Plaintiffs v Defendant

1 This proceeding raises as the central issue whether there is a mistake in the formula for the calculation of variable outgoings payable under a lease between the Plaintiffs as landlords and responsible entity, and Myer Pty Ltd ("Myer") as tenant under a lease executed on 4 September 2001 ("the Lease") of its department store ("the premises") at the Chadstone Shopping Centre ("Chadstone"). The term of the Lease is 30 years commencing on 23 November 1998; together with one option for a further term of 15 years.

2 More particularly, the central issue arises with respect to cl 3(b) of the Fourth Schedule to the Lease which concerns the calculation of Myer's contribution, as tenant, to increases in variable outgoings. The Plaintiffs contend that there is a mistake in these Lease provisions in that the reference in cl 3(b) to "the immediately preceding Accounting Period" should be a reference to "the Base Accounting Period". For convenience in these reasons, this is referred to as "the Mistake". Such a reference does not, however, pre-empt the question whether there is a relevant mistake.

3 The registered proprietors of Chadstone are the First Plaintiff ("Perpetual") and the Second Plaintiff ("Bridgehead"). During the relevant period, Perpetual has held 50% of Chadstone as trustee of, or custodian for, a publicly listed trust. Gandel Management Limited ("GML") was manager and then responsible entity of the trust. In 2002, the Third Plaintiff ("Vicinity") replaced GML as responsible entity of the trust and assumed GML's rights with respect to the Lease. Perpetual, Bridgehead and GML, and for the period after October 2002 Perpetual, Bridgehead and Vicinity, are collectively referred to as the "Plaintiffs".

4 In the event of a finding that there was a Mistake, the next question is whether the Court should correct the Mistake, either by a process of construction or by means of the equitable remedy of rectification. These questions, in turn, also require consideration of the various defences raised by Myer, which include - with respect to rectification - acquiescence and laches. Additionally, Myer raises and relies upon the statute of limitations and also the application of the common law cause of action of account stated.

5 In the event that a Mistake is found and none of the Myer defences are successful, the Plaintiffs seek from Myer a payment in respect of an underpayment of increases in variable outgoings. It is the common position between the parties that any such underpayment would be quantified in a separate and subsequent part of the trial of this proceeding in the event that the parties are unable to agree the amount.

6 In 1994, the Plaintiffs began preparation for "Stage 20" of the development of Chadstone which finally received internal approval in 1997. Stage 20 included substantial demolition and building works and the addition of David Jones as a second department store.[1]

7 Myer, at that time, was the key anchor tenant and the sole department store at Chadstone. It occupied the premises pursuant to a favourable lease,[2] which had been amended in 1989 to give Myer certain rights in the event that a second department store was added to Chadstone.[3]

8 In the circumstances, Stage 20 could not proceed unless Myer agreed to surrender its existing lease and enter into a new lease on terms that would facilitate the redevelopment.[4] It was expected that, if Stage 20 did proceed, Myer would lose $16 million in revenue when the David Jones department store opened.[5] The rent payable by Myer would also increase significantly,[6] with only a small increase in floor area.[7] There appears to be some consensus - though perhaps not common ground - that Myer was to be no worse off under the new Lease than under its then existing 1983 Lease;[8] which also made provision for payment by Myer of a contribution to variable outgoings. In any event, commercially, one would wonder why the position would be otherwise, absent some highly beneficial collateral arrangement of which there is no evidence in this case. In any event, this not a decisive consideration in the present context.

9 The concept plans for Stage 20 were provided to Myer in March 1994,[9] and the parties engaged in negotiations over the course of the ensuing years. Mr Peter Leslie and Mr Neville Beer were the principal commercial negotiators for the Plaintiffs and Mr Raymond McNamara was the principal commercial negotiator for Myer.[10] Internal and external lawyers were also involved on both sides to assist in preparing the documentation. When negotiations on variable outgoings reached a critical point, the variable outgoings clause was also reviewed and redrafted for the Plaintiffs by Mr Paul Powderly, who was "in charge of outgoings for all centres".[11]

10 The final draft of the Lease was scheduled to an agreement for lease ("AFL") executed in September 1997.[12] The AFL and draft Lease were preceded by numerous drafts of "Heads of Agreement" ("HoA") which set out, in short terms, the essential elements of the proposed lease. None of the HoA were ever executed and it is not contended by either party that any of the HoA were legally binding.

11 The final version of the HoA was dated 26 November 1996.[13] The Plaintiffs contend that the HoA are objective contemporaneous evidence of how the parties intended that Myer's contribution to Variable Outgoings would be calculated. The first draft HoA was prepared by 20 September 1995.[14] In subsequent drafts, the document became an "Invitation to Make an Offer Heads of Agreement".[15] These documents were also sometimes described as simply an "Invitation to Make an Offer".[16]

12 The Plaintiffs contend that to overcome the Mistake in cl 3(b) of the Fourth Schedule of the Lease, that clause should be construed or rectified in accordance with Annexure B to the Further Amended Statement of Claim. For convenience, this Annexure B is reproduced in the Annexure to these reasons (and is referred to hereafter as "the Annexure" or "Annexure B to the Further Amended Statement of Claim", depending on context).

13 The reasons why the Plaintiffs contend that this is necessary are as follows:[17]

...

13.1 The Fourth Schedule, as written, defines "Base Accounting Period" as the Accounting Period of twelve months commencing on 1 July following the Commencing Date (i.e. the first full year of the Lease term). But the Fourth Schedule does not use the term "Base Accounting Period" at all in the annual calculations for which the Fourth Schedule provides;

13.2 The concept of the Base Accounting Period was an important one, and was the subject of negotiation until 12 May 1997;

13.3 Clause 3 is divided into two parts. Paragraph (a) applies "in respect of the second full Accounting Period after the Commencing Date" (i.e. the second full year of the Lease term). The increase in outgoings is described in sub-paragraph (a)(i) by reference to "the immediately preceding Accounting Period". In the case of "the second full Accounting Period after the Commencing Date", the "immediately preceding Accounting Period" is, of course, the first Accounting Period. That is the same thing as the Base Accounting Period;

13.4 Thus, the calculation in Clause 3(a) is to be done by reference to the Base Accounting Period. This is reflected in the formula in Clause 3(a)(ii), where the factor "VO" is defined as the Variable Outgoings "for the Accounting Period preceding the Accounting Period in respect of which the calculation is being made". This factor is correctly applied in Clause 3(a)(ii) to adjust for changes in the Index by multiplying VO by CPI(2) divided by CPI(1). VO is applied correctly in Clause 3(a)(ii), also, by calculating the increase from the previous year by deducting the Variable Outgoings in the first year from the CPI-adjusted Variable Outgoings in that year;

13.5 In contrast, Clause 3(b) is expressed to apply "in respect of each subsequent Accounting Period". But a clear mistake has occurred because Clause 3(b) is identical to Clause 3(a) although the former is expressed to apply only to the second full Accounting Period, while the latter is expressed to apply to the remaining (26) years of the first term, and the 15 years of the second term. It is impossible to discern any plausible explanation for this, and Myer has not suggested any;

13.6 The Owners' case is supported also by Clause 5 of the Fourth Schedule. It refers to the "Base Accounting Period" not being updated if the option is exercised. That reference makes no sense unless the Base Accounting Period is relevant to the calculations of the Variable Outgoings contribution during the 15 years of the extended term. That is made relevant, and Clause 5 is given sense, only if the Fourth Schedule is construed or rectified as pleaded by the Owners.

14 The Plaintiffs contend that the correction to the Lease which they plead in Annexure B to the Further Amended Statement of Claim is necessary: first, to give effect to the distinction in cl 3 of the Fourth Schedule to the Lease between the second full Accounting Period and subsequent Accounting Periods; secondly, to give relevance to cl 5 of the Fourth Schedule to the Lease; and, thirdly, as a correction which goes no further than is necessary to correct the Mistake.

15 Myer, on the other hand, contends that the terms of the Lease do not indicate any drafting infelicities or absurdities and that, consequently, there is no basis to construe the Lease as a commercial agreement other than in accordance with its terms. Moreover, Myer contends that the expression "Base Accounting Period" does have work to do with respect to cl 5 of the Fourth Schedule to the Lease - as that provision now stands:[18]

1. If the Lessee exercises the option given to it for a further term of fifteen years the Base Accounting Period will not be updated and the lease for the further term shall incorporate such alterations as are necessary to provide for the Lessee to contribute to Increases in Variable Outgoings as if such further term were a continuation of this Lease.

Though, as Myer concedes, the expression may only have a minor drafting role in the context of these provisions, it does, nevertheless, have a role. Consequently, the expression cannot be characterised as mere "surplusage" and thus support the Plaintiffs' contentions made on this basis. The issue of "absurdity" is addressed in detail in the reasons which follow but, for present purposes, it is sufficient to make reference to the submissions by Myer that the evidence given on behalf of the Plaintiffs does not indicate that they had any difficulty in interpreting and applying the terms of the Lease for some 20 years or so.

16 Before descending into the particulars of the negotiating history, it should be emphasised that the process began in the early to mid-1990s, now the best part of 30 years ago. The Plaintiffs did call a number of witnesses in relation to the negotiating history, the testimony of which is considered in more detail in the reasons which follow. Nevertheless, it is clear, both from their evidence and as a matter of human experience, that the recollections of these witnesses are now sporadic and hazy, as would be expected, and that reliance in relation to the negotiating history should be placed primarily upon the documentary evidence.[19]

17 Between September 1995 and November 1996 at least 14 drafts of the HoA were exchanged between the parties, with numerous changes made on different issues. During that time, the parties put forward proposals and counterproposals on the question of whether, and in what manner, Myer should contribute to increases in variable outgoings.

18 On 24 August 1994, negotiation of the HoA between the Plaintiffs and Myer about Stage 20 had commenced. In September 1995, the Plaintiffs drafted a HoA and provided it to Myer with the master plans for Stage 20 which, by that time, had been prepared.

19 The Plaintiffs provided a very detailed account of the negotiating process said to be evident from the contents of the HoAs.[20]

20 A summary of this process was also provided by Myer.[21]

21 From September 1995 to May 1996, the parties put forward competing positions with respect to the issue of contribution to variable outgoings, which may be summarised as follows:

(a) on 20 September 1995 the Plaintiffs proposed a draft HoA that provided that Myer would contribute to increases in variable outgoings over the base year;[22]

(b) on 29 April 1996 Myer responded with a draft HoA that provided that it would not contribute to increases in variable outgoings at all;[23] and

(c) on 22 May 1996 the Plaintiffs responded with a draft HoA that again provided that Myer would contribute to increases in variable outgoings over the base year.[24]

The drafts provided after September 1995 followed a series of meetings between the Plaintiffs and Myer between January 1996 and 22 May 1996.[25] The Plaintiffs contend that these discussions indicate that since increases in variable outgoings would not be covered by the rent review process, the Plaintiffs, understandably, wanted separate provision to be made for increases in variable outgoings.[26] Commercially, of course, this is unsurprising in a commercial lease of the type contemplated unless the parties were content with a grossed up rent. However, it is also clear that difficulties are encountered in formulating commercial terms in this respect where the lease is for a long term, such as the Lease in this instance, and where, consequently, movements in variable outgoings are likely to be difficult to estimate for that period.

22 On 14 August 1996, the parties met to discuss the terms proposed in the Plaintiffs' then most recent draft HoA, which had been provided to Myer on 13 August 1996 (though dated "13/5/96").[27] At that meeting, Mr McNamara made it clear that Myer would not agree to contribute to increases in variable outgoings over the base year.[28] On 15 August 1996, Mr McNamara followed up the meeting the day before by sending his annotations to the draft HoA stipulating, among other things, that Myer would not contribute to variable outgoings at all.[29] The annotated draft from Myer struck out the paragraph in Item 8 of the Plaintiffs' draft HoA dealing with Myer's contribution to variable outgoings and had the word "DELETE" written next to that clause in the margin. The annotated draft HoA was signed by Mr McNamara at the top of the first page. This signing is, as Myer observes in its submissions, significant in that this was the only HoA ever signed by anybody.

23 On 6 September 1996, the Plaintiffs sent Myer an amended draft HoA dated 4 September 1996 which, apart from dating, was the same was the draft that had been sent to Mr Andrew Erikson. As observed in the Plaintiffs' submissions, they "changed tack" in this draft.[30] In Item 6 of the draft, they include variable outgoings in the rent review process - hence Ms Angelika Dickschen describing it as a "gross" lease in her 5 September 1996 letter to Mr Erikson. The rent review had ratcheted increases in rent every five years. Since increases in variable outgoings were to be covered by the rent review mechanism, Item 8 concerning Variable Outgoings now read "Included in Annual Base Gross Rental". At that time, further negotiations were scheduled for 13 September 1996.[31] The reference to a copy of the draft having been sent to Mr Erikson is a reference to a draft being sent to him on 5 September 1996 together with instructions to him, as a partner of Malleson Stephen Jacques ("Mallesons") to prepare a draft AFL and a draft of the Lease accordingly.[32]

24 Thus, as observed by Myer, by 6 September, the Plaintiffs had seemingly accepted Myer's change. Mr Leslie wrote to Mr McNamara providing an amended draft HoA with the variable outgoings reference deleted as stipulated by Mr McNamara, under cover of a letter that said:[33]

We refer to your letter of August 15th, 1996, and enclose herewith our revised Heads of Agreement incorporating the terms and conditions upon which we are prepared to recommend your offer for final board approval.

We have attempted to incorporate some of your suggestions with other points being left for further discussion at our meeting scheduled for September 13th, 1996.

25 On 11 September 1996, Myer sent the Plaintiffs handwritten amendments to the draft HoA dated 4 September 1996.[34] Myer reverted to its position, as at 13 August 1996, namely, no ratcheted increase in rent in Item 6 and no increase in variable outgoings in Item 8. On 13 September 1996, the Plaintiffs met with Myer and then,[35] on 25 September 1996, there was a Gandel Group Pty Ltd ("Gandel Group") board meeting. As can be seen from the minutes of that meeting, the board considered the draft HoA that Myer had sent on 11 September 1996 because Myer was not accepting the 12% ratchet.[36] Myer was also reported as requesting an increased tenure under the Lease of 30 years.

26 On 24 September 1996 and 27 September 1996,[37] there was further correspondence by fax from Mr Beer to Mr McNamara highlighting a change to the formula for the rent increases. The Plaintiffs proposed to Myer a new base gross rent review mechanism. In the 4 September 1996 draft HoA the Plaintiffs sought a 12% ratchet every five years and the new proposal was to reduce the ratcheted increase in base gross rent to 5% on the basis there would be a review after the first five years and then every three years thereafter.[38] On 8 October 1996, the Plaintiffs prepared an amended draft HoA incorporating these changes.[39]

27 The position under the draft HoA dated 8 October 1996 was that the Lease term was to be 30 years with a 15 year option - which extended Myer's tenure from the existing termination in 2013 up to 2043. Item 6 matched the 27 September 1996 base rent proposal. As increases in variable outgoings would be recovered under the rent review, no increases were needed under Item 8. At this point, negotiations were continuing, but many of the terms seemed relatively settled and a draft AFL and Lease was being prepared by Mallesons. This is consistent with Ms Dickschen providing the 8 October 1996 draft HoA to Mr Erikson.[40] On 11 October 1996, Mallesons provided to the Plaintiffs the draft AFL and the draft Lease, the draft Lease being based on the 8 October 1996 draft HoA.[41]

28 On 15 October 1996, Mr Beer sent a letter to Mr McNamara as follows:[42]

Please find herewith the documentation confirming the proposed new Myer store at Chadstone Shopping Centre.

Although not spelt out in this letter, the draft HoA which it attached was, as Myer observes, in fact quite different to what had gone before. Mr Beer had had financial models prepared that contemplated a net lease instead of a gross or semi-gross lease,[43] and the draft HoA attached to the 15 October 1996 letter in part reflected that change, with the addition of the "Item 8" pleaded by the Plaintiffs in this proceeding:[44]

The Lessee is responsible for 80% of the increases in centre operating expenses as the demised premises relates to total lettable area of the centre over the base year (year 1). These annual increases are to the lesser of CPI or actual.

From the terms of the correspondence, it is apparent that Mr Beer intended this as an "offer".[45]

29 The proposal or offer made by Mr Beer in the 15 October 1996 letter was, the Plaintiffs say, an attempt by Mr Beer to break an impasse with a modified net rent deal as, prior to 15 October 1996, Myer had rejected the Plaintiffs' proposals for increases of base rent to be 5% on reviews after the first five years and then every three years.

30 The draft HoA sent to Myer on 15 October 1996 contained significant changes by comparison with previous drafts but, as observed by Myer, the letter attaching the amended HoA was an anomaly in the chain of correspondence in that, unlike all other correspondence attaching a draft HoA that had been changed,[46] it made no reference to any revision having been made to the attached draft. Nor were the changes marked up on the attached draft.[47] And nor was the change to a net lease consistently reflected in the draft HoA, which still provided on its first page for "base gross rental" and the increase of this amount by "base gross rent reviews".[48] In spite of this, neither Mr Beer nor Mr McNamara recall any discussion about these changes to the draft HoA.[49] Nor is there any evidence, in contrast to other amended drafts of the HoA,[50] that Mr McNamara acknowledged or considered the "offer". By contrast, there is ample evidence, as Myer submits, that Mr McNamara had already rejected the concept at least twice.[51] Consistently with this, Mr Beer's last positive recollection of Mr McNamara's position is that Mr McNamara had rejected the concept.[52] Moreover, Mr Beer does not have any recollection of Mr McNamara accepting it, nor is there any other record of its acceptance by Mr McNamara at that time. The only further version of the HoA was sent by Mr Leslie to Ms Gabrielle Noonan at Myer on 26 November 1996.[53] Although it was copied to Mr Beer and Mr S Macrae at the Plaintiffs, and to Mr Mark Graham - whose focus was on store design and not on things such as rent and outgoings[54] - it was not sent or copied to Mr McNamara. Accordingly, as submitted by Myer, it is not apparent that the critical changes to the draft HoA concerning Myer's contribution to increases in variable outgoings were ever agreed by Mr McNamara.

31 On 24 October 1996, the Plaintiffs sent to Myer the draft AFL and draft of the Lease drawn by Mallesons.[55] Clause 4.3 of the Mallesons draft of the Lease incorporated the Net Proposal.[56] On 30 October 1996, a Gandel Group board meeting was held. Messrs Beer and Leslie were authorised to continue negotiations with Myer based on the 15 October 1996 HoA; a copy of which formed part of the board papers.[57] On 6 November 1996, a GML board meeting occurred. Stage 20 of the Chadstone development was Item 5.2.5 on the board agenda.[58] The board papers for that item[59] sought approval for the, by then, 23 October 1996 HoA; a copy of which was part of the board papers. That draft HoA was identical to the 15 October 1996 HoA draft. Messrs Beer and Leslie were authorised to continue negotiations with Myer on the basis of the 23 October 1996 HoA.[60] The Plaintiffs contend that these board papers make it plain that they were proceeding on the basis of the 23 October 1996 HoA and, further, that the recovery of increases in variable outgoings would be calculated by reference to the base year. This is not, however, a position accepted by Myer. In my view, the evidence of dealings between the parties at this stage indicates quite clearly that negotiations were, as at that time, continuing between the Plaintiffs and Myer, and the position can be put no higher than as at 26 November 1996 the GML board had a particular view as to how the negotiations should proceed and be resolved. The same appears to be the position following the GML board meeting on 4 December 1996.[61]

32 At this stage, drafting continued and it does appear that some of those involved in the negotiating or drafting process assumed that at that time, Myer would contribute to increases in variable outgoings in some way. As indicated, Myer's contention is that the position could not be put higher than that. More particularly in this respect, Myer submits:[62]

1. However, Item 8 of the draft HoA was in only general terms and the evidence confirms that, even among those who expected Myer to contribute to variable outgoings, there was no clear conception as to how any contribution to variable outgoings would work. Thus:

(a) Item 8 included a cap to the effect that "annual increases are to the lesser of CPI or actual";[63] whereas

(b) Mr Erikson of Mallesons prepared a draft lease with a formula that provided for a "lesser of CPI or actual" limit only in the immediately preceding year and otherwise calculated the contribution by reference to the full actual increase in outgoings for every other year (it resembles the pleaded Annexure B, but uses a different calculation and gives a different result);[64] and

(c) in Mr Beer's summary for the Gandel Management Ltd Board,[65] he provided that Myer would contribute to the increase in variable outgoings by way of both:

(i) a base gross rent (ie. including the variable outgoings) increase; and

(ii) a separate increase provision that broadly resembled Item 8, although not in the same terms.

1. The Gandel Management Limited Board appear to have (at least) had regard to that summary in making decisions on the David Jones lease, in preference to the equivalent HoA[66] and it continued to be presented to the board in subsequent board papers.[67]

In my view, Myer's submissions in this respect correctly state the position, for the reasons and on the basis of the material as indicated.

Negotiating and drafting the Agreement for Lease and Lease

33 In October 1996, the parties were moving from drafting the HoA to drafting the AFL and the Lease.

34 For Myer, Ms Noonan became involved in the task of preparing a draft AFL and the Lease.[68] For the Plaintiffs, Mallesons was already preparing a draft AFL and a draft of the Lease,[69] and their first draft AFL and draft of the Lease was provided to Myer on 24 October 1996.[70] Myer rejected Mallesons' draft of the Lease provided to it on 24 October 1996,[71] following which there was a lull in substantive negotiations on the draft of the Lease until the basic form of the Lease was agreed in principle and Myer's version of the draft of the Lease was available in early April 1997.[72]

35 In December 1996, Ms Dickschen and Mr Beer became responsible for the drafting process with respect to the AFL and the Lease for the Plaintiffs. Mr Leslie was no longer involved in the preparation of those documents.[73] Mr Beer gave Ms Dickschen instructions and relied on her and external lawyers to undertake the drafting process, his evidence being that he left the drafting to them, but made the commercial decisions.[74] It is the position, as the Plaintiffs submit, that although Mr Beer was questioned with a view to showing that he read the contracts closely, his evidence is clear that he did not. So, for example, Mr Beer was questioned about "his" 16 January 1997 letter to Myer about clauses in the draft of the AFL and said he thought that it was a joint effort with Ms Dickschen.[75] The Plaintiffs observe that Ms Dickschen was not challenged on her evidence that she drafted the entire letter.[76] From the perspective of Myer, it is clear from the evidence that the negotiating team was Mr McNamara and Ms Noonan, and that the former was providing instructions to the latter throughout the drafting process.[77] As the Plaintiffs observe in their submissions, it took some time for a decision to be made as to whether the AFL and the Lease would be in the Myer standard form or in the form drafted by Mallesons.[78]

36 On 11 December 1996, Mallesons advised the Plaintiffs that they considered that the Myer forms were inappropriate, with the result that Mr Beer sent Mallesons' advice to Mr McNamara, with a proposal to overcome the issue.[79] However, in the negotiations in late 1996 and early 1997, the Myer version of the AFL was the basis of the discussion. At this time, there had been no agreement between the Plaintiffs and Myer as to which form of the Lease would be used as the precedent for the Lease.[80] On 5 March 1997, a meeting to negotiate the draft AFL - noting that a common draft of the Lease did not yet then exist - was held between Mr Beer on behalf of the Plaintiffs and Mr McNamara and Ms Noonan on behalf of Myer. One of the agreements recorded in Ms Noonan's letter to Ms Dickschen was that Myer would have Phillips Fox "bring the [Original Myer Lease] up to 1997 standards".[81] In other words, the Original Myer Lease would be the precedent for the drafting of the Lease from that point on.

37 Meanwhile, after the GML board meeting on 4 December 1996, Mr Beer's priority was getting the draft AFL and the attached draft of the Lease agreed because the viability of Stage 20 at Chadstone depended on starting construction as early as possible.[82] If commencement of construction was delayed, construction costs and finance costs might vary so much that the feasibility of Stage 20 might have to be revisited.[83] Early the following year, on 18 February 1997, a GML board meeting was held and the master plan for Stage 20 was presented,[84] including that Myer would pay outgoings at the "lesser of 80% increases in outgoings over year 1 or CPI". The board resolved to approve this.[85] This, the Plaintiffs contend, is further clear evidence of the Plaintiffs' intention.[86] However, for the reasons which follow, I remain of the view that a manifestation of intention this might be, but it is, at best, intention at a point in time during an ongoing negotiation process; a process which must be viewed very much in the context of subsequent events, negotiations and changing and developing intentions of all concerned.

38 On 3 April 1997, Myer provided the first draft of the Lease.[87] The covering letter said:[88]

The Lease reflects word for word the [Original Myer Lease] except for changes necessary to reflect the Heads of Agreement and other changes to reflect changes in law.

[Plaintiffs' emphasis].

39 The new Fourth Schedule of the Lease took the form in which it remained, apart from a change in the formulae which are discussed further in these reasons, at that time providing:[89]

For the calculation of the Lessee's contribution to increases in Variable Outgoings:

1. "Base Accounting Period" means the Accounting Period of twelve months commencing on 1 July following the Commencing Date.
2. "Lessee's Proportion" means eighty per cent (80%) of that part of the whole of the Increase in Variable Outgoings which bears the same proportion to the whole of the Increase in Variable Outgoings as the Gross Lettable Area of the Demised Premises bears to the Gross Lettable Area of all buildings in the Centre.
3. "Increase in Variable Outgoings" means

(a) in respect of the second full Accounting Period after the Commencing Date (that is the Accounting Period commencing on the second 1st July falling after the Commencing Date) the lesser of:

(i) the amount by which the Variable Outgoings for that Accounting Period exceed the Variable Outgoings fir [sic] the immediately preceding Accounting Period: and

(ii) an amount equal to

VOx

(b) in respect of each subsequent Accounting Period the lesser of:

(i) the amount by which the Variable Outgoings for that Accounting Period exceed the Variable Outgoings for the immediately preceding Accounting Period; and

(ii) an amount equal to

VOx

where

VO is the Variable Outgoings for the Accounting Period preceding the Accounting Period is [sic] respect of which the calculation is being made

CPI(2) is the Index issued for the quarter ended 31 March during the Accounting Period preceding the Accounting Period is [sic] respect of which the calculation is being made

CPI(1) is the Index issued for the quarter ended 31 March twelve months prior to CPI(2).

...

40 At this point, it is helpful to consider how the draft formulations with respect to Myer's contribution to variable outgoings progressed in the parties' drafts of the Lease between October 1996 and late April 1997; a progression helpfully summarised in the Myer submissions as follows:[90]

1. Between October 1996 and late April 1997, the draft formulations describing Myer's contribution to variable outgoings progressed in the parties' draft Leases as follows:

(a) on 11 October 1996 Mallesons put forward its first formulation to the plaintiffs, but this was not provided to Myer;[91]

(b) on 23 October 1996 Mallesons put forward a second formulation in a draft Lease,[92] which the plaintiffs sent to Myer on 24 October 2016[93] ("Second Mallesons Formulation") but Myer rejected that draft lease in its entirety;[94]

(c) on 3 April 1997 Myer sent the plaintiffs a draft Lease containing a third and different formulation, which had been prepared by Phillips Fox[95] ("Third Formulation"); and

(d) on 16 April 1997 Ms Dickschen again sought to press the Second Mallesons Formulation, but this was not accepted by Myer.[96]

41 Thus, in early May 1997, or at the end of the preceding month, the evidence indicates that the parties were pressing for competing formulations with respect to Myer's contribution to variable outgoings. It follows, it is submitted by Myer, that it may reasonably be inferred that the parties were cognisant of the differences between these formulations. The contemporaneous evidence shows that the Plaintiffs' team of negotiators was closely examining the draft leases, including these different formulations.[97] It was in this context that the Plaintiffs ceased to press the Second Mallesons Formulation and instead drafted and proposed a fourth formulation[98] ("the Fourth Formulation") that was ultimately proposed to Myer on 30 May 1997,[99] agreed by Myer and ultimately used in Clause 3(b) as executed on 4 September 2001.[100]

42 With respect to the drafting and review of the variable outgoings formula in the Lease in May 1997, Myer submits, and in my view correctly, that the evidence is that before it was agreed by the parties the Fourth Formulation was:[101]

(a) drafted by Mr Powderly,[102] who was "in charge of outgoings for all centres" for the Plaintiffs;[103]

(b) reviewed by Ms Dickschen of the Plaintiffs,[104] whose evidence was that she would have read the Fourth Schedule to the Lease at that time and would have made some comment if she had seen an error;[105]

(c) reviewed by Mr Erikson of Mallesons;[106] and

(d) reviewed by Mr Beer of the Plaintiffs.[107]

43 The evidence also shows that the draft was also provided to Mr John Gandel and Mr Clive Appleton of the Plaintiffs, which showed the changes to be made to effect the Fourth Formulation marked up on the document next to cl 3(a)(ii), but not cl 3(b)(ii).[108] Mr Beer gave evidence which, in my view, was properly described as somewhat evasive, about his role in checking the formula at this time.[109] Ms Dickschen's evidence was that she received instructions from Mr Beer either in writing or orally in a face-to-face meeting[110] and that the letter she then sent to Phillips Fox with the new formula for cl 3(a)[111] would have been in accordance with Mr Beer's instructions.[112] Markings on the retained documents, such as handwritten ticks next to the Fourth Formulation,[113] and Mr Erikson's handwritten notes alongside the references to the formula in Ms Dickschen's memorandum[114] appear to confirm, in my view, that at least some of these individuals gave the clause specific consideration and approved it.[115] During this process, no one made any reference to Item 8 (either by name or by description), nor sought to compare the Fourth Formulation with Item 8, nor queried with others whether it reflected Item 8. The move to the Fourth Formulation also represented the Plaintiffs' abandonment of the Second Mallesons Formulation, which was the formulation closest to the Plaintiffs' pleaded case in this proceeding (as set out in the Annexure to these reasons), and which had been twice rejected by Myer.[116] For these reasons, the contentions by the Plaintiffs with respect to these dealings and negotiations in relation to these variable outgoings provisions[117] should be rejected, particularly the following somewhat gratuitous observation made in these submissions which, as indicated, is simply not supported by the evidence:[118]

1. Had the parties agreed on 12 May 1997 or thereafter to abandon calculating increases in variable outgoings by reference to the "base year" in favour of the "preceding year", in her 30 May 1997 letter an experienced property lawyer like Dickschen would have asked Paine to delete Clauses 1 and 5 in the Fourth Schedule of this draft. The Court should find there was no such agreement to abandon.

44 The evidence of subsequent communications between the parties and the state of the draft documentation does not, in my view, suggest a common intention to implement Item 8 but, rather, is demonstrative of a clear intention by both parties to be bound by the AFL and the Lease as drafted. It is to the detail of these communications and documentation to which I now turn.

45 On 2 July 1997, the report to the GML board was that the AFL remained unsigned.[119] The Board was not told that management had decided to abandon Item 8 in the HoA in favour of calculating increases in variable outgoings by reference to the preceding year. Whilst this may have been the position at that stage, that is certainly not the end of the story having regard to subsequent events.

46 Also on 2 July 1997, Mr McNamara confirmed that Myer had received its board's approval for the new store at Chadstone "in accordance with the terms set out in the Draft Agreement for Lease", which annexed the Lease.[120] Mr McNamara's unchallenged evidence was that by this letter he meant the board of Coles Myer Limited ("CML") had approved the draft of the AFL, including the Lease annexed to it, as it existed at 2 July 1997.[121]

47 Although the relevant Myer board papers can no longer be located,[122] Mr McNamara's unchallenged evidence was that:[123]

A heads of agreement for a specific store would never actually be approved because the only documents ultimately put to the Board [of CML] and Mancom [which was the management committee of Myer] for approval would be a lease or agreement for lease.

48 Since the final GML board approval for Stage 20 at Chadstone given on 7 May 1997 was conditional upon the AFL with Myer being executed and that construction of Stage 20 had to start in July or August 1997, the AFL needed to bind Myer by July or August 1997. Mr Beer asked Ms Dickschen to get advice from Mr Erikson as to whether Myer was bound by the combination of the draft AFL and Mr McNamara's 2 July 1997 letter.[124] Mr Erikson advised, in letters dated 10 and 17 July 1997, that he was not satisfied that Myer was bound. There was further correspondence on 11, 16 and 17 July 1997 between Mr Beer and Mr McNamara about the AFL and whether Myer was bound by it.[125] In any event, on 16 July 1997, Mr McNamara wrote to Mr Beer confirming that:[126]

...the terms and conditions of the Agreement for Lease (including annexed Lease) as per Phillips Fox's draft dated 20 June 1997 represent the agreement between the Lessor named thereon and Myer Stores Ltd.

Also in July 1997, the variable outgoings mechanism within the Lease was further varied, to incorporate a Base Variable Outgoings component.[127] This process of redrafting would likely have required the variable outgoings mechanism in the Lease to be revisited to some degree.[128] There was no suggestion that any concern was otherwise raised regarding the variable outgoings clause at that time. Moreover, the concept of a Base Variable Outgoings component is not to be found in any of the drafts of the HoA, which, in my view, further indicates that the draft HoAs provided only limited guidance to the parties in their drafting of the AFL and Lease.

49 On 19 August 1997 Ms Noonan sent Ms Dickschen "the Agreement for Lease (in triplicate) executed by Myer Stores Ltd" for execution by the lessors.[129] However, before the Agreement for Lease could be executed by the lessors, it was a requirement for:[130]

...senior management like me [Neville Beer] to agree that it was in order to sign the AFL and also required a certification letter from the external lawyers that the AFL accorded with the instructions which the lawyers had been given. In the case of the AFL, the certification letter was to come from Erikson...

Although Mr Beer's evidence as to whether he provided that agreement was somewhat evasive,[131] he did concede that he would not have departed from his usual practice in this regard.[132]

50 The evidence of events which follow is that after Mr Erikson of Mallesons corrected some drafting errors in the AFL he had identified in his 25 August 1997 fax to Mr Campbell Paine of Phillips Fox, the Mallesons' certification letter dated 8 September 1997 was provided to the Plaintiffs. The letter said:[133]

I have reviewed the engrossed form of the Agreement for Lease between your companies and Myer Stores Limited with respect to Chadstone Shopping Centre and also the accompanying Lease.

The Agreement for Lease and Lease:

(a) have been engrossed (following the incorporation of hand written amendments) in accordance with my instructions;

(b) reflect the commercial terms of the transaction agreed;

(c) contain no unusually onerous or objectionable provisions which are inconsistent with my instructions;

(d) contain limitation of liability clauses for the benefit of the trustee; and

(e) the Agreement for Lease is in order for execution.

[Plaintiffs' emphasis]

51 In relation to Mr Erikson's evidence, the Plaintiffs say that although he cannot recall comparing the HoAs with the AFL and the Lease, he does not believe that he did so. That, the Plaintiffs submit, must be so, because he was never given the 26 November 1996 HoA. He said that he obtained instructions to enable him to write the letter, which, it is inferred, must have come from Ms Dickschen. That is likely, the Plaintiffs contend, as Mr Erikson was only sporadically involved and not involved in commercial discussions.[134]

52 However, in my view, the position with respect to Mr Erikson's evidence is quite straightforward and, as submitted by Myer, is as follows:[135]

Mr Erikson's evidence was straightforward:[136]

(a) he provided the certification letter, including certifying that the AFL and Lease reflected the commercial terms of the transaction agreed;

(b) he believed each of the matters contained in his letter to be true when he wrote it;

(c) he would have certified that the AFL and Lease reflected the commercial terms on the basis of instructions;

(d) he is confident that he had those instructions at the time of providing the certification; and

(e) he did not see any need to compare the terms of the AFL and the Lease with any draft HoA because the draft HoAs were not provided to him on the basis that they contained the terms of the deal.

53 In my view, the objective evidence supports Mr Erikson's evidence as to the accuracy of his certification. Before certifying the AFL and the Lease, he first required several corrections to be made;[137] the nature and detail of those corrections confirms that he undertook the certification task diligently. Similarly, Ms Dickschen confirmed in her evidence that she, too, was at that time satisfied that the documents were in a proper state to be executed by the Plaintiffs.[138]

54 By 15 September 1997, the AFL was executed accordingly,[139] though at least one copy is dated 6 November 1997.[140]

55 The execution of the AFL had the effect that, even absent execution of the Lease, the Lease would be binding on the parties from the Commencement Date. In this respect, the AFL provided, in clause 8.3, that:

On and from the Commencing Date...the Lessee and the Lessor shall each respectively be bound by...the Lease as if the same were duly completed and duly executed and delivered by both parties...

56 Mr Stephen Bott, who signed the AFL for Myer, was available for cross examination.[141] There is no suggestion, however, that any of those who executed the AFL intended anything other than to bind the parties to the terms set out therein, which included the terms of the Lease. Those executing the AFL included Mr Powderly, who was the Plaintiffs' employee responsible for outgoings at all the centres.[142] As Myer observes, the Plaintiffs have never pleaded that there was any error in, nor sought rectification of, the executed AFL. The significance of this is, however, not clear having regard to the position that, as submitted by the Plaintiffs, the AFL is now performed and thus "spent" and so the Lease is the only element of this documentation to which rectification now has any possible relevance or effect.[143]

57 The Lease was executed on 4 September 2001. In relation to its execution, the Plaintiffs submit that cll 8 and 9 of the AFL obliged the parties, the Plaintiffs and Myer, to complete and execute the draft Lease scheduled to the AFL when Stage 20 of the Chadstone redevelopment was finished. The Plaintiffs contend that the parties' common intention could not change after the AFL was executed. Myer's signatories to the Lease, Mr Philip Smith and Mr Bruce Fethers, were available for cross-examination;[144] but were not cross-examined. It is contended by Myer that, nevertheless, there is no suggestion that those who executed the Lease intended anything other than to bind the parties to the terms set out therein. As has been observed previously, the Plaintiffs do not seek to rectify any provisions of the AFL which, as has been explained, included the draft Lease which was attached to the AFL as a schedule. In other words, the position of the Plaintiffs appears, quite clearly, to be that the provisions and any relevant parties' intentions were effectively "cast in stone" upon the execution of the AFL.

58 In spite of the delay in executing the Lease, the new Lease term granted preceded the execution date by some years. Pursuant to cl 8.3 of the AFL, the Commencement Date of the Lease is 23 November 1998. There was no suggestion, however, that the actual, earlier commencement date of the Lease has any bearing on the issues the subject of this proceeding.

59 The variable outgoings payable until 30 June 2000 was the Base Variable Outgoings Payment under cl 3.16 of the Lease. Increases in variable outgoings from July 2000 were those calculated under cl 3(a) of the Fourth Schedule to the Lease. Clause 3(b) did not operate until after the Lease was executed.

60 Returning to the position contended for by the Plaintiffs, namely, that the parties' common intention could not change after the AFL was executed - a position from which Myer does not dissent - reference should be made to events between October 1999 and September 2001 which are specifically highlighted in some detail in the Plaintiffs' submissions:[145]

1. On 27 October 1999 GML became responsible entity for the GRT[146] (in 1999 the managed investment scheme provisions - Chapter 5C - of the Corporations Law commenced and the GST legislation was enacted). Perpetual retired as trustee of the GRT.[147] GML appointed Perpetual as custodian to hold the GRT's assets as agent for GML.[148]
2. From late 1999 to 2001, after the construction of Stage 20 was completed, the Lease had to be completed (e.g. commencing date and commencing rent inserted) and executed. The form of Lease attached to the AFL was amended to:

165.1 include a GST clause (which is Clause 18 of the executed Lease);

165.2 amend various definitions, including Perpetual's limitation of liability provisions resulting from the change in GRT's structure and include provisions limiting GML's liability (which is Clause 19 of the executed Lease);

165.3 include the commencing date, commencing rent and the "Base Variable Outgoings Payment" in the First Schedule.[149]

1. On 4 September 2001 the Lease was executed by Perpetual, GML, Bridgehead and Myer.[150] Mark Feikema, a solicitor employed by the Gandel Group who had replaced Dickschen, oversaw the amendments referred to in the preceding paragraph. However, he was not asked to advise about recovery of variable outgoings and just assumed that the draft Lease attached to the AFL correctly recorded the parties' agreement.[151]
2. On 3 October 2002 Vicinity (then known as Commonwealth Managed Investments) replaced GML as responsible entity of the GRT (which changed its name to "CFS Gandel Retail Trust").[152] Under sections 601FS(1) and 601FT of the Corporations Act 2001 (Cth), GML's rights with respect to the Lease became the rights of Vicinity.

For the sake of completeness, it is observed that there is no suggestion on the part of the Plaintiffs that this process of dealings and communications and amendments to the provisions of the draft Lease prior to its execution on 4 September 2001 had any effect on the proposition that the parties' common intention with respect to the Lease could not change after the AFL was executed; at least insofar as is relevant to the present proceedings.

61 Since the execution of the Lease, the outgoings have been estimated, invoiced,[153] paid, checked, confirmed and adjusted by the parties in accordance with cl 3(b) of the Fourth Schedule to the Lease.[154] The Plaintiffs agree that between 2001 and September 2012, the parties performed the Lease according to its terms.[155] Particularly, the Plaintiffs observe that, relevantly, under cl 4.6(b) of the Lease, the Plaintiffs' calculated estimates of variable outgoings before a financial year commenced ("Estimates") and notified Myer of them, and under cl 4.6(c) they calculated the necessary adjustment after that year had concluded and gave Myer a statement of the adjustment ("Adjustment Statements"). Myer respectively paid the amounts calculated in accordance with cl 4.6(b) and (c). As required by the provisions of the Fourth Schedule of the Lease, the increases in variable outgoings were calculated against the preceding year, not the base year.

62 The Plaintiffs say that typical of the suite of documents passing between the parties are those for the year ended 30 June 2007,[156] which comprised:

(a) the schedule calculating the budget estimate;[157]

(b) the Owners 15 September 2007 letter and enclosed audit report on the actual outgoings incurred;[158]

(d) a GST invoice for the adjustment.[160]

On 20 June 2011, a box of Myer documents, some concerning the Myer Chadstone store between 1996 and 2001, was destroyed.[161]

63 The Plaintiffs also monitored the recovery of variable outgoings for their own accounting and budgeting purposes, applying the formula in cl 3(b).[162] In my view, as submitted by Myer, the Plaintiffs' accounting records clearly and readily showed:

(a) the extent of their recovery of variable outgoings from Myer;[163]

(b) the rate at which Myer's contribution to variable outgoings was expected to grow over the next 5 years (well below inflation);[164]

(c) that Myer's contribution to variable outgoings was expected to grow at a much slower rate than David Jones';[165] and

(d) that Myer contributed less to variable outgoings than comparable tenants such as David Jones, with the gap expected to widen over time. For example, Myer was forecast to contribute $2,116,000 for "Operating Recoveries" in 2011 while David Jones would contribute $2,964,000[166] - despite the fact that David Jones' premises were smaller than Myers' premises.[167]

This information was available both in detailed breakdowns[168] and in "major and specialty tenant splits" which made for easy comparison with other major tenants.[169]

64 None of the information to which reference has been made regarding the operation of cl 3(b) of the Fourth Schedule to the Lease caused any apparent concern to, or even comment by, the Plaintiffs or by the employees responsible for the tracking and recovery of variable outgoings. In particular:

(a) there was no difficulty in giving effect to the Lease;[170] consequently

(b) no one raised any difficulty in interpreting and applying Clause 3(b);[171] and

(c) no one suggested that Clause 3(b) was in any way problematic or uncommercial.[172]

Moreover, Mr Beer's evidence on behalf of the Plaintiffs was that the level of Myer's contribution to variable outgoings under cl 3(b), as shown in the rolling 5-year budgets, would not have caused him any concern.[173] Similarly, Mr Ashley Brown's evidence was that a major or specialty tenant having a very good deal on what it contributed to outgoings was not in itself a cause for concern.[174]

65 The Plaintiffs' claim did not arise from a sudden understanding of the terms of cl 3(b) of the Fourth Schedule to the Lease; provisions which had been read, understood and applied numerous times over the preceding 20 years or so without any concern. Nor did it arise from the comparison of the various other tenants' contributions to outgoings at Chadstone; a comparison which had also long been available. The issue only appeared problematic in the peculiar circumstances of a "mistake" by the Plaintiffs' property analyst, Ms Melissa Walsh.[175] Mr Brown accepted that, had Ms Walsh not made that mistake, the issue regarding Myer's contribution to variable outgoings would probably not have arisen.[176]

66 So much Myer submits in relation to the alleged "Mistake". As to the Plaintiffs' position, they submit:[177]

1. In about October 2012 the path to the Owners discovering the Mistake commenced with Ashley Brown (Brown) recognizing a discrepancy.[178] Brown took the matter up with David Seward (Seward), a solicitor employed by one of the Owners. Seward was to obtain the original files.[179] It was Seward who discovered the error.[180] The Mistake was identified in the management Financial Issues Summary for April 2013,[181] the commentary in which was drafted by Seward.[182]

67 Having regard to these matters, and more generally, the evidence does not, in my view, support the Plaintiffs' position with respect to the Mistake. Rather, the position which emerges from the evidence at trial is that Mr Brown and Mr David Seward appear to have formed the view that there was a "mistake" in the Lease, without asking anyone who knew anything about the preparation of the Lease.[183] Mr Seward was, and still is, an in-house lawyer of Vicinity Centres,[184] which manages Chadstone on behalf of the Plaintiffs.

68 Moreover, Mr Beer, was not asked if there was a mistake.[185] Rather, in 2014, he was told that there was a mistake in the Lease.[186] In my view, the submissions by Myer with respect to his evidence are correct; namely, that his reconstruction of his recollection from documents before which he had only a general recollection[187] occurred in that context.[188]

69 One might have thought that parties in the position of the Plaintiffs would - having formed the view that there had been what is, on their case, a significant "mistake" with respect to the provisions of the Lease - bring the matter to the tenant's, Myer's, attention with some expedition and explanation. That is, however, not what occurred, as is clear from the Plaintiffs' own submissions:[189]

1. The Owners gave a "medium" rating to the chances of recovery from Myer in the "Risks & Opportunities" section of their rolling 5-year budget.[190] From time to time the rating was considered by Brown's team, as was the rough quantification of the recovery.[191] Because the consideration was in the "Risks & Opportunities" section of the budget, accuracy was not as important.[192] The quantification was made without reference to the rectified lease.[193] The final calculation (being the one in the writ) was made with legal assistance from Seward.[194]
2. The Owners deferred raising the Mistake with Myer because they anticipated Myer saying that Myer had to give its consent to Stages 38 and 40 of Chadstone as a means of Myer avoiding the claim.[195] As matters transpired, there was no requirement for consent[196] and no carpark issue.[197]
3. Obviously, the whole point was to avoid giving Myer the opportunity to avoid liability in respect of variable outgoings by trading that off for its consent to the carpark issue. Myer has not provided any evidence that it would not have done precisely that.
4. Myer has elected to call absolutely no evidence about Stages 38 and 40 of Chadstone.
5. Once the management decision was made to proceed with the claim in mid-2015, external legal advice needed to be obtained by the Owners.[198]
6. On 2 December 2015 the Owners sent a letter to Myer informing Myer of the Mistake and requesting Myer's co-operation to correct the Mistake.[199] The letter included the final calculation.
7. On 24 December 2015 the Owners sent Myer a letter attaching invoices for the years ended 30 June 2000 to 2015 (2015 Demands) for the Shortfall. The letter requested payment of the Shortfall.[200]
8. On 12 January 2016 the Owners emailed Myer invoices replacing those sent on 24 December 2015.[201]
9. On 3 February 2016 Myer sent a letter to the Owners denying that the Mistake occurred.[202]
10. On 11 February 2016 this proceeding commenced but the Writ was not served.

70 As Myer observes, the Plaintiffs, despite "discovering" the "mistake" in October 2012,[203] did not reveal their claim to Myer until December 2015. As Myer submits, and the Plaintiffs effectively concede in their submissions, the delay was not accidental. In this respect, Myer submits that the Plaintiffs deliberately concealed the alleged mistake regarding cl 3(b) of the Fourth Schedule to the Lease in order to enhance their negotiating position with Myer in respect of other issues. Thus it is said, as the Plaintiffs might require Myer's consent[204] to the Stage 38 development at Chadstone, such concealment, Myer says, denied it the opportunity to use it as a negotiating point to achieve a more favourable outcome regarding the variable outgoings claim. Stage 38 and the other intertwined stages, such as Stage 40, were significant matters for the Plaintiffs, involving the expenditure of over $500 million and continuing expansion and development of Chadstone.[205] At the same time, Myer says, the Plaintiffs also sought to identify an unrelated issue, such as consent to a change of control in the event of a takeover of Myer, as leverage against Myer in the variable outgoings claim.[206] Concluding, Myer submits that the strategy is obvious enough and squarely spelled out in the Plaintiffs' recently discovered emails.[207] However, Mr Beer would not admit to it in evidence.[208] The significance or otherwise of these matters is considered further in the reasons which follow in relation to various defences raised by Myer.

71 The Plaintiffs make two claims. The first is based on principles of contractual construction and the second seeks rectification of the Lease. Again, it is observed that the Plaintiffs do not seek rectification of the AFL.

72 In both instances, the Plaintiffs contend that the correct form of cl 3(b) of the Fourth Schedule is as set out in the Annexure. However, as Myer observes, this form is not the formula that the Plaintiffs used for their own internal purposes. After deciding that there was a mistake in cl 3(b) of the Fourth Schedule, the Plaintiffs' own analysts considered the question multiple times[209] and came up with several different formulas.[210] Following such analysis, and trying to be as accurate as they could,[211] Mr Brown, with the assistance of his team of property analysts, chose to use a different - undisclosed - formula[212] in assessing the potential value of the "mistake".[213] Thus, Myer contends that the form said by the Plaintiffs to be the correct form of cl 3(b) does not otherwise appear to have been used by the Plaintiffs outside of this proceeding.[214] Nevertheless, the form contained in the Annexure is the formula for which the Plaintiffs contend in this proceeding.

73 The meaning of a commercial contract is to be ascertained objectively, by reference to the text, context and purpose of the contract. In terms of context, the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract may, depending on the particular circumstances, need to be included and considered. The task of the Court is to ascertain what a reasonable businessperson would have understood those terms to mean.[215]

74 Further, in construing written contracts, the Court is to have regard to all the words used[216] "so as to render them all harmonious with one another".[217] In construing instruments such as commercial contracts "preference is given to a construction supplying a congruent operation to the various components of the whole".[218]

75 The process of construction is ordinarily possible by reference to the contract alone. Nevertheless, evidence of surrounding circumstances may be resorted to where there is an ambiguity or in circumstances where the words are susceptible of more than one meaning but cannot be adduced to contradict the plain meaning of the contract.[219]

76 Recourse may be had to external matters in the case of ambiguity, but whether the contract is "ambiguous" is not confined to lexical, grammatical or syntactical considerations. A contract is relevantly "ambiguous" where the scope or applicability of the contract is doubtful.[220] It is also permissible, if necessary, to identify the commercial purpose or objects of the contract where that task is facilitated by an understanding of the transaction, the background, the context and the market in which the parties are operating.[221]

77 There are strict limitations on the sort of materials going to surrounding circumstances that can be used for the purpose of detecting the objective intention of the parties. Objective evidence of the surrounding circumstances known to the parties includes their "knowledge of the genesis of the transaction, the background, the context [and] the market in which the parties are operating".[222] In this vein, Allsop P (when President of the New South Wales Court of Appeal) said, in Franklins Pty Ltd v Metcash Trading Ltd:[223]

1. The High Court authorities to which I have referred and in particular Pacific Carriers v BNP Paribas and Toll (FGCT) v Alphapharm, and the recognition of the significance of the objective theory assist in appreciating the scope of the evidence that is admissible. The evidence, to be admissible, must be relevant to a fact in issue, probative of the surrounding circumstances known to the parties or of the purpose or object of the transaction, including its genesis, background, context and market in which the parties are operating. What is impermissible is evidence, whether of negotiations, drafts or otherwise, which is probative of, or led so as to understand, the actual intentions of the parties. Such evidence might be legitimate, however, if directed to one of the legitimate aspects of surrounding circumstances. The distinction can be subtle in any particular case. As Macfarlan JA and I said in Kimberley Securities Ltd v Esber [2008] NSWCA 301 at [5]:

The possible subtlety of the distinction can be seen in Lord Wilberforce's reasons in Prenn v Simmonds ... at 1384-1485, and the recognition that the objective commercial aim may, possibly, be ascertained from some aspect of what has passed between the parties. The distinction can also be seen in what Mason J said in Codelfa at 352 about prior negotiations and their legitimate use "to establish objective background facts which were known to both parties and the subject matter of the contract", and their inadmissibility "in so far as they consist of statements and actions of the parties which are reflective of their actual intentions or expectations." ...

Antecedent correspondence has been considered by the High Court to fall within objective evidence of this kind for the purpose of construing an executed deed.[224]

78 If the literal meaning of a contract gives rise to an absurdity, the court, in construing the agreement, might depart from the literal meaning of the words, but the circumstances in which a court may do this are somewhat constrained. Nevertheless, where a court, construing a contract as a whole and in context, reaches a "strong level of conviction" that both:

(a) the literal meaning of the contractual words produces an absurdity or repugnancy or inconsistency with the rest of the contract; and

(b) it is self-evident from the contract what the parties' objective intention was, that court, as a matter of construction of the contract, has power to supply, omit or correct words to displace the absurd or inconsistent meaning with a relevant commercial meaning.[225] There does not need to be ambiguity before the court may intervene.[226] The principle is not confined to correcting only linguistic errors such as "inconsistent" being read as "consistent" - the process of supplying words may "bring a marked divergence from the text".[227]

79 The principles applicable have been discussed in a number of cases, particularly, Westpac Banking Corporation v Tanzone Pty Ltd;[228] and in several subsequent decisions of the New South Wales Court of Appeal in which Tanzone was applied_._[229] It is clear from both Tanzone and other decisions to which reference is made that the approach applied does not represent a departure from ordinary principles of construction but is, rather, a specific illustration of the application of those principles. This is clear both from the reasoning in Tanzone, to which I will now turn in more detail. It is also emphasised by Leeming JA (with whom Macfarlan and McColl JJA agreed) in National Australia Bank v Clowes,[230] where his Honour said, after referring to the two elements inherent in this approach to which reference has been made,[231] "[w]here both those elements are present ... ordinary processes of contractual construction displace an absurd literal meaning by a meaningful legal meaning" [emphasis added].

80 Turning now to Tanzone. In that case, cl 2.02 of the subject lease provided for a increase in rent on biannual review dates, the increase being the greater of 8% or CPI increases. However, read literally, the CPI increase every two years was to be calculated as the difference between CPI at the commencement of the lease and the CPI prior to the review date. In other words, on the 8th biennial review, the CPI increase was not CPI at lease year 16 minus CPI at least 14, but CPI at year 16 minus CPI at year 0.

81 As submitted by the Plaintiffs, the steps which the Court took in Tanzone are instructive:

(a) it noted the widely differing rates of inflation in Australia in the 10 years preceding the lease commencement;[232]

(b) it identified the "possible consequences" arising from the application of the literal construction of the lease as being "absurd" when viewed in the context of the "possibilities that must have been apparent to the parties" when the lease commenced;[233]

(c) it identified the object of clause 2.02 as being to guarantee the lessor a minimum rental increase of 8% but a higher increase if inflation was greater than 8%;[234]

(d) it identified the "obvious" mistake as using the CPI figure for lease year 0 as the comparator instead of the CPI for the year which was 2 years before the review;[235] and

(e) it added words to avoid the absurdity produced by the "obvious" mistake.

82 The courts are, of course, cautious to warn of the limits of this type of reasoning, lest it be considered a means - by way of a loose definition of "absurdity" - to avoid contracts that a party might have come to regard as commercially onerous or unreasonable. Accordingly:

(a) "[a] court is not justified in disregarding unambiguous language simply because the contract would have a more commercial and businesslike operation if an interpretation different to that dictated by the language were adopted";[236]

(b) "[i]f the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust";[237]

(c) "[t]he courts have no mandate to rewrite agreements, so as to depart from the language used by the parties, merely to give a provision an operation which, as it appears to the court, might make more commercial sense";[238]

(d) the "test of absurdity is not easily satisfied";[239] and

(e) the principle requires a very strong level of conviction that a mistake has been made_._[240]

Recently, in Apple & Pear Australia Ltd v Pink Lady America LLC,[241] the Victorian Court of Appeal said:

[W]hile a court should construe a commercial contract to avoid absurdity 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.

83 The parties' approaches in respect of the construction process proceed from somewhat different perspectives. The Plaintiffs argue for a self-evident correction of the Lease provisions in question on the basis of the reasoning in Tanzone - or at least, principally - whereas Myer submits that there was simply no "absurdity" in any relevant sense, particularly having regard to the application of the critical Lease provisions without demur for 20 years or so previously.

84 The Plaintiffs submit that the similarity between the lease in Tanzone and the Lease is clear in that:[242]

(a) the Lease was negotiated against a background of differing increases in the rate of inflation;

(b) Clause 4.6 and the Fourth Schedule could produce absurd results;

(c) the Lease potentially was for 45 years (30 + 15) and the parties expected "increases" in variable outgoings - Clause 4.6 and the Fourth Schedule were all about securing for the Owners 80% of the increases over the long term;

(d) the mistake by the draftsperson is obvious - the reference year was meant to be the "Base Accounting Period"; and

(e) the words suggested by the Owners correct the absurdity or repugnancy and make the entire Fourth Schedule harmonious.

85 The Plaintiffs continue in their submissions in making the point that they have not previously referred to contextual matters, but that the second of the two requirements - that "it is self-evident from the contract what the parties' objective intention was"[243] - must mean "from the contract properly construed" [emphasis added]. Thus it is said that this means resort may be had to appropriate contextual material. On this basis it is said that there is no doubt that upon reading the Fourth Schedule of the Lease literally, its scope or applicability is doubtful - in other words, it is said to be "ambiguous". Consequently, the Plaintiffs contend that recourse may be had to "events, circumstances and things external to the contract" which are, objectively, known to both parties or which assist in identifying the purpose or object of the contract.

86 On this basis it is said that the 26 November 1996 HoA,[244] Myer's letter dated 3 April 1997,[245] and Myer's inclusion of the Fourth Schedule referring to "Base Accounting Period" in every draft of the Lease drawn by it[246] demonstrate that the purpose and object of the Lease included the compensation of the Plaintiffs for increases in variable outgoings, and specifically that such compensation be calculated by reference to the "Base Accounting Period". In contrast, it is said that there is no evidence at all - documentary or testamentary - of Myer informing the Plaintiffs that Myer did not agree that the contribution would be calculated in accordance with Item 8 of the HoA. To the contrary, it is said that Myer's position was its form of lease had been prepared to reflect the HoA.[247]

87 Myer, on the other hand, approaches these issues from the perspective of whether or not the critical Lease provisions are "absurd". The point is made that in this case:

(a) the allegedly "absurd" meaning has been applied without demur for 20 years or so; and

(b) despite numerous people seeking to apply Clause 3(b) of the Fourth Schedule both before and after the alleged "discovery" of a "mistake", no one - not even the Plaintiffs themselves[248] - has ever thought to apply the allegedly "self-evident" meaning set out in the Annexure containing the terms which the Plaintiffs say cure the "mistake".

Myer says, therefore, that it seems surprising that the Plaintiffs allege absurdity, or that they allege the contents of the Annexure has the "self-evident" meaning of cl 3(b) of the Fourth Schedule to the Lease. In any event, Myer contends that if one considers the two elements referred to above in turn, it is clear that neither is fulfilled.

88 As to the first, it is submitted by Myer that the present provisions now in dispute are not "absurd". The Fourth Schedule of the Lease provides "[f]or the calculation of [Myer's] contribution to increases in Variable Outgoings". Since 1998, cl 3(b) has been applied without giving rise to any difficulty or any question, either in ascertaining its meaning or in the outcomes it generates.[249] It is conceded that whilst post contractual conduct cannot itself establish the meaning of the agreement, it at least provides a large data set of examples that illustrate that cl 3(b) provides a perfectly functional formulation. In my view, this is a correct statement of the position in the present context.

89 Moreover, I accept that the highest the Plaintiffs' case could go is that cl 3(b) of the Fourth Schedule is poorly drafted in that there is redundancy or duplication in the manner of drafting, or that it does not provide for as large a contribution to variable outgoings as the Plaintiffs would like. Nevertheless, this does not make the provision "absurd". It is neither surprising nor remarkable to have redundant drafting or duplication in complicated legal documents. Additionally, it might also be inferred that the draftsperson did not see themselves as drafting a redundant provision, but maintained the same terminology as between the sub-paragraphs for the sake of emphasis and clarity, rather than relying upon some other drafting, grammatical or syntactical shorthand to achieve the same result but in a manner which might have been thought to be less clear or to cause confusion in the future.

90 In the present context, the fact that Myer's contribution to variable outgoings is not as much as the Plaintiffs might like cannot, of itself found a finding that the provisions in question are "absurd". Indeed, the Plaintiffs' own officers, Mr Beer and Mr Brown, admitted that they themselves saw nothing troubling in that fact.[250] As Myer emphasises, in fact the Plaintiffs saw nothing troubling about it for 17 years. Moreover, the possibility that the formula contained in the provisions may produce a reduction in Myer's contribution to variable outgoings from time to time does not render the provisions "absurd".[251]

91 Moreover, the evidence indicates that the only context in which cl 3(b) gave rise to a query was in the peculiar circumstances created by a mistake made by the Plaintiffs' analyst, Ms Walsh.[252] In my view, it is clear that the fact that a clause is seen to give anomalous results in the context of an erroneous application cannot be said to make it "absurd". Indeed, the contra proposition would, in itself, be absurd.

92 Additionally, Mr Powderly, who was responsible for outgoings at the Plaintiffs' centres, did not think that the Fourth Schedule of the Lease was "absurd". In fact, he proposed what the Plaintiffs now allege is "absurd".[253] Ms Dickschen, a property lawyer with many years' experience, did not think it "absurd" either. It is apparent from both Mr Powderly's memorandum[254] and Ms Dickschen's notes[255] that they both examined, not just the formula, but the full text of the Fourth Schedule of the Lease in detail. The text plainly refers to the calculation being performed over the "preceding year". Finally, in this respect, the submissions by the Plaintiffs that there is no evidence at all, documentary or testamentary, of Myer informing the Plaintiffs that Myer did not agree that the contribution would be calculated in accordance with Item 8 of the HoA are of little moment; and this is so despite Myer's statement that its form of lease had been prepared to reflect the HoA. In this respect, reference is made to a letter from Ms Noonan to Ms Dickschen dated 3 April 1997 enclosing the first draft of the Lease. This letter contained the following notes with respect to the enclosed draft of the Lease:[256]

1. the Lease reflects word for word the Lease of the existing store, except for changes necessary to reflect the Heads of Agreement and other changes to reflect changes in law.
2. Myer has not otherwise incorporated many of its normal requirements (eg: restriction of sale/subdivision, right to leave certain items of fixtures and fittings on lease expiry, GST/VAT clause) on the agreed understanding that similarly neither Gandel nor the Trustee would impose any of its "standard" requirements on Myer. Accordingly, Myer reserves the right to make further changes pending receipt of your comments.
3. as part of the dock area is for Myer's exclusive use, a licence of this area will be required. I attach a copy of our standard licence clause for inclusion in the Lease.
4. the list of non statutory outgoings in the Fourth Schedule has not yet been verified by Myer. It is the same list as in the existing Lease.

In my view, taking this letter at face value, it does not support the Plaintiffs' contention as it is clear that the draft of the Lease is just that, a first draft, and that Myer's position - its intentions with respect to a new lease - was not necessarily static and might change during the subsequent negotiation process.[257] Moreover, the evidence does not establish that Ms Noonan can be regarded as the "directing mind and will" of Myer in any relevant sense with respect to its "corporate" intentions.[258]

93 For the preceding and following reasons, a submission of this kind - particularly with reference to the 3 April 1997 letter - does not advance the position having regard to the point at which Myer's draft form of lease had been prepared and in light of subsequent events and the development of the documentation as has been described.

Is it "self-evident" that the proposed correction constitutes the parties' objective intention?

94 The Plaintiffs contend that the proposed correction is self-evident and constitutes the parties' objective intention. In support of this position, the Plaintiffs contend that Myer's submission that the proposed correction does not reflect Item 8 of the 26 November 1996 HoA because Item 8 is "inchoate, vague and not sufficiently certain" and "is open to numerous interpretations",[259] ought to be rejected. More particularly, it is said that this submission suffers from two misconceptions. The first, an assumption that the 26 November 1996 HoA was an agreement which the parties were merely to document and, secondly, one which relies on an assumption that the parties were, as at 26 November 1996, with the HoA on one day and in September 1997 with the executed AFL the next. The Plaintiffs say with respect to these matters that, first, the HoA is merely evidence of common intention and, secondly, that the latter proposition or assumption ignores the drafting progression. For the preceding reasons, in my view, the Plaintiffs' submissions in this respect are indicative of the problems with their case;[260] both with respect to establishing any relevant common intention having regard to the provisions of the AFL and, ultimately, the Lease as executed, and in light of, what they acknowledge, was a "drafting progression". Rather, in my opinion, it is far from self-evident that the proposed correction to the Lease constitutes the objective intention of the parties. The proposed correction, contained in the Annexure, provides that, in any given year of the Lease, Myer must pay an increase in variable outgoings that is calculated using:

(a) the increase in actual outgoings over the base year for every year except the immediately preceding year; and

(b) the lesser of CPI or actual increase for (only) the immediately preceding year.

There are, however, a number of possible alternatives to cl 3(b) of the Fourth Schedule.

95 More particularly, it is not "evident", let alone "self-evident" why the CPI formulation in sub-cl 3(b)(ii) - which is in contradistinction to the "actual" increases provided for in sub-cl 3(b)(i) - should require the payment of actual increases in all the years except one, rather than CPI increases. Far from being self-evident:

(a) in the 20 years since the clause was first drafted, no one (other than perhaps Mr Seward, who has not given evidence[261]) ever conceived that the Annexure might be the correct construction; and

(b) not even the Plaintiffs used the Annexure for their own internal purposes.

If any meaning is self-evident, it can only be the meaning that has been applied without fail and without question by numerous people - including the Plaintiffs' own employees, for 20 years or so.

96 In conclusion, in my opinion, the Plaintiffs have not established that cl 3(b) of the Fourth Schedule is "absurd". Further, I accept the submission of Myer that of all the innumerable changes that could be made to cl 3(b) of the Fourth Schedule to the Lease, that which is set out in the Annexure is among the least evident.[262] It is certainly not "self-evident".

97 For the preceding reasons, the Plaintiffs' claim in contractual construction must fail.

98 The approach of the courts to a claim for rectification is tempered by the strong presumption that a written contract executed by the parties is a true record of their agreement.[263] Nevertheless, this may not be the real position, hence the remedy of rectification, the key elements of which are set out in the judgment of Gageler, Nettle and Gordon JJ in Simic v New South Wales Land and Housing Corporation in the following terms:[264]

1. Rectification is an equitable remedy, the purpose of which is to make a written instrument "conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately". For relief by rectification, it must be demonstrated that, at the time of the execution of the written instrument sought to be rectified, there was an "agreement" between the parties in the sense that the parties had a "common intention", and that the written instrument was to conform to that agreement. Critically, it must also be demonstrated that the written instrument does not reflect the "agreement" because of a common mistake. Unless those elements are established, the "hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties" cannot be displaced.
2. The issue may be approached by asking - what was the actual or true common intention of the parties? There is no requirement for communication of that common intention by express statement, but it must at least be the parties' actual intentions, viewed objectively from their words or actions, and must be correspondingly held by each party.

The common mistakes which may be corrected by rectification include mistakes as to the effect and not merely the form of a document.[265]

99 Relief by way of rectification will not be granted unless there be "clear and convincing proof"[266] that, at the time of the execution of the written instrument[267] sought to be rectified:[268]

(a) there was an "agreement" between the parties, in the sense that the parties had a "common intention" that the written instrument was to conform to that agreement; and

(b) the written instrument does not reflect the "agreement" because of a common mistake.

100 It is clear from Simic that relief by way of rectification does not require as an essential element an antecedent agreement.[269] What is essential, however, is that the executed contract does not reflect the true intention of the parties.[270] It follows from Simic and the preceding authorities to which reference has been made that a plaintiff seeking rectification must prove what the true common intention was;[271] and that at the time when the document was executed, the document did not embody the true common intention.[272]

101 The "intention" that is relevant to a claim for rectification is the subjective intention of the parties.[273] It follows that before rectification is available, there has to be an intention of both parties concerning the term said to need rectification so that if the term was not the subject of negotiations, or was not otherwise shared by both parties, there is no room for rectification.[274] Evidence of the parties' subjective intention may be ascertained from any external or outward expressions manifested by the party's words or conduct and also from statements of the party's subjective state of mind.[275]

102 It is also clear that, in the context of a rectification claim, the correction said to be required to the written contract must be capable of identification in clear and precise terms, as the court will not assume the task of making the contract for the parties.[276]

103 In light of the strong presumption adopted by the courts in the context of rectification claims that a written contract executed by the parties is presumed to be the true record of their agreement, the onus on the party seeking rectification is necessarily a heavy one. That party must advance "clear and convincing proof" that the written contract does not embody the final intention of the parties.[277] Relief by way of rectification is, however, not barred because the document which is sought to be rectified was read before it was executed.[278] Nor does it matter that the parties intended to execute a document drawn by their solicitors, although the onus is more difficult to discharge when all parties have been legally represented throughout the negotiation of the contract which is sought to be rectified.[279] It also follows that if an agreement is negotiated over an extended period, a claim for rectification may be harder to establish due to the unlikelihood of parties mistakenly recording their agreement if they have devoted significant time to preparing a written agreement;[280] and there is an "inherent unlikelihood" that both parties would be under the same mistake where they are represented by solicitors during the negotiation and drafting of the agreement.[281]

104 Questions of intention when only natural persons are involved in the negotiation and execution of a contract which is sought to be rectified do not pose the same difficulties that may arise with respect to corporate parties. Thus, there is a question whether the state of mind of a natural person should be attributed to a corporate party as a matter of interpretation of the relevant substantive rule.[282] The substantive rule here is the law of contract.

105 The primary rule of attribution in the case of a corporation is the corporate constitution, but further rules are required to enable the corporation to do business.[283] The primary rule is supplemented by the general rules of attribution found in the principles of agency.[284] The principle of agency used in contract law, particularly in cases of rectification, is that the relevant officer or employee is the person who is the "directing mind and will" of the corporation in relation to the contract.[285]

106 The cases dealing with rectification claims variously describe the relevant officer or employee whose intention is to be attributed to the corporation as the "decision maker",[286] the person "whose job it was to make the required business judgment as to the terms upon which [the corporation] should contract";[287] and the "decision maker" as opposed to a person conducting a "mere negotiation".[288] The cases also recognise that the intentions of the negotiator will be material if the negotiator either is also the decision maker; or shares in a relevant way those intentions with the decision maker.[289] It follows that where an organ of the corporation executes or approves a contract as a formality and the negotiator's role is critical to that organ's decision, the negotiator's intention will be attributed to the corporation.[290] This explains why the evidence may demonstrate objectively an intention by the decision maker to enter into the contract which the negotiator had negotiated and agreed, such that the intention, and the mistake, was adopted by the decision maker.[291] The outcome of each case necessarily depends on the particular facts.[292]

Application of the principles concerning rectification

107 The Plaintiffs submit that the evidence clearly establishes that their intention throughout was that recoveries of increases in variable outgoings were to be calculated by reference to the base year, as indicated in the 26 November 1996 HoA. Moreover, it is contended that any difficulty that would ordinarily be posed by the fact that Ms Dickschen and Mr Erikson were involved in drafting and negotiating the Lease is "dispelled by the evidence".[293]

108 Additionally, the Plaintiffs submit that the Court should reject any contention made by Myer and through cross-examination that the Plaintiffs "ceased to press" for increases in variable outgoings to be calculated by reference to the base year.[294] It is said by the Plaintiffs that the evidence relied upon by Myer does not support its assertion in this respect for a variety of reasons. First, it said that all Mr Powderly was asked to do was to check the Fourth Schedule to the Lease but was not asked to check whether it matched Item 8 in the 26 November 1996 HoA.

109 Secondly, with respect to the review of Mr Powderly's formula in the Fourth Schedule by Ms Dickschen, it is said that she only requested a change to cl 3(a)(ii) - being that part of cl 3 dealing with the first year. The Plaintiffs say that if the calculation of increases in variable outgoings were no longer to be by reference to the base year, why would an experienced property solicitor like Ms Dickschen have continued to retain the definition of "Base Accounting Period" in cl 1 of the Fourth Schedule. It is said by the Plaintiffs that she would not have and would have, rather, deleted cll 1 and 5 of the Fourth Schedule. It is also said that she would have sought instructions from Mr Beer about it in writing, just as she had at other times. Thus, the Plaintiffs say, Ms Dickschen simply overlooked the mistake in cl 3(b).

110 Thirdly, the Plaintiffs reject the contention by Myer that Mr Erikson "reviewed" the Fourth Schedule. They said that the first problem with this is that the documents that Myer points to as the basis for his review is Ms Dickschen's notes regarding the error in the formula in paragraph 3(a)(ii) - nothing about cl 3(b)(ii). Moreover, the Plaintiffs say that the more formidable obstacle for Myer is that Mr Erikson says that he was not involved in commercial matters and that he only reviewed Ms Dickschen's comments but did not compare his clause against the Fourth Schedule because he was not asked to do so, having assumed that Ms Dickschen was handling the drafting.[295]

111 Fourthly, the Plaintiffs say that the evidence does not support Myer's contention that Mr Beer reviewed the Fourth Schedule and drafted documents about it.[296] The Plaintiffs say that Mr Beer said, repeatedly, that he made the commercial decisions and left the drafting of these documents to Ms Dickschen.

112 Next, the Plaintiffs submit that, had Ms Noonan, Mr Paine and Mr Baddeley given evidence, they could have explained why, as very experienced property solicitors, they specifically included cll 1 and 5 in the Fourth Schedule, dealing with the "Base Accounting Period", in the first draft of the Lease - which was said in Ms Noonan's covering letter to be done to reflect the 26 November 1996 HoA - and retained those clauses in three subsequent drafts if their instructions were that Myer had agreed with the Plaintiffs that the increases were to be calculated by reference to the preceding year. The Plaintiffs say that they could also explain why they were discussing the "base year" on 12 May 1997. The Plaintiffs say, however, that the explanation is patent - the arrangements between the Plaintiffs and Myer had not changed from Item 8 in the 26 November 1996 HoA.

113 Additionally, the Plaintiffs submit that bearing in mind the understandable formality adopted when Mr Beer sought approval from the Gandel Group and GML boards, Myer's contention necessarily means that Mr Beer and Ms Dickschen decided to ignore their authority and act without seeking approval from the two boards. It is said that this was never put to Mr Beer or Ms Dickschen. The Plaintiffs say that the GML board was told precisely the opposite as late as 7 May 1997 at its board meeting - the papers for which Mr Beer drew using Ms Dickschen's notes. Moreover, it is said that there is no subsequent board paper suggesting any change.

114 In terms of Myer's intention, the Plaintiffs say that the evidence also clearly establishes that throughout, it was that recoveries of increases in variable outgoings were to be calculated by reference to the Base Year as indicated in the 26 November HoA. It is said that if Myer did decide that it would not agree to calculate the increases by reference to the Base Year in accordance with the HoA, Myer would have had a duty to communicate that to the Plaintiffs. The Plaintiffs contend that concealment of that change of position would be a serious matter and the Court should, rather, infer that Myer, like the Plaintiffs, simply overlooked the fact that the Fourth Schedule was not consistent with the HoA.

115 Concluding their submissions in relation to this issue, the Plaintiffs say that there is obviously a disconformity between the parties' common intention concerning increases in variable outgoings on the one hand and the Fourth Schedule of the Lease on the other. They say that the necessary correction is clear, and repeat the matters relied upon in relation to the clarity of the necessary correction as submitted in relation to the arguments put with respect to the proper construction of the critical Lease provisions.[297]

116 Myer responds on two bases with respect to the application of the principles concerning rectification. The first is that there was no common intention which would provide any basis for the rectification claim and, secondly, there was no intention, let alone a common intention, that the Lease provisions should be those for which the Plaintiffs contend, as set out in the Annexure. For the reasons which follow, I am of the opinion that the evidence supports both these propositions. I turn first to the issue of common intention, more broadly.

117 In my view, it is the position that the evidence goes no further than establishing that:

(a) from 15 October 1996 until late April 1997, the Plaintiffs' representatives intended to include a clause in the Lease to the effect that Myer would pay a contribution to variable outgoings roughly corresponding with Item 8, but not in terms as set out in the Annexure; and

(b) from 15 October 1996 to late April 1997, Ms Noonan, who was instructed to prepare a draft Lease for Myer, prepared the first draft by reference to the most recent draft HoA to pass between the parties, which included Item 8. But there is no evidence that this HoA reflected Mr McNamara's position; and there is evidence to suggest that it did not. Further, preparing a document by reference to a draft HoA does not mean the parties intended to implement every part of the draft HoA, especially when the parties then implemented a Base Variable Outgoings Payment which is nowhere to be found in any draft HoA.

In any event, it is the position that in May 1997, there was a thorough reworking of the formula in the draft of the Lease by Mr Powderly. That new formulation was checked by numerous highly qualified and experienced professionals. In my view, the evidence is clear that from this point on, there is simply no evidence that either party - and certainly not Myer - intended thereafter anything other than the terms of the Lease as drafted. I turn now to further evidentiary matters which, in my view, support that position.

118 Ms Dickschen's evidence was that, in relation to the changes to the formulation in May 1997:

(a) she received instructions from Mr Beer either in writing or orally in a face-to-face meeting;[298] and

(b) the 30 May 1997 letter she then sent to Phillips Fox with the new formula for Clause 3(b)[299] would have been in accordance with Mr Beer's instructions.[300]

119 Mr Erikson's evidence regarding the execution of the AFL (which annexed the Lease) was that:[301]

(a) he provided the certification letter for the AFL in September 1997, including certifying that the AFL and Lease reflected the commercial terms of the transaction agreed;

(b) he believed each of the matters contained in his letter to be true when he wrote it;

(c) he would have certified that the AFL and Lease reflected the commercial terms on the basis of instructions; and

(d) he is confident that he had those instructions at the time of providing the certification.

It is clear from Mr Erikson's evidence that he certainly did not see any need to compare the terms of the AFL and the Lease with any earlier draft HoA; and the draft HoA was not provided to him on the basis that they contained the terms of the "deal".[302]

120 Moreover, from Myer's perspective, there can be no suggestion that its board ever intended to implement anything other than the AFL and the Lease as drafted, because it gave its approval "in accordance with the terms set out in the Draft Agreement for Lease", which annexed the Lease.[303] Moreover, Mr McNamara's unchallenged evidence was that: [304]

A heads of agreement for a specific store would never actually be approved because the only documents ultimately put to the Board [of CML] and Mancom [i.e. the Management Committee of Myer] for approval would be a lease or agreement for lease.

And, finally, the parties, by clause 8.3 of the AFL, agreed to be bound by the Lease from the Commencement Date. As has been observed previously, the AFL is not challenged by the Plaintiffs, nor sought to be rectified.

121 As the authorities to which reference has previously been made indicate, courts are, in considering rectification claims, embarking upon the consideration of those claims in the context of the presumption that a written contract executed by the parties is a true record of their agreement. Clearly, and again as illustrated and reinforced by the authorities, that presumption is even more powerful where there has been a carefully considered negotiation process over a significant period of time in the hands of experienced professionals acting on behalf of each party. This is clearly the position in the present circumstances. Moreover, having regard to the careful redrafting process in May 1997, the review of that drafting read by several experienced professional people, the subsequent procuring of board approval and the certification by Mr Erikson that the documents were in accordance with the commercial terms of the transaction agreed, were the Plaintiffs to establish their rectification case, it must follow that there was at least incompetence, and possibly negligence, on the part of many or all of:

(d) Mr Erikson (including in particular by his certification that the Agreement for Lease and Lease were in accordance with the commercial terms of the transaction agreed);

There is, in my opinion, simply no basis for supposing such endemic incompetence or negligence on the part of these apparently relevantly skilled and experienced individuals. Reference to these considerations does not mean that the Plaintiffs are required, in order to establish its case, to prove such incompetence or negligence. Rather, these considerations go to the unlikelihood that the proposition advanced by the Plaintiffs reflect the reality of the position as between the parties.[305]

122 Turning now to the second of the propositions advanced by Myer in relation to this issue, namely that there was no common intention, let alone a common intention by either party that the Lease should contain the terms for which the Plaintiffs contend as contained in the Annexure. This is, in my view, clear when regard is had to the submissions advanced in this respect by Myer in relation to the terms proposed as set out in this Annexure. I turn to those matters now in more detail.[306]

123 Item 8, for example, provided that "[t]hese annual increases are to the lesser of CPI or actual", whereas the provisions contained in the Annexure do not limit the annual increases to the lesser of CPI or actual. Further, because the Annexure provisions only ever apply the CPI cap to one year - the immediately preceding year, it has the effect that, when actual increases exceed CPI over multiple years - Myer is made to pay the actual increase for every year except the immediately preceding year. This is illustrated as follows in circumstances where actual increases exceed CPI:

(a) in Year 10 the Annexure will include 9 years of actual increases and 1 year of CPI increases; and

(b) in Year 11 the Annexure will include 10 years of actual increases and 1 year of CPI increases,

so that the "annual increases" are "not to the lesser of CPI or actual" but are actual increases every year apart from the immediately preceding year. The Annexure clearly does not limit "annual increases to the lesser of CPI or actual" as stipulated in Item 8.

124 As for Item 8, it was never intended as a final description and was in such vague and general terms that it gives rise to a number of different theoretical possibilities. Some of these are described in the Amended Defence to Further Amended Statement of Claim and some detailed examples are given by way of illustration.[307] More exist in the Plaintiffs' undisclosed analysis; after "discovering" the "mistake", the Plaintiffs themselves also came up with "multiple" different formulations.[308] Significantly, the one they chose to use for their own purposes when trying to be as accurate as they could be[309] produced very different figures to those which would be produced by applying the provisions contained in the Annexure.[310] Even at the time of drafting, in late 1996, there was no clear conception of what was intended and different descriptions were used. The Second Mallesons Formulation was the closest formulation to the provisions contained in the Annexure - although it is not precisely the same and gives different results. This formulation was rejected by Myer twice.[311]

125 In conclusion with respect to this issue, the Plaintiffs have not made out their claim for rectification as they have not established - and certainly not by "clear and convincing proof" -

(a) any intention at all (common or otherwise) that the Lease should conform with the Annexure;

(b) that any common intention inconsistent with cl 3(b) persisted past May 1997, let alone until the Lease was executed on 4 September 2001; or

(c) any common mistake as to the effect of cl 3(b).

Moreover, the conduct of the parties in applying the relevant provisions of the Lease without demur is, in all the circumstances, indicative of a common intention to be bound by the terms of the Lease as executed - a position which militates against the Plaintiffs' arguments with respect to common intention.[312]

126 Myer pleads that the Plaintiffs have acquiesced to the payments made by Myer for increases in variable outgoings and the "Plain Meaning" of the Fourth Schedule to the Lease.[313] Myer emphasised, in the course of its submissions, that no issue arises with respect to defences to rectification in the event that the Court does not accede to the Plaintiffs' rectification claim. As indicated in the preceding reasons, the position is that the Plaintiffs' rectification claim has failed and, consequently, defensive matters - whether acquiescence or laches - do not arise. Nevertheless, for the sake of completeness, it is desirable that some view is expressed with respect to these issues.

127 In Byrnes v Kendle,[314] Gummow and Hayne JJ said that acquiescence was:

best understood as requiring calculated (that is, deliberate and informed) inaction by [the plaintiff] or standing by, which encouraged [the defendant] reasonably to believe that [the defendant's] omissions were accepted or not opposed by [the plaintiff].

[Myer's emphasis]

Thus, for acquiescence to exist, the plaintiff must be aware that an act is about to be done to its prejudice but take no steps to stop it, such that the defendant can reasonably believe its conduct is accepted by the plaintiff.[315] It follows that the essence of a good acquiescence defence is that the plaintiff who deliberately stands by in relation to a violation of rights "may thereby be debarred from his remedy in respect of [that violation]".[316]

128 In terms of the application of these principles, the ultimate inquiry which is directed to whether the equitable jurisdiction is enlivened is "whether the plaintiff has, by his inaction and standing by, placed the defendant or third party in a situation in which it would be inequitable and unreasonable 'to place him if the remedy were afterwards to be asserted'".[317]

129 The Plaintiffs became aware of the alleged mistake in September or October 2012.[318] The Plaintiffs made Myer aware of the alleged mistake in December 2015. Thus, the Plaintiffs contend that under the principles with respect to knowingly standing by to the ignorance of Myer, any relevant inaction by the Plaintiffs could only have occurred during those three years or so. Thus, the Plaintiffs submit that at most it could be said that they stood by from October 2012 until February 2016, during which time Myer paid significantly smaller increases in variable outgoings than they contend should have been paid on the basis of the Adjustment Statements for the years ended 30 June 2012 (alleged underpayment of $1,947,267), 2013 ($2,093,893), 2014 ($2,340,095) and 2015 ($2,455,606).

130 On this basis, the Plaintiffs ask, rhetorically, "why is it inequitable and unreasonable for Myer to pay the increases in variable outgoings which it should have been paying the whole time?".[319] They ask further: "[w]hy would it be inequitable and unreasonable for Myer to pay those agreed increases for the remaining 12 years of the Lease and the 15 years of the option?".[320] Moreover, the Plaintiffs submit that Myer does not point to an inequity other than it thought it had paid what was due. In truth, it is said by the Plaintiffs, there is no inequity in Myer being held to the Lease as rectified. They say that Myer has had the benefit of retaining and using the underpaid amounts for years; and Myer does not say it cannot pay now. The Plaintiffs submit that any concern that the Court has about interest can be dealt with by imposing a condition specifying the rate of interest and the date from which it is to be paid - or it may determine those matters under s 58 of the Supreme Court Act 1986. Concluding its submissions, the Plaintiffs contend that there is no reason why their delay in bringing this claim warrants denying them their prima facie entitlement to rectification.

131 Myer, on the other hand, submits at some length that the Plaintiffs made a calculated and deliberate decision not to bring the alleged mistake to Myer's attention until December 2015 in order to secure a collateral advantage in dealings with Myer in relation to other matters, whether affecting Chadstone or otherwise. The issues identified by Myer in terms of these allegations of collateral advantage are, first, an "unidentified issue" with the Myer Centre Adelaide - which appeared to have something to do with a portfolio review of leases - which the Plaintiffs sought to resolve before raising the alleged mistake with Myer.[321] The second issue raised in this respect is the suggestion that the alleged mistake was concealed to prevent Myer from linking it with Myer giving its consent for works to be performed by the Plaintiffs on Myer's car park at Chadstone in connection with work on Stages 38 and 40 of the redevelopment of Chadstone; Stage 38 apparently having impact on Myer's carpark.[322] Concluding with respect to its submissions as to this second alleged collateral advantage issue, Myer submits:[323]

1. The plaintiffs decided not to raise the alleged mistake with Myer until they had Myer's "unqualified written consent for the works" for Stage 38 "and the works have substantially commenced".[324] It was only until this had been dealt with that the plaintiffs decided it would pursue its claim.[325] The "commercial people" of the plaintiffs "were keeping this claim secret from Myer" so that the issue of Myer's consent to the project and the claim were "not linked".[326] The plaintiffs "wanted to prevent it from being linked to issues when it didn't suit them, such as the consent to the carpark".[327]

132 On this basis, Myer submits that the Plaintiffs' claim for rectification should be denied:[328]

1. Acquiescence is an "equitable defence".[329] Since all equitable relief is discretionary, the phrase "equitable defence" is perhaps a misnomer and it is better to describe acquiescence as a "defensive equity".[330] Rectification is an equitable remedy and may be refused on the basis of acquiescence.[331]
2. The plaintiffs decided not to bring the alleged mistake to Myer's attention for 3 years and 3 months and then to conceal that it had deliberately delayed in bringing the alleged mistake to Myer's attention. During the period of 3 years and 3 months, the plaintiffs accepted payments of variable outgoings, determined in accordance with Clause 3(b), without any complaint or query. This was a highly calculated decision by the plaintiffs. They decided that the project to redevelop the Centre was more important to them than rectifying the alleged mistake. This is not surprising since the redevelopment involved expenditure of upwards of $500 million by the plaintiffs and Vicinity Centres[332] and the plaintiffs' claim is approximately $19.14 million.[333]

Myer also submits that rectification should be denied because the Plaintiffs were apparently content with the form of the Lease as it stands from September 2012 until December 2015 in spite of the fact that the Lease had run for over half its term by December 2015 (being approximately 17 of 30 years); the Plaintiffs had, on their case, been underpaid approximately $16.8 million up to 30 June 2015; and they knew that delay in making their claim may cost them the ability to recover due to the operation of the statute of limitations.[334]

133 Thus, the position of Myer is, in summary, that the Plaintiffs, by taking no steps having discovered the alleged mistake, have produced a situation in which Myer can reasonably believe that its conduct is accepted by the Plaintiffs and, or alternatively, that the Plaintiffs, by their inaction, have placed Myer in a position where it would be inequitable and unreasonable for the remedy of rectification to be asserted.

134 In my view, Myer fails to establish its defence to any claim by the Plaintiffs to rectification for two reasons. The first is that whilst it might be thought that the delay by the Plaintiffs in bringing the alleged mistake to Myer's attention pending the resolution of other, collateral, matters was in the nature of "hard-nosed" commercial dealings, this does not, of itself, make the Plaintiffs' conduct inequitable and unreasonable vis-à-vis Myer. The position during this time was that Myer was paying variable outgoings contributions under the provisions of the Lease at a rate which, if the Plaintiffs' claims were successful, would be at an advantageously lower rate than would otherwise be the case. Clearly, this position would be to the advantage of Myer, both in terms of cash flow and the use of money. Moreover, it is not clear on the basis of the material before the Court in these proceedings that Myer could have resisted providing its consent to any alterations to its carpark in the course of Stages 38 or 40 of the redevelopment of Chadstone having regard to the provisions of the Lease in this respect. In the course of the hearing of oral closing submissions, the Plaintiffs made reference to cl 9.3 of the Lease which provides specifically that any consent which might be required from Myer cannot be unreasonably withheld.[335] The question whether Myer's withholding of consent would have amounted to an unreasonable withholding at odds with these provisions of the Lease is not a matter agitated in these proceedings, much less resolved. Additionally, there is an issue as to whether the contemplated alterations to the Myer carpark at Chadstone would have required its consent in any event. Even assuming that Myer's consent was required and that Myer could have withheld consent, there is no evidence that it would have wished to do so, or that Myer made any protest with respect to the works.[336]

135 The second reason for the failure of this defence is that there is not, in my view, any conduct on the part of the Plaintiffs which could, between September 2012 and December 2015, have led Myer to reasonably believe that "its conduct [was] accepted by the Plaintiffs".[337] Absent Myer knowing in September 2012 that there was an issue with respect to the alleged mistake, the only reasonable belief that Myer could have held during the period September 2012 to December 2015 is that the Lease term was continuing and the Lease provisions were being applied as they had been since the date of its commencement. Nothing flows from this, as Myer had no knowledge of any inconsistent proposition as now put or claimed by the Plaintiffs.

136 Rectification is an equitable remedy and may be refused on the basis of laches.[338] As to its elements, Young JA (with whom Allsop P and MacFarlane JA agreed) said, in Crawley v Short:[339]

The elements of the defence of laches are: (i) knowledge of the wrong; (ii) delay; and (iii) unconscionable prejudice caused to the opponent by the delay.

The Plaintiffs admit that they had knowledge of the alleged mistake from September 2012 and delayed bringing it to Myer's attention for three years and three months. The question is, therefore, whether this has caused unconscionable prejudice to Myer.

137 In my view, it is the position that for Myer to succeed in its laches defence, it has to prove[340] that:

(a) the Plaintiffs had knowledge of the alleged Mistake;

(b) the Plaintiffs unreasonably delayed in commencing proceedings; and

(c) unconscionable prejudice is caused to Myer by the delay if rectification were to be granted.[341]

It is also clear that delay can only start when the relevant party against whom laches is pleaded obtains knowledge of the wrong. Ordinarily, this requires proof that that party had sufficient actual or inferred knowledge of the facts;[342] suspicions are not enough.[343] The degree of knowledge necessary to satisfy the first element, set out above, is a question of fact and degree in each case to be taken together with all other facts of the particular case.[344]

138 As indicated, Myer, as the party raising the defence of laches, has the burden of identifying the period of delay and the prejudice it sustained in that period.[345] Where the relief sought is rectification, the cases indicate that if there is no reason for the plaintiff to have looked for a mistake, the fact that a document on the face of it contains an error is insufficient to bar a claim by reason of laches.[346] Mere delay is insufficient to invoke the laches defence.

139 In relation to claims of prejudice as a result of lost evidence, the issue is whether the evidence which may have cast a different complexion on the matter has been lost during the period of delay.[347] Clearly, the loss of "just any evidence" is not sufficient in this respect.

140 Thus, the ultimate question with respect to the laches defence is whether it is practically unjust to grant relief. In answering this question, account must be taken of the type of transaction, the nature of the relief claimed, the length of any "delay", whether the plaintiff had sufficient knowledge to justify the commencement of proceedings and matters of prejudice.[348]

141 The period of delay pleaded by Myer is between September 2012 and December 2016 when the writ in these proceedings was served. The pleaded prejudice identified by Myer is that it lost what is said to be evidence which is likely to have supported Myer's case.[349]

142 The loss of evidence is, however, documentary evidence and it is a reasonable retort from the Plaintiffs, in my view, that there is no evidence that any of Myer's witnesses have "lost their memory" since September 2012; though, as indicated previously, it is clear that in circumstances such as have arisen in these proceedings, documentary evidence is likely to be more reliable.[350] Nor, as the Plaintiffs contend, is there any evidence of lost documents - for example, by the destruction of documents during the period of delay.

143 The evidence shows, as submitted by the Plaintiffs, that CML still possesses corporate documents which Myer has apparently chosen not to tender. The evidence also shows that other documents were destroyed by Myer in June 2011, before the period of delay commenced in September 2012. Moreover, there is no evidence demonstrating that such documentary evidence may have cast a different complexion on the matter, particularly as the Plaintiffs have tendered the correspondence passing between the parties during negotiations and the drafting of the Lease. In any event, I accept that Myer could have clarified the value of lost evidence by calling Ms Noonan and Mr Paine.

144 Consequently, without evidence of prejudice to Myer, there is no injustice established and the laches defence must fail. Also, having regard to the nature of laches as an equitable defence, issues of prejudice need to be weighed as they affect all parties involved with respect to the equitable relief sought and the equitable defence sought to be raised. Having regard to the state of the evidence advanced by Myer as to prejudice and the other matters to which reference has previously been made in relation to issues with respect to the acquiescence defence, I accept that, even if the delay has caused some prejudice to Myer, that prejudice does not warrant the Plaintiffs being denied the claim of rectification which they seek - assuming, of course, that they had been successful in making that claim.

145 Acquiescence and laches are equitable defences and hence are only relevant to the grant of equitable relief.[351] Declaratory relief is discretionary in nature and is a form of relief derived from the inherent power of all courts of record, both at law and in equity.[352] In the exercise of this inherent power by superior courts, the discretionary nature of declaratory relief means that it is not possible or desirable to lay down rules about when a declaration should be granted.[353] It follows, as stated in Meagher, Gummow & Lehane's Equity: Doctrines & Remedies that:[354]

[E]ven though on authority and principle the traditional equitable barriers to relief do not apply to declaratory relief as such, circumstances that may engage traditional equitable barriers to relief may be relevant to the wide discretion whether to grant or refuse declaratory orders under the court's statutory powers.

146 In the present circumstances, Myer submits that the circumstances relevant to the equitable defence of acquiescence, which is discussed in the preceding reasons, are relevant to the discretion whether or not to grant declaratory relief in favour of the Plaintiffs. It is said that this is particularly so since the declaratory relief sought is equivalent to rectification and hence equivalent to an equitable remedy. Apart from relying in this respect on the contents of the prayer for relief in the Plaintiffs' claim, it is said that this is also clear from the reliance by the Plaintiffs on the case of Westpac Banking Corporation v Tanzone in their outline of opening submissions; the principle in that case having been referred to as "contractual rectification".[355]

147 For the preceding reasons with respect to the acquiescence defence sought to be relied upon by Myer, I am of the view that the Court's discretion with respect to the grant of declaratory relief in favour of the Plaintiffs should not be refused or in any way constrained as sought by Myer - assuming, of course, that the position that the Court had reached with respect to the Plaintiffs' claim, either on the basis of construction or rectification, meant that they had been successful. As the Plaintiffs' claim has failed on both bases, the issue of declaratory relief does not arise; but, in any event, if it did, it would not be refused or constrained.

148 An account stated is a cause of action that exists at common law. There are numerous statements of what constitutes an account stated contained in old English and Australian authority. These statements note two forms of account stated. Jordan CJ's statement in Commonwealth Dairy Produce Equalisation Committee Ltd v McCabe[356] is often referred to in Australian cases as stating the two forms of account stated. Jordan CJ said as follows:[357]

An action for money found to be due on accounts stated may take one of two forms. It is always essential in such an action that there should have been before action brought an admission by the defendant or his agent to the plaintiff or his agent that the sum claimed is due by the defendant to the plaintiff. But this admission may be so framed as to be merely an acknowledgment of indebtedness, in which case although it supplies evidence of the debt the evidence may be rebutted by proof that no debt in fact existed. Or it may take the form of an account stated and agreed to between two parties, by which it is in effect agreed that the items on both sides shall be set off and the balance paid. In the latter type of case, the agreement for set-off supplies good consideration for the promise to pay the amount of the balance; and the account stated is itself an agreement for valuable consideration constituting a cause of action, and not merely evidence of liability.

[Myer's emphasis; citations omitted]

149 Myer relies upon the second type of account stated, which is often called a "real account stated".[358] For a real account stated, "several items of claim are brought into account on either side, and, being set against each other, a balance is struck, and the consideration for the payment of the balance is the discharge of the items on each side".[359] A real account stated is a contract supported by consideration;[360] which has been said to belong "to the field of contract".[361]

150 There must, however, be mutual credits and debits for a "real account stated" otherwise there is no consideration.[362] If "the whole accounting is to be rendered by one party to the other", there is no consideration.[363] The issue of mutual credits and debits was addressed by Brennan J in Bank of NSW v Brown:[364]

It is not necessary that there should be debts or claims on both sides: all that is required is that there be cross items of account the liability for which and the credit for which are discharged by the account stated.

151 An account stated may be pleaded as a defence provided the defendant has paid the amount which it alleges is owing to the plaintiff. A defensive account stated is a "species of accord and satisfaction".[365]

152 Myer, prefaces its submissions by reference to cl 4.6 of the Lease, which it summarises in the following terms:[366]

(a) increases in variable outgoings are to be paid for each Accounting Period. An Accounting Period is a financial year.

(b) the increases in variable outgoings are to be paid in advance of the final determination of the increase for a particular Accounting Period. These advance payments are to be made monthly and are determined on the basis of an estimate provided by the Lessor.

(c) the final amount that the Lessee must pay for the increase in variable outgoings for an Accounting Period is to be determined by a setting off arrangement. This is referred to in clause 4.6(c) as follows:

... if the amount of the Lessee's required contribution to increases in Variable Outgoings calculated by reference to the Fourth Schedule exceeds the sum paid by the Lessee in respect thereof on the basis of the Lessor's estimate the deficiency shall be paid by the Lessee to the Lessor upon demand; and if the amount thereof is less than the sums paid by the Lessee in respect thereof the Lessor shall forthwith refund the excess to the Lessee.

(d) The Lessor must provide an "audited itemised statement" of variable outgoings to the Lessee for each Accounting Period. The statement is to be provided "as soon as practicable" after the variable outgoings have been determined for that Accounting Period: clause 4.6(d).

153 Thus, Myer submits that cl 4.6 creates a system for setting off amounts paid by Myer against amounts owing to the Plaintiffs to determine a final amount owing to either Myer or the Plaintiffs. The final amount was determined separately for each Accounting Period. Myer contends that these factors all show that a separate agreement, in the form of an account stated, was reached for the amount of the increases of variable outgoings for each Accounting Period. The consideration for this agreement is said to be the setting off of amounts owing between Myer and the Plaintiffs. Myer relies upon the evidence of Ms Jane Pendlebury with respect to the process of estimation through the Budgeted Outgoings Statements and the provision of the Actual Outgoings Statements in due course.[367] The Plaintiffs accept that Myer has paid amounts determined in accordance with the provisions of the Lease as they now stand.[368]

154 In conclusion, Myer submits that for each year, a binding contractual agreement was reached between Myer and the Plaintiffs concerning the amount of increases in variable outgoings that was to be paid by Myer. The offsetting of debits and credits amounted to the giving of consideration. Thus, Myer contends that regardless of whether the Plaintiffs' claim for rectification or a declaration of a particular construction of the Lease succeeds, these binding agreements still stand. So it would follow that no repayment is due from Myer to the Plaintiffs for financial year 2002 to financial year 2015 and that, consequently, Myer is entitled to a repayment of $4,704.81 for the financial year 2001.

155 In my view, Myer's claim by way of account stated must fail because there were no mutual dealings involved in the process relied upon. Each Adjustment Statement delivered by the Plaintiffs to Myer was "one-sided". Moreover, there is no evidence about each Adjustment Statement to suggest it was negotiated, agreed between the parties or final. Clause 4.6 of the Lease did not say an Adjustment Statement was to be any such thing. On the contrary, these provisions, particularly sub-cl 4.6(e), envisaged that Adjustment Statements were not final and could be disputed. The parties did not negotiate and agree that a balance was to be paid. The parties merely performed sub-cll 4.6(b) and (c) of the Lease. If the Adjustment Statements are to be regarded as an account, each such statement is the first form of account and is merely an acknowledgment of the debt so that evidence may be tendered to show that it is erroneous. It is not a real account stated which is binding subject to being reopened.

156 The Plaintiffs also made submissions in support of the position that if the Adjustment Statements did amount to binding accounts stated, there was a basis for their setting aside at common law or in equity or under mistake.[369] Having regard to my findings with respect to the claim of account stated, the issue of mistake does not arise. Nevertheless, if this issue were a live one, I would be of the opinion that, in the present case, the persons who entered into the account stated "agreement" for each financial year on behalf of Myer and the Plaintiffs intended to implement the terms of the Lease and were under no mistake as to what they were doing. They had a common intention to implement the Lease and did so.[370] Moreover, to the extent that the Plaintiffs seek to rely on an alleged mistake by the persons who entered into the Lease, it is unclear on the evidence whether the relevant people who were mistaken are Mr Beer, Mr McNamara or, possibly, the board members of the Gandel Group or CML. Even if it is accepted that any of these people made a mistake, none of them was involved in determining the payment of variable outgoings for the period from financial year 2002 to financial year 2015. The intentions of these people may have been relevant to any mistake concerning the Lease, but they would not be relevant to any "separate agreements" that may have been entered into each financial year concerning the payment of variable outgoings were the process properly to be regarded as one of "mutual dealings" such as to constitute an account stated. Finally, even if it were to be accepted that the intentions of these people were relevant, there was no mistake from September 2012 onwards, because on the Plaintiffs' own case they were entirely aware of the alleged Mistake at that time and still kept accepting payments in accordance with the Lease provisions as they now stand. This would mean that if the account stated claim were successful, the "agreements" reached for the financial years 2012 to 2015, inclusive, may not be set aside.

157 Myer contends that if it is found liable to pay any amounts with respect to increases in variable outgoings, the Plaintiffs are barred from recovering amounts concerning the financial years 2002 to financial year 2009 (inclusive) as a result of the operation of s 5(1)(a) of the Limitation of Actions Act 1958 ("the LAA"), which provides as follows:

The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued -

158 The Plaintiffs contend that the LAA did "not apply until December 2015 because time only began to run once Myer was given an Adjustment Statement which, as required by clause 4.6(c), calculated increases in accordance with the Fourth Schedule".[371] The Plaintiffs gave Myer "Adjustment Statements" in respect of each financial year shortly after the end of each year. Each of these "Adjustment Statements" was calculated in accordance with the Fourth Schedule to the Lease. As Myer observes in its submissions, the Plaintiffs' submission is that "time only began to run once Myer was given an Adjustment Statement which, as required by clause 4.6(c), calculated increases in accordance with the Fourth Schedule".[372] The corollary of the Plaintiffs' submission, Myer says, is that time began to run for the payment of variable outgoings for a particular financial year shortly after the end of that financial year. Proceedings were commenced on 11 February 2016. Thus, Myer contends, any claim for a financial year which had an "Adjustment Statement" issued prior to 11 February 2010 is out of time and hence each financial year up to and including financial year 2009 is out of time.

159 Myer's submissions on this basis are, as indicated, only made in the event that the Court finds that the Plaintiffs have an entitlement to recover moneys with respect to adjustments to variable outgoings over and above moneys already paid by Myer - a position which, in turn, depends upon a favourable finding to the Plaintiffs with respect to either the construction of the relevant Lease provisions or the grant of rectification of those provisions as sought. As, for the preceding reasons, that is not the position which has been reached, statute of limitations issues do not arise. Nevertheless, for the reasons which follow, I am of the opinion that the reasoning with respect to the application or otherwise of this legislation as contended for by the Plaintiffs would represent the correct position if statute of limitations issues arose. It is to this reasoning which I now turn.

160 Section 5(1) of the LAA directly applies to the Plaintiffs' claim in debt or for damages whether cl 3(b) of the Fourth Schedule of the Lease is corrected by construction or rectification. If the latter, that is, if rectification is granted, the effect of the order for rectification is retrospective,[373] with the consequence that whether a debt is owed or a breach has occurred is assessed ex post facto.[374] However, the Plaintiffs' claim based on rectification is entirely equitable,[375] and consequently the LAA does not apply to it - at least not directly, as equity has long applied legislation such as limitations of actions legislation only by analogy in certain circumstances.[376] Consequently, the effects of delay upon the availability of the remedy of rectification are dealt with under the equitable doctrines of acquiescence and laches, and not under the LAA.

161 It is trite that under s 5(1) of the LAA a cause of action for breach of contract "accrues" upon breach.[377] It is axiomatic that time will not start to run for the purposes of the LAA where the time for performance by the defendant has yet to arise because the obligation is conditional and the condition has yet to be fulfilled.

162 This proceeding was commenced on 11 February 2016. Each amount calculated under cll 4.6(a) and 4.6(c) of the Lease was a separate debt and obligation. On any view, s 5 of the LAA cannot apply to debts which arose after 11 February 2010. However, as the Plaintiffs contend, the Court should find, and does find to the extent that this may ultimately prove to be necessary, that the LAA does not apply at all because Myer's obligation to pay was conditional, and the condition was not satisfied until December 2015.

163 Both cll 4.6(a) and 4.6(c) condition Myer's obligation to pay the "increases in Variable Outgoings" upon those increases having been "calculated in accordance with" the Fourth Schedule. Clauses 4.6(b) and 4.6(c) condition Myer's obligation to pay upon notice - a notification for the former and a demand for the latter. In the absence of receipt of a demand "calculated in accordance with" the Fourth Schedule, Myer's liability to pay under cl 4.6(c) of the Lease was conditional, and that condition had not been satisfied.[378]

164 In the alternative, and also I think correctly, nothing in the Lease makes time of the essence[379] and nothing precludes more than one demand for the debt - especially since in cl 1 of the Lease it is stated that "words importing the singular number shall include the plural". Until 2015, none of the Estimates under cl 4.6(b) and none of the Adjustment Statements under cl 4.6(c) were calculated in accordance with the Fourth Schedule as construed or rectified. The requirement under cl 4(c) that the actual increases be determined "as soon as practicable" is met. The word "practicable" means "capable of being put into practice".[380] Because the formula in cl 3(b) of the Fourth Schedule would have to be treated as wrong were the Plaintiffs successful in its construction and rectification claims - it was not "practicable" to determine the actual outgoings in accordance with the Fourth Schedule at that time.

165 For these reasons, it follows that Myer's obligation to pay the amounts calculated in the 2015 Demands was not unconditional unless and until those demands were made on Myer. The corollary is that Myer's liability to pay interest did not arise until the 2015 Demands were made. Thus, no limitation defence arises because six years did not expire between delivery of the 2015 Demands and the issue of the Writ in February 2016.

166 For the preceding reasons, the Plaintiffs' claims fail - whether on the basis of claims with respect to the proper construction of the provisions of the Lease or its claims for rectification of those provisions.

167 The parties are to bring in orders to give effect to these reasons. I otherwise reserve the question of costs.

[ANNEXURE B TO THE FURTHER AMENDED STATEMENT OF CLAIM]

For the calculation of the Lessee's contribution to increases in Variable Outgoings:

1. "Base Accounting Period" means the Accounting Period of twelve months commencing on 1 July following the Commencing Date.
2. "'Lessee's Proportion" means eighty per cent (80%) of that part of the whole of the Increase in Variable Outgoings which bears the same proportion to the whole of the Increase in Variable Outgoings as the Gross Lettable Area of the Demised Premises bears to the Gross Lettable Area of all buildings in the Centre.
3. "Increase in Variable Outgoings" means

(a) in respect of the second full Accounting Period after the Commencing Date (that is the Accounting Period commencing on the second 1st July falling after the Commencing date) the lesser of:

(i) the amount by which the Variable Outgoings for that Accounting Period exceed the Variable Outgoings for the immediately preceding Accounting Period; and

_ - VO_

(b) in respect of each subsequent Accounting Period the lesser of:

(i) the amount by which the Variable Outgoings for that Accounting Period exceed the Variable Outgoings for the Base Accounting Period; and

_ - BVO_

VO is the Variable Outgoings for the Accounting Period preceding the Accounting Period in respect of which the calculation is being made

BVO is the Variable Outgoings for the Base Accounting Period

CPI(2) is the Index issued for the quarter ended 31 March during the Accounting Period preceding the Accounting Period in respect of which the calculation is being made

CPI(1) is the Index issued for the quarter ended 31 March twelve months prior to CPI(2).

1. "Variable Outgoings" means (to the extent to which the same are not specifically payable (whether directly or by way of reimbursement to the Lessor) from time to time by any Lessee or other occupier of any part of the Centre under the terms of its occupancy thereof) the total of all outgoings costs and expenses of the Lessor or for which the Lessor is liable (other than expenses expressly excluded by the subsequent provisions of this Schedule) now or hereafter assessed or assessable charged or chargeable paid or payable or otherwise incurred upon or in respect of the Centre or upon the Lessor in relation to the Centre or in the conduct management and maintenance of the Centre and in the use and occupation of the same as a high-class regional shopping and commercial centre and whether such costs are incurred by engaging independent contractors or are incurred by employing or engaging personnel employed by the Lessor or any of its related companies and in particular but without limiting the generality of the foregoing shall include:

(a) all duties and taxes (other than land tax or income tax) paid or payable by the Lessor in consequence of the receipt by the Lessor of rent or other moneys or in consequence of the Lessor having any estate or interest in the Centre;

(b) all premiums for the public liability insurance, workers' compensation insurance, insurance of all structures building plant machinery equipment fittings and fixtures of the Centre, plate glass insurance, loss of rent and consequential loss insurance and all other policies of insurance effected by the Lessor in respect of the Centre and/or the Lessor (referrable to the Centre or the Lessor in relation to the Lessor's ownership or interest in the Centre) and for such amounts and against such risks as the Lessor may from time to time deem necessary or desirable with such extensions or exclusions as the Lessor shall think fit;

(c) all charges for water gas oil electricity light power fuel telephone loud speaker and intercommunication systems sewerage and other services furnished or supplied to the Centre for the general benefit or purposes of the Centre (but excluding services supplied to the individual tenancies of the Centre) or to the Centre management offices;

(d) all costs of repairs maintenance renovations and replacements of and to the Centre to the extent that such costs are not properly chargeable to capital;

(e) the cost of painting repair and other maintenance work to the Common Areas and of all cleaning of Common Areas and of the prevention and eradication of rodents pests and vermin;

(f) all costs of management control and administration of the Centre including wages, long service leave, holiday pay, sick leave and superannuation, audit, and accountancy fees and legal expenses and costs and expenses of challenging any rate, valuation or assessment on the Centre or on the Lessor in respect of the Centre;

(g) all costs and expenses associated with the effective operation and the parking areas and any extensions thereof from time to time available in the Common Areas inclusive of any amounts paid to any contractor engaged by the Lessor to operate such area;

(h) all costs and expenses of gardening landscaping and providing and maintaining decorative features in Common Areas;

(i) all costs and expenses of caretaking and security;

(j) all costs and expenses associated with the effective operation of any Child Minding Centre, toilets and other facilities in Common Areas including the cost of personnel to operate such services;

(k) all costs and expenses associated with running and maintaining lifts and/or escalators in Common Areas;

(l) the costs (including electricity and any other source of power used) of ventilating and/or airconditioning of the Centre or any part thereof including all costs and expenses associated with running and maintaining the plant and equipment therefor and other mechanical equipment and appurtenance and including without limiting the generality aforesaid the fees and/or premiums payable to specialist contractors and/or wages paid to permanent staff employed and the cost of materials used by the Lessor in or about the maintenance and servicing of such plant equipment. mechanical services and appurtenances

(i) any rate or tax attributable to the Demised Premises or the Centre which pursuant to Clauses 4.1, 4.2 or 4.3 the Lessee is liable to pay or reimburse to the Lessor, shall not be taken into account in calculating Variable Outgoings;

(ii) where the Demised Premises are separately airconditioned, sprinklered, or provided with other services by virtue of plant and equipment in respect of which the Lessee is responsible to meet running costs, maintenance and the like then any costs incurred as described in paragraphs (c) and (l) of this Schedule shall only be taken into account in calculating Variable Outgoings to the extent (if any) to which such costs relate to Common Areas_;_

(iii) if part only of the Centre (including the Demised Premises) enjoys the benefit of any facility (other than airconditioning) the cost of which falls within the definition of Variable Outgoings the Lessee's proportion of such Variable Outgoings shall be that proportion which the Gross Lettable Area of those parts of the Demised Premises bears to the Gross Lettable Area of that part of the Centre (inclusive of the Demised Premises) which enjoys the benefit of such facility.

(iv) there shall be excluded from Variable Outgoings:

- the cost of works carried out to any part of the Centre including equipment installed therein which comprise either works of a structural nature or works properly chargeable to capital;

- contributions to a sinking fund or the like to cover anticipated repairs or renovations;

- the cost of extensions or additions to the Centre;

- contributions by the Lessor to any promotional fund or Merchants Association formed for the promotion of the Centre;

- rental payable by the Lessor in respect of land buildings or equipment comprising part of the Centre;

- valuation fees save for the purposes of objecting to assessments of rates and taxes included in Variable Outgoings;

- Financial Institutions Duty save for such duty imposed on the Lessor when receipts of rental, variable outgoings and the like are first deposited by the Lessor with its bank or other financial institution

- moneys expended by the Lessor in fulfilling its obligations under the Agreement for Lease.

1. If the Lessee exercises the option given to it for a further term of fifteen years the Base Accounting Period will not be updated and the lease for the further term shall incorporate such alterations as are necessary to provide for the Lessee to contribute to Increases in Variable Outgoings as if such further term were a continuation of this Lease.

PERPETUAL LIMITED (ACN 000 431 827) First Plaintiff

BRIDGEHEAD PTY LTD (ACN 006 082 515) Second Plaintiff

VICINITY FUNDS RE LIMITED (ACN 084 098 180) Third Plaintiff

[1] Witness Statement of Neville Beer (8 May 2017), [16].

[2] Witness Statement of Raymond McNamara (4 August 2017), [35(b)].

[3] Deed of Variation, recital G, cl 2.1.

[5] Memorandum of Peter Leslie regarding Comparison of Rental Rates.

[6] Chadstone Master Plan: Preliminary Feasibility Study No 3 (March 1996), 8 noting Myer's current total occupancy costs as $4,582,932; compare with Memorandum of Peter Leslie regarding Comparison of Rental Rates, noting the Current Myer Offer of $6.76 million.

[8] Witness Statement of Neville Beer (8 May 2017), [23]; Witness Statement of Raymond McNamara (4 August 2017), [36]; cf Transcript, 241-2, 245-6, 258, 279-80.

[9] Letter from Neville Beer to David Lawson (30 March 1994).

[10] Witness Statement of Neville Beer (8 May 2017), [22]; Witness Statement of Raymond McNamara (4 August 2017), [12].

[11] Witness Statement of Angelika Dickschen (7 June 2017), [45.1]-[45.3]. The role of Gandel Asset Management Pty Ltd is explained in the Witness Statement of Neville Beer (8 May 2017), [10.2].

[12] Agreement for Lease (6 November 1997).

[13] Invitation to Make an Offer: Heads of Agreement (26 November 1996).

[14] Heads of Agreement (20 September 1995).

[15] Invitation to Make an Offer: Heads of Agreement (16 January 1996); similarly in subsequent drafts.

[16] Facsimile from Peter Leslie to Raymond McNamara (16 January 1996); see also Invitation to Make an Offer Heads of Agreement (16 January 1996) at clause 16 "Approvals" and similarly in subsequent drafts.

[17] Plaintiffs' Closing Submissions (27 November 2017), [13].

[19] Auswest Timbers Pty Ltd v Secretary to the Department of Sustainability and Environment [2010] VSC 389; (2010) 241 FLR 360 at 400-2 [87]; FoodCo UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch) [3]-[5] (Lewison J); and see North East Solution Pty Ltd v Masters Home Improvement Australia Pty Ltd [2016] VSC 1, [10]-[12] (Croft J).

[20] Plaintiffs' Closing Submissions (27 November 2017), [59]-[96].

[21] Defendant's Outline of Closing Submissions (28 November 2017), [15]-[31].

[22] Heads of Agreement (20 September 1995).

[23] Draft Heads of Agreement (29 April 1996).

[24] Invitation to Make an Offer: Heads of Agreement (22 May 1996).

[25] See Plaintiffs' Closing Submissions (27 November 2017), [61]-[65].

[26] See Plaintiffs' Closing Submissions (27 November 2017), [65].

[27] Facsimile from Peter Leslie to Raymond McNamara (13 August 1996), with attached Invitation to Make an Offer: Heads of Agreement (dated both 13 August 1996 and 13 May 1996).

[28] Witness Statement of Neville Beer (8 May 2017), [47.2]; see also Minutes of Meeting with Myer (14 August 1996) as described by Mr Beer in his Witness Statement at [47].

[29] Letter from Raymond McNamara to Peter Leslie (15 August 1996), attaching Annotated Invitation to Make an Offer: Heads of Agreement (14 August 1996); Witness Statement of Neville Beer (8 May 2017), [47]-[48].

[30] See Plaintiffs' Closing Submissions (27 November 2017), [71].

[31] Witness Statement of Neville Beer (8 May 2017), [51].

[32] Letter from Angelika Dickschen to Andrew Erikson (5 September 1996), attaching Invitation to Make an Offer: Heads of Agreement (1 September 1996).

[33] Letter from Peter Leslie to Raymond McNamara (6 September 1996) attaching Invitation to Make an Offer: Heads of Agreement (4 September 2016).

[34] Witness Statement of Neville Beer (8 May 2017), [53].

[35] Witness Statement of Neville Beer (8 May 2017), [57].

[36] Witness Statement of Neville Beer (8 May 2017), [56].

[37] Facsimile from Neville Beer to Raymond McNamara (24 September 1996); Facsimile from Neville Beer to Raymond McNamara (27 September 1996).

[38] Witness Statement of Neville Beer (8 May 2017), [57].

[39] Invitation to Make an Offer: Heads of Agreement (8 October 1996).

[40] Witness Statement of Angelika Dickschen (7 June 2017), [18].

[41] Witness Statement of Neville Beer (8 May 2017), [60]; Witness Statement of Angelika Dickschen (7 June 2017), [19].

[42] Letter from Neville Beer to Raymond McNamara (15 October 1996) attaching Invitation to Make an Offer: Heads of Agreement (15 October 1996).

[43] See e.g. Analysis of Myer Rent Proposals (undated).

[44] Invitation to Make an Offer: Heads of Agreement (15 October 1996), [8].

[45] Witness Statement of Neville Beer (8 May 2017), [59].

[46] See e.g. Facsimile from Peter Leslie to Raymond McNamara (16 January 1996) referring to "revised" HoA; Facsimile from Mark Graham to Neville Beer (29 April 1996) describing changes in attached HoA; Facsimile from Peter Leslie to Mark Graham (22 May 1996) referring to "revised" HoA; Facsimile from Peter Leslie to Raymond McNamara (13 August 1996) referring to "revised proposed" HoA; Letter from Peter Leslie to Raymond McNamara (6 September 1996) referring to "revised" HoA.

[47] Invitation to Make an Offer: Heads of Agreement (15 October 1996).

[48] Invitation to Make an Offer: Heads of Agreement (15 October 1996), [4], [6].

[49] Witness Statement of Neville Beer (8 May 2017), [59]; Witness Statement of Raymond McNamara (4 August 2017), [48]-[53].

[50] See e.g. Minutes of Meeting with Myer (14 August 1996); Letter from Raymond McNamara to Peter Leslie (15 August 1996), attaching Annotated Invitation to Make an Offer: Heads of Agreement (14 August 1996); Letter from Raymond McNamara to Peter Leslie (11 September 1996) attaching Annotated Invitation to Make an Offer: Heads of Agreement (4 September 1996).

[51] Minutes of Meeting with Myer (14 August 1996); Letter from Raymond McNamara to Peter Leslie (15 August 1996) attaching Annotated Invitation to Make an Offer: Heads of Agreement (14 August 1996), [6]; Letter from Raymond McNamara to Peter Leslie (11 September 1996) attaching Annotated Invitation to Make an Offer: Heads of Agreement (4 September 1996).

[52] Witness Statement of Neville Beer (8 May 2017), [47.2].

[53] Letter from Peter Leslie to Gabrielle Noonan (26 November 1996), copied to Mr Beer, Mr S MacRae and Mr M Graham.

[54] Witness Statement of Raymond McNamara (4 August 2017), [12].

[55] Witness Statement of Angelika Dickschen (7 June 2017), [25].

[57] Witness Statement of Neville Beer (8 May 2017), [62]-[63].

[58] Gandel Management Limited Board Meeting Agenda (6 November 1996).

[59] Gandel Management Limited Board Papers (30 October 1996), [5.2.5] (Chadstone Master Plan); Invitation to Make an Offer: Heads of Agreement (23 October 1996).

[60] Witness Statement of Neville Beer (8 May 2017), [63]-[65].

[62] Defendant's Outline of Closings Submissions (28 November 2017), [33], [34]; see also Plaintiffs' Closing Submissions (27 November 2017), [88]-[96].

[63] Invitation to Make an Offer: Heads of Agreement (15 October 1996), [8].

[64] Draft Lease (23 October 1996), cl 4.3(b)(ii).

[65] Board Papers, 29 "Gandel Management Limited Item 5.2.4 Chadstone Master Plan".

[66] Gandel Management Limited, Board Minutes (4 December 1996), 5 referring to Board Papers, 29 "Gandel Management Limited Item 5.2.4 Chadstone Master Plan".

[67] Gandel Management Limited, Board Papers (18 February 1997), [4.4].

[68] Witness Statement of Raymond McNamara (4 August 2017), [14]; see also Letter from Peter Leslie to Gabrielle Noonan (26 November 1996).

[69] Letter from Angelika Dickschen to Andrew Erikson (5 September 1996).

[70] Letter from Angelika Dickschen to Raymond McNamara (24 October 1996).

[71] See Letter from Neville Beer to Raymond McNamara (11 December 1996), [1].

[72] See e.g. Letter from Neville Beer to Raymond McNamara (16 January 1997); Letter from Gabrielle Noonan to Neville Beer (23 January 1997).

[73] Witness Statement of Neville Beer (8 May 2017), [74]; Witness Statement of Angelika Dickschen (7 June 2017), [24].

[74] Witness Statement of Neville Beer (8 May 2017), [49], [91]; and Transcript, 123 (Angelika Dickschen).

[75] Letter from Neville Beer to Raymond McNamara (16 January 1997); Transcript, 101-2.

[76] Witness Statement of Angelika Dickschen (7 June 2017), [30].

[77] Witness Statement of Raymond McNamara (4 August 2017), [14].

[78] Plaintiffs' Closing Submissions (27 November 2017), [99].

[79] Witness Statement of Neville Beer (8 May 2017), [76]; Letter from Neville Beer to Raymond McNamara (11 December 1996).

[80] Witness Statement of Neville Beer (8 May 2017), [78].

[81] Witness Statement of Neville Beer (8 May 2017), [80]; Facsimile from Gabrielle Noonan to Angelika Dickschen (5 March 1997).

[82] Witness Statement of Neville Beer (8 May 2017), [77].

[83] Witness Statement of Neville Beer (8 May 2017), [77].

[84] Gandel Management Limited, Board Papers (18 February 1997), [4.3]-[4.4].

[85] Witness Statement of Neville Beer (8 May 2017), [79].

[86] Plaintiffs' Closing Submissions (27 November 2017), [102].

[87] Letter from Gabrielle Noonan to Angelika Dickschen (3 April 1997).

[88] Letter from Gabrielle Noonan to Angelika Dickschen (3 April 1997).

[89] Draft Lease (3 April 1997), Fourth Schedule, 1-2.

[90] Defendant's Outline of Closing Submissions (28 November 2017), [38].

[91] Letter from Andrew Erikson to Angelika Dickschen (11 October 1996) attaching a draft lease.

[93] Letter from Angelika Dickschen to Raymond McNamara (24 October 1996).

[94] Letter from Neville Beer to Raymond McNamara (11 December 1996).

[95] Letter from Gabrielle Noonan to Angelika Dickschen (3 April 1997) with attached draft lease.

[96] Facsimile from Angelika Dickschen to Gabrielle Noonan (16 April 1997).

[97] Letter of Advice from Andrew Erikson to Angelika Dickschen (14 April 1997) regarding Myer's draft AFL and Lease; Annotated Analysis of Draft Lease (15 April 1997); Facsimile from Angelika Dickschen to Andrew Erikson (17 April 1997); Facsimile from Andrew Erikson to Angelika Dickschen (17 April 1997); Facsimile from Angelika Dickschen to Andrew Erikson (23 April 2017); Facsimile from Angelika Dickschen to Gabrielle Noonan (24 April 1997); Myer Lease - Summary (24 April 1997); Mallesons Stephen Jaques - File Note (24 April 1997); Myer Agreement for Lease and Lease Summary (9 May 1997); Letter from John Landerer to Angelika Dickschen (12 May 1997); and see also the detailed treatment of this process as set out in the Plaintiffs' Closing Submissions (27 November 2017), [106]-[121].

[98] Facsimile from Angelika Dickschen to Campbell Paine (30 May 1997) with proposed changes to the draft lease.

[99] Letter from Angelika Dickschen to Campbell Paine (30 May 1997).

[100] Letter from Campbell Paine to Angelika Dickschen (20 June 1997) with attached Draft Lease (20 June 1997); compare with the executed Lease (4 September 2001); and see Plaintiffs' Closing Submissions (27 November 2017), [122]-[135].

[101] Defendant's Outline of Closing Submissions, (28 November 2017), [41].

[102] Memorandum from Paul Powderly to Angelika Dickschen (22 May 1997).

[103] Witness Statement of Angelika Dickschen (7 June 2017), [45.1]-[45.3]. The role of Gandel Asset Management Pty Ltd is explained in Witness Statement of Neville Beer (8 May 2017), [10.2].

[104] Facsimile from Angelika Dickschen to Andrew Erikson (23 May 1997) attaching Myer Agreement for Lease and Lease Comments (23 May 1997); see also Handwritten notes of Angelika Dickschen (22-23 May 1997) - note that Angelika Dickschen's memorandum reveals a close reading of the amended Lease, picking up on cross-referencing problems and clauses that do not work as intended.

[105] Transcript, 133 (Angelika Dickschen).

[106] Facsimile from Angelika Dickschen to Andrew Erikson (23 May 1997); Myer Agreement for Lease and Lease Comments (23 May 1997). The handwritten notes on the latter document are Erikson's notes, see Transcript, 140-1 (Andrew Erikson); see generally Transcript, 136, 137-8, 139-40 (Andrew Erikson).

[107] Memorandum from Angelika Dickschen to Neville Beer (26 May 1997); attaching Draft Letter from Angelika Dickschen to Campbell Paine (26 May 1997).

[108] Memorandum from Angelika Dickschen to John Gandel and Clive Appleton (6 June 1997), attaching Draft Agreement for Lease (20 May 1997) and Annotated Draft Lease (20 May 1997) see especially the Fourth Schedule.

[110] Transcript, 133 (Angelika Dickschen).

[111] Facsimile from Angelika Dickschen to Campbell Paine (30 May 1997).

[112] Transcript, 133, (Angelika Dickschen).

[113] See e.g. Facsimile from Angelika Dickschen to Campbell Paine (30 May 1997), 3.

[114] Myer Agreement for Lease and Lease Comments (23 May 1997). The handwritten notes are Mr Erikson's notes, see Transcript, 140-1 (Andrew Erikson).

[116] Letter from Angelika Dickschen to Raymond McNamara (24 October 1996) attaching Draft Lease (23 October 1996). On 3 April 1997, Myer's response proposes a different formula (see Draft Lease (3 April 1997), Fourth Schedule). On 16 April 1997, Ms Dickschen again "suggests" the Second Mallesons Formulation, see Facsimile from Angelika Dickschen to Gabrielle Noonan (16 April 1997) (and attachments); Myer responds and accepts changes to other clauses, however it persists with its formula regarding variable outgoings.

[117] Plaintiffs' Closing Submissions (27 November 2017), [134]-[136].

[118] Plaintiffs' Closing Submissions (27 November 2017), [136].

[119] Witness Statement of Neville Beer (8 May 2017), [97].

[120] Facsimile from Raymond McNamara to Neville Beer (2 July 1997).

[121] Witness Statement of Raymond McNamara (4 August 2017), [57].

[122] Witness Statement of Jonathan Garland (4 August 2017), particularly at [5]-[11].

[123] Witness Statement of Raymond McNamara (4 August 2017), [24].

[124] Witness Statement of Neville Beer (8 May 2017), [99].

[125] Witness Statement of Neville Beer (8 May 2017), [99] and documents referred to therein.

[126] Facsimile from Raymond McNamara to Neville Beer (16 July 1997).

[127] Witness Statement of Angelika Dickschen (7 June 2017), [51] and the documents cited therein.

[128] See e.g. Facsimile from Angelika Dickschen to Gabrielle Noonan (14 August 1997).

[129] Letter from Gabrielle Noonan to Angelika Dickschen (19 August 1997), with attachments including the Lease.

[130] Witness Statement of Neville Beer (8 May 2017), [105].

[133] Letter from Andrew Erikson to the directors of Perpetual Trustees Australia Ltd and Bridgehead Pty Ltd (8 September 2017).

[135] Defendant's Outline of Closings (28 November 2017), [55].

[136] Transcript, 144 (Andrew Erikson).

[137] Facsimile from Andrew Erikson to Campbell Paine (25 August 1997).

[139] Facsimile from Angelika Dickschen to Campbell Paine (15 September 1997).

[140] Agreement for Lease: Perpetual Trustees Australia Limited, Bridgehead Pty Ltd and Myer Stores Limited (6 November 1997), Schedule 1.

[141] Witness Statement of Stephen Bott (4 August 2017). The Plaintiffs elected not to cross-examine him.

[142] Witness Statement of Angelika Dickschen (7 June 2017), [45.1]-[45.3]. The role of Gandel Asset Management Pty Ltd is explained in Witness Statement of Neville Beer (8 May 2017), [10.2]. See the signature on page 47 of the Agreement for Lease: Perpetual Trustees Australia Limited, Bridgehead Pty Ltd and Myer Stores Limited (6 November 1997).

[144] Witness Statement of Phillip Smith (3 August 2017); Witness Statement of Bruce Fethers (17 November 2017). The Plaintiffs elected not to cross-examine them; and see Transcript, 263.

[145] Plaintiffs' Closing Submissions (27 November 2017), [164]-[167].

[146] Witness Statement of Mark Feikema (2 June 2017), [11]. Constitution of the Gandel Retail Trust; Historical Company Extract for Vicinity NVN Trust (25 September 2017), item 5100.

[147] Gandel Retail Trust - Trustee's Retirement Notice (22 June 1999).

[148] Gandel Retail Trust Custody Agreement (10 September 1999).

[149] Witness Statement of Mark Feikema (2 June 2017), [16].

[150] Lease between Perpetual Trustees Australia Limited, Bridgehead Pty Ltd, Gandel Management Limited and Myer Stores Limited (4 September 2001).

[151] Witness Statement of Mark Feikema (2 June 2017), [17].

[152] Deed of Retirement and Appointment of a Responsible Entity: Gandel Retail Trust (2 October 2002); Historical Company Extract for Vicinity NVN Trust (25 September 2017), item 5107.

[153] Witness Statement of Jane Pendlebury (4 August 2017). See also Annotated Actual Outgoings for Financial Year ending 30 June 2008 (31 October 2008); Annotated Actual Outgoings for Financial Year ending 30 June 2010 (11 November 2010).

[154] Witness Statement of Jane Pendlebury (4 August 2017). See also Annotated Adjustment Note for Outgoings in Year Ending 30 June 2007 (20 September 2007); Annotated Adjustment Note for Outgoings in Year Ending 30 June 2006 (28 September 2006).

[155] Plaintiffs' Closing Submissions (27 November 2017), [168].

[156] Plaintiffs' Closing Submissions (27 November 2017), [169].

[157] Chadstone Budget - Outgoings - Myer (2006/07).

[158] Letter to Myer from Natalie Andreadis of Colonial First State Property Management (15 September 2017) attaching Independent Audit Report of Ernst & Young (8 August 2007) and Schedule of Recoverable Outgoings for year ended 30 June 2007.

[159] Chadstone Myer Actual Outgoings (2006/07).

[160] Annotated Adjustment Note for Outgoings in Year Ending 30 June 2007 (20 September 2007).

[161] Witness Statement of Jonathan Garland (4 August 2017), [5]-[10].

[163] Chadstone Consolidated Budget for the Years Ending 30 June 2007 to 30 June 2011: Majors Summary, 3, 4.

[164] Chadstone Consolidated Budget for the Years Ending 30 June 2007 to 30 June 2011: Majors Summary, 3, 4.

[165] Chadstone Consolidated Budget for the Years Ending 30 June 2007 to 30 June 2011: Majors Summary, 3, 4.

[166] Chadstone Consolidated Budget for the Years Ending 30 June 2007 to 30 June 2011: Majors Summary, 3, 4.

[168] See e.g. Chadstone Consolidated Budget for the Years Ending 30 June 2007 to 30 June 2011: Majors Summary; Chadstone Consolidated Budget for the Years Ending 30 June 2008 to 30 June 2012: Majors Summary; Chadstone Consolidated Budget for the Years Ending 30 June 2009 to 30 June 2013: Majors Summary; Chadstone Consolidated Budget for the Years Ending 30 June 2010 to 30 June 2014: Majors Summary.

[169] See e.g. Chadstone Budget 2006/07 Recovery Profile - Major & Specialty Tenant Split; Chadstone Budget 2007/08 Recovery Profile - Major & Specialty Tenant Split; Chadstone Budget 2008/09 Recovery Profile - Major & Specialty Tenant Split; Chadstone Budget 2009/10 Recovery Profile - Major & Specialty Tenant Split; Chadstone Budget 2010/11 Recovery Profile - Major & Specialty Tenant Split.

[175] Witness Statement of Ashley Brown (23 November 2017), [22]-[32]; esp [24]-[25]; Transcript, 154-5.

[177] Plaintiffs' Closing Submissions (27 November 2017), [171].

[178] Witness Statement of Ashley Brown (23 November 2017), [22]-[32].

[179] Witness Statement of Ashley Brown (23 November 2017), [31].

[181] Appendix 2 to Financial Issue Summary (April 2013): Chadstone Myer Lease Outgoings Clause.

[186] Transcript, 107, 118 (Neville Beer).

[187] Witness Statement of Neville Beer (8 May 2017), [18].

[189] Plaintiffs' Closing Submissions (27 November 2017), [172]-[181]; and see also [182]-[187] with respect to correspondence etc with Myer in relation to the sums with respect to variable outgoings which the Plaintiffs sought to recover.

[190] E.g. Budget FY16: 2016-20 Chadstone: Risks & Opportunities.

[195] See Email from Martin James to Ashley Brown and David Seward (29 May 2014).

[197] See Email from Martin James to Neville Beer, Mark Monagle and David Seward (13 April 2015).

[199] Letter from Jo Turner to Timothy Clark (2 December 2015).

[200] Letter from Jo Turner to Timothy Clark (24 December 2015).

[201] Email from Diane Hall to Timothy Clark, David Seward and Jo Turner (12 January 2016); Duplicate Adjustment Note from Vicinity to Myer (24 December 2015); Adjustment Note from Vicinity to Myer (24 December 2015).

[202] Letter from Timothy Clark to Jo Turner (2 February 2016).

[203] Witness Statement of Ashley Brown (23 November 2017), [24]-[31].

[204] Transcript, 109, 112 (Neville Beer).

[206] Email from Neville Beer to Martin James, Mark Monagle, Paul Donoghue and George Karabatsos (25 August 2014); Transcript, 111-2 (Neville Beer).

[207] Email from Martin James to Neville Beer, Mark Monagle, David Seward, Ashley Brown, Tony Gilchrist, Paul Donoghue and Matthew Norden (27 February 2014); Email from Martin James to Ashley Brown and David Seward (29 May 2014); Email from Neville Beer to Martin James, Mark Monagle, Paul Donoghue and George Karabatsos (25 August 2014); Email from Martin James to David Seward and Tony Sprekos (21 April 2015).

[209] Transcript, 176-7 (Ashley Brown).

[212] Budget FY16: 2016-20 Chadstone, Risks & Opportunities, 22; Transcript, 176 (Ashley Brown); see also Transcript, 177-8 (Ashley Brown).

[213] Transcript, 178-80 (Ashley Brown). Mr Brown was not aware of Annexure B ever being used by the Plaintiffs for their own purposes and the documents evidence the use of a different formula.

[214] Transcript, 178-80 (Ashley Brown). The Plaintiffs have not otherwise discovered any document using the formula in Annexure B, so the usual inference would apply.

[215] Mount Bruce Mining v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116 [47]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) (2017) ALJR 486 at 496 [45], 502[73]; and Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at 656-7 [35].

[216] Adams v Lambert (2006) 228 CLR 409 at 417 [21].

[217] Australian Broadcasting Commission v Australasian Performing Right Association Limited [1973] HCA 36; (1973) 129 CLR 99 at 109; Trust Co (Nominees) Ltd v Banksia Securities Ltd (recs and mgrs. apptd) [2016] VSCA 324, [36]-[37].

[218] Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522 at 529 [16].

[219] Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352; Mount Bruce Mining v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116 [48].

[220] Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216; (2012) 45 WAR 29 at 51 [81], approved in Apple and Pear Australia Ltd v Pink Lady America LLC [2016] VSCA 280; (2016) 343 ALR 112 at 149 [121].

[221] Mount Bruce Mining v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116-7 [48]-[49].

[222] Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 461-2 [22]; Mount Bruce Mining v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116-7 [48]-[49].

[223] [2009] NSWCA 407; (2009) 76 NSWLR 603 at 619 [24].

[224] Royal Botanical Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 at 58-9 [26], 60 [30].

[225] Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 426-7; Watson v Phipps (1986) 60 ALJR 1 at 3; Murray Goulburn Co-operative Ltd v Cobram Laundry Service Pty Ltd [2001] VSCA 57, [26]; Westpac Banking Corporation v Tanzone [2000] NSWCA 25; (2000) 9 BPR 17,521 at 17,524 [22]-[23] ("Tanzone"); National Australia Bank Ltd v Clowes [2013] NSWCA 179; (2013) 8 BFRA 600 at 608-9 [34]-[38]; Bank of Queensland Ltd v Chartis Australia Insurance Ltd [2013] QCA 183, [36]; Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 89 NSWLR 633 at 661 [117]-[118]; and see Lewison and Hughes, The Interpretation of Contracts in Australia (Lawbook Co, 2012), [9.01].

[226] Westpac Banking Corporation v Tanzone [2000] NSWCA 25; (2000) 9 BPR 17,521 at 17,524 [21]; National Australia Bank Ltd v Clowes [2013] NSWCA 179; (2013) 8 BFRA 600 at 609 [38]; Bank of Queensland Ltd v Chartis Australia Insurance Ltd [2013] QCA 183, [36], Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 89 NSWLR 633 at 661 [117].

[227] National Australia Bank Ltd v Clowes [2013] NSWCA 179; (2013) 8 BFRA 600 at 609 [36], applied in Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 89 NSWLR 633 at 661 [118].

[228] Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521 at 17,524 [19]-[20] agreeing with Windeyer J in Tanzone Pty Ltd v Westpac Banking Corporation [1999] NSWSC 478; (2000) 9 BPR 17,287 at 17,294 [31].

[229] Mainteck Services Pty Ltd v Stein Heurtey [2014] NSWCA 184; (2014) 89 NSWLR 633; National Australia Bank Ltd v Clowes [2013] NSWCA 179; (2013) 8 BFRA 600; Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297; (2011) 15 BPR 29,545.

[230] [2013] NSWCA 179; (2013) 8 BFRA 600.

[231] National Australia Bank v Clowes [2013] NSWCA 179; (2013) 8 BFRA 600 at 608 [34].

[232] Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521 at 17,525 [27].

[233] Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521 at 17,525 [29], the possible consequences being set out at 17,525 [28].

[234] Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521 at 17,525 [30].

[235] Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521 at 17,526 [34].

[236] Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137, [55]; approved by Gummow, Heydon and Bell JJ in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604.

[237] Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 at 109.

[238] Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297; (2011) 15 BPR 29,545 at 29,549 [18]; see similarly National Australia Bank v Clowes [2013] NSWCA 179; (2013) 8 BFRA 600 at 609 [38]; Mainteck, at 662 [120]; and Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137, [55].

[239] Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297; (2011) 15 BPR 29,545 at 29,549 [18]; Mainteck at 662 [120]; and National Australia Bank v Clowes [2013] NSWCA 179; (2013) 8 BFRA 600 at 609 [38].

[240] Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 426-7; see also Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297; (2011) 15 BPR 29,545 at 29,549 [18]; National Australia Bank v Clowes [2013] NSWCA 179; (2013) 8 BFRA 600 at 609 [38].

1. [241] [2016] VSCA 280; (2016) 343 ALR 112 at 158 [152]; see also at 178 [228].

[242] Plaintiffs' Closing Submissions (27 November 2017), [207].

[243] See above, [76].

[244] See above, [30]-[31].

[245] See above, [38].

[246] See above, [39].

[247] Letter from Gabrielle Noonan to Angelika Dickschen (3 April 1997); Draft Lease (3 April 1997).

[248] Transcript, 180 (Ashley Brown). Mr Brown was not aware of Annexure B ever being used by the plaintiffs for their own purposes and the documents evidence the use of a different formula. The plaintiffs have not otherwise discovered any document using the formula in Annexure B, so the usual inference would apply. Compare Transcript, 176-80 (Ashley Brown), regarding the counterfactual resulting in a figure of $6.337million to the end of the 2016 financial year.

[249] Transcript, 152-4, 171 (Ashley Brown); Transcript, 118 (Neville Beer).

[251] And there was in fact a zero increase in the financial year 2014/15 (see Transcript, 200).

[252] Transcript, 171 (Ashley Brown); and see above, [65]-[67].

[253] Memorandum from Paul Powderly to Angelika Dickschen (22 May 1997).

[254] Memorandum from Paul Powderly to Angelika Dickschen (22 May 1997).

[255] Handwritten notes of Angelika Dickschen (22-23 May 1997). See the reference to the "previous period" and to "12 months earlier" in Ms Dickschen's handwritten notes and calculations.

[256] Letter from Gabrielle Noonan to Angelika Dickschen (3 April 1997) attaching Draft Lease (3 April 1997).

[257] Cf Plaintiffs' Closing Submissions (27 November 2017), [142]-[144].

[258] See below, [104]-[106] and [34]-[35] as to Gabrielle Noonan's negotiating role.

[259] Amended Defence to Further Amended Statement of Claim (30 October 2017), [10], [14].

[260] Plaintiffs' Closing Submissions (27 November 2017), [213]-[221].

[262] Defendant's Outline of Closing Submissions (28 November 2017), [111].

[263] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 at 483 [33]; and see also Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 713-4 [460].

[264] [2016] HCA 47; (2016) 339 ALR 200 at 223 [103]-[104] ("Simic"); see also Denis SK Ong, Ong on Rectification (Federation Press, 2017) 102-5.

[265] Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 340-4; Club Cape Schanck Resort Co Ltd v Cape County Club Pty Ltd [2001] VSCA 2; (2001) 3 VR 526 at 539 [39]; RCR Tomlinson Ltd v Russell [2015] WASCA 154, [51].

[266] Pukallus v Cameron [1982] HCA 63; (1982) 180 CLR 447 at 452; Mander Ltd v Clements [2005] WASCA 67; (2005) 30 WAR 46 at 50 [11]; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 712 [451].

[267] Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 712 [451]; Denis SK Ong, Ong on Rectification (Federation Press, 2017) 131-4.

[268] Simic v NSW Land & Housing Corp [2016] HCA 47; (2016) 339 ALR 200 at 223 [103].

[269] See also Denis SK Ong, Ong on Rectification (Federation Press, 2017) 124-5.

[270] Simic v NSW Land & Housing Corp [2016] HCA 47; (2016) 339 ALR 200 at 209 [32], 226 [117]. See also Patrick Stevedores Operations (No 2) Pty Ltd v Melbourne Port Lessor Pty Ltd and Anor [2016] VSC 528, [38].

[271] Slee v Warke [1949] HCA 57; (1949) 86 CLR 271 at 281; Club Cape Schanck Resort Co Ltd v Cape Country Club Pty Ltd [2001] VSCA 2; (2001) 3 VR 526 at 530 [14]; Ryledar Pty Ltd v Euhporic Pty Ltd [2007] NSWCA 65; (2009) 69 NSWLR 603 at 632 [138]; Patrick Stevedores Operations (No 2) Pty Ltd v Melbourne Port Lessor Pty Ltd and Anor [2016] VSC 528, [38].

[272] Club Cape Schanck Resort Co Ltd v Cape Country Club Pty Ltd [2001] VSCA 2; (2001) 3 VR 526 at 530 [14]; Ryledar Pty Ltd v Euhporic Pty Ltd [2007] NSWCA 65; (2009) 69 NSWLR 603 at 630-1 [130]-[131]; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 712 [451]; Patrick Stevedores Operations (No 2) Pty Ltd v Melbourne Port Lessor Pty Ltd and Anor [2016] VSC 528, [38].

[273] Ryledar Pty Ltd v Euhporic Pty Ltd [2007] NSWCA 65; (2009) 69 NSWLR 603 at 641-2 [179]-[182], 657 [267]; Denis SK Ong, Ong on Rectification (Federation Press, 2017) 85-6, 115-8, 147-8.

[274] Ryledar Pty Ltd v Euhporic Pty Ltd [2007] NSWCA 65; (2009) 69 NSWLR 603 at 655 [259]; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 710 [445].

[275] Ryledar Pty Ltd v Euhporic Pty Ltd [2007] NSWCA 65; (2009) 69 NSWLR 603 at 642 [182]; Denis SK Ong, Ong on Rectification (Federation Press, 2017) 85-6, 115-8, 123, 126-7.

[276] Pukallus v Cameron [1982] HCA 63; (1982) 180 CLR 447 at 452; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 711 [446]; Denis SK Ong, Ong on Rectification (Federation Press, 2017) 119.

[277] Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 712 [451]; Pukallus v Cameron [1982] HCA 63; (1982) 180 CLR 447 at 452; Leibler v Air New Zealand Ltd (No 2) [1999] 1 VR 1 at 4-5 [9], 15 [38], 28 [73]; Club Cape Schanck Resort Co Ltd v Cape Country Club Pty Ltd [2001] VSCA 2; (2001) 3 VR 526 at 528 [6], 529-30 [10], 539 [38]; Ryledar Pty Ltd v Euhporic Pty Ltd [2007] NSWCA 65; (2009) 69 NSWLR 603 at 638 [161], 642 [182].

[278] Ryledar Pty Ltd v Euhporic Pty Ltd [2007] NSWCA 65; (2009) 69 NSWLR 603 at 630-1 [130]-[131].

[279] Leibler v Air New Zealand Ltd (No 2) [1999] 1 VR 1 at 19 [49]; Club Cape Schanck Resort Co Ltd v Cape Country Club Pty Ltd [2001] VSCA 2; (2001) 3 VR 526 at 539 [38]; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 713-4 [460]-[461].

[280] Leibler v Air New Zealand Ltd (No 2) [1999] 1 VR 1 at 19 [49]; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 713-4 [460]-[461].

[281] Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 713-4 [460]-[461].

[282] Christian Youth Camps Ltd v Cobaw Community Health Services Ltd [2014] VSCA 75; (2014) 50 VR 256 at 283-6 [102]-[110].

[283] Christian Youth Camps Ltd v Cobaw Community Health Services Ltd [2014] VSCA 75; (2014) 50 VR 256 at 284 [105].

[284] Christian Youth Camps Ltd v Cobaw Community Health Services Ltd [2014] VSCA 75; (2014) 50 VR 256 at 284 [105].

[285] Anfrank Nominees Pty Ltd v Connel (1989) 1 ACSR 365 at 388-9; applied in RCR Tomlinson Ltd v Russel [2017] WASCA 129, [87]; Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55, [33].

[286] Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55, [41]; Thiess Pty Ltd v FLMIDTH Minerals Pty Ltd [2010] QSC 6, [126]; Thiess Pty Ltd v Arup Pty Ltd [2012] QSC 185, [198].

[287] Thiess Pty Ltd v FLMIDTH Minerals Pty Ltd [2010] QSC 6, [126].

[288] Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55, [41]; Thiess Pty Ltd v Arup Pty Ltd [2012] QSC 185, [198].

[289] Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55, [41]; Thiess Pty Ltd v Arup Pty Ltd [2012] QSC 185, [198].

[290] Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55, [41], [43]; Thiess Pty Ltd v FLMIDTH Minerals Pty Ltd [2010] QSC 6, [126]; Thiess Pty Ltd v Arup Pty Ltd [2012] QSC 185, [198].

[291] Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55, [41]-[43]; Liberty Mercian Ltd v Cuddy Civil Engineering Pty Ltd [2013] EWHC 2688, [130].

[292] Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55, [41]-[43]; Thiess Pty Ltd v Arup Pty Ltd [2012] QSC 185, [198]-[200].

[293] See Plaintiffs' Closing Submissions (27 November 2017), [234].

[294] See Plaintiffs' Closing Submissions (27 November 2017), [235] (referring to Myer's Opening Submission at [31]).

[295] Witness Statement of Andrew Erikson (5 June 2017), [27].

[296] Defendant's Outline of Opening Submissions (15 November 2017), [32(d)].

[297] See above, [84]-[86].

[298] Transcript, 133 (Angelika Dickschen).

[299] Facsimile from Angelika Dickschen to Campbell Paine (30 May 1997).

[300] Transcript, 133 (Angelika Dickschen).

[303] Facsimile from Raymond McNamara to Neville Beer (2 July 1997); see also Witness Statement of Raymond McNamara (4 August 2017), [57].

[304] Witness Statement of Raymond McNamara (4 August 2017), [24].

[306] See Defendant's Outline of Closing Submissions (28 November 2017), [118]-[125].

[307] See the description in Amended Defence to Further Amended Statement of Claim (30 October 2017), sch 1 and the examples in Amended Defence to Further Amended Statement of Claim (30 October 2017), sch 2.

[308] Transcript, 178 (Ashley Brown); and see Transcript 275-7.

[310] Transcript, 178-9 (Ashley Brown).

[311] First in December 1996: see Letter from Neville Beer to Raymond McNamara (11 December 1996), [1]; Second in April/May 1997: see Facsimile from Angelika Dickschen to Gabrielle Noonan (16 April 1997) (see especially p. 14 of the attached document); and Myer's (and the Plaintiffs') failure to implement it thereafter.

[312] See Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at 724 [512].

[313] Amended Defence to Further Amended Statement of Claim (30 October 2017), [25(e)].

[314] [2011] HCA 26; (2011) 243 CLR 253 at 279-80 [79]; citing Deane J in Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 at 337-8, 340.

[315] Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 at 337; Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 at 267, 279-80, 294 [27], [79], [134]; CSR Ltd v Amaca Pty Ltd [2016] VSCA 320 ("CSR").

[316] Glasson v Fuller [1922] SAStRp 8; [1922] SASR 148 at 161.

[317] Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 at 341 quoting Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1279.

[318] Plaintiffs' Closing Submissions (27 November 2017), [300] and Defendant's Outline of Closing Submissions (28 November 2017), [140].

[319] Plaintiffs' Closing Submissions (27 November 2017), [302].

[320] Plaintiffs' Closing Submissions (27 November 2017), [302].

[321] Defendant's Outline of Closing Submissions (28 November 2017), [142].

[322] Defendant's Outline of Closing Submissions (28 November 2017), [144]-[147].

[323] Defendant's Outline of Closing Submissions (28 November 2017), [148].

[324] Email from Neville Beer to Martin James, Mark Monagle, Paul Donoghue and George Karabatsos (25 August 2017) and the evidence of Neville Beer, Transcript, 111.

[325] Email from Martin James to David Seward and Tony Sprekos (21 April 2015); the evidence of Neville Beer, Transcript, 113-4 and the evidence of Ashley Brown, Transcript, 158.

[328] Defendant's Outline of Closing Submissions (28 November 2017), [149]-[150].

[329] See Peter W Young, Clyde Croft and Megan Louise Smith, On Equity (Lawbook Co, 2009), [17.10], [17.150].

[330] Peter W Young, Clyde Croft and Megan Louise Smith, On Equity (Lawbook Co, 2009), [17.10], citing Commonwealth v Verwayen (1990) 170 CLR 394 at 435 (per Deane J).

[331] I C F Spry, The Principles of Equitable Remedies (Lawbook Co, 9th ed, 2014), 630.

[333] Further Amended Statement of Claim (23 October 2017).

[334] Defendant's Outline of Closing Submissions (28 November 2017), [151].

[337] See above, [127]-[128] where the principle in this respect is stated, with reference to the decisions in Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 and the other cases there cited.

[338] I C F Spry, The Principles of Equitable Remedies (Lawbook Co, 9th ed, 2014), 630.

[339] [2009] NSWCA 410; (2009) 262 ALR 654-678 [163]; and see also Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239-40, cited with approval in Turner v General Motors (Australia) Pty Ltd [1929] HCA 22; (1929) 42 CLR 352 at 366, 369; Fysh v Page [1956] HCA 13; (1956) 96 CLR 233; Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 at 341 and CSR Ltd v Amaca Pty Ltd [2016] VSCA 320, [242].

[340] Myer has the burden on both acquiescence and laches - Savage v Lunn [1998] NSWCA 203; BC9800548 at 58-9.

[341] Crawley v Short [2009] NSWCA 410; (2009) 262 ALR 654 at 678 [163]; CSR Ltd v Amaca Pty Ltd [2016] VSCA 320, [241].

[342] Sze Tu v Lowe [2014] NSWCA 462; (2014) 89 NSWLR 317 at 391 [418].

[343] Sze Tu v Lowe [2014] NSWCA 462; (2014) 89 NSWLR 317 at 393-4 [428].

[344] Crawley v Short [2009] NSWCA 410; (2009) 262 ALR 654 at 678 [169].

[345] CSR Ltd v Amaca Pty Ltd [2016] VSCA 320, [268]-[269].

[346] Crawley v Short [2009] NSWCA 410; (2009) 262 ALR 654 at 678 [171].

[347] Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 at 330; Sze Tu v Lowe [2014] NSWCA 462; (2014) 89 NSWLR 317 at 392 [423]; CSR Ltd v Amaca Pty Ltd [2016] VSCA 320, [267].

[348] Crawley v Short [2009] NSWCA 410; (2009) 262 ALR 654 at 679 [175]-[180]; Gerace v Auzhair Supplies Pty Ltd (in liq) [2014] NSWCA 181; (2014) 87 NSWLR 435 at 546-7 [73].

[349] See Defendant's Outline of Closing Submissions (28 November 2017), [155]-[160].

[350] See above, [16].

[351] Peter W Young, Clyde Croft and Megan Louise Smith, On Equity (Lawbook Co, 2009), [17.20].

[352] P W Young, Declaratory Orders (Butterworths, 2nd ed, 1984), 5 [104] referring to Anderson, Actions for Declaratory Judgments (Harrison Co, Atlanta, Georgia, 2nd ed, 1951); cf Ambridge Investments Pty Ltd (in liq) (rec apptd) v Baker [2010] VSC 59, [61] (Vickery J).

[353] Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 at 581-2. Section 36 of the Supreme Court Act 1986 states that "A proceeding is not open to objection on the ground that a merely declaratory judgment is sought, and the Court may make binding declarations of right without granting consequential relief".

[354] J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015), [19.315].

[355] Mainteck [2014] NSWCA 184; (2014) 89 NSWLR 633 at 661 [115] and see the heading immediately before that paragraph.

[356] [1938] NSWStRp 30; (1938) 38 SR (NSW) 397.

[357] [1938] NSWStRp 30; (1938) 38 SR (NSW) 397 at 401. See also Lewis v Wilson (1997) 42 NSWLR 228 at 230; Lewis v Lamb [2011] NSWSC 873, [18]; Steiner v Strang [2016] NSWC 9, [37]-[38], [40]-[41]; Bank of NSW v Brown [1983] HCA 1; (1983) 151 CLR 514 at 535; and see Middleditch v Ellis [1848] EngR 757; (1848) 2 Exch 623; 154 ER 640.

[358] Laycock v Pickles [1863] EngR 944; (1863) 4 B&S 497 at 506; [1863] EngR 944; 122 ER 546 at 549, cited in Hampton Gold Mining Areas Ltd v Metals Exploration Ltd (1995)17 WAR 30 at 38, 46; Bank of NSW v Brown [1983] HCA 1; (1983) 151 CLR 514 at 535; Executor Trustee & Agency Co of South Australia Ltd v Thompson [1919] HCA 51; (1919) 27 CLR 162 at 170.

[359] J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015), [26-105] quoting Laycock v Pickles [1863] EngR 944; (1863) 4 B&S 497 at 506; [1863] EngR 944; 122 ER 546 at 549.

[360] Executor Trustee & Agency Co of South Australia Ltd v Thompson [1919] HCA 51; (1919) 27 CLR 162 at 170; Commonwealth Dairy Produce Equalisation Committee Ltd v McCabe [1938] NSWStRp 30; (1938) 38 SR (NSW) 397 at 401; Lockyer v Macready [1965] NSWR 801 at 819-20; Lewis v Lamb [2011] NSWSC 873 at [18].

[361] Hampton Gold Mining Areas Ltd v Metals Exploration Ltd (1995) 17 WAR 30 at 44.

[362] J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015), [26-110].

[363] Anglo-American Asphalt Co v Crowley Russel & Co [1945] 2 All ER 324 at 331.

[364] [1983] HCA 1; (1983) 151 CLR 514 at 536.

[365] J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015), [26-110]; Hampton Gold Mining Areas Ltd v Metals Exploration Ltd (1995) 17 WAR 30 at 44, 46.

[366] Defendant's Outline of Closing Submissions (28 November 2017), [169].

[367] Defendant's Outline of Closing Submissions (28 November 2017), [171]-[175].

[368] Plaintiffs' Opening Submissions (15 November 2017), [30].

[369] See Australia Estates Pty Ltd v Cairns City Council [2005] QCA 328; Rees v Rees [2016] VSC 452.

[370] See Defendant's Outline of Closing Submissions (28 November 2017), [182].

[371] Plaintiffs' Opening Submissions (15 November 2017), [42].

[372] Defendant's Outline of Closing Submissions (28 November 2017), [186].

[373] CA & CA Ballan Pty Ltd v Olive Hume (Australia) Pty Ltd [2017] VSCA 11, [32]; Denis SK Ong, Ong on Rectification (Federation Press, 2017) 7-10, 139-40.

[374] Spathis v Hanave Investments Co Pty Ltd [2002] NSWSC 304, [108]-[111].

[375] There is no period prescribed for rectification (cf s 21 of the LAA for the equitable claims against trustees) and there is no common law claim analogous to rectification so s 5(8) is not engaged.

[376] Peter W Young, Clyde Croft and Megan Louise Smith, On Equity (Lawbook Co, 2009), [17.290].

[377] Kone Elevators Pty Ltd v Popa [2006] VSCA 26, [21]; Louis v Galbally & O'Bryan [2007] VSCA 158, [23].

[378] And see Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041; and C E Health Underwriting & Insurance (Australia) Pty Ltd v Daraway Constructions Pty Ltd (Supreme Court (Vic), Bath J, 3 August 1995, unreported).

[379] Nothing in cl 4.6 or the surrounding circumstances makes it inequitable not to treat the failure of the Plaintiffs to comply exactly with the time stipulation as relieving Myer from the obligation to pay the increases properly calculated - see United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 at 928.