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[2022] VSC 467
Supreme Court of Victoria
2022-08-18
Connock J
Original judgment source is linked above.
CONTRACT - CONSTRUCTION - Construction of deed of settlement - Alleged breach and repudiation of the deed of settlement - Calculation of rent - Obligations of parties to the deed of settlement - Whether deed of settlement repudiated - Whether alleged repudiation accepted - Alleged failure to co-operate - Alleged failure to give the other party the benefit of the agreement - Specific performance - Uncertainty - Severance of contractual terms - Implied term to do all things necessary to all the other party to have the benefit of the contract - Breach of contract - Whether deed of settlement affirmed - General principles of construction of contract - Whether failure to pay rent under an existing lease a breach of the deed of settlement - Masters v Cameron - General principles regarding repudiation of contracts - Implied terms - Uncertainty - Affirmation - Acceptance of repudiation.
Part E: Terms and operation of the Settlement Deed 29
Part E.1 - Defendants' contentions regarding the Settlement Deed and the claimed engagement of Masters v Cameron principles 30
Part E.1.1 - Masters v Cameron - Defendants' position 30
Part E.1.2 - Masters v Cameron - Plaintiff's position 35
Part E.1.3 - Principles and observations - Masters v Cameron 38
Part E.1.4 - Consideration and determination - The defendants' Masters v Cameron contention 45
Part E.2 - Settlement Deed execution and date that it came into effect 55
Part E.3 - Object and purpose of the Settlement Deed 56
Part E.4 - Implied term of the Settlement Deed requiring the parties to co-operate 58
Part E.6 - Was the New Lease to come into effect and operate from no later than 1 October 2019? 71
Part E.6.1 - New Lease from 1 October 2019 - Plaintiff's position 72
Part E.6.2 - New Lease from 1 October 2019 - Defendants' position 74
Part E.6.3 - Principles and observations - Time for performance of contractual obligations 78
Part E.6.4 - Consideration and determination - New Lease from 1 October 2019? 82
Part E.7 - Clause 4 of the Settlement Deed and the entitlement to a six-month licence of the top floor of Unit 27 'at no cost' 92
Part E.8 - Whether the terms (ie the words) of clause 2(b) regarding the rental determination mechanism for the New Lease were intended to be an express term of the New Lease 94
Part E.9 - The premises the subject of the New Lease 96
Part E.10 - Commencement of the New Lease and discontinuance of the 2016 Lease 97
Part E.11 - Was Rossi Recycling obliged to pay rent under the 2016 Lease? 97
Part E.12 - Clause 2(e) of the Settlement Deed: construction, uncertainty, and severability. 99
Part E.12.1 - Plaintiff's position - Clause 2(e) 99
Part E.12.2 - Defendants' position - Clause 2(e) 102
Part E.12.3 - Principles and observations - Uncertainty and severance 103
Part E.12.4 - Consideration and determination - Clause 2(e), construction, uncertainty and severance 113
Part E.13 - Item 22 of the schedule to the 2016 Lease 123
Part E.13.1 - Consideration and determination - Item 22 124
Part E.14 - Brief summary of conclusions regarding the operation and construction of the Settlement Deed 127
Part F: Alleged breaches of the Settlement Deed by the defendants, the notices of breach, and the taking possession of the 2016 Lease Premises and other parts of Unit 27 129
Part F.1 - Alleged breaches of the Settlement Deed by Paul or Buckland Valley 130
Part F.1.1 - Failing or refusing, or continuing to fail or refuse, to draft a lease 131
Part F.1.2 - Not responding to the plaintiff's proposed valuer and not agreeing or proposing to refer the question of market rental to the Australian Property Institute 136
Part F.1.3 - Demanding rent pursuant to the 2016 Lease for the months of October 2019, November 2019 and December 2019 and thereafter; issuing notices of breach alleging failure to pay rent pursuant to the 2016 Lease; and taking possession of the 2016 Lease Premises and other parts of Unit 27 for failure to remedy defaults referred to in the notices of breach issued under the 2016 Lease 140
Part F.1.4 - The validity of the notices of breach issued by Buckland Valley on 18 and 22 November 2019 and the taking of possession of the property by Buckland Valley on 8 and 10 December 2019, including whether it was 'wrongful' or 'unconscientious' 146
Part G: Rossi Recycling and Glen's estoppel claim 150
Part H: Alleged breaches of the Settlement Deed by Glen and Rossi Recycling 153
Part H.1 - Alleged breaches of the Settlement Deed by Glen 155
Part H.1.1 - Glen taking steps to appoint himself as a director and terminate Paul as a director without the consent or authorisation of Paul; Glen taking steps to transfer Paul's shares in Rossi Recycling without the consent or authorisation of Paul; Glen filing forms with ASIC to reflect resignation, appointment and transfer 155
Part H.1.2 - Refusing Paul access to the Business premises to permit Paul to take possession of commercial waste bins 162
Part H.1.3 - Failing to give Paul possession of commercial waste bins 168
Part H.1.4 - Causing the 2016 Lease to be terminated 169
Part H.2 - Alleged breaches of the 2016 Lease by Rossi Recycling or Glen and related matters 174
Part H.2.1 - Whether Rossi Recycling or Glen breached the 2016 Lease by the non-payment of rent for October, November and December 2019 175
Part H.2.2 - Whether Rossi Recycling or Glen demanded or evinced an intention that Rossi Recycling would not remedy the rental payment breaches of the 2016 Lease unless Buckland Valley agreed to a monthly rent of $16,666.66 payable under that lease 176
Part H.2.3 - Whether Rossi Recycling or Glen denied the existence of any ongoing monthly tenancy over the premises the subject of the 2016 Lease 179
Part H.2.4 - Whether Rossi Recycling or Glen denied the existence of the 2016 Lease 179
Part H.2.5 - Whether Rossi Recycling or Glen refused or failed to recognise Buckland Valley's contractual rights under the 2016 Lease or any existing lease 181
Part H.2.6 - Whether Rossi Recycling or Glen committed trespass by re-taking possession of the premises on 9 December 2019 before being locked out again by Paul and Buckland Valley at about 5am the following morning 182
Part H.2.7 - Whether Rossi Recycling or Glen caused the 2016 Lease to be terminated by any or all of the conduct referred to in Parts H.2.1 to H.2.6 above 185
Part I - Whether Glen or Rossi Recycling repudiated the Settlement Deed by reason of the conduct referred to in Parts H1 or H2 above 186
Part I.1 - Principles and observations - Repudiation 187
Part I.3 - Rossi Recycling and Glen's repudiation position 194
Part I.4 - Consideration and disposition - Repudiation 196
Part I.5 - Was any repudiation accepted by Paul and Buckland Valley and did Paul and Buckland Valley affirm the Settlement Deed? 202
Part I.5.2 - Glen and Rossi Recycling's submissions 203
Part I.5.3 - Consideration and disposition - Acceptance of repudiation and affirmation 205
Part I.6 - Was the taking of possession of Unit 27 by Buckland Valley done under the Settlement Deed, an affirmation of it, and/or a failure to give quiet possession under the 2016 Lease? 212
Part J: Is Rossi Recycling entitled to an order for specific performance of the Settlement Deed? 214
Part J.1 - Glen and Rossi Recycling's submissions 214
Part J.2 - Paul and Buckland Valley's submissions 217
Part J.4 - Consideration and disposition - Specific performance 220
Part K: Paul's counterclaim in respect of the Alleged Rossi Debt 229
1 These reasons relate to the determination in part of acrimonious disputes that have arisen over a number of years between members of the Rossignoli family in connection with a recycling business, property and other assets of related companies and discretionary trusts. In broad terms, the disputes have been between Paul Rossignoli on the one hand, and his three adult children on the other, namely, Glen, Matthew, and Catherine[1] - and in the current context, between Glen and Paul in particular. Glen is the second defendant to counterclaim. Matthew and Catherine are not parties to this proceeding.
2 The family disputes have a long and involved history and have been the subject of two previous proceedings in this court and other proceedings. The two previous proceedings in this court (Settled Proceedings) were settled on the terms set out in a deed of settlement dated 6 September 2019 (Settlement Deed).
3 The claims and counterclaims in the current proceeding relate to the meaning, operation, and alleged breaches of the Settlement Deed. The plaintiff (Rossi Recycling or plaintiff) claims that the defendants have breached the Settlement Agreement and seeks orders for specific performance of the Settlement Deed, damages for its breach, and other relief.
4 The defendants resist these claims. The first defendant (Buckland Valley) alleges that the Settlement Deed was repudiated by the plaintiff, that the repudiation was accepted by at least early December 2019, and that the Settlement Deed is at an end. Buckland Valley seeks a declaration to this effect by its counterclaim. By his counterclaim the second defendant (Paul) also alleges that the Settlement Deed was repudiated and terminated. Paul claims damages from Rossi Recycling for an alleged breach regarding the provision of waste bins to him and a breach of clause 6 of the Settlement Agreement, which is alleged to have imposed a contractual obligation upon Rossi Recycling to re-pay to Paul a debt of $353,281 (Alleged Rossi Debt).
5 At the request of the parties, and because some damages issues cannot be determined prior to certain independent third party rental valuation steps occurring if specific performance of the Settlement Deed is ordered, the trial was split and the hearing the subject of these reasons did not address any damages or compensation issues.[2]
6 Central to the disputes, issues, and the terms of the Settlement Deed, are the recycling business known as Eastern Recycling (Business) owned by the plaintiff as trustee of the Rossignoli Property Trust (RP Trust), and the premises from which it operates in Ringwood, Victoria. That property is owned by Buckland Valley as trustee of two trusts, the Rossignoli Trust No. 3 (RT3 Trust) (as to 70%) and the Heatherdale Property Trust (HP Trust) (as to 30%). The Business employed about 22 staff at the time of the hearing, and its previous year's turnover was said by Glen to have been about $5.6 million, with it being said that the Business was on track for a turnover of about $7 million to $8 million for the current year.
7 Paul started the Business,[3] and Glen has worked in the Business from a young age. In 2012 Glen was appointed by Paul as its General Manager. Paul and Glen no longer get on and have not done so for some years. Paul is, and was at all relevant times, the sole director and shareholder of Buckland Valley. At the time of entry into the Settlement Deed, Paul was also the sole director of, and held 6 of the 12 shares (50%) in, Rossi Recycling. At that time, Glen, Matthew and Catherine each held 2 shares in Rossi Recycling.[4]
8 The premises from which Rossi Recycling operates the Business is the subject of a five-year lease between Rossi Recycling and Buckland Valley, the term of which commenced on 1 October 2016 (2016 Lease).
9 The 2016 Lease utilised the standard form Law Institute of Victoria (LIV) (Commercial Property) lease document. It was common ground that this LIV standard form lease document is what is referred to in clause 2(e) of the Settlement Deed, which was apparent on the evidence in any event.
10 The premises the subject of the 2016 Lease (2016 Lease Premises) were described in the following terms:
First Floor office area factory 27, Unit 38 (weighbridge) and Unit 39 (storage area) 87-91 Heatherdale Road Ringwood and S3 Industrial Area 1 (with exeption [sic] of 800m in lots 13 and 14 on north side industrial 1 Area of the property[5]
11 It was common ground that the reference to areas 38 and 39 was intended and understood to be a reference to areas 48 and 49, and that the reference to lots 13 and 14 was intended and understood to be a reference to lots 14 and 15.[6] Although there had been some potential for confusion regarding the identification and layout of the premises as a result of some land subdivision over time, this was addressed in a helpful annotated land diagram document tendered by the defendants that was not relevantly controversial.[7] For ease of reference this document (Land Diagram) comprises Attachment 1 to these reasons.
12 The disputes the subject of the Settled Proceedings related in part to the Business, the premises from which it operated, and the 2016 Lease. In one of the Settled Proceedings (Trustee Removal Proceeding) Glen was seeking to have Rossi Recycling and Buckland Valley removed as trustees of the trusts earlier referred to. Allegations were made against Paul regarding his fitness to act, including an allegation that the rental set by Paul for Buckland Valley as lessor, and accepted by Paul for Rossi Recycling as lessee under the 2016 Lease, was materially excessive. In the second of the Settled Proceedings (Receiver Proceeding), Paul was seeking to have receivers appointed to Rossi Recycling on the basis of an allegation that the Business was not financially viable. It was during the trial of these proceedings in 2019 that a settlement agreement was reached and the relevant parties entered into the Settlement Deed.
13 The Settlement Deed is set out later in these reasons. In broad terms[8] the Settlement Deed provided for, among other things: Paul to step away from Rossi Recycling and the Business; Glen being transferred Paul's shares in Rossi Recycling and becoming the appointer and guardian under the RP Trust; Buckland Valley agreeing to enter into a new five-year lease[9] with Rossi Recycling at a rent to be agreed or determined by an independent valuer (New Lease); certain related party loans being dealt with; the retention by Paul of some specified items of equipment and waste bins; the dismissal of each of the Settled Proceedings; and the parties releasing each other from further claims.
14 After the Settlement Deed was entered into further disputes arose between Glen and Paul regarding, among other things: its meaning and operation; what was required of each party; the appointment of an independent valuer to determine the rental under the New Lease; the amount of rental payable in the meantime; the equipment and waste bins to be retained by Paul; and some other matters. In early December 2019 this saw Paul locking Glen and Rossi Recycling out of the 2016 Lease Premises for alleged non-payment of rent and the serving of notices of re-entry; Glen and Rossi Recycling seeking to take back possession of the 2016 Lease Premises and conduct the Business; and Paul and Buckland Valley taking further steps locking Glen and Rossi Recycling out of the 2016 Lease Premises and seeking to terminate the 2016 Lease.
15 On 11 December 2019 this proceeding was commenced by Rossi Recycling seeking urgent relief. The relief sought included declarations that the notices of breach of the 2016 Lease dated 18 and 22 November 2019 were void and of no effect; specific performance of the Settlement Deed; an interlocutory injunction restraining the defendants from interfering with the plaintiff's occupancy; and relief from forfeiture if the notices of breach were valid.
16 Relief from forfeiture orders were made by Macaulay J in December 2019, from which time Rossi Recycling has continued to operate the Business from the premises the subject of the 2016 Lease.[10]
17 Since that time the interlocutory steps in the proceeding have been drawn out and there have been many amendments to claims and counterclaims, as well as other interlocutory disputes and issues between the parties. Many issues for determination were raised and identified by the parties, ultimately leading to a further revised list of issues being in the form provided to the court during the trial on 28 October 2021 (Revised Issues List). This list is reproduced as Attachment 2 to these reasons. In these reasons some of the issues have been addressed in different order or under broader or more collective topic headings.
18 A summary of my determinations and conclusions is set out in Part L of these reasons. As will be seen, I have concluded that:
(a) Orders will be made requiring Buckland Valley and Paul to specifically perform their respective obligations under the Settlement Deed, including the obligations under clause 1, the Co-operation Terms, and the entry into the New Lease pursuant to clause 2 at the independently determined current market rental addressed in clause 2(b) of the Settlement Deed.
(b) Buckland Valley and Paul's counterclaim for a declaration that the Settlement Deed has been repudiated by Glen and Rossi Recycling, and terminated by Buckland Valley and Paul, has failed and will be dismissed.
(c) Paul has failed in his counterclaim:
(i) against Glen and Rossi Recycling seeking damages for breach of the Settlement Deed in relation to the waste bins;[11]
(ii) against Rossi Recycling for damages or payment of an amount of money (and interest) in respect of the Alleged Rossi Debt.
(d) The decree of specific performance and the precise form of orders will be further addressed with the parties, including:
(i) whether the position with the Last Bin, or payment of the second instalment under clause 6(b) of the Settlement Deed, should be addressed by way of conditions in connection with the orders granting specific performance;
(ii) directions and orders for the future conduct of the proceeding and the hearing and determination of the remaining issues in the proceeding regarding the plaintiff's damages and compensation claims.
19 Tractax Pty Ltd (ACN 056 188 562) was incorporated on 3 June 1992. On 3 June 1992, the RP Trust was created by deed, the trustee of which was Tractax Pty Ltd.
20 On 19 April 1993, Buckland Valley was incorporated. Paul is and was at all material times the sole director of Buckland Valley.
21 Paul also owned and controlled a demolition company, Able Demolition and Excavation Pty Ltd (Able Demolition), which is currently in liquidation.
22 On 20 April 1993, the RT3 Trust was created by deed.
23 On 1 June 1994, the Business was established, which was acquired by Tractax Pty Ltd on 14 March 1995.
24 On 11 June 1996, Tractax Pty Ltd was renamed Rossi Recycling.
25 Glen was appointed as General Manager of Rossi Recycling in July 2012 and took up the role of managing the Business. The appointment of Glen as General Manager was due to Paul suffering a mental health breakdown. Paul stated that he considered that his family members would be the best option available to run the Business.
26 Glen stated that during his working life he had only worked at Rossi Recycling and other companies owned by Paul, including Able Demolitions.
27 On 5 September 2001, the HP Trust was created by deed.
28 On 4 October 2001, Buckland Valley purchased two properties located at 87-91 Heatherdale Road, Ringwood and 22 Palmerston Road, West Ringwood, respectively. The two properties were each purchased by Buckland Valley - as to 70% as trustee for the RT3 Trust, and as to 30% as trustee for the HP Trust.
29 On 1 October 2016, Buckland Valley as lessor and Rossi Recycling as lessee entered into the 2016 Lease.[12] Paul said a lease was required because he could not agree with Glen on the running of the Business and Paul wanted to make sure that there was no doubt about the rent that had to be paid.
30 The rent for the 2016 Lease recorded in item 6 of the schedule to the 2016 Lease was $334,908[13] inclusive of GST per annum payable monthly in advance on the first day of each month. The term of the lease was for five years, starting on the first day of October 2016, with four five-year options to renew. Between 1 October 2016 and 1 September 2019, Rossi Recycling paid rent consistent with the terms of the 2016 Lease, which was not in issue between the parties.
31 On 28 February 2018, Glen commenced the Trustee Proceeding in the Supreme Court of Victoria against Rossi Recycling, Buckland Valley and Paul. The Trustee Proceeding was commenced by Glen due to disagreements with Paul around the Business and what Glen considered was materially excessive rent being charged by Buckland Valley to Rossi Recycling under the 2016 Lease. The relief sought included:
(a) injunctions preventing Paul, Rossi Recycling and Buckland Valley from acting other than in the ordinary course of business and preventing Paul from exercising his power as guardian and appointor of the RP Trust, the HP Trust and the RT3 Trust; and
(b) replacement of Rossi Recycling and Buckland Valley as trustees of the RP Trust, the HP Trust and the RT3 Trust.
32 The allegations in the Trustee Proceeding included an allegation that the 'fair market rental for the premises under the 2016 Lease was approximately $200,000 per annum' and that Paul had 'caused [Rossi Recycling] to pay significantly higher than market rental'.
33 On 29 November 2018, Paul commenced the Receiver Proceeding against Rossi Recycling seeking the appointment of a receiver to the assets and business of Rossi Recycling. In the lead up to the commencement of the Receiver Proceeding, Paul had stated that he had formed the view that the Business was not viable and that he wanted to close it down and sell the property from which it operated.
34 On 6 September 2019, and following a mediation held during the trial of the Settled Proceedings, Rossi Recycling, Glen, Paul and Buckland Valley executed the Settlement Deed.
35 On 13 September 2019, the defendants' then solicitors, Slater and Gordon (Slaters) wrote to the plaintiff's solicitors, Dunemann Sutherland (Dunemanns) proposing valuers to assess the rental amount. In part that letter stated:
... our client is content for your client to arrange for the drafting of the relevant documentation regarding the matters set out in clause 1 of the Deed ...
We advise that our client as landlord will attend to drafting the lease of the property. ...
Further to clause 2(b) of that Deed we are instructed to propose the following valuers:
1. Joe Perillo ...
2. Roger Scrivener/John Forsyth ...
Please advise whether your client is agreeable to the appointment of any of the above valuers.
36 On 18 September 2019, Dunemanns wrote to Slaters, enclosing for Paul's signature forms for:
(a) Paul's resignation as director and secretary of Rossi Recycling;
(b) Paul's resignation as appointor and guardian of the RP Trust; and
(c) the nomination of Glen as appointor and guardian of the RP Trust.
37 On 19 September 2019, Slaters wrote to Dunemanns advising that Paul wished to attend the 2016 Lease Premises on 21 September 2019 to collect assets belonging to him as it was said he was entitled to do pursuant to the Settlement Deed. Dunemanns responded stating that upon the return of the documents provided to Slaters, which needed to be executed and returned by Paul, Glen would provide assistance in facilitating Paul's wishes. Slaters responded stating that the documents would be executed, and informed Dunemanns that a tradesman had been organised to attend the premises on Saturday and requested a key to enable him to access the office.
38 On 20 September 2019, Dunemanns wrote to Slaters, informing them that they did not agree with Buckland Valley's and Paul's proposed valuers and proposed the appointment of an alternative valuer, Mr David Matler. No reasons for not agreeing to use the valuers named by Buckland Valley and Paul were given.
39 No response to the proposed alternative valuer was received from Paul or Buckland Valley, although further correspondence was exchanged, including that referred to below.
40 On 20 September 2019, Paul attended the premises but did not take any waste bins away with him. Glen and Paul provided slightly differing accounts of what was said, aspects of which are discussed later in these reasons when addressing the issues. To the extent that there were inconsistencies in the accounts of Glen and Paul, I generally prefer the evidence of Glen over that of Paul, including in relation to this issue. As I discuss further below, I found Glen to be a more credible and reliable witness. That said, and as will be seen, the issues regarding the waste bins narrowed considerably during the trial and in closing submissions. Ultimately the dispute related to one 27m2 waste bin only (Last Bin),which at the time of trial had not been provided. Some of the waste bins were already in Paul's possession and others had been placed by Glen on land controlled by Paul (defined later below as the Red Lot), which was ultimately not controversial. Paul said he already had four or five of the bins and that he collected a further four from the Red Lot.
41 Glen gave evidence, which I accept, that all of the waste bins in question were owned by Rossi Recycling. Although there had initially been an issue about ownership of the bins in connection with Able Demolition, this fell away. In any event, to the extent that Paul's evidence about ownership of the waste bins was inconsistent with Glen's evidence, I do not accept it. I also accept Glen's evidence regarding some of Rossi Recycling's waste bins having been lent to Able Demolitions at some point to assist with a large project.
42 Glen was also consistent in his evidence that Paul was entitled to 'retain' the 10 waste bins referred to in the Settlement Deed and his evidence that Paul already had some of the waste bins and that he (Glen) needed to work out what Paul already had so he could make the balance available. That was a reasonable and understandable position to take. I accept Glen's evidence on this topic, although by the end of the trial there was little or no controversy on the point. As things transpired, events and Paul's position overtook things so that as at the time of trial the Last Bin had not been requested by Paul. As will be seen, I accept Glen's evidence that he intends to give the Last Bin to Paul when he asks for it, or at least make it available for collection.
43 After Paul attended the 2016 Lease Premises on 20 September 2019, further correspondence passed between Slaters and Dunemanns, which concluded in Dunemanns stating:
Please have your client provide a list of those items that he asserts are not the property of Rossi Recycling Pty Ltd and are located at the transfer station on the land coloured yellow on the plan annexed to the Deed of Release.
We believe the documents provided by our client and to be executed by your client are all that is required to transfer control of the trustee and trust as provided in the Deed of Release. Any further documentation is secondary.
Any application brought by your client will be strenuously defended and all recent correspondence will be produced to the Court to support our client's assertion that your client has not honoured his obligations as provided for in the Deed of Release.
44 In September 2019, Glen filed forms with ASIC recording the following changes with effect from 13 September 2019:
(a) the resignation of Paul as a director and secretary of Rossi Recycling;
(b) the appointment of Glen as a director and secretary of Rossi Recycling; and
(c) the transfer of Paul's shareholding in Rossi Recycling to Glen.[14]
45 Rossi Recycling did not pay rent pursuant to the 2016 Lease for the month of October 2019 on 1 October 2019. This is addressed in more detail later below when dealing with the issues regarding the date from which the New Lease was to commence.
46 On 10 October 2019, Paul again attended the premises but did not take any waste bins from the Red Lot or ask for any more waste bins.
47 Rossi Recycling did not pay rent pursuant to the 2016 Lease for the month of November 2019 on 1 November 2019.
48 On 18 November 2019, Slaters sent a letter to Dunemanns enclosing a notice of breach of lease. The notice alleged failure to pay rent on each of 1 October 2019 and 1 November 2019 pursuant to a lease dated 1 October 2019[15] over premises being factory 27, unit 38 (weighbridge), unit 39 (storage area) and S3 (excluding 800m2).
49 On 21 November 2019, Dunemanns responded to Slaters' letter, stating in part as follows:
We refer to your client's purported Notice of Breach of lease and advise that our client does not accept the validity of the same. ...
Never having executed such a lease, our client is completely unaware of the provisions of any lease dated 1 October 2019 and we request that you provide a copy of the same.
We note that our letter of 20 September 2019 has received no response. As, apparently, your client does not accept the appointment of the valuer nominated by our client and our client does not accept the valuers nominated by your client ... we suggest that the parties agree to the nomination of a valuer by the president of the Law Institute of Victoria. ...
Our client has instructed us to repeat that a correct market rental for the premises is in the region of $200,000 per annum and accordingly has instructed us that it is prepared to pay rental to your client at the rate of $16,666.66 per month whilst an appropriate rental is determined by a valuer. Please advise if your client is prepared to accept this arrangement and whereupon payment for the past two months can be made.
Finally we request that you let us have draft lease documentation as provided for in the Deed of Settlement at your earliest convenience. In that regard we confirm having offered to prepare this documentation but your Ms Young advised the writer that she would prepare the same.
50 As a consequence of the typographical error in Slaters' notice of breach of 18 November 2019, which mistakenly referred to a 1 October 2019 lease instead of the 1 October 2016 lease, on 22 November 2019, Slaters responded to Dunemanns' letter, enclosing two further notices of breach. In part that letter read as follows:
Please find enclosed Notices.
In the event that it is found that a lease commencing 1 October 2016 is in existence the first Notice is relied on. In the event it is found that the lease is not in existence, we are of the view that your client is subject to a monthly tenancy and we rely on the second Notice.
In addition, we are concerned in relation to the solvency of your client. We would be grateful if you could provide a copy of your client's financial statements for the year end 30 June 2019 and a copy of the monthly trading reports for the period July to October 2019.
51 The first notice of breach sent on 22 November 2019 alleged a failure to pay rent on 1 October 2019 and 1 November 2019 in the sum of $29,304.45 (each month) pursuant to a lease dated 1 October 2016 over premises being factory 27, unit 38 (weighbridge), unit 39 (storage area) and S3 (excluding 800m2) - being the 2016 Lease. The second (alternative) notice of breach sent on 22 November 2019 alleged a failure to pay rent on 1 October 2019 and 1 November 2019 in the sum of $29,304.45 (each month) pursuant to a month-to-month tenancy with respect to the same premises.
52 On 25 November 2019, Slaters sent a letter to Dunemanns enclosing a resignation and nomination form executed by Paul. The form provided for the resignation of Paul as appointor and guardian of the RP Trust and for the nomination of Glen as appointor and guardian of the RP Trust.
53 Rossi Recycling did not pay rent on 1 December 2019 pursuant to the 2016 Lease for the month of December 2019.
54 Glen stated in his evidence, and I accept, that the legal advice he had received was that he was not obliged to pay an amount of rent for October, November and December 2019 unless it was independently and properly determined in accordance with the terms of the Settlement Deed. He said, and I accept, that he was not trying to get out of paying rent at all and that the money for rent was not spent or needed elsewhere and it stayed in the bank.
55 On 4 December 2019, Dunemanns wrote to Slaters, stating that:
Your client's assertion that somehow a monthly tenancy has arisen is refuted by our client. Equally our client denies the purported legitimacy of a lease dated 1 October 2016 as the same was not executed as at that date.
We note that by the Deed of Settlement ... an arrangement was made whereby a formal lease would be entered into at a rental to be assessed independently. We have made suggestions to your client concerning resolution of the current impasse between our respective clients relating to nomination of a rental assessor. Your client has not responded to these suggestions. Further your client has not provided a draft lease the terms of which would be relevant to any rental assessor.
Accordingly we are instructed to request that your client honour its obligations under the Deed of Settlement and advise if nothing further is forthcoming from your client then our client will be forced to return this matter to court.
56 Although the purported legitimacy of the lease was referred to in this letter, Glen stated in his evidence that he regarded the 2016 Lease as continuing.
57 On 8 December 2019, Paul attended the premises, attached two notices of re-entry, and changed the locks so as to exclude Rossi Recycling and Glen from the 2016 Lease Premises. The first notice of re-entry provided in part:
WHEREAS by a lease with a commencement date of 1 October 2016 ("the lease") where Buckland Valley Pty Ltd ("the landlord") let you Rossi Recycling Pty Ltd as tenant the premises situated at and known as Factory 27, 87-91 Heatherdale Rd Ringwood in the State of Victoria 3134 ("the premises")
...
AND WHEREAS you are in breach of agreement to pay rent and such rent is in arrears for a period in excess of 14 days from the date on which the same is payable
...
AND NOW THEREFORE TAKE NOTICE that the landlord HEREBY ENTERS into and upon the premises to the intent that the lease and the term thereby created upon such re-entry absolutely cease and determine AND TAKE FURTHER NOTICE that the landlord requires you to quit and deliver up possession of the premises forthwith.
WHEREAS you have been occupying premises ("the tenancy") where Buckland Valley Pty Ltd ("the landlord") let you Rossi Recycling Pty Ltd as tenant the premises situated at and known as Factory 27, 87-91 Heatherdale Rd Ringwood in the State of Victoria 3134 ("the premises") on a month to month basis
...
AND WHEREAS you are in breach of agreement to pay rent and such rent is in arrears for a period in excess of 14 days from the date on which the same is payable
...
AND NOW THEREFORE TAKE NOTICE that the landlord HEREBY ENTERS into and upon the premises to the intent that the Right to Occupy and the term thereby created upon such re-entry absolutely cease and determine AND TAKE FURTHER NOTICE that the landlord requires you to quit and deliver up possession of the premises forthwith
59 On 9 December 2019, Glen attended the premises, 'jemmied' the locks and operated for the day.
60 On 10 December 2019, security guards engaged by Paul attended the premises at approximately 5am, and on the instructions of Paul took possession of the 2016 Lease Premises and the other parts of Unit 27 for Buckland Valley, changed the locks and excluded Rossi Recycling and Glen from the premises. A dispute arose and the police were called, although they did not stay involved because it was a civil matter. Glen and Rossi Recycling were prevented from accessing the 2016 Lease Premises.
61 On 11 December 2019, Rossi Recycling filed the writ in this proceeding seeking, among other things, specific performance of the Settlement Deed, relief from forfeiture if the notices of breach were valid, and injunctive relief against Buckland Valley and Paul.
62 A contested hearing before Macaulay J took place on 12 December 2019. The material relied upon by Buckland Valley and Paul included an affidavit of Glen sworn 10 December 2019 and an affidavit of Paul affirmed on 12 December 2019. The reasons of Macaulay J record that Rossi Recycling:
openly offered in court to pay the arrears of rent at $29,304.45 per month for October, November and December and undertook to pay rent in the same monthly sum until the determination by an independent valuer of any different market rental, under a new lease in accordance with the deed of settlement.[16]
63 On 12 December 2019, interim orders for possession were made by Macaulay J until 11am on 13 December 2019, pending payment of $87,913.35 as rent claimed by Buckland Valley pursuant to the 2016 Lease. Glen gave evidence, which I accept, that there was sufficient money in the Business account at that time, which he estimated to be about $300,000.
64 When concluding that it was appropriate to grant the relief sought, Macaulay J also observed that he did:
not regard it as equitable that [Paul] should be able to take advantage of Rossi's failure to pay three month's rent, which Rossi now undertakes to pay, as the grounds for being able to secure a radically different outcome to the one he agreed to three months ago, to the substantial detriment to Rossi.[17]
65 The rental arrears under the 2016 Lease for the months of October, November and December 2019 was paid by Rossi Recycling to Buckland Valley on 12 December 2019.
66 On 13 December 2019 orders were made by Macaulay J in the following terms (excluding formal matters):[18]
ORDER
...
OTHER MATTERS: A. This order is signed by the Judge pursuant to rule 60.02(1)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules).
B. On 12 December 2019, on the return of the plaintiffs summons dated 11 December, INTERIM orders were made ordering the defendants to give possession of the premises until 11 am on 13 December 2019 pending payment to the first defendant of $87,913.35 as rent for the premises. That order was made on the basis that if that payment was made, the same orders for possession would be made on an INTERLOCUTORY basis pending the hearing and determination of the proceeding.
C. On 12 December 2019, the plaintiff paid $87,913.35 to the defendants, accordingly, the orders for possession are made on an INTERLOCUTORY basis as follows:
THE COURT ORDERS THAT:
- The defendants give possession to the plaintiff of the properties referred to in the Deed of Settlement dated 6 September 2019 identified as:
- The top floor of Unit 27, 89 Palmerston Road Ringwood;
- That part of the plan attached to the Deed of Settlement dated 6 September 2019 marked yellow.
- The defendants are restrained until further order, but subject to the terms of any lease that may subsequently be entered between the plaintiff and the first defendant, from interfering with the plaintiff's possession and quiet enjoyment of:
The top floor of Unit 27, 89 Palmerston Road Ringwood;
That part of the plan attached to the Deed of Settlement marked yellow.
AND THE COURT FURTHER DIRECTS THAT;
- Notwithstanding non-compliance with r 5.04(3) of the Rules, the indorsement of claim on the writ shall stand as the plaintiff's statement of claim and compliance with r 14.02 (that the plaintiff serve a statement of claim within 30 days of the defendants' appearance) is dispensed with.
- By 4:00 pm on 31 January 2019 the defendants file and serve their Defence.
- The proceeding be listed for directions before a Judge in the Commercial Court for directions.
- Costs of the plaintiff's summons are reserved.
67 In early 2020, Paul took some initial steps to list for sale part of the 2016 Lease Premises, being what was known as (variously) the upstairs of Unit 27, factory 27, area 27, or lot 27 (Unit 27).
68 On 5 February 2020, Dunemanns wrote to Slaters, stating:
We are instructed that [Paul] attended our client's business premises yesterday, unannounced and uninvited with an estate agent, Rowan Thompson, demanding access to our client's office so as to allow inspection by potential purchasers. Our client, rightfully, refused admission.
The estate agent later confirmed your client has listed Lot 27 for sale.
We refer to paragraph 5 of the Deed of Settlement dated 6 September 2019 and wherein your client granted our client a 12 month option to purchase Lot 27. Your client's present actions referred to above tend to suggest that your client does not consider himself bound by the Deed of Settlement. Please immediately confirm that your client does not intend to sell the property and will honour his said contractual obligations. In the absence of receiving such advice our client will be forced to bring yet further proceedings against your client seeking an injunction to restrain any such sale.
We refer to paragraph 2 of the Deed of Settlement dated 6 September 2019 and confirm that no agreement has been reached concerning the appointment of an independent property valuer to determine the initial rent and that we have received no response to our client's suggested valuers. In these circumstances our client will not unilaterally seek such appointment.
69 On 14 February 2020, Slaters responded to Dunemanns' letter of 5 February 2020 stating that Unit 27 had been taken off the market:
We refer to your letter of 5 February 2020 and advise that the property at Unit 27, 87-91 Heatherdale Road, Ringwood and referred to in your letter as Lot 27 has been taken off the market.
70 On 15 March 2020, a notice relating to the RP Trust was executed by Glen stating:
Take notice that Rossi Recycling in its capacity as Trustee of the RPT intends after the expiry of 14 days from the date hereof to exclude [Paul] as a General Beneficiary of the RPT.
The notice was executed by Glen, who it was stated was authorised to sign on behalf of Rossi Recycling as the sole director.
71 On 18 March 2020, Buckland Valley requested Rossi Recycling to provide copies of: financial statements of the RP Trust for the six month period ending 31 December 2019; monthly trading statements for January to February 2020; and the cash balance of the RP Trust as at 13 March 2020.
72 On 19 March 2020, Slaters wrote to Dunemanns. Through this letter, Buckland Valley notified Rossi Recycling of its intent to take possession of 'area 27' on 23 March 2020, stating in part:
We note that the existence of a Deed of Settlement dated 6 September 2019 is currently in dispute. Regardless of whether those terms are applicable, the term in paragraph 4 granting a licence over "area 27" has now expired.
As a result, our client intends to take possession on 23 March 2020.
Please ensure your client has vacated the premises and clear access is provided so that possession can occur by that date.
73 On 20 March 2020, Rossi Recycling provided some information via correspondence from Dunemanns to Slaters, namely: Rossi Recycling bank balances between September 2019 and 13 March 2020; and Rossi Recycling profit and loss statement for the period July 2019 to December 2019.
74 On 23 March 2020, the six-month period referred to in clause 4 of the Settlement Deed came to an end and Rossi Recycling gave up possession of those parts of Unit 27 referred to in that clause to Buckland Valley.
75 On 1 April 2020, by declaration of exclusion dated 1 April 2020 and executed by Paul for Rossi Recycling as trustee of the RP Trust, Paul was excluded from the class of general beneficiaries of the RP Trust.
76 During September 2020, Buckland Valley requested Rossi Recycling to provide copies of: financial statements of the RP Trust for the period 1 January 2020 to 1 June 2020; monthly trading statements for March to August 2020; and the cash balance of the RP Trust as at 30 August 2020.
77 Following a change in the structure of Slaters' legal practice, by September 2020 Paul and Buckland Valley were (and continued to be) represented by Aptum Legal.
78 In connection with the claims in this proceeding, a court-appointed expert was appointed to provide an opinion regarding market rental under the 2016 Lease. The parties considered that this may assist in resolving the disputes. The court-appointed expert was Mr Brindley. It was common ground that this was not an appointment under the Settlement Deed, which Paul alleged was at an end in any event. On 20 February 2021, Mr Brindley provided a report and determined that, in his opinion, the market rental for the premises under the Proposed Lease was $216,500 per annum (plus GST) which was $19,800 per calendar month with two months' rent free[19] (Brindley Report). It was common ground between the parties that in this part of the hearing, the parties were not relying upon the Brindley Report for the purposes of establishing the market rental or in relation to damages.
79 On 26 March 2021, Aptum Legal issued a demand to Rossi Recycling for payment of the Alleged Rossi Debt of $353,281. This amount was not paid by Rossi Recycling.
80 Dunemanns responded on 29 March 2021, noting that the assertion that the Settlement Deed had been repudiated 'is hotly contested in this proceeding before the Supreme Court.' Reference was also made to Buckland Valley acting consistently with the Settlement Deed by taking possession of Unit 27 at the expiry of the six-month period referred to in clause 4 of the Settlement Deed. Dunemanns stated that if any steps were taken to enforce the Alleged Rossi Debt, urgent injunctive relief would be sought together with indemnity costs orders.
81 On 17 June 2021, Dunemanns wrote to Aptum Legal seeking confirmation as to whether, pending the hearing of this proceeding, they required payment of the $114,427 due pursuant to clause 6(a) of the Settlement Deed, which addressed the Alleged Rossi Debt. That letter read as follows:
We refer to clause 6 of the deed of settlement executed on 6 September 2019 pursuant to which Rossi Recycling was obliged to pay to Paul Rossignoli the sum of $114,427 by 1 July 2021, with a further payment of $114,427 by 1 July 2022.
Rossi Recycling is ready, willing and able to make such payments, and in particular for present purposes, is ready willing and able to pay the sum of $114,427 to Paul Rossignoli by 1 July 2021 pursuant to the terms of the Deed of Settlement.
Please confirm whether your client accepts that the deed of settlement continues to bind the parties so that the amount of $114,427 is payable by 1 July 2021, in which case the payment will be made by the due date. For the sake of clarity, our client's position is that the deed of settlement has not been repudiated and continues to bind the parties.
Alternatively, please confirm by return correspondence if your client continues to maintain that the deed of settlement has been repudiated so that the sum of $114,427 is not payable by 1 July 2021. If so, our client will not make any such payment. But failure to make such payment should not be taken to be an acceptance by our client that deed of settlement has been repudiated. As stated above, our client's position is that it has not been repudiated.
82 On 22 June 2021, Aptum Legal responded stating, in part:
It is a matter for your client whether it pays Mr Paul Rossignoli the amount of $114,427 on 1 July 2021. If it does not, we will be submitting at trial that that conduct is consistent with the repudiation of the deed of settlement by your client.
You should be aware that if your client decides to pay the above at the time your client itself contends it is obliged to do so, Mr Rossignoli will treat that amount in reduction of the damages payable by your client for breach of clause 6 of the deed of settlement and will indicate to the Court at trial that it accepts that reduction in damages.
83 On 1 July 2021, Rossi Recycling paid $114,427 to Paul, which was accepted by Paul and stated by Aptum Legal to be 'received as a reduction in damages recoverable by the second plaintiff by counterclaim from the first defendant by counterclaim, and the claim for such damages will be reduced accordingly at trial'. Dunemanns had previously stated on 28 June 2021, as the 'final say' in the matter, that the payment was made by Rossi Recycling in satisfaction of its client's obligations under the Settlement Deed.
84 On 1 August 2021, Rossi Recycling did not renew the 2016 Lease, and Aptum Legal wrote to Rossi Recycling stating that 'from 30 September 2021 Buckland Valley will remain in possession of the Premises on a monthly overholding basis pursuant to clause 10 of the Lease' and that the monthly rent would remain at $29,304.
Part C: The Settlement Deed
85 The Settlement Deed is relatively short, although that has not deterred the parties from enthusiastically arriving at points of difference regarding its meaning and operation. It is convenient and helpful to set out its terms in full.[20]
DEED OF SETTLEMENT
This deed of settlement is dated 6 September 2019
BETWEEN:
GLEN ROSSIGNOLI
and
PAUL ROSSIGNOLI
and
ROSSI RECYCLING PTY LTD
(as trustee of the Rossignoli Property Trust)
and
BUCKLAND VALLEY PTY LTD
(as trustee of the Rossignoli Trust No3 and the Heatherdale Property Trust)
RECITALS
The parties to this deed are parties to proceeding S Cl 2018 00737 and S Cl 2018 02512 in the Supreme Court of Victoria (the Proceedings).
The parties wish to settle all issues between them in the Proceedings on the terms set out herein.
In this deed the following abbreviations am used:
'GR' means Glen Rossignoli
'PR' means Paul Rossignoli
'RR' means Rossi Recycling Pty Ltd
'BV' means Buckland Valley Pty Ltd.
'RPT' means the Rossignoli Property Trust
'RT3' means Rossignoli Trust No3
'HPT' means Heatherdale Property Trust
NOW BY THE TERMS OF THIS DEED IT IS AGREED AS FOLLOWS:
PR agrees to:
(a) Resign forthwith as director and secretary of RR;
(b) Transfer forthwith to GR, or at his direction, his total shareholding in RR;
(c) Irrevocably and permanently resign his position as appointor and guardian of the RPT and appoint GR in his place.
Subject to clause 3, BV, and PR as its controller, agree that BV will enter into a commercial lease for the property shown in yellow on the attached plan, on the following terms:
(a) The initial term shall be for a period of 5 years, to commence with effect from the execution of the lease, with 4 consecutive options for 5 year extensions of that term thereafter, such renewals to be on the same terms subject to rental and renewal provision herein;
(b) The initial rent payable shall be that rental which is determined by an independent property valuer who is a certified property valuer with the Australian Property Institute to be appointed by the parties by agreement and if no agreement to be appointed by the Australian Property Institute as being a current market rental for the property and to whom each of PR and GR may make such representations as they see fit and both GR and PR agree to abide the outcome of the valuer's determination without complaint or appeal;
(c) The costs of the independent valuer shall be borne equally by the parties;
(d) During each term there shall be rent rises of 3% per annum, and at the commencement of each further term there shall be a market rental review;
(e) The lease terms shall be on a standard LIV commercial lease, subject to the Retail Leases Act and to terms reasonably permitted by that Act;
(f) The area of the leasehold shall be the land coloured yellow as set out in the attached map at Annexure A, to be recorded within the terms of the lease;
(g) The lessee shall be entitled to modify the premises as it thinks fit with the consent of the landlord, such consent not to be unreasonably withheld.
The existing lease over the property shall terminate immediately upon RR and BV entering into the lease referred to in paragraph 2.
For a period of 6 months from the date of this deed, RR shall be entitled to a licence to occupy and use the top floor of the property referred to within the area referenced by "27" on the attached map, at no cost, together with the right to use the toilets, safe and telephone system on the ground floor, which licence shall be irrevocable for that period.
For a period of 12 months from the date of these terms, RR shall have an option to purchase the property referenced by "27" on the attached map, at market value.
The parties agree that in relation to the loan recorded in the books of account of RR, that RR is indebted to PR in the amount of $353,281 as at 30 June 2018, and which together with any further loan amounts shall be wholly discharged upon the following payments by RR to PR:
(a) $114,427 payable by 1 July 2021;
(b) $114,427 payable by·1 July 2022.
And the parties further agree that the partial payment required by this clause shall discharge the said loan to the extent of such payment.
Subject to paragraph 10, the parties agree that the proceeds of sale from the property known as S5 at Palmerston Road Ringwood, may be distributed to PR as a beneficiary of the RT3 and HPT or otherwise dealt with as BV considers fit.
BV and RR agree that the amount of $579,757 is owed by RR to BV as at 30 June 2018 and BV hereby agrees to release RR from that debt together with any other indebtedness which has accrued since 30 June 2018.
GR acknowledges and agrees:
(a) That the distribution in paragraph 7 is an authorised and valid distribution;
(b) That BV (as trustee of the trusts) is indebted to PR (and/or his associated entities) in the amount of approximately $3.956 million, which indebtedness is payable at call;
(c) That, subject to these terms, BV as the trustee of the above trusts has an unfettered discretion to make distributions (corpus or income or otherwise) in accordance with the trust deeds of those trusts, including PR and associated entities, including a distribution of $10,000 per month to PR and/or his nominee, without prejudice to any other distributions to which the trustee; BV, may make to PR and/or his associated entities, or other benefits, at any time and from time to time.
GR hereby releases and discharges PR and/or his associated entities from any claims, actions, demands, or suits in respect of any action or decisions of BV and/or PR and/or his associated entities, or associated, in respect of, any of the matters referred to in the preceding paragraph (a)-(c).
PR shall indemnify RR against all outstanding legal costs and disbursements as at 5pm 30 August 2019, in relation to the Proceedings incurred but not yet paid by RR including any expert and legal costs.
PR shall be entitled to retain the following plant:
(a) The deck screen;
(b) Wood splitter;
(c) Bale spikes;
(d) Laser level;
(e) 10 bins, being 2 each of 27m, 18m, 10m, 8m and 6m.
The parties release and discharge each other from all claims and demands of whatever kind raised in, or arising out of the subject matter of, the Proceedings.
Upon the execution of these terms, the parties agree to the dismissal of the proceedings with no orders as to costs and shall sign consent orders to that effect.
The deed may be executed in counterparts.
The parties agree that this deed is confidential to the parties and cannot be disclosed to any third party other than in order to meet taxation or other legal requirements or otherwise by operation of law.
This deed comes into effect at 5pm on 13 September 2019
Executed as a Deed this [6th] day of September 2019.
................................................
Glen Rossignoli
................................................
Paul Rossignoli
................................................
Rossi Recycling Pty Ltd (as trustee for the Rossignoli Property Trust) by Paul Rossignoli as director.
................................................
Buckland Valley Pty Ltd (as trustee for the Rossignoli Trust No3 and Heatherdale Property Trust) by Paul Rossignoli as director.
86 The only witnesses to give evidence were Glen and Paul. They each gave oral evidence in chief[21] and were cross-examined. Due to restrictions associated with the COVID-19 pandemic their evidence was given remotely by audio visual link, which was clear and allowed me to observe each of them closely when they gave their evidence.
87 Glen had worked for his father from a young age and ever since he left school. Glen presented as a straightforward, open, honest and credible witness doing his best to answer questions asked of him, even when at times the question was not always clear to him. His concern was evident and genuine. He was not defensive in cross-examination and did not present as a witness who was seeking to embellish his evidence to suit his position, or as a witness wanting to make speeches. To the extent it was submitted otherwise, I do not accept those submissions. His responses were generally fluent and responsive. He also made concessions or statements that he might have perceived not to suit his position when addressing some of the questions asked.
88 These features of Glen's approach and credibility were apparent through various aspects of his evidence, including, for example, when he addressed the basis of the suggested $200,000 per annum rental pending the obtaining of a market value. He said, and I accept, he was trying to put a number in place until the issue was resolved. Another example was when he naturally volunteered that he had gained access to the premises when first locked out and that he had cut the locks and jemmied open the doors. A further example was his acknowledgement regarding the time it may have taken to get a valuation. It was also apparent from what he said, and I accept, that he was seeking and acting upon legal advice relating to the events and circumstances as they unfolded.
89 It was plain that he considers the relationship breakdown with his father and the ongoing commercial and other disputes to be unfortunate and stressful, financially and otherwise. Given the circumstances as reflected by the history of the proceeding and the evidence, this was unsurprising.
90 The above observations do not overlook the matters raised in cross-examination, or the occasional added comment of Glen regarding his perception of his father, Paul, and Paul's approach and attitude. Given the history of the relationship and disputes over many years, this was understandable and did not detract in any material way from his credibility.
91 The result is that Glen generally presented as a genuine, credible, straightforward and honest witness. To the extent that Paul and Buckland Valley submitted otherwise, I do not accept those submissions. Having regard to some concerns I express below regarding Paul's evidence, where there was a contest upon issues of fact and recollections of events with which they were each involved, I generally prefer the evidence of Glen to that of Paul, subject of course to the impact of any other corroborating evidence.
92 At the time Paul gave evidence he was of advancing years. His evidence regarding his personal history revealed him to have been a hardworking person who, through that hard work, had established successful businesses, including fruit stands at South Melbourne Market, a tree removal business, a demolition business with Able Demolitions, and the recycling business with Rossi Recycling. Paul said, and I accept, that his highest level of education was 'grade 7', which he commenced but did not complete. He said he could not read at all until the age of 32, and described his current level of literacy as being able to read slowly. It was apparent that Paul has been a street smart, hardworking businessperson.
93 With respect to emails, he said that he writes out what he wants to say and his partner, Jane Fulton, types them. Although the language and terms of at least one email, viewed in the context of Paul's evidence regarding his level of literacy, allows for the inference that, at times, Paul's partner is likely to have had greater substantive input on some of the communications than Paul's evidence suggested, it matters not for present purposes.[22] That said, I did regard Paul's evidence on this topic as being at least a little self-serving and defensive.
94 Paul presented as a strong-willed and proud man who in the past, and currently, considers that he knows what is best so far as his children and the Business is concerned. His own evidence and Glen's evidence suggested that he has firm and fixed views, and is not particularly open minded so far as Glen is concerned - or, at times, with others who do not agree with him. His evidence and my observation of Paul saw him appear as a strongminded person with very strong self-belief who likes things to go the way he wants them to.
95 It is possible that these characteristics are what led to Paul presenting at times as someone who was responding to some questions and issues with an eye to what he perceived to be of assistance to his position, rather than always openly and responsively addressing that which was asked of him - which also occurred in evidence in chief. He also was not slow to volunteer matters even if what was being said was not responsive. An example was his added (non-responsive) comment during evidence in chief that he had 'reluctantly' collected waste bins from the Red Lot because they were not in good condition.
96 One concerning example was Paul's evidence in his affidavit affirmed 12 December 2019 in the hearing before Macaulay J regarding a new lease having been entered into as at 12 December 2019 with a security firm called 'Security Guards Melbourne', which was relied upon by Paul to seek to resist the application for relief from forfeiture heard by Macaulay J. In cross-examination in this trial it became apparent that there were real issues regarding the accuracy or truth of this evidence, which was underscored by Paul's statements on the topic in cross-examination. To the extent that Paul equated the grant of a lease to the security firm (as referred to in his 12 December 2019 affidavit relied upon before Macaulay J) with asking 'them to stay there and guard the property until things are resolved', I do not accept that evidence as a credible explanation, which in my view was self-serving and not believable. I also accept that, having regard to Paul's cross-examination on the topic, what was said in his affidavit of 12 December 2019 regarding Buckland Valley having now granted a lease to Security Guards Melbourne cannot be accepted. Paul's evidence and approach to this topic during cross-examination materially undermined his credibility and underscored my impression of his willingness to say at times what he considered to be helpful to his case, whether accurate or not.
97 The end point is that on contested factual issues with Glen, and in the absence of meaningful corroborating evidence, it is in my view necessary to approach Paul's evidence with caution. As I have said, I generally prefer the evidence of Glen where there is a contest with the evidence of Paul.
98 I add that Paul also appeared to have little or limited appreciation of the role he played as a director of the trustees of the relevant trusts, it being apparent that he considered the assets and property to have been more his, than assets of the trusts.
99 That said, and as the parties acknowledged, the majority of factual matters were not in dispute, which was reflected in part in the agreed chronology, the documentary evidence, and various aspects of the parties' written submissions.
Part E: Terms and operation of the Settlement Deed
100 A number of issues were raised regarding the terms, construction, and operation of the Settlement Deed that first need to be addressed before turning to allegations regarding alleged breaches of the Settlement Deed and related matters.
101 In this Part, I address the following matters regarding the operation of the Settlement Deed:
(a) The defendants' contentions regarding the Settlement Deed and the claimed engagement of the Masters v Cameron principles.
(b) When the Settlement Deed came into effect.
(c) The object and purpose of the Settlement Deed.
(d) Whether there was an implied term of the Settlement Deed requiring each of the parties to co-operate so as to allow the other parties to have the benefit of the agreement embodied in the Settlement Deed.
(e) Whether, upon the proper construction of the Settlement Deed, it provided for the terms (ie the words) of clause 2(b) of the Settlement Deed to be set out as terms of the New Lease, or provided for the rental amount to be independently determined first, with that amount then to be inserted into the New Lease.
(f) Whether, upon the proper construction of the Settlement Deed, it provided for the New lease to be entered into at the new rental from 1 October 2019 or alternatively, such reasonable time as may be determined.
(g) What premises were to be the subject of the New Lease.
(h) The proper construction of clause 2(e) of the Settlement Deed, whether it is uncertain, and whether it is severable if it is.
(i) The proper construction of clause 4 of the Settlement Deed, including the reference in it to the entitlement to a licence of the top floor of Unit 27 being 'at no cost'.
(j) When the New Lease was to commence and the 2016 Lease was to end.
(k) Whether Rossi Recycling was obliged to pay rent under the 2016 Lease, and if so, in what amount for the months of October, November and December 2019.
(l) What, upon the proper construction of the Settlement Deed, the terms of the New Lease were to be.
(m) Whether, upon the proper construction of the Settlement Deed, the terms of Item 22 of the schedule to the 2016 Lease (Item 22) are to be included in the New Lease.
Part E.1 - Defendants' contentions regarding the Settlement Deed and the claimed engagement of Masters v Cameron principles
Part E.1.1 - Masters v Cameron - Defendants' position
102 The defendants submitted that the Settlement Deed did not grant a tenancy and submitted that the objective intention of the parties under clauses 2 and 3 of the Settlement Deed was to reflect an intention to settle on what would be the terms of the new lease if one was to be made, rather than to grant a new lease by the Settlement Deed. It was submitted that the parties should not be bound to any new lease unless and until the parties have executed a formal lease.
103 It was submitted that clauses 2 and 3 of the Settlement Deed recorded an intention to settle on what were to be terms of a new lease, if it should be made, with the parties not being bound to any such new lease unless the parties executed a formal contract. This, so it was said, was a 'classic third category of Masters v Cameron, namely that the new lease wouldn't come into effect unless and until there was a[n] execution of the lease where the terms and conditions have been agreed'.
104 It was emphasised that it was one thing for two parties to settle upon what would be the terms of an agreement if it should be made, and quite another thing to make the agreement. The defendants submitted that clauses 2 and 3 of the Settlement Deed did not create a binding lease on Buckland Valley but created a framework for agreement only when the parties agreed to and executed a formal contract, consistent with the third category in Masters v Cameron.
105 In support of this position in their written and oral submissions, the defendants relied upon what were said to be seven matters. In substance it was submitted as follows:
106 First, whilst it was well recognised where the parties intended to make an immediately binding agreement and believed they had done so, the courts will strive to uphold the agreement despite the omission of terms or a lack of clarity. That is not the position where the question before the court is whether or not the parties intended to make a binding contract. It was said that this enquiry ought not to be approached with any predisposition in favour of upholding anything, and that the question was whether there was anything to uphold.
107 Second, the Settlement Deed was to be construed carefully. Clauses 2 and 3 were not intended to have, and did not have, any binding effect of their own. It was submitted that clause 2 of the Settlement Deed does not of itself grant a tenancy until a formal lease is entered into. It was further submitted that clause 2 was in effect a 'subject to contract' provision. In this context, reference was also made to clause 2(a) providing that the new lease was to commence with effect from the time of execution of the New Lease.
108 Third, it was submitted that it was clear that the parties only got so far in the course of this settlement because if they had got all the way then all of the new lease terms would have been specified, or there would have been a mechanism or criteria (such as referral to arbitration or reasonableness) that could provide certainty as to the terms and a provision for formalising the same. The defendants contended that the Settlement Deed specifically contemplated that the agreement for a new lease had not been made and that, upon its proper construction, there was only an 'expectation' of a new lease.
109 Fourth, the terms of clause 2(e) were relied upon. It was submitted that the other parts of clause 2 dealt with major matters, but clause 2(e) expressly contemplated that other provisions would be agreed upon and operate together as one contract once completed, with the 2016 Lease continuing in the meantime. The defendants contended that clauses 2 and 3 provided the expectation of a seamless transition from the existing lease to a new lease if a new lease could be agreed but, if it could not be agreed, the existing lease would continue according to its terms subject to the variation of premises as referred to in clause 4.
110 In this context, reference was made to the new lease being 'on' a standard LIV lease rather than on terms being those 'in' such a lease, and to the further terms to be negotiated under clause 2(e) that were reasonably permitted by the Retail Leases Act 2003 (Vic) (RL Act) - as opposed to reasonable terms. Reference was made to the Settlement Deed not dealing with or prescribing any of the inclusions required which might be inserted into the schedule to the standard LIV lease document, including those regarding, for example: guarantors; outgoings; public risk insurance; the interest rate on money due; the security deposit; the mediation procedure; and whether there would be any additional terms. Reference was also made to Item 22 of the schedule, which is discussed later below. In addition, the defendants referred to the terms included in the court order addressing the court-appointed expert valuation process and Rossi Recycling not wanting such provisions or a guarantee to be part of the new lease.
111 The above matters were said to reveal that the terms to be negotiated were not mechanical but had real commercial substance and were to be agreed in order to make a standard LIV lease complete.
112 It was submitted that clause 2(e) of the Settlement Deed provided the framework for the negotiation of commercially significant terms to go into a new lease but did not commit either the landlord or the tenant to a new lease in the absence of all terms being negotiated and agreed.
113 Fifth, it was submitted that it could not be reasonably concluded that if the parties to the Settlement Deed did not agree on terms of the kind referred to above that they nevertheless intended under the Settlement Deed that Rossi Recycling should have a new lease and be confined only to the terms referred to in clauses 2 (a)-(d) and (f)-(h) of the Settlement Deed.
114 Sixth, it was submitted that the conduct of the parties after the entry of the Settlement Deed could inform the question of whether the parties intended that there would be a new tenancy agreement between Rossi Recycling and Buckland Valley upon the Settlement Deed coming into effect. The defendants contended that Rossi Recycling's conduct after the Settlement Deed was executed was consistent with the parties not intending that the Settlement Deed would create a new binding lease unless and until the parties had agreed and executed a new lease. In this context, reference was made to Rossi Recycling's solicitors' letter of 21 November 2019 requesting draft lease documentation and Glen's evidence during cross-examination on that topic regarding the prospect of negotiations.
115 Seventh, it was contended that the court should also take into account the nature and magnitude of the transaction, which was said to be significant for both parties. Without the further kinds of terms referred to above by the defendants it was contended that the new lease would be missing terms usually found in such a lease thereby creating significant elements of commercial uncertainty and incompleteness for both parties, which cannot be ignored when assessing the intention of the parties. The defendants contended that it was inherently unlikely that the parties would have bound themselves to a commercially significant new lease at the time of executing the Settlement Deed.
116 It was submitted that clause 2 of the Settlement Deed alone could not sensibly govern a more than a 20-year commercial relationship and it was missing terms of the kind earlier referred to.
117 The defendants further submitted that the parties to the Settlement Deed have demonstrated that they cannot agree on the terms of any proposed new lease to be made, that a formal new lease cannot be executed, and therefore specific performance cannot lie.
118 It is also to be noted in this Masters v Cameron context that during the exchanges with senior counsel for the defendants during closing submissions, it was confirmed by senior counsel that there was no question that the Settlement Deed was intended to be immediately binding and that clause 2 was intended to be binding. However, it was put that the more pertinent question was whether, embedded in clauses 2 and 3, there was an intention to be bound to a lease or an intention to be bound to a lease if one could be made.
119 In the alternative to their Masters v Cameron submissions, the defendants submitted that clause 2 of the Settlement Deed was unenforceable because clause 2(e) of the Settlement Deed rendered the proposed lease indeterminant and, further, that the clause cannot be excised and the indeterminacy cannot be cured. The defendants submitted that although clause 2 prescribed essential terms, these were necessary but not sufficient. As a result, the further terms contemplated by clause 2 were indeterminant, and any agreement to enter into a new lease failed for want of the complete agreement as to terms. That is, it was insufficiently certain, or void for uncertainty.
120 In this context, it was submitted that clause 2(e) could not be severed because, even if it was, the tenancy remained incomplete in material commercial respects and the lease envisaged by the remainder of clause 2 would not be what the parties had intended by the Settlement Deed.
121 It was further submitted that terms of the kind referred to by the defendants could never be the subject of implied terms or be dealt with by reference to considerations of reasonableness, and that the court could not fill the gaps by such techniques. Reference was made to clause 2 not providing the criteria upon which the court could determine the kinds of terms that should or should not be included in the new lease, noting there was no other mechanism, such as the appointment of an arbitrator to determine further terms, to resolve any uncertainty as to terms.
122 Reference was also made to the absence of evidence as to what terms might be regarded as additional terms that are 'reasonably permitted' by the RL Act and to the fact that the Settlement Deed does not prescribe a criteria of reasonableness. Reference to what were said to be selective terms referred to in the plaintiff's pleading was said to be without merit or foundation, and attention was also drawn to the observations of Kirby P in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (Austotel).[23]
Part E.1.2 - Masters v Cameron - Plaintiff's position
123 The plaintiff did not ultimately approach the Settlement Deed through the Masters v Cameron lens in the way that the defendants did in their submissions. Rather, the plaintiff emphasised that there was no issue between the parties that the Settlement Deed recorded the terms of settlement between the parties and that the parties intended to be legally and immediately bound by its terms at the time of its execution. In this context, it focused upon the application of established principles of construction to the terms of the Settlement Deed and, in particular, the terms and operation of clause 2(e) of the Settlement Deed.
124 The plaintiff contended that the intent and purpose of the Settlement Deed was to transition control of the existing tenancy and Business from Paul to Glen and that, upon its proper construction, the closing words in clause 2(e) do no more than allow the parties to include in the lease such other incidental and reasonable terms as may be agreed between them, but if no further terms were agreed, no further terms would be included.[24] This, so it was said, gave the parties flexibility to agree further terms, but did not require it.
125 It was further submitted that upon the proper construction of clauses 2 and 3 of the Settlement Deed, the deed operated so that the parties would continue on with a new lease on the existing standard form LIV lease document terms, including the existing schedule items to the 2016 Lease except for:
(a) the changes effected/required by clauses 2(a), (b), (d), (f) and (g) of the Settlement Deed; and
(b) the addition of other terms incidental to those terms as were permitted by the RL Act as were agreed between the parties, if any.
126 Although during the plaintiff's oral submissions it was submitted that the schedule to the New Lease was not to include Item 22 of the schedule to the 2016 Lease,[25] the plaintiff's further written submissions of 18 November 2021 did not expressly refer to carving out Item 22. This issue is addressed later in these reasons.
127 In the alternative, the plaintiff submitted that if its primary position was not accepted then the closing words of clause 2(e) were vague and uncertain and ought to be severed if they are to be construed as permitting any terms to be included that are reasonably consistent with the RL Act, or to be construed as requiring the parties to negotiate in good faith. The primary matters relied upon by the plaintiff in this context were said to be:
(a) The established principles regarding severance.
(b) Except for the concluding words of clause 2(e), the clause is sufficiently clear regarding what was intended, which was essentially what existed under the 2016 Lease - that is, the standard LIV commercial lease document terms, subject to the RL Act.
(c) The 2016 Lease and the New Lease proposed by clause 2(e) were standard LIV commercial leases subject to the RL Act and there was no relevant inconsistency between clause 2(e) (with the concluding words excluded) and the 2016 Lease that would require the whole of clause 2 to be disregarded altogether.
(d) The concluding words of clause 2(e) fall within the character of words considered in Fitzgerald v Masters,[26] namely, 'simply a compendious provision inserted by way of more abundant caution to cover such incidental matters as did not obtrude themselves for the consideration of the parties'. It was said that if words fitting that description are sufficiently uncertain that they cannot be enforced, or be left in the contract even though they did not ultimately have any work to do, then those words alone can and should be severed in construing the whole clause.
(e) A central aspect of the Settlement Deed was making provision for a new lease at a new market rent for different premises so as to exclude the upstairs of Unit 27. Consequently, clause 2(e) cannot be severed as a whole in the manner suggested by the defendants so as to leave the 2016 Lease in existence. The creation of a new lease was said to be central to the Settlement Deed and that if clause 2(e) is found to be uncertain in its entirety it is such a material and important provision in the whole bargain that there must be inferred an intention not to make a contract which would operate without it, and the invalid promise should be treated as inseverable from the contract. It was submitted that the Settlement Deed does not permit an interpretation where the 2016 Lease would continue until its expiry pursuant to its terms. This was said to be contrary to the purpose and intent of the Settlement Deed generally and against at least clause 4 specifically.
128 The plaintiff further submitted that if the defendants' fallback position was correct and the concluding words required the parties to negotiate in good faith, such words were uncertain and should be severed, and that for the reasons earlier referred to there was no reason why the whole clause needs to be severed. Again it was submitted that the continuation of the 2016 Lease would be inconsistent with the purpose and object of the Settlement Deed. In addition, the plaintiff contended that given the hostility and total family breakdown that has existed between the parties it was fanciful to suggest that the parties, as reasonable businesspeople, would agree to terms whereby the validity of the agreement to grant a lease would depend upon a further successful negotiation in good faith between the parties.
Part E.1.3 - Principles and observations - Masters v Cameron
129 The principles from Masters v Cameron are well established and, as the Court of Appeal has observed, have been addressed in countless decisions over many decades. They were recently referred to in Molonglo Group (Australia) Pty Ltd v Cahill (Molonglo)[27] as follows:
134. In Masters v Cameron,[28] Dixon CJ, McTiernan and Kitto JJ identified the following three categories of 'agreements' which may arise when parties agree that they are to enter into a further formal contract:
(a) where 'the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect'.[29]
(b) where 'the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document'.[30]
(c) where 'the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract'.[31]
135. A fourth category has been identified, reflecting what the High Court had earlier said in Sinclair, Scott & Company Ltd v Naughton.[32] That category applies where 'the parties were content to be bound immediately and exclusively by the terms which they had agreed upon, while expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms'.[33]
136. A document which falls in the first, second or fourth Masters v Cameron category is an immediately binding contract whereas a document which falls in the third category is not.[34]
...
148. It is important to bear in mind that the four Masters v Cameron categories are not intended to be exhaustive or strict and that the issue of classification ought not be allowed to obscure the real task of ascertaining the intentions of the parties.[35]
149. The fact that an agreement is subject to a condition whose performance lies wholly or partly within the power of one of the parties to the agreement does not mean that no binding contract can arise until the condition is fulfilled.[36] For example, where the condition specifies that one of the parties must approve of something which is to happen in the future - such as receipt by that party of a satisfactory offer of finance to fund the purchase of land - that party does not have an absolute or unfettered right to decide whether to provide approval.[37] In such a case, a binding contract arises from the outset which requires the relevant party to act honestly in relation to providing approval.[38]
130 In The Edge Development Group Pty Ltd v Jack Road Investments Pty Ltd (Edge Development),[39] the Court of Appeal addressed the position regarding the potential relevance of pre-contractual and post-contractual conduct in the Masters v Cameron context as follows:
46. Likewise, where the issue is not the meaning of a term but whether the parties intended that the document in which it appears should be a binding contract, the issue is 'to be determined, objectively, from the text of the document, construed in the context of the circumstances in which it came into being'.[40] Again, it is relevant to take into account the commercial context and surrounding circumstances of the parties' dealings.[41] The parties' pre-contractual conduct is relevant and admissible on the issue of what each party by their words and conduct would have led a reasonable person in the position of the other party to believe.[42]
47. Finally, post-contractual conduct can also be admissible on the issue of whether the parties intended a document to be a binding contract, but only in limited circumstances, such as where the conduct constitutes an admission against interest.[43] Otherwise, the general position is that post-contractual conduct is not admissible for the purpose of construing a contract.[44] The Court in Nurisvan explained that it may be relevant to examine correspondence and communications between the parties, including subsequent to the document in question, to place that document in the context of the negotiations and determine whether the parties intended it to constitute the terms of a binding agreement.[45] Alternatively, even where there was no chain of correspondence providing context to the creation of the relevant document, subsequent negotiations and communications between the parties may be relevant to demonstrate the nature and extent of the terms that might be necessary for the conclusion of a binding agreement but which were not included in the document in question.[46]
131 I refer also to the observation of Riordan J in Edge Development[47] at first instance regarding the fourth category and the principles more generally, which are convenient to repeat:
38. The principles to be applied in determining whether the parties intended to enter into a binding contract in circumstances where a subsequent formal contract is contemplated are well established.
39. In Masters v Cameron 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[48]
(a) 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 ('the first category').
(b) 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. The effect of the term to execute a formal document may be to 'place upon the parties an obligation, capable of being specifically enforced by the court, to sign a further contract in accordance with the informal agreement which they have already made' ('the second category').[49]
(c) 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 ('the third category').
40. A fourth category, by way of variation on the first category, was suggested by McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd,[50] as arising 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.
41. This fourth category has been accepted in many subsequent cases[51] and was confirmed on appeal.[52] However, the Court of Appeal did not appear to adopt the nomenclature of an additional category. Rather, McHugh JA said as follows:[53]
the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances.[54] 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.
42. The concept of a fourth category has also been the subject of some criticism;[55] and 'the ... classifications are no longer, if they ever were, applied as strict categories into which such cases must fall'.[56] I adopt the approach of Giles JA in Tasman Capital Pty Ltd v Sinclair, who observed that 'the categorisation does not greatly contribute to the decision in the particular case',[57] because the decisive issue is whether or not the parties intended to be contractually bound.[58]
43. 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.[59] The circumstances that are properly taken into account 'are so varied as to preclude the formation of any prescriptive rules'.[60] However, when the issue is whether parties intended to be bound by a single document, it is 'to be determined, objectively, from the text of the document, construed in the context of the circumstances in which it came into being'.[61]
44. In any event, when undertaking the determination as to intention:
(a) what is considered is that which is 'objectively ... conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened';[62] and
(b) what is not considered are the uncommunicated subjective motives or intentions of the parties, which are irrelevant.[63]
45. The utility of presumptions has been strongly doubted;[64] but matters that have been considered relevant in undertaking this determination have included the following:
(a) Where the disputed agreement is in writing, the words used by the parties must be the strongest indicator of whether the parties intended to be legally bound. If, on proper construction of the document, it is sufficiently clear that the parties were content to be bound immediately, then the matter is resolved irrespective of the subject matter, magnitude or complexity of the transaction or whether the parties contemplated a further contract in substitution for the first contract.[65]
(b) Whether the informal agreement is expressed to be 'subject to contract'[66] or the absence of such words.[67]
(c) The presence of the parties' signatures on a document said to contain the terms of the agreement suggests an intention to form binding relations; though the effect of the signature cannot, of itself, give rise to a binding agreement if the terms of the signed document do not otherwise support the characterisation of the agreement as binding.[68]
(d) The detail of the terms, to which the parties descended in the informal agreement, may indicate whether the parties did or did not intend to be immediately bound. As was stated by Powell JA in Liquorland (Australia) Pty Ltd v GYG Holdings Pty Ltd:
In carrying out the task of determining ... what was the relevant intention of the parties, a court may have regard, not only to the matters upon which the parties have reached their consensus, but also to the areas in respect of which they have failed to reach any consensus.[69]
(e) An informal agreement which deals with a transaction of great magnitude or complexity 'may suggest that the informal agreement was not intended to constitute a binding contract'.[70]
(f) The established or common practice with respect to agreements of the type in question may indicate that the parties did not intend to be finally bound until the completion of a formal contract.[71] An example of such a practice is with respect to the sale of real estate.[72]
(g) The fact that the parties did not use solicitors for the informal agreement but proposed to do so for the formal contract, may be a factor indicating that the parties did not intend to be bound by the informal agreement.[73]
46. With respect to the effect of post agreement communications, the courts have considered that such communications may be relevant to the following:
(a) Admissions by conduct of the existence or non-existence of a legally binding contract.[74]
(b) Throwing light upon the meaning of the language in the informal agreement for the purpose of determining whether the language expresses an intention to enter or not enter contractual relations.[75]
(c) Whether and to what extent there were uncompleted negotiations between the parties; and the significance of the uncompleted issues.[76]
47. However, as observed above at [43], where a single document is alleged to constitute the contract between the parties (as opposed to a contract alleged to have arisen orally or from an exchange of correspondence) the relevant intention is to be determined objectively from the text of the document, construed in the context of the circumstances in which it came into being.[77] The relevance of subsequent conduct, in such a case, may be limited to the questions of:
132 In this context, reference should also be made to the helpful discussion and observations of Lyons J in Delaney v Delaney (Delaney),[80] to which I refer but will not set out.
Part E.1.4 - Consideration and determination - The defendants' Masters v Cameron contention
133 I do not accept that the application of the well-established Masters v Cameron principles provide any relevant assistance to the defendants in the circumstances. I am also of the view that the approach of the defendants in this context involved an inapposite or misapplication of the principles, although even if that were not to be so it does not change the position.
134 During the constructive and at times extended exchanges with senior counsel for the defendants on this topic during closing submissions, it was made clear by senior counsel, and confirmed more than once, that the defendants were not contending that there was an absence of intention[81] of the parties to be immediately bound by the terms of the Settlement Deed. For example, it was confirmed that the defendants '... don't contend that the deed of settlement isn't a concluded and binding agreement ...'[82] and it was later said that '... there's no question the deed was intended to be binding. And that clause 2 [of the Settlement Deed] was intended to be binding.'[83] That was a proper and responsible position for the defendants to take, and the evidence demonstrated that it was the objective intention of the parties to enter into legal relations and immediately to be bound by the terms of the Settlement Deed in any event.
135 To so conclude of course does not determine other issues regarding the proper construction, meaning and operation of the Settlement Deed. Nor does it determine the extent to which the terms are sufficiently certain, or what may or may not follow from the analysis and consideration regarding these matters. As the Court of Appeal observed in Nurisvan Investment Ltd v Anyoption Holdings Ltd, '... the question of whether the parties intended to reach a concluded agreement is not the same question as whether, assuming such an intention, they reached agreement on sufficient terms to constitute a legally enforceable contract ...'.[84]
136 Given the position taken by the defendants (and the plaintiff) regarding the parties' objective intention to be immediately bound by the terms of the Settlement Deed (whatever they may mean upon their proper construction and whether enforceable or otherwise), in the present circumstances that in my view is the end of the relevant enquiry so far as the application of the Masters v Cameron principles are concerned. The enquiry then turns to the proper construction, meaning and operation of the terms of the Settlement Deed, which in the present case includes considerations regarding uncertainty or incompleteness in the context of the terms of the New Lease addressed in clause 2 of the Settlement Deed and implied terms requiring the parties to co-operate. Contrary to the submissions and approach of the defendants, the next steps after determining that the Settlement Deed was (objectively) intended to be immediately binding do not then involve a further or second Masters v Cameron enquiry regarding clause 2 and 3 of the Settlement Deed in isolation. This is in substance why I am of the view that the defendants' approach in this context involved an inapposite or misapplication of the Masters v Cameron principles.
137 Having regard to the above it is not strictly necessary to address why it is that I share the view expressed by the parties that it is clear that the parties objectively intended to be immediately bound by the Settlement Deed, or address the defendants' further or second 'application' of the Masters v Cameron principles in connection with clauses 2 and 3 of the Settlement Deed. However, given the submissions made by the defendants, it may be of assistance to the parties to make some observations regarding the same, which I do in turn below.
138 The established Masters v Cameron principles have been earlier referred to and there was no relevant controversy between the parties regarding the same.[85] As the myriad of cases in this area reveal, the controversy between parties is typically the application of the principles to the facts in question, recognising also that each case is necessarily dependent upon its own facts. That said, it is desirable to underscore, as many cases have, that the Masters v Cameron categories are not intended to be exhaustive or strict and that the issue of classification ought not to be allowed to obscure the real task of ascertaining the intention of the parties.[86]
139 As Riordan J observed in Edge Development,[87] classifications are no longer, if they ever were, applied as strict categories into which cases must fall and categorisation does not greatly contribute to the decision in a particular case because the decisive issue is whether or not the parties intended to be contractually bound. This observation drew in part upon the observation of McHugh JA in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (GR Securities)[88] that the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.
140 There are a number of features of the Settlement Deed and circumstances surrounding it that support the clear conclusion that the parties objectively intended to be immediately and contractually bound by the terms of the Settlement Deed. It is sufficient to mention the following:
(a) The context in which the Settlement Deed was entered into. This included it being the result of a further mediation between the parties ordered and held after the commencement in this court of the joint trial of the Trustee Removal Proceeding and the Receiver Proceeding, which were finally resolved and each dismissed pursuant to the terms of the Settlement Deed.
(b) The parties each being assisted by experienced solicitors and counsel in the negotiation and preparation of the Settlement Deed.
(c) The formal nature and language of the Settlement Deed and its terms, including the fact that it was a deed - as its terms and execution clauses reflected and was not in issue between the parties.
(d) The terms and language of the Settlement Deed including, for example: recital B, in which it was recorded that the 'parties wish to settle all issues between them in the proceedings on the terms set out herein; the formal opening language introducing the operative provisions above clause 1; the broad operative mutual releases referred to in clause 13; the agreement recorded in clause 14 that the Trustee Removal Proceeding and the Receiver Proceeding be dismissed 'upon the execution' of the Settlement Deed with no order as to costs and the obligation to sign consent orders to that effect; the execution clauses and execution of the Settlement Deed by Glen and by the solicitor for Paul, Buckland Valley and Rossi Recycling;[89] and the specification in clause 17 of 5pm on 13 September 2019 as being the date and time that the Settlement Deed 'comes into effect'.
(e) The absence of any language or terms to suggest that a further version of the Settlement Deed was contemplated or might be prepared.
(f) The absence of any language, terms or other evidence to suggest that the Settlement Deed was to be subject to contract or something analogous to the same. That the Settlement Deed recorded in clauses 2 and 3 Buckland Valley's and Paul's agreement regarding the entry into the New Lease does not provide any support that it was contemplated that the Settlement Deed would be recorded or embodied in a further document or provide any support for a contention that the parties did not objectively intend for the terms of the Settlement Deed to be immediately binding.[90]
(g) The detailed subject matter addressed by the terms of the Settlement Deed, its relationship with the allegations in the Trustee Removal Proceeding and the Receiver Proceeding, and the 'separation' of the Business and its operation from Paul and his involvement.
(h) The parties acting swiftly in accordance with the Settlement Deed by seeking and obtaining consent orders dismissing the Trustee Removal Proceeding and the Receiver Proceeding, which orders were made by this court on 9 September 2019.
(i) The absence of any negotiation of further terms of the Settlement Deed or any communications suggesting that such a thing was contemplated.
(j) The absence of any evidence or suggestion that there was a common or established practice of settlement agreements or deeds of settlement entered into in similar or analogous circumstances being taken not to be immediately binding pending the recording of terms in a different document.
(k) Putting the issue of the alleged repudiation to one side, the parties proceeding at all times on the basis that the Settlement Deed was immediately binding - which was also reflected in the pleadings and the manner in which the proceeding was conducted by both parties.
141 As I have said, in my view it is very clear that the parties intended to be immediately bound by the terms of the Settlement Deed.[91] Although the matters referred to above support this conclusion, the same result would follow if regard was had only to the terms of the Settlement Deed and the circumstances leading up to its execution. The position is reinforced when these matters are considered in combination with one or more of the other matters raised[92] (or in any combination), but the result does not change if these additional matters are put to one side.
142 I turn now to what I have described as the defendants' further or second attempt to apply the Masters v Cameron principles in relation to clauses 2 and 3 of the Settlement Deed, notwithstanding that it was plain (and was accepted by the parties) that the objective intention of the parties was that the Settlement Deed would be immediately contractually binding. It is sufficient to make the following observations.
143 As I have said, having regard to the above, the relevant Masters v Cameron principles do not engage. Rather, it is a matter for the court to now consider the meaning, operation and enforceability of the relevant terms on the basis that the parties intended the terms of the Settlement Deed to be immediately binding.
144 Even if that were not so, and the Masters v Cameron principles could relevantly engage with clauses 2 and 3 of the Agreement notwithstanding the objective intention that the terms of the Settlement Deed would be legally binding on them,[93] I do not accept that the defendants' position regarding the New Lease is relevantly assisted or that the position can be seen to be what was described as a classic example of the position under the third Masters v Cameron category. I make the following further points in this context.
145 First, the decisive issue is always the intention of the parties, which is to be objectively ascertained in the manner earlier referred to.
146 Second, clauses 2 and 3 are not to be considered in isolation but as part of the terms of the Settlement Deed.
147 Third, having regard to the terms of the Settlement Deed and the circumstances earlier referred to, it is in my view clear that the objective intention of the parties was that they would be immediately bound by the terms of the Settlement Deed, including clauses 2 and 3 of it, from the time they entered into it.[94] It is also the case that this remains the position if only the terms of the Settlement Deed are taken into consideration in the context of the circumstances leading up to its execution, or those matters are considered with one or more of the other circumstances to which I have earlier referred.
148 Fourth, the position regarding this objective intention that the terms of the Settlement Deed would be immediately legally binding does not change even if it is assumed for the purposes of argument that clause 2(e) renders aspects of the provisions of the Settlement Deed regarding the New Lease uncertain or indeterminate. Whilst on that assumption the uncertainty or indeterminacy would be a feature of the Settlement Deed's terms that would be seen to be relevant to consideration of the objective intention issue, when evaluated with the other matters to which I have referred, and particularly the terms of the Settlement Deed and the circumstances of its execution, it does not alter the conclusion that the parties objectively intended to be immediately legally bound by the terms of the Settlement Deed, including clauses 2 and 3. True it is that other consequences may flow if clause 2(e) renders aspects of the provisions of the Settlement Deed regarding the New Lease uncertain or indeterminate, but as the authorities have observed, that is a different matter.
149 That said, given the conclusion I have reached later in these reasons regarding the proper construction of clause 2(e) of the Settlement Deed, the defendants can draw no relevant assistance from any claimed uncertainty or indeterminacy in this Masters v Cameron context[95] in any event.
150 Fifth, other matters raised by the defendants' submissions in support of their Masters v Cameron contention that clauses 2 and 3 are a classic example of the third category showing no binding agreement existed do not provide assistance to the defendants. Briefly, I observe further as follows:
(a) Assuming their relevance to the exercise, when considered in the context of the above they do not lead to any different conclusion, even if they are considered only against the terms of the Settlement Deed and the context and circumstances of its entry as earlier referred to. They weigh less so if one or more of the other circumstances I have earlier referred to are also taken into account.
(b) I accept that in the search for the objective intention of the parties in a Masters v Cameron context the enquiry ought not to be approached with '... any predisposition in favour of upholding anything ...' and that the position is different once it has been established that the parties intended to make a binding agreement.[96] As the defendants observed, in that circumstance the courts have shown themselves to seek to strive to uphold bargains - although I would add that courts only do so within the permissible limits that the application of established principles permit. However, that this is so does not relevantly assist the defendants.
(c) I accept that, like other clauses, clauses 2 and 3 are to be construed carefully - but also in the context of the Settlement Deed as a whole. Again, this does not relevantly assist the defendants in this context.
(d) I do not accept that clause 2 of the Settlement Deed '... is in substance a "subject to contract" provision ...'. That is not what it says and it is not a construction that reasonable businesspeople would give it. Further, to seek to cast it in this way appears in part to be a consequence of what I consider to be the misapplication of the Masters v Cameron principles discussed above. In any event, even if it were to be assumed that clause 2 were to be so construed, it would be far from determinative and would fall to be another factor to be taken into account in evaluating the circumstances. In this regard I refer again to my comments in sub-paragraph (a) above and I refer to my conclusions recorded later below regarding the proper construction of clause 2(e).
(e) Even if it were to be assumed to be correct that the terms of the Settlement Deed regarding the New Lease were not sufficiently certain or complete in one or more of the ways referred to by the defendants so as to make it enforceable, these would be matters to be considered in the context of the other matters raised and evaluated, and in my view the result would remain the same as referred to in sub-paragraph (a) above.
(f) The nature and extent of the transaction does not in my view assist the defendants, particularly when regard is had to the existence of the 2016 Lease, the formal nature of the Settlement Deed, its terms, the involvement of lawyers, the various matters dealt with, the context of its entry, and its object to settle all issues in the Settled Proceedings between the parties. Even if the New Lease transaction is assumed to be a transaction of the kind, magnitude and complexity referred to by the defendants, given these matters and the other factors I have referred to no different result would follow when considered in the context of the other matters and circumstances to which I have referred. Further, given the existence of the 2016 Lease prior to the Settlement Deed, in my view the magnitude and scope of the New Lease transaction, and its importance to the analysis, was somewhat overstated by the defendants in the circumstances in any event.
(g) I do not accept the submission that the matters referred to in clause 2 of the Settlement Deed deal with only minor matters. It is sufficient to refer to the terms regarding: the identification of the premises; the term of the lease; the options; the method for determining the rental; the reference to the standard form LIV Commercial Lease (which was also used for the 2016 Lease); the rent rises; and the ability for the lessee to modify the premises. Plainly, these are significant matters. Insofar as this submission was maintained by the defendants, it is without force and does not assist them.
(h) The conclusions reached later in these reasons below regarding the proper construction, meaning and operation of clauses 2 and 3 of the Settlement Deed weigh against the defendants' position in the Masters v Cameron context.
(i) There is little or no persuasive force in the defendants' observation that Rossi Recycling's solicitors asked for a 'draft' lease by their letter of 21 November 2019. The defendants' lawyers had said that they would prepare the lease, and it was being sought by the plaintiff's solicitors. The language of 'draft' does not relevantly assist the defendants, but even if it were assumed to have the force contended for, when considered against the terms and context of the Settlement Deed, with or without the other considerations earlier referred to, no different result would follow. The same can be said of the evidence given by Glen in cross-examination regarding the prospect of negotiations. In the evaluation of the issue at hand it simply does not carry the defendants far at all in this context.[97] It should also be noted that Glen's evidence was given in a context where, at the commencement of this part of his cross-examination, senior counsel for Paul and Buckland Valley expressly asked Glen '... to assume that the terms of settlement required the parties to negotiate further terms from the standard lease terms. Just assume that for a moment', to which Glen responded 'Okay, yeah.' The questions that followed in cross-examination regarding negotiations were based on an assumed requirement of the need for negotiations and therefore the evidence Glen gave on the topic is of little assistance to the defendants even if the point had otherwise been persuasive, which it is not.[98]
(j) To the extent the defendants pressed a contention that the circumstances surrounding the making of orders appointing Mr Brindley as a court-appointed expert in this proceeding, or the terms of those orders[99] (Brindley Orders) provided support for the defendants' Masters v Cameron contention, I do not accept that submission - even assuming that such evidence would be admissible on the topic. The terms of the Brindley Orders were arrived at in a materially different context and for a different purpose. Whether considered alone or in combination with any of the other matters I (or the parties) have referred to, they do not relevantly assist the defendants' case in this context.
151 The result is that I am satisfied that it has been established that it was the objective intention of the parties to be immediately bound by the terms of the Settlement Deed. To the extent that the defendants sought to apply again or separately the objective intention Masters v Cameron principles to clauses 2 and 3 of the Settlement Deed in connection with the New Lease, in my view such an approach is inapposite or misconceived. However, even if that were not to be so, for the reasons I have referred to, the result does not change if that were not to be so and such principles are applied to clauses 2 and 3 of the Settlement Deed.
Part E.2 - Settlement Deed execution and date that it came into effect
152 The existence and execution of the Settlement Deed was admitted as between the parties and there was no issue arising between the parties regarding the date or execution of the Settlement Deed. It was common ground that the Settlement Deed was dated 6 September 2019 and that there was a provision in clause 15 allowing the deed to be executed in counterparts. There was a counterpart of the Settlement Deed in evidence signed by Paul for himself, for Rossi Recycling, and for Buckland Valley. There was another counterpart in evidence signed by Glen for himself (which also had been signed by Ms Young of Slaters on behalf of Paul, Rossi Recycling and Buckland Valley).
153 Clause 17 of the Settlement Deed provided that 'This deed comes into effect at 5pm on 13 September 2019'. To some extent this sat in tension with clause 14, which provided that the parties agreed 'upon the execution of these terms' (on 6 September 2019) 'to the dismissal of the proceedings with no orders as to costs and shall sign consent orders to that effect'. As mentioned, consent orders dismissing the Trustee Removal Proceeding and the Receiver Proceeding were made by consent by this court on 9 September 2019.
154 That said, there was no relevant issue between the parties raised regarding this date difference or these matters, nor any submissions directed at them, and therefore no more need be said on the topic for present purposes.
Part E.3 - Object and purpose of the Settlement Deed
155 The commercial purpose and object of the Settlement Deed is a matter relevant to, but not determinative of, the proper construction of its terms in accordance with the well-established principles of construction earlier referred to. As the opening and closing submissions of the parties revealed, and was common ground, although there were some differences in the language used by the parties, there was little if any difference of substance between the parties regarding the commercial purpose and object of the Settlement Deed.
156 The defendants referred to the whole basis of the Settlement Deed as being the creation of a settlement under which Paul and Buckland Valley kept the premises, Glen and Rossi Recycling would have control over the Business, a new current market rental would be struck with a new lease, Paul would forgive some of Rossi Recycling's indebtedness so that it could better stand on its own two feet, and Paul could have some equipment located at the premises collected by him. In other words, so the defendants said, father and son would go their own ways, the father controlling the premises and the son controlling and running the recycling business, with a new lease at market rental, and the recycling business being given relief by Paul and Buckland Valley against some debts owed by Rossi Recycling.
157 Glen and Rossi Recycling observed that there appeared to be little dispute as to the commercial purpose and object to be achieved by the Settlement Deed, stating that they included the following:
(a) The immediate transfer of the control of Rossi Recycling to Glen so that Glen would have control over Rossi Recycling, the RP Trust and the Business going forward. That is, as was stated by the defendants, each of the parties 'would go their own ways'.
(b) To alter the extent of the premises to be leased so that under the New Lease the upstairs of Unit 27 was no longer leased but could be occupied for a period of six months by Rossi Recycling from the date of the Settlement Deed at no cost (prospectively).[100]
(c) To resolve allegations of excessive rent by determining and applying current market rent going forward for the premises actually occupied by Rossi Recycling in accordance with the agreed mechanism in the Settlement Deed.
(d) To enter into a new lease for the premises leased by Rossi Recycling (excluding the upstairs of Unit 27) at a market rent for those premises.
(e) Allocation of identified plant and equipment.
(f) Agreements in relation to debts recorded in accounts.
158 In general terms, and putting to one side any of the contentious issues of construction addressed below, I accept that, in substance, the Settlement Deed had as its commercial objects and purpose, matters of the kind referred to by each of the plaintiff and defendants. Without detracting from or excluding such matters as were referred to by the parties, the substance of the commercial object and purpose of the Settlement Deed can be summarised in the following terms:
To finally resolve between the parties the issues and differences the subject of the Trustee Removal Proceeding and the Receiver Proceeding through an agreement directed at allowing Paul and Glen to go their separate ways through terms with mutual benefits to facilitate:
(a) Rossi Recycling, with Glen in control, running the Business at the 2016 Lease Premises, but excluding Unit 27, under a new lease for the lease term referred to in the Settlement Deed at an independently determined current market rental.
(b) Paul ceasing to be involved in the Business, whether through Rossi Recycling or otherwise.
(c) Buckland Valley, controlled by Paul, being the Lessor under the New Lease, and also with the potential to sell Unit 27 after a period, including to Rossi Recycling.
(d) Paul being entitled to possession and ownership of certain equipment and waste bins.
(e) The final resolution of claims or disputes regarding:
(i) inter-company loans between Rossi Recycling and Paul, Rossi Recycling and Buckland Valley, and Buckland Valley and Paul;
(ii) trust distributions by Buckland Valley to Paul or others from the sale of certain property of the RT3 Trust and the HP Trust.
(f) Each of the parties releasing each other from relevant claims as referred to in the Settlement Deed.
Part E.4 - Implied term of the Settlement Deed requiring the parties to co-operate
159 The genesis and history of terms implied by law requiring parties to a contract to co-operate with each other to allow the other party to have the benefit of the agreement, and the imposition of a negative covenant not to hinder or prevent the fulfilment of the purpose of the promises made in the contract, have been the subject of recent considered and detailed discussion by the Court of Appeal in Adaz Nominees Pty Ltd v Castleway Pty Ltd (Adaz Nominees)[101] and Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd (Bensons).[102]
160 Although it is not necessary to address these issues at length in this case given the common ground between the parties regarding the existence of an implied term regarding the obligation of each of the parties to co-operate (referred to further below), it is convenient and helpful to set out the following extracts from each of those authorities given that the allegations of breach in this case focus in part on the implied obligations of the parties to give necessary co-operation to allow the other parties to have the benefit of the Settlement Deed.
161 In Adaz Nominees, the comprehensive observations of the Court of Appeal on this topic included the following:[103]
106. In Mackay v Dick, Lord Blackburn said that there is a general rule that where parties have contracted for a thing to be done each agrees to do all that is necessary on its part for the carrying out of that thing though there may be no express words to that effect.[104] In Butt v McDonald, Griffith CJ said there is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary to enable the other party to have the benefit of the contract.[105] In Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd, the High Court quoted and adopted these statements of general principle.[106]
107. The High Court has also recognised the existence of a negative covenant implied by law. In Peters (WA) Ltd v Petersville Ltd, Gleeson CJ, Gummow, Kirby and Hayne JJ said this covenant required a party 'not to hinder or prevent the fulfilment of the purpose of the express promises made' in the contract.[107] In that respect they cited a passage from Dixon J's judgment in Shepherd v Felt and Textiles of Australia Ltd where he said, in describing the obligations of a sales agent:
The express promise of the appellant to use his best endeavours to obtain orders for the respondent and to influence business on its behalf necessarily includes an obligation not to hinder or prevent the fulfilment of its purpose. Moreover, the contract established a relation between the parties intended to subsist for a period, and it involved some degree of mutual confidence and required a continual co-operation. Its object was the increase of the sale of the respondent's manufactures, and to that end the extension of the respondent's business connection. Such an agreement inevitably imported a tacit condition that the appellant should perform the services faithfully which he contracted to give the respondent, and should not endeavour to impede or defeat the respondent in the sale of its manufactures at the prices it might think proper to ask.[108]
108. In this context, the express reference by Dixon J, and by Gleeson CJ, Gummow, Kirby and Hayne JJ, to hindering or preventing fulfilment of the 'purpose' of the express promises is important.
109. It has not always been clear whether these principles apply as a matter of construction or as implied terms. The current most authoritative exposition of the principles appears to us to be found in the plurality judgment of the High Court in Commonwealth Bank of Australia v Barker.[109]
110. Commonwealth Bank v Barker concerned a dispute between an employer (the bank) and an employee (Barker) over the circumstances of his redundancy. He contended that his employment contract contained an implied term requiring mutual trust and confidence, and he also contended for a breach of the Mackay v Dick duty to cooperate. The postulated obligation of mutual trust and confidence was a new implied term which the High Court was urged to adopt relying upon authorities in the United Kingdom.
111. In that context French CJ, Bell and Keane JJ addressed the issue of implied terms generally.[110] They referred to terms implied under the principles in BP Refinery v Hastings as terms implied 'in fact or ad hoc'. A separate category of implied terms was terms implied 'in law in all classes of contract'.
112. The plurality observed that it has been argued that some terms said to be implied by law are in fact rules of construction and that all such terms of universal application fall into that category.[111] They observed that the principle enunciated by Lord Blackburn in Mackay v Dick had been characterised in that way by Mason J in Secured Income, although he had also referred to the rule as an implied 'duty to cooperate'.[112]
113. The plurality endorsed an academic observation that in practice the two kinds of implied terms, in fact and by law, tend to 'merge imperceptibly' into each other.[113]
114. In the specific context of the term implied by law they emphasised the criterion of 'necessity', and, in that context, they quoted and adopted the analysis of McHugh and Gummow JJ in Byrne v Australian Airlines,[114] an earlier High Court appeal concerning an employment contract. The plurality said:
In Byrne v Australian Airlines Ltd, McHugh and Gummow JJ emphasised that the 'necessity' which will support an implied term in law is demonstrated where, absent the implication, 'the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined' or the contract would be 'deprived of its substance, seriously undermined or drastically devalued'.[115]
Later, the plurality returned to this issue saying that the relevant 'necessity' was not satisfied by demonstrating 'reasonableness', but may be demonstrated by the 'futility' of the transaction absent the implication.[116]
115. As to the other judges, Kiefel J also quoted and adopted what McHugh and Gummow JJ had said in Byrne v Australian Airlines about 'necessity' in this context.[117] Gageler J, in referring to the 'requisite inquiry' before a new term implied by law might be found, said that it had been described as the application of a 'test' of 'necessity' and cited the relevant passage from Byrne v Australian Airlines which the other judges had quoted and adopted.[118]
116. Thus, it seems that the relevant principles are best analysed as terms implied by law. 'Necessity' is the rationale for their existence and the circumstance which must be 'demonstrated' for them to be operative. The requisite necessity is so demonstrated where, absent the implication, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, seriously undermined; or the contract would be deprived of its substance, seriously undermined or drastically devalued.
117. On this basis, the law will imply, in appropriate circumstances, a positive obligation to take action (to co-operate and to do all such things as are necessary to enable the other party to have the benefit of the contract), and a negative covenant not to hinder or prevent the fulfilment of the purpose of the express promises made in the contract.
118. The relevant duty 'is a duty to afford the other party the benefit of what he has contracted for; not a duty to act generally in the other party's best interests'.[119] A term implied by law cannot be used as a basis for imposing on a party something commercially advantageous to the other party but for which the contract does not provide.[120] The implied term is necessarily informed by the express terms of the contract.[121] Thus, this Court has not accepted contentions that a term implied by law can, in effect, turn a contractual non-exclusive licence into an exclusive one;[122] or require a party to act as if an express contractual right did not exist.[123] As the Court of Appeal of the Supreme Court of Western Australia recently observed, the term implied by law, whether expressed positively or as a negative covenant, is not only limited by the criterion of necessity but must relate to bringing about something which the contract requires to happen.[124] Even more recently, the Court of Appeal of the Supreme Court of Queensland has held that the implied duty to co-operate is 'conditioned' by the concept of reasonableness.[125]
162 These observations were referred to with approval in Bensons where it was said as follows:[126]
104. In the context of a breach of an implied term to cooperate, the general principle is often traced back to Mackay v Dick,[127] in which Lord Blackburn said that there is a general rule that where parties have contracted for a thing to be done, each party agrees to do all that is necessary on its part for the carrying out of that thing though there may be no express words to that effect.[128] The duty to cooperate has also been expressed as a negative covenant 'not to hinder or prevent the fulfilment of the purpose of the express promises made' in the contract.[129]
105. There has long been debate about whether the duty to cooperate arises from the general law of contract (sometimes expressed as a universal rule of construction) or as an implied term which is subject to the usual limitations on implication explained in BP Refinery (Westernport) Pty Ltd v Shire of Hastings.[130] If it is the former, the obligation will condition every contract as a rule of universal application. If it is implied, it will arise when it meets the test of necessity and it cannot be inconsistent with any of the express terms of the contract. Favouring the former approach, Lord Atkin said in Southern Foundries (1926) Ltd v Shirlaw:[131]
Personally I should not so much base the law on an implied term, as on a positive rule of the law of contract that conduct of either promiser or promisee which can be said to amount to himself 'of his own motion' bringing about the impossibility of performance is in itself a breach.[132]
106. In Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd,[133] Mason J treated the rule as applying even where there are no express words to that effect. His Honour cited the statement of Lord Blackburn in Mackay v Dick referred to in para 104 above.[134]
107. Notwithstanding the area of debate, the better view is that the duty to cooperate arises as an implied term of the contract.[135] That was the conclusion reached by this Court in Adaz Nominees Pty Ltd v Castleway Pty Ltd[136] after a detailed analysis of the authorities, and it is, in our respectful opinion, a correct statement of the law.
108. That means that the duty to cooperate, with its positive and negative connotations, is implied because of necessity and must give way to the express terms of the contract. In Adaz Nominees, Whelan JA and Riordan AJA said:
Thus, it seems that the relevant principles are best analysed as terms implied by law. 'Necessity' is the rationale for their existence and the circumstance which must be 'demonstrated' for them to be operative. The requisite necessity is so demonstrated where, absent the implication, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, seriously undermined; or the contract would be deprived of its substance, seriously undermined or drastically devalued.
On this basis, the law will imply, in appropriate circumstances, a positive obligation to take action (to co-operate and to do all such things as are necessary to enable the other party to have the benefit of the contract), and a negative covenant not to hinder or prevent the fulfilment of the purpose of the express promises made in the contract.[137]
109. The application of the so-called 'prevention principle' has not always proceeded by reference to an identified breach of an implied term to cooperate or the like. For example, in Peter Turnbull,[138] a sale of oats was conditional on the purchaser nominating a vessel for loading in Sydney within a specified time. The seller informed the purchaser that it could not supply the oats in Sydney and the purchaser did not nominate a vessel. The seller relied on the failure to nominate the vessel to excuse its own failure to supply the oats. The High Court held that the seller could not rely on the failure to nominate. Dixon CJ explained:
Now long before the doctrine of anticipatory breach of contract was developed it was always the law that, if a contracting party prevented the fulfilment by the opposite party to the contract of a condition precedent therein expressed or implied, it was equal to performance thereof: Hotham v East India Co.[139] But a plaintiff may be dispensed from performing a condition by the defendant expressly or impliedly intimating that it is useless for him to perform it and requesting him not to do so. If the plaintiff acts upon the intimation it is just as effectual as actual prevention.[140]
110. Although not based on a breach of an implied term, Dixon CJ referred to repudiatory conduct ('anticipatory breach') which expressly or implicitly intimates to the innocent party that it is useless to perform a condition, in consequence of which that party is dispensed from performing the condition.[141] Mason CJ articulated the principle in Foran v Wight[142] as follows:
if the repudiating party by his refusal to perform or other conduct intimates to the innocent party that he need not perform an obligation which is a condition precedent to the performance by the repudiating party of his obligation, and does not retract that intimation in time to give the innocent party an opportunity to perform his obligation, that party may be excused from actual performance of the condition precedent. The repudiating party then waives complete performance of the condition precedent and his conditional promise becomes unconditional.[143]
111. However it is applied, it is clear from the authorities that there are two interrelated aspects of the doctrine. The first is wrongful conduct and the second is its consequences. As to the first, the cases sometimes refer to one party having defaulted,[144] or having engaged in wrongful conduct, without specifying the nature of the obligation or the standard by which the conduct is said to be wrongful. However, ultimately the assessment of the conduct must be rooted in the terms of the contract, often a duty to cooperate or use best endeavours. As Finn J observed in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd:[145]
Part of our difficulty arises from the fact that, express or implied term apart, we have no other available common law device for imposing obligations on parties that are contractual in character. We do not have the facility, for example, to treat the duty as simply a mandatory rule of contract law as do many European legal systems.[146]
112. In order to gauge whether the acts or omissions are wrongful, the touchstone must be the terms of the contract. The impugned conduct must be measured against the obligations of the contract.
113. In this case, the judge considered the so-called 'prevention principle' separately and in advance of his consideration of whether Bensons' impugned conduct constituted a breach of contract. In doing so, the judge focused his attention only on the consequence of the relevant conduct, that is, did it deprive the other party of a substantial chance of meeting the relevant condition?
114. Given that the prevention principle is commonly a reflection of the obligation on the parties to a contract not to hinder or prevent one another from enjoying the benefit of the contract, and generally the source of the obligation is an implied term that is found in most contracts, it is unsurprising that little time was spent analysing the jurisprudential nature of the obligation. The prevalence of the obligation means that generally the focus will be on the consequences of the impugned conduct for the performance of the contract. That is what occurred here. It might also be thought that where the consequence is established (one party has prevented the other from enjoying the bargain) there will inevitably be an antecedent breach. In our opinion, however, it is an error to consider the prevention principle divorced from the terms of the contract and it is a breach of a contractual term that gives rise to the potential application of the principle.
163 The learned author of Heydon on Contract also emphasises that the duty of co-operation is confined by the limits of what is necessary to be done to afford the other party the benefit of what has been contracted for and make the contract workable, and that it is not an obligation to act generally in the other party's best interests. As Heydon explains, the principle does not require a person to interrupt his or her own activities merely to help the other if he or she sees the other getting into difficulties; nor is it a mechanism for attenuating the consequences of hard or harsh contractual provisions.[147]
164 As I have said, it was common ground between the parties that they were each subject to an implied duty to co-operate, with the position being expressed in the Revised Issues List as follows:[148]
The parties agree that on the proper construction of the Settlement Deed there was a duty to co-operate but disagree as to whether it was breached.
165 Even if the parties had not agreed regarding the substance of the position, the result would not change. There are terms implied by law in the Settlement Deed to the effect discussed above in Adaz and Bensons that impose upon the parties:
(a) a positive obligation to co-operate and to do all such things as are necessary to enable the other party to have the benefit of the contract; and
(b) an obligation not to hinder or prevent the fulfilment of the purpose of the express promises made in the contract,
166 A review of the Settlement Deed reveals that these implied terms are not inconsistent with the express terms of the Settlement Deed and that the Settlement Deed terms impose obligations and contemplate further steps where co-operation by the parties is necessary.
167 The separate and contentious issues regarding the alleged breach of the Co-operation Terms by the defendants and the plaintiff are addressed later in these reasons.
Part E.5 - Construction of commercial contracts
168 There was no relevant controversy between the parties regarding the principles of construction to be applied when construing a commercial contract. They have been addressed and restated in countless authorities and it is convenient to repeat in similar terms my observations regarding the same in ATG Lanka (PVT) Limited v Safety Mate Pty Ltd (ATG Lanka),[149] which I do below.
169 The Court of Appeal in Aventus Cranbourne Thompsons Road Pty Ltd v Home Consortium Leasehold Pty Ltd[150] addressed the topic as follows:
The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. It may be necessary in determining the proper construction where there is a constructional choice.
...
Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to 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. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.
Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption 'that the parties ... intended to produce a commercial result'. Put another way, a commercial contract should be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'.[152]
In Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd, Kiefel, Bell and Gordon JJ said:
It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.
Clause 4 is to be construed by reference to the commercial purpose sought to be achieved by the terms of the lease. It follows, as was pointed out in the joint judgment in Electricity Generation Corporation v Woodside Energy Ltd, that the court is entitled to approach the task of construction of the clause on the basis that the parties intended to produce a commercial result, one which makes commercial sense. It goes without saying that this requires that the construction placed upon cl 4 be consistent with the commercial object of the agreement.[153]
- In addition, the Court must have regard to all of the words used in the agreement 'so as to render them all harmonious one with another'[154] and to ensure the 'congruent operation [of] the various components [as] a whole'.[155] In Kosciusko Thredbo Pty Ltd v Commissioner of Taxation (Cth), the High Court observed that: 'permitted use provisions, like any other provision in a written document, must be construed according to their terms and as part of the entire document.'[156]
170 This approach to construction had earlier been succinctly stated by a differently constituted Court of Appeal in PCCEF Pty Ltd v Geelong Football Club Ltd (PCCEF):[157]
171 Drawing on the reasons of Tate JA in Apple and Pear Australia Ltd v Pink Lady America LLC,[162] the court also emphasised that while a court should construe a commercial contract to avoid commercial nonsense, it is not part of its role to construe an agreement that otherwise has an explicable commercial result in a manner that increases the commercial benefits to one party to the agreement.[163]
172 In Siemens Gamesa Renewable Energy Pty Limited v Bulgana Wind Farm Pty Ltd (Siemens),[164] Riordan J helpfully summarised the principles as follows:
87. To construe the terms of a commercial contract, the Court asks 'what a reasonable businessperson would have understood those terms to mean'.[165] To answer that question, 'the reasonable businessperson [is] placed in the position of the parties',[166] and the Court applies the following principles:
(a) The terms are construed objectively and the subjective intentions of the parties are irrelevant.[167]
(b) The objective approach requires reference to the text and its ordinary meaning, together with:
(iii) the context, being the entire text of the contract including matters referred to in the text; and
(iv) the purpose.
These matters will ordinarily be identified by reference to the contract alone,[168] but evidence of mutually known objective background circumstances relevant to the purpose is admissible 'no matter how clear the "ordinary meaning" of the words'.[169] Identification of purpose may allow admission of evidence of the genesis of the transaction, the background, the context and the market in which the parties are operating.[170]
173 In Siemens, Riordan J went on to consider the ambiguity requirement in Codelfa, and more particularly, the question of whether evidence of surrounding circumstances could be admitted to establish the existence of ambiguity, ultimately concluding that the 'true rule' in Codelfa does not permit evidence of surrounding circumstances in order to identify ambiguity.[171] For present purposes it is not necessary to add further to this discussion.
174 The following observations of the High Court in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd[172] regarding poorly drafted agreements also warrant extraction:
[97] Finally, it is to be observed that, even if the resultant lease were considered to be a remarkably poor deal from the Lessor's point of view (and, to repeat, it is not obvious that it should be so regarded), the precept that commercial contracts be construed as it is thought an honest and reasonable businessperson would construe them will stretch only so far. As Lord Mustill observed in Charter Reinsurance Co Ltd v Fagan:[173]
"There comes a point at which the court should remind itself that the task is to discover what the parties meant from what they have said, and that to force upon the words a meaning which they cannot fairly bear is to substitute for the bargain actually made one which the court believes could better have been made. This is an illegitimate role for a court."
[98] Poor drafting may justify a court in being more ready to depart from the natural and ordinary meaning of the terms of a contract,[174] and no doubt, the poorer the drafting, the less willing a court should be to be "driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention".[175] But poor drafting provides "no reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language they have used interpreted in the light of the relevant factual situation in which the contract was made".[176] Where there is ambiguity which permits of two alternative and semantically not improbable interpretations, construction in accordance with what it may be supposed would be the approach of honest and reasonable businesspersons may assist in choosing one such alternative over the other. But where, as here, the language and surrounding circumstances of a commercial contract present a choice between, on the one hand, a plain, ordinary and commercially not irrational meaning of a clause and, on the other, a meaning which is significantly removed from the natural and ordinary meaning of the terms of the clause, which ill-accords with other provisions of the agreement, and which in the end produces an outcome that is more commercially acceptable from one of the parties' point of view only, the precept runs out of application. Unless the Anglo-Australian objective theory of contract is now to be cast aside, the commercial approach to construction[177] is not a licence to alter the meaning of a term that is "clear and fairly susceptible of one meaning only" to achieve a result that the court may think to be reasonable.[178] The court is not authorised under the guise of construction to make a new contract for the parties at odds with the contract to which they have agreed.[179] Where, as here, all things considered, the words of a clause are fairly susceptible of only one meaning, they must be given that effect.
175 I refer also to the recent summary and observations of the Court of Appeal in the context of a settlement agreement in Butler v Kenny & Ors (Butler).[180]
176 In JPA Finance Pty Ltd v Gordon Nominees Pty Ltd (JPA Finance),[181] McLeish JA made a number of observations regarding notices given under a commercial contract and issues regarding the need for strict compliance or otherwise. These are extracted and further referred to in Part F.1.4 below.
Part E.6 - Was the New Lease to come into effect and operate from no later than 1 October 2019?
177 There was no relevant controversy between the parties regarding the established principles of construction earlier referred to. The areas of controversy related to the result that is said to follow from the application of those principles regarding the proper construction of the Settlement Deed. A primary issue was whether, upon the proper construction of the Settlement Deed, the New Lease was to be entered into for a tenancy, at the new rental, starting on 1 October 2019, or, alternatively, within such reasonable time as may be determined by the court.
Part E.6.1 - New Lease from 1 October 2019 - Plaintiff's position
178 The plaintiff submitted that a number of facts compelled the conclusion that the New Lease was to come into effect and operate from no later than 1 October 2019. In substance, the matters said to support this contention were as follows:
(a) The rent for September 2019 having already been paid in advance on 1 September 2019 and the next rental payment being due on 1 October 2019, 24 days after the Settlement Deed was executed.
(b) The top floor Unit 27 being excised from premises for the New Lease and the subject of a licence entitlement 'at no cost', as provided for in clause 4 of the Settlement Deed, with the result that payment of the rental under the 2016 Lease after the entry into the Settlement Deed would necessarily include a component of rental for Unit 27 which was no longer the subject of the 2016 Lease. This, so it was said, would be unreasonable, uncommercial and unjust.
(c) If the 2016 Lease applied after 1 October 2019, Rossi Recycling would be subject to other financial obligations beyond rent including, for example, outgoings, utility charges, and the obligation to take out insurance, in respect of Unit 27 when those premises were not part of the lease. This was said to be inconsistent with clause 4 because it provided that the licence of Unit 27 would be at no cost.
(d) If the 2016 Lease operated beyond 1 October 2019, Buckland Valley would be in breach of it after the licence over Unit 27 expired because the lease required Buckland Valley to give quiet enjoyment over the premises leased and not to derogate from the grant - which it was said would follow if possession were to be taken of Unit 27 whilst the 2016 Lease was on foot.
(e) Part of the object of entry into the Settlement Deed was the settlement of the claims in the Trustee Removal Proceeding, including a central allegation that the rental was excessive. It was submitted that Buckland Valley insisting on excessive rent under the 2016 Lease for October, November and December 2019 was inconsistent with that object and defeats the primary purpose of the settlement agreement of entering into the New Lease.
(f) The role of clause 3 of the Settlement Deed was said to preserve the status quo during the month of September 2019 until the New Lease could be executed with effect from 1 October 2019 and with the rental mechanism included within its terms. That is, clause 3 was a practical short-term measure to maintain continuity of tenancy that was incidental to the primary purpose of entering the New Lease and the purpose of clause 3 was not to bind the parties beyond 1 October 2019. The requirement for the New Lease at the new rent to be entered into with effect from 1 October 2019 was submitted not to be inconsistent with clause 3 when read in that way. This, so it was said, was a construction that rendered all of the clauses of the Settlement Deed harmonious with one another.
(g) There was no impediment to the New Lease being executed with the words of the rent setting mechanism set out in clause 2(b) of the Settlement Deed included as a term of the lease. The actual process of calculation would then take place in due course and the New Lease could and should have been executed formalising the new tenancy with effect from 1 October 2019.
(h) The defendants' contention that the valuation process might reasonably take longer than the end of September 2019 was no more than the assertion of a possibility that was not supported by evidence. It was said further that construing the clause in that way does not address each of the clauses of the Settlement Agreement if the 2016 Lease was to continue beyond 1 October 2019. Reference was made to the Unit 27 licence entitlement in clause 4 and the fact that it would operate after the New Lease was operative from 1 October 2019.
179 It was submitted in the alternative that if the New Lease was not to take effect from 1 October 2019, then on the proper construction of the Settlement Deed the New Lease was to be entered into within a reasonable time of the execution of the Settlement Deed, which the plaintiff submitted was by 1 October 2019. By reference to Perri v Coolangatta Investments Pty Ltd,[182] it was submitted that what is a reasonable time is a question of fact and depends upon the circumstances, with its limit being determined by reference to what is fair to both parties.
180 The factors relevant to the question of what was a reasonable time, looked at through the lens of fairness, were said by the plaintiff to be: Rossi Recycling being deprived of the benefit of the licence entitlement in clause 4 if the 2016 Lease applied beyond 1 October 2019; the existence of strong indications that the rental imposed by the 2016 Lease was excessive[183] such that payment of rent under the 2016 Lease beyond 1 October 2016 was likely to be a payment in excess of the market rent bargained for in clause 2(b); and the claimed fact that the defendants provided no reason why entering into the New Lease with effect from 1 October 2019 would cause any harm.
181 The plaintiff further submitted that it was open to the court to determine that a reasonable time to enter into the New Lease was a date other than by 1 October 2019, but that it was not immediately apparent on what basis that might be found. The plaintiff's position was that if an alternative time is to be fixed then that time cannot extend far beyond 1 October 2019 because to do so would deprive the plaintiff of the benefit granted under the Settlement Deed, including the licence entitlement under clause 4, and disproportionately advantage the defendants.
Part E.6.2 - New Lease from 1 October 2019 - Defendants' position
182 The defendants submitted that there was no term of the Settlement Deed that, upon its proper construction, meant that the New Lease referred to in clause 2 would be entered into for a tenancy at a new rental determined in accordance with clause 2(b) by 1 October 2019 or, alternatively, within such reasonable time as may be determined.
183 The defendants submitted that the Settlement Deed envisaged the parties potentially later executing a lease after completing a number of steps and it made no provisions for or restrictions on when those steps were required to be completed or when the New Lease was to be executed - or even whether it would be executed. It was submitted that the relevant steps could not realistically occur before 1 October 2019 and that, by providing (in clause 3 of the Settlement Deed) that the existing lease was to terminate upon the execution of the New Lease, the Settlement Deed provided for the continuation of that lease until such time as those steps could be completed. It was further submitted that in this context, and the absence of any textual support for a 1 October 2019 completion date, the Settlement Deed cannot be construed as requiring the New Lease to be executed by 1 October 2019.
184 The steps and other matters relating to timing referred to by the defendants were: the absence of a time stipulation in clause 2; time not being expressed to be of the essence; clause 2(a) stating that the term of the lease is to commence with effect from the execution of the lease; clause 2 being expressed to be subject to clause 3, which states that the existing lease is to terminate immediately upon the entry into the New Lease; the determination of rent under clause 2(b) being subject to four steps or preconditions; the open-ended nature of clause 2(e); and the contention that the parties had not reached a conclusive binding agreement as to the terms of the proposed lease.
185 In responding to matters raised by the plaintiff, the defendants: referred to an alleged concession in opening that the rent remains payable under the 2016 Lease even if a new lease had not been entered into by 1 October 2019; contended that rent could have continued to have been paid and there may then have had to have been an adjustment or accounting upon determination of the new rental with respect to rent previously paid; submitted that the determination of rent under the Settlement Deed only related to the New Lease and not rent payable under the 2016 Lease; and further submitted that, consistent with the rental payment made to Buckland Valley in September 2019, the amount of rental payable per month under the 2016 Lease remained $29,304.35 per calendar month.[184]
186 The defendants submitted that there was no real tension between clauses 3 and 4 because clause 4 (which relates to Unit 27) could be read as varying the operation of the 2016 Lease so that Unit 27 (upstairs) was no longer subject to that lease because of the entitlement to a licence at no additional cost. It was said that this was not a radical reshaping of the 2016 Lease because the leased area of Unit 27 comprised only 0.78% of the total leased area. It was submitted that upon its proper construction there was no intention to grant a 'free' licence over Unit 27, only that the licence not be granted at an additional cost on top of the rental under the 2016 Lease - which was to continue to be paid. Following the six months, so it was said, Rossi Recycling had the option to purchase Unit 27 and, further, it was said, keeping the rental the same presented a practical straightforward mechanism for the continuance of possession under the 2016 Lease until the parties entered into a new lease if one could be agreed upon.
187 It was further submitted that the payment of $29,304.35 on 1 September 2019 under the 2016 Lease indicated that there was no imperative to enter into the New Lease by 1 October 2019. This was also said to tell against the contention that the same amount was not payable on 1 October 2019 and the months thereafter. It was contended that rent was being paid and could continue to be paid in accordance with the 2016 Lease until the New Lease was entered into, which is what the Settlement Deed contemplated.
188 As to the steps to be taken to enter into the New Lease, the defendants submitted that the plaintiff's position that all steps could be taken before 1 October 2019 was not realistic, which was said to have been accepted by Glen in his evidence. It was also submitted that even if the steps were capable of being concluded before 1 October 2019, that did not support a construction that the Settlement Deed required the New Lease to be entered into before that date.
189 The defendants disputed that the words of the rental determination methodology term of the Settlement Deed in clause 2(b) could be included as a term in a new lease that could be executed before the rental assessment steps were completed. They said that the Settlement Deed did not make a new lease but provided a mechanism for the parties to execute one in the future if terms could be agreed, with the existing lease continuing until that time. Again reference was made to the defendants' Masters v Cameron contentions, what was contended to be the open-ended nature of clause 2(e) of the Settlement Deed, and the absence of any agreement regarding the same.
190 With respect to the plaintiff's alternative position regarding reasonable time, the defendants accepted that there was an obligation to co-operate, stating that it also encompassed the well-settled duties of a contracting party to act reasonably to implement the terms of the contract where its terms required co-operative acts.[185] In this context, they submitted that clause 2 of the Settlement Deed provided that the parties agreed to enter into a new lease subject to co-operation, having rent determined under clause 2(b), and identifying other terms under clause 2(e). It was said that these tasks were not imposed on any particular party but were to be achieved jointly.
191 Whilst it was acknowledged that where a contract imposed an obligation upon one party alone it may be necessary to consider whether it should be construed as requiring performance by that party of that obligation within a reasonable time or whether such a term should be implied, the position here was said to be different. In substance it was said that the New Lease obligation was to be achieved jointly and that this required the parties to co-operate. The issue was said to be whether either of the parties failed to co-operate, which it was said does not involve the introduction of the concept of carrying out an obligation within a reasonable time.
Part E.6.3 - Principles and observations - Time for performance of contractual obligations
192 Where no time is stated for the performance of an obligation (or exercise of a right), the law is said to imply an obligation that performance (or exercise) shall occur within a reasonable time.[186] So much was not controversial.
193 Reasonable time is said to be a question of fact rather than law.[187] It is not generally possible to answer the question of what is a reasonable time with any degree of precision and the answer will depend on the particular circumstances of the case. There are a number of factors which the courts have considered relevant in determining what a reasonable time is.
194 In Pearl Mill Co Ltd v Ivy Tannery Ltd,[188] McCardie J said:
Reasonable time is of course a matter which depends on the nature of the contract, its terms, the class of goods, the practice of the trade, and the general circumstances of the case.
195 The test of what is a reasonable time is an objective test.[189]
Applicable legal principles
[99] His Honour summarised the applicable legal principles as follows:
"[115] It is often said that where the time for performance of a contractual obligation has not been specified, 'the law implies that it is to be performed within a reasonable time': Canning v Temby [1905] HCA 45; (1905) 3 CLR 419 at 424 per Griffith CJ; [1905] HCA 45. To similar effect is the statement of Dixon J in Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1 that '[a]n implication of a reasonable time when none is expressly limited is, in general, to be made unless there are indications to the contrary': at 13. It is accepted that that general observation includes cases involving a contractual right of termination. So, for example, in Elders Ltd v Incitec Pivot Ltd [2006] SASC 99, Debelle J considered that it was implicit in a term providing for a right of termination if no agreement on ongoing trading terms were reached by 1 December of a given year that the right be exercised within a reasonable time after 1 December: at [90].
[116] What constitutes a reasonable time is a question of fact which will depend on the context in which the right arises and the circumstances of each particular case: see Cavallari v Premier Refrigeration Co Pty Ltd [1952] HCA 26; (1952) 85 CLR 20 at 26 per Dixon CJ, McTiernan, Fullagar and Kitto JJ. As Brennan J said in Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537, '[i]ts limit is determined by reference to what is fair to both parties' at the time of the exercise of the right: at 567-8; [1982] HCA 29; see also K & M Prodanovski Pty Ltd v Calliden Insurance Ltd [2012] NSWCA 117 at [48] per Meagher JA (with whom Macfarlan JA and Tobias AJA agreed), citing Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 at 444 per McHugh JA (with whom Priestley JA agreed)."
[100] To the authorities cited by the primary judge may also be added the decision of this court in Ellmore (Maitland) Pty Ltd v Tull (1995) 7 BPR 14,305.
[101] One important observation that needs to be made with regard to the primary judge's exposition of principle relates to his statement that the limit of what is a reasonable time is to be determined by what is fair to both parties at the time of the exercise of the right. The passage cited from Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; [1982] HCA 29 does not indicate when the content of what is a reasonable time is to be assessed. It does not stand for the proposition that it is to be assessed at the time of the actual exercise of the right, although that is of course the point of time by reference to which the court will assess whether a reasonable time (within the meaning of the contract on its proper construction) has passed. This is a subtle but important distinction. In my opinion, the relevant time for considering what is in fact a reasonable time is the time at which, under the contract, the right which is to be exercised is first capable of being exercised (just as the time for assessing whether a notice to complete affords a reasonable time for completion is the time of the giving of the notice: see Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 at 444. As I point out at [109] below, the time for ascertaining the legal meaning of "reasonable time" must be the time of contracting.
[102] The implication of reasonable time drawn in Reid v Moreland Timber Company Pty Ltd (1946) 73 CLR 1; [1946] HCA 48 referred to by the primary judge in the passage extracted above was an implication in respect of the exercise of a right as opposed to the performance of an obligation (although the cases referred to by Dixon J in support of the implication were all cases concerning the latter). So too, this court's decision in K & M Prodanovski Pty Ltd v Callidan Insurance Ltd (2012) 60 MVR 456; [2012] NSWCA 117 to which the primary judge also referred concerned the exercise of a contractual right.
[103] In the course of argument, I raised with the parties the question whether or not there was any difference in principle between the concepts of "a reasonable time to perform an obligation" and "a reasonable time to exercise a right". Their respective researches did not point to any difference being drawn in the authorities, and it has been held that whether or not a reasonable time has passed either for the performance of an obligation or the exercise of a right is a question of fact or one of mixed fact and law: see, for example, Lyon v Creati [1892] VicLawRp 140; (1892) 18 VLR 629 at 630; The Picturesque Atlas Co Ltd v Searle [1892] VicLawRp 141; (1892) 18 VLR 633 at 639.
[104] What is a reasonable time in any given case may be affected by the nature of the obligation to be performed (for example, whether it is dependent on some third party performance or circumstances outside the control of the party under the obligation) or the right to be exercised (for example, whether the right is dependent upon the provision of some information that may need to be assessed before the right can be exercised or simply upon the happening of an event or the passing of a particular time).
[105] In Ellis v Thompson [1838] EngR 85; (1838) 3 M & W 445; 150 ER 1219, cited by Dixon J in Reid, Baron Alderson said (at 456-457; 1224-1225) that:
"It seems to me the correct mode of ascertaining what reasonable time is in such a case as this, is by placing the Court and jury in the same situation as the contracting parties themselves were in at the time they made the contract: that is to say, by placing before the jury all those circumstances which were known to both parties at the time the contract was made, and under which the contract itself took place. By so doing, you enable the Court and jury to form a safer conclusion as to what is the reasonable time which the law implies, and within which the contract is to be performed." (Emphasis added)
[106] The question referred to in [103] above was animated by the fact that in Perri, where Sir Gerard Brennan (at 568) said that the limit of reasonableness was "determined by reference to what is fair to both parties", his Honour was talking about an obligation to fulfil a condition. In that case, the obligation was the sale of a property owned by the purchasers of another property the subject of a contract for sale and the issue was what was a reasonable time within which such a sale should be effected. That is and was a very different case from the present where what was involved was a consideration of what was a reasonable time for the exercise of a right to terminate the 2HA, no agreement having been reached by the parties as to Baseline True Up by 28 February 2013. That right came into existence on 28 February 2013, and all that ASC needed to do was to decide whether or not to exercise it.
...
[109] The other significant point to note about this passage is that the legal meaning of what is a reasonable time is to be ascertained as at the date of the contract, although what will be reasonable as a matter of fact will inevitably fall to be assessed by reference to circumstances as at the date on which the right is first capable of being exercised (or the date on which the obligation falls to be performed), viewed in the context of the contract as a whole. This accords with the passage from Ellis v Thompson cited above, and is also consistent with the endorsement in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35] by Gummow, Hayne and Kiefel JJ of Lord Reid's statement in James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 at 603 that "... it is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made". (Emphasis added)
197 Basten JA in the same proceeding noted the following:
[155] On one approach, the 2012 agreement contained an implied term requiring that the power of termination be exercised within a reasonable period. However, that restructures the question so as to remove the focus from contractual interpretation, so that the contract is relegated to the context for determining reasonableness. It may be accepted that there is no bright line between interpretation and implication; nevertheless, one effect of treating the issue of reasonable time as other than a question of contractual interpretation is to remove the focus of attention from the intention of the parties at the time of entering into the agreement, albeit an intention to be objectively ascertained.
[156] There is another element at play. The objective approach to contractual interpretation focuses on the language used as it would have been understood by an independent observer. That tends to free the courts from the constraining influence of reflecting upon the actual intention of the parties. Nevertheless, at least where there is uncertainty, the approach acknowledges the need to understand the contractual context and the information available to the parties.[192] (It is not necessary for current purposes to decide whether that information extends to that which they could have ascertained at the time of contracting, but did not.[193] ) One important function of the approach is to preclude either party relying on uncommunicated intentions or expectations. However, there remains a fine line between construing the words used, having regard to the context in which the contract was formulated, and using precontractual negotiations to construe the language.
[157] A practical function of the objective approach is to control the factual disputes which could arise if contract cases required resolution of factual disputes as to precontractual negotiations, let alone post-contractual conduct.[194] However, such a pragmatic consideration of dispute resolution cannot give rise to an inflexible rule of interpretation.
[158] If the question of the validity of the termination does not turn upon contractual interpretation, it may be open to the court to have regard to post-contractual events and the conduct of the parties. This approach was adopted by the primary judge...
198 When addressing the topic of contingent conditions, in Australian Mutual Provident Society v Landsa Ltd (Receiver and Manager Appointed) & Ors,[195] Ormiston J, with McDonald J and Hansen J agreeing, observed as follows:
The explicit terms of cl. 26.7 state that the obligations of the vendor are conditional upon one of three conditions being satisfied. Upon proper analysis the condition is, in the language of Brennan J. in Perri v. Coolangatta at 565, "at once a condition precedent to the obligation of the parties to complete the contract and a condition subsequent to the whole contract so that the non-occurrence of the specified event[s] would entitle the vendor to avoid it": cf. the latter part of cl. 26.7. But the condition is not a promissory condition; rather, in the language of certain judges and commentators, it is a condition dependent upon the fulfilment of a contingency, or more precisely in this case upon the non-fulfilment of a series of contingencies; cf. Carter and Harland, Contract Law in Australia, 2nd ed., (1991), paras 733-5, 739-42. Again to adapt the language of Brennan J. in Perri v. Coolangatta at 565: "Though the stipulation specifies the event[s] upon the occurrence of which the obligations to complete cease to be contingent, the stipulation contains no promise that the event[s] will occur." ["Event" has been altered to the plural.] The absence of any promise may indicate, as I have said, some difficulty in implying any time for satisfaction of the condition if it is not explicitly prescribed by the contract. It is one thing to impose upon a party an obligation to perform a promise within a reasonable time, for the court will then have to measure the reasonableness of that party's behaviour, a task commonly undertaken. It is another matter, however, in dealing with a contingent condition, to assess a reasonable time by which the contingency must be satisfied, a task which may not be so easy.
On the other hand, and this demonstrates the significance of Perri v. Coolangatta, courts have been required to determine by what time contingent conditions must be satisfied in cases where the contract is silent. The argument of uncertainty is constantly raised but nevertheless, in order to give commercial efficacy to the transaction, courts have endeavoured to construe conditions in a way which will enable the contract to be carried out.
Part E.6.4 - Consideration and determination - New Lease from 1 October 2019?
199 I do not accept the plaintiff's submission that, upon the proper construction of the Settlement Deed, clauses 2, 3 and 4[196] are to be construed as providing for the New Lease to be entered into for a tenancy at the new rental starting on 1 October 2019. Applying the established principles of construction, in my view that is not what a reasonable businessperson in the position of the parties would have understood those terms to mean. Further, whilst it is in my view clear, and I accept, that what was objectively intended to be determined to be pursuant to clause 2(b) was the current market rental for the premises to be the subject of the New Lease at the time the Settlement Deed became operative,[197] that does not materially support the plaintiff's contention that the New Lease was to operate from 1 October 2019. There are a number of considerations that lead me to these conclusions, which I elaborate on below.
200 First, that is not what the Settlement Deed says. Clause 2 in its chapeau provides that Buckland Valley, and Paul as its controller, agree that Buckland Valley will enter into a new lease in respect of the relevantly marked property shown on the plan attached to the Settlement Deed (New Lease Premises). However, neither in clause 2 nor elsewhere in the Settlement Deed is the date by which this is to occur specified - whether by reference to a specific date, method, formula or otherwise.
201 Second, the absence of a time stipulation can be contrasted with other parts of the Settlement Deed that set out specific times by which performance of various obligations are to take place and specific times by which events are to occur. Examples are: the forthwith stipulation in clauses 1 (a) and (b); the 'immediately' in clause 3; the six-month period in clause 4; the 12-month period in clause 5; the two payment dates in clause 6; the indemnity sunset date in clause 11; and the 'upon execution' timing in clause 14.
202 Third, it is evident from the opening words of clause 2 that what is contemplated is the entry into a new lease at an (unspecified) future date, and that the Settlement Deed does not constitute or purport to be the New Lease.
203 Fourth, there is no direct or indirect reference to 1 October 2019 in clause 2 or anywhere else in the Settlement Deed. If the parties had intended to specify a fixed or certain date by which the New Lease was to be entered into they could have done so. Notwithstanding the involvement of lawyers and the formal nature of the Settlement Deed, no date was specified.[198]
204 Fifth, the defendants are correct that there are a number of steps that are expressly contemplated to be undertaken prior to Buckland Valley entering into the New Lease. These include the determination of the rental through the structured process referred to in clause 2(b), the allowance of a period to see if any further terms are to be agreed pursuant to clause 2(e), and the preparation and execution of the New Lease subsequent to the taking of such steps.
205 It should be noted in this context that, as is addressed in more detail later below, I have concluded that:
(a) upon its proper construction, clause 2 does not provide for the words of the term referred to in clause 2(b) of the Settlement Deed to be inserted in that form in the New Lease as a term of it, but contemplates that the new rental determination by the independent certified property valuer referred to in clause 2(b) will take place prior to the New Lease being executed, with the rental amount as determined (New Rent) then being specified in the New Lease as the rent under that lease; and
(b) upon its proper construction, clause 2(e) does not require the parties to agree to further terms, or constitute an agreement to agree, but allows for the inclusion of such further terms permitted by the RL Act as may be agreed, if any.
206 Sixth, clause 3 expressly provides that the 2016 Lease is to terminate 'upon [Rossi Recycling] and [Buckland Valley] entering into the ...' New Lease referred to in clause 2. The Settlement Deed contemplates the 2016 Lease remaining in place until the New Lease is entered into.[199]
207 Seventh, given the various steps that are to occur before the New Lease is entered into, including the independent current market rental determination process and the making of submissions regarding the same as the parties see fit, it may be inferred that it is at least possible, if not likely, that the relevant steps would not be able to be completed by 1 October 2019. That said, the result would not change even if this consideration is put to one side.
208 Eighth, contrary to aspects of the plaintiff's submission, it does not follow from my conclusion that the New Lease was not to operate from 1 October 2019, that the terms of the Settlement Deed would permit, for example, the defendants to stymie or obstruct the undertaking of the steps necessary to be undertaken in advance of Buckland Valley entering into the New Lease that it agreed in clause 2 of the Settlement Deed to enter into. It is to be noted, in this context, that clause 2 imposes an obligation on Buckland Valley to enter into the New Lease and that Buckland Valley (and the other parties to the Settlement Deed) is subject to the implied Co-operation Terms imposing an obligation to co-operate discussed earlier. If, for example, the defendants were to conduct themselves in connection with the New Lease so as to breach their implied obligations to co-operate, or the obligation imposed by clause 2 to enter into the New Lease, then other rights and remedies would be available.[200]
209 Ninth, I do not accept that my conclusion operates so as to deprive the plaintiff of the benefit of clause 4 (which relates to Unit 27), that it renders the Settlement Deed inharmonious, or that it sits uncomfortably with the continuation of the 2016 Lease until the New Lease is entered into.
210 Clause 3 makes clear that the 2016 Lease will not terminate until the New Lease is entered into. When that occurs the 2016 Lease terminates 'immediately'. Until that time the 2016 Lease remains on foot and without variation to the rent or the 2016 Lease Premises - including the top floor of Unit 27.
211 Clause 4 of the Settlement Deed records that, 'For a period of 6 months from the date of this deed [Rossi Recycling] shall be entitled to a licence to occupy and use ...' the part of Unit 27 referred to 'at no cost',[201] which licence shall be irrevocable for that period. A 12-month option to purchase the entirety of Unit 27 at market value is also provided to Rossi Recycling in clause 5.
212 In my view, upon the proper construction of the Settlement Deed, the parties objectively intended that the New Lease would be entered into during the six-month period after the entry into the Settlement Deed. If that occurred, the New Lease Premises did not include the top floor of Unit 27, which did form part of the 2016 Lease Premises. If, as I have determined the parties objectively intended, the New Lease was entered into prior to the end of that six-month period then, absent an entitlement to a licence over that part of the 2016 Lease Premises, the 2016 Lease would have terminated and with it any rights to occupy the top floor of Unit 27. Upon its proper construction, clause 4 catered for that prospect. That is, it ensured that Rossi Recycling would have the right to use and occupy the top floor of Unit 27[202] for a period of six months from the date of the Settlement Deed notwithstanding the entry into the New Lease prior to that time.
(a) When the New Lease was entered into (within the six-month period) immediately terminating the 2016 Lease at the same time, Rossi Recycling remained entitled to occupy the area the subject of the licence from the time of termination until the end of the six-month period - at no cost.
(b) Putting to one side for the moment any issue of breach of the Settlement Deed, if the New Lease had not been entered into by the end of the six-month period, and consistent with the operation of clause 3, the 2016 Lease would remain on foot unaltered with the top floor remaining part of the 2016 Lease Premises until the time that the 2016 Lease was terminated upon the entry into the New Lease.[203] In that circumstance there would likely be no need for Rossi Recycling to rely upon its entitlement to a licence of the top floor of Unit 27 because it remained part of the 2016 Lease Premises, with that lease remaining on foot.
214 It was a known fact that the area in question was the office space used for the Business - which is also referred to in handwriting in the 2016 Lease and something Glen gave evidence about. The objective intention of the parties was to ensure that Rossi Recycling could continue to occupy and use its office space for no less than a clear and certain six-month period after the Settlement Deed was entered into. This was achieved by ensuring that there was an entitlement to a licence over that area when the New Lease was to be entered into prior to the end of that six-month period.
215 In my view the above construction is what a reasonable businessperson in the position of the parties would have taken clauses 3 and 4 to mean. It also sits comfortably with the object and purpose of the Settlement Deed earlier discussed and allows clauses 2, 3, 4 and 5 of the Settlement Deed to operate harmoniously, with each having a sphere of operation.
216 In addition, it causes no difficulty with the rent to be paid under the 2016 Lease if it remained on foot because the top floor of Unit 27 remains part of the 2016 Lease Premises leased to Rossi Recycling until the 2016 Lease terminated by the entry into the New Lease.
217 This construction also sits harmoniously with the rejection of the plaintiff's contention that the New Lease was to be entered into and take effect by 1 October 2019 - although it sits comfortably with the plaintiff's alternative contention that, if the 2016 Lease continued until entry into the New Lease, the premises under the 2016 Lease remained the same.
218 Even if I had been of the view that clauses 3 and 4 operated so as to vary the 2016 Lease so as to remove the top floor of Unit 27 from the 2016 premises from either the date of the Settlement Deed or six months after it was entered into, the position would not impact my conclusion regarding the 1 October 2019 New Lease start date submission of the defendants in any event. This is because I would have construed clauses 3 and 4 as varying only the premises the subject of the 2016 Lease and not the rental payable under the 2016 Lease. Given that in this scenario Rossi Recycling would remain entitled to use and occupy the top floor of Unit 27 pursuant to the licence, the amount it would be paying would remain the same by reason of no adjustment to the rent. In this scenario the words 'at no cost' should be construed as meaning 'no additional cost' - which would sit comfortably with the rent under the 2016 Lease continuing to be paid.
219 Whilst it is true in this alternative scenario that if the New Lease was not entered into until after the six- month period the rent under the 2016 Lease would remain the same from that six-month period notwithstanding the premises reduction, it may be concluded, as I have, that the parties objectively intended that the New Lease would be in place before the end of this six-month period and that such an issue would not arise. As is later determined below, I have concluded that the New Lease was to be entered into within a reasonable time, which was within three months after the operative date of the Settlement Deed.
220 The upshot is that I do not accept the plaintiff's submission that, upon the proper construction of the Settlement Deed, clauses 2, 3 and 4 are to be construed as providing for the tenancy the subject of the New Lease to operate from 1 October 2019 at the revised independently determined current market rental.
221 I add for completeness that the plaintiff's submissions regarding the likelihood of the rental under the 2016 Lease being excessive do not assist it in this context, even if they were assumed to be true and relevant. The evaluative construction exercise undertaken above by the application of the established principles results in the rejection of the defendants' contention that the New Lease was to operate from 1 October 2019.
222 That being so, it is not necessary, in this context, to address any additional matters raised by the defendants, although a number of matters arise in the context of the other matters of construction addressed below. I should say, however, that the defendants' submissions regarding the size of the premises the subject of the licence or the size of the top floor of Unit 27 do not assist them. Even if I had been of a different view, it would not have been open to me on the evidence to reach any conclusion regarding the rental or likely magnitude of it that should be paid or was being paid for that part of Unit 27 that formed part of the 2016 Lease Premises.
223 As to the plaintiff's alternative position regarding a reasonable time, I have concluded that clause 2 imposes an obligation upon Buckland Valley to enter into a New Lease. So much is plain from the opening words of clause 2 where Buckland Valley, and Paul as its controller, agree that Buckland Valley 'will enter into' what I have referred to as the New Lease (being a lease of the kind described in clause 2). As is discussed later below, it will also be seen that I do not consider the Settlement Deed to be too uncertain or incomplete in this regard, although I will say no more about that for the moment.
224 I add that, although not expressed in clause 2, on its proper construction the New Lease is to be between Buckland Valley and Rossi Recycling. Although the parties proceeded on this basis, and it is the meaning that a reasonable businessperson would arrive at, it is expressly apparent from the terms of clause 3, which refer to the New Lease referred to in clause 2 of the Settlement Deed being a lease between 'RR' and 'BV' - which are defined in Recital C to the Settlement Deed to be Rossi Recycling and Buckland Valley respectively.
225 Because clause 2 imposes an obligation upon Buckland Valley to enter into the New Lease with Rossi Recycling and no time for performance of that obligation by Buckland Valley is specified, there is an implied obligation on the part of Buckland Valley to do so within a reasonable time of the date the Settlement Deed became operative. I refer in this regard to the principles and observations set out earlier above on this topic. There is also an obligation upon Buckland Valley and Paul, pursuant to the Co-operation Terms, to co-operate and do all things necessary to allow Rossi Recycling to have this benefit and not to hinder or prevent the fulfilment of the promise.
226 To the extent the defendants contended that the Settlement Deed did not impose an obligation upon Buckland Valley requiring it to perform its obligations under clause 2 within a reasonable time, or that the reasonable time obligation ought not to be implied or imposed, I do not accept that submission. The opening words of clause 2 record Buckland Valley's agreement to enter into the New Lease and it agrees that it 'will' do so. The time for performance of that obligation is not specified and there is an implied obligation to do so within a reasonable time. The fact that each of the parties are subject to the implied obligation to co-operate does not alter that position, noting further that such a duty is implied in many (but not necessarily all) contracts where there are express or implied reasonable time stipulations.
227 As to what is a reasonable time, the parties provided limited assistance in their evidence on this topic and I am left to do the best that I can with the evidence before me. With that in mind, I have concluded that a reasonable time for the performance of the obligation would be three months[204] from the 13 September 2019 operative date of the Settlement Deed, having regard to the following:
(a) The object and purpose of the Settlement Deed as earlier referred to.
(b) The live issue between the parties as to whether or not the rent was excessive, including the existence of the views expressed in the Brindley Report, although the position does not change if these are ignored.
(c) The objective intention of the parties to settle all issues between them and go their separate ways.
(d) The objective commercial desirability of the commercial parties acting with reasonable expedition to get their respective commercial affairs in order and certain.[205]
(e) What I infer to be the relatively straightforward nature of the valuation task, which in part is informed by the nature of the tasks as reflected in the valuation reports in evidence - although I have no regard to the values in this context given the position of the parties and the basis upon which the proceeding was conducted.
(f) The shorter periods of time taken by the valuers to produce the Brindley Report and the Charter Keck report that were in evidence. The Brindley Report was produced in a little longer than two months (including the Christmas period) and the Charter Keck report was produced in a little less than two months. However, the Charter Keck process did not involve obtaining submissions from different parties.
(g) The relatively straightforward nature of the New Lease given the terms of the Settlement Deed, the LIV standard form lease and the 2016 Lease.
(h) Allowing for a reasonable period to nominate and engage a valuer and make submissions in accordance with the procedure provided for in clause 2(b).
(i) Allowing for a reasonable period for the nominated valuer to carry out their assessment and provide a report.
(j) Allowing a reasonable period of time for the parties to see if any additional terms could be agreed pursuant to clause 2(e).
(k) The fact that not all of the steps referred to above would need to occur in a linear fashion. For example: lease preparation could be commenced, with room left for any insertion regarding the New Rent; the parties could communicate regarding the prospect of including any additional agreed terms; and steps could be taken to agree a valuer, or nominate the same in the absence of agreement.
(l) The indication given by clauses 3 and 4 that a licence for the top floor of Unit 27 was likely to have been necessary for part of the six-month period after the date of the Settlement Deed, which is an indicator of an objective intention that it was contemplated that the New Lease would have been entered into prior to the end of the six-month period. That said, my conclusion regarding three months being a reasonable time would not change even if this is put to one side.
228 Although I have concluded that a reasonable time for the performance of Buckland Valley's obligation to enter into the New Lease was three months from the date of entry into the Settlement Deed, other issues arise in the context of breach given the parties' respective allegations regarding the other's alleged failures to comply with the parties' respective obligations to co-operate to the extent necessary to allow the other party to have the benefit of the Settlement Deed. These matters are further addressed later in these reasons when dealing with the alleged breaches.
Part E.7 - Clause 4 of the Settlement Deed and the entitlement to a six-month licence of the top floor of Unit 27 'at no cost'
229 As is apparent from the discussion above, the parties addressed clause 4 in the context of the 1 October 2019 start date issue, which I have addressed at some length above. For the reasons I have referred to in that context, and at the risk of repetition, upon the proper construction of the Settlement Deed:
(a) Pursuant to clause 3, the 2016 Lease terminates 'immediately' upon entry into the New Lease.
(b) Until the 2016 Lease terminates it remains on foot without variation to the rent or the 2016 Lease Premises.
(c) Clause 4 provides Rossi Recycling with an entitlement to a licence for the first floor of factory Unit 27[206] for six months from the date of the Settlement Deed, being 6 September 2019 at no cost. It does not alter the terms of the 2016 Lease, which remain on foot.
(d) If, as I have concluded was objectively intended by the parties, the New Lease was to be entered into before the end of the six-month licence period, the New Lease would come into effect in respect of the New Lease Premises, which do not include the first floor to Unit 27. In that circumstance, Rossi Recycling was able to take advantage of its entitlement to the licence of that space for the balance of the six-month period, at no cost. Neither the rent under the 2016 Lease nor the premises the subject of it were altered by the terms of clause 4.
(e) In respect of the downstairs area of Unit 27 referred to in clause 4 of the Settlement Deed that did not form part of the 2016 Lease Premises, Rossi Recycling was able to exercise its licence entitlement to occupy that area from the date of the Settlement Deed given that it did not have rights to use that area under the 2016 Lease.
230 The meaning I have arrived at is what a reasonable businessperson in the position of the parties would have taken clauses 3 and 4 to mean and reflects the objective intention of the parties. It also is consistent with the language of the Settlement Deed, permits a sphere of operation for each of the clauses, and allows the terms of the Settlement Deed to operate harmoniously. In addition, it sits comfortably with the absence of any language expressing an intention to vary the 2016 Lease, which is consistent with clause 3 given that it expressly contemplates the 2016 Lease continuing and terminating 'immediately' upon entry into the New Lease. As it happens, it is consistent with the plaintiff's alternative submission that, if the 2016 Lease continues until the New Lease is entered into, the premises under the 2016 Lease do not change.[207]
Part E.8 - Whether the terms (ie the words) of clause 2(b) regarding the rental determination mechanism for the New Lease were intended to be an express term of the New Lease
231 As discussed in the context of the plaintiff's 1 October 2019 New Lease start date contention above, the plaintiff submitted that there was no impediment to the New Lease being executed with the words of the rent setting mechanism set out in clause 2(b) of the Settlement Deed being included as an express term of the New Lease, with the process and rent determination being invoked thereafter. The defendants contested that position and, in substance, submitted that such a meaning is not consistent with the terms of the Settlement Deed, is not a meaning that an ordinary businessperson in the position of the parties would ascribe to it, and that it would give rise to uncertainty or non-commercial outcomes as to what rental was to be paid under the New Lease pending the rental determination.
232 It is apparent from my discussion of the 1 October 2019 start date issue (to which I refer) that I do not accept the plaintiff's submission regarding clause 2(b). As I have said earlier, upon its proper construction, clause 2 does not provide for the words of the term referred to in clause 2(b) of the Settlement Deed to be inserted in that form in the New Lease. The clause reflects an objective intention that the new current market rental determination by an independent certified property valuer referred to in clause 2(b) will take place prior to the New Lease being executed, with the New Rent as determined then being specified in the New Lease as the rent under that lease. I elaborate further below as to why.
233 It is evident from the express language of clause 2 of the Settlement Deed that it was not intended that all of the terms referred to in sub-clauses (a) to (g) were to be transposed into the New Lease in terms. To do so would be somewhat non-sensical, which is well illustrated by that part of clause 2(e), which refers to the terms being 'on a standard LIV commercial Lease'. That language (ie, those words) would not be transported directly into the New Lease as a term of it. Rather, it records in a shorthand way where the majority of the terms of the New Lease are to be sourced from. The same can be said of the balance of clause 2(e) - noting for completeness that the contentious construction issues regarding clause 2(e) are discussed further below. The concluding words of clause 2(f) '... to be recorded within the terms of the lease', also speak against a construction that favours an objective intention to transport directly the terms (ie the words) of each sub-clause in clause 2 as a term of the New Lease in the language used in the Settlement Deed.
234 That is not to say that the words in clause 2(b) would not be capable of being included in a lease as a term of it. However, to do so here would be to treat parts of clause 2 inconsistently given the language used in it.
235 More significantly, if the New Lease was to contain a rent setting mechanism term of the kind referred to in clause 2(b) (as opposed to specifying the New Rent after the process had been undertaken), it would create the possibility or likelihood of uncertainty regarding the rent to be paid for the period between the entry into the New Lease until the various steps associated with the rent fixing mechanism had been completed. Put another way, neither party would be in position to know what amount of rent was to be paid in the meantime. So much was reinforced during the constructive exchanges with counsel for the plaintiff, who was unable to provide a satisfactory answer to this potential consequence. That is not a criticism of the advocacy, but a reflection of the circumstance that would likely follow from the construction contended for by the plaintiff.
236 In my view the risk or likelihood of such an outcome weighs objectively against an intention that the language of clause 2(b) was to be directly transposed into the New Lease in terms. I do not consider that a reasonable businessperson in the position of the parties would take the Settlement Deed to mean that there would or may be a period after the entry into the Settlement Deed where neither party could ascertain what rental was to be paid pending the determination of the market rental under the market rental determination mechanism in the Settlement Deed.
237 It would also not sit well with the object and purpose of the Settlement Deed because it would create the scope for further dispute in circumstances where the parties were seeking to resolve all issues between them, including those regarding the allegations of excessive rent. However, if as I have determined, the objective intention of the parties was to have the rental determination carried out prior to the entry into the New Lease and to have the amount of the New Rent as determined by the valuer inserted as the rental under the New Lease, with the existing rental under the 2016 Lease continuing in the meantime, no such risk or likelihood of uncertainty arises.
238 In my opinion this is what a reasonable businessperson in the position of the parties would take the clause to mean. It also sits comfortably with the language and is aided by the parties' respective obligations to co-operate to allow the other party to have the benefit of the Settlement Deed. In addition, it sits comfortably with the mechanism in clause 3 of the Settlement Deed, which records that the 2016 Lease is to terminate 'immediately' upon the New Lease being entered into. In these circumstances no uncertainty or risk of uncertainty regarding the payment of rent arises pending entry into the New Lease, with each party having their own respective rights and potential remedies if one or other of them was to fail to comply with their respective implied obligations to co-operate or other obligations under the Settlement Deed.
Part E.9 - The premises the subject of the New Lease
239 There was no relevant controversy between the parties regarding the premises to be the subject of the New Lease. They were described in the chapeau to clause 2 of the Settlement Deed as the 'property shown in yellow on the attached plan' - which plan was attached to the Settlement Deed. This was also reflected in the Land Diagram and confirmed by the parties during the hearing. The New Lease Premises are the same premises as were the subject of the 2016 Lease except for the first floor of Unit 27, which was excluded.[208]
Part E.10 - Commencement of the New Lease and discontinuance of the 2016 Lease
240 Upon the proper construction of the Settlement Deed this is quite straightforward and there was no relevant controversy between the parties about it.[209] At the trial it was common ground that the 2016 Lease was on foot at the time the Settlement Deed was entered into. This was also reinforced in clause 3 of the Settlement Deed by its reference to the 'existing lease'.
241 Clause 3 of the Settlement Deed expressly provided that 'The existing lease over the property shall terminate immediately upon RR and BV entering into the lease referred to in paragraph 2'. It is in my view plain that, as is reflected in clause 3, it was the objective intention of the parties that the 2016 Lease would remain operative until it was terminated as contemplated in clause 3. Consequently, the New Lease was to commence when it was entered into between the parties, at which time the 2016 Lease would terminate.
Part E.11 - Was Rossi Recycling obliged to pay rent under the 2016 Lease?
243 The 2016 Lease imposed an obligation upon Rossi Recycling to pay rent at the rate specified under the 2016 Lease. The Settlement Deed did not alter that obligation. The obligation to pay rent under the 2016 Lease was to change to an obligation to pay rent under the New Lease when the New Lease was entered into and the 2016 Lease terminated. Rossi Recycling was required to pay rental at the rate required by the 2016 Lease in the meantime, and the terms of the Settlement Deed did not change that.
244 Of course this says nothing about what rights or remedies either of the parties might have against the other if there has been a failure to comply with their respective implied obligations of co-operation under the Settlement Deed (or other terms) and the failure caused the obligation to pay rent under the 2016 Lease to continue for longer than would otherwise have been the case if such contractual obligations had been complied with. However, that is a different topic, which is addressed in part when dealing with the question of alleged breaches later in these reasons. It is also part of the damages issues that the parties and the court contemplated will be addressed in the next phase of the hearing after the independent determination of current market rental if specific performance were to be ordered - as I have determined it will be.
245 There was no dispute between the parties that, if it was required to be paid, the rental under the 2016 Lease was $29,304.35 payable in advance on the first day of each month - which was also the monthly amount of rent paid by Rossi Recycling on or about 1 September 2019 prior to the entry into the Settlement Deed.[210] The terms of the Settlement Deed did not alter this amount and this was the rental that was required by the terms of the 2016 Lease[211] - not the Settlement Deed - to be paid under the 2016 Lease (including for the months of October, November and December 2019 referred to by the parties in the Revised Issues List).
246 To the extent that the defendants maintained a contention that the Settlement Deed imposed an obligation upon Rossi Recycling to pay rent under the 2016 Lease, I do not accept that submission. The rental payment obligation was imposed on Rossi Recycling by the terms of the 2016 Lease. The terms of the Settlement Deed did not purport to impose such an obligation. So much is unsurprising given the absence of any need to do so given the express terms of the 2016 Lease that impose the obligation to pay rent which, as I have determined, were unaltered by the terms of the Settlement Deed so long as the 2016 Lease remained on foot.
247 As to the question of whether the plaintiff breached its implied obligation to co-operate by failing to pay rent in October, November and December 2019, this is addressed later in the reasons when dealing with questions of breach.
Part E.12 - Clause 2(e) of the Settlement Deed: construction, uncertainty, and severability.
248 The entirety of clause 2 of the Settlement Deed is set out in Part C above. Clause 2(e) provides as follows:
Subject to clause 3, BV, and PR as its controller, agree that BV will enter into a commercial lease of the property shown in yellow on the attached plan, on the following terms:
...
(e) The lease terms shall be on a standard LIV commercial lease, subject to the Retail Leases Act and to terms reasonably permitted by that Act;[212]
...
249 Many of the parties' submissions about this clause were raised in the submissions referred to earlier regarding the defendants' Masters v Cameron contentions and the plaintiff's contentions regarding the 1 October 2019 start date, to which I have referred earlier in Part E but shall not repeat. The substance of additional submissions of the parties in the context of clause 2(e) and the issues raised regarding uncertainty and severability are referred to and addressed below.
Part E.12.1 - Plaintiff's position - Clause 2(e)
250 In substance, the plaintiff submitted that,[213] upon their proper construction, clauses 2 and 3 of the Settlement Deed operated so that, through the New Lease, the parties would continue on with a lease in the same terms as the 2016 Lease, including the existing schedule items in the 2016 Lease, except for:
(a) the changes effected/required by clauses 2(a), (b), (d), (f) and (g) of the Settlement Deed; and
(b) the addition of other terms pursuant to clause 2(e) incidental to those terms as were permitted by the RL Act and were in fact agreed between the parties, if any. That is, if no such additional terms were agreed then no additional terms would be included and the New Lease would be entered into and the parties would proceed without them.
251 It was submitted by the plaintiff that, on their proper construction, the closing words of clause 2(e) do no more than allow the parties to include in the New Lease such other incidental and reasonable terms as might be agreed between them, if any. It was contended that if no further terms were agreed between the parties, as was in fact the case, then no further terms would be included. The closing words of clause 2(e) were said to give the parties flexibility to include further agreed terms, although in fact that flexibility was not exercised. The plaintiff further submitted that this construction is consistent with the language used, gives effect to the words used, is businesslike, and should be preferred.
252 In support of this position the plaintiff also submitted that:
(a) The plaintiff's construction was consistent with and well served the object and purpose of the Settlement Deed.
(b) The defendants were not submitting that the Settlement Deed would be uncertain if the concluding words of clause 2(e) did not have effect. Rather, it was said that the defendants were submitting that clause 2 of the Settlement Deed can effectively be disregarded or ignored and that the 2016 Lease would continue. In this context, it was contended that clause 2 makes clear that the objective intention of the parties, was essentially that the terms which existed under the 2016 Lease would continue in the New Lease, subject to the matters referred to in the Settlement Deed. The plaintiff submitted that there is no basis for disregarding the words of clause 2 altogether.
(c) The concluding words are of the character referred to in Fitzgerald v Masters, being 'simply a compendious provision inserted by way of more abundant caution to cover such incidental matters as did not obtrude themselves for the consideration of the parties'.[214]
(d) With reference to Brew v Whitlock (No 2),[215] it was contended that, if the closing words of clause 2(e) are sufficiently uncertain that they cannot be enforced, or remain in the contract even though they ultimately did not have work to do, then those words can and should be severed.
(e) A central aspect of the Settlement Deed was making provision for the New Lease (at market rent excluding the top floor of Unit 27) and that the entirety of clause 2 or all of clause 2(e) cannot be severed as a whole to leave the 2016 Lease in existence. It was submitted that, consistent with Brew v Whitlock (No 2), because the promise of a New Lease in clause 2 was so material and important a part of the bargain there must be inferred an intention not to make a contract without it and therefore the promise of a New Lease in clause 2 should be treated as inseverable. It was said that the Settlement Deed does not permit an interpretation where the 2016 Lease would continue until its expiry pursuant to its terms. Such a result was said to be contrary to the purpose, object and intent of the Settlement Deed, including the express terms of clause 2 and clause 4.
253 In the alternative, the plaintiff submitted that if its position regarding the proper construction of clause 2(e) was not accepted then the closing words of clause 2(e) are uncertain and ought to be severed or struck through if they are to be construed as permitting the inclusion of any terms that are reasonably consistent with the RL Act, or if they are to be construed as requiring the parties to negotiate further terms in good faith.
Part E.12.2 - Defendants' position - Clause 2(e)
254 The defendants contended that[216] clause 2(e) supported its Masters v Cameron contention regarding what it referred to as the agreement to lease in clause 2 - albeit accepting that the parties intended to be immediately bound by the terms of the Settlement Deed.
255 In the alternative to the defendants' Masters v Cameron position, the defendants submitted that clause 2 of the Settlement Deed was unenforceable because clause 2(e) renders the proposed lease indeterminate and uncertain. In this context, reliance was placed upon the closing words of clause 2(e) and the Settlement Deed not dealing with the matters referred to in the schedule to the standard form LIV commercial lease (LIV Lease Schedule).
256 It was further submitted that the last part of clause 2(e) could not be severed because even if that occurred the proposed lease would be incomplete in material respects given that the terms of the LIV Lease Schedule were not sufficiently addressed. In addition, it was submitted that:[217]
(a) Severing the last part of clause 2(e) would not reflect what the parties intended, and that, in the context of a negotiated settlement where the parties agreed to a particular course to resolve contested litigation, the parties should not be taken to have intended that clause 2(e) or any clause be severable.
(b) The court cannot fill the gaps in the LIV Lease Schedule by reference to implied terms or considerations of reasonableness, and that clause 2 provides no criteria upon which a court could determine the kinds of terms that should or should not be included in the lease. In this context, it was stated that clause 2(e) merely provided that those terms be reasonably permitted by the RL Act and that these words do not permit the court to deploy criteria as to what should or should not be included in the New Lease.
(c) There was no other mechanism agreed by the parties to resolve the uncertainty as to the terms of the New Lease and, further, there was no evidence adduced as to what additional terms might be 'reasonably permitted' by the RL Act. To the extent that the plaintiff sought to 'pick and choose' terms,[218] by reference to 'reasonableness' it was said that such an approach was flawed as that was not the criteria referred to in clause 2(e). As mentioned earlier, reliance in this context was placed on the observations of Kirby P in Austotel.[219]
(d) Alternatively, if clause 2 (including clause 2(e)) 'is permissible and enforceable' then the terms of the New Lease should be the terms that were referred to in what was described as 'Column A, as varied by Column B' to the attachment of the Brindley Orders made on 14 December 2020.[220]
Part E.12.3 - Principles and observations - Uncertainty and severance
257 There was no relevant dispute between the parties regarding the relevant principles to be applied in this context and reference was made by both parties to well-established principles and frequently cited cases regarding Masters v Cameron, construction of commercial contracts, uncertainty, and severance. I have earlier set out some principles and observations regarding the first two of these topics. As to uncertainty and severance, it is convenient and sufficient to draw upon that which has been said by others.
258 In Thorby v Goldberg,[221] Menzies J observed that:
The appellants sought to establish that the clauses in question do not impose contractual obligations upon the interrelated grounds (i) that it appears from the agreement that there was no completed agreement between the parties about matters to which the clauses relate and (ii) that the clauses in their context lack the certainty requisite to establish legal rights and obligations. It was further argued that the agreement contained illegal covenants. It will therefore be necessary to examine the agreement as a whole but, before I do so, I would say that I do not think the law to be applied is in any doubt and I agree with and will apply the following statement of that law from the dissenting judgment of Sugerman J. He said: "It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential or critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties. Again, there is no binding contract where the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intention".
259 In Upper Hunter County DC v Australian Chilling and Freezing Co Ltd,[222] Barwick CJ observed that:
But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. Lord Tomlin's words in this connexion in Hillas & Co. Ltd. v. Arcos Ltd.[223] ought to be kept in mind. So long as the language employed by the parties, to use Lord Wright's words in Scammell (G.) & Nephew Ltd. v. Ouston[224] is not "so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention", the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.
260 President Kirby referred to the observations of Barwick CJ in Biotechnology Australia Pty Ltd v Pace:[225]
...
2. The court will endeavour to uphold the validity of the agreement between the parties: see Hillas & Co Ltd v Arcos Ltd. The court will attempt to avoid frustrating the wishes of the contracting parties so far as those wishes may be ascertained from the agreement between them: see Meehan (at 589); see also Barwick CJ in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 at 437 where his Honour said that: "In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements."
3. But the court will not do so, where, in effect, it is asked to spell out, to an unacceptable extent, that to which the parties have themselves failed to agree. Nor will the court clarify that which is irremediably obscure. Most particularly, the court will not accept for itself a discretion which the parties have, by their agreement, reserved to one or other of them. To do so would not be to effect the contract but to change it: Kofi-Sunkersette Obu v A Strauss & Co Ltd [1951] AC 243 at 250 (PC).
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... It is convenient to distinguish between two varieties of uncertainty in this wide sense and to call the first uncertainty and the second incompleteness. A contract is uncertain if some essential term is so vague that no definite meaning can be assigned to it. A contract is incomplete if the parties have deliberately (and whether expressly or by implication) left some essential term to be settled by their future agreement: May and Butcher Ltd. v. R. [1934] 2 K.B. 17n, at p. 20, per Lord Buckmaster; Thorby v. Goldberg [1964] HCA 41; (1964) 112 C.L.R. 597, at p. 607, per Menzies J.; Australian and New Zealand Banking Group Ltd. v. Frost Holdings Pty. Ltd. [1989] V.R. 695, at p. 700.
A contract is not bad for uncertainty merely because of ambiguity: the ambiguity must be incapable of resolution before that result will follow. Courts are reluctant to strike down an agreement on the ground of uncertainty or incompleteness.
Even if it is impossible to assign a definite meaning to a provision it may be possible for the provision to be severed, leaving the rest of the contract good.
If the court comes to the conclusion that parties intended to make a contract it will if possible give effect to their intention by overcoming difficulties said to result from uncertainty or incompleteness.
While the distinction between uncertainty and incompleteness is a useful one, the vagueness of a provision may lead to its being held that there is no contract either on the ground of uncertainty or on the ground of incompleteness, the fatal dilemma being that the provision either is incapable of being given a definite meaning or, properly construed, shows that the parties intend to reach agreement hereafter by way of settling some point presently left outstanding: G. Scammel and Nephew Ltd. v. H. C. and J. G. Duston [1941] A.C. 251, per Lord Russell of Killowen, at p. 261, and per Lord Wright, at pp. 268-73.
Vagueness or incompleteness will bring a supposed contract down because there has been a failure to agree upon such terms as are in the circumstances legally necessary to constitute a contract: although the parties intended to make a contract, the law says that they have failed to do so...
262 Justice Einfeld comprehensively reviewed the authorities on uncertainty in SVI Systems Pty Ltd v Best & Less Pty Ltd & Ors.[228] Although lengthy, aspects of these observations merit extraction:
[60] Two considerations must be taken into account before concluding that no agreement capable of being enforced has been reached notwithstanding an apparent offer and acceptance. Firstly, the agreement may be uncertain because the language used by the parties is not sufficiently precise and clear in its meaning to identify the scope of the rights and obligations agreed to. Secondly, the agreement may be incomplete because, even though the language used is perfectly clear in its meaning, part of the transaction may still remain to be agreed upon so that there is no completed agreement. In any given case there may in fact be elements both of uncertainty and incompleteness: G Scammell & Nephew Ltd v H C & J C Ouston [1941] AC 251; [1941] 1 All ER 14 (G Scammell & Nephew Ltd); Elizabeth Bay Developments Pty Ltd v Boral Building Services Pty Ltd (1995) 36 NSWLR 709; Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] VicRp 55; [1994] 2 VR 106.
[61] When there has been a choice between enforcing an uncertain or incomplete agreement that, when enforced, is something that the parties did not in fact agree to, and on the other hand upholding the reasonable expectations of parties who believed they had a contract, the alleged contract has usually been enforced, especially when it is executed and commercial: Prints for Pleasure Ltd v Oswald-Sealy (Overseas) Ltd [1968] 3 NSWR 761; Amalgamated Television Services Pty Ltd v Television Corp Ltd [1970] 3 NSWR 85; Cudgen Rutile (No 2) Pty Ltd v Chalk [1975] AC 520; (1974) 4 ALR 438; Rowella Pty Ltd v Hoult [1987] 1 Qd R 386; Hawthorn Football Club Ltd v Harding [1988] VicRp 6; [1988] VR 49; Anangel Atlas Compania Naviera SA v Ishikawajima-Harima Heavy Industries Co Ltd (No 2) [1990] 2 Lloyd's Rep 526; Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] VicRp 55; [1994] 2 VR 106; Re Roberts, Repington v Roberts Gawen [1881] UKLawRpCh 241; (1881) 19 Ch D 520; Nea Agrax SA v Baltic Shipping Co Ltd [1976] QB 933; [1976] 2] All ER 842. However, the nature of the agreement contemplated must always be considered so that where for example the transaction is a large one and terms usually found in an agreement are missing, elements of uncertainty and incompleteness should not be ignored: Toyota Motor Corp.
[62] Where a contract is said to be uncertain, but the parties have shown by their conduct that they understand and can apply its terms without difficulty, such conduct should not be ignored by holding that the terms of the contract are unintelligible by reason of uncertainty: York Air Conditioning & Refrigeration (A'asia) Pty Ltd v Commonwealth [1949] HCA 23; (1949) 80 CLR 11; Hempel v Robinson [1924] SAStRp 45; [1924] SASR 288; Sinclair v Schildt [1914] WALawRp 23; (1914) 16 WALR 100. In such situations the agreement may be upheld as a contract on the basis that by their actions in performance the parties have made certain the elements which were previously uncertain: Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; [1932] All ER Rep 494; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110.
[63] The same result may also be reached on the basis of an implied contract having come into existence and incorporating as many as possible of the terms of the original agreement: Way v Latilla [1937] 3 All ER 759; British Bank for Foreign Trade Ltd v Novinex Ltd [1949] 1 KB 623; [1949] 1 All ER 155.
...
[67] A clause which has more than one possible meaning or which may produce more than one result when interpreted is not void for uncertainty: Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429; Head v Kelk [1962] NSWR 1363; McDermott v Black [1940] HCA 4; (1940) 63 CLR 161; Waldron v Tsimiklis (1975) 12 SASR 481; Meehan v Jones; Australian Energy Ltd v Lennard Oil NL [1986] 2 Qd R 216; Yaroomba Beach Development Co Pty Ltd v Coeur de Lion Investments Pty Ltd (1989) 18 NSWLR 398; Youell v Bland Welch & Co Ltd (No 2) [1990] 2 Lloyd's Rep 431 (the Superhulls Cover Case); Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (t/as Uncle Bens of Australia) (1992) 27 NSWLR 326; Star Shipping AS v China National Foreign Trade Transportation Corp (The Star Texas) [1993] 2 Lloyd's Rep 445.
[68] As long as the clause is capable of a meaning, it should be given the meaning consistent with the intention of the parties: Upper Hunter County District Council; Fitzgerald v Masters; Gregory & Bradshaw; Anangel Atlas Compania Naviera SA (No 2); S & E Promotions Pty Ltd v Tobin Bros Pty Ltd (1994) 122 ALR 637; Head v Kelk; Waldron v Tsimiklis; Biotechnology Australia Pty Ltd; BHP Petroleum (Timor Sea) Pty Ltd v Minister for Resources [1994] FCA 1002; (1994) 49 FCR 155; 121 ALR 280.
[69] The question is one of construction: Meehan v Jones, and the language used should be interpreted broadly and fairly: Hillas v Arcos; Cohen v Mason; The Star Texas; Woodside Offshore Petroleum Pty Ltd v Atwood Oceanics Inc [1986]WAR 253; Terrex Resources NL; and not narrowly or pedantically: Upper Hunter County District Council; Head v Kelk; Waldron v Tsimiklis; Biotechnology Australia Pty Ltd. So long as it is not utterly impossible to place a reasonable meaning on the language used and to discern the parties' intention, the agreement will be enforced: Brown v Gould [1972] Ch 53; Hammond v Vam Ltd [1972] 2 NSWLR 16; Head v Kelk; Meehan v Jones; Gregory & Bradshaw; The Star Texas.
[70] Agreements which are apparently vague or uncertain may be made certain by considering a standard of reasonableness by which the content of the agreement can be more precisely defined: Hillas v Arcos; King v Ivanhoe Gold Corp Ltd [1908] HCA 75; (1908) 7 CLR 617. Alternatively, certainty may be achieved by an appeal to the understanding or practices of business people: R W Cameron & Co v L Slutzkin Pty Ltd [1923] HCA 20; (1923) 32 CLR 81; Bowes (carrying on business as British Tie Co) v Chaleyer (carrying on business as J Chaleyer & Co) [1923] HCA 15; (1923) 32 CLR 159.
[71] Where a phrase is uncertain only in the sense that the precise implications of the phrase are still to be ascertained, there is no contractual uncertainty provided that when the facts arise for application of the phrase, it is capable of being applied with reasonable certainty: Bowes v Chaleyer; Upper Hunter County District Council; Tonelli v Komirra Pty Ltd [1972] VicRp 87; [1972] VR 737. However, if the words used, although clear in their meaning, are incapable of being applied to the facts, the agreement will fail for uncertainty: Mercantile Credits Ltd v Harry [1969] 2 NSWR 248; Re Nudgee Bakery Pty Ltd's Agreement [1971] Qd R 24; Custom Credit Corp Ltd v Gray [1992] VicRp 36; [1992] 1 VR 540.
[72] A binding contract will not exist if the parties are still in the process of refining essential aspects of the bargain: Australian Broadcasting Corp v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540; Lubo Medich Holdings Pty Ltd v D and A Lu Pty Ltd (unreported, CA(NSW), Gleeson CJ, Mahoney P and Beazley JA, 8 May 1996). An intention to contract, whether expressed in terms of intention to make or accept an offer or in terms of an intention to create legal relations, is therefore essential. Accordingly, if the parties' intention to be bound is conditional on agreement being reached in relation to essential terms, there is no contract unless those terms are agreed: Toyota Motor Corp; Metal Scrap Trade Corp v Kate Shipping Co Ltd (The Gladys) (No 2) [1994] 2 Lloyd's Rep 402.
[73] In other words, for an implication to be made, the parties must have finally agreed on a bargain and the law does not permit a court to imply terms for the purpose of making incomplete negotiations an enforceable contract: Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695; May and Butcher Ltd v R [1934] 2 KB 17n; Toyota Motor Corp; Vroon BV v Foster's Brewing Group Ltd [1994] VicRp 53; [1994] 2 VR 32; Hawkins v Clayton (1988) 164 CLR 539; 78 ALR 69; Byrne v Australian Airlines Ltd (1995) 185 CLR 410; 131 ALR 422; Ashmore v Corporation of Lloyd's (No 2) [1992] 2 Lloyd's Rep 620.
[74] On the other hand, an incomplete agreement may be enforced if terms relating to essential matters, which the parties themselves have not expressly dealt with, can be implied into the contract. For example, terms relating to a reasonable time for performance and a reasonable price for the subject matter of the contract can be implied: Parker v Manessis [1974] WAR 54; W & J Investments Ltd v FCT (1987) 16 FCR 314; 76 ALR 293; Foley v Classique Coaches Ltd [1934] 2 KB 1; Whitehouse Properties Pty Ltd v Bond Brewing (NSW) Ltd (1992) 28 NSWLR 17; Couronne Investments Pty Ltd v Bardot Pty Ltd (unreported, SC(Qld), White J, 10 April 1996); Hall v Busst [1960] HCA 84; (1960) 104 CLR 206; Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582. In other words, where a contract which is prima facie incomplete has been largely performed by one or both parties, the agreement may be upheld by the implication of terms in order to avoid the injustice to a party who had performed but was unable to enforce the contract: Yea Corporation v Roberts [1879] VicLawRp 183; (1879) 5 VLR (E) 222; Hall v Busst.
[75] An arrangement whereby the parties agree to negotiate in the future on some essential matter will not be enforced on the basis that the agreement is incomplete, uncertain or is supported by consideration which is illusory: Carr v Brisbane City Council [1956] St R Qd 402; Courtney and Fairbairn Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297; [1975] 1 All ER 716; Mallozzi v Carapelli SpA [1976] 1 Lloyd's Rep 407; Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600; 43 ALR 68; Itex Shipping Pte Ltd v China Ocean Shipping Co (The Jing Hong Hai) [1989] 2 Lloyd's Rep 522; Coal Cliff Collieries v Sijehama Pty Ltd (1991) 24 NSWLR 1; Walford v Miles [1992] 2 AC 128; [1992] 1 All ER 453. Accordingly, the law does not recognise as an enforceable contract an agreement to agree or negotiate a contract: Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353; Von Hatzfeldt-Wildenburg v Alexander [1911] UKLawRpCh 90; [1912] 1 Ch 284; ; ; ; ; ; ; ; ; ; ; ; ; .
[76] An incomplete agreement, being no more than an agreement of the parties to agree at some time in the future which is not effective as a contract, will not be enforced: Booker Industries; Coal Cliff Collieries. Accordingly, a contract will fail for incompleteness where, even though the language used may be quite clear in its meaning, some essential, material or important part of the bargain is yet to be agreed: see, for example, Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601; Vroon BV; Hempel v Robinson; May and Butcher Ltd v R; Foley v Classique Coaches Ltd; Willesden v Webb [1937] QWN 8; G Scammell & Nephew Ltd. However, the agreement may be upheld where there is a machinery provision that can be applied to supply the omitted term, where a term can be implied to deal with the omission, or where severance is possible.
[77] Where the parties have reached agreement on certain terms, but have indicated that further terms are to be negotiated, the agreement is not necessarily void for uncertainty or incompleteness, since the terms in question may not be essential terms of the agreement: Ravinder Rohini Pty Ltd v Krizaic [1991] FCA 318; (1991) 30 FCR 300; 105 ALR 593; Granit SA v Benship International Inc [1994] 1 Lloyd's Rep 526. Moreover, although an agreement to negotiate further terms which are essential to the completion of the contract is no different from an agreement to agree, it would appear that an express agreement to negotiate further essential terms in good faith may be binding if the parties have also agreed on the criteria against which the negotiations may be judged, objectively, in the event of a dispute: Coal Cliff Collieries; Hillas v Arcos, Trawl Industries of Australia.
263 In Brew v Whitlock (No 2),[229] the Full Court of the Supreme Court of Victoria addressed the principles regarding severance at length, to which I refer but will not set out. In Whitlock v Brew,[230] the High Court affirmed the decision of the Full Court of the Victorian Supreme Court in Brew v Whitlock (No 2)[231] and, relevantly, Taylor, Menzies and Owen JJ observed[232] that:
It, therefore, becomes necessary to determine whether the condition is severable from the rest of the provisions of the contract or whether the whole contract falls. On this point the learned judge of first instance after referring to the observations of Knox C.J. in Life Insurance Co. of Australia Ltd. v. Phillips[233] and to Fitzgerald v. Masters[234], held that the condition was of such a quality that it could be ignored. But those cases and Nicolene Ltd. v. Simmonds[235], to which also he made a reference, are simply particular examples of conclusions reached by the application of a general principle. That general principle is stated by Knox C.J. in the first-mentioned case[236]:
"When a contract contains a number of stipulations one of which is void for uncertainty, the question whether the whole contract is void depends on the intention of the parties to be gathered from the instrument as a whole. If the contract be divisible, the part which is void may be separated from the rest and does not affect its validity."
Observations in the same case make it clear that in seeking to ascertain the intention of the parties to a written contract extrinsic evidence may not be resorted to except where such evidence may be called in aid in the interpretation of the written instrument. Clearly enough, it seems to us, it is not to the point to make an independent examination of extrinsic facts, even if they were within the knowledge of both parties, and upon such evidence to conclude that a particular provision was or was not of importance to them or to either of them; the question for determination is the intention of the parties as disclosed by the contract into which they have entered. Neither Phillips Case[237] nor Fitzgerald v. Masters[238] bear any resemblance to the present case. Nor does the case of Nicolene Ltd. v. Simmonds[239], the headnote of which, as was pointed out in Fitzgerald v. Masters[240], inaccurately states the effect of the contract then under consideration. Of course, cases may arise where a vague, uncertain or meaningless clause in a contract may simply be ignored. An elementary example of this is to be found in the last clause on p. 2 of the contract in this case. But special condition 5 does not fall into any such category; nor can it be said to be a clause inserted solely for the benefit of one of the parties and capable of being waived by him.
264 In SVI Systems Pty Ltd v Best & Less Pty Ltd,[241] Einfeld J helpfully summarised the position regarding severance as follows:
[64] Whether uncertain conditions can be severed without destroying the entire agreement must also be considered. When a contract contains a number of conditions one of which is void for uncertainty, the question whether the whole contract is void depends on the intention of the parties to be gathered from the agreement as a whole: Life Insurance Co of Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60; Whitlock v Brew [1968] HCA 71; (1968) 118 CLR 445; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251. Where a provision relating to some inessential or incidental matter is vague, uncertain or meaningless, it may simply be ignored: Life Insurance Co of Australia Ltd; Whitlock v Brew; Update Constructions Pty Ltd, and the rest of the contract enforced: Nicolene Ltd v Simmonds [1953] 1 QB 543; Bosaid v Andry [1963] VicRp 67; [1963] VR 465; Caltex Oil (Aust) Pty Ltd v Alderton [1964-65] NSWR 456; Tern Minerals NL v Kalbara Mining NL (1990) 3 WAR 486; Cohen v Mason [1961] Qd R 518.
[65] It is a question of construction whether the parties intended that if the clause in question could not for any reason take effect the whole contract must fail. Even a clause relating to an important matter may be severable: Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420; David Jones Ltd v Lunn (1969) 91 WN (NSW) 468; South Coast Oils (Qld and NSW) Pty Ltd v Look Enterprises Pty Ltd [1988] 1 Qd R 680; Spectra Pty Ltd v Pindari Pty Ltd [1974] 2 NSWLR 617.
[66] The test to be applied is whether the parties must be taken to have intended that an offending provision is severable or intended that, if the clause in question could not for any reason take effect, the whole contract must fail: Fitzgerald v Masters; Whitlock v Brew; David Jones Ltd v Lunn; Terrex Resources NL v Magnet Petroleum Pty Ltd [1988] 1 WAR 144. In determining an intention in respect of a written contract, extrinsic evidence may not be resorted to except where such evidence may be called in aid of interpretation: Whitlock v Brew. Where severance is not possible, because it would radically alter the agreement intended by the parties, the whole agreement will fail: Duggan v Barnes [1922] ArgusLawRp 88; [1923] VLR 27; Whitlock v Brew; G Scammell & Nephew Ltd.
265 In State of New South Wales v Banabelle Electrical Pty Ltd,[242] Einstein J expressed the position in this way:
[32] When a contract contains a number of stipulations, one of which is void for uncertainty, the question whether the part which is void ("the offending provision") may be separated so as to not affect the validity of the remainder will depend upon whether the parties intended that if the offending provision could not for any reason take effect, the remainder may, notwithstanding this circumstance, be given effect. This question is a question of construction.
[33] The fundamental proposition has been expressed in a number of alternative ways. The alternatives differentiate between questions raising the possibility of the entirety of an agreement failing and questions raising the possibility of the balance of a particular clause or group of relevantly related clauses failing. As some of the authorities cited below make plain, alternative ways of putting the fundamental proposition seem to include the following:
"Where severance is not possible:
- because severance of the clause would result in the remainder failing to reflect the intention of the parties
- because severance would have the result of disregarding the main purpose and substance of the parties intention
- because severance would have the result that a provision which is fundamental or essential to the parties bargain will require to be disregarded
- because severance would alter entirely the scope and intention of either:
• the relevant clause or
• the group of relevantly related clauses or
• the whole agreement
the balance of a clause or group of relevantly related clauses or the whole agreement will fail."[243]
[34] Albeit questions which may be raised as to the difference between a clause which is meaningless and a clause which is incomplete (cf Nicolene Ld v Simmonds [1953] 1 QB 543 at 551, per Denning LJ), the defendants have submitted that the proper approach to problems of the type presently before the Court is reflected in the following passage from the judgment of Sugerman J (with whose reasons Walsh J agreed) in Caltex Oil (Australia) Pty Ltd v Alderton (1964) 81 WN (Pt 1) (NSW) 297 at 297; [1964-65] NSWR 456 at 456:
"... A blank left in an instrument generally renders meaningless the portion of the instrument in which it appears. But this may leave the instrument as one which is capable of being carried into effect and enforced, disregarding the meaningless provision, just as may happen where some inessential provision of a contract is so vague and uncertain as to be incapable of any precise meaning." (citing Nicolene v Simmonds, (emphasis added))
266 In United Group Rail Services Ltd v Rail Corporation New South Wales,[244] Allsop P also referred to established authorities and succinctly stated the principles of severance as follows:
[86] There is no doubt that in the process of construction of a document words "may ... be supplied, omitted or corrected ... where it is clearly necessary in order to avoid absurdity or inconsistency": Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 426-427; see also Homburg Houtimport B V Agrosin Private Ltd [2003] UKHL 12; [2004] 1 AC 715 at 741 [23] and 748 [53].
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[90] The principles to decide whether or not a contract or part of a contract is severable or not from some provision void for uncertainty are not, relevantly, in doubt. It is a question depending upon the intention of the parties to be gathered from the instrument as a whole: Whitlock v Brew [1968] HCA 71; (1968) 118 CLR 445 at 453, 457 and 461; Life Insurance Company of Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60 at 72; Brooks v Burns Philp Trustee Co Ltd [1969] HCA 4; (1969) 121 CLR 432 at 442; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [No 2] [1975] UKPCHCA 1; (1975) 133 CLR 331 at 342.
Part E.12.4 - Consideration and determination - Clause 2(e), construction, uncertainty and severance
267 I have earlier addressed the defendants' contentions regarding Masters v Cameron in Part E.1 above. As to the proper construction of clause 2(e), and the issues regarding alleged uncertainty and severance, I have reached the following conclusions:
(a) Upon the proper construction of the Settlement Deed:
(i) the New Lease referred to in clause 2 of the Settlement Deed was to be on the same terms as the 2016 Lease except for the changes reflected in the Settlement Deed, and in particular clause 2 of that deed; and
(ii) the words '... and to terms reasonably permitted by that [RL] Act ...' in clause 2(e) mean such additional terms, if any, as are agreed and are permitted by the RL Act.
(b) Neither clause 2, clause 2(e) nor any other part of clause 2 is uncertain. Consequently, the severability or otherwise of clause 2, clause 2(e) (or any other part of clause 2) does not arise.
(c) In any event, even if the closing words of clause 2(e) had been found to be uncertain, that part of clause 2(e) would be severable.
(d) If the whole of clause 2, or the whole of or first part of clause 2(e), had been found to be uncertain, neither clause 2 nor clause 2(e) would be severable and the Settlement Deed would have been void or unenforceable by reason of uncertainty.
268 The meaning referred to in sub-paragraph (a) of the preceding paragraph is what in my view a reasonable businessperson in the position of the parties would have understood the terms in clause 2 to mean having regard to the language used by the parties, the circumstances addressed by the contract and the commercial purpose or object to be secured by the Settlement Deed. It also produces the objectively intended commercial result that is consistent with and well serves the object and purpose of the Settlement Deed earlier referred to. I expand further below regarding this proper construction, following which I turn to the issue of severability.
269 It is to be recalled that a material part of the genesis of the transaction reflected in the Settlement Deed is the resolution of the Trustee Proceeding and the Receiver Proceeding, with a view to resolving all issues between the parties in a manner that would see the ongoing conduct of the Business by Rossi Recycling under Glen's control (without the involvement of Paul) pursuant to the New Lease. The terms of the Settlement Deed were agreed in the context of the existence of the 2016 Lease being on foot at that time in circumstances where a central issue in the Trustee Proceeding was whether the rent that had been set by Paul when he controlled both Rossi Recycling (as lessee) and Buckland Valley (as lessor) was excessive. It was not in dispute, and was evident in any event, that this was a major issue between the parties regarding the 2016 Lease.
270 The desire to resolve all issues is reflected not only in Recital B of the Settlement Deed; it is reflected in the structure of the deed, the topics with which it deals and the releases that it contains. It is apparent that the Settlement Deed identifies and addresses various areas of dispute and seeks to deal with them, and otherwise contains broad mutual releases between the parties. A substantial and significant commercial result that is sought to be achieved is readily apparent, namely the ongoing operation of the Business at the premises to be leased under the terms of the New Lease in a manner similar to that which had been occurring for many years before, except to the extent provided for in the Settlement Deed.
271 An important existing objective fact at the time the Settlement Deed was executed was the existence of the 2016 Lease in the form that it was in. I accept the plaintiff's submission that what was objectively intended was for the state of affairs as reflected in that lease to continue under a New Lease in the same terms as the 2016 Lease except to the extent provided for by the terms of the Settlement Deed, and in this context, clause 2 in particular. To so conclude is supported by the language, structure and content of the Settlement Deed when construed in the context of the objective genesis of the transaction, its object and purpose and that which it seeks to achieve. In this context, I draw attention to the following.
273 Second, each of the parties emphasised that the major issue between the parties regarding the 2016 Lease in the Trustee Proceeding was the allegation that the rental fixed by it was excessive. It was plain from the court documents in this proceeding that this was and remained a central issue, if not the central issue, between the parties in that proceeding.
274 Third, the parties agreed, and it was established in any event, that the parties intended to be immediately bound by the terms of the Settlement Deed.
275 Fourth, as is apparent from the terms of the Settlement Deed, it recorded the agreement that was to achieve the commercial result and object and purpose earlier referred to in Part E.3 above. A central and significant part of that agreement was resolving the primary issue between the parties regarding the rent in a way that would facilitate and allow the Business to continue to be conducted at the same location for an extended period at an independently determined current market rental.
276 Fifth, the language regarding Buckland Valley's obligation to enter into the New Lease is strong and clear. It records that Buckland Valley 'will enter into' the New Lease.
277 Sixth, the Business had been conducted over an extended period at that location, and since October 2016, pursuant to the 2016 Lease. The parties were well familiar with its terms and objectively intended that these terms would continue under the New Lease, subject to the agreed adjustments as reflected in the Settlement Deed, and particularly clause 2 thereof. That is what a reasonable person in the position of the parties would have taken clause 2 to mean.
278 Seventh, to so construe clause 2 of the Settlement Deed sits comfortably with the language and other terms of the Settlement Deed and allows them to operate congruently and harmoniously - and in a manner that sits comfortably with and well serves the object and purpose of the Settlement Deed.
279 Eighth, to construe the Settlement Deed as embodying a circumstance that, on the defendants' case, could or would result in Rossi Recycling being subject to the 2016 Lease for the rest of its term (and any options exercised[247]) when a primary issue between the parties was the issue of excessive rent is not a meaning that a reasonable businessperson in the position of the parties would arrive at. It is also not a meaning that well serves or sits comfortably with the commercial object or purpose of the Settlement Deed. For example, it does not resolve one of the central issues between the parties, does not facilitate the parties being able to go their separate ways having resolved the issues between them, and it does not allow the Business to continue at its current location at an independently determined current market rental for the premises to be occupied.
280 Ninth, the reference to the terms of the lease being '... on a standard LIV commercial lease ...' does not cause any material difficulty and was not said to be problematic in terms of understanding what was being referred to. It was common ground between the parties, and apparent from the evidence, that the 2016 Lease was 'on a standard form LIV commercial lease ...' document,[248] which was also recorded on the face of that document, including the notice on its front page.
281 As it was common ground between the parties (and not the subject of any submissions to the contrary) that the 2016 Lease and the New Lease were subject to the RL Act, the inclusion of the language in clause 2(e) about the LIV commercial lease being 'subject to' the RL Act, was also not the cause of any relevant controversy. So much was understandable given the common position of the parties regarding the RL Act.
282 Tenth, the parties were not starting with a blank canvas in the context of the New Lease but were reaching agreement in the context of the existing 2016 Lease. That did not have a blank schedule but had a schedule of terms that had been addressed and was in operation. The terms of the Settlement Deed sought to address the issues that were to be reflected in the New Lease. The terms of the 2016 Lease were to remain the same except for the matters reflected in the Settlement Deed (and particularly clause 2) - and any necessary or consequential adjustments.
283 Eleventh, to construe the terms of the Settlement Deed in this way does not result in the existence of gaps and issues in the schedule to the New Lease but sees a schedule consistent with the manner in which the parties had been conducting the landlord and tenant relationship, except to the extent otherwise provided for by the terms of the Settlement Deed.[249] To so construe the Settlement Deed upholds the bargain reached between the parties and allows the objectively intended commercial result to be achieved. To the extent that it was contended that construing the Settlement Deed results in re-writing the agreement, or changing the nature of the bargain, I do not accept that submission. It does not.
284 Twelfth, it is apparent that clause 2 deals with essential, central and important matters in a sufficiently clear way, which was effectively acknowledged by the defendants in any event.[250] For example, clause 2 addresses: the term of the New Lease; the options and further terms; the rental; the rent rises; the premises; and other matters.
285 Thirteenth, the New Lease contemplated the use of the LIV standard form document in a context where it was objectively known by the parties what its structure was, including the existence of the schedule. The vast majority of the matters referred to in clause 2 are matters to be addressed in the schedule to the LIV standard form document. A construction that favours the matters in the existing 2016 Lease schedule being adjusted as reflected but otherwise leaving the schedule items the same is a businesslike interpretation well serving the object and the purpose of the Settlement Deed. A construction that suggests that all other matters were left for further agreement and that, if they could not be agreed, there would be no New Lease and Rossi Recycling would be left with the 2016 Lease does not well serve the Settlement Deed's object and purpose, would work commercial inconvenience, and would not achieve the commercial result. It is not an interpretation that a reasonable businessperson in the position of the parties would give it, noting also the existing poor relationship between the parties and the excessive rental allegations of Glen in the Trustee Proceeding.
286 Fourteenth, the absence of any express mechanism in the Settlement Deed for addressing other items in the schedule to the New Lease speaks in favour of the construction arrived at rather than against it. As the plaintiff at least implicitly submitted, no such mechanism was required because the terms of the 2016 Lease schedule were to carry across except to the extent provided for by the Settlement Deed.
287 Fifteenth, the construction I prefer sits comfortably with the structure and the content of the other parts of the Settlement Deed, including clause 3. This is because it contemplates a relatively seamless transition from the 2016 Lease to the New Lease at the time the New Lease is entered into. As I have indicated earlier, the existence of the entitlement to a licence in clause 4 is part of the structure reflecting the contemplated transition.
288 Sixteenth, keeping in mind matters such as those referred to above, and applying the established principles, it would be wrong to attribute to the parties an objective intention that there would be no enforceable agreement in relation to the New Lease unless and until the parties reached a fresh agreement in relation to matters referred to in the schedule to the LIV Lease that are not addressed in the Settlement Deed. In my view a reasonable businessperson in the position of the parties would not attribute such a meaning to clause 2 or any part of it. This is further supported by other features of the Settlement Deed, including the terms of clause 2; the object and purpose earlier referred to; the commercial result sought to be achieved; the existence of non-conditional releases in clause 13; and the agreement in clause 14 that upon the execution of the Trust Deed the Trustee Proceeding and the Receiver Proceeding would be dismissed.
289 Noting that many of the observations referred to above are directed to the conclusion that the New Lease referred to in clause 2 was to be on the same terms as the 2016 Lease except for the changes reflected in that clause, it is necessary and desirable to make some further observations regarding the terms, proper construction and operation of clause 2(e) of the Settlement Deed.
290 As is apparent from the above, the references in clause 2(e) to the standard LIV commercial lease, and it being subject to the RL Act, are not the features of clause 2(e) that have given rise to this aspect of the controversy between the parties. It is the closing words: '... and to terms reasonably permitted by that [RL] Act ...'. Of course these words also fall to be construed by reference to the established principles of construction to which I have earlier referred, including the requirement that they be considered in the context of the terms of the Settlement Deed as a whole.
291 Although the language is not as precise or clear as it might have been, it is my view that, upon their proper construction, the words '... and to terms reasonably permitted by that [RL] Act ...' in clause 2(e) mean such additional terms, if any, as are agreed and are permitted by the RL Act. That is, if other terms are agreed between the parties that are not proscribed by the RL Act then they will also be included in the New Lease. However, the words do not purport to impose upon any party the obligation to agree any further terms. If no further terms of the character I have described are agreed between the parties, then the New Lease will not include them. This construction is to be preferred to a construction that requires parties to agree on further terms, and a construction that contemplates otherwise ascertaining and inserting additional terms.
292 Consistent with the position and conclusion referred to above, this is in my view the meaning that a reasonable businessperson in the position of the parties would give to the clause having regard to the language used, the terms of the deed as a whole, and the genesis and object and purpose of the agreement recorded in the Settlement Deed. It also gives meaning and a sphere of operation to the terms of clause 2(e) in the context of the terms of clause 2 (properly construed), and allows the terms of the Settlement Deed to operate congruently and harmoniously so as to achieve the commercial result that was intended.
293 Given all of the other terms that are addressed through the terms of the LIV commercial lease document, clause 2 of the Settlement Deed, and the terms of the 2016 Lease that remain unaltered, such a conclusion sits comfortably within such a framework. This is because it creates the scope for, or facilitates, the parties including additional agreed terms, if any, but does not have the capacity or prospect of undermining the operation of clause 2, the object or purpose of the transaction, or the commercial result that is sought to be achieved. Further, it involves no re-writing of the bargain or the changing of its nature. Rather, it operates harmoniously with the other terms of the Settlement Deed in a manner that reflects the objective intention of the parties and sees the bargain upheld and the commercial result achieved. The other constructions contended for do not have this effect.
294 It will be apparent from the above that I do not accept the defendants' submission that clause 2 or clause 2(e) (either in whole or in part)[251] operates so as to render the terms of the proposed New Lease indeterminate. Upon the proper construction of the Settlement Deed, clause 2 and 2(e) operate as I have earlier referred to and achieve the objectively intended commercial result embodied in the bargain between the parties. It will be apparent from the above that, upon the proper construction of the Settlement Deed, I do not consider that clause 2, clause 2(e), or any part of clause 2 or 2(e) to be void or unenforceable by reason of uncertainty.
295 As I have concluded that the closing words of clause 2(e) are not uncertain it is not strictly necessary to consider whether they would have been severable if they had been found to be uncertain. However, for completeness, I briefly address this issue below.
296 Even if I had concluded that the closing words of clause 2(e) were uncertain, I would have concluded that they would be severable in any event. Applying the principles regarding severance earlier referred to, and having regard to the above conclusions regarding the proper construction of clause 2 and the New Lease being on the same terms as the 2016 Lease except as provided for in the Settlement Deed, the severance position is in my view clear. The closing words of clause 2(e) cannot be seen to be objectively intended to be as so important or connected with the other terms so as to be incapable of being severed or deleted. Given the other conclusions reached regarding the construction of the Settlement Deed, the elimination of the closing words of clause 2(e) would not alter the substantive nature of the agreement embodied by the Settlement Deed, or clauses 2, 3 and 4 of it. Indeed, given the other terms it seems that severance would barely alter the extent of the agreement embodied in the Settlement Deed at all.
297 It follows that if the closing words of clause 2(e) were severed they would not impact upon the enforceability of the remaining clauses of the Settlement Deed, including the balance of clause 2.
298 There is one further matter in this context that I should mention. If I had concluded that the closing words of clause 2(e) were uncertain but that they were not severable, then this would have impacted not only on clause 2 of the Settlement Deed.[252] It would have resulted in the non-severable part not being severable from the Settlement Deed itself, thereby rendering the terms of the Settlement Deed void or unenforceable by reason of uncertainty.
299 That said, and in any event, it is in my view plain that the obligation in clause 2 requiring Buckland Valley to enter into the New Lease is central and so connected with the other promises the subject of the Settlement Deed so as to form an indivisible part of the whole agreement which could not be taken to pieces without altering its nature - and fundamentally so. If clause 2 had been found to have been uncertain in its entirety, or even clause 2(e) or the first part of it,[253] the central importance to the contract as a whole of each of clause 2, clause 2(e), and the first part of clause 2(e)[254] would have resulted in the inability to sever any of them from the Settlement Deed, with the result being that the Settlement Deed would have been void or unenforceable in its entirety.[255]
300 Finally on this topic, to the extent that the defendants pressed their alternative contention that pursuant to the closing words of clause 2(e) the court should impose terms of the kind referred to in the Annexure to the Brindley Orders, I do not accept that submission. No relevant assistance can be gained by the defendants (or the plaintiff) from the terms or circumstances in which that order was made, which was dealing with a different issue in a vastly different context. In any event, given the conclusions reached above regarding the proper construction of clause 2, uncertainty, and severance, it is not necessary to elaborate further on this issue. I note also that, by the conclusion of closing oral submissions, this issue did not really appear to be pressed in any event. This is further referred to when dealing with specific performance in Part J below.
301 I move next to the final contentious construction issue, being that relating to Item 22 of the schedule to the 2016 Lease.
Part E.13 - Item 22 of the schedule to the 2016 Lease
302 Item 22 of the schedule to the 2016 Lease is headed 'Additional Provisions'. It is the part of the standard form LIV commercial lease document where additional provisions are inserted, as was common ground and is apparent from the terms of the standard form document in any event. Item 22 in the schedule to the 2016 Lease is in the following terms:
Additional provisions:
22.1 The Landlord shall be permitted to construct a new building on S3 Industrial 1 with approval to subdivide as soon as planning has been approved. Upon completion of the construction the tenant shall be entitled to utilise the constructed building and rental shall be reviewed and adjusted between the parties accordingly.[256]
303 The issue that arose can be shortly stated. It was whether a term to the effect of Item 22 of the 2016 Lease was to be included in the schedule to the New Lease or whether upon the proper construction of the terms of the Settlement Deed, including clause 2(g), such a term was to be excluded from the New Lease.
304 Rossi Recycling said it was not to be included as a term because of the existence and operation of clause 2(g) of the Settlement Deed. It also submitted that, given the object and purpose of the Settlement Deed, the inclusion of a term to the effect of Item 22 would not be a business-like interpretation. To some degree it also contended that the term was spent in any event given that the subdivision of the land had occurred.
305 Although the defendants disputed that clause 2 was sufficiently certain, their ultimate (but alternative) position on this point was that if clause 2 was sufficiently certain and enforceable and included the terms of the 2016 Lease except to the extent altered by the Settlement Deed, then a term to the effect of Item 22 was to be included in the New Lease. It was further submitted that it was not impacted by clause 2(g) of the Settlement Deed, and that there was no basis for concluding that it was spent in any event, which was also said to be a matter that could not be determined in this proceeding any way.
Part E.13.1 - Consideration and determination - Item 22
306 I have earlier determined that the schedule to the New Lease was to be in the same terms as that under the 2016 Lease except to the extent provided for in the Settlement Deed.[257] As to the issue regarding Item 22, I have concluded that, upon its proper construction, the Settlement Deed does not contemplate the inclusion in the New Lease of a term to the effect of Item 22 of the 2016 Lease.
307 Clause 2(g) records that the New Lease is to contain a term that provides that '... The lessee shall be entitled to modify the premises as it thinks fit with the consent of the landlord, such consent not to be unreasonably withheld.'
308 Clause 2(g) is to be construed as part of the Settlement Deed as a whole, in accordance with the principles earlier referred to, and having regard to the object and purpose that I have earlier addressed. Approaching the matter in this way, and although the Settlement Deed could have been more clearly drafted,[258] it is in my view sufficiently clear that clause 2(g) was objectively intended to be the only provision[259] dealing with building, or alteration to the buildings, in connection with the premises the subject of the New Lease.
309 This sits well with the express language of clause 2(g) in a context where the object and purpose of the Settlement Deed is to allow Glen and Paul to go their separate ways in the manner earlier referred to. It also sits comfortably with part of the object and purpose of facilitating the running of the Business at the New Lease Premises going forward without the involvement or interference of Paul. This construction gives effect to the object and purpose, and the agreement to enter into a New Lease allowing the New Lease Premises to be used by Rossi Recycling under Glen's control, and gives effect to the terms of clause 2(g) of the Settlement Deed. Among other things, and properly construed, the terms of clause 2(g) evidence an objective intention for control over the New Lease Premises, including building and alterations, to be under Rossi Recycling's control (through Glen), but subject to the balancing of interests by the inclusion of the consent (not unreasonably withheld) qualification in clause 2(g).
310 This construction also sits well with the genesis of the Settlement Deed transaction and the nature of the relationship between the parties at the time it was entered into, although the conclusion would not change even if the nature of the relationship is put to one side.
311 The conclusion I have reached involves a businesslike construction and is what a reasonable businessperson in the position of the parties would have taken the Settlement Deed to mean in this context. As the plaintiff submitted, this is underscored to some extent by consideration of the alternative, including that the inclusion of a term as recorded in Item 22 of the schedule to the 2016 Lease would facilitate Paul's ability to become immediately or swiftly involved with the New Lease Premises pursuant to such a clause following entry into the New Lease and interfere with Rossi Recycling's enjoyment of them. Contrary to the submissions of Paul and Buckland Valley, I do not accept that this was objectively intended or that it is in any way a businesslike construction. It is also to be recalled that Item 22 was inserted as a term of the 2016 Lease when Paul was in control of both the landlord and tenant, namely Buckland Valley and Rossi Recycling.
312 In light of the conclusion I have reached, it is not necessary to address the plaintiff's contention that the term in the 2016 Lease was 'spent' in any event - noting also that on the evidence before me that would not have been possible to determine in this proceeding.
313 The end point is that, upon the proper construction of the Settlement Deed, there was not to be a term of the New Lease to the effect of the term set out in Item 22 of the schedule to the 2016 Lease.
314 Given the conclusion referred to above regarding Item 22, and my earlier determination that the schedule to the New Lease was to be in the same terms as the schedule to the 2016 Lease, except to the extent provided for in the Settlement Deed, the schedule to the New Lease will reflect the changes recorded in the Settlement Deed, which in summary are as follows:
(a) The five-year term referred in clause 2(a) of the Settlement Deed from the date that is three months after the operative date of the Settlement Deed, or the next business day where the end of that period does not fall on a business day.
(b) Four further options each of five years as referred to in clause 2(a) of the Settlement Deed.
(c) The initial rent as determined in accordance with clause 2(b) of the Settlement Deed, reflecting the current market rental as at the 13 September 2019 operative date of the Settlement Deed.
(d) Rent rises during each term of 3% per annum as referred to in clause 2(d) of the Settlement Deed.
(e) Mandatory market reviews on the commencement date of each further term as referred to in clause 2(d) of the Settlement Deed.
(f) The RL Act applying to the New Lease.
(g) The premises referred to in clause 2(f) of the Settlement Deed, but with any necessary adjustments to accurately describe the premises and correct the errors reflected in the 2016 Lease (as referred to earlier and addressed in the Land Diagram).
(h) The inclusion of the premises modification term referred to in clause 2(g) of the Settlement Deed.
(i) The absence of the term referred to in Item 22 of the 2016 Lease.
(j) Adjustments to the outgoings term in the 2016 Lease insofar as they relate to Unit 27 (or any other land or premises not forming part of the premises under the New Lease) so as to remove any obligation to pay outgoings in respect of Unit 27 (or any other land or premises not forming part of the premises under the New Lease).
(k) Any additional terms in fact agreed between Rossi Recycling and Buckland Valley.[260]
315 Otherwise, and subject to any necessary consequential drafting amendments, the schedule to the New Lease will be as reflected in the 2016 Lease.
Part E.14 - Brief summary of conclusions regarding the operation and construction of the Settlement Deed
316 Before moving to the questions regarding alleged breaches of the Settlement Deed, it is convenient briefly to summarise the primary conclusions addressed above regarding the construction and operation of the Settlement Deed:
(a) It was the parties' objective intention to be immediately bound by the terms of the Settlement Deed, including clauses 2, 3 and 4 of it.
(b) No relevant issue arises as to the date the Settlement Deed came into effect.
(c) The commercial purpose and object of the Settlement Deed was to the effect described in Part E.3 above.
(d) There were implied terms of the Settlement Deed imposing obligations upon the parties to co-operate to the effect of the terms referred to in Part E.4 above.
(e) Although what was to be determined pursuant to clause 2(b) of the Settlement Deed was the current market rental for the New Lease Premises at the time the Settlement Deed became operative on 13 September 2019, upon the proper construction of the Settlement Deed, it did not provide for the New Lease to come into effect from 1 October 2019.
(f) Clause 2 of the Settlement Deed imposes an obligation upon Buckland Valley to enter into the New Lease with Rossi Recycling within a reasonable time.
(g) A reasonable time for entering into the New Lease was by no later than three months after the 13 September 2019 operative date of the Settlement Deed, or the next business day if that time ended on a non-business day.
(h) Pursuant to clause 3 of the Settlement Deed, the 2016 Lease terminates immediately upon entering into the New Lease.
(i) Until the 2016 Lease terminates it remains on foot without variation to the rent or 2016 Lease Premises.
(j) Clause 4 of the Settlement Deed does not alter the terms of the 2016 Lease or require Rossi Recycling to pay any additional amount to Buckland Valley for the Unit 27 licence entitlement the subject of that clause.
(k) The terms or words of clause 2(b) of the Settlement Deed were not objectively intended to be transported into the New Lease as an express term of the New Lease. The objective intention of the parties was to have the current market rental determination carried out prior to the entry into the New Lease and then to insert the independently determined current market rental amount as the rent under the New Lease.
(l) The premises the subject of the New Lease are as described in the Settlement Deed and are the same as the 2016 Lease Premises except for the first floor of Unit 27, which is excluded.
(m) The New Lease commences when it is entered into, which is also when the 2016 Lease terminates.
(n) Rossi Recycling was obliged to pay rent under the 2016 Lease in October, November and December 2019.
(o) Upon their proper construction, the closing words of clause 2(e) of the Settlement Deed mean such other terms, if any, as are agreed between the parties and are permitted by the RL Act.
(p) Neither clause 2, clause 2(e), or the closing words of clause 2(e) are void or unenforceable for uncertainty. Even if the closing words of clause 2(e) had been uncertain, they would be severed.
(q) If clause 2, or the whole or first part of clause 2(e), had been uncertain they would not be severable and the Settlement Deed would have been void or unenforceable for uncertainty.
(r) Upon the proper construction of the Settlement Deed, the New Lease referred to in clause 2 was to be on the same terms as the 2016 Lease except for the changes reflected in the Settlement Deed, and particularly clause 2.
(s) The New Lease is not to contain a term to the effect of the term in Item 22 of the schedule to the 2016 Lease.
Part F: Alleged breaches of the Settlement Deed by the defendants, the notices of breach, and the taking possession of the 2016 Lease Premises and other parts of Unit 27
(a) Whether Paul or Buckland Valley breached the Settlement Deed - and if so when - by reason of one or more of the following:
(i) failing or refusing, or continuing to fail or refuse, to draft a lease;
(ii) failing or refusing, or continuing to fail or refuse, to respond to the plaintiff's proposal for a valuer in its letter of 20 September 2019;
(iii) if they did not agree to Rossi Recycling's proposal of a valuer, failing or refusing, or continuing to fail or refuse, to agree or propose to refer the question of market rent to the Australian Property Institute to nominate a valuer in accordance with clause 2 of the Settlement Deed;
(iv) demanding rent pursuant to the 2016 Lease for the months of October 2019, November 2019 and December 2019 and thereafter;
(v) issuing notices of breach alleging failure to pay rent pursuant to the 2016 Lease;
(vi) taking possession of the premises (including Unit 27) for failure to remedy the defaults referred to in the notices of breach issued under the 2016 Lease.
(b) The validity of the notices of breach issued by Buckland Valley on 18 and 22 November 2019.
(c) The taking of possession of the property by Buckland Valley on 8 and 10 December 2019, including whether it was 'wrongful' or 'unconscientious'.
(d) Whether the taking of possession of Unit 27 by Buckland Valley on 23 March 2020:
(i) was done under the terms of the Settlement Deed;
(ii) was an affirmation of the Settlement Deed;
(iii) alternatively, constituted a failure to give quiet possession of the premises during the term of the tenancy in accordance with the 2016 Lease, and a breach of that lease.
Part F.1 - Alleged breaches of the Settlement Deed by Paul or Buckland Valley
318 It is to be recalled in the context of these allegations that I have determined that there were terms implied by law in the Settlement Deed to the effect of the Co-operation Terms earlier referred to that imposed upon the parties:
(a) a positive obligation to co-operate and to do all such things as are necessary to enable the other party to have the benefit of the contract; and
(b) an obligation not to hinder or prevent the fulfilment of the purpose of the express promises made in the contract.
Part F.1.1 - Failing or refusing, or continuing to fail or refuse, to draft a lease
319 The plaintiff submitted that the defendants breached the Co-operation Terms by failing to draft and provide a new lease within a reasonable time, despite their lawyers having undertaken to do so on 13 September 2019. The plaintiff submitted that the draft lease was never provided to the plaintiff and that it could be inferred from Paul's evidence that there was no intention to grant a lease and that no steps were taken to prepare it, alternatively that a lease would only be provided if the plaintiff could prove its solvency to him. This was said to be a breach of the Co-operation Terms. It was also contended that a reasonable time in the circumstances was so that the New Lease could be operative from 1 October 2019. The plaintiff further submitted that any suggestion that the preparation of a lease would take several months was unsustainable, it being said that it was effectively conceded by Paul in cross-examination that a lease could be prepared very quickly.
320 The defendants accepted that in Slaters' letter of 13 September 2019 it was stated that their client as landlord would attend to drafting the lease of the property, which it submitted was a positive and co-operative step. It was said that soon afterward Glen failed to act co-operatively to achieve other matters agreed upon, including by: stating that he would only assist Paul in collecting assets upon Paul first executing documents to transfer control of Rossi Recycling; by rejecting the valuers proposed by Buckland Valley on 20 September 2019 without reason and proposing a new valuer; and by failing to pay rent that was due and owing under the 2016 Lease on 1 October, 1 November and 1 December 2019.
321 The defendants submitted that by proposing valuers on 13 September 2019 and offering to attend to drafting of the lease the defendants had taken the first positive steps to co-operate but that it was because of subsequent conduct by Glen and Rossi Recycling that the matters did not progress further. It was further submitted that Paul regarded the failure by Rossi Recycling to pay rent as a breach of a fundamental term of the Settlement Deed and that the defendants regarded the Settlement Deed and the 2016 Lease at an end.
322 I have concluded that each of Paul and Buckland Valley breached the Co-operation Terms by failing to take further steps to prepare a form of the New Lease document and provide it to the plaintiff within a reasonable time, or at all.
323 Pursuant to clause 2 of the Settlement Deed, Buckland Valley, and Paul as its controller,[261] agreed that Buckland Valley would enter into the New Lease. In order for that to occur it was necessary for the parties to co-operate to allow each other to have the benefit of the contract embodied in clause 2 and not to hinder the fulfilment of the promise. Whilst I accept that the defendants initially co-operated in part by stating in Slaters' letter of 13 September 2019 that the New Lease would be prepared by 'their client' and suggesting two valuers, the evidence showed and it was common ground that no proposed lease was ever prepared and provided to the plaintiff, whether within a reasonable time or at all. I also note Paul's evidence in cross-examination that, notwithstanding entry into the Settlement Deed, his position was that he would only enter into a lease if Rossi Recycling could prove that it was solvent. That said, the evidence did not establish that this was conveyed or expressed to Glen or his solicitors at the time or before the notices of breach were sent in November 2019.
324 The failure to take steps to prepare the lease and provide it to the plaintiff as the defendants stated that they would was a breach of each of the Co-operation Terms by each of Paul and Buckland Valley, noting in this regard that although it was Buckland Valley that was to be the lessor, Paul was its controller and also party to the express agreement in clause 2 of the Settlement Deed.
325 In my view what was necessary for the defendants to do given the terms of clause 2 and the content of Slaters' letter of 13 September 2019 was to draft and provide to the plaintiff the lease document within a reasonable time of the entry into the Settlement Deed. By not doing so they did not do all things necessary to allow Rossi Recycling and Glen to have the benefit of the Settlement Deed, and they hindered the fulfilment of the promise in clause 2 of the Settlement Deed.
326 I add for completeness that my conclusion regarding the breach of the Co-operation Terms in this context by Paul and Buckland Valley would not change even if Paul's evidence regarding only permitting Buckland Valley to enter into a lease if Rossi Recycling established that it was solvent was put to one side. It would remain the position that each of Paul and Buckland Valley had breached the Co-operation Terms by failing to prepare and provide to the plaintiff the New Lease document within a reasonable time, or at all.
327 As to what was a reasonable time within which the New Lease document was to be provided by, I do not accept the plaintiff's submission that this had to be by 1 October 2019. In this regard I refer to my earlier rejection of the plaintiff's 1 October 2019 construction contention and I refer to my conclusion that a reasonable time for performance of Buckland Valley's obligation to enter into the New Lease was by no later than three months after the 13 September 2019 operative date of the Settlement Deed, or the next business day where that time ended on a non-business day.
328 That being so, and noting also my later conclusion that the terms of the Settlement Deed (as opposed to the 2016 Lease) did not impose upon Rossi Recycling a contractual obligation to pay rent under the 2016 Lease, in my view the Co-operation Terms required Buckland Valley and Paul to provide the New Lease to Glen and Rossi Recycling at a time before the end of that three-month period which: allowed time for it to be considered by Glen and Rossi Recycling and their solicitors and for responding to Paul and Buckland Valley, before it was to be provided to the independent valuer who was to determine the current market rental. The provision of the New Lease document could easily have occurred even if the rental amount had not yet been determined, because a 'blank space' could have been left in the lease for its insertion once determined.
329 In the circumstances I consider that for Paul and Buckland Valley to comply with the Co-operation Terms so as to allow Glen and Rossi Recycling to have the benefit of clause 2 of the Settlement Deed, it was necessary for the lease document to be provided to them no later than four weeks after the 13 September 2019 date that the Settlement Deed was said in clause 17 to have become operative from. In this context, I add the following observations in support of this conclusion.
330 First, I accept the plaintiff's position that the preparation of the New Lease was a relatively straightforward matter given the terms of clause 2 of the Settlement Deed, the existence of the 2016 Lease, and the standard form LIV commercial lease document. So much was understandably not a matter of controversy. The plaintiff's position was that Paul and Buckland Valley agreed by Slaters' letter of 13 September 2019 to prepare the New Lease and that this could and should have been done by 1 October 2019. Paul's evidence was also consistent with the lease preparation being a relatively straightforward matter.
331 Second, having regard to the conclusions I have reached regarding the proper construction and operation of the Settlement Deed and clauses 2, 3 and 4 in particular, the preparation of the New Lease was a relatively straightforward matter.
332 Third, it was in Glen and Rossi Recycling's interest to progress the matter, as they indicated at trial, and it can be inferred that it was at least likely that they would have acted relatively expeditiously following receipt of the New Lease - whether then including the new rental or not. I say this because Glen regarded the rent under the 2016 Lease to be materially excessive. Further, the lease document would then have been available to provide to the independent valuer as potentially relevant material to his or her deliberation, which I note was specifically referred to in Dunemanns' letter of 4 December 2019.
333 Fourth, although it would have been possible, and may have been helpful and constructive, for Paul and Buckland Valley to have provided the New Lease document earlier, this was not necessary to be done to allow Glen and Rossi Recycling to have the benefit of the Settlement Deed. This is reinforced by the fact, as I have found, that a reasonable time for the performance of the obligation under clause 2 of the Settlement Deed to enter into the New Lease was three months from the operative date of the Settlement Deed.
334 Fifth, noting my conclusion that a reasonable time for the performance of the obligation under clause 2 of the Settlement Deed for Buckland Valley to enter into the New Lease was three months, to enable Rossi Recycling to have the benefit of the Settlement Deed in this regard it was necessary for Paul and Buckland Valley to co-operate by providing the New Lease document to them sufficiently in advance of that time to be considered, responded to and provided to the independent valuer. As I have said, in my view this required the New Lease document to be provided to Glen and the plaintiff no later than 28 days after 13 September 2019.[262] This would have provided sufficient time for the defendants' lawyers to prepare the lease document and advise their clients without haste or urgency.
335 The result is that each of Paul and Buckland Valley breached the Co-operation Terms by failing to draft and provide the New Lease document to Glen and Rossi Recycling by no later than 28 days after 13 September 2019, or the next business day where that time ended on a non-business day. This remains so even if the current market rental determination would not have been carried out by that time and therefore a blank space needed to be left for its insertion once determined.
336 I do not accept that the matters sought to be relied upon by the defendants provide a defence to this allegation of breach. Further, if the matters raised by the defendants were established and constituted a breach by the plaintiff of the Co-operation Terms, so long as the Settlement Deed was on foot in the circumstances these matters did not alter or operate to dilute the defendants' obligations under the Co-operation Terms in this context. Whilst breaches by the plaintiff or Glen may have their own consequences, they could not have altered the fact that each of Paul and Buckland Valley breached the Co-operation Terms in the way that I have described in connection with the failure to provide the New Lease document to Glen and Rossi Recycling. As to the alleged breaches by Glen and Rossi Recycling, these are addressed in more detail later in these reasons.
337 Further, and in any event, as is discussed later in these reasons, when dealing with the allegations of breach of the Settlement Deed by Glen and Rossi Recycling, I do not accept that the defendants established that Glen (or Rossi Recycling) breached the Co-operation Terms by reason of either of their conduct in relation to the transfer and consent documents, not accepting the valuers proposed by Buckland Valley, failing to pay rent under the 2016 Lease, or otherwise. It will also be seen later in these reasons that I do not accept that Glen or Rossi Recycling repudiated the Settlement Deed or that it was otherwise terminated.
Part F.1.2 - Not responding to the plaintiff's proposed valuer and not agreeing or proposing to refer the question of market rental to the Australian Property Institute
338 The plaintiff submitted that both Paul and Buckland Valley breached the Co-operation Terms by failing to respond to Rossi Recycling's suggested alternative valuer, Mr Matler, and by not agreeing or proposing to refer the question of market rental to the Australian Property Institute as contemplated by clause 2 of the Settlement Deed. It was contended that no explanation was provided for the absence of a response and that it could be inferred that the reason for no response was the same reason that a New Lease document was not provided, namely that Paul considered he had no obligation to do so unless Rossi Recycling proved to him that it was solvent. This, so it was said, prevented Glen and the plaintiff from having the benefit of the Settlement Deed and hindered or prevented the fulfilment of the promises, including those related to the New Lease and the agreed current market rental determination mechanism in the Settlement Deed.
339 The defendants denied that they had breached the Co-operation Terms as alleged and submitted that it was the conduct of Glen earlier referred to that caused matters not to progress and that neither party had sought an appointment from the Australian Property Institute before the Settlement Deed came to an end.
340 In my view each of Paul and Buckland Valley breached the Co-operation Terms by not responding to the plaintiff's suggested valuer within a reasonable time of that suggestion being made in the plaintiff's solicitors' letter of 20 September 2019 (or at all). In my view a reasonable time for responding to that suggestion was no later than 14 days after 20 September 2019.
341 The current market rental determination mechanism in clause 2(b) necessarily required the co-operation of each party. The valuer was to be appointed by agreement, or if no agreement, by the Australian Property Institute. The defendants' step in suggesting valuers by Slaters' letter of 13 September 2019 was a timely and co-operative step that started the process. The plaintiff and Glen's prompt response about the valuer through their solicitor's letter of 20 September 2019 was also a timely and co-operative step, in which it was stated that their client would prefer the appointment of Mr David Matler.
342 The ball was then in the defendants' court to indicate whether they agreed or did not agree with the alternative suggestion. If they agreed then the valuer could be appointed. If they did not agree then, in the absence of agreement on an alternative, co-operative steps would then need to be taken by the parties to bring about the appointment of a valuer by the Australian Property Institute, as contemplated by clause 2(b). This was not a complicated process.
343 It was common ground, and established on the evidence, that the defendants did not respond to the plaintiff's suggestion of the alternative valuer, whether within a reasonable time or at all. By failing to respond to the plaintiff's valuer suggestion within a reasonable time (or at all), the defendants were failing to give the necessary co-operation needed to allow Glen and the plaintiff the benefit of the rental determination valuation process agreed between the parties, including the appointment of the valuer and the determination of the current market rental in accordance with clause 2. That was a breach of the Co-operation Terms by each of Paul and Buckland Valley, noting also that it hindered and prevented Glen and Rossi Recycling obtaining fulfilment of the promise regarding the entry into the New Lease.
344 In my view a reasonable time to respond to what was a straightforward issue was no more than 14 days after the date of the plaintiff's solicitors' letter suggesting the alternative valuer, or the next business day where that time ended on a non-business day. I consider this to be a reasonable time given that: the task of responding was a straightforward task that could be dealt with swiftly; it was open to each of the parties to agree or disagree with the valuer nominated by the other and there was no implied or other obligation[263] requiring reasons to be provided; it allowed a period of time for the defendants or their solicitors to make enquiries regarding Mr Matler if they wished to do so; it takes into account the possibility that the defendants' lawyers had other work tasks or commitments that would prevent them from addressing the task immediately; it allows for time to obtain instructions and provide a response to the plaintiff's solicitors; it is part of a process that contemplated a current market rental valuation then being obtained; and it takes into account the obligation in clause 2 requiring Buckland Valley through Paul as its controller to enter into the New Lease within a reasonable time.
345 Again, I do not accept that the matters sought to be relied upon by the defendants provide a defence to this allegation of breach. Even if the matters raised were established and constituted a breach by the plaintiff of the Co-operation Terms, so long as the Settlement Deed was on foot in the circumstances these matters did not alter or operate to dilute the defendants' obligations under the Co-operation Terms in this context. Whilst breaches by the plaintiff of such terms may have their own consequences, they did not alter the fact that each of Paul and Buckland Valley breached the Co-operation Terms by not responding in relation to the suggested alternate valuer within a reasonable time or at all.
346 In any event, and as noted above (and discussed in more detail later below), I do not accept that the defendants established that Glen breached the Co-operation Terms of the Settlement Deed by reason of his conduct in relation to the execution of documents filed with ASIC, not accepting the valuers proposed by Buckland Valley, failing to pay rent under the 2016 Lease, or otherwise. It will also be seen later in these reasons that I do not accept that Glen or Rossi Recycling repudiated the Settlement Deed or that it was otherwise terminated.
347 That said, I do not accept the plaintiff's submission that the defendants breached the Co-operation Terms by not taking steps towards the appointment of a valuer by the Australian Property Institute. This was a step that was to follow if there was no agreement regarding the valuer to be appointed. Because the defendants failed to inform the plaintiff whether they did or did not agree to the suggested alternate valuer within a reasonable time or at all, the defendants had not made known whether they did or did not agree to the alternative valuer proposed by Glen and the plaintiff. On the evidence before me, and because the defendants had not made their position known regarding the proposed alternative valuer, it was not a breach of the Co-operation Terms by the defendants not to take steps to seek to have a valuer nominated by the Australian Property Institute at that time. However, and as I have said, by not responding within a reasonable time or at all, Paul and Buckland Valley breached the Co-operation Terms by not doing all things necessary to allow Glen and Rossi Recycling to have the benefit of the Settlement Deed, including this aspect of it - and by hindering its fulfilment.
348 If the defendants had complied with the Co-operation Terms and responded to the plaintiff's alternative suggestion by stating that they did not agree to the valuer proposed, it would then have been incumbent upon each of the parties to give necessary co-operation to enable a valuer to be nominated by the Australian Property Institute in the absence of agreement on an alternative. As things transpired, on the facts of this case that position was not reached.
349 I add for completeness that, to the extent that it was pressed, I do not accept the defendants' submission that either party was constrained in deciding whether to agree or not to agree to valuers suggested by the other party. There was also no term imposing an obligation on either party to provide reasons for any disagreement and it was open to each party not to agree even if such disagreement was because, for example, it was a valuer nominated by the other party. The Co-operation Terms do not compel an alternative conclusion. No conclusion that the Settlement Deed required a party to have sound or other reasons before not agreeing to a suggested valuer is necessary to allow the other parties to have the benefit of the agreement. The absence of reasons, communicated or otherwise, also did not prevent the other party from obtaining the benefit of the agreement. Rather, clause 2(b) catered for the absence of agreement (by either party) by providing a mechanism for appointment of a valuer where there was no agreement. To the extent that the defendants contended otherwise, I do not accept that submission. To so conclude would not be a businesslike construction or reflect the objective intention of the parties.
Part F.1.3 - Demanding rent pursuant to the 2016 Lease for the months of October 2019, November 2019 and December 2019 and thereafter; issuing notices of breach alleging failure to pay rent pursuant to the 2016 Lease; and taking possession of the 2016 Lease Premises and other parts of Unit 27 for failure to remedy defaults referred to in the notices of breach issued under the 2016 Lease
350 The plaintiff submitted that the rent payable under the 2016 Lease was an un-differentiated lump sum payable for the occupation of all of the premises demised under the 2016 Lease which included the top floor of Unit 27. It was contended that the demands for further rent pursuant to the 2016 Lease beyond that which was paid on 1 September 2019 necessarily entailed demands for rent for part of the top floor of Unit 27 and therefore necessarily entailed breaches of clause 4 of the Settlement Deed, which granted Rossi Recycling an irrevocable licence to occupy the top floor at no cost for six months. For that reason it was said that each of the demands for rent for October, November and December 2019, and any claimed right to possession based on such demands, constituted breaches of clause 4 of the Settlement Deed. Further it was said that such demands and claims to possession were necessarily founded upon the breaches of the Co-operation Terms that was manifested in the failure to provide the New Lease document at a market rental for premises actually leased from 1 October 2019.
351 The plaintiff submitted that it was well established that a party will not be permitted to take advantage of their own wrong, including breach of the obligation to co-operate, referring in this regard to the decisions in Bensons[264] and Joseph Street Pty Ltd v Tan.[265] It was said that the court should not recognise or sanction Buckland Valley's notices of breach of the 2016 Lease or the forcible taking of possession of the premises given that they were each founded upon breaches of clause 4 of the Settlement Deed and also upon the breach of duty to co-operate in failing to prepare a lease that was to displace the 2016 Lease.
352 In this context, the plaintiff relied upon its submissions in support of the contention that the New Lease was to come into effect from 1 October 2019, which I have referred to and addressed earlier.[266]
353 The defendants accepted that Buckland Valley demanded rent under the 2016 Lease, issued notices of breach, and took possession of the 2016 Lease Premises for what it said was Rossi Recycling's failure to remedy the breaches as referred to in the notices. It was said that these steps were taken to enforce the 2016 Lease and Buckland Valley's rights arising from the breach of the 2016 Lease. This was said to be consistent with clause 3 of the Settlement Deed, which it was submitted provided for the existing lease to continue until the parties entered into a New Lease. In this context, the defendants submitted that by enforcing the 2016 Lease and requiring Rossi Recycling to remedy its breaches the defendants were acting in accordance with both the terms of the 2016 Lease and the requirements of the Settlement Deed.
354 It was submitted that the demanding of rent, issuing of notices of breach and taking of possession could not be a breach of the Co-operation Terms under the Settlement Deed by the defendants. It was said further that the taking of possession was because of the failure by the plaintiff to pay rent under the 2016 Lease and thereby a failure by the plaintiff to comply with the Co-operation Terms ensuring the continuance of the 2016 Lease in accordance with clause 3 of the Settlement Deed.
355 The resolution of these issues depends materially upon the proper construction of the Settlement Deed, which is addressed at some length in Part E above, and to which I refer but shall not repeat. As is apparent from that part of these reasons, I have not accepted the plaintiff's submissions regarding the proper construction of the Settlement Deed insofar as it relates to the alleged 1 October 2019 commencement date of the New Lease, or the rental payment submissions in connection with the operation of clause 4 and the entitlement to a licence of (relevantly) the top floor of Unit 27. It will be recalled that I have determined that, upon the proper construction of the Settlement Deed:
(a) It did not provide for the New Lease to be entered into or to take effect from 1 October 2019.
(b) Clause 2 imposed an obligation upon Buckland Valley to enter into a New Lease within a reasonable time of the operative date of the Settlement Deed.
(c) No more than three months from the 13 September 2019 operative date of the Settlement Deed was a reasonable time for Buckland Valley, and Paul as its controller, to comply with the obligation under clause 2 of the Settlement Deed requiring Buckland Valley to enter into the New Lease.[267]
(d) Clause 4 of the Settlement Deed provided Rossi Recycling with an entitlement to a licence for (relevantly) the first floor of Unit 27 for six months from the date of the Settlement Deed at no cost. However, it did not alter the terms of the 2016 Lease which remained on foot. Further, neither the rent under the 2016 Lease nor the premises the subject of that lease were altered by the terms of clause 4.
356 Having regard to the conclusions reached about the proper construction of clauses 2, 3 and 4 of the Settlement Deed, the 2016 Lease continued and operated in accordance with its terms, including for the months of October, November and December 2019. Had a New Lease been entered into at any time during one of these months then the 2016 Lease would have ended at that time, as provided by clause 3 of the Settlement Deed. I again refer to the earlier discussion in Part E of these reasons regarding the proper construction of the Settlement Deed.
357 Putting the Co-operation Terms to one side for the moment, absent other considerations the result is that the 2016 Lease continued to operate in accordance with its terms in October, November and December 2019. Consequently:
(a) Rental was payable in accordance with the terms of the 2016 Lease on (relevantly) 1 October, 1 November and 1 December 2019.
(b) Buckland Valley as lessor under the 2016 Lease was entitled to require Rossi Recycling to pay rent under the 2016 Lease for (relevantly) October, November and December 2019.
(c) If Rossi Recycling failed to pay rent for one or more of the months of October, November or December 2019, Buckland Valley was entitled to exercise such rights as it had under the 2016 Lease in respect of that failure.
358 Having regard to the above, neither Buckland Valley nor Paul breached any of the express terms of the Settlement Deed by demanding rent under the 2016 Lease for the months of October, November or December 2019, by issuing notices of breach under the 2016 Lease in respect of non-payment of rent for those months, or by exercising Buckland Valley's rights under the 2016 Lease in respect of the non-payment of rent, including the taking of possession of the premises under the 2016 Lease insofar as that taking of possession did not include Unit 27. However, although the top floor of Unit 27 was part of the 2016 Lease Premises, it was also part of the Unit 27 premises that was the subject of the irrevocable licence to occupy granted by Buckland Valley to Rossi Recycling for a six-month period from the date of the Settlement Deed pursuant to clause 4 of the Settlement Deed. Consequently, although Buckland Valley had certain rights under the 2016 Lease, it also had obligations under clause 4 of the Settlement Deed and the Co-operation Terms in relation to the same.
359 By taking possession of Unit 27 on 8 and 10 December 2019, Buckland Valley breached clause 4 of the Settlement Deed and the Co-operation Terms. This is because by so doing it sought to revoke the irrevocable licence given under clause 4. In acting this way, Buckland Valley failed to co-operate and do all things necessary to allow Rossi Recycling to have the benefit of the right to occupy Unit 27 pursuant to clause 4 of the Settlement Deed, and hindered and prevented the fulfilment of the purpose of the express promise made in clause 4 of the Settlement Deed in relation to the occupancy of Unit 27 pursuant to the licence.
360 Paul, as the sole controller of Buckland Valley, caused Buckland Valley to so act. Paul is a party to the Settlement Deed, and by causing Buckland Valley to act in that way in relation to Unit 27 he also breached the Co-operation Terms in a like manner to that of Buckland Valley.
361 I have earlier also determined that the defendants breached the Co-operation Terms by not sending the New Lease document to the plaintiff and by not responding to the suggested alternative valuer. Whilst such breaches of the Co-operation Terms by the defendants raise issues as to what if any damage might have been suffered as a result of the same, the breaches did not operate to remove the plaintiff's obligations to pay rent under the 2016 Lease.
362 To the extent that it was contended by the plaintiff that the defendants' breach of the Co-operation Terms engaged the principle that a party will not be permitted to take advantage of their own wrong so as to deprive Buckland Valley from demanding rent under the 2016 Lease for the months I have referred to, I do not accept that submission. In this context, it is to be noted that the rent under the 2016 Lease was required to be paid by the terms of that lease, not the terms of the Settlement Deed. It is also to be recalled in this context that I have determined that a reasonable time for Buckland Valley to comply with its obligation to enter into a New Lease under clause 2 of the Settlement Deed was three months after the operative date of the Settlement Deed. Put another way, Buckland Valley was not under a contractual obligation to enter into the New Lease prior to the end of that three-month period, which it may be observed expired after 1 December 2019. In my view the principle addressed by the Court of Appeal in Joseph Street Pty Ltd v Tan[268] does not engage.
363 Even if it were to be assumed that the principle referred to operated in the way submitted by the plaintiff, it has not been established on the evidence before me that the entitlement to demand rent for the months in question, and for Buckland Valley to exercise its rights under the 2016 Lease upon the non-payment of rent, arises as a result of Buckland Valley (or Paul) taking advantage of its own wrong or breach of the Settlement Deed.
364 It will be apparent that I accept the defendants' submissions that Buckland Valley was entitled to demand rent pursuant to the 2016 Lease for the months of October, November and December 2019, issue notices of breach alleging a failure to pay rent by Rossi Recycling in those months, and to exercise such rights as it had under the 2016 Lease consequent upon the non-payment of rent, including seeking to take possession of the premises the subject of the 2016 Lease.[269] However, by taking possession of Unit 27 on 8 and 10 December 2019, each of Buckland Valley and Paul breached the Settlement Deed in the way that I have referred to above.
365 Thus far I have dealt with the position in relation to the months of October, November and December 2019. The Revised Issues List also raises the question of whether the defendants breached the Settlement Deed by making demands for rental, issuing notices for breach and taking possession of the premises 'thereafter'. It is not necessary to address this issue and it is undesirable to do so because it involves a hypothetical. On the evidence before me there was no evidence of demands for rental after December 2019 and no evidence of the issue of notices of breach or the taking of possession by Buckland Valley after December 2019. There was evidence, and it appeared to be common ground, that rental had been paid under the 2016 Lease in accordance with its terms since December 2019. Although rental payment is said to be relevant to the issue of loss and damage or compensation, this is not the subject of this part of the hearing.
Part F.1.4 - The validity of the notices of breach issued by Buckland Valley on 18 and 22 November 2019 and the taking of possession of the property by Buckland Valley on 8 and 10 December 2019, including whether it was 'wrongful' or 'unconscientious'
366 The plaintiff relied upon its position referred to above, including its 1 October 2019 construction contention, and submitted that if there was no entitlement to the whole of the rent pursuant to the 2016 Lease beyond that which was paid on 1 September 2016 then any rental demand or notice of breach in respect of rent referable to the whole of the 2016 Lease Premises would be invalid. Consequently, so it was said, any taking possession of the premises based on such a demand would be in breach of clauses 2 and 4 (in relation to Unit 27), and in breach of the Co-operation Terms in relation to the 2016 Lease Premises.
367 The defendants relied upon their earlier submissions and submitted that the demand for rental, the notices of breach, and the taking of possession, involved the valid and lawful exercise of Buckland Valley's rights under the 2016 Lease.
368 Having regard to the matters referred to in Part E and Part F.1.3 above, it will be apparent that most of the plaintiff's submissions have not been accepted and that in my view the notices of breach issued by Buckland Valley on 18 and 22 November 2019 were valid, as was the enforcement of its rights under the 2016 Lease on 8 and 10 December 2019. Such actions were not wrongful or unconscientious in the exercise of Buckland Valley's rights under the 2016 Lease as a result of the plaintiff's non-payment of rent. However, by taking possession of Unit 27, each of Buckland Valley and Paul breached the Settlement Deed in the manner described in Part F.1.3 above. That taking of possession of Unit 27 was therefore wrongful in that context, although it was not established to be unconscientious.
369 To the extent that the plaintiff pressed a contention that the first notice dated 18 November 2019 was invalid because it referred to a '1 October 2019' lease instead of the '1 October 2016' lease, I do not accept that submission, which in my view was technical and without substantive merit.
370 In JPA Finance,[270] McLeish JA made the following observations regarding notices given under a commercial contract and the question of the need for strict compliance or otherwise after considering the decisions in Tricontinental Corporation Ltd v HDFI Ltd,[271] and Bond v Hongkong Bank of Australia Ltd:[272]
[60] Taken together, the judgments in Bond reaffirm that the question whether a contract requires strict compliance with provisions as to notice, in order for a notice given in connection with the contract to be effective, is one of construction of the contract.
[61] Neither Tricontinental nor Bond stands for the proposition that notice requirements always require strict compliance. Both of them turned on the language of the relevant contract and, at least to some extent, on its nature as a contract of suretyship or guarantee.
...
[64] He continued:
In my view, such documents should be construed practically, so as to give effect to their presumed commercial purposes and so as not to defeat the achievement of such purposes by an excessively narrow and artificially restricted construction. The law facilitates and upholds commercial contractual obligations and the expectations that derive from them. Statute and equity may sometimes come to the aid of parties where various forms of unfairness or inequality can be shown. None was invoked in this appeal. But as between a commercial enterprise and a finance provider, such as a bank, the law should be the upholder of agreements. It should eschew artificialities and excessive technicalities for these will not be imputed to the ordinary businessperson. Business is entitled to look to the law to keep people to their commercial promises.[273]
...
[66] The question whether a contractual stipulation as to the mode of giving notice has been complied with may also involve a process of construction of the notice itself. The construction of the contract and the notice raises common issues, especially because both matters concern the same contractual and commercial context.
[67] The principles of construction of notices are not relevantly different to those governing the construction of contracts. This Court has endorsed Lord Steyn's articulation of the principles in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd.[274] It is convenient to set out the analysis of Gillard AJA (with whom Winneke P and Buchanan JA agreed) in MLW Technology Pty Ltd v May,[275] which was also endorsed by Warren CJ, Tate and Beach JJA in Salta Constructions Pty Ltd v St George Bank:[276]
The law should strive to uphold a contract wherever possible to avoid the reproach of being the destroyer of bargains. The principle applies not only to contracts but also to the actions of businessmen. The point has been recently reinforced in the House of Lords in relation to a notice given pursuant to a contract by Lord Steyn in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd. That case concerned a lease and the validity of a notice to determine the lease. The notice wrongly stated the date of termination and the question arose whether it was effective. The Court of Appeal, adopting a strict approach, held that it was not. On appeal, the House of Lords by a majority held that it was sufficient. Lord Steyn formulated a number of propositions and stated with respect to proposition 2 the following:
(2) The question is not how the landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene.
... the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases. Given that the reasonable recipient must be credited with knowledge of the critical date and terms of clause 7(13) the question is simply how the reasonable recipient would have understood such a notice.
His Lordship noted that the law had moved on from a strict technical approach and said:
Since then there has been a shift from strict construction of commercial instruments to what is sometimes called purposive construction of such documents ... It is better to speak of a shift towards commercial interpretation. About the fact of the change in approach to construction there is no doubt.
In determining the meaning of the language of commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction.[277] The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.
... The approach also accords with authority in this Court.[278] ...
371 In my view a reasonable businessperson or a reasonable recipient in the position of the plaintiff or Glen receiving the first notice would have understood the notice to be a notice relating to the 2016 Lease. It was the only lease between the parties at the time and the only lease the subject of the dispute between them. There was no lease dated 1 October 2019, but there was a lease dated 1 October 2016, being the 2016 Lease, which had been and was the subject of the proceedings and the ongoing dispute between the parties. A reasonable businessperson or recipient would have understood the notice to be referring to the 2016 Lease - and also that the reference to 2019 instead of 2016 was a typographical error.
372 The result is that the typographical error in the first notice did not affect its validity. Further and in any event, even if the first notice of 18 November 2019 had been invalid by reason of the typographical error, the issue was rectified or cured by the second notice dated 22 November 2019, which was not the subject of such a challenge.[279]
Part G: Rossi Recycling and Glen's estoppel claim
373 In this part I address Glen and Rossi Recycling's estoppel claim, including:
(a) Whether by entering into the Settlement Deed and by stating in correspondence on 13 September 2019 that Buckland Valley and Paul would prepare the new lease, Buckland Valley and Paul thereby represented that:
(i) The next rent to be paid after the entry into the Settlement Deed (which was payable on 1 October 2019 in advance for the month of October 2019) was to be market rental for premises actually leased (that is, excluding Unit 27) determined in accordance with clause 2 of the Settlement Deed.
(ii) They would prepare a new lease, inter alia, giving effect to the above.
(i) Did Rossi Recycling rely on them to its detriment?
(ii) Was it, or would it be, unconscionable for Paul and Buckland Valley to resile from those representations by:
(A) failing to prepare a lease with effect from 1 October 2019, or within such other reasonable time as the Court determines?
(B) asserting an entitlement to rent pursuant to the 2016 Lease for the months of October, November and December 2019 and thereafter?
(C) issuing notices of breach for failure to pay rent pursuant to the 2016 Lease for the months of October, November and December 2019?
(D) taking possession of the premises (including Unit 27) for failure to pay rent pursuant to the 2016 Lease for the months of October, November and December 2019?
(iii) Are Paul and Buckland Valley thereby estopped from resiling from the representations?
374 The plaintiff submitted that the estoppel was an estoppel by deed and also that it arose by way of promissory estoppel. Noting the conclusions that I have reached earlier regarding the proper construction of the Settlement Deed and related matters, the plaintiff's estoppel claim can be crisply addressed.
375 By entering into the Settlement Deed and stating in Slaters' correspondence on 13 September 2019 that the landlord would prepare the New Lease, Buckland Valley and Paul did not represent (or record or represent in the Settlement Deed): (a) that the next rental to be paid after the entry into the Settlement Deed (which was payable on 1 October 2019) was to be a new market rental for the premises actually leased (that is, excluding the top floor of Unit 27) determined in accordance with clause 2 of the Settlement Deed; or (b) that the defendants would prepare a New Lease to that effect.
376 So far as the Settlement Deed is concerned, it is sufficient, in this context, to refer to my observations in Part E and Part F.1.3 above regarding: the proper construction of the Settlement Deed; my rejection of the plaintiff's contention that the New Lease was to take effect from 1 October 2019; and my earlier conclusions regarding the proper construction and operation of clauses 2, 3 and 4 of the Settlement Deed, including in relation to the position regarding rental under the 2016 Lease and the top floor of Unit 27.
377 As earlier noted, it may also be observed that the terms of the Settlement Deed do not directly address the date from which the independently determined current market rental is to take effect once it has been determined. In my view there are also no other features of the Settlement Deed that either directly or indirectly convey, in the abstract or in the circumstances, either or both of the agreed representations. This remains the position whether the Settlement Deed is considered alone, together with Slaters' letter of 13 September 2019, or with one or more of any of the other circumstances of this case.
378 The terms of Slaters' letter of 13 September 2019 do not advance the plaintiff's position. The letter was short and referred to the Settlement Deed. It was in the following terms:
Dear Sir
Paul Rossignoli & Ors ats Glen Rossignoli
Supreme Court Proceedings S CI 2018 00737
Paul Rossignoli -v- Rossi Recycling Pty Ltd and Glen Rossignoli
Supreme Court Proceedings S ECI 2018 02512
We refer to the Deed of Settlement (Deed) in the above matters.
Rossi Recycling Pty Ltd
We advise that our client is content for your client to arrange for the drafting of the relevant documentation regarding the matters set out in clause 1 of the Deed for his consideration.
Lease
We advise that our client as landlord will attend to the drafting of the lease of the property.
Valuers
Further to clause 2(b) of that Deed we are instructed to propose the following valuers:
1. Joe Perillo
Partner
Knight Frank
2. Roger Scrivener/John Forsyth
Scrivener Forsyth
We attach a copy of the relevant Curriculum Vitaes of the above valuers.
You will note that the proposed valuers have significant experience in rental assessments and are both accredited specialist retail valuers and therefore are suitably qualified to conduct the valuation required.
Please advise whether your client is agreeable to the appointment of any of the above valuers.
Yours faithfully
Diana Young
Principal Lawyer
SLATER AND GORDON
379 As is apparent, the letter says nothing about the date from which the independently determined market rental is to take effect in respect of the premises the subject of the New Lease. Relevantly, it simply refers to the Settlement Deed and states that Slaters' '... client as landlord will attend to the drafting of the lease of the property'. Neither the language of the letter nor any other feature of it conveys directly or otherwise any representation or position regarding the date from which the market rental will apply or the premises the subject of the rental. It records no more than the fact that the drafting of the New Lease is to be attended to by the landlord, Buckland Valley.
380 When the letter is considered in conjunction with the Settlement Deed, the plaintiff's contention gathers no greater force, and I again refer in this regard to my earlier observations regarding the proper construction of the Settlement Deed in this context.
381 Given the above conclusions it is not necessary to traverse any of the well-rehearsed principles regarding estoppel by deed or promissory estoppel, noting that there appeared to be no live issue between the parties on the topics in any event. The plaintiff has failed to establish the foundation upon which it seeks to build its estoppel claims. In these circumstances it is also not necessary to address the other issues identified above, although it may be noted for completeness that, given the failure of the plaintiff to establish the existence of the alleged representations, it follows that it has also not established that they were relied upon by the plaintiff, or relied upon to its detriment.
382 The end result is that no estoppel by deed or promissory estoppel of the kind alleged arises and the plaintiff's claims in this regard must fail.
Part H: Alleged breaches of the Settlement Deed by Glen and Rossi Recycling
383 Parts H to J below address the issues raised in items 10 to 15 of the Revised Issues List. Although not always well expressed, at their core these issues relate to the central question of whether the Settlement Deed was repudiated by Glen or Rossi Recycling, whether any repudiation was accepted, whether the Settlement Deed was affirmed by Buckland Valley and Paul, whether orders granting specific performance should be made in favour of Rossi Recycling, and some related matters.
(a) Whether Glen breached the Settlement Deed by one or more of the following:
(i) taking steps to appoint himself as a director of Rossi Recycling and terminate Paul as a director of Rossi Recycling without the authorisation or consent of Paul;
(ii) taking steps to transfer Paul's shares in Rossi Recycling to Glen without the authorisation or consent of Paul;
(iii) filing forms with ASIC to reflect (i) and (ii);
(iv) refusing Paul access to the Rossi Recycling premises to permit Paul to take possession of commercial waste bins;
(v) failing to give Paul possession of commercial waste bins;
(vi) causing the 2016 Lease to be terminated;
(i) breached the 2016 Lease by failing to pay rent for the months of October 2019, November 2019 and December 2019;
(ii) demanded, or evinced an intention, that Rossi Recycling would not remedy the alleged breaches of the 2016 Lease unless Buckland Valley agreed to a monthly rent of $16,666 payable under that lease;
(iii) denied the existence of any ongoing monthly tenancy over the premises;
(iv) denied the existence of the 2016 Lease;
(v) refused or failed to recognise Buckland Valley's contractual rights under the 2016 Lease or any existing lease;
(vi) committed trespass by re-taking possession of the premises in December 2019;
(vii) by any or all of that conduct, caused the 2016 Lease to be terminated.
Part H.1 - Alleged breaches of the Settlement Deed by Glen
Part H.1.1 - Glen taking steps to appoint himself as a director and terminate Paul as a director without the consent or authorisation of Paul; Glen taking steps to transfer Paul's shares in Rossi Recycling without the consent or authorisation of Paul; Glen filing forms with ASIC to reflect resignation, appointment and transfer
385 The defendants submitted that Glen breached the Settlement Deed by taking steps to appoint himself as a director of Rossi Recycling in place of Paul and steps to transfer Paul's shares in Rossi Recycling to himself without the consent or authority of Paul, and by filing forms with ASIC in relation to these matters.
386 Rossi Recycling and Glen disputed that the settlement agreement had been breached by Glen's actions and contended that there was no substance to the defendants' complaint. It was contended that the action was not unilateral or without authorisation because the Settlement Deed terms clearly provided that Paul agreed to resign and transfer the shares forthwith. This was said to reflect the agreement in clause 1 of the Settlement Deed for the immediate transfer of control which, so it was said, constituted the authority and consent by Paul and Rossi Recycling.
387 This position was said to be supported by the object and purpose to be achieved by the Settlement Deed, and in particular clause 1 of it. It was further submitted that, notwithstanding the claimed unilateral transfer of control, on 25 November 2019 Paul executed and provided to Glen and Rossi Recycling his resignation as appointor and guardian of the RP Trust and a separate form appointing Glen as the appointor and guardian in his place pursuant to clause 1(c) of the Settlement Deed. This was contended to be a step completing or perfecting the transfer of control of Rossi Recycling and the Business to Glen as contemplated by the Settlement Deed.
388 I have concluded that Glen did not breach the Settlement Deed by taking the steps that he took in relation to appointment as a director, the transfer of shares and the filing of forms with ASIC recording his appointment as a director of Rossi Recycling and recording the transfer of Paul's shares in Rossi Recycling.
389 There was no relevant dispute of fact. Acknowledging some repetition with that which I have referred to earlier, it was established on the evidence and largely common ground that:
(a) The Settlement Deed was executed on 6 September 2019.
(b) Clause 1 of the Settlement Deed provided that Paul agreed to: (a) resign forthwith as a director and secretary of Rossi Recycling; (b) transfer forthwith to Glen, or at his direction, Paul's total shareholding in Rossi Recycling; and (c) irrevocably and permanently resign his position as appointor and guardian of the RP Trust and appoint Glen in his place.
(c) By email dated 11 September 2019, the plaintiff's solicitors sent to the defendants' lawyers a transfer form for Paul to sign to transfer the shares in Rossi Recycling to Glen.
(d) By letter dated 13 September 2019, Slaters informed Dunemanns, among other things, that their client was content for the plaintiff to arrange for the drafting of the relevant documentation regarding the matters set out in clause 1 of the deed and that their client as landlord would attend to the drafting of the lease of the property.
(e) Glen[280] filed the Form 484s with ASIC advising of the resignation of Paul as a director and secretary of Rossi Recycling, the appointment of Glen as a director and secretary of Rossi Recycling, and the transfer of Paul's shareholding in Rossi Recycling to Glen. At that time Paul had not signed resignation and share transfer documents. The agreed chronology recorded that this lodgement occurred on 13 September 2019[281] in one part of the chronology and on 19 September 2019 in another part. This also sat in tension with the Form 484s exhibited to the affidavit of Paul affirmed 12 December 2019 opposing the relief from forfeiture application. Those documents recorded that two separate forms were filed dealing with the cessation of Paul being a director and the appointment of Glen as a director, with the latter recording that it was received by ASIC on 25 September 2019 at 09:49:46 AM and the former recording that it was received on the same day at 10:09:49AM. The Form 484s recording the change of shareholding in Rossi Recycling from Paul to Glen were recorded as having been lodged with ASIC on 30 September 2019 at 12:22:51 PM. If there is an error with the date referred to by the parties in the agreed chronology it appears likely that it was connected with the relevant forms recording the director's cessation date as 13 September 2019, which may be observed is consistent with clause 17 of the Settlement Deed. Glen's direct evidence, which I accept, also confirmed that the documents were lodged in late September 2019 and not on 13 September 2019. That said, even if the other dates I have referred to are assumed to be correct it would make no difference to the result.
(f) By letter dated 18 September 2019, Dunemanns sent to Slaters documents for Paul to sign recording his resignation as a director and secretary of Rossi Recycling and his resignation as appointor and guardian of the RP Trust and the nomination of Glen as appointor and guardian of the RP Trust.
(g) By letter dated 19 September 2019, Slaters wrote to Dunemanns informing them, among other things, that Paul wished to attend the Business premises on 21 September 2019 to collect assets which it was said he controls and those assets which he is entitled to retain as set out in the Settlement Deed.
(h) By email of 19 September 2019, Dunemanns informed Slaters that they had been instructed to advise that upon return of the documents recently forwarded to Slaters for execution by Paul, their clients would be provided with every assistance required to facilitate Paul's wishes.
(i) By email of the same day from Slaters to Dunemanns, Slaters informed Dunemanns that they had received the documents for signature by Paul and that once they had been reviewed they would have them executed. The email stated that in the meantime their client had organised a tradesman to attend the premises on Saturday and requested a key to be made available to him to access the office. A follow-up email was sent on 20 September 2019.
(j) Dunemanns responded by letter of 20 September 2019 stating, among other things, that their client preferred that the executed documents transferring control of the Business be delivered before there was further distribution and allocation of assets, but that they were also instructed that at all relevant times Paul held a master key to the complete complex. Reference was also made to the documents to be signed by Paul being very straightforward and simple. It was also stated that if the executed documents were forwarded to Dunemanns that afternoon then Glen suggested that the parties meet at the transfer station at 3pm on Saturday, when most of the day's business at the premises would have been completed.
(k) On 20 September 2019, Paul attended the premises, and I accept Glen's evidence regarding what he said Paul did and did not do at that time, which I refer to further below in the context of the waste bins issue. For present purposes, it is sufficient to note that, on the evidence before me, the director resignation documents and share transfer documents were not provided to Glen in advance of that visit or subsequently.
(l) By letter of 20 September 2019, Dunemanns wrote again to Slaters stating that their client's suspicions had been confirmed and that they were instructed that 20 minutes earlier that day Paul had attended the Business premises and demanded that he be given everything that he wanted and that he stated that he was the boss until he signed the documents and that he was not signing anything until he got everything that was his. Dunemanns requested that Slaters counsel their client concerning his actions, stating that they appeared to fly in the face of the Settlement Deed that was 'painstakingly negotiated between the parties'.
(m) Glen said, and I accept, that he discussed the topic at length with his solicitor and that he was advised that the signed Settlement Deed could itself be used as the basis for lodging the forms with ASIC regarding transfer and appointment as a director. This then occurred in late September 2019 as referred to above.
(n) Further correspondence followed, aspects of which I have referred to in the Background section above and was addressed in the agreed chronology.[282] This included the correspondence of 25 November 2019 enclosing the appointment and resignation documents signed by Paul in respect of the RP Trust, of which Rossi Recycling was the trustee and owner of the Business.
390 Pursuant to the terms of the Settlement Deed, Paul did agree to resign 'forthwith' as director and secretary of Rossi Recycling and 'forthwith' transfer to Glen or at his direction his total shareholding in Rossi Recycling. The ordinary meaning of 'forthwith' is recorded in the Oxford English Dictionary as being 'immediately, at once, without delay or interval'. That is consistent with the Macquarie Dictionary, which records the ordinary meaning as 'immediately; at once; without delay'. It may be observed that each of these meanings refer to time frames by when an act or thing is to occur, albeit a very short time frame.
391 In my view, upon its proper construction clause 1 records Paul's agreement regarding that which he is to do forthwith, but does not record or operate as a resignation or transfer in and of itself. So much is apparent from the language of the clause. It is also a meaning that would be given to it by a reasonable businessperson in the position of the parties.
392 It is a separate question, however, whether by acting as he did Glen breached the terms of the Settlement Deed. In my view he did not. Whilst questions may arise as to what effect the steps taken have or may have had at different times, that is a different matter, but was not an issue raised or addressed by the parties, with the defendants also describing the alleged breach as a 'technical breach' at one point in their submissions.[283] The steps Glen took, whether through his solicitors or otherwise, to file documents with ASIC regarding resignation, appointment and transfer, do not breach any express term of the Settlement Deed. They also do not breach the Co-operation Terms.[284] This is because the actions taken by Glen do not involve a failure by him to co-operate and do all such things as were necessary to allow Paul and Buckland Valley to have the benefit of the Settlement Deed, nor do they involve steps taken by Glen that hinder or prevent the fulfilment of the purpose of the express promises made in the Settlement Deed. On the contrary, the steps taken were consistent with the substance of what was reflected in clause 1 of the Settlement Deed. If and to the extent Glen needed authority or consent from Paul to take the steps that he did, such authority was given or to be implied from clause 1 of the Settlement Deed, and supported by the later resignation and appointment documents relating to the RP Trust on 25 November 2019.
393 To the extent that the defendants pressed a contention that there was an implied term of the Settlement Deed that the transfer of control of Rossi Recycling to Glen by the resignation of Paul as a director and by transfer of his shareholding to Glen would be effected in accordance with clause 1 of the Settlement Deed and not otherwise,[285] I do not accept that submission.
394 As the Court of Appeal observed in Adaz Nominees Pty Ltd v Castleway Pty Ltd:[286]
71 In relation to the implication of terms (other than terms implied by law), it is well established that five criteria must be satisfied before a term will be implied to give business efficacy to a contract. These are that the implied term:
(a) must be reasonable and equitable;
(b) must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(c) must be so obvious that 'it goes without saying';
(d) must be capable of clear expression; and
(e) must not contradict any express term of the contract.[287]
395 The alleged implied term referred to above does not satisfy these criteria. This is because it is not necessary to give business efficacy to the Settlement Deed. The Settlement Deed is effective without it, as a review of clause 1 of the Settlement Deed reinforces. It is also not so obvious that it goes without saying, which is also linked in part to the first observation.
396 In any event, even if it were to be assumed that by acting as he did in this regard Glen was in breach of clause 1 of the Settlement Deed, the alleged implied term, or the Co-operation Terms, this would not have amounted to repudiatory conduct, whether by evincing an intention to no longer be bound by the Settlement Deed or otherwise. On the contrary, whether effective or not, Glen's conduct was consistent with bringing into effect the substance of the bargain the subject of the Settlement Deed, including the agreement of Paul regarding resignation and the transfer of shares in clause 1 of the Settlement Deed. Given the terms of clause 1, and to the extent it is germane, I do not accept that Glen was not 'authorised' to act as he did. I also refer further to the discussion of repudiation and the question of specific performance later in Parts I and J of these reasons.
Part H.1.2 - Refusing Paul access to the Business premises to permit Paul to take possession of commercial waste bins
397 By the conclusion of the trial the issues regarding the waste bins had narrowed considerably. Although broader issues were raised in the defendants' written closing submissions and addressed in the evidence, during oral closing submissions senior counsel for the defendants responsibly informed the court that the only live issue related to one 27 m² waste bin, which I have earlier defined as the Last Bin.
398 That said, and in any event, it was not established that Glen or Rossi Recycling breached the Settlement Deed by refusing Paul access to the Business premises to permit Paul to take possession of the commercial waste bins.
399 Clause 12 of the Settlement Deed provided (relevantly) that Paul:
shall be entitled to retain the following plant:
(a) The deck screen;
(b) Wood splitter;
(c) Bale spikes;
(d) Laser level;
(e) 10 bins, being 2 each of 27m, 18m, 10m, 8m and 6m.
400 Glen gave evidence, which I accept, that the deck screen, wood splitter, bale spikes and laser level were already in Paul's possession at his Clonbinane property. He also said, and I accept, that Paul had some of the waste bins in his possession and he needed to work out what they were so the balance could be made available. It became common ground, and was established by Glen's evidence, which I accept, that, with the exception of the Last Bin, after the Settlement Deed was executed and prior to 20 September 2019 Glen had arranged for the balance of the waste bins to which Paul was entitled under the Settlement Deed[288] to be moved to part of the land that Paul had retained (or had rights to) and that Rossi Recycling did not occupy. That land is that part of the land coloured red on the Land Diagram (Red Lot). I refer also to Paul's evidence on this topic in the Background section above and the discussion of Glen's further evidence regarding the waste bins later below.
401 In advance of Friday 20 September 2019, and subsequently, there was an exchange of correspondence between Slaters and Dunemanns, as referred to earlier in these reasons.
402 Glen gave evidence, which I accept, that on 20 September 2019 Paul arrived at the 2016 Lease Premises unannounced driving a semitrailer[289] with a machine already on the trailer, and without stopping at the gatehouse, did a U-turn and then exited the premises colliding with a bollard on the way out and damaging one of the tyres on the semitrailer. He then drove out onto the road and parked the semitrailer on the Red Lot (that Paul retained control of) and where the waste bins for Paul were, except for the Last Bin.
403 Paul then walked from the Red Lot onto the Business premises. In the conversation that then occurred between Paul and Glen, Glen said that he needed Paul to sign the paperwork to transfer the Business properly. Glen said, and I accept, that Paul responded by saying that he was not signing anything until he got everything he wanted. Glen said, and I accept, that Paul did not attempt to move any of the bins that were on the Red Lot and did not then or later ask for the Last Bin. Glen said, and I accept, that Paul left the semitrailer on the Red Lot, departing with his partner Ms Fulton.
404 Not long after Paul arrived, Dunemanns wrote to Slaters informing them that they had been instructed that approximately 20 minutes previously Paul had attended the premises and demanded that he be given everything that he wanted. That letter was in the terms earlier referred to. Slaters responded by letter later that day stating that Paul had instructed them that there was additional equipment and other material owned by Paul[290] that had been removed from Unit 27 by Glen and that Glen had denied 'our client as landlord' reasonable access to inspect and record the assets not owned by Rossi Recycling. It was said that if the equipment and material were not returned to its location in Unit 27, or confirmed that it would be made available for collection on Monday 23 September 2019 by 4pm, Paul would issue an application seeking appropriate orders. It was also said that Paul needed access to all parts of the premises at 2pm on Monday 23 September 2019 for the purpose of inspection and recording the assets not owned by Rossi Recycling. Among other things it was stated that Glen's refusal to allow Paul access and removal of 'personal assets' was disappointing and inflammatory.
405 At 5:43pm that day Dunemanns responded asking Slaters that they have their client provide a list of the items that he asserted were not the property of Rossi Recycling and located at the transfer station. They stated that they believed the documents provided by them to be executed was all that was required to transfer control of the trustee and the trust and that any additional documentation was secondary. It was further stated that any application brought by Paul would be strenuously defended, with all correspondence being produced to the court to support their current position that Paul had not honoured his obligations as provided for in the Settlement Deed.
406 On 10 October 2019, Paul returned to the premises by driving his car, without stopping, into the yard and then onto the Red Lot. A short while later he drove the semitrailer, which he had parked on the Red Lot on 20 September 2019, out by the same route across Rossi Recycling's premises, with Ms Fulton following him out, driving his ute. Glen said, and I accept, that Paul did not talk to anybody at Rossi Recycling, did not attempt to move the bins that were on Paul's property (being the Red Lot), and did not ask to take the Last Bin.
407 On 18 November 2019, Buckland Valley served its notice of breach of lease dated that day. Dunemanns responded by letter of 21 November 2019, substantial parts of which were extracted earlier in these reasons as follows:
We refer to your client's purported Notice of Breach of lease and advise that our client does not accept the validity of the same. ...
Never having executed such a lease, our client is completely unaware of the provisions of any lease dated 1 October 2019 and we request that you provide a copy of the same.
We note that our letter of 20 September 2019 has received no response. As, apparently, your client does not accept the appointment of the valuer nominated by our client and our client does not accept the valuers nominated by your client ... we suggest that the parties agree to the nomination of a valuer by the president of the Law Institute of Victoria. ...
Our client has instructed us to repeat that a correct market rental for the premises is in the region of $200,000 per annum and accordingly has instructed us that it is prepared to pay rental to your client at the rate of $16,666.66 per month whilst an appropriate rental is determined by a valuer. Please advise if your client is prepared to accept this arrangement and whereupon payment for the past two months can be made.
Finally we request that you let us have draft lease documentation as provided for in the Deed of Settlement at your earliest convenience. In that regard we confirm having offered to prepare this documentation but your Ms Young advised the writer that she would prepare the same.
408 Thereafter events unfolded as summarised in the Background section above,[291] leading to the commencement of these proceedings in December 2019 seeking specific performance of the Settlement Deed and the plaintiff's relief from forfeiture application.
409 It was not established on the evidence that either Glen or Rossi Recycling refused Paul access to the 2016 Lease Premises for the purposes of taking possession of any waste bins, including the Last Bin - or that any later specific request was made and refused in relation to the Last Bin in any event. The evidence showed that events were somewhat overtaken by the notices of breach sent on 18 and 22 November 2019 and what transpired thereafter in connection with the re-entry of the 2016 Lease Premises by Buckland Valley.
410 As I have said earlier, Paul already had possession of some of the waste bins that he was entitled to 'retain' under the Settlement Deed and it was reasonable and appropriate for Glen to ascertain what Paul had so that he could provide him with the balance. Glen's evidence, which I accept, revealed that this is what he was seeking to do before providing the two 27m2 bins referred to in the Settlement Deed to Paul. That did not involve a breach of the Settlement Deed.
411 Glen gave clear and consistent evidence during cross-examination regarding what had occurred with the waste bins, which I accept. He was also clear in his evidence, which I accept, that he always intended for Paul to have the waste bins he was entitled to under the Settlement Deed. He said, and I accept, that he intends to give Paul the Last Bin when he wants it, but as yet he has not asked for it or come to collect it. That is not surprising given that Paul has contended since at least 12 December 2012 that the Settlement Deed is at an end.
412 Having regard to the evidence it has not been established as a factual matter that Glen or Rossi Recycling refused access to the 2016 Lease Premises to allow Paul to take possession of the commercial waste bins that he was entitled to 'retain' under the Settlement Deed. Whilst the events serve further to highlight challenges in the relationship between father and son in the context of their bitter dispute, this factual allegation has not been made out. It follows that even if the terms of the Settlement Deed imposed an obligation upon Glen or Rossi Recycling to permit access of the kind that is said was refused, no breach of the Settlement Deed in this regard has been established.
413 Further and in any event, even if the facts and circumstances referred to above had constituted a refusal by Glen or Rossi Recycling of access to the Business premises to allow Paul to take possession of the commercial waste bins, it would not in the circumstances have constituted a breach of the terms of the Settlement Deed.
414 First, there was no express term of the Settlement Deed requiring such access to be given.
415 Second, by acting as they did in this context neither Glen nor Rossi Recycling breached the Co-operation Terms. It is apparent from Glen's evidence and the contemporaneous correspondence that passed between the parties at the time in September 2019 that Glen and Rossi Recycling were seeking to proceed with the carrying out of the bargain between the parties recorded in the Settlement Deed. It is also apparent from the correspondence from Dunemanns to Slaters that they were taking steps to facilitate access to the premises, albeit stating that they wished to have the resignation and transfer documents signed, which was not unreasonable.[292]
416 To the extent that it was submitted that Glen's evidence regarding a desire to ascertain what waste bins of Rossi Recycling Paul already had or might have already had supports the contention that Paul was refused access to the premises for the purpose of taking possession of the Last Bin, I do not accept that submission. Further and in any event, it would not have been unreasonable or a breach of the Co-operation Terms of the Settlement Deed for Glen first to confirm whether Paul was already in possession of any waste bins of the kind referred to in the Settlement Deed before allowing waste bins to be collected or providing them to Paul. It is to be noted in this context that clause 12 of the Settlement Deed records that Paul 'shall be entitled to retain ...' the bins in question - and that Glen gave evidence, which I accept, that a number of the other items referred to in clause 12 to be 'retained' by Paul were already in his possession.
417 The end result on this issue is that the defendants have not established that Glen or Rossi Recycling breached the Settlement Deed by refusing Paul access to the Rossi Recycling premises to permit Paul to take possession of any waste bins, including the Last Bin.
Part H.1.3 - Failing to give Paul possession of commercial waste bins
418 This issue is closely related to the previous issue, and in part repetitive of it. It was also not established that Glen or Rossi Recycling breached the Settlement Deed by failing to give Paul possession of commercial waste bins. Having regard to the above discussion regarding waste bins in Part H.1.2 above, to which I refer, this issue can be addressed swiftly.
419 As mentioned above, in the end the live issue between the parties related only to the Last Bin. It was also common ground and established on the evidence that the Last Bin has not yet been provided to Paul. However, that this is so does not mean that Glen or Rossi Recycling have breached the Settlement Deed in this regard. Rather, what has occurred is that the events that have transpired in this unfortunate relationship have unfolded in a way where circumstances overtook this aspect of the completion of the steps contemplated by the Settlement Deed and it has not yet been completed. So much is apparent from the above summary and earlier observations regarding the sequence of events and the agreed chronology.
420 It is also to be noted in this context that, on the evidence before the court, there has not been any later specific request by Paul to Glen that he be permitted to come and collect the Last Bin or a refusal of it, noting also that it was not established on the evidence that any such request was made on Paul's site visits on 20 September 2019 and 10 October 2019. This is not to ignore the correspondence that preceded the visit, which has to be viewed in the context of the visits themselves and what occurred during them. Of course, given that Paul sought to re-enter the premises and contends that the Settlement Deed was thereafter terminated (by no later than 12 December 2019), it is perhaps unsurprising that no request for anything has been made since at least 18 November 2019 when the first notice of breach under the 2016 Lease was sent to Rossi Recycling.
421 That said, and as will be seen from the discussion of the issue of specific performance later below, I will hear further from the parties regarding the precise form of orders to give effect to the decree of specific performance, including whether any condition should be included in relation to the Last Bin.
422 The result is that the defendants have not established that Glen or Rossi Recycling breached the Settlement Deed by failing to provide to Paul, or allow him to take possession of, the Last Bin.[293] Even if the circumstances had constituted a breach, it would not have been repudiatory in character in any event given the circumstances in which events transpired.
Part H.1.4 - Causing the 2016 Lease to be terminated
423 The defendants submitted that Glen and Rossi Recycling breached clause 2 of the Settlement Deed by causing the 2016 Lease to be terminated. This was said to be clear by reason of: the non-payment of rent on 1 October and 1 November 2019; Buckland Valley issuing the notices of breach of the lease for non-payment of rent, which required Rossi Recycling to remedy the breach within 14 days failing which Buckland Valley would re-enter the premises and forfeit the lease; Glen and Rossi Recycling not remedying the breach by paying the rent and allowing the 14-day notice period to lapse; Buckland Valley issuing a notice of re-entry on 8 December 2019 requiring Rossi Recycling to remedy the arrears of rent by 5pm that day; Rossi Recycling not paying the rent owing; and Buckland Valley re-taking possession - although it will be recalled that on 12 December 2019 Rossi Recycling sought and obtained relief from forfeiture by the orders of Macaulay J.
424 In the context of alleged breaches of the Settlement Deed by Paul and Buckland Valley by taking of possession of the Business premises, the defendants had also contended[294] that the taking of possession was because of the failure to pay rent for October, November and December 2019 and 'thereby a failure to co-operate in ensuring the continuance of that lease in accordance with clause 3 of the [Deed of Settlement]'. In this context, reference was made to Forklift Engineering Australia Ltd v Powerlift (Nissan) Pty Ltd (Forklift).[295]
425 The plaintiff submitted that: Glen and Rossi Recycling did not cause the 2016 Lease to be terminated; that the 2016 Lease was governed by its own terms in any event; a breach of the 2016 Lease by non-payment of rent was not a breach of clause 2 of the Settlement Deed or any other provision of it, including the Co-operation Terms; if anyone caused the 2016 Lease to be terminated in December 2019, it was Paul and Buckland Valley; and that the demanding of rent and the notices of breach were invalid because the independently determined rent was to apply from 1 October 2019 and, further, Buckland Valley's demands sought rent for premises not leased to Rossi Recycling insofar as they sought rent for the first floor of Unit 27.
426 I have concluded that it has not been established that Glen or Rossi Recycling breached clause 2 or the Co-operation Terms of the Settlement Deed[296] by causing the 2016 Lease to be terminated. I elaborate below.
427 Clause 2 of the Settlement Deed has been set out earlier. It does not relate to the 2016 Lease. It addresses the New Lease that Buckland Valley and Paul as its controller have agreed that they will enter into. It is not the repository of any obligation on the part of Glen or Rossi Recycling under the 2016 Lease. Even if all the factual matters relied upon by the defendants are assumed to be true, this does not give rise to a breach of clause 2 of the Settlement Deed. As to whether it gives rise to a breach of the 2016 Lease is a different question that has been earlier addressed in part, and is further referred to later below. This, of itself, is sufficient reason for disposing of the defendants' contention that Glen and Rossi Recycling breached clause 2 of the Settlement Deed by reason of non-payment of rent and related matters. Three further matters may be briefly noted.
428 First, there is no express term of the Settlement Deed that Glen or Rossi Recycling will not cause the 2016 Lease to be terminated by non-payment of rent, and it was not contended otherwise. Further, putting the Co-operation Terms to one side, it was not alleged that there was an implied term to this effect, which was an understandable position for the defendants to take. Had such an allegation been made it would not have been made good.
429 Second, even if it is assumed to be correct that the 2016 Lease would continue and remain as the source of the rights and obligations of the parties in relation to the leased premises until the New Lease was entered into, this does not assist the defendants with their allegation that Glen and Rossi Recycling breached clause 2 of the Settlement Deed by non-payment of rent and related matters. This is because it does not change the fact that clause 2 addresses Paul and Buckland Valley's agreement to enter into the New Lease and is not the repository of any obligation on the part of Glen and Rossi Recycling under the 2016 Lease - whether considered alone or in conjunction with any other terms of the Settlement Deed, including clauses 3 and 4 and the Co-operation Terms.
430 Third, and in any event, I accept Glen and Rossi Recycling's contention that they did not in fact cause the 2016 Lease to be terminated. Whilst it was common ground and established on the evidence that Rossi Recycling did not pay rent under the 2016 Lease on 1 October, 1 November and 1 December 2019, this was in the context of a dispute between the parties regarding the proper construction of the Settlement Deed and the rental to be paid from 1 October 2019. The plaintiff's position was that it was to be a market rental from that time and it offered to pay what in effect it regarded as a proxy for that amount of $200,000 per annum (payable monthly at $16,666.66) pending the independent determination. The defendants' position was that the rent payable remained as the rent payable under the 2016 Lease until the New Lease was entered into. However, whilst that may be so, I do not accept that it was established that Glen or Rossi Recycling caused Buckland Valley to re-enter the premises and seek to terminate the 2016 Lease.[297] It was the decisions of Paul and Buckland Valley (through Paul) to re-enter and seek to terminate the 2016 Lease following the non-payment of rent in the circumstances earlier described that caused the re-entry and termination of the 2016 Lease by Buckland Valley (through Paul as its controller). There were other options open to Paul in the circumstances, including seeking to recover the then alleged unpaid rental, or seeking other relief through the courts. Looked at fairly and in substance it is in my view evident that it was the decision of Buckland Valley (through Paul as its controller) that 'caused' the re-entry and the termination of the 2016 Lease until this proceeding was commenced seeking, among other things, specific performance, and the relief from forfeiture which was granted by Macaulay J on 12 December 2019.
431 To the extent that the defendants pressed the contention that the non-payment of rent and related matters constituted a breach of the Co-operation Terms of the Settlement Deed by Glen and Rossi Recycling, I do not accept that submission.
432 In this context, it is first to be noted, as I have determined, that the express terms of the Settlement Deed did not impose an obligation upon Rossi Recycling (or Glen) to pay rental under the 2016 Lease.[298] There is also no express term of the Settlement Deed requiring the parties to the 2016 Lease to comply with its terms. So much is unsurprising.
433 Keeping this in mind, it also cannot be persuasively contended that the implied Co-operation Terms of the Settlement Deed impose or carry with them obligations on the part of Rossi Recycling (or Glen) to comply with the rental payment (or other) terms under the 2016 Lease. The Co-operation Terms do not exist in a vacuum but are construed as part of the whole of the Settlement Deed and are informed by it. The payment of rental by Rossi Recycling under the 2016 Lease is not part of the bargain or agreement embodied by the terms of the Settlement Deed. Insofar as rental is payable under the 2016 Lease, it is governed by its own terms as I have earlier determined. That ceases to be the position immediately upon the entry into the New Lease, as is expressly reflected in clause 3 of the Settlement Deed. Whilst a breach of the Settlement Deed by Paul and Buckland Valley in connection with their obligations under clause 2 regarding the entry into the New Lease by Buckland Valley within the reasonable time I have referred to may give rise to other rights and remedies, it is in my view tolerably clear that the existing 2016 Lease continues until the New Lease is entered into - which I have determined was objectively intended to occur, and in a time frame of the kind that I have determined.
434 The short point is that it cannot be said that so-called 'co-operation' by Glen or Rossi Recycling in the form of payment of rent for October, November and December 2019 was 'necessary' to allow Paul or Buckland Valley to have the benefit of the agreement embodied in the Settlement Deed, which relevantly had as its focus the entry into the New Lease at an agreed or independently determined market rental.
435 Although it was not put this way by the defendants, I add briefly for completeness that it also cannot be meritoriously contended that the non-payment of rental under the 2016 Lease breached the negative obligation of the Co-operation Terms not to hinder or prevent the fulfilment of the purpose of the promises made in the contract. In addition to the matters I have referred to above, it is in my view clear that the obligation to pay rental under the 2016 Lease, so long as it remained in force, was neither the object nor purpose of the promises made in the contract, namely the Settlement Deed.[299]
436 Further and in any event, even if the Co-operation Terms had imposed an obligation upon Glen or Rossi Recycling to pay rental under the 2016 Lease, for the reasons mentioned above in this section, I do not accept that Glen or Rossi Recycling caused the re-entry of the premises or Buckland Valley (through Paul as its controller) to seek to terminate the lease.
437 As I have said, the result remains that the defendants have not established that either Glen or Rossi Recycling breached clause 2, the Co-operation Terms, or any other terms of the Settlement Deed by 'causing' the 2016 Lease to be terminated. Neither Glen nor Rossi Recycling breached the Settlement Deed in the manner alleged.
438 Even if I had concluded that non-payment of rent under the 2016 Lease was a breach of clause 2 of the Settlement Deed, in my view it would not have amounted to repudiatory conduct. Viewed in context and in the circumstances it is apparent that Glen and Rossi Recycling were not evincing an intention not to be bound by the Settlement Deed or other repudiatory conduct.[300] Rather, the circumstances I have earlier referred to evinced an objective intention to proceed with the bargain the subject of the Settlement Deed.
439 Contrary to the submission of the defendants, I do not accept the contention that the conduct conveyed an intention not to carry out the contract or that the defendants would be justified in inferring such an intention. Further, a review of the correspondence and circumstances in my view reveals that there were bona fide differences between the parties, which was consistent with, among other things, Glen's evidence regarding obtaining and acting on legal advice, and the proposal of a rental payment of $16,666 per calendar month pending the determination of the independent market rental. While the circumstances as they emerged in the strained relationship between the parties were less than ideal, I do not accept that, even if non-payment of rent had been a breach of the Settlement Deed, it was repudiatory in character - whether taken alone or together with any other circumstance. It is also to be noted that the plaintiff commenced these proceedings seeking specific performance on 11 December 2019 and sought and obtained relief from forfeiture.
Part H.2 - Alleged breaches of the 2016 Lease by Rossi Recycling or Glen and related matters
440 The matters addressed below are sourced from item 11 in the Revised Issues List, from which it will be apparent that there is considerable overlap or commonality with many issues already addressed in these reasons above.
Part H.2.1 - Whether Rossi Recycling or Glen breached the 2016 Lease by the non-payment of rent for October, November and December 2019
441 I have addressed the issues of construction regarding the Settlement Deed in Part E of these reasons above, including in relation to the question of Rossi Recycling's obligation to pay rent under the 2016 Lease in Part E.11. Among other things, I have concluded that the 2016 Lease imposed an obligation upon Rossi Recycling to pay rent as provided for in that lease and that the Settlement Deed did not alter that obligation. This was to change to an obligation to pay rent under the New Lease when the New Lease was entered into and the 2016 Lease was terminated as a result. I refer to my reasoning and conclusions in Part E and Parts F.1.3 and F.1.4 above.
442 There was no dispute between the parties that if rental under the 2016 Lease was required to be continued to be paid as it had been paid prior to the entry into the Settlement Deed then the rent payable for each of the months of October, November and December 2019 was $29,304.35 per calendar month payable in advance on the first day of each month. It was also common ground that prior to seeking relief from forfeiture Rossi Recycling had not paid any rent for the months of October, November and December 2019, although it had proposed and suggested that $200,000 per annum ($16,666.66 per month) be paid pending the determination of the independent current market rental.
443 Having regard to that which I have addressed earlier in these reasons it follows that, by reason of Rossi Recycling's failure to pay rental in October, November and December 2019, Rossi Recycling breached the terms of the 2016 Lease.
444 The position for Glen is different. He was not a party to the 2016 Lease and under no obligation to pay rent or any other amount pursuant to it. Glen did not breach the 2016 Lease by reason of Rossi Recycling's failure to pay rent on 1 October, 1 November or 1 December 2019.
Part H.2.2 - Whether Rossi Recycling or Glen demanded or evinced an intention that Rossi Recycling would not remedy the rental payment breaches of the 2016 Lease unless Buckland Valley agreed to a monthly rent of $16,666.66 payable under that lease
445 In my view this issue was not well expressed by the parties and it was not really separately well addressed in their respective closing submissions, although the sequence of events were dealt with in the context of whether Glen or Rossi Recycling breached the 2016 Lease and caused it to be terminated.
446 The sequence of events in relation to the non-payment of rent was as summarised in the Background section of these reasons and further referred to in other parts of these reasons above, to which I refer but will not set out in detail again. Briefly, it will be recalled that the events included the following:
(a) On 21 November 2019, Dunemanns responded to Slaters' letter of 18 November 2019 and disputed the validity of the notice of breach of lease and stated that 'our client has instructed us to repeat a correct market rental for the premises is in the region of $200,000 per annum and accordingly has instructed us that it is prepared to pay rental to your client at the rate of $16,666.66 per month whilst an appropriate rental is determined by a valuer. Please advise if your client is prepared to accept this arrangement and whereupon payment of the past two months can be made.' The letter also requested the draft lease documentation provided for in the Settlement Deed at Slaters' earliest convenience, with reference being made to Slaters' previous letter in which it was said that Slaters would prepare the lease.
(b) On 22 November 2019, Slaters sent another letter enclosing two further notices of breach of lease in respect of the rental payments for October and November and correcting the typographical error regarding the date of the lease so that it recorded the date of 1 October 2016, rather than 1 October 2019. The letter also stated that if it is found that a lease commencing 1 October 2016 is in existence the first of the two fresh notices was relied upon, but in the event that it was found not to be in existence, they were of the view that Rossi Recycling was subject to a monthly tenancy and relied on the second of the fresh notices included with the letter.
(c) On 25 November 2019, Slaters sent to Dunemanns a signed form recording Paul's resignation as appointor and guardian of the RP Trust and a signed form where Paul appointed Glen as appointor and guardian of the RP Trust.
(d) On 4 December 2019, Dunemanns wrote to Slaters refuting that a monthly tenancy had arisen. They also stated in that letter that 'equally our client denies the purported legitimacy of a lease dated 1 October 2016 as the same was not executed as that that date'. The letter was in the following terms:
Your client's assertion that somehow a monthly tenancy has arisen is refuted by our client. Equally our client denies the purported legitimacy of a lease dated 1 October 2016 as the same was not executed as at that date.
We note that by the Deed of Settlement ... an arrangement was made whereby a formal lease would be entered into at a rental to be assessed independently. We have made suggestions to your client concerning resolution of the current impasse between our respective clients relating to nomination of a rental assessor. Your client has not responded to these suggestions. Further your client has not provided a draft lease the terms of which would be relevant to any rental assessor.
Accordingly we are instructed to request that your client honour its obligations under the Deed of Settlement and advise if nothing further is forthcoming from your client then our client will be forced to return this matter to court.
(e) Although the 2016 Lease was referred to in the letter of 4 December 2019, Glen stated in his evidence that he regarded the 2016 Lease as continuing.
(f) On 8 December 2019, Paul attended the premises and attached notices of eviction and changed the locks so as to exclude Rossi Recycling and Glen, as referred to in more detail earlier in these reasons. On 9 December 2019 Glen accessed the premises after he 'jemmied' the locks.
(g) On 10 December 2019, Paul arranged for security guards to be at the premises from 5am, changed the locks again and excluded Glen and Rossi Recycling from the premises.
(h) On 11 December 2019, Rossi Recycling filed a writ in this proceeding seeking specific performance, an order for possession, injunctive relief, and relief from forfeiture.
(i) Payment of the rent under the 2016 Lease for the months of October, November and December 2019 was made by Rossi Recycling on or about 12 December 2019, being the day of the hearing of the plaintiff's application for relief from forfeiture before Macaulay J.
447 It is apparent from the evidence that in October, November and December 2019 Rossi Recycling did not pay the rent amount provided for by the 2016 Lease and that, pending the independent rental valuation, Rossi Recycling and Glen proposed an arrangement whereby a market rental of $16,666.66 per month would be paid pending the outcome of that determination. The evidence showed that this amount had been derived from a valuation obtained at a previous time by Rossi Recycling. It was less than the monthly rental then being paid under the 2016 Lease.
448 It may also be noted that the letter of 4 December 2019 was sent in what was characterised as an 'impasse' regarding the progress of the advancement of the bargain the subject of the Settlement Deed, which recorded Glen and Rossi Recycling's complaint that the defendants had not responded regarding the valuer and not provided the draft lease, which it was said would be relevant to any rental assessor. It was also sent in the context of the proposal put in the letter of 21 November 2019, as an interim measure, and in which it was stated that payment of rent for the past two months would then be made.
449 Paul and Buckland Valley did not directly engage with the terms of the letter of 21 November 2019, but sent the revised notices of breach of the 2016 Lease on 22 November 2019 as noted above.
450 Returning to the issue as framed by the parties, I do not consider that it is correct to characterise what occurred as reflecting a demand by, or evincing an intention of, Glen or Rossi Recycling that Rossi Recycling would not remedy the alleged breaches of the 2016 Lease unless Buckland Valley agreed to a rental of $16,666.66 per month. Rather, in the context of the circumstances I have referred to, including the 'impasse' regarding the progression of the agreement to enter into the New Lease, it was proposing a rental payment arrangement in an amount that it was suggesting was a proxy for market rental pending the determination of market rental, and at least implicitly suggesting that payment adjustments one way or the other may be required when that occurred. This was consistent with Glen and Rossi Recycling's position that the Settlement Deed contemplated that the market rental under the New Lease would be operative from 1 October 2019.
451 That said, given the conclusions I have reached regarding the proper construction of the Settlement Deed, it does not change the fact that Rossi Recycling was required to pay rental under the 2016 Lease on 1 October, 1 November and 1 December 2019 in the way that I have earlier described. It was in breach of the 2016 Lease, but not the Settlement Deed, by reason of its failure to pay rent. This breach of the 2016 Lease does not amount to a breach of the Settlement Deed and was not (and could not have been) a repudiation of it.
Part H.2.3 - Whether Rossi Recycling or Glen denied the existence of any ongoing monthly tenancy over the premises the subject of the 2016 Lease
452 The Court was informed by senior counsel for the defendants that this issue was not being pressed.
Part H.2.4 - Whether Rossi Recycling or Glen denied the existence of the 2016 Lease
453 It was not in dispute that Dunemanns wrote the letter of 4 December 2019 to Slaters in response to their letter of 22 November 2019 enclosing new notices of breach of lease based on the 2016 Lease and in the alternative on a monthly tenancy, or that the letter was in the terms that it was in. On behalf of the defendants, in the letter of 22 November 2019, their solicitors were raising the question of whether the 2016 Lease was to be found to be valid, or whether the monthly tenancy was in place.
454 Although the letter of 4 December 2019 contained a statement regarding the monthly tenancy and the 2016 Lease as referred to above, its characterisation falls to be considered not in isolation but in the context of that which preceded it and that which followed it. This includes the Settlement Deed that referred to the existing lease. That said, it appears that what was being denied was not so much the legitimacy of the existing lease but rather a lease 'dated 1 October 2016' on the basis that it had not been executed at that date - noting that the original lease had not been signed. It may also be noted that it was confirmed with the court that it was not in issue between the parties in the proceeding that the 2016 Lease was in existence and on foot, which was also consistent with Glen and Rossi Recycling's position in seeking specific performance and relief from forfeiture through the commencement of this proceeding in December 2019 and its continuation thereafter.
455 On the evidence it is not clear what was intended to be conveyed by the terms of the statement in the 4 December 2019 letter. It may be also observed that it was clear at least shortly thereafter that Rossi Recycling was not denying the existence of the 2016 Lease but was in fact relying upon it when seeking relief from forfeiture in this court on 12 December 2019. That said, it cannot be, and was not, disputed that the letter of 4 December 2019 from Dunemanns was in the terms in which it was sent and included the statement regarding the legitimacy of the 'lease dated 1 October 2016'.
456 In any event, the important issue to recognise is that this statement in the letter is raised because it is said to be relevant to the issue of whether Glen or Rossi Recycling repudiated the Settlement Deed.
457 In this context, it is important to note that the sending of the letter of 4 December 2019 was not in my view a breach of the Settlement Deed by Glen or Rossi Recycling. So much is reinforced by the terms of the letter which: refer to the impasse; express concern regarding the absence of response to the suggested valuer and the rental proposed pending resolution; and refer to the failure to provide the lease document. Further, the letter concludes with a specific request that Paul and Buckland Valley 'honour [their] obligations under the Deed of Settlement ...' and states that '... if nothing further is forthcoming from your client our client will be forced to return this matter to court.'
458 In any event, and however characterised, even if it had been a breach of the Settlement Deed, I do not accept that the second sentence of the letter of 4 December 2019, taken alone or together with any other conduct or circumstances, amounted to a repudiation of the Settlement Deed by Glen or Rossi Recycling. Viewed in context of the balance of the letter and the other circumstances and sequence of events it is in my view evident that it is not conduct of a character that evinces an objective unwillingness to render performance of the Settlement Deed or to fulfil it only in a manner substantially inconsistent with the parties' obligations - or conduct that is otherwise repudiatory. It is conduct revealing that the bargain the subject of the Settlement Deed is sought to be enforced and that if the 'impasse' regarding its meaning and operation is not resolved between the parties then Glen and Rossi Recycling will seek to enforce the Settlement Deed through the courts and have the issues resolved, which is what happened through the commencement of the proceeding the subject of these reasons. However the second sentence of the 4 December 2019 letter is characterised, neither Glen nor Rossi Recycling breached the Settlement Deed because neither sending the letter, including that statement, or any other related conduct amounted to a repudiation of the Settlement Deed or any part of it. It is also to be remembered that, as a matter of fact, the 2016 Lease document had not been signed by Rossi Recycling. Making reference to that fact, directly or indirectly, in the way referred to in the 4 December 2019 letter and related circumstances did not constitute a breach of the Settlement Deed. Even if it had, it is not repudiatory in character, whether viewed alone or in combination with any other circumstance.
Part H.2.5 - Whether Rossi Recycling or Glen refused or failed to recognise Buckland Valley's contractual rights under the 2016 Lease or any existing lease
459 This is another issue that is perhaps described in less than ideal terms. At a factual level it is sufficient to observe that the factual position was as earlier described above and that by not paying rental on 1 October, 1 November and 1 December 2019 Rossi Recycling breached the 2016 Lease in the context and circumstances earlier described. It is also the case that the letter of 4 December 2019 from Dunemanns was in the terms set out and sent in the context and circumstances earlier described.
460 I do not think it is correct to say, or that it was established, that Rossi Recycling failed to recognise or refused to recognise Buckland Valley's contractual rights under the 2016 Lease or any existing lease. More accurately, the parties, through their solicitors, were expressing a difference of view as to what each considered the position to be in relation to the operation of the Settlement Deed and the payment of rental pending the determination of market rental by an independent valuer in accordance with the terms of the Settlement Deed in circumstances where, by their conduct, Glen or Rossi Recycling were conveying an objective desire and intent to comply with the Settlement Deed and have the court determine the position if the impasse could not be resolved.
461 Again, the real question is not so much the stated issue or characterisation of the alleged conduct in isolation or in the abstract, but the question of whether, taken alone or together with other conduct of Glen and Rossi Recycling, the conduct amounted to a repudiation of the Settlement Deed. In any event, neither the non-payment of rent under the 2016 Lease nor the sending of the 4 December 2019 letter breached the Settlement Deed. And as I have said, had one or either of them amounted to a breach, in the circumstances they were not repudiatory in nature. Viewed fairly, Glen and Rossi Recycling's conduct conveyed, objectively, that they wanted the Settlement Deed to be performed, for the court to resolve any impasse regarding its proper construction and operation, and that if the issues could not be resolved between the parties they would take steps to enforce the Settlement Deed through the court, which is what occurred.
Part H.2.6 - Whether Rossi Recycling or Glen committed trespass by re-taking possession of the premises on 9 December 2019 before being locked out again by Paul and Buckland Valley at about 5am the following morning
462 The defendants contended that when Rossi Recycling and Glen re-took possession of the 2016 Lease Premises on 9 December 2019 by jemmying the locks after Buckland Valley had re-entered the premises, they committed trespass. This was not the subject of any detailed submissions and no distinction was made in the submissions in this context between Glen and Rossi Recycling.
463 The plaintiff and Glen also did not address the issue of trespass at any length. They denied there was a trespass on the basis that Buckland Valley's re-entry was invalid because the notices of breach were ineffective in the manner earlier referred to. However, they did not make a submission that if the notices of re-entry were valid then they did not commit trespass on the property that was not part of Unit 27. As to Unit 27, it was submitted that they could not have committed trespass to that part of Unit 27 which was the subject of the entitlement to a licence under clause 4 of the Settlement Deed.
464 Intentionally or negligently entering or remaining on, or directly causing any physical matter to come into contact with, land in the possession of another without permission, or otherwise without lawful authority, is a trespass. Trespass to land is actionable per se. The tort protects the interest of a plaintiff in maintaining their land free from physical intrusion. To enter another's land without permission is a trespass, although such an entry may be an assertion of title and then the determination of any claim in trespass will have the effect of determining who has title. Where a lessee in possession of land holds over at the expiration of a term, remaining on the land is not an active trespass although the lessee may, depending upon the circumstances, be removed by an action for ejectment.[301] For present purposes it is not necessary to elaborate on these matters or traverse the authorities.[302]
465 I have determined that the notices of breach and re-entry were valid. It was not in dispute that on 9 December 2019 Buckland Valley as owner of the premises was in possession having re-entered that day. It was also not in dispute that Glen and Rossi Recycling (through Glen) had used self-help to re-take possession of the 2016 Lease Premises including the top floor of Unit 27 on 9 December 2019, or in dispute that they occupied them until being locked out again at about 5am the following morning on 10 December 2019.
466 That being so, and putting the top floor of Unit 27 to one side for the moment, Glen and Rossi Recycling were not at that time entitled to possession or to occupy the balance of the 2016 Lease Premises under the 2016 Lease. By entering and remaining in possession of the premises from the morning of 9 December 2019 until about 5am the following day I accept that Glen and Rossi Recycling committed trespass. Understandably, neither Glen nor Rossi Recycling submitted otherwise in the event that it was found that rental was payable under the 2016 Lease and that the notices of breach were valid - as in fact I have found.
467 As to Unit 27, clause 4 of the Settlement Deed provided Rossi Recycling with an entitlement to a licence of the top floor of Unit 27 (and the other parts of Unit 27 referred to in the Settlement Deed). If, as I have determined, the Settlement Deed remained on foot as at 9 December 2019 when Glen jemmied the locks and re-took possession of the premises, there was a right for Rossi Recycling to occupy Unit 27 pursuant to the entitlement to a licence and therefore neither Glen nor Rossi Recycling were trespassers insofar as they took possession or occupied the relevant parts of Unit 27, or it was necessary to access Unit 27 through the gate that was jemmied. Whether access to Unit 27 was otherwise able to be gained elsewhere was not addressed by the parties, but I infer that it was not given the evidence about Glen and Rossi Recycling being locked out and excluded. As will be seen, I have determined that the Settlement Deed did remain on foot at that time.
468 I note for completeness two further matters in this context. First, the allegation of trespass in paragraph 48A of the fourth further amended defence and counterclaim filed by the defendants (after the trial commenced) was an allegation that Rossi Recycling committed trespass, not Rossi Recycling and Glen. However, in the agreed Revised Issues List dated 28 October 2019 the relevant issue (in item 11(f)) was framed by reference to Rossi Recycling and Glen and the parties proceeded on this basis, as has the court - and it was not submitted that the court should do otherwise.
469 Second, Buckland Valley does not in the fourth further amended defence and counterclaim seek any relief by way of damages in respect of the alleged trespass.[303] Rather, and as is apparent from the prayer for relief (which was amended during the trial), it seeks a declaration that the Settlement Deed has been repudiated by Glen and Rossi Recycling and has been terminated. This is reinforced by issue 12 in the Revised Issues List, which is directed to whether Glen or Rossi Recycling engaged in relevant conduct (including the alleged trespass) and whether, if so, such conduct amounted to a repudiation of the Settlement Deed by Glen or Rossi Recycling.[304]
470 This issue of trespass does not assist Paul or Buckland Valley in the alleged repudiation context. The re-taking of possession of the 2016 Lease Premises on 9 December 2019 by Glen and Rossi Recycling until they were locked out again the following morning was not a breach of the Settlement Deed. Even if it had been, it would not have amounted to repudiatory conduct under the Settlement Deed, whether considered alone or in the context of any one or more of the other matters sought to be relied upon by Paul and Buckland Valley. On the contrary, it was further conduct objectively conveying an intention to proceed with the bargain the subject of the Settlement Deed, which was reinforced by the urgent issue of these proceedings seeking specific performance and relief from forfeiture, including urgent interlocutory relief.
Part H.2.7 - Whether Rossi Recycling or Glen caused the 2016 Lease to be terminated by any or all of the conduct referred to in Parts H.2.1 to H.2.6 above
471 The defendants' submissions on this aspect essentially mirrored the submissions they made in support of their contention that Rossi Recycling and Glen breached the Settlement Deed by causing the 2016 Lease to be terminated.
472 As I have indicated above, Rossi Recycling did breach the 2016 Lease by not paying rent on 1 October, 1 November and 1 December 2019. Glen was not a party to the 2016 Lease and did not breach the 2016 Lease by reason of the non-payment of rent by Rossi Recycling.
473 Consistent with the reasoning referred to earlier, I do not accept that it was established that Glen or Rossi Recycling caused the 2016 Lease to be terminated. What caused the lease to be terminated was Paul and Buckland Valley (through Paul) making the decisions that were made after rental was not paid. In this regard I refer to, without repeating, my earlier observations on this topic in Part H.1.4 above.
474 That said, again the primary issue in this context is whether Glen or Rossi Recycling repudiated the Settlement Deed. Glen and Rossi Recycling's non-payment of rent was not a breach of the Settlement Deed and, as I have indicated, the other alleged breaches of the Settlement Deed in this context have not been made out. Paul and Buckland Valley have not made good their repudiation allegation in this regard. Further, for the reasons earlier addressed in this Part, even if Glen or Rossi Recycling had 'caused' the termination of the 2016 Lease, and it was a breach of the Settlement Deed, it would not have amounted to a repudiation of the Settlement Deed.[305]
Part I - Whether Glen or Rossi Recycling repudiated the Settlement Deed by reason of the conduct referred to in Parts H1 or H2 above
(a) Whether Glen or Rossi Recycling repudiated the Settlement Deed by reason of the alleged conduct referred to in Part H above.
(b) If Glen or Rossi Recycling repudiated the Settlement Deed by any of the alleged conduct,
(i) whether the repudiation was accepted by Paul and Buckland Valley;
(ii) whether Paul and Buckland Valley affirmed the Settlement Deed.
Part I.1 - Principles and observations - Repudiation
476 There was no relevant issue between the parties regarding the principles applicable to the question of repudiation. They have been addressed in many cases and it is convenient to refer to the following.
477 In Shevill v Builders Licensing Board,[306] Gibbs CJ stated a contract may be repudiated
... if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract (Freeth v. Burr[307]) or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way (Ross T. Smyth & Co. Ltd. v. T. D. Bailey, Son & Co.[308]; Carr v. J. A. Berriman Pty. Ltd.[309] ...
478 In the same case, Wilson J spoke of the seriousness of repudiation:[310]
Repudiation of a contract is a serious matter and is not to be lightly found or inferred: Ross T. Smyth & Co. Ltd. v. T. D. Bailey, Son & Co.[311] In considering it, one must look to all the circumstances of the case to see whether the conduct "amounts to a renunciation, to an absolute refusal to perform the contract": Mersey Steel and Iron Co. v. Naylor, Benzon & Co.[312]
Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party's inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way.
480 Brennan J's analysis was referred to in the Victorian Court of Appeal decision of Sopov v Kane Construction Pty Ltd,[315] to which I refer but shall not recite.
481 On the topic of seriousness, in Laurinda, Deane and Dawson JJ stated:[316]
Lord Wright's oft-quoted admonition that 'repudiation of a contract is a serious matter, not to be lightly found or inferred' (Ross T. Smyth & Co. Ltd. v. T. D. Bailey, Son & Co[317]) is, no doubt, a wise one. It should not, however, be allowed to cloud the fact that an allegation of repudiation of contract in a civil case does not involve an assertion that the alleged repudiator subjectively intended to repudiate his obligations. Thus, it is of little assistance in the present case to identify reasons why the lessor was unlikely to have subjectively desired to repudiate its agreement to grant a lease. An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention. The question is what effect the lessor's conduct 'would be reasonably calculated to have upon a reasonable person' (per Lord Herschell L.C., Carswell v. Collard[318]; Forslind v. Bechely-Crundall[319]). It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it.
482 These principles were re-iterated by a majority of the High Court (Gleeson CJ, Gummow, Heydon and Crennan JJ) in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (Koompahtoo):[320]
The term repudiation is used in different senses[321]. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations[322]. It may be termed renunciation[323]. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it[324]. (In this case, we are not concerned with the issues that arise where the alleged repudiation takes the form of asserting an erroneous interpretation of the contract. Nor are we concerned with questions of inability as distinct from unwillingness.) Secondly, it may refer to any breach of contract which justifies termination by the other party[325]. It will be necessary to return to the matter of classifying such breaches. Campbell J said this was the sense in which he would use the word "repudiation" in his reasons. There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements[326]. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words.
483 The Victorian Court of Appeal in R & A Cab Co Pty Ltd v Kotzman[327] (Ashley JA, with whom Kellam JA and Osborn AJA agreed) stated the key principles emerging from the authorities with respect to repudiation as follows:
45. First, in Shevill and Anor v The Builders Licensing Board.[328] Wilson J said that -
Repudiation of a contract is a serious matter and is not to be lightly found or inferred: Ross T. Smyth & Co., Ltd. v. T. D. Bailey, Son & Co. In considering it, one must look to all the circumstances of the case to see whether the conduct "amounts to a renunciation, to an absolute refusal to perform the contract": Mersey Steel and Iron Co. v. Naylor, Benzon & Co.[329]
46. In the same case, Gibbs CJ observed that a binding contract -
... may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract (Freeth v. Burr) or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way.[330]
47. Second, whether a party's conduct amounts to repudiation is not ascertained by an inquiry into the subjective state of the mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party's ...intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations, and not in any other way.[331]
48. Third, it has been stated very often that the whole circumstances of the case must be examined in order to see whether there was repudiation. Lord Keith of Kinkel put it this way in Woodar Investment Development Ltd v Wimpey Construction UK Ltd:[332]
My Lords, in deciding the issue of repudiation which arises in this appeal, the guiding principle is that enunciated by Lord Coleridge CJ in Freeth v Burr.
"In cases of this sort, where the question is whether the one party is set free by the action of the other, the real matter for consideration is whether the acts or conduct of the one do or do not amount of an intimation of an intention to abandon and altogether to refuse performance of the contract."
The matter is to be considered objectively - per Bowen LJ in Johnstone v Milling:
"The claim being for wrongful repudiation of the contract it was necessary that the plaintiff's language should amount to a declaration of intention not to carry out the contract, or that it should be such that the defendant was justified in inferring from it such intention. We must construe the language used by the light of the contract and the circumstances of the case in order to see whether there was in this case any such renunciation of the contract."
The importance of looking at the whole circumstances of the case was emphasised by Lord Selborne LC in Mersey Steel & Iron Co Ltd v Naylor, Benzon & Co and by Singleton LJ in James Shaffer Ltd v Findlay Durham & Brodie.
49. Fourth, qualifying to some extent the principle noted at [47], in some circumstance, 'a mere honest misapprehension, especially if open to correction, will not justify a charge of repudiation'.[333] The proposition has typically fallen for consideration where the defaulting party has acted in reliance upon an erroneous interpretation of the contract. In that particular context, the bona fides (or otherwise) of the defaulting party is a relevant factor.[334] In Australia, as in England, it has been suggested that an aggrieved party should take steps to persuade the mistaken party of its error if it wishes to rely upon that other party's conduct as a repudiation of the contract.[335]
484 The principles have been applied in a variety of decisions including, for example, by Sackville AJA (with whom McColl and Gleeson JJA agreed) in Stephen Wayne Velik v Noreen Steingold,[336] Gleeson JA (with whom Bathurst CJ and Ward JA agreed) in Galafassi v Kelly,[337] Digby J in Mair v Rhodes & Beckett,[338] Almond J in ESG Epping Pty Ltd v Love;[339] Lyons J in Euromark Ltd v Smash Enterprise Pty Ltd;[340] and by Croft J in Impact Funds Management Pty Ltd (as Trustee for IIG 401 Collins Trust) v Roy Morgan Research Ltd.[341]
485 In substance, the defendants submitted that Glen and Rossi Recycling repudiated the Settlement Deed in three ways, namely:
(a) by causing the 2016 Lease to prematurely terminate when the maintenance and continuance of that lease was a fundamental obligation and key element of the Settlement Deed;
(b) by manifesting an unwillingness to perform the Settlement Deed through the alleged breaches referred to in Part H.1 above and by the conduct raised under Part H.2 above, from which Paul and Buckland Valley were entitled to conclude that the Settlement Deed would not be performed substantially according to its requirements; and
(c) by adopting an erroneous and unreasonable interpretation of the Settlement Deed that Rossi Recycling was not required to pay the rent due and owing under the 2016 Lease, including by contending that the 2016 Lease was illegitimate and acting on that basis.
486 With respect to the second alleged manifestation of repudiation it was submitted that the conduct of Glen and Rossi Recycling in breaching the Settlement Deed by causing the 2016 Lease to prematurely terminate is also to be viewed together with: (a) Glen and Rossi Recycling's other breaches of the Settlement Deed, namely the 'technical breach'[342] regarding the transfer of ownership of the Business and the breach of clause 12 in connection with the Last Bin; (b) Glen and Rossi Recycling's contradictory conduct in refusing to pay the rent that was due under the 2016 Lease and offering up the lesser sum of rental that was put forward in the Trustee Proceeding that was compromised by the Settlement Deed; and (c) Glen and Rossi Recycling's denial of the existence of the 2016 Lease and that the 2016 Lease was to continue to operate until the New Lease was entered into.
487 The defendants submitted that by this conduct Glen and Rossi Recycling manifested an unwillingness to perform the Settlement Deed according to its requirements and a willingness only to perform the obligations under the Settlement Deed as and when it suited them to do so, or not at all. Reference was also made to Warren J's observations in Forklift[343] that successive breaches can have a combined significance or a cumulative effect so as to constitute repudiation even where particular matters considered in isolation would not necessarily amount to a sufficient seriousness to constitute repudiation. It was said that in that case Warren J concluded that when the various allegations of conduct and actions were considered on a cumulative basis it should be concluded that the company and its employees adopted a cavalier attitude towards the obligations owed by it to the other party under the two agreements. Her Honour was said to have observed that the overall conduct manifested an intention not to be bound by the terms of the two contracts and therefore found that the company repudiated each of the agreements and that the other party was entitled to accept the repudiation in each case.
488 The defendants submitted that the conduct of Glen and Rossi Recycling was of the character described by Warren J in Forklift,[344] but with the added seriousness that the causing of the termination of the 2016 Lease was itself a fundamental breach of the Settlement Deed. It was submitted that it was not enough that Glen and Rossi Recycling were keen to have the New Lease concluded, with reliance also being placed upon the defendants' Masters v Cameron contention. It was said that there was an imperative to substantially comply with the terms of the bargain struck and that this was especially critical in the context of the Settlement Deed where the parties had sought to compromise the dispute through 'a tightly negotiated bargain'. Using Biggs v Miller[345] as an example, it was stated that although the Settlement Deed sought to achieve a new lease, Glen and Rossi Recycling had gone about that process in a way that was fundamentally at odds with what the Settlement Deed required to be done, including by denying the existence of the existing lease, rejecting suggested valuers arbitrarily, and imposing a new rental that had no basis.
489 As to the third manifestation of alleged repudiation, the defendants submitted that the pursuit of an unreasonable or erroneous interpretation of the contract can also manifest an inability or unwillingness to perform the contract according to its true terms, referring in part to the statement in DTR Nominees Pty Ltd v Mona Homes Pty Ltd (DTR Nominees)[346] that a party '... By insisting on an incorrect interpretation of the contract evinces an intention that he will not perform the contract according to its terms.' It was submitted that Glen and Rossi Recycling did not put forward their construction point until after the 2016 Lease was terminated and that in any event, it does not explain an insistence on not paying any rent at all. Further it was put that in the correspondence of 21 November 2019 and 4 December 2019 Rossi Recycling put forward two erroneous and unreasonable bases for refusing payment of rent, namely that no invoice for rent had been issued and that the 2016 Lease had not been executed and was not legitimate.
490 It was submitted that these contentions were unreasonable and inconsistent with the clear words of the Settlement Deed and that, although they have now been abandoned, they had not been abandoned at the time of the notice of breach and the notice of re-entry. It was said that the letter of 21 November 2019 evinced an intention that Glen and Rossi Recycling would not perform the Settlement Deed according to its terms. It was further submitted that the breach notices gave Glen and Rossi Recycling a reasonable opportunity to reconsider the position they were adopting under the Settlement Deed, but they persisted with an unjustifiable position. It was therefore submitted that by 'persisting in that position', refusing to pay the rent that was due and owing, and causing the 2016 Lease to be terminated, Glen and Rossi Recycling repudiated the Settlement Deed.
Part I.3 - Rossi Recycling and Glen's repudiation position
491 Glen and Rossi Recycling strongly disputed that they had repudiated the Settlement Deed, submitting also that any of the conduct that was found to have occurred was to be considered in context and was far outweighed by the ongoing efforts of Glen and Rossi Recycling to have the Settlement Deed performed. In this context, some emphasis was placed upon Glen and Rossi Recycling's demands that the Settlement Deed be performed in the correspondence from Dunemanns, the primary benefit bargained for by Glen in the Settlement Deed being the new tenancy, and Rossi Recycling instituting the proceedings on 11 December 2019 to enforce equitable rights to specific performance of the Settlement Deed. It was submitted that matters such as these, viewed objectively, would have countered any sense in which it might be said that Glen and Rossi Recycling's conduct demonstrated a renunciation of the Settlement Deed, and all the more so in circumstances where, in the face of ongoing demands that the Settlement Deed be performed, neither Paul nor Buckland Valley provided any explanation for their failure to provide a draft lease, respond regarding the proposed alternate valuer, or respond regarding the market rental proposal.
492 It was also submitted that non-payment of rent was not a breach of the Settlement Deed and that, in any event, any failure to pay rent under the 2016 Lease was amenable to a claim for damages under the lease at worst and cannot be said to be so essential or significant to be repudiatory of the Settlement Deed.
493 With respect to some of the particular allegations referred to in Part H above and addressed earlier, Glen and Rossi Recycling's additional submissions included the following:
(a) The steps taken in relation to the transfer of the Business and asset notices were consistent with, and seeking to put into effect, that which was agreed in clause 1 of the Settlement Deed.
(b) Given the sequence of events, and the only remaining issue relating to the Last Bin, there was no sound basis for contending that the non-delivery of the Last Bin to date was repudiatory.
(c) Neither Glen nor Rossi Recycling caused the 2016 Lease to fail, and it was not repudiatory anyway.
(d) There was no obligation under the Settlement Deed to pay rent under the 2016 Lease as this was dealt with by the 2016 Lease. Further and in any event, non-payment of rent under the 2016 Lease was not sufficiently central to the Settlement Deed and was not capable of, and does not, objectively convey to a reasonable person in the situation of the other parties renunciation of the Settlement Deed as a whole or a fundamental obligation under it. In this context, it was submitted that the evidence showed that Rossi Recycling never denied the obligation to pay rent for the relevant months, and that there was a dispute about what the appropriate rent was to be. It was also submitted that even if there had been an obligation to pay rent under the Settlement Deed, damages would be sufficient and it cannot be said to have been an essential term of the Settlement Deed.
(e) The defendants' characterisation of the failure to pay rent as repudiatory and their attempt to terminate the 2016 Lease as a result should be seen for what they were, which was said to be an opportunistic attempt to manufacture repudiation and scuttle the Settlement Deed so as to gain control of the entire property and sell it as soon as possible for their own benefit. This was said to be compounded by Paul and Buckland Valley's failure to give any notice that they intended to terminate the Settlement Deed if payment of rent was not made.
(f) Proposing to pay rent of $16,666.66 per calendar month pending the independent determination could not amount to a repudiation of the Settlement Deed. Reliance was also placed upon Glen and Rossi Recycling's construction contentions.
(g) Glen and Rossi Recycling's position in the correspondence in November and December 2019 regarding the 2016 Lease could not be seen to be repudiatory when seen in context of all of the circumstances. It was submitted that it demonstrated the opposite position.
(h) Glen and Rossi Recycling's attempt to regain possession of the premises on 9 December 2019 cannot be seen to be repudiatory. It was said to reflect a forcible attempt to continue what was clearly contemplated in the Settlement Deed and any trespass in this context was submitted also not to be repudiatory.
(i) Glen and Rossi Recycling were entitled not to agree to the valuer being put forward by Paul and Buckland Valley, and so to act was not repudiatory.
Part I.4 - Consideration and disposition - Repudiation
494 The question of repudiation was framed by reference to the alleged conduct and events that I have addressed in Parts H.1 and H.2 above. Taking into account the findings I have made, and applying the principles relevant to repudiation to the circumstances of this case, it will be apparent from what I have said earlier that I do not accept that it has been established that Glen or Rossi Recycling repudiated the terms of the Settlement Deed by any of the conduct or circumstances raised and addressed, whether such matters are considered in isolation, together, or in any combination.
495 Given that I have concluded that neither Glen nor Rossi Recycling breached the Settlement Deed, it is not strictly necessary to expand further on the issue of repudiation given the way the contention was put. However, given the submissions made, and in addition to the observations made on repudiation in Part H.1 and Part H.2 above, I elaborate further as to why I have concluded that the Settlement Deed was not repudiated by Glen or Rossi Recycling.
496 At the outset it must be emphasised, as various authorities have done, that the issue is not to be addressed by an inquiry into the subjective state of mind of Glen or Rossi Recycling (through Glen). A principled inquiry requires the focus to be on the relevant alleged conduct, as was accepted by the parties. It should also be underscored that this is a case where it remains important to be mindful that the alleged conduct relied upon by the defendants is not to be atomised or divorced from its context or the whole of the relevant circumstances of the case. So much was also properly accepted by the parties.
497 When the conduct of Glen and Rossi Recycling is considered in the context of the circumstances in question it is in my view apparent that, far from evincing an intention not to be bound by the terms of the Settlement Deed, or other repudiatory conduct, the conduct of Glen and Rossi Recycling revealed the objective intention of Glen and Rossi Recycling to be bound by the terms of the Settlement Deed, to see the bargain the subject of the Settlement Deed proceed, and to have the parties perform their respective obligations under the Settlement Deed. I draw attention to the following.
498 First, I refer to, without repeating, the observations I have earlier made in these reasons regarding the circumstances and sequence of events and the findings I have made regarding the alleged conduct in Parts H.1 and H.2 above.
499 Second, given that I have concluded that any of the conduct of Glen or Rossi Recycling relied upon by Paul and Buckland Valley[347] in the repudiation context did not amount to a breach of the Settlement Deed, there are no breaches of the Settlement Deed by Glen or Rossi Recycling that can be relied upon as a foundation for the defendants' repudiation contention.
500 Third, I have indicated in various of Parts H.1 and H.2 above that even if I had found certain conduct there referred to to be in breach of the Settlement Deed, such conduct, whether considered alone or together with other circumstances, is not repudiatory in character. Again, I refer to Parts H.1 and H.2 above.
501 Fourth, I do not accept the defendants' submission that the communications, events and circumstances relied upon revealed an unwillingness on the part of Glen or Rossi Recycling to perform the Settlement Deed, or an intention to no longer to be bound by the terms of the Settlement Deed, or anything similar or akin to it. I also do not accept that Paul and Buckland Valley were entitled to conclude from the circumstances that the Settlement Deed would not be performed substantially according to its requirements.
502 In addition to the matters referred to above, it may be noted that, although the circumstances were challenging, viewed objectively, substantively and fairly, the sequence of events, communications and circumstances revealed a different position to that contended for by the defendants - as a review of the correspondence passing between the solicitors supports. The evidence demonstrated, objectively, that Glen and Rossi Recycling were parties that, by their conduct, were seeking to proceed with the bargain the subject of the Settlement Deed, and proposing to seek the court's assistance to enforce it if the differences between the parties could not be resolved.
503 Examples of that conduct include: displaying a reasonable and co-operative attitude through the Dunemanns' letter when access was sought in September 2019;[348] promptly responding to the defendants' suggested valuer; nomination of the valuer; the prompt preparation and sending of documents for signature; waiting for Slaters to prepare the lease document and chasing up the document; chasing up a response for the valuer; putting waste bins on the Red Lot; the content of the letters from Dunemanns, including the letters leading up to the letter of 4 December 2019; seeking to resolve the impasse referred to in Dunemanns' letter of 4 December 2019; again seeking responses regarding the lease and the valuer and the rental proposal in the 4 December 2019 letter; stating in the 4 December 2019 letter that if the impasse could not be resolved they would return the matter to the court to seek to enforce the Settlement Deed; the commencement of these proceedings shortly thereafter seeking specific performance and relief from forfeiture; and paying all outstanding rent on 12 December 2019.
504 Whilst the above are non-exhaustive examples, they underscore the importance of ensuring that enquiries regarding repudiation require a consideration of the whole of the circumstances to see whether there was repudiation - noting also that repudiation is a serious matter not lightly to be inferred. In my view, a review of the circumstances in this case of the kind required by the authorities makes clear that, having regard to the circumstances, neither Glen nor Rossi Recycling engaged in repudiatory conduct, whether different aspects of their conduct are relied upon separately or in any combination with other conduct.
505 Fifth, and as I have said, I do not accept that, in the circumstances, the express or implicit differences of view regarding the interpretation of the Settlement Deed or Glen and Rossi Recycling's conduct in relation to it was a breach of the Settlement Deed, or repudiatory conduct in any event. A review of the circumstances demonstrates that the Settlement Deed is not drafted as tightly or well as it might have been and that there was room for differences of view as to how it was to operate - noting also that there was no express provision addressing the time at which the New Lease was to be entered into between the parties. It was not established that Glen or Rossi Recycling was not acting bona fide in proceeding as they did and I accept that they were, notwithstanding that I have found that non-payment of rent was a breach of the 2016 Lease. That they were so acting is not only supported by the run of correspondence and objectively demonstrated intent to proceed with the Settlement Deed, but also by their stated intention on 4 December 2019 to return the matter to the court if the differences between them could not be resolved. That they then acted promptly and commenced proceedings seeking specific performance further supports this position. Of course the conclusion in this case does not draw into question the well-accepted position that a party's conduct in connection with the insistence upon an unreasonable interpretation of an agreement can in some circumstances amount to repudiatory conduct. That is not the situation in the present case.
506 That Glen and Rossi Recycling were acting bona fide was also supported by Glen's evidence regarding the legal advice he said he obtained about the continued occupancy of Unit 27 being at no cost, meaning that the rent under the 2016 Lease would not remain as it was and was to be adjusted to market rent. He said, and I accept, that he received legal advice that he was not obliged to pay the old rent under the 2016 Lease. Glen said that this is what led to the proposal for rental to be paid of the $200,000 amount in the meantime, which was consistent with the Charter Keck valuation. Glen said, and I accept, that he was not seeking to get out of paying rent, and that the rent money for October, November and December 2019 was not utilised elsewhere in the Business but was kept in the bank. This was also consistent with rent for these months being paid on 12 December 2019 in connection with the relief from forfeiture application and the court being informed by the plaintiff's counsel on 12 December 2019 that it could and would be paid.
507 As is apparent from these reasons, this construction issue regarding the licence for Unit 27 being at no cost referred to by Glen was one of the primary matters of construction that fell for determination in this proceeding and is self-evidently not a straightforward issue given the drafting of the Settlement Deed.
508 That Glen and Rossi Recycling's position regarding the proper construction of the Settlement Deed evolved further as events transpired does not change the position, and is far from unusual. In any event, neither the extent that it did, nor the timing at which it did, can be characterised as repudiatory. Further, similar observations can be made regarding the issues raised during the impasse about rental. The raising of the matters by Rossi Recycling in the context of the non-payment of rental was neither a breach of the Settlement Deed nor repudiatory in nature even if it had been.
509 In this context, it is also to be remembered that I have concluded that non-payment of rent under the 2016 Lease was not a breach of the Settlement Deed in any event, and that Glen and Rossi Recycling did not otherwise breach the Settlement Deed.
510 I add that there was also no relevant force in the defendants' contention that, Rossi Recycling raising the absence of an invoice for rent, assisted the defendants' position. Although the absence of an invoice for the rent also does not assist Rossi Recycling's position under the 2016 Lease, neither Rossi Recycling nor Glen breached the Settlement Deed by raising it. Again, even if it had been a breach of the Settlement Deed, it was not conduct that was repudiatory in character, whether considered alone or in combination with other conduct.
511 Sixth, the defendants did not establish that Glen breached the Settlement Deed in relation to the waste bins, noting also that the only remaining live issue between the parties in this context was in relation to the Last Bin. Had there been such a breach, it was not conduct that was repudiatory in nature, whether considered alone or in combination with any other conduct.
512 Seventh, whilst it is well established that different aspects of conduct considered together might constitute repudiation when one or more of them alone or in combination do not, that does not assist the defendants in this context given the observations above - and the fact that I have considered the alleged conduct alone and in all combinations. As to reliance on the facts in Forklift[349] and DTR Nominees[350] by the defendants, that does not assist them. Each case is dependent on its own facts and circumstances and it is the circumstances in question that are paramount. It may also be observed that a review of these cases reveal materially different facts and circumstances, although it is not necessary for present purposes to recite the detail of those differences.
513 Eighth, I accept that Glen and Rossi Recycling regaining possession of the 2016 Lease Premises by self-help was not a breach of the Settlement Deed and, further, that it was an act that was objectively consistent with an intention to proceed with the bargain the subject of the Settlement Deed and have the parties perform their respective obligations under it.[351] This was again also reinforced by the statements in the letter of 4 December 2019 that Glen and Rossi Recycling would seek relief from the court if the impasse regarding the performance of the Settlement Deed could not be resolved, and the fact that these proceedings were issued days later seeking specific performance and relief from forfeiture.
514 To the extent the defendants pressed a contention that Glen or Rossi Recycling breached the Settlement Deed by taking steps to change the banking arrangement authorities for Rossi Recycling, I do not accept that submission. It was not a breach of the Settlement Deed for Glen to do so. It was consistent with what was contemplated by the Settlement Deed and the object and purpose of it. It was a step consistent with the Business continuing under Glen's control without interference by, or involvement with, Paul. Further and in any event, even if it had been a breach, such a step cannot be seen to be repudiatory in character, whether considered alone or in combination with any other circumstance.
515 The end result is that I do not accept that by their conduct or any aspect of it, and whether considered alone or in any combination, Glen or Rossi Recycling repudiated the Settlement Deed. That being so, there was no scope for Paul or Buckland Valley to accept a repudiation of the Settlement Deed by Glen or Rossi Recycling so as to bring it to an end.
Part I.5 - Was any repudiation accepted by Paul and Buckland Valley and did Paul and Buckland Valley affirm the Settlement Deed?
516 Having determined that neither Glen nor Rossi Recycling repudiated the Settlement Deed, it is not necessary to address the issues of acceptance of repudiation or affirmation. However, given the submissions made on the topic, I address the position below.
517 The defendants submitted that Glen and Rossi Recycling's repudiation of the Settlement Deed was accepted by the unequivocal conduct of Paul and Buckland Valley re-taking possession of the 2016 Lease Premises after the notice of breach and notice of re-entry were not remedied and the taking of steps to sell the 2016 Lease Premises, and that this was reaffirmed in paragraphs 33 and 43 of Paul's affidavit of 12 December 2019. It was said that this occurred prior to any step being taken by Rossi Recycling to seek to comply with clause 3 of the Settlement Deed by seeking to revive the 2016 Lease through its application for relief from forfeiture.
518 The defendants submitted that this was an unequivocal acceptance of repudiation in accordance with the principles set out in Sargent v ASL Developments Ltd[352] that:
(a) the words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other;[353]
(b) essential to the making of an election is communication to the party affected by words or conduct of the choice thereby made, and it is accepted that once an election is made it cannot be retracted. An election takes place if the conduct of the party is such that it would be justifiable only if an election had been made one way or the other.[354]
Part I.5.2 - Glen and Rossi Recycling's submissions
519 Glen and Rossi Recycling denied that the Settlement Deed had been repudiated. They submitted in the alternative that, even if there had been repudiation, it had not been accepted in any event. They also emphasised that any election to accept a repudiation and so terminate a contract must be communicated to the other party in clear and unequivocal terms, relying upon Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW).[355]
520 It was further submitted that neither the notices of re-entry nor the taking of possession of the 2016 Lease Premises could constitute a communication of acceptance of a repudiation of the Settlement Deed. It was contended that there was nothing in the taking of possession under the 2016 Lease in those circumstances that unequivocally communicated to Rossi Recycling or Glen that Paul or Buckland Valley had elected to accept any repudiation of the Settlement Deed. It was said that this was particularly so given the Settlement Deed contained many other obligations and terms and did not govern the 2016 Lease.
521 It was submitted that there were no other indications, by correspondence or otherwise, in relation to any of the other obligations under the Settlement Deed, of Paul or Buckland Valley purporting to bring the Settlement Deed to an end by accepting allegedly repudiatory conduct. It was said that if Paul and Buckland Valley had intended to terminate the Settlement Deed altogether then one would expect that there would be some communication about it, and that the absence of any such communication renders the notice of re-entry and the taking of possession of the 2016 Lease ambiguous at best for Paul and Buckland Valley - but on any view not unequivocal.
522 Glen and Rossi Recycling also submitted that Paul's affidavit of 12 December 2019 did not constitute a clear and unequivocal communication that the Settlement Deed was terminated because as at that date, so it was said, Paul and Buckland Valley were continuing to assert rights that were derived from, and continued by virtue of, the Settlement Deed. In this context, Rossi Recycling referred to Paul and Buckland Valley's position that the licence to occupy Unit 27 continued until March 2020 (when Buckland Valley re-took possession) and to Paul providing his resignation as appointor and guardian of the RP Trust on 25 November 2019, which was after the notices of breach dated 18 and 22 November 2019 were provided to Rossi Recycling.
523 It was further contended that by the time the 12 December 2019 affidavit was affirmed or relied upon by Paul, Buckland Valley had been served with the originating process and affidavits in this proceeding demonstrating unequivocally that Glen and Rossi Recycling were seeking to enforce the terms of the Settlement Deed. This was also said to have occurred in a context where there had been no response to Rossi Recycling's request for a draft lease which Paul and Buckland Valley's solicitors previously said would be provided by them. In these circumstances it was said that the assertion that the 12 December 2019 affidavit constituted an acceptance of repudiation should not be accepted because it was not a clear and unequivocal communication to Glen and Rossi Recycling that Paul and Buckland Valley accepted the alleged repudiation.
Part I.5.3 - Consideration and disposition - Acceptance of repudiation and affirmation
524 Although I have dealt with the acceptance and affirmation issues below, it is to be remembered that, given my earlier findings regarding the absence of breach and repudiatory conduct, the issue is not necessary to decide.
525 There was no dispute of principle between the parties, and given that this issue is not strictly necessary to resolve I do not propose to traverse the authorities.[356] It is well accepted that termination for breach at common law requires the giving of notice. Where the person is confronted with a choice of affirming the contract or accepting a repudiation an election is required, and the right to elect to terminate the contract can be lost if the person elects to continue contractual preference.
526 An election needs to be communicated to the other party in clear and unequivocal terms. If an election to terminate is made and communicated, the discharge becomes effective from the time of the clear and unequivocal communication of the election and not the time of the breach or repudiation. Further, once an effective election to terminate is communicated, the agreement cannot be re-established by later conduct unless the parties agree to enter into a new contract to that effect. Termination discharges all unperformed obligations, except those which the contract provides should continue in operation.
527 I do not accept the defendants' submission that, even if there had been repudiation, they made an effective election to terminate the Settlement Deed by the service of the notices of breach, by service of the notices of re-entry, by taking possession of the 2016 Lease Premises, or by taking some steps with an estate agent in relation to the sale of the 2016 Premises.[357] This is because these actions did not clearly and unequivocally communicate to Glen or Rossi Recycling by words or conduct that Paul and Buckland Valley were accepting Glen and Rossi Recycling's claimed repudiation of the Settlement Deed and thereby electing to terminate the Settlement Deed. It will also be recalled that the notice of breach and notices of re-entry did not refer to the Settlement Deed or purport to address or accept any breach of it.
528 Putting to one side for the moment any question of affirmation and its impact upon the defendants' ability to elect to accept a repudiation had the Settlement Deed been repudiated, the position regarding Paul's affidavit of 12 December 2019 is different. Paragraphs 32 and 33 of that affidavit were in the following terms:
Buckland Valley regards the terms of settlement as ended
32. In accordance with the terms of settlement, I retained J.P.Sesto & Co, commercial lawyers, to draft a new lease as contemplated by paragraph 2 of the terms of settlement.
33. However, once the plaintiff failed to pay rent on 1 October 2019, and then again on 1 November 2019, and now since 1 December 2019, I have continued to regard this as a breach of a fundamental terms of the terms of settlement namely that the existing lease continue until the new lease had been signed. BV regards the terms of settlement as having ended.
529 The affidavit was provided to Glen and Rossi Recycling in the context of the commencement of this proceeding when it was given to their counsel at about 9:55am on the morning of the hearing before Macaulay J. By those paragraphs and the clear statements made by senior counsel for the defendants during that hearing that they considered the Settlement Deed to be at an end, it was communicated clearly and unequivocally to Glen and Rossi Recycling that non-payment of rent under the 2016 Lease in October, November and December 2019 was regarded by Paul and Buckland Valley as a breach of a fundamental term of the Settlement Deed and that the Settlement Deed was regarded by Paul and Buckland Valley as being at an end. The result is that, absent any issue of earlier affirmation (addressed further below), if non-payment under the 2016 Lease for one or more of the months in question had amounted to a repudiation of the Settlement Deed (which I have found it did not), the Settlement Deed would have come to an end at the time that affidavit was communicated to Glen and Rossi Recycling. The acceptance of such a repudiation would have been effective at that time.
530 I add for completeness that I do not accept that paragraph 43 of Paul's affidavit would have had the same effect. This is because it specifically addresses the 2016 Lease and not the Settlement Deed.
531 That said, there is a further issue associated with affirmation which complicates the position, although it would not ultimately change the outcome if the Settlement Deed had been repudiated by non-payment of rent on 1 December 2019.
532 Relevant principles regarding affirmation were not controversial[358] between the parties. Glen and Rossi Recycling referred to the following:
(a) a party affirms a contract where a party has two alternative rights and acts in a manner consistent with the exercise of one of those rights and inconsistent with the other;[359]
(b) acts done by a party in, or for the purpose of, the performance of the contract after a repudiatory breach, constitute an affirmation as long as it is consistent only with the continued existence of the contract;[360]
(c) whether a party's words or conduct amount to an election to continue performance is a question of fact to be determined objectively and does not depend upon an actual intention to do so;[361]
(d) the consequence of affirmation is that the contract continues with full effect and the parties must perform their obligations under the contract.
533 Glen and Rossi Recycling also accepted that if the Settlement Deed was terminated on 12 December 2019 by a valid acceptance of repudiatory conduct then it could not be affirmed by later conduct absent a further agreement to that effect between the parties.[362]
534 Glen and Rossi Recycling contended that Paul and Buckland Valley had affirmed the Settlement Deed by reason of the following:
(a) The resignation of Paul as guardian and appointer of the RP Trust and nomination of Glen being sent by Slaters to Dunemanns on 25 November 2019.
(b) The conduct of the defendants in relation to Unit 27 being consistent with only the enforcement of the Settlement Deed. In this context, emphasis was placed upon clause 4 of the Settlement Deed, the defendants' lawyers' letter of 14 February 2020 confirming that Unit 27 had been taken off the market, and their letter of 19 March 2020 notifying Rossi Recycling of Buckland Valley's intention to repossess the top floor Unit 27 on 23 March 2020 because of the expiry of the licence under clause 4 of the Settlement Deed. On that date Buckland Valley took possession of Unit 27, which Rossi Recycling surrendered at that time.
(c) The demanding and taking possession of Unit 27 by Buckland Valley from Rossi Recycling being consistent only with the enforcement of the Settlement Deed and inconsistent with the contention that the Settlement Deed had been terminated - and therefore amounted to an affirmation of the Settlement Deed.
(d) Buckland Valley's letter of 17 August 2021 in which it was asserted that from 30 September 2021 Rossi Recycling would remain in possession of the premises at Unit 27 on a monthly over holding basis pursuant to clause 10 of the 2016 Lease.
(e) The correspondence that was exchanged on 17 and 22 June 2021 between the parties' solicitors regarding the payment due under clause 6 of the Settlement Deed on 1 July 2021. In particular, reference was made to the defendants' lawyers' statements that, although it was a matter for Glen and Rossi Recycling as to whether it paid the amount of $114,427 to Paul on 1 July 2021, 'if he does not, we will be submitting a trial of the conduct is consistent with the repudiation of the deed of settlement by your client.'
(f) Paul's acceptance of the payment of $114,427 by Glen on 1 July 2021.
(g) Paul's alleged collection of some waste bins from the Red Lot in early 2021.
535 Rossi Recycling further submitted that if the above matters do not amount to affirmation then they were relevant to the question of whether Paul and Buckland Valley in fact terminated the Settlement Deed by acceptance of repudiatory conduct, and also whether specific performance should be granted. It was said that these matters would count in favour of the grant of specific performance because it would be unjust to allow Paul and Buckland Valley to take what advantages they can from the Settlement Deed (such as possession of Unit 27 and payment under clause 6), but at the same time insist that the Settlement Deed should not be performed in respect of the New Lease.
536 Buckland Valley and Paul emphasised that their acceptance of the repudiatory conduct had brought the Settlement Deed to an end by no later than 12 December 2019. Insofar as affirmation was concerned they focused upon Unit 27. They submitted that upon the commencement of the Settlement Deed a six-month licence was granted to Rossi Recycling over Unit 27 and operated from that time. They contended that although the Settlement Deed was repudiated and treated by Buckland Valley and Paul as at an end in December 2019, this did not have the effect of terminating the licence that had already been granted. It was said that the discharge brought to an end future performance, although Buckland Valley did not, upon accepting the repudiation, take steps to terminate the licence and therefore it ended at the completion of its six-month term. It was submitted that Buckland Valley's taking possession of the licensed area did not affirm or revive the Settlement Deed.
537 Paul and Buckland Valley further submitted that, in any event, subsequent affirmatory conduct could not undo Buckland Valley's earlier unequivocal election to treat the Settlement Deed as at an end, at which point the Settlement Deed was finally and conclusively discharged. In this context, reliance was placed upon the following observations of Barwick CJ in Ogle v Comboyuro Investments Pty Ltd:[363]
[I]f the promisee chooses to treat the contract as at an end, insofar as it requires further performance on the part of either party to it, the promisor will be quit of any obligation further to perform the contract ... [i]t is also a consequence of the acceptance of the repudiation that the contract, being duly terminated, may not be revived except by consent of the parties.
538 Given that it has not been established that the Settlement Deed was repudiated by Glen and Rossi Recycling, I shall only briefly state my conclusions regarding the affirmation issues raised:
(a) The execution of the documents by Paul, resigning as guardian and appointor of the RP Trust, and nominating Glen in his place, and the provision of these documents to Dunemanns on 25 November 2019 were objectively unequivocal acts done by Paul that were consistent only with the performance of the Settlement Deed. They amounted to an election at that time to continue performance of the Settlement Deed. It will be recalled that these steps were expressly agreed and provided for in clause 1 of the Settlement Deed.
(b) The affirmation on 25 November 2019 was effective because, as I have earlier determined, there was no effective election by Paul or Buckland Valley to terminate the Settlement Deed prior to that time.[364]
(c) Because the 25 November 2019 affirmation of the Settlement Deed occurred after the non-payment of rent for October and November 2019, the consequence would have been that any purported later acceptance of repudiation of Settlement Deed relying on non-payment of rent for those months would have been ineffective. This is because by Paul's conduct he and Buckland Valley had elected to continue with performance of the Settlement Deed, notwithstanding the claimed repudiatory breaches of it based on non-payment of rent under the 2016 Lease for October and November 2019.
(d) However, because rental was not paid on 1 December 2019 under the 2016 Lease, if I had found this non-payment to be repudiatory of the Settlement Deed, Paul's statement in his 12 December 2019 affidavit would have been an effective acceptance of that repudiation and an effective election to terminate the Settlement Deed. This is because the breach for non-payment of rent on 1 December 2019 would have been a fresh repudiatory breach that occurred after the affirmation on 25 November 2019, that was open for Paul and Buckland Valley to accept even if their purported acceptance for the earlier claimed repudiatory breaches was ineffective by reason of the affirmation on 25 November 2019. Even if the statements in the affidavit had not been enough (which they were), when combined with senior counsel for the defendants' statements to the same effect in court on 12 December 2019, the election was clear and unequivocal.
539 Given the above, it is not necessary to address any of Glen and Rossi Recycling's submissions regarding affirmation associated with Paul and Buckland Valley's conduct after 12 December 2019, including conduct in relation to Unit 27 and conduct in accepting payment of $114,427 on 1 July 2021. Because the election to terminate on 12 December 2019 would have been effective, any later claimed affirmatory conduct would not have affected the position in the absence of a further agreement between the parties.
Part I.6 - Was the taking of possession of Unit 27 by Buckland Valley done under the Settlement Deed, an affirmation of it, and/or a failure to give quiet possession under the 2016 Lease?
540 As previously noted, Glen and Rossi Recycling submitted that if the 2016 Lease was found to continue until the New Lease was entered into, then Rossi Recycling was entitled to retain possession of the upstairs of Unit 27 pursuant to the 2016 Lease, notwithstanding the terms of the Settlement Deed.
541 The defendants submitted that the taking of possession of Unit 27 did not breach the 2016 Lease because the lease was varied, upon execution of the Settlement Deed, by the grant of the licence under clause 4 of the Settlement Deed.
542 I refer to my earlier observations in Part E above regarding the proper construction of the Settlement Deed including clauses 2, 3 and 4 of the Settlement Deed. It will be recalled that, among other things, I have determined that the 2016 Lease continues until the New Lease is entered into, and that the premises and rental under the 2016 Lease remained the same, including the top floor of Unit 27. It was also not in dispute that Buckland Valley took possession of the top floor of Unit 27 and the other parts of Unit 27 the subject of clause 4 on 23 March 2020.
543 That being so, and noting that the New Lease has not yet been entered into, the position as at 23 March 2020 was:
(a) The top floor of Unit 27 remained as part of the premises under the 2016 Lease,[365] which lease remained on foot as at 23 March 2020.
(b) The other parts of Unit 27 were not part of the premises the subject of the 2016 Lease but were the subject of only the entitlement to a six-month licence under clause 4 of the Settlement Deed, which had ended.
544 Whilst it is apparent that in March 2020 Buckland Valley proceeded on the basis that the 2016 Lease Premises did not include the upstairs of Unit 27 and that only the six-month licence in clause 4 existed in respect of Unit 27, the true position was a little more nuanced. Because the top floor of Unit 27 remained as part of the premises the subject of the 2016 Lease and that lease remained on foot, Rossi Recycling was entitled to its right of quiet possession of the 2016 Lease Premises whilst the 2016 Lease remained on foot. The terms of the Settlement Deed did not provide Buckland Valley with the right to take possession of that part of the premises under the 2016 Lease if the New Lease had not been entered into. I again refer to my observations in Part E and Parts F.1.3 and F.1.4 above on this topic.
545 On the other hand, the balance of Unit 27 was not part of the premises the subject of the 2016 Lease but was the subject of only the six-month licence entitlement under clause 4 of the Settlement Deed. Consequently, this resulted in Buckland Valley being entitled to take possession of the balance of Unit 27 at the end of the six-month licence period referred to in clause 4 of the Settlement Deed.
546 Given the absence of repudiation, and my consideration of acceptance and affirmation above in any event, it is not necessary to address the question of whether taking possession of Unit 27 in March 2020 was an affirmation of the Settlement Deed. However, at the risk of repetition, I make two brief observations.
547 First, if non-payment of rent on 1 December 2019 had been repudiatory conduct then that repudiation would have been accepted on 12 December 2019, and therefore the later conduct of taking possession in March 2020 was not capable of constituting an affirmation of the Settlement Deed absent further agreement.
548 Second, because the licence entitlement in the Settlement Deed included a six-month licence entitlement to the ground floor of Unit 27 that was not part of the 2016 Lease Premises, then the re-taking of possession of that part of Unit 27 would have, in the absence of the assumed repudiation, amounted to an affirmation of the Settlement Deed on the part of Paul and Buckland Valley at that time.
549 I turn now to the question of specific performance.
Part J: Is Rossi Recycling entitled to an order for specific performance of the Settlement Deed?
550 In this part I address whether Rossi Recycling should be granted relief requiring Buckland Valley and Paul to specifically perform their obligations under the Settlement Deed.
Part J.1 - Glen and Rossi Recycling's submissions
551 Glen and Rossi Recycling submitted that this is a clear case where orders for specific performance should be made. They submitted that: (a) it was plain that damages are not an adequate remedy; and (b) Glen and Rossi Recycling have been and remain ready, willing and able to perform their obligations under the Settlement Deed, including Rossi Recycling entering into the New Lease and paying rent pursuant to the New Lease in the manner contemplated by the Settlement Deed.
552 It was submitted that Glen's evidence about Glen and Rossi Recycling being ready, willing and able to perform their obligations under the Settlement Deed was uncontested. They submitted further, and in any event, that the sequence of events and circumstances, including the correspondence from their solicitors dated 18, 19, 20, 20, and 20 September 2019, 21 November 2019 and 4 December 2019, demonstrated and supported that position. This was said to be further supported by the commencement of these proceedings seeking specific performance and by their payment of outstanding rent under the 2016 Lease in connection with the grant of relief from forfeiture, and the payment of rent since that time (which payment was not disputed by Buckland Valley).
553 It was submitted that it was clear on the evidence that Glen and Rossi Recycling had at all stages been seeking to have the Settlement Deed performed and enforced and that this weighed materially in their favour in this context.
554 Glen and Rossi Recycling submitted that orders should be made requiring Paul and Buckland Valley to do all things necessary to be done under clause 2 of the Settlement Deed:
(a) to have the market rent determined; and
(b) to have Buckland Valley enter into the New Lease with Rossi Recycling as provided for in the Settlement Deed.
555 It was ultimately submitted and confirmed in oral closing submissions that the New Lease that Buckland Valley should be ordered to enter into should be in the same terms as the 2016 Lease,[366] including terms the same as those in the existing schedule to that lease, except for the changes as contemplated and required by clause 2 of the Settlement Deed.[367] Among other submissions, it was submitted that the terms of Item 22 of the 2016 Lease do not carry across to the New Lease[368] and that, because the New Lease Premises do not include Unit 27, adjustment needed to be made to the demised premises and outgoings in the schedule to take this into account. It was further submitted that this would result in a lease schedule the same as, or substantially to the effect of the lease schedule that comprises Attachment 3 to these reasons. For ease of reference and comparison purposes, the schedule to the 2016 Lease is reproduced as Attachment 4 to these reasons.[369]
556 It was further submitted that, in light of what was contended to be the proper construction of the closing words of clause 2(e) of the Settlement Deed, and the absence of any agreement regarding any further terms, the closing words of clause 2(e) had no role to play in the context of specific performance and did not impact on the relief to be granted.
557 Glen and Rossi Recycling also emphasised the broad powers of the court to craft relief to best serve the interests of justice between the parties in the circumstances, drawing in part upon some frequently cited observations of the Court of Appeal in Flinn v Flinn,[370] and observations extracted from Spry's Equitable Remedies[371] regarding specific performance.
558 Insofar as it was said that Glen and Rossi Recycling did not have clean hands and should be deprived of the remedy of specific performance, this was denied and also said not to have been pleaded. It was also said that, as a matter weighed in the balance of the court's discretion, any adverse conclusions regarding the conduct of Glen or Rossi Recycling should not operate so as to deprive the plaintiff of the specific performance remedy in what was said to be a clear case for granting it. Glen and Rossi Recycling also drew attention to various aspects of Paul's conduct (personally and as controller of Buckland Valley) since the entry into the Settlement Deed, all of which has been earlier referred to in other parts of these reasons.
559 It was also stated during submissions that the plaintiff was entitled to specific performance by the defendants of their obligations under the Settlement Deed as well as equitable or common law damages for breach of the Settlement Deed. In its written submissions, these damages claims[372] were said to comprise:
(a) Damages for business interruption as a result of the wrongful taking of possession of the 2016 Lease Premises by Buckland Valley.
(b) Damages for breach of the Settlement Deed, which were said to be equal to the difference between:
(i) the rent actually paid under the 2016 Lease from 1 October 2019 (of $29,304.25 per calendar month); and
(ii) the market rent that should have been paid per calendar month pursuant to the determination under clause 2 of the Settlement Deed from 1 October 2019, or such other date as the court decides, with that amount to be determined after the performance of the rent determination process contemplated by clause 2(b) of the Settlement Deed is completed.
(c) Alternatively, if the Settlement Deed was found to have been repudiated and terminated so that the parties remained bound by the 2016 Lease, damages for derogation from the grant as a result of the failure to provide quiet possession of Unit 27 after March 2020 pursuant to the terms of the 2016 Lease.
Part J.2 - Paul and Buckland Valley's submissions
560 The defendants' position was that there should be no order for specific performance. In taking this position, the defendants relied heavily upon many of their submissions made in connection with other issues addressed earlier in these reasons.
561 The primary matters referred to or emphasised by the defendants that were said to make an order for specific performance inappropriate in the circumstances were as follows:
(a) The Masters v Cameron contentions addressed earlier.
(b) The defendants' alternative contention that clause 2 of the Settlement Deed was uncertain and indeterminate and therefore ought not to be enforced.
(c) That the grant of specific performance would require ongoing supervision by the court to ensure that the parties agreed and executed the terms of the New Lease.
(d) The court should not be satisfied that Glen and Rossi Recycling were and are ready, willing and able to perform the Settlement Deed, particularly in relation to the financial capacity to meet rent into the future. In this context, reference was made to a claimed failure to respond to a call for the production of financial statements for the 2021 financial year and Glen's evidence about any business plan for the Business being in his head. It was submitted that the onus was on Glen and Rossi Recycling to prove that they are ready, willing and able to perform the Settlement Deed. It was said that the court should infer that the provision of the financial statements called for would not have been of assistance to the plaintiff insofar as their financial capacity was concerned. This was said to show that Glen and Rossi Recycling were not prepared to seek relief from the court with clean hands and show that they had not demonstrated that they would be able to meet their future obligations under the New Lease.
562 As an alternative position, it was put briefly in the written closing submissions that if specific performance was to be ordered then the New Lease should also include the terms that the defendants had included in the Brindley Orders - although by the conclusion of oral closing submissions this appeared not ultimately to be pressed, it also being confirmed that this was not a case where in the present circumstances the court itself should, could or would be determining what are or might be reasonable terms.
563 There was no relevant dispute between the parties regarding well-established principles that govern the question of whether or not specific performance of an agreement should be granted. Understandably, little time and space was devoted to these matters by the parties in their respective oral and written submissions, with the parties focussing on the facts and circumstances in question. Principles and observations regarding the remedy of specific performance have been traversed and addressed in many of the well-known texts and authorities, to which I refer but will not recite.[373]
564 Specific performance is an equitable remedy requiring a contracting party to carry out one or more contractual obligations resting on that party. It is primarily a discretionary remedy for the enforcement of contracts. It is a personal remedy and may be ordered absolutely or subject to conditions. The major area for the operation of the remedy of specific performance involves contracts, and commonly contracts involving transactions dealing with real property.
565 The authorities reveal a distinction between two categories of specific performance - one dealing with executory agreements and the other dealing with the performance of executed agreements. Sometimes the former is referred to as specific performance in the proper or narrow sense, being a remedy compelling execution in specie of a contract. Specific performance of executed contracts is at times referred to as specific performance in the wider or more usual sense, being an order that a party to an executed contract perform some or all of their obligations under the contract.[374]
566 The requirements and discretionary factors taken into account[375] when considering whether or not a decree of specific performance ought to be made depend upon the circumstances of a particular case, although a number of them are frequently raised or in issue. They include:
(a) whether there is an enforceable agreement;
(b) whether there has been a breach of the agreement;
(c) whether any issue of impossibility of performance arises;
(d) whether damages are an adequate remedy;
(e) whether the plaintiff has demonstrated, at least at the time when any order is to be made, it is ready, willing and able to perform all other substantial obligations;
(f) whether there is mutuality in the sense that it is possible to award the remedy against both parties;
(g) the plaintiff's conduct and whether the plaintiff comes to equity with clean hands;
(h) hardship to the defendant of awarding specific performance;
(i) the involvement or impact from third parties;
(j) laches or delay.
567 The court has broad powers in connection with ordering specific performance. It may make the remedy conditional and give consequential directions. This includes making directions regarding the machinery to ensure that the decree is carried out, and making detailed orders about how the decree is to be carried into effect.
568 It is commonly the case that the issues between litigating parties relate not to the principles regarding the requirements or factors to be taken into account, but their application to the particular facts and circumstances in question. That is the case here and it is to these matters that I now turn.
Part J.4 - Consideration and disposition - Specific performance
569 In my view this is a clear case for the grant of specific performance. Given all of that which has been addressed in these reasons, my reasons for so concluding can be relatively shortly stated.
570 I have concluded that the Settlement Deed was not terminated, that it was breached by Buckland Valley and Paul, that it remains on foot, and that the obligations that remain to be performed include Paul and Buckland Valley co-operating to have the market rental determined as required by clause 2 and Buckland Valley entering into the New Lease.
571 Given the subject matter in question (meaning the premises to be the subject of the New Lease), the object and purpose of the Settlement Deed, and the nature of the Business that is to continue to be conducted on the New Lease Premises over an extended period, it is plain that damages are not an adequate remedy. It was understandably not contended otherwise by Paul or Buckland Valley, but had it been so contended I would not have accepted that submission. I note in this regard that Macaulay J reached the same conclusion in his reasons dealing with the relief from forfeiture application and that it was not then contended otherwise by the defendants.[376] Given my conclusion on this topic it is not necessary in this case to add to the ongoing judicial and other discussion as to whether damages being an inadequate remedy is to be seen as a 'jurisdictional' requirement or a discretionary matter. However the requirement or factor is characterised, it has been established in this case.
572 Although the defendants relied on their lengthy submissions regarding Masters v Cameron and uncertainty in opposition to the grant of specific performance, these contentions do not assist them given the conclusions I have reached in relation to these matters. I refer to Part E above.
573 I accept Glen and Rossi Recycling's submission that it was established that Glen and Rossi Recycling are (and were) ready, willing and able to perform their obligations under the Settlement Deed, including Rossi Recycling being ready, willing and able to co-operate so as to proceed with the current market rental determination process and enter into the New Lease with Buckland Valley and pay rent pursuant to it. As Barwick CJ observed in Mehmet v Benson,[377] this 'ready, willing and able' question is one of substance and not one to be resolved in any technical or narrow sense, and one where it is important to bear in mind '... what is the substantial thing for which the parties contract and what on the part of the plaintiff in a suit for specific performance are his essential obligations'.[378]
574 In IGA Distribution Pty Ltd v King & Taylor Pty Ltd and Anor (IGA),[379] Nettle J underscored the point as follows:
190 The principles are well established. They do not require the plaintiff to show that it has strictly and literally complied with all of its obligations under the agreement: Fullers Theatres Ltd v Musgrove[380] or even that it is now ready and willing to perform strictly and literally its obligations in future. The requirement is rather one of substantial compliance, as was explained by Barwick CJ in Mehmet v Benson[381] as follows:
"The question as to whether or not the plaintiff is ready and willing to perform the contract is one of substance not to be resolved in any technical or narrow sense. It is important to bear in mind what is the substantial thing for which the parties contract and what on the part of the plaintiff in a suit for specific performance are his essential obligations. Here the substantial thing or which the defendant bargained was the payment of the price: and, unless time be of the essence, he obtained what he bargained for if by the decree he obtains hes [sic] price with such ancillary orders as recompense him for the delay in its receipt. To order specific performance in this case would not involve the court in dispensing with anything for which the vendor essentially contracted. But it is the essential terms of the contract which he must be ready and willing to perform. He seeks a transfer of the interest in land, the subject of the contract: the counterpart obligations the payment of the price. In considering the question of the plaintiff's readiness and willingness in this respect in this case there are many factor [sic]. His default in paying the instalments of the price, whilst not conclusive, is amongst these factors... In my opinion, notwithstanding the defaults of the plaintiff in the payment of the instalments of price, he was not unready or unwilling to perform the contract in its essential terms; specific performance ought to have been granted."[382]
191 IGA stands ready now to provide the estimate and cheque if that is what clause 12.4 is held to require. Hence, even assuming the breach which is contended for, I do not see in it any or at least sufficient reason to refuse specific performance.
575 The evidence showed that Rossi Recycling is (and has been) ready, willing and able to perform its obligations, including to enter into the New Lease and provide necessary co-operation under the Co-operation Terms to have the rent under the New Lease independently determined in accordance with the terms of the Settlement Deed. So much was clear on the evidence, including Glen's oral evidence on the topic during examination in chief and cross-examination, which I accept. It was also supported by the sequence of events that I have addressed earlier in these reasons.
576 To the extent it was contended that the position in relation to the Last Bin ought to stand in the way of a grant of specific performance because it is indicative of Glen and Rossi Recycling not being ready, willing and able to comply with the terms of the Settlement Deed, I do not accept that submission. Again, the sequence of events earlier addressed reveals that this is not so and that the Last Bin can be provided anyway, which was a matter I have earlier said that I accepted Glen's evidence about. Glen's evidence regarding the waste bins in examination in chief and the extended cross-examination on the topic, which I accept, firmly supported the position that he and Rossi Recycling were and had been ready, willing and able to perform the obligations under the Settlement Deed in connection with the Last Bin (and the other bins). As previously mentioned, it was not unreasonable for Glen and Rossi Recycling first to establish which of the waste bins were already in Paul's possession so as to be able to work out what additional bins needed to be provided to Paul. I also accept Glen's consistent evidence that Paul has not sought to collect or asked to be provided with the Last Bin, and Glen's evidence that he will make it available when asked. Glen was very clear about that in cross-examination. I add that the fact that there was no request for the Last Bin is not surprising given Paul's position that the Settlement Deed was at an end.
577 Further, even if I had found that there had been a breach of the Settlement Deed in relation to the provision of the Last Bin, I would not have found it to be repudiatory in nature in the circumstances. It would also not have stood in the way of the grant of specific performance in the circumstances, given what is at the heart of the agreement as reflected in the Settlement Deed, and Glen and Rossi Recycling establishing at trial that they are ready, willing and able to perform their obligations. That said, I will also hear from the parties as to the precise form of orders, including as to whether any conditions in relation to the provision of the Last Bin should be included in connection with the decree of specific performance.
578 I do not accept that what transpired at the hearing in connection with a call for the 2021 financial statements for Rossi Recycling supports in any meaningful way Paul and Buckland Valley's contention that Glen or Rossi Recycling did not establish that they were and are ready, willing and able to perform the obligation to enter into the New Lease - or for that matter, the payment of rent under it by Rossi Recycling.
579 The call for production that was made during Glen's evidence by senior counsel for the defendants was for production of the financial statements for Rossi Recycling and the RP Trust for 30 June 2021. Glen gave evidence at the time, which I accept, that the preparation of the documents had not yet been finalised. It was apparent from his evidence that the documents being called for did not exist. So much could also be inferred from his evidence that he could get them 'done'. I accept Glen and Rossi Recycling's submission that there was no failure to respond to the call for production because the documents called for did not then exist. There was no obligation on Glen or Rossi Recycling to prepare those financial statements for the defendants or the court at the time. It may also be noted that Glen's evidence concluded on the same day a little while after the call for production was made and that counsel for each of the plaintiff and defendant agreed to Glen being excused. In my view there is nothing of substance in the defendants' attempt to use the circumstances of the call and the absence of production as a factor against the grant of specific performance.
580 Even if it could have been inferred that any existing financial statements that could have been produced would not have assisted Rossi Recycling in establishing that rental could have been paid under the New Lease, or that its financial position was sound;[383] that is only part of the evidence that would be taken into account. The evidence showed that all back rent had been paid by 12 December 2019 and Glen gave evidence (which I accept), and it was not in dispute, that rent had been paid since that time until the time of trial, and that the Business had been operating at the 2016 Lease Premises throughout that extended period. Glen also gave evidence, which I accept, about rent money being kept in the bank and being available for payment, and direct evidence about being able to perform obligations under the 2016 Lease and the New Lease. I also accept his evidence about the turnover and size of the Business, including that it was on track for about $7 million to $8 million turnover for the year, which was a projected increase on the previous year.
581 I also do not accept that the position in relation to the call demonstrated a lack of bona fides or that it weighs materially at all against the exercise of the court's discretion to grant specific performance.
582 It may also be observed in this context that the Settlement Deed did not contain any terms or conditions regarding the provision of financial information or the financial position of Rossi Recycling in connection with the agreed obligation by Buckland Valley (and Paul as its controller) to enter into a New Lease with Rossi Recycling. It may also be said that the payment of rent under the New Lease is not an obligation imposed by the Settlement Deed itself but is to be the subject of an obligation under the terms of the New Lease. The New Lease will operate according to its terms and if rent is not paid under it in future then Buckland Valley will have such rights as it has under the New Lease.
583 To the extent that the defendants pressed a contention that the absence of written business plans - or business plans being in Glen's head - demonstrated in part that Glen and Rossi Recycling had not established that they were ready, willing and able to perform their obligations under the Settlement Deed, I do not accept that submission. It is also outweighed by Glen's direct evidence about being able to pay rent and the payment of rent since December 2019 earlier referred to. I also refer to the terms of the Settlement Deed, which does not address the financial position of the Business or anything about business plans.
584 The end point remains that I am satisfied that Glen and Rossi Recycling have established that they are ready, willing and able to carry out their respective obligations under the Settlement Deed.
585 As to the contention that the specific performance remedy should be denied because the failure to provide such financial information as existed in response to or in connection with the call at trial constitutes unclean hands of a kind that should deprive the plaintiff of the remedy, I do not accept that submission.[384] I refer to the observations made above regarding the financial position, rental payment and history of events. That which transpired in connection with the call does not travel at all close to establishing unclean hands in the context under consideration. Although each case, of course, depends on its own facts, Nettle J's observations on this topic in IGA also merit extraction here:[385]
[246] I turn finally to the question of clean hands. Apart from cases of fraud or misrepresentation or illegality or a breach of contract leading to a lack of readiness or willingness on the part of the plaintiff to perform his obligations, there are broadly speaking two main categories of cases in which plaintiffs are denied specific performance on the basis of a lack of clean hands[386]: first, where the plaintiff is shown materially to have misled the court or to have abused its process, or to have attempted to do so; and, secondly, where the grant of relief would enable the plaintiff to achieve a dishonest purpose and where in all the circumstances it appears to the court to be inequitable to grant the particular relief in question. It is the second of those categories which is said to be of relevance here.
[247] The gist of that second category of case is that equity will not assist the unconscionable conduct on the part of the plaintiff, either by enforcing a right already improperly obtained or by otherwise furthering unconscionable purposes. But the undesirable behaviour in question must involve more than mere "general depravity". It must have an immediate and necessary relation to the equity sued for; it must be a depravity in a legal as well as in a moral sense; and, in order to have an immediate and necessary relation to the equity sued for, the plaintiff must seek to derive advantage from his dishonest conducti n so direct a manner that it is considered to be unjust to grant him relief.
[248] In my view, that is not the present case. IGA is not engaging in unconscionable conduct. Its rights under the agreement for lease were not improperly obtained and it does not pursue those rights in furtherance of any unconscionable purpose. What is put against IGA is that, in submitting the new forms of agreement under cover of the letter of 21 June 2001, IGA had in mind the evasion of duty properly payable on the original agreement for lease. But even assuming that were so, it would rise no higher than the category of "mere general depravity", lacking an immediate and necessary relation to the specific performance of the original agreement.
586 In the present case, it is also the fact that Glen and Rossi Recycling's rights under the Settlement Deed were not improperly obtained and it has not been alleged or established that the rights are being pursued in furtherance of any unconscionable purpose. In any event, however the circumstances are characterised in relation to financial information, the financial position of Rossi Recycling, or the call made at trial, it is plain that the conduct does not possess a sufficient and immediate relation to specific performance of the Settlement Agreement so as to work against the grant of specific performance. All things considered, in my view there is no sound basis for contending that any conduct on the part of Rossi Recycling or Glen should preclude an order for specific performance being made.
587 It was not put that the present case falls into the category of cases where the hardship to the defendants as a result of the nature of the deal done would or might warrant the discretion to be exercised against Rossi Recycling because of the financial position. Had such submission been made I would not have accepted it, noting again the absence of any information or financial hurdles in the Settlement Deed and the other matters I have addressed above regarding the payment of rental. I also refer generally to the following observations of Nettle J in IGA regarding 'hardship' as a discretionary factor in this context:[387]
These contentions may be dealt with briefly. The sort of hardship which will preclude the grant of specific performance does not extend to precluding specific performance because the defendant has made an improvident contract. If the defendant has agreed to the terms of the contract sought to be enforced, they should be enforced[388]. There may be cases in which the bargain which is sought to be enforced is so improvident from the defendant's point of view that equity will refuse specific relief, but the circumstances will be rare and where they occur there is likely to be involved something tantamount to undue influence which renders enforcement unconscionable. The defendant has to show that a decree of specific performance would impose hardship amounting to oppression far outweighing the inconvenience to the plaintiff if he is left to his remedy in damages[389].
588 To the extent that the defendants pressed the contention that specific performance ought to be refused because the grant of the remedy will require constant supervision from the court, I do not accept that submission. First, requiring Paul and Buckland Valley to comply with their obligations under the Settlement Deed so as to result in compliance with clause 1, the market rental determination taking place, and the New Lease between Buckland Valley being entered into is not something that can be fairly or properly characterised as requiring constant supervision or anything akin to it. The circumstances here present as ripe for the grant of specific performance.
589 Second, and in any event, the extent to which any supervision may be needed is a factor for the court to take into account and does not present as a disqualifying factor. In the present circumstances, even if an element of so-called 'supervision' is needed, given the obligations under the Settlement Deed to be enforced, it is not of a character that weighs against the grant of specific performance in the circumstances of this case. It may be noted in this context that judicial discussion and engagement on this topic reveals a slide away from supervision concerns being a material factor against the grant of specific performance in some cases, although each case of course depends on its own facts when the judicial discretion falls to be exercised.[390]
590 To the extent the defendants maintained an alternative position that if specific performance was to be ordered then the court should include lease terms of the kind that had been included by them as assumptions for part of the Brindley Orders, I do not accept that submission. That exercise was of an entirely different character that was carried out in a different context for a different purpose. That said, it appeared to be ultimately acknowledged in oral closing submissions by senior counsel for the defendants that it would not be an appropriate course for the court to be taking in this case. In any event, so to do would also be inconsistent with the determinations I have made regarding the proper construction of the Settlement Deed and the terms of the New Lease.
591 The result is that orders should be made requiring the defendants to specifically perform the Settlement Deed so as to comply with clause 1, co-operate so as to bring about the current market rental determination as at 13 September 2019 and result in the entry into the New Lease between Buckland Valley as lessor and Rossi Recycling as lessee on the basis that I have earlier referred to in Part E above.[391] The precise form of the orders will be addressed with the parties.
Part K: Paul's counterclaim in respect of the Alleged Rossi Debt
592 Clause 6 of the Settlement Deed recorded that the parties agreed that, in relation to the loans recorded in the books of Rossi Recycling, Rossi Recycling was indebted to Paul in the amount of $353,281 as at 30 June 2018. Clause 6 also provided that this loan amount, together with any further loan amounts, shall be wholly discharged upon Rossi Recycling making a payment to Paul of $114,427 by 1 July 2021 and $114,427 by 1 July 2022.
593 As recorded in the Background section of these reasons, Rossi Recycling paid $114,427 to Paul on 1 July 2021. This was said by Rossi Recycling to have been paid pursuant to clause 6 of the Settlement Deed. Paul said, through his lawyers, that the amount would be received as a reduction in the damages payable consequent upon the breach and repudiation of the Settlement Deed and its termination.
594 I have found that the Settlement Deed was not breached, repudiated or terminated. The Settlement Deed remained on foot and under its terms Rossi Recycling was not required to pay the Alleged Rossi Debt of $353,281 to Paul. I also find that, as was stated by Rossi Recycling's solicitors at the time of payment, the payment of $114,427 to Paul by Rossi Recycling on 1 July 2021 was payment of the instalment required to be paid by Rossi Recycling to Paul pursuant to clause 6(a) of the Settlement Deed.
595 That being so, and noting also that the claim that the Settlement Deed was repudiated and terminated has also failed, Paul's allegations that Rossi Recycling was obliged by the terms of the Settlement Deed to pay the Alleged Rossi Debt and that he breached clause 6 of the Settlement Deed by not doing so, have not been made out. Rossi Recycling did not breach the Settlement Deed by not paying Paul the Alleged Rossi Debt and Paul's counterclaim for damages (or for the payment of this amount)[392] fails.
596 I add that, at the time of the hearing, the date for payment of the second instalment by Rossi Recycling to Paul pursuant to clause 6(b) of the Settlement Deed had not arrived, and on the evidence before me it is not currently known whether this amount was paid by 1 July 2022 or some other arrangement was made - although no application in relation to this matter has been foreshadowed or made by any party. That said, I will allow the parties to make submissions in connection with the grant of specific performance as to whether any conditions should be imposed relating to the payment of the second instalment if it has not already been paid.
597 Given the large number of issues raised by the parties, it is likely of assistance to collect together a summary of the primary conclusions reached above. Of course the conclusions as expressed should not be considered in isolation but in the context of the more detailed discussion in other parts of these reasons. The summary is set out in the paragraphs that follow.
598 It was the parties' objective intention to be immediately bound by the terms of the Settlement Deed, including clauses 2, 3 and 4 of the Settlement Deed.
599 No relevant issue arises as to the date the Settlement Deed came into effect.
600 The commercial purpose and object of the Settlement Deed was to the effect described in Part E.3 above.
601 There were implied terms of the Settlement Deed to the effect of the Co-operation Terms imposing obligations upon the parties to co-operate, as referred to in Part E.4 above.
602 Although what was to be determined pursuant to clause 2(b) of the Settlement Deed was the current market rental for the New Lease Premises at the time the Settlement Deed became operative on 13 September 2019, upon the proper construction of the Settlement Deed it did not provide for the New Lease to come into effect from 1 October 2019.
603 Clause 2 of the Settlement Deed imposes an obligation upon Buckland Valley to enter into the New Lease with Rossi Recycling within a reasonable time.
604 A reasonable time for entering into the New Lease by Buckland Valley was by no later than three months after the 13 September 2019 operative date of the Settlement Deed, or the next business day if that time ended on a non-business day.
605 Pursuant to clause 3 of the Settlement Deed, the 2016 Lease terminates immediately upon Buckland Valley and Rossi Recycling entering into the New Lease.
606 Until the 2016 Lease terminates it remains on foot without variation to the rent or the 2016 Lease Premises.
607 Clause 4 of the Settlement Deed does not alter the terms of the 2016 Lease or require Rossi Recycling to pay any additional amount to Buckland Valley for the licence entitlement the subject of that clause.
608 The terms or words of clause 2(b) of the Settlement Deed were not objectively intended to be transported into the New Lease as an express term of the New Lease. The objective intention of the parties was to have the market rental determination carried out prior to the entry into the New Lease and then to insert the independently determined rental amount as the rent under the New Lease.
609 The premises the subject of the New Lease are as described in the Settlement Deed and are the same as the 2016 Lease Premises except for the first floor of Unit 27, which is excluded.
610 The New Lease commences when it is entered into, which is also when the 2016 Lease terminates.
611 Rossi Recycling was obliged to pay rent under the 2016 Lease in October, November and December 2019.
612 Upon their proper construction, the closing words of clause 2(e) of the Settlement Deed mean such other terms, if any, as are agreed between the parties and are permitted by the RL Act.
613 Neither clause 2, clause 2(e), or the closing words of clause 2(e) are void or unenforceable for uncertainty. Even if the closing words of clause 2(e) had been uncertain, they would be severed.
614 If clause 2, or the whole or first part of clause 2(e), had been uncertain, they would not be severable and the Settlement Deed would have been void or unenforceable for uncertainty.
615 Upon the proper construction of the Settlement Deed, the New Lease referred to in clause 2 was to be on the same terms as the 2016 Lease except for the changes reflected in the Settlement Deed, and clause 2 in particular. Otherwise, the schedule to the New Lease is to be in the same terms as the schedule to the 2016 Lease, as is referred to in Part E.13.1 above.
616 The New Lease is not to contain a term to the effect of the term in Item 22 of the schedule to the 2016 Lease.
617 Paul and Buckland Valley breached the Co-operation Terms of the Settlement Deed by failing to prepare a form of the New Lease document and to provide it Glen and Rossi Recycling within a reasonable time, or at all. A reasonable time was no later than the next business day after four weeks from the 13 September 2019 operative date of the Settlement Deed, namely, by Monday 14 October 2019.[393]
618 Paul and Buckland Valley breached the Co-operation Terms of the Settlement Deed by failing to respond to Glen and Rossi Recycling's suggested valuer within a reasonable time of that suggestion being made on 20 September 2019, or at all. A reasonable time was no later than 14 days after 20 September, 2019, namely, by Monday 7 October 2019.[394]
619 Paul and Buckland Valley did not breach the Settlement Deed by not taking steps to have a valuer appointed by the Australian Property Institute to determine the current market rental for the New Lease Premises pursuant to clause 2(b) of the Settlement Deed. Given Paul and Buckland Valley's breach of the Co-operation Terms in relation to the valuer nominated by Glen and Rossi Recycling, the time for nomination of a valuer by the Australian Property Institute had not arrived. It would have arrived if Paul and Buckland Valley had responded within a reasonable time to Glen and Rossi Recycling's proposed valuer and said they did not agree to the valuer suggested by Glen and Rossi Recycling.
620 Paul and Buckland Valley did not breach the Settlement Deed by demanding rent pursuant to the 2016 Lease for the months of October, November, and December 2019, or by issuing notices of breach or re-entry pursuant to the 2016 Lease alleging a failure to pay rent for those months.
621 The notices of breach dated 18 November and 22 November 2019 issued by Buckland Valley based on the 2016 Lease[395] were valid notices under the 2016 Lease.
622 Paul and Buckland Valley did not breach the Settlement Deed by taking possession of the 2016 Lease Premises insofar as the taking of possession related to the 2016 Lease Premises other than the upstairs of Unit 27.[396] That taking of possession was not wrongful or unconscientious.
623 Paul and Buckland Valley did breach clause 4 and the Co-operation Terms of the Settlement Deed by causing Buckland Valley to take possession of Unit 27 on 8 and 10 December 2019. That taking of possession was therefore wrongful, although it was not established to be unconscientious.
(a) that the next rental to be paid after the entry into the Settlement Deed (which was payable on 1 October 2019) was to be a new market rental for the premises actually leased (that is, excluding the top floor of Unit 27) determined in accordance with clause 2 of the Settlement Deed; or
(b) that the defendants would prepare a New Lease to that effect.
625 Rossi Recycling's estoppel claims[397] have not been established.
626 Glen did not breach the Settlement Deed in one or more of the ways referred to in sub-paragraphs (a) to (f) of Item 10 of the Revised List of Issues (Attachment 2 to these reasons).
627 Rossi Recycling breached the 2016 Lease by not paying rental pursuant to that lease on 1 October, 1 November and 1 December 2019.
628 Rossi Recycling and Glen did commit trespass on 9 December 2019 in the manner referred to in Part H.2.6 above.
629 Neither Rossi Recycling nor Glen repudiated the Settlement Deed by one or more aspects of their conduct, whether each aspect of their conduct is considered alone, together, or in any combination. It follows that neither Buckland Valley nor Paul accepted any repudiation of the Settlement Deed by Rossi Recycling or Glen because the Settlement Deed was not repudiated by either of them.
630 If it had been the case that Glen and Rossi Recycling had repudiated the Settlement Deed by their conduct, including their conduct in connection with the non-payment of rent under the 2016 Lease:
(a) the service of the notices of breach under the 2016 Lease, the service of the notices of re-entry under the 2016 Lease, the taking of possession of the 2016 Lease Premises, and the taking of preliminary steps in connection with a sale of the 2016 Lease Premises, would not have amounted to an effective acceptance of repudiation or effective election to terminate the Settlement Deed;
(b) Paul affirmed the Settlement Deed by signing and sending to Glen and Rossi Recycling the notices of resignation and appointment relating to the RP Trust pursuant to clause 1(c) of the Settlement Deed on 25 November 2019;
(c) if non-payment of rent on 1 December 2019 under the 2016 Lease had been a repudiation of the Settlement Deed, Paul's statement in paragraph 33 of his affidavit[398] of 12 December 2019 would have amounted to an effective acceptance by Paul and Buckland Valley of repudiation and an effective election to terminate the Settlement Deed from the time of receipt of the affidavit on 12 December 2019 by Glen and Rossi Recycling; and
(d) assuming a repudiation of the kind referred to in sub-paragraph (c), absent a fresh agreement between the parties, any conduct of Paul and Buckland Valley subsequent to 12 December 2019 in connection with Unit 27 or acceptance of the payment made on 1 July 2021 by Rossi Recycling (or other aspects of the Settlement Deed) would not have altered the fact that the Settlement Deed would have come to an end as a result of Paul and Buckland Valley's election on 12 December 2019 to terminate the Settlement Deed.
631 The top floor of Unit 27 remained as part of the 2016 Lease Premises under the 2016 Lease, which was on foot when possession of Unit 27 was taken by Buckland Valley in March 2020. Rossi Recycling was entitled to its right of quiet possession of the 2016 Lease Premises, and the terms of the Settlement Deed did not provide Buckland Valley with the right to take possession of the top floor of Unit 27 in March 2020 because the 2016 Lease remained on foot at that time.
632 The other parts of Unit 27 were not part of the 2016 Lease Premises and the taking of possession of those parts of Unit 27 by Buckland Valley or Paul at the end of the six-month licence period referred to in clause 4 of the Settlement Deed did not result in any failure to give quiet possession of the 2016 Lease Premises to Rossi Recycling.
633 Rossi Recycling is entitled to relief requiring Paul and Buckland Valley to specifically perform their respective obligations under the Settlement Deed, including the obligations under clause 1, the Co-operation Terms, and the entry into the New Lease pursuant to clause 2 at the independently determined current market rental as at 13 September 2019.
634 Given the findings made, Buckland Valley and Paul's counterclaim seeking a declaration that the Settlement Deed was repudiated by Glen and Rossi Recycling and terminated by Paul and Buckland Valley's acceptance of that repudiation fails.
635 Paul's counterclaim in respect of the Alleged Rossi Debt and the waste bins has not been made out and will be dismissed.
636 As noted at the commencement of these reasons, the trial was split at the request of the parties and this part of the trial did not address any damages or compensation issues. Primarily this was because it was first necessary to determine whether the Settlement Deed was terminated, whether alleged breaches by Paul and Buckland Valley were established, and whether specific performance was to be ordered. If specific performance was to be granted, it was considered to be necessary to allow the independent market rental valuation process to occur before considering any damages or compensation questions given the significance of the market rental assessment to any damages assessment.
637 When addressing the terms of the orders to be made granting specific performance I will also address with the parties appropriate directions for the future conduct of the proceeding.
638 Relief from forfeiture orders were made by Macaulay J on 13 December 2019. It was not suggested by the defendants or the plaintiff that they did not take effect permanently. That relief was ordered by Macaulay J for the reasons he then gave, applying the well-established principles he referred to. Given the manner in which Macaulay J's orders are expressed, I will hear from the parties as to whether any further final orders are necessary to be made regarding such relief. If further orders are necessary, and having regard to the facts to which I have referred, the findings made, the conclusions reached, and the applicable principles regarding relief from forfeiture, it is clear that such orders should be made.[399]
639 The plaintiff has succeeded in its claim for breach of the Settlement Deed against Paul and Buckland Valley and is entitled to orders requiring Paul and Buckland Valley to specifically perform their respective obligations under the Settlement Deed. The issue of damages is to be dealt with in the next phase of the proceeding.
640 Buckland Valley and Paul have failed in their counterclaim seeking a declaration that the Settlement Deed was repudiated by Glen and Rossi Recycling. This counterclaim will be dismissed.[400]
(a) against Glen and Rossi Recycling seeking damages for breach of the Settlement Deed in relation to the waste bins;
(b) against Rossi Recycling for damages or payment of an amount of money (and interest) in respect of the Alleged Rossi Debt.
642 The precise form of orders to be made and the question of costs will be further addressed with the parties, including:
(a) the terms of the orders to effect specific performance of the Settlement Deed by Paul and Buckland Valley;
(b) whether the position with the Last Bin, or payment of the second instalment under clause 6(b) of the Settlement Deed, should be addressed by way of any conditions in connection with the orders granting specific performance; and
(c) directions for the future conduct of the remaining issues in the proceeding.






(a) failing or refusing, or continuing to fail or refuse, to draft a lease?
(b) failing or refusing, or continuing to fail or refuse, to respond to the plaintiff's proposal for a valuer in its letter of 20 September 2019?
(c) if they did not agree to Rossi Recycling's proposal of a valuer, failing or refusing, or continuing to fail or refuse, to agree or propose to refer the question of market rent to the Australian Property Institute to nominate a valuer in accordance with clause 2 of the Settlement Deed?
(d) demanding rent pursuant to the 2016 Lease for the months of October 2019, November 2019 and December 2019 and thereafter?
(e) issuing notices of breach alleging failure to pay rent pursuant to the 2016 Lease?
(f) taking possession of the premises (including Unit 27) for failure to remedy the defaults referred to in the notices of breach issued under the 2016 Lease?
(a) 18 November 2019; and
(b) 22 November 2019
(a) 1 October 2019?
(b) 1 November 2019?
(c) 1 December 2019?
If so, did such an obligation continue by reason of the defendants' breaches of the Settlement Deed?
(a) The next rental to be paid after the entry into the Settlement Deed (which was payable on 1 October 2019 in advance for the month of October 2019) was to be market rental for premises actually leased (that is, excluding Unit 27) determined in accordance with clause 2 of the Settlement Deed?
(b) They would prepare a new lease, inter alia giving effect to the above?
(a) Did Rossi Recycling rely on them to its detriment?
(b) Was it, or would it be, unconscionable for Paul and Buckland Valley to resile from those representations by:
(i) failing to prepare a lease with effect from 1 October 2019, or within such other reasonable time as the Court determines?
(ii) asserting an entitlement to rent pursuant to the 2016 Lease for the months of October, November and December 2019 and thereafter?
(iii) issuing notices of breach for failure to pay rent pursuant to the October 2016 Lease for the months of October, November and December 2019?
(iv) taking possession of the premises (including Unit 27) for failure to pay rent pursuant to the 2016 Lease for the months of October, November and December 2019?
(c) Are Paul and Buckland Valley thereby estopped from doing so?
(a) taking steps to appoint himself as a director of Rossi Recycling and terminate Paul as a director of Rossi Recycling without the authorisation or consent of Paul?
(b) taking steps to transfer Paul's shares in Rossi Recycling to Glen without the authorisation or consent of Paul?
(c) filing forms with ASIC to reflect (a) and (b)?
(d) refusing Paul access to the Rossi Recycling premises to permit Paul to take possession of commercial waste bins?
(e) failing to give Paul possession of commercial waste bins?
(f) causing the 2016 Lease to be terminated?
(a) breach the 2016 Lease by failing to pay rent for the months of October 2019, November 2019 and December 2019?
(b) demand, or evince an intention, that Rossi Recycling would not remedy the alleged breaches of the 2016 Lease unless Buckland Valley agreed to a monthly rent of $16,666 payable under that lease?
(c) deny the existence of any ongoing monthly tenancy over the premises?
(d) deny the existence of the 2016 Lease?
(e) refuse or fail to recognise Buckland Valley's contractual rights under the 2016 Lease or any existing lease?
(f) commit trespass by re-taking possession of the premises in December 2019?
(g) by any or all of that conduct, cause the 2016 Lease to be terminated?
(a) engaged in the conduct referred to in paragraph 10 above;
(b) engaged in the conduct referred to in paragraph 11 above;
did that conduct, whether alone or in combination, amount to a repudiation of the Settlement Deed by Glen and/or Rossi Recycling?
(a) accept any repudiation of the Settlement Deed by Glen and/or Rossi Recycling?
(b) affirm the Settlement Deed?
(a) Done under the terms of the Settlement Deed?
(b) An affirmation of the Settlement Deed?
(c) Alternatively, a failure to give quiet possession of the premises during the term of the tenancy in accordance with the 2016 Lease, and a breach of that lease?
(The issues raised on the Counterclaim are addressed under issues 9 to 13 above.)





[1] As the parties did at the hearing and in submissions, for ease of understanding in these reasons I respectfully refer to the family members by their first names.
[2] See consent orders of Connock J made 16 June 2021 as amended by consent orders made on the first day of trial on 19 October 2021.
[4] Clause 1 of the Settlement Deed recorded that Paul agreed to, among other things, resign forthwith as director of Rossi Recycling and transfer forthwith to Glen, or at his direction, Paul's shares in Rossi Recycling.
[5] This description was part in typed text and part in handwriting, with the underlined parts above indicating the handwritten part. The underlining does not appear in the original.
[6] It was also common ground between the parties that the 2016 Lease was in place between the parties with effect from 1 October 2016, notwithstanding that it had not been signed.
[7] Noting that the reference in note 6.2 of the Land Diagram to 'Lots 13 and 14' is intended to be a reference to 'Lots 14 and 15'.
[8] And subject to the disputes and issues addressed in this proceeding that are dealt with in these reasons.
[9] With the four further options each of five years. As will be seen, in this proceeding the defendants contend that the agreement to lease was not intended to be immediately binding and, among other things, that the Settlement Deed was repudiated by Rossi Recycling in any event.
[10] But not including the upstairs of Unit 27 after the six-month period referred to in clause 4 of the Settlement Deed. This is addressed in more detail later in these reasons.
[11] Noting also that in the end there was only an issue in relation to the Last Bin, which is addressed later in these reasons.
[12] As earlier noted, the 2016 Lease was not executed, but it was common ground between the parties and confirmed to the court that the 2016 Lease was and had been in place between them.
[13] Being $27,909 per calendar month, which later increased to $29,304 per calendar month.
[14] As later discussed, it appears that these forms were lodged on 25 and 30 September 2019, although it makes no difference to the result if they were assumed to have been lodged on 13 or 19 September 2019 as referred to in the chronology. See Part H.1.1 below.
[16] [2019] VSC 825, [16].
[18] The reference in paragraph 4 of the order to January 2019 was a slip and intended to be a reference to January 2020, which slip was corrected by a further order made 13 December 2019.
[19] The basis of the valuation was addressed by reference to various different assumptions and other matters referred to in the terms of the orders made by Connock J on 14 December 2020.
[20] Excluding the plan attached to it referred to in clause 2.
[21] There were no witness statements, but witness outlines had been filed. Aspects of Paul's affidavit affirmed on 12 December 2019 and filed when resisting the application before Macaulay J in December 2019 were also relied upon.
[22] I refer to Ms Fulton's email of 17 February 2020 by way of example.
[23] (1989) 16 NSWLR 582, 587.
[24] Plaintiff's closing written submissions at [49]. Although during oral submissions senior counsel for the defendants sought to characterise this contention by reference to Masters v Cameron principles, the plaintiff did not approach the matter in this way and it was plain that the submission was as to the proper construction of the terms, as the express words of its written submission state. Further, the plaintiff made no such Masters v Cameron submissions in its other submissions relying as it did on the position that the Settlement Deed was intended to be immediately binding.
[25] Which provided that the landlord shall be permitted to construct a new building on S3 industrial one with approval to subdivide as soon as planning has been approved. Upon completion of the construction the tenant shall be entitled to utilise the constructed building and rental shall be reviewed and adjusted between the parties accordingly.
[26] [1956] HCA 53; (1956) 95 CLR 420, 427 (Dixon CJ and Fullagar J) cited with approval in Brew v Whitlock (No 2) [1967] VicRp 102; [1967] VR 803, 807-8.
[27] [2018] VSCA 147 (Maxwell P, Whelan and Kyrou JJA).
[29] Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360.
[30] Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360.
[31] Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360.
[32] [1929] HCA 34; (1929) 43 CLR 310 ('Naughton').
[33] Nurisvan [2017] VSCA 141 [103], citing Naughton [1929] HCA 34; (1929) 43 CLR 310, 317; G R Securities (1986) 40 NSWLR 631, 634; Lucke v Cleary (2011) 111 SASR 134, 149-50 [57]-[58].
[34] Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360-1; Naughton [1929] HCA 34; (1929) 43 CLR 310, 317.
[35] Feldman v GNM Australia Ltd [2017] NSWCA 107 [68]; Moffatt Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60 [37]; Nurisvan [2017] VSCA 141 [103].
[36] Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571, 581-2 ('Meehan').
[37] Meehan [1982] HCA 52; (1982) 149 CLR 571, 589.
[38] Meehan [1982] HCA 52; (1982) 149 CLR 571, 581, 589, 597-8.
[39] [2019] VSCA 91 (Kaye, McLeish and Hargrave JJA).
[40] Nurisvan [2017] VSCA 141 [110] (Osborn, Santamaria and Kaye JJA).
[41] Ibid [106]; G R Securities (1986) 40 NSWLR 631, 634 (McHugh JA with Kirby P and Glass JA agreeing).
[42] Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 97578, 14,563 (Kirby P); Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313; (2015) 90 NSWLR 605, 616-7 [64]-[65] (Beazley P).
[43] Molonglo [2018] VSCA 147 [132] (Maxwell ACJ, Whelan and Kyrou JJA); Nurisvan [2017] VSCA 141 [81]-[84] (Osborn, Santamaria and Kaye JJA); Queensland Phosphate Pty Ltd v Korda [2017] VSCA 269 [37] (Tate and Beach JJA and Sifris AJA).
[44] Nurisvan [2017] VSCA 141 [77] (Osborn, Santamaria and Kaye JJA), citing FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] VicRp 76; [1993] 2 VR 343, 350 (Brooking J); Ryan v Textile Clothing & Footwear Union of Australia [1996] VicRp 67; [1996] 2 VR 235; James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583, 603 (Lord Reid); Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153, 164 [26] (Heydon JA); Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570, 582 [35] (Gummow, Hayne and Kiefel JJ).
[45] Nurisvan [2017] VSCA 141 [110].
[46] Ibid [111], citing Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540, 547-8 (Gleeson CJ with Hope and Mahoney JJA agreeing).
[47] [2018] VSC 326, [38]-[47].
[48] [1954] HCA 72; (1954) 91 CLR 353, 360 (Dixon CJ, McTiernan and Kitto JJ).
[49] Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629, 639 (Walsh J). Also see Niesmann v Collingridge [1921] HCA 19; (1921) 29 CLR 177, 182 (Knox CJ).
[50] (1986) 40 NSWLR 622, 628.
[51] See, for example, Tern Minerals NL v Kalbara Mining NL (1990) 3 WAR 486, 4945 (Ipp J); Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101, 110 [24] (Ipp J, Pidgeon J agreeing); Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44, [86]-[88] (Handley AJA).
[52] GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 6345. (McHugh JA, with whom Kirby P and Glass JA agreed).
[54] 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.
[55] See E Peden, J Carter and G Tolhurst, 'When Three Just Isn't Enough: The Fourth Category of the "Subject to Contract" Cases' (2004) 20 Journal of Contract Law 156, who say at 156: '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, is capable of capturing scenarios thought otherwise to fall within the purported fourth category (at 165-6).
[56] 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).
[57] [2008] NSWCA 248 [26] (with whom McColl JA and Young CJ agreed), a decision reported in [2008] NSWCA 248; (2008) 75 NSWLR 1, but the relevant portion is not included in that report.
[58] 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. That an inquiry as to intention, to be objectively determined, is the decisive issue is additionally confirmed by 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); and Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2016) 329 ALR 1, 110 [702] and 111 [712] (Edelman J).
[59] 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 [65] (Beazley P with whom Bathurst CJ and Meagher JA agreed).
[60] Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, 105 [25] (Gaudron, McHugh, Hayne and Callinan JJ).
[61] Nurisvan Investment Ltd & Anor v Anyoption Holdings Pty Ltd [2017] VSCA 141 [110] (Osborn, Santamaria and Kaye JJA); cited with approval in Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147 [131] (Maxwell ACJ, Whelan and Kyrou JJA).
[62] Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, 105-6 [25] (Gaudron, McHugh, Hayne and Callinan JJ).
[64] Ibid 106 [26]-[27]; Seventh Shar Nominees Pty Ltd v Hortico Pty Ltd [2000] VSC 155, [29] (Mandie J).
[65] GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634 (McHugh JA); cf Sinclair, Scott and Co v Naughton [1929] HCA 34; (1929) 43 CLR 310, 317-18 (Knox CJ, Rich and Dixon JJ).
[66] Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 362 (Dixon CJ, McTiernan and Kitto J).
[67] Niesmann v Collingridge [1921] HCA 19; (1921) 29 CLR 177, 182 (Knox CJ).
[68] Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2016) 329 ALR 1, 110-11 [709]-[710] (Edelman J) and the authorities cited therein. On the effect given to the agreement's terms, see GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634 (McHugh JA); and Sinclair, Scott and Co v Naughton [1929] HCA 34; (1929) 43 CLR 310, 317-18 (Knox CJ, Rich and Dixon JJ).
[69] (unreported, 28 October 1994, NSWCA) 40.
[70] Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] VicRp 55; [1994] 2 VR 106, 137 (Brooking J); Geebung Investments Pty Ltd v Varga Investments Pty Ltd No 8 Pty Ltd (1995) 7 BPR 97,578, 19 (Kirby P).
[71] Liquorland (Australia) Pty Ltd v GYG Holdings Pty Ltd (unreported, 28 October 1994, NSWCA (Powell JA) 40; approved in Geebung Investments Pty Ltd v Varga Investments Pty Ltd No 8 Pty Ltd (1995) 7 BPR 97,578, 16 (Kirby P).
[72] Elgas Ltd v AJ Young Industries Pty Ltd (1986) 4 BPR 97,270, 6 (McHugh JA, with whom Mahoney and Priestley JJA agreed); Seventh Shar Nominees Pty Ltd v Hortico Pty Ltd [2000] VSC 155, [29] (Mandie J).
[73] Geebung Investments Pty Ltd v Varga Investments Pty Ltd No 8 Pty Ltd (1995) 7 BPR 97,578, 19 (Kirby P). See also, Elgas Ltd v AJ Young Industries Pty Ltd (1986) 4 BPR 97,270, 5 where Mahoney JA (with whom McHugh and Priestley JJA agreed) said: 'The lawyer's role may be merely that of finalising what is already an operative agreement; or it may be to draw out the implications, and so the questions, inherent in an informal consensus so that the parties may make an operative decision in relation to them. Where it is contemplated that, in relation to such questions, the parties may differ and that, unless a further consensus be arrived at, there will be no binding contract, the initial consensus is not a contract.'
[74] Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 97,023, 9255-6 (McClelland J).
[75] Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 550 (Gleeson CJ, with whom Hope and Mahoney JJA agreed).
[76] Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 97,023, 9255 (McClelland J); Geebung Investments Pty Ltd v Varga Investments Pty Ltd No 8 Pty Ltd (1995) 7 BPR 97,578, 18 (Kirby P).
[77] Nurisvan Investment Ltd & Anor v Anyoption Holdings Pty Ltd (2017) VSCA 141 [110] (Osborn, Santamaria and Kaye JJA); cited with approval in Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147 [131] (Maxwell ACJ, Whelan and Kyrou JJA).
[78] Ibid [111]. Also see Australian Broadcasting Corporation v XIVth Commonwealth Games (1988) 18 NSWLR 540, 549-550 (Gleeson CJ, with whom Hope and Mahoney JJA agreed) and authorities cited therein.
[79] Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147 [132] (Maxwell ACJ, Whelan and Kyrou JJA).
[80] [2021] VSC 365, [326]-[345].
[84] [2017] VSCA 141, [108] (Osborn, Santamaria and Kaye JJA) citing also Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548.
[85] Including with respect to evidence that may be taken into account when addressing a Masters v Cameron enquiry.
[86] See, for example, Molonglo [2018] VSCA 147, 148 (Maxwell P, Whelan and Kyrou JJA) and the cases there cited.
[87] [2018] VSC 326, [41]-[42], citing and adopting what was said by Giles JA in T_asman Capital Pty Ltd v Sinclair_ [2008] NSWCA 248, [26] (with whom McColl JA and Young CJ agreed).
[88] (1986) 40 NSWLR 631, 634-5 (with whom Kirby P and Glass JA agreed). That an inquiry as to intention, to be objectively determined, is the decisive issue is additionally confirmed by 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); and Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2016) 329 ALR 1, 110 [702] and 111 [712] (Edelman J).
[89] No issue was raised regarding the execution of the Settlement Deed by any party.
[90] Noting for completeness that no submission was made to this effect in any event.
[91] Putting to one side a possible tension regarding execution on 6 September 2019, the agreement in clause 14 to dismissal of the proceedings upon execution, and clause 17 and the Settlement Deed coming into effect on 13 September 2019. There was no issue raised between the parties in relation to this aspect and it need not be addressed further.
[94] Or it became effective, which for present purposes is a distinction that does not matter and was not an issue between the parties.
[96] For the avoidance of doubt, the inquiry addressed in these reasons has not been approached with a predisposition in favour of upholding anything (except for the rule of law, properly applied).
[97] I add for completeness that it is not necessary in the circumstances to address the extent to which such evidence is or may be admissible on the objective intention issue.
[100] There is a construction issue regarding the operation of clause 4 of the Settlement Deed in connection with Unit 27 which is addressed later in these reasons.
[103] [2020] VSCA 201 (Whelan JA and Riordan AJA; see also the observations of McLeish JA at [263]-[282], who reached a different conclusion on the facts in relation to the implied obligation to co-operate).
[104] (1881) LR 6 App Cas 251, 263.
[106] [1979] HCA 51; (1979) 144 CLR 596, 607 (Mason J, with whom Gibbs, Stephen and Aickin JJ agreed; Barwick CJ determining the appeal on a narrower basis without disagreeing) ('Secured Income').
[107] [2001] HCA 45; (2001) 205 CLR 126, 142 [36] (Gleeson CJ, Gummow, Kirby and Hayne JJ).
[109] [2014] HCA 32; (2014) 253 CLR 169 ('Commonwealth Bank v Barker').
[115] Commonwealth Bank v Barker [2014] HCA 32; (2014) 253 CLR 169, 189 [29].
[119] Beerens v Bluescope Distribution Pty Ltd [2012] VSCA 209; (2012) 39 VR 1, 13 [54] (Nettle JA) ('Beerens').
[120] McMahon v National Foods Milk Ltd [2009] VSCA 153; (2009) 25 VR 251, 265 [13] (Nettle JA) ('McMahon').
[121] Beerens [2012] VSCA 209; (2012) 39 VR 1, 13 [54].
[122] McMahon [2009] VSCA 153; (2009) 25 VR 251, 265 [13].
[123] Beerens [2012] VSCA 209; (2012) 39 VR 1, 13 [54].
[124] Bell Group NV (in liq) v Insurance Commissioner of Western Australia [2017] WASCA 229, [113].
[125] Wellington and others v Huaxin Energy (Aust) Pty Ltd [2020] QCA 114, [78].
[126] [2021] VSCA 69 (Niall, Emerton and Sifris JJA).
[129] Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126, 142 [36]; [2001] HCA 45 (Gleeson CJ, Gummow, Kirby and Hayne JJ) ('Peters').
[130] (1977) 180 CLR 266 ('BP Refinery').
[131] [1940] AC 701 ('Southern Foundries').
[133] (1979) 144 CLR 596; [1979] HCA 51 ('Secured Income Real Estate').
[135] Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 449; [1995] HCA 24 (McHugh and Gummow JJ); Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32 ('Barker').
[136] [2020] VSCA 201 ('Adaz Nominees').
[141] Park v Brothers [2005] HCA 73, [42] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ), citing Peter Turnbull [1954] HCA 25; (1954) 90 CLR 235, 246-7; [1954] HCA 25.
[144] Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd (1984) 3 NSWLR 613, 614E (Glass JA), 620F (Mahoney JA) and 632D (Priestley JA); Joseph Street Pty Ltd v Tan [2012] VSCA 113; (2012) 38 VR 241, [47] (Warren CJ, Nettle JA and Cavanough AJA).
[146] Ibid 208 [919] (citations omitted).
[147] See JD Heydon, Heydon on Contract (Lawbook, 2019) 845-51 [21.370]-[21.420] and the cases there cited.
[148] At earlier points in the proceeding there had also been an issue regarding the existence or otherwise of an implied term or duty of good faith and questions regarding its breach but this was expressly not pressed or pursued by any of the parties.
[149] [2021] VSC 820, [175]-[182].
[150] [2020] VSCA 199, [36]-[38] (Kyrou, Niall and Hargrave JJA), when construing the terms of a commercial lease.
[151] Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17, 29 (Mason J), 40-1 (Brennan J) and 51-2 (Deane J); [1985] HCA 14.
[152] [2015] HCA 37; (2015) 256 CLR 104, 116-7 [46]-[51]; [2015] HCA 37 (citations omitted).
[153] [2017] HCA 12; (2017) 261 CLR 544, 551 [16]-[17]; [2017] HCA 12 (citations omitted).
[154] Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109; [1973] HCA 36 (Gibbs J).
[155] Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522, 529 [16]; [2005] HCA 17 (Gleeson CJ, McHugh, Gummow and Kirby JJ).
[156] [1987] HCA 64; (1987) 168 CLR 147, 155; [1987] HCA 64 (Mason CJ, Wilson, Dawson and Gaudron JJ).
[157] [2019] VSCA 144 (Whelan, McLeish and Emerton JJA).
[158] Electricity Generation Co v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] ('Woodside').
[160] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104, 116 [48] ('Mount Bruce Mining').
[161] Codelfa Constructions Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352 ('Codelfa'); Apple and Pear Australia Ltd v Pink Lady America LLC (2016) 343 ALR 112; [2016] VSCA 280 [231]-[232] (Ferguson and McLeish JJA); see also [92]-[139] (Tate JA) ('Apple and Pear').
[162] [2016] VSCA 280, [92]-[139] (Tate JA), [231]-[232] (Ferguson and McLeish JJA).
[163] PCCEF [2019] VSCA 144, [55].
[164] [2020] VSC 126, [87]-[88].
[165] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] (French CJ, Hayne, Crennan, and Kiefel JJ) ('Woodside'); 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').
[166] 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').
[168] 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); Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216; (2012) 45 WAR 29, 50 [76] (McLure P, with whom Newnes JA and Le Miere J agreed) ('Hancock').
[169] Lopes v Taranto [2018] VSCA 288, [66]-[72] (Kyrou, McLeish and Hargrave JJA), quoted with approval in Canale v G W & R Mould Pty Ltd [2018] VSCA 346, [45] (Whelan and McLeish JJA with whom Tate JA agreed). Cf Hancock [2012] WASCA 216; (2012) 45 WAR 29, 50 [76] where the Western Australian Court of Appeal took the contrary view.
[170] Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 116-7 [46], [49] (French CJ, Nettle and Gordon JJ).
[171] Siemens [2020] VSC 126, [89]-[109].
[172] [2017] HCA 12; (2017) 261 CLR 544, [97]-[98].
[173] [1997] AC 313 at 388 (Lord Goff of Chieveley, Lord Griffiths and Lord Browne-Wilkinson agreeing at 381).
[174] Arnold v Britton [2015] AC 1619 at 1628 [18] per Lord Neuberger of Abbotsbury PSC, with whom Lord Sumption and Lord Hughes JJSC agreed (Lord Hodge JSC agreeing at 1637 [66]).
[175] Mitsui Construction Co Ltd v Attorney General of Hong Kong (1986) 33 BLR 1 at 14, cited with approval in Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) [2001] EWCA Civ 1466; [2001] 2 All ER (Comm) 299 at 306 [13] per Mance LJ.
[176] Mitsui Construction 33 BLR 1 at 14. See also Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 at 2910 [210] per Lord Clarke of Stone-cum-Ebony JSC, with whom Lord Phillips of Worth Matravers PSC, Lord Mance, Lord Kerr of Tonaghmore and Lord Wilson JJSC agreed.
[177] Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 at 300 per Isaacs J; Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 at 437 per Barwick CJ; compare Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] UKHL 19; [1997] AC 749 at 770-1; per Lord Steyn; Society of Lloyd's v Robinson [1999] UKHL 22; [1999] 1 WLR 756 at 763; per Lord Steyn (the other Law Lords agreeing at 758, 767‑8).
[178] Photo Production Ltd v Securicor Transport Ltd [1980] UKHL 2; [1980] AC 827 at 851; per Lord Diplock. See also Arnold v Britton [2015] AC 1619 at 1628 [18] per Lord Neuberger PSC, with whom Lord Sumption and Lord Hughes JJSC agreed (Lord Hodge JSC agreeing at [66]).
[179] Johnson v American Home Assurance Co [1998] HCA 14; (1998) 192 CLR 266 at 272 [19] per Kirby J; Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 388 per Lord Mustill (Lords Goff, Griffiths and Browne-Wilkinson agreeing at 381.
[180] [2022] VSCA 102, [27]-[29] (Kyrou, McLeish and Walker JJA).
[182] (1982) 149 CLR 537; 41 ALR 441, 463 (Brennan J).
[183] In this regard reference was made to the Brindley Report and another previously obtained rental valuation report - although in further closing submissions on 14 December 2021 counsel for both parties agreed that the Brindley Report was not to be relied upon for valuation purposes in this part of the hearing.
[184] I add for completeness that the dollar amount of rent payable under the 2016 Lease was not controversial, as was also evident from the evidence, reasons and orders in the application before Macaulay J.
[185] Referring in this context to Primary Flooring Pty Ltd v Australian Comfort Group Pty Ltd [2019] VSC 104, [43] (Croft J).
[186] Hick v Raymond and Reid [1892] UKLawRpAC 51; [1893] 1 AC 22; Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1 (Dixon J); Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537, 543 (Gibbs CJ), 554 (Mason J), 567-8 (Brennan J).
[187] Cavallari v Premier Refrigeration Co Pty Ltd [1952] HCA 26; (1952) 85 CLR 20, 27-8 (Dixon CJ, McTiernan, Fullagar and Kitto JJ).
[188] [1919] 1 KB 78, 83.
[189] Harrop Engineering Australia Pty Ltd v Beauville Pty Ltd [2016] VSC 17, [128] (Elliott J).
[191] While Emmett AJA disagreed with the conclusions reached by the President in relation to the question of whether the Transition Date occurred and whether the second HOA came into operation, he agreed with the conclusion reached by the President on all other questions including the contentions around 'reasonable time', see page 680-1 and [218].
[192] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352 (Mason J); [1982] HCA 24; Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184, [69]-[74] (Leeming JA; Ward and Emmett JJA agreeing).
[193] JD Heydon, Heydon on Contract (2019, Pyrmont, Lawbook Co) at par 9.1300.
[194] Heydon on Contract at par 9.1520.
[195] [1997] 1 VR 564, 572-3. See also Harrop Engineering Australia Pty Ltd v Beauville Pty Ltd [2016] VSC 17 (Elliott J).
[196] Or any other parts of the Settlement Agreement.
[197] Which was stated in clause 17 of the Settlement Deed to be at 5pm on 13 September 2019.
[198] I note for completeness that no claim for rectification based on common intention or otherwise in this regard was made or pursued (which is not to suggest that there appeared to be a basis for such a claim).
[199] The position regarding Unit 27 is also addressed in more detail below.
[200] Aspects of which are discussed later in these reasons in the context of the allegations of breach of the obligation to co-operate and the claim for specific performance.
[201] Together with the other areas referred to on the ground floor.
[203] To the extent that the ground floor area referred to in clause 4 was not part of the 2016 Lease Premises, there was an entitlement to a licence to use and occupy that part of Unit 27 for the six months at no cost.
[204] Or the next business day where the end of that period falls on a non-business day.
[205] But noting that the Settlement Deed does not state that time is to be of the essence.
[206] And the additional ground floor area referred to in clause 4.
[207] This is also addressed later below in connection with the taking of possession of Unit 27 by Buckland Valley and Rossi Recycling's right to quiet enjoyment.
[208] But noting the earlier qualifications I have mentioned regarding some misdescription in the 2016 Lease that were agreed and not in issue between the parties.
[209] Although there was controversy between the parties as to when it was intended that the New Lease should take effect from. This was addressed above when dealing with the plaintiff's contention regarding the 1 October 2019 start date.
[210] Which was apparent from the evidence in any event. There were disputes about the construction of clauses 3 and 4 and the date at which it was said that the New Lease was to commence, which I have referred to and determined earlier above.
[211] Without '... any set-off (legal or equitable) or deduction whatever ...' as provided for in clause 2.1.1 of the 2016 Lease.
[212] Footnote not in original. It was common ground between the parties that the RL Act applied to the 2016 Lease and would apply to the New Lease, and no submissions were made to the court on this issue.
[213] These submissions are referred to in more detail in Part E.1.2 above. See also Parts E.6.1 regarding the plaintiff's 1 October 2019 start date contention.
[214] [1956] HCA 53; (1956) 95 CLR 420, 427.
[216] These submissions are referred to in more detail in Part E.1 above. See also Part E.5.2 regarding the plaintiff's 1 October 2019 start date contention.
[217] These and additional submissions were also relied upon in support of the defendants' contention that specific performance should not be granted. This issue is addressed later below.
[218] Referred to in its pleading, although not ultimately pursued in that way by the conclusion of the trial.
[219] (1989) 16 NSWLR 582, 587.
[220] This order appointed an expert to express an opinion on the market rental for the premises during the course of the interlocutory steps in this proceeding, well after the dispute the subject of these proceedings arose. It was hoped by the parties that the appointment may assist in resolving the dispute at a mediation, but this did not come to pass. It was common ground that it was not an appointment pursuant to the terms of the Settlement Deed. The defendants' position in relation to these terms was diluted or muted during oral closing submissions, which is discussed further in Part J below.
[221] [1964] HCA 41; (1964) 112 CLR 597, 606-7.
[222] [1968] HCA 8; (1968) 118 CLR 429, 436-7.
[223] [1932] UKHL 2; (1932) 147 L.T. 503, at p. 512.
[225] (1988) 15 NSWLR 130, 135.
[226] [1994] VicRp 55; [1994] 2 VR 106, 130.
[227] Brooking, Tadgell and JD Phillips JJ.
[230] [1968] HCA 71; (1968) 118 CLR 445 (Kitto J and Taylor, Menzies and Owen JJ, with McTiernan J dissenting).
[232] Whitlock v Brew [1968] HCA 71; (1968) 118 CLR 445, 461.
[243] See Baycorp Advantage Ltd v Royal and Sun Alliance Insurance Australia Ltd [2003] NSWSC 941, [80].
[245] And was established on the evidence in any event. This is not to ignore the correspondence of 4 December 2019 and related matters, which are discussed and addressed later in these reasons in Parts H.2.4, H.2.5, and Part I.
[246] Subject to the agreed position regarding the misdescription of the premises earlier referred to.
[247] But subject to the review provisions in respect of further terms as provided for in Items 16 and 17 of the schedule to, and clause 11 of, the 2016 Lease.
[248] And that the form of the standard form had not changed.
[249] And any necessary consequential amendments.
[250] Subject to the position regarding clause 2(e), which I discuss further below.
[252] As various aspects of the defendants' written and oral submissions suggested.
[253] As opposed to the closing words only.
[254] As opposed to its closing words.
[255] Given the primary conclusion reached it is not necessary for me to add further to the jurisprudential and judicial discussion regarding the use of 'void' or 'unenforceable' in the context of severance and uncertainty.
[256] The Land Diagram and notes recorded that subdivision had occurred in 2018 and that 'S3 Industrial 1' land was what became Lot S4 on the premises diagram attached to the Settlement Deed.
[257] Subject to any consequential amendments.
[259] Subject to any other terms that may be said to relate to such matters that appear in the standard form LIV lease document or are imposed by the RL Act.
[260] For the avoidance of doubt, and as addressed earlier in connection with clause 2(e), there is no obligation on any party to agree to any additional terms requested by any party. If no such additional terms are raised by a party and agreed between them, no additional terms will be included in the New Lease.
[262] Or the next business day where this period ended on a non-business day.
[263] Including the obligations imposed by the Co-operation Terms.
[264] [2021] VSCA 69, [102].
[265] [2012] VSCA 113; [2012[ 38 VR 241, [47].
[266] It was submitted in the alternative that if the 2016 Lease continued then the plaintiff was entitled to remain in possession of the 2016 Lease Premises, including the top floor of Unit 27. This is addressed further in Part I.6 below.
[267] Or the next business day where that period ended on a non-business day.
[268] (2011) 38 VR 24, [47].
[269] It will be recalled that this proceeding was originally commenced as a proceeding seeking specific performance and relief from forfeiture and that relief from forfeiture was granted by the orders of Macaulay J made on 13 December 2019, with such relief being made conditional upon the payment of rent under the 2016 Lease for the months of October, November and December 2019, which was paid on 12 December 2019.
[273] [Ibid]/Pan Foods [2000] HCA 20; (2000) 170 ALR 579, 584-5 [24].
[274] [1997] UKHL 19; [1997] AC 749, 767-771.
[275] [2005] VSCA 29 [78]-[82].
[276] [2014] VSCA 289; (2014) 45 VR 245, 253-4 [28]; see also Yan v Zhang [2018] VSC 694 [111] (Kennedy J).
[278] MLW [2005] VSCA 29, [78]-[82] (citations omitted).
[279] I note also that the notices were not challenged on any other basis other than those referred to above. In any event, on the evidence and submissions before me there did not emerge any other valid basis for challenging the validity of the notices.
[280] I infer with the assistance of his solicitors or accountant - although it matters not if this was not so.
[281] Which was also referred to by the plaintiff's counsel in opening.
[282] Having regard to the evidence, to date Paul has not signed forms for his resignation as a director of Rossi Recycling or the transfer of the shares in Rossi Recycling to Glen.
[283] And it was not suggested that Glen was not acting in the capacity as a director of Rossi Recycling after 13 September 2019, which the evidence clearly showed that he was. Senior counsel for Paul also stated in closing oral submissions that because Glen had already changed the ASIC register there was nothing else left for Paul to do to effect the resignation and transfer, thereby at least implicitly accepting or contending that the resignation and transfer had been effected. Glen was at least a director within the meaning of s 9 of the Corporations Act 2001 (Cth) of Rossi Recycling at all relevant times, given that he was acting as a director of Rossi Recycling. However, this was not an issue in the proceeding and need not be addressed further. As to the position of third parties regarding the assumptions that may be made about entries in the ASIC register see, for example, ss 128 and 129 of the Corporations Act 2001 (Cth).
[284] And it was not suggested that there were other implied terms that were breached in this regard.
[285] As alleged in paragraph 21 of the defendants' counterclaim.
[286] [2020] VSCA 201, [71] (Whelan JA and Riordan AJA).
[287] BP Refinery v Hastings (1977) 180 CLR 266, 283 (Lord Simon, Viscount Dilhorne and Lord Keith) adopted in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 605-6 (Mason J).
[289] Which, as Glen said, was not a waste bin truck.
[290] Which was not referring to the waste bins the subject of the Settlement Deed.
[292] Having regard to the terms of those documents, and noting the terms of clause 1 of the Settlement Deed, I also accept the plaintiff's submission that these documents were straightforward and simple and could have been executed without delay - noting further that Paul had agreed in clause 1 of the Settlement Deed to 'resign forthwith' and to transfer the shares 'forthwith'.
[293] Or any other of the waste bins referred to in clause 12 of the Settlement Deed.
[294] See defendants' written closing submissions [32].
[295] [2000] VSC 443, [91]. And the observation in that case by Warren J that '... one party to a contract ought not be allowed to rely upon a breach of a duty of good faith if it is in breach of that duty itself.'
[296] Or any other term of the Settlement Deed.
[297] Which conclusion holds even if, contrary to the above, I had determined that Glen or Rossi Recycling breached the Settlement Deed by non-payment of rent for October, November and December 2016 and the non-compliance with the demands for the same.
[298] Or otherwise comply with its terms.
[299] See generally the discussion in Part E.4 above.
[301] See generally RP Belkin and JLR Davis, Law of Torts (LexisNexis Butterworths, 5th ed, 2013) ch 5.
[302] Which the parties did not do either.
[303] Which for the avoidance of doubt is not to suggest that it ought to have.
[304] See issue 12 in Attachment 2 to these reasons.
[305] Whether considered alone or in combination with any one or more of the other circumstances addressed above.
[306] [1982] HCA 47; (1982) 149 CLR 620, 625.
[307] (1874) I.R. 9 C.P. 208, at p. 213.
[308] [1940] 3 All E.R. 60, at p. 72.
[309] [1953] HCA 31; (1953) 89 C.L.R. 327, at p. 351.
[310] [1982] HCA 47; (1982) 149 CLR 620, 633.
[311] [1940] 3 All E.R. 60, at p. 71.
[312] (1884) 9 App. Cas. 434, at p. 439.
[315] [2007] VSCA 257, [9], [112].
[316] [1989] HCA 23; (1989) 166 CLR 623, 657-658.
[317] [1940] 3 All E.R. 60, at p. 71.
[318] (1893) 20 R. (H.L) 47, at p. 48.
[319] 1922 S.C. (H.L.) 173, at p. 190.
[320] [2007] HCA 61; (2007) 233 CLR 115, [44].
[321] Heyman v Darwins Ltd [1942] AC 356 at 378; Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620 at 625-626.
[322] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 634 per Mason CJ.
[323] Heyman v Darwins Ltd [1942] AC 356 at 397.
[324] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 659.
[325] See Carter, Breach of Contract, 2nd ed (1991), p217.
[326] eg, Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286 at 304-305; Associated Newspapers Ltd v Bancks [1951] HCA 24; (1951) 83 CLR 322.
[331] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623, 647 (Brennan J). The repudiation might, of course, be express; in which case the task is unlikely to be difficult. Note also that in some circumstances a defaulting party's bona fide but mistaken belief in the correctness of its conduct can be relevant. See these reasons at [49].
[332] [1980] 1All ER 571, 586. To the same effect, in Ross T Smyth & Co Ltd v TD.; Bailey, Son & Co [1940] 3 All ER 60, 72 Lord Wright took into account, in considering whether repudiation had been established, 'the whole course of the transaction, before and after' the sending of an invoice which was relied upon by the party alleging repudiation
[333] Ross T Smyth, citation fn 19, 72 (Lord Wright).
[334] See the discussion in Paterson, Robertson & Heffey, Principles of Contract Law, (2nded, 2005), paras 22.60 to 22.65.
[335] DTR Nominees Pty Ltd v Mona Homes Pty Ltd and Anor [1978] HCA 12; (1978) 138 CLR 423, 432-433.
[336] [2013] NSWCA 303, [85]-[86].
[337] [2014] NSWCA 190, [62]-[63].
[338] [2018] VSC 132, [125].
[339] [2019] VSC 250, [36].
[340] [2021] VSC 97, [913].
[341] [2016] VSC 221, [158]-[159].
[342] Which is how the defendants described it in one part of their submissions.
[343] [2000] VSC 443, [87].
[346] [1978] HCA 12; (1978) 138 CLR 423, 432 (Stephen, Mason and Jacobs JJ).
[347] To the extent it was agreed or found to have occurred.
[348] To the extent that it was submitted that this correspondence did not display a reasonable or co-operative approach by Glen or Rossi Recycling, I do not accept that submission, remembering also that a time was suggested after business had concluded for the day for the visit to occur and that it was not unreasonable to be asking for the resignation and transfer.
[351] Which is not to ignore my earlier observations regarding trespass.
[355] [1993] HCA 27; (1993) 182 CLR 26, 39, 42.
[356] However, see, for example, JD Heydon, Heydon on Contract (Lawbook, 2019) 921-3 [24.420]-[24.540] and the cases there cited.
[357] Which did not proceed at that time in any event.
[358] See, for example, JD Heydon, Heydon on Contract (Lawbook, 2019) 1155-64 [31.640]-[31.920].
[359] Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37, 36 [115].
[360] Carr v JA Berriman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327, 348 [17].
[361] Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634, 646; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26, 42 (Deane, Toohey, Gaudron and McHugh JJ).
[362] See JD Heydon, Heydon on Contract (Lawbook, 2019) 1163 [31.870].
[363] [1976] HCA 21; (1976) 136 CLR 444, 451-2.
[364] Assuming that the Settlement Deed had been repudiated, which it had not been.
[365] And were also the subject of Rossi Recycling's entitlement to a licence under clause 4 of the Settlement Deed.
[366] It was common ground that the terms of the standard LIV lease document for the 2016 Lease were the same as the terms of standard form LIV lease document referred to in clause 2(e) of the Settlement Deed. I add for completeness that this was not a case where it was ultimately suggested by either party that the court could or should insert other clauses that it considered to be reasonable, which was a proper position for the parties to take, and sits well with the conclusions I have reached in any event. Even if such a submission had been made, given the absence of any meaningful or expert evidence on the topic, the court would not in the circumstances of this case have been in a position to do so in any event.
[367] It will be recalled that this aspect was also addressed when dealing with issues of construction in Part E above.
[368] It was earlier determined in Part E above that the New Lease is not to include a term to the effect of the term in Item 22 of the schedule to the 2016 Lease.
[369] I refer also to my observations in the Background section above regarding the misdescription of the 2016 Lease Premises (in part) in the schedule and my references to the Land Diagram forming Attachment 1 to these reasons.
[371] ICF Spry, Equitable Remedies (Lawbook, 9th ed, 2014).
[372] Which, absent agreement, are to be further addressed in the next phase of this proceeding.
[373] And from which aspects of the following paragraphs have been drawn. See, for example, JD Heydon, Heydon on Contract (Lawbook, 2019) ch 27; ICF Spry, Equitable Remedies (Lawbook, 9th ed, 2014) ch 3; JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) ch 20; David Wright, Principles of the Australian Law of Remedies (Lawbook, 2020) ch 12; W Covell, K Lupton and L Parsons, Lovell & Lupton Principles of Remedies (LexisNexis Butterworths, 7th ed, 2019) ch 7.
[374] A discussion of these matters and the jurisprudence relating to the same is not germane for present purposes.
[375] One area of judicial and other discourse relates to the extent to which damages being an adequate remedy is to be seen as a 'jurisdictional' requirement rather than a factor relevant to the exercise of the discretion. This is not a matter that needs to be addressed for the purpose of this proceeding.
[376] Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd [2019] VSC 825, [25].
[377] [1965] HCA 18; (1965) 113 CLR 295, 307-309.
[379] [2002] VSC 440 (Nettle J). It may also be noted that Nettle J observed at [199] that damages will not ordinarily be regarded as an adequate remedy for breach of an agreement to lease, because of the unique value which is ascribed to land. This observation resonates in this case in the context of damages being an inadequate remedy.
[380] [1923] HCA 12; (1923) 31 CLR 524 at 549-550.
[381] [1965] HCA 18; (1965) 113 CLR 295 at 307-8.
[382] And see Meagher, Gummow and Lehane, Equity Doctrines and Remedies, at [2024].
[384] Or in relation to any other conduct of Glen or Rossi Recycling.
[385] [2002] VSC 440. I also refer generally to JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) [3-090]-[3-120].
[387] [2002] VSC 440, [243].
[388] Pacta sunt servanda in equity as much as at law: Axelsen v O'Brien [1949] HCA 18; (1949) 80 CLR 219 at 226.
[389] Dowsett v Reid [1912] HCA 75; (1912) 15 CLR 695.
[390] As to some of the discussion regarding supervision not always being seen as a material impediment, see, for example: Co-op Insurance Society Ltd v Argyll Stores Holdings [1997] UKHL 17; [1998] AC 1; Riltang Pty Ltd v L Pty Ltd (2004) 12 BPR 22, 347, [51]; Patrick Stevedores Operation No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1.
[391] And subject to any consequential adjustments.
[392] Noting for completeness that damages are claimed in the prayer for relief and it is pleaded as a breach of contract claim in paragraphs 65 to 69 of the pleading filed 26 October 2021 (although the heading to that section of the pleading refers to the Alleged Rossi Debt as a debt due).
[393] Which takes into account that a period of four weeks after 13 September 2019 ended on Saturday 12 October, 2019, which was not a business day.
[394] Which takes into account that a period of 14 days after 20 September 2019 ended on Saturday 5 October, 2019, which was not a business day.
[395] As opposed to the alternative notice based on a month-to-month tenancy.
[396] The other parts of Unit 27 were not part of the 2016 Lease Premises, although they were the subject of the licence entitlement in clause 4 of the Settlement Deed.
[397] Being the promissory estoppel and estoppel by deed claims referred to in Items 8 and 9 of the Revised Issues List and addressed in Part G above.
[398] Which was made on behalf of Buckland Valley and filed on behalf of both defendants.
[399] And it was not suggested otherwise by any party.
[400] Although the prayer for relief records Buckland Valley as the party that seeks this relief, paragraph 51 of the pleading (filed 26 October 2021) records that both Paul and Buckland Valley seek a declaration in relation to the repudiation and termination of the Settlement Deed.
[401] Adjusted in part according to the defined terms used in these reasons.
Rossi Recycling Pty Ltd
Buckland Valley Pty Ltd & Anor [2022] VSC 467
(1905) 3 CLR 419
(1946) 73 CLR 1
(1952) 85 CLR 20
(1982) 149 CLR 537
(1988) 14 NSWLR 438
(2012) 60 MVR 456
(2008) 238 CLR 570
(1968) 118 CLR 429
(1995) 36 NSWLR 709
(1974) 4 ALR 438
(1949) 80 CLR 11
(1940) 63 CLR 161
(1975) 12 SASR 481
(1989) 18 NSWLR 398
(1992) 27 NSWLR 326
(1994) 122 ALR 637
(1994) 49 FCR 155
(1908) 7 CLR 617
(1923) 32 CLR 81
(1923) 32 CLR 159
(1988) 18 NSWLR 540
(1988) 164 CLR 539
(1995) 185 CLR 410
(1987) 16 FCR 314
(1992) 28 NSWLR 17
(1960) 104 CLR 206
(1989) 16 NSWLR 582
(1982) 149 CLR 600
(1991) 24 NSWLR 1
(1954) 91 CLR 353
(1973) 129 CLR 629
(1991) 30 FCR 300
(1925) 36 CLR 60
(1968) 118 CLR 445
(1990) 20 NSWLR 251
(1990) 3 WAR 486
(1956) 95 CLR 420
(1969) 121 CLR 432
(1975) 133 CLR 331
(1929) 43 CLR 310
(1986) 40 NSWLR 631
(2011) 111 SASR 134
(1982) 149 CLR 571
(2015) 90 NSWLR 605
(2001) 53 NSWLR 153
(1921) 29 CLR 177
(1986) 40 NSWLR 622
(2000) 22 WAR 101
(1985) 2 NSWLR 309
(2008) 75 NSWLR 1
(2013) 46 VR 447
(2016) 329 ALR 1
(2002) 209 CLR 95
(1979) 144 CLR 596
(2001) 205 CLR 126
(1931) 45 CLR 359
(2014) 253 CLR 169
(2012) 39 VR 1
(2009) 25 VR 251
(1977) 180 CLR 266
(1954) 90 CLR 235
(1989) 168 CLR 385
(1984) 3 NSWLR 613
(2012) 38 VR 241
(2003) 128 FCR 1
(1985) 157 CLR 17
(2015) 256 CLR 104
(2017) 261 CLR 544
(1973) 129 CLR 99
(2005) 221 CLR 522
(1987) 168 CLR 147
(2014) 251 CLR 640
(1982) 149 CLR 337
(2016) 343 ALR 112
(2012) 45 WAR 29
(1917) 24 CLR 288
(1998) 192 CLR 266
(2019) 58 VR 393
(2019) 101 NSWLR 679
(2014) 89 NSWLR 633
(1964) 112 CLR 597
(1988) 15 NSWLR 130
(2001) 187 ALR 302
(2002) 54 NSWLR 503
(2009) 74 NSWLR 618
(2011) 38 VR 24
(1990) 21 NSWLR 689
(1991) 25 NSWLR 286
(2000) 170 ALR 579
(2014) 45 VR 245
(1982) 149 CLR 620
(1989) 166 CLR 623
(2007) 233 CLR 115
(1938) 61 CLR 286
(1951) 83 CLR 322
(1978) 138 CLR 423
(1974) 131 CLR 634
(1993) 182 CLR 26
(1953) 89 CLR 327
(1976) 136 CLR 444
(1965) 113 CLR 295
(1923) 31 CLR 524
(1949) 80 CLR 219
(1912) 15 CLR 695
(1998) 195 CLR 1