to structure themselves so that the assets of the company are held by the parent company, while one or more subsidiary trading entities are used to tender for (and undertake) construction works. He says that accordingly, it is relatively standard practice for principals, such as Council, to insist upon the provision of a parent company guarantee to secure the performance of the underlying contract.
Mr Ridley's evidence was that he has drafted and negotiated at least three other aquatic centre construction contracts for other Victorian councils which were awarded to a subsidiary entity of ADCO Constructions (including ADCO Group). He deposes that as best as he can recall, ADCO Constructions provided a PCG on each of those projects. Mr Ridley said that having dealt previously with ADCO Group and ADCO Constructions, he knew that ADCO Constructions typically provided PCGs for similar size contracts.
This evidence explains the basis for some of the assumptions made by Mr Ridley throughout the contract negotiations, but it does not establish the requisite intention to create legal relations as between Council and ADCO Constructions beyond what would occur when the PCG was executed.
In my view, the proposition that Council and ADCO Constructions intended to create legal relations by entering into the alleged contract is not supported by the evidence.

[144]

ADCO Constructions contends that if the Court finds that it is subject to a contractual obligation to provide the PCG, then that contract is unenforceable due to the provisions of s 126 of the Instruments Act.
Given my finding that there is no contract between Council and ADCO Constructions for the provision of the PCG, this question does not require determination. However, out of deference to the parties' submissions, I will briefly express a view.
I agree with Council's submission that s 126 of the Instruments Act does not apply to the case brought against ADCO Constructions, which is that there is an alleged contract between them that ADCO Constructions will provide Council with the executed PCG. Council's case against ADCO Constructions is not an action of the type contemplated in s 126. In my view, s 126 would have to be satisfied if Council brought an action to enforce the PCG, but that is not what is occurring here. I do not accept ADCO Constructions' submission as set out at paragraph 438 above, as I do not accept that characterisation of Council's case.
However, I do not agree with Council's submission that if s 126 does apply, the execution of the Construction Contract by Mr McBurnie and Mr Conroy would satisfy the requirement for the agreement to be in writing and signed. In this regard, I agree with ADCO Constructions' submission as set out at paragraph 444 above. I find it very difficult to accept that the Signature Confirmation Letters, which specifically refer to ADCO Group and not to ADCO Constructions, could be taken to satisfy s 126 insofar as ADCO Constructions is concerned.
In particular, this case can be distinguished from cases such as Pugwall, where the operative clause creating the guarantee was in the contract itself and where the guarantor had signed the contract, albeit in his capacity as director rather than in his personal capacity. The issues in that case included whether this was sufficient for the purposes of s 126 of the Instruments Act so that the personal guarantee of the director was enforceable. There, it was held that the particular capacity in which a person to be charged signed an agreement was irrelevant to the satisfaction of s 126 of the Instruments Act; the execution was sufficient.[128] This is because the question for the purpose of s 126 is not one of intention but of evidence as against the signatories.[129] Pugwall does not assist Council, as it is not truly analogous. It is not as if it is argued that Mr McBurnie and Mr Conroy personally agreed to provide a guarantee. While not differentiating between a signature on behalf of the named company and the person themselves is one thing, it is quite another thing to say that as the person was a director of company A and company B, signing on behalf of company A is sufficient for s 126 as against company B. I do not accept Council's submission at paragraph 429 above as it overstates what the Court of Appeal held in Pugwall. In my view, Pugwall stands for the proposition that a director signing on behalf of a company is sufficient evidence of the guarantee as against the director as an individual for the purpose of s 126. Pugwall does not go so far as to provide support for the proposition that a director signing a document on behalf of company A is sufficient for the purpose of s 126 as against company B, if that person is a director of both. After all, it is not as if Mr McBurnie or Mr Conroy are the 'persons' to be charged or are lawfully authorised by ADCO Constructions (if it be the person to be charged) to do so in this context. In , it was held that did not assist McKenzie as the document was clearly signed by the person to charged.130
I do not find the parties' submissions based on analogies with sale of land contracts to be helpful in determining this question.
Council's argument as set out at paragraph 433 above, made for the first time in its written closing submission, was developed further during oral closing address. Junior Counsel for Council submitted that this means that the Court can make a declaration that the PCG is enforceable. It was submitted that applying Alonso, if the Court accepts that the evidence establishes that ADCO Constructions agreed contractually to provide a PCG and that s 126 needs to be complied with, then the approach in Alonso paves the way for Council to seek a declaration and for the Court to make a declaration that the PCG is enforceable.
During the course of oral address, I stated that this needed to be explored, as it was not what I had understood the case to be. Junior Counsel for Council accepted this, saying that it is not framed in the declaratory relief sought in its pleading. I would go further than that: it is not something raised at all in the pleading, including in Council's Reply to ADCO Construction's Amended Defence. However, Council submits that it is open on the evidence for that declaration to be made. Junior Counsel appeared to attempt to excuse it being raised at the time of closing address by saying that it had come about as a consequence of meeting ADCO Constructions' case regarding s 126.
To my mind, this argument is antithetical to the primary case run by Council. The whole point of this proceeding is that Council does not have a PCG executed by ADCO Constructions, and it has brought this proceeding in order to get one. I expressed this during the course of argument, to which Council's response was that it was an alternative argument that was being run. Council maintains its primary relief as pleaded, but says that if I find s 126 must be satisfied and that it has been satisfied here by execution of the Construction Contract, then the PCG is enforceable.
With respect, this submission does not make sense. If Council's position is correct, then it would have been able to mount a positive case that the PCG was in writing and signed by ADCO Constructions, and seek this additional declaration. It is not a merely responsive submission.
I agree with the submission made by ADCO Constructions that the contention that there is an executed PCG by reason of the Construction Contract having been signed is fanciful.
In oral submissions, Senior Counsel for ADCO Constructions took issue with Council's position that it would be entitled to this additional declaration, complaining that it had not been raised earlier and was not the way that the case has been run. It was said that ADCO Constructions cannot now deal with it, and may have run its case differently if that kind of argument had been advanced. It is too late for Council to raise this now. I agree with those submissions.
I note that in opening address, senior counsel for Council stated that s 126 arises in circumstances where a party is suing upon the guarantee and to enforce it; to charge the defendant upon its special promise. Senior counsel also went on to say that Council is not seeking to enforce the guarantee in this proceeding, rather, it is seeking the provision of the guarantee. That submission was wholly consistent with Council's pleaded case, but it is the opposite of what Council submitted in oral closing submissions. This is another reason why Council cannot advance such a case now.
However, the issue does not squarely arise as it predisposes a finding that there is a contract between Council and ADCO Constructions for the provision of the PCG, and I have rejected such a finding.

[158]

ADCO Constructions contends that as Council has no valid and binding contract with ADCO Constructions, equity will not enforce an agreement which is not valid and binding.[131]
ADCO Constructions says that if the Court finds that ADCO Constructions is in breach of a contract, the Court should refuse equitable relief in any event for the reasons set out below.
ADCO Constructions submits that demonstrating inadequacy of damages remains a fundamental requirement to obtain an order for a mandatory injunction.[132] This is an onus Council bears.
ADCO Constructions says that Council fails to adequately address this issue at a factual level, treating ADCO Group and ADCO Constructions - and the contracts and consequences of breach - as one and the same. Different contracts and claims are alleged against each. The question of whether damages are an adequate remedy needs to be determined with reference to the contract between Council and ADCO Constructions (if established) and the consequences of ADCO Constructions' breach (if established).
It says that Council's submissions have nothing to do with the contention that damages are an inadequate remedy. Council's submissions could only have relevance to why damages are an inadequate remedy for the alleged breach of the Construction Contract by ADCO Group, and have no relevance to ADCO Constructions. In respect of the reference to the loss of a 'risk allocation mechanism', ADCO Constructions contends that the discussion in East Rockingham as to risk allocation mechanisms has no relevance to parent company guarantees (which do not function as risk allocation mechanisms) and is unique to bank guarantees (which are qualitatively different to parent company guarantees). Regarding Council's submission that it acted promptly and reasonably once it became aware that the PCG had not been provided, ADCO Constructions says that (insofar as this submission might be relevant to ADCO Constructions) the Council only raised with ADCO Constructions:

[164]

This case tells a salutary tale. Council has a contractual right as against ADCO Group to be provided with a parent company guarantee and indemnity executed by ADCO Constructions. At the time of contracting and shortly thereafter, the prevailing contractual situation meant that Council was in a strong commercial position: it had both contractual and commercial leverage to ensure it was given the executed PCG, due to the fact that without it, Council could have refused to give ADCO Group access to the site to conduct the works and it could have refused payments being made to ADCO Group. I have little doubt that had Council exercised its contractual rights at the time, the executed PCG would have been forthcoming. Events having transpired the way they have, and in face of the delays and added costs of the Project, in particular the consequences of the Roof Collapse, ADCO Constructions has taken what appears to be a commercially opportunistic approach to not execute the PCG. It took that approach in December 2024, adopting ADCO Group's position as to the narrow interpretation of clause 5.6 of the Construction Contract to contend that Council's right to the executed PCG was conditional and as to the fallback position that in any event Council had waived its rights to the executed PCG. The basis for those positions has now fallen away, with the findings I have made in this judgment. I have decided to make an injunction in favour of Council against ADCO Group mandating ADCO Group to do all within its power to provide the executed PCG to Council. The evidence is that ADCO Constructions and its subsidiaries have, for many years now, undertaken significant construction projects, including for a number of local councils. The evidence also establishes that at the time ADCO Group agreed to the requirement for a parent company guarantee and indemnity to be included in the Construction Contract, it likely had at least informal approval from ADCO Constructions for that negotiating position. The evidence in this case does not establish that Council has a contractual right to the PCG as against ADCO Constructions, however all of the circumstances of this case (as it now stands) and the broader commercial considerations mean that at the very least, ADCO Constructions has an opportunity to reconsider its position.
The parties are to confer in respect of an appropriate form of order to give effect to these reasons, and as to costs. By 4pm on Wednesday 17 December 2025, the parties are to provide my Chambers with:

Plaintiff v Defendants

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Judgment (259 paragraphs)

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Cases Cited (33)