Questband Pty Ltd v Macquarie Bank Ltd [2009] QSC 7

[2] The defendant is a large and equally successful investment bank.

[3] On 24 August 2002 the plaintiff ('Questband') executed four contracts for the purchase of adjoining blocks of land in Billinghurst Crescent, Upper Coomera. The four parcels of land have the following real property descriptions:

(a) Lot 101 on SP 100044 County of Ward Parish of Coomera;

(b) Lot 102 on SP 100044 County of Ward Parish of Coomera;

(c) Lot 103 on SP 100044 County of Ward Parish of Coomera;

(d) Lot 104 on RP 167138 County of Ward Parish of Coomera.

The vendors were respectively Ms L G Ballard, Mr A R O'Dell, Mr and

[4] The total consideration to be paid by Questband for the purchase of the four parcels was $3,781,752.

[5] Questband's purpose in buying the land was to amalgamate the four parcels, subdivide the amalgamated block, and sell the subdivided allotments as residential building sites.

[6] The four contracts were identically relevant in their terms. By special condition 3.1 the contracts were conditional upon Questband obtaining a development permit from the Gold Coast City Council for a material change of use of the property to allow it to be developed for residential purposes, 'on terms to (Questband's) complete satisfaction', within nine months. By special condition 4.1 the contracts were conditional upon Questband obtaining, also within nine months, a development permit to reconfigure or amalgamate the four parcels 'on terms to (Questband's) complete satisfaction.'

[7] Settlement was to occur 30 days after satisfaction of conditions 3.1 and 4.1. By clause 5 of the general conditions settlement had to occur between 9 am and 5 pm on the day of settlement.

[8] By clause 6 of the general conditions of contract time was of the essence. By clause 8 of the special conditions settlement of each contract was subject to the contemporaneous settlement of the others.

[9] By special conditions 3.2 and 4.2 respectively Questband was obliged to apply for the material change of use and reconfigurations within three months from the date of contract, namely by 24 November 2002. It seems clear that the applications were not made until 27 November 2002, or a day or two later. The cheque drawn to pay the application fee for the material change of use was dated 27 November 2002 and it is likely that the cheque was sent with the applications. In any event the application was incomplete until the cheque was received by the Council.

[10] None of the contracts was subject to finance.

[11] On 1 May 2003 Mr Ingles met with Mr Wiltshire, the defendant's director of its real estate structured finance division in Queensland, and Mr Barnes who worked in the same division. They discussed Questband's need for finance in order to complete the four purchases and Mr Ingles inquired whether the defendant ('Macquarie') would make the advance. Mr Ingles' companies had borrowed from Macquarie in the past. He was familiar with Macquaries' method of doing business and the conditions it generally imposed in connection with loans for land development.

Mr Wiltshire said he thought it likely that Macquarie would make the loan.

[12] Between 12 May and 22 May Questband prepared a number of feasibility studies consisting largely of cash flow projections based upon estimates of development costs and selling prices which showed the proposed subdivision to be very profitable. The studies were sent to Macquarie whose employees in Mr Wiltshire's division studied them and prepared projections of their own.

[13] On 22 May 2003 Questband's solicitors wrote to all the vendors to inform them that it waived the benefit of special conditions 3 and 4. The consequence was that settlement of the four contracts was due on 23 June 2003, a Monday.

[14] Also on 22 May 2003 Macquarie sent what was called a 'mandate letter' to

'Further to our recent discussions, we confirm that ... Macquarie ... would be pleased to prepare a loan facility ('the Facility') submission, for consideration by Macquarie's ... credit committee, to provide funding ... . The following pages of this document ('mandate') detail the general terms and conditions of the proposed Facility.

(Macquarie) will proceed with the preparation of the Facility submission subject to receipt of an executed copy of this mandate, along with the application fee submitted in accordance with the provisions of the mandate.'

[15] A disclaimer appeared at the foot of the page, in rather small print, in these terms:

'Credit approval for a Facility has not yet been obtained. Until formal Facility and security documents have been executed and all conditions precedent satisfied, (Macquarie) reserves the right to amend, add or delete any terms of the Facility and until then will not be under any legal obligation whatsoever to provide the Facility. No officer of (Macquarie) is authorised to commit (Macquarie) to provide the Facility other than in accordance with the foregoing.'

[16] The proposed loan was for $9,158,000 'to provide funds to assist with the acquisition of land on ... Billinghurst Crescent at Coomera, ... the demolition of any improvements ... on the ... property, the design, construction and sale of a residential subdivision comprising 123 lots ... in accordance with the draft project cash flow prepared by (Questband) ... .'

[17] Clause 1.9 of the enclosed conditions was headed 'Conditions Precedent' and read:

'The provision and settlement of the cash advance shall be conditional upon the fulfilment of the following conditions, which are each to be effected to the satisfaction of (Macquarie) and are to be provided at (Questband's) cost.'

Clause 1.9.1(iv) was headed 'Geotechnical Report'. It read:

'(Questband) is to provide a geotechnical report from an acceptable geotechnical engineer confirming that there are no impediments on the (land) that could inhibit the construction of the project and that the ground structure and proposed building structure are suitable for the proposed project.'

'Progress of the application will be dependent upon (Questband's) ... provision of the following information:

(b) Copy of plans and specifications ... for the project;

(c) Breakdown of the project land costs and development costs/other costs and consultancy fees;

(d) Group structure diagram for the customer group;

(e) History/background and relevant experience of the customer in undertaking property development;

(g) Balance sheets and profit and loss accounts for (Questband) and corporate guarantors for each of the previous two financial years;

(h) The customer and corporate guarantor group's monthly cash flow forecast for the next 12 months;

(i) A list of the customer and corporate guarantor group's existing property assets and corresponding borrowings;

(j) Signed and dated asset and liability statements for all personal guarantors;

(l) Relevant consultancy reports (e.g. environmental, geotechnical, structural, survey, etc.).'

'If you wish to proceed further with the requests for consideration of a Facility from (Macquarie), please sign the attached copy of this mandate and return along with a cheque for $25,000 being the application fee.

Consultant reports ... may be required prior to approval. (Questband) will be liable to reimburse (Macquarie) for any unrecouped costs with regard to these matters, whether the Facility is approved or not, or proceeds or not.

(Questband) confirms its request that (Macquarie) proceeds to consider an application ... for a Facility on the terms and conditions proposed in section 1 of this mandate. The enclosed cheque for $25,000 is forwarded on the understanding that it will be:

(a) applied towards any outstanding costs and the balance refunded if (Macquarie) does not approve the Facility; or

(b) credited towards the establishment fee upon (Questband's) acceptance of a formal offer of a Facility; or

[20] Mr Ingles read Macquarie's letter and passed it on to Mr Anderson, the development finance manager for Mr Ingles' companies. He read it and recommended that Mr Ingles proceed in accordance with the mandate to obtain a loan from Macquarie on the terms outlined in the mandate. Indeed he wrote to

'... The mandate letter ... is an excellent funding package for us. ... We should knock them over in the rush to accept this deal.'

[21] Earlier, Mr Ingles had had some preliminary negotiations with another financier but they were not pursued, presumably because of the attractiveness of Macquarie's proposal.

[22] On 26 May 2003 Questband signed and returned Macquarie's mandate letter. On the same day Mr Ingles spoke to Mr Wiltshire by telephone. He asked whether Macquarie could approve the advance in time for settlement which was due on

23 June. The timeframe was tight but Mr Wiltshire believed the bank could make the necessary preparations in time. He told Mr Ingles that he would try to obtain funding in time for settlement and that he believed it could be done. The signed mandate letter and a cheque for $25,000 was posted that day.

[23] In his statement Mr Wiltshire describes a conversation with Mr Ingles in which he said the usual timeframe for Macquarie to approve a loan transaction of the type in question was six to eight weeks and he told Mr Ingles that he 'could not be sure that (Macquarie) could process the deal in time' for a 23 June settlement, but would do its best to meet that deadline. Mr Wiltshire dates this conversation as 1 May 2003, the first occasion on which he and Mr Ingles spoke of the possibility of Macquarie making the advance. He must be mistaken about the date. The contracts of purchase were not made unconditional until 22 May. It was not until then that it was known that settlement would be 23 June. I expect Mr Wiltshire has confused that occasion with the conversation he had by telephone with Mr Ingles on 26 May. Mr Ingles asserts that he then told Mr Wiltshire the contracts were due for settlement on 23 June and asked if finance could be provided in time. Mr Wiltshire replied that there would be no problems and that he would 'push it through'.

Mr Wiltshire denied using those words but agreed that he indicated that he was confident that the loan could be approved in time, although the period for doing so was 'tight'.

[24] I think this is what happened. Mr Ingles asked if the loan would be approved by

23 June and Mr Wiltshire said he believed it could be. My impression was that both men were confident that they could make the necessary arrangements in time but both understood that there was a need for haste.

[25] As will emerge Macquarie's employees acted upon that understanding but Questband's did not.

[26] On 20 June 2003 Questband and Macquarie executed the Facility Agreement pursuant to which Macquarie agreed to provide loans to Questband on the conditions set out. By clause 5 Macquarie's obligation to make advances was subject to the issue of draw-down notices confirming the amount for which the advance was required, and the receipt by Macquarie of the conditions precedent listed in item 25 of the schedule to the Agreement no later than five banking days (or such lesser period agreed to by Macquarie) prior to the draw-down date for the first advance.

[27] By clause 5.5 each document to be provided to Macquarie in fulfilment of any condition precedent had to be provided at Questband's cost and in a form and substance satisfactory to Macquarie and from a consultant acceptable to Macquarie in its absolute discretion (in each case).

[28] 'Draw-down notice' was defined to mean a request for a draw-down of an advance. By clause 3 the Facility, that is the loan monies, would be available in a series of advances not to exceed the total amount agreed to be lent.

[29] Item 25 in the schedule to the Facility Agreement listed the conditions precedent to the first advance. Condition (xiv) was:

'Confirmation from a certifying engineer acceptable to and acting on behalf of (Macquarie) that the cost of the proposed construction phase of the project ... will not exceed the construction cost amount contained in the Feasibility ... or such other costs as (Macquarie) might approve. Further, the certified engineer is to confirm that the construction phase of the project can be completed within the time allowed in the Feasibility.'

[30] A great deal happened between 26 May and 23 June 2003 but despite that activity Macquarie did not issue cheques in time for settlement which was required by the contracts no later than 5 pm on 23 June. There were delays in satisfying some conditions precedent. It will be necessary to consider the facts in more detail but for the moment it is enough to record that Macquarie's solicitor set off by car from Brisbane at about 4.30 pm to drive to the Gold Coast where settlement was due. He might have expected to arrive between 5.15 and 5.30 but a serious accident on the motorway delayed him so that he arrived after 6. One of the vendors, Ms Ballard, was not prepared to extend time. The land had increased appreciably in value since August 2002 and she wished to take advantage of the market. She rescinded the contract by reason of Questband's failure to complete the purchase on time. The other vendors would have accepted late payment but Macquarie refused to fund a development which did not include all four parcels.

[31] Accordingly Questband could not buy the land and lost the profits it anticipated from the subdivision and sale of the residential allotments. It claims damages against Macquarie for the loss of the opportunity to earn those profits. Its case is that Macquarie breached implied contractual terms to co-operate with Questband, or to take steps so as to be ready to make advances necessary for the acquisition of the land before the expiration of the time fixed for settlement. Macquarie resists the claim and counter-claims, alleging in its turn breaches by Questband of an implied contractual obligation to satisfy the conditions precedent for the making of the advance in time for it to give approval and achieve settlement. It claims the loss of fees and interest it would have earned had it funded Questband's development.

[32] There are four implied terms pleaded by Questband. The first, alleged in paragraph 11A(e) of the amended statement of claim is that it was an implied term of the mandate letter that Macquarie would make a decision whether or not to offer the proposed Facility within a reasonable time, and such a time expired earlier than 19 June 2003.

[33] The second implied term is asserted in paragraph 12C of the amended statement of claim. This term is said to be implied in the Facility Agreement of 20 June 2003. It is said to be that both Questband and Macquarie would do all things reasonably necessary to enable the other to have the benefit of the Agreement.

[34] The third implied term appears in paragraph 12E of the amended statement of claim. It is that Macquarie was obliged to use its best or reasonable endeavours to obtain the information it required from consulting engineers in sufficient time to permit it to make an advance to Questband to complete the purchases.

[35] The fourth implied term, alleged in paragraph 19A, is that Macquarie was obliged to make reasonable endeavours to make the advance available to Questband to allow it to complete the purchases and, in particular, to provide funds to Questband in sufficient time for settlement to occur at Southport before 5 pm.

[36] It is necessary to review the events of May and June 2003 to appreciate the arguments of the parties and to see whether the implied terms, necessary for the plaintiff's success, should be read into the parties' agreements and, if they are, whether there was a breach of them.

[37] The trial was limited to questions of liability on claim and counter-claim. All questions of causation and quantum of loss are to be tried separately, if necessary, after liability has been determined. The amount claimed by Questband in its statement of claim is in excess of $10,000,000. The sum is substantial and Macquarie resisted a finding of liability strenuously and by reference to all available arguments of fact and law. I express no criticism. The circumstance I have described is to be expected from competent and conscientious practitioners. I mention it only to explain that it is not necessary to deal with matters in as much detail as is found in the parties' submissions and in the volume of oral and documentary evidence adduced at trial.

[38] One of the conditions of the mandate which had to be satisfied before Macquarie would offer the loan, it will be remembered, was that Questband obtain a geotechnical report on the condition of the land. The purpose of the report was obvious and was well understood by Mr Ingles. It was to ascertain whether large areas of rock underlay the surface. If it did the cost of excavations would be expected to increase substantially so that the costs of development would increase and the time taken to complete the subdivision would extend. These factors would affect the profitability of the development and, perhaps, its viability.

[39] On or about 26 May 2003 Mr Rix, an employee of Questband, was instructed to obtain a quotation from Coffey Geosciences Pty Ltd ('Coffey') for the provision of the geotechnical report. Mr Rix seems to have passed the instruction on to

Mr Macintosh of Kellogg Brown & Root Pty Ltd ('KBR'), the firm of consulting engineers engaged by Questband for the various developments undertaken by

Mr Ingles' companies. On 10 June 2003 Mr Macintosh sent a facsimile transmission to Dr Shaw of Coffey:

'As discussed, could you please provide a fee proposal to Questband ... for a geotechnical report on the soil conditions likely to be encountered on this site. They are expecting a typical one page report that they can forward to their bankers.'

[40] A 'one page report' was not likely to comply with the condition of the mandate that the geotechnical report should confirm that there were no impediments to inhibit the construction of the subdivision. The misunderstanding appears to have been caused by the fact that Mr Rix was not shown a copy of the mandate and did not know the terms of the condition the report was to satisfy. Nor did he have authority to retain Coffey without Mr Ingles' express approval.

[41] On 4 June 2003 Mr Anderson sent to Mr Wiltshire a number of documents in response to the requirements of the mandate letter. He sent:

• Copies of the four contracts to purchase the land.

• A diagram of the 'current group structure' of Mr Ingles' companies.
• A consolidated group profit and loss statement and balance sheet for the year ending 30 June 2002 and the year to date, 28 February 2003.

• A group cash flow budget for the years 2003 and 2004.

• A statement of Mr Ingles' assets and liabilities.

• The Gold Coast City Council's draft development conditions for the subdivision.

[42] What Mr Anderson sent did not comply with condition 3. Mr Barnes replied by facsimile transmission on 6 June 2003. He pointed out that there were 'a number of variances' in the information contained in the documents sent by Mr Anderson and asked him to 'update' a spreadsheet he had sent earlier by email 'by inserting a brief description of each entity and completing the full entity name ...'. The letter went on:

'We require copies of financial statements for the year ended 30 June 2002 for all Ingles group entities. Please forward this information as soon as possible.

As per the further information requested in the mandate ... please forward any relevant consultant reports relating to the project which may have been completed (e.g. environmental, geotechnical, survey etc.).'

[43] Although Mr Anderson had sent information relating to the financial circumstances of the 'Ingles group of companies' he had not sent financial reports for the individual companies in the group. This had been required by the mandate letter. They were sent later on request from Mr Barnes. Mr Anderson explained that he did not send them initially because he thought the 'corporate structure I ... sent ... showed a truer picture of the group.' He may have been right but the bank officers had their own requirements which had to be complied with if it were to lend money to Questband. One of those requirements was the provision of individual financial reports for Mr Ingles' companies.

[44] On 10 June Mr Anderson provided some further information in response to

Mr Barnes' correspondence of 6 June but did not, until a later date which the evidence did not identify, send the individual company financial reports.

[45] Also on 10 June 2003 Mr Ingles wrote to Mr Wiltshire attaching the completed spreadsheet which Mr Barnes had sent by email on 6 June. This provided the information Macquarie required as to the identity of companies in the Ingles group and their status. The information to date provided by Questband to Macquarie allowed Mr Barnes to commence work on the preparation of the loan agreement.

[46] It should be explained that the preparation of the Facility Agreement involved Macquarie's officers in preparing (i) a credit proposal to be submitted to members of the bank's credit committee for their approval and (ii) a report on the property to be developed. The credit proposal which had to be approved by six separate designated bank officers set out the borrower and guarantors, the structure of the 'deal'; details of the property as well as an analysis of the feasibility of the development and a risk analysis for the bank. The property report was concerned with the attributes of the land to be developed and its suitability as the basis for making a profit. It included a valuation of the land as well as engineering and geotechnical reports addressing features of the land which might impact upon its subdivision and development.

[47] Mr Barnes took on the role of preparing the credit proposal and Ms Degotardi and Mr Summers prepared the property report.

[48] On 12 June 2003 Dr Shaw replied to Mr Macintosh's facsimile transmission of

'Thank you for ... inviting Coffey ... to submit a proposal to prepare a brief overview of the anticipated geotechnical conditions at the above site.

The report is expected to contain a brief description of the site conditions and provide general comment on the geotechnical aspects of the proposed residential development of the area. No subsurface investigation is proposed and observations will be limited to walk-over inspection and published geological data. Our estimate of fees is ... $1,000. ... It is understood that the report is required no later than 20 June 2003. This can be achieved.'

[49] Mr Ingles approved Coffey's retainer on those terms and on 17 June 2003 Mr Rix faxed Dr Shaw that Questband accepted the quote and asked 'that works commence immediately', and that it required 'the report to be finalised and with ourselves by 20 June 2003.'

[50] On 12 June 2003 Ms Degotardi spoke to Mr Anderson and asked him to send cost estimates for the development prepared by KBR. These were required by clause 3.0(c) of the mandate and were needed for Ms Degotardi's work on the feasibility of the development. It appears that Mr Anderson had the costs information in his possession prior to 12 June 2003 but had not conveyed it to Macquarie prior to

[51] On the following day, 13 June, Macquarie's officers had completed a draft loan facility for submission to the members of its credit committee. Arrangements were made for the members of the committee whose approval was required to consider the draft proposal in principle because one or more of them was expected to be out of the country in the following days.

[52] By 16 June 2003 Mr Barnes had finalised the credit submission and entered it into Macquarie's computerised credit approval system. The submission was a detailed document running to 35 pages. There were five annexures including the property report, feasibility cash flows and an Ingles 'group organisation chart'.

[53] Once the credit submission had been entered on the credit approval system all that remained on Macquarie's side was the consideration by members of the credit committee to the proposal and the signification of their approval or disapproval. Should approval be given by all members the bank's employees would then prepare the Facility Agreement to put to Questband for its acceptance or rejection.

[54] There were six officers of Macquarie who had to give their approval to the credit proposal before the bank could prepare and offer the Facility to Questband. They gave their approval between 16 and 20 June 2003. In the meantime Mr Barnes in anticipation of their approval put in train the preparation of the Facility Agreement so that it could be offered immediately approvals were given.

[55] On 16 June 2003 he requested Mr Besley of Hogan Besley Boyd Lawyers to 'provide a fixed fee quote to complete the documentation and settlement of the proposed Facility to Questband ...'. Mr Besley provided his quotation at 9 pm that night and at 4.30 pm the following day, 17 June, Mr Barnes retained him and sent the relevant documents by email. At 5.07 pm Mr Barnes emailed Mr Ingles seeking approval for Mr Besley's retainer. The costs were chargeable against Questband, the putative borrower. Mr Ingles gave his assent, but not until the morning of

[56] On 17 June Mr Barnes sought quotations from two firms of engineers 'to complete a pre-construction cost estimate report and monthly progressive cost estimates and project reports as per Macquarie's ... standard instructions.' On 18 June Mr Barnes accepted the quote from Cardno MBK (Qld) Pty Ltd ('Cardno') and confirmed 'its appointment ... as Macquarie ... consultant to perform the duties of the certifying engineer pertaining to the bank's financing of the ... project.' In particular Cardno was appointed to 'prepare a report containing (its) estimate of the construction costs and timing for the project ... by Friday, 20 June 2003.'

[57] Mr Barnes anticipated that final credit approval would be received on 19 June though, as it turned out, the last two approvers gave their approval on the 20th. In that anticipation he emailed Ms Wyer, an employee in Macquarie's prudential division, attaching a draft of the relevant Facility documents for her approval.

Mr Barnes explained that prudential approval was an internal process within Macquarie's real estate structured finance division. Its purpose was to ensure that the conditions imposed on a Facility by the credit committee were satisfied prior to finance being provided to a borrower.

[58] The events of 20 and 23 June have a critical significance and must, unusually, be addressed with reference to a precise chronology.

[59] At 9.26 am on 20 June Coffey sent its report to Questband by facsimile transmission. The report read:

'Coffey ... has prepared an overview of the geotechnical conditions at the ... site ... .

A consultant from our Brisbane office visited the site on the morning of 19 June 2003 to carry out a walk-over assessment of the site conditions. No subsurface investigations have been carried out in the preparation of this assessment. ...

There are no visible rock outcrops and nearby exposures indicate a soil cover of about 600mm over extremely to highly weathered rock. Shallow excavations for bulk earthworks should be feasible using conventional earthmoving equipment but would need to be confirmed by site specific investigations. ...'

[60] The fax was addressed to Mr Rix who gave it to Mr Anderson at about 9.30 am.

Mr Anderson did not send it on to Macquarie until 12.49 pm. Mr Wiltshire and

Mr Barnes read the report and realised it was insufficient. It is obvious that it did not answer the description of a geotechnical report at all. What was required was a report about the subsurface conditions which might impact upon development, not a visual inspection of the surface.

[61] At about 1.30 pm Mr Wiltshire and Mr Barnes spoke by telephone to Mr Ingles.

Mr Rix noted that Macquarie 'want actual boreholes/subsurface info.' Mr Ingles promised to obtain the further information. Mr Anderson contacted Dr Shaw of Coffey and requested him to test the subsurface conditions of the site. An arrangement was made for an excavator to attend on the Monday, 23 June, to dig test pits. Settlement, it will be recalled, was due by 5 pm that day.

[62] In fairness to Questband, Mr Ingles and Mr Anderson, it should be mentioned that another Ingles company was developing a subdivision in the near vicinity of Billinghurst Crescent and that the conditions, both surface and subsurface of that development were believed to be similar to those at Billinghurst Crescent. In addition there was a great deal of published geological data about the

Upper Coomera Valley. Mr Ingles thought that Macquarie would be satisfied with its knowledge of the site conditions revealed by the adjacent development and the published data. Mr Wiltshire made it clear that the bank's approval processes required specific information about the particular site.

[63] The published data established that the site was 'known to be underlain by weathered metamorphic rocks of the Neranleigh-Fernvale Beds, including Greywackwe, Argillite, Quarzite, Chert, Shale, Sandstone and Greenstone.'

Dr Shaw's site inspection had revealed a predominance of Argillite which is a fine grained rock, not unusual on the Gold Coast, which can generally be excavated using conventional earthmoving equipment.

[64] Attention must now turn to a different front. Mr Besley, whose efforts to prepare the complicated loan documentation in time and to attend settlement within time were rightly regarded by both sides as outstanding, encountered some barriers to his progress placed, unintentionally, in his way by the junior solicitor from the firm engaged by Questband. On 17 June Mr Besley sent McCullough Robertson an email setting out his requirements. He asked for certified copies of the constitutions of 16 Ingles' companies, which he identified, a certified copy of the trust deed for the Ingles Family Trust, searches and inquiries with respect to each of the four properties to be acquired. The particular searches required were numerous and specifically identified. Mrs Allen, as she has become, responded on 18 and 19 June but did not provide all the information that Mr Besley had requested.

[65] At 3.05 pm on 20 June 2003 he sent her an email:

'We still require certified copies of the constitutions for the following (nine) companies ...

We still require your response to paragraphs 3 and 4 of our letter of June 17 ... .

You have not yet provided all of the searches requested by us in respect to each of the four ... properties. Specifically, none of what was requested at paragraph 5(a) to (j) has been provided in respect to Lot 104 and the following remain outstanding in respect to each of the other lots ...

Please provide ... development permit(s) ... (and) ... confirm that ... the ... permits are satisfactory to your client.

As stated in the attached letter of today's date to your client, we will not be in a position to certify to our client that the matter is ready for settlement until such time as all conditions precedent in item 25 of the schedule to the Fixed Fee Facility and Guarantee Agreement have been satisfied.

Once we receive all the documents from you we will review them and report to your client. Provided that report is satisfactory we will then be in a position to certify that the matter is ready for settlement. It will take three to four hours after we certify before we receive the cheques. We will need to discuss with you the proposed logistics of settlement on the Gold Coast. ...'

[66] At 4.16 pm on 20 June Mr Barnes emailed to Mr Anderson a copy of the letter which Mr Besley had sent to Mrs Allen at 3.05. In his covering note he drew attention to the 'conditions precedent detailed in item 25 of the schedule to the Facility Agreement' and mentioned that he had 'no information relating to the survey certificate.' Mr Anderson does not seem to have appreciated that the letter required any response from him. Whether or not he was right in that assessment he did not attempt to bring forward the geotechnical investigation of the site scheduled for Monday morning.

[67] Mr Besley had his secretary telephone Mrs Allen to ensure that she had received his email and would respond to it. Mrs Allen inquired whether Mr Besley really needed the material he had requested because it appears someone from Questband had advised that not all of it was in fact needed. She asked the secretary to request Mr Besley to ring her, which he did at 3.20 pm. He confirmed that he did need the information set out in his letter and that once he had received it would take time to review it.

[68] Mrs Allen did not answer Mr Besley's invitation to discuss the logistics of settlement at the Gold Coast. She did intimate that McCullough Robertson would not act as Macquarie's unpaid agent and informed him of the time and place arranged for settlement. She then left work for the weekend and did not return to her office until Monday morning, 23 June.

[69] The last approval for the credit proposal was given at 1.49 pm on 20 June. Some time that afternoon the Facility Agreement which had been prepared by Mr Besley, and the associated documents, were executed by Macquarie and Questband.

[70] At 5.58 pm on 20 June Mr Van der Merwe from Cardno faxed his report to Macquarie. He wrote:

'Due to the time restraint we did not inspect the site as yet. However from our experience on a similar development in close proximity ... there does not appear to be any apparent site conditions likely to have a material effect on the estimated costing. The feedback from KBR indicate that no adverse physical conditions are expected on site.

KBR indicated that geotechnical investigations have not yet been done; no evaluation had been done with regard to rock, possible pre-loading of the site or treatment of potential acid sulphate soils ... . No provision is made in the development estimate for any such costs.

Now allowance has been made in the development estimate for any installation or upgrading of a stormwater system ... .'

[71] It is common ground that the report was not satisfactory to Macquarie.

[72] Both Mr Barnes and Mr Besley went to work on Saturday, 21 June. At 4.25 pm that day Mr Besley sent Mrs Allen an email, copied to Mr Barnes, identifying what requirements had been satisfactorily complied with and setting out 'requirements and issues (that) require your urgent reply'. At 7.46 pm that Saturday evening

Mr Barnes emailed Mr Ingles a copy of Mr Besley's email to Mrs Allen. Neither Mrs Allen nor Mr Ingles were at work and did not reply until the Monday morning.

[73] When work commenced on Monday, 23 June, two important conditions precedent for the making of the loan had not been satisfied. They were the provision of a satisfactory geotechnical report and satisfactory confirmation from a certifying engineer as to the cost of the development. There were other unsatisfied conditions but they related for the most part to questions of documentary formality and could be attended to with relative despatch.

[74] At 8.30 Mr Wiltshire and Mr Barnes telephoned Mr Ingles to ask what progress was being made with respect to the geotechnical report. He replied that Coffey was on the site digging test pits and that he would provide the geotechnical report as soon as possible. At 8.59 am Mr Barnes telephoned Mr Ricketts from Cardno and told him that they would receive a report from Coffey, and that Cardno's report would be required to address the content of the Coffey report. Mr Barnes also told

Mr Ricketts that an engineer had to inspect the site that morning, and the matter was urgent.

[75] There is a dispute between the parties as to when Mr Wiltshire and/or Mr Barnes decided that the Coffey report should be provided to Cardno for consideration in its report. Mr Barnes said that he told Mr Ingles of this requirement in the telephone conversation at 1.39 pm on 20 June to which Mr Wiltshire, Mr Ingles and

Mr Anderson were parties. Mr Wiltshire does not corroborate that evidence. The first note of the requirement was made at 8.30 am on Monday, 23 June when

Mr Wiltshire spoke to Mr Ingles. The fact that both the (initial) Coffey report and Cardno report were due on 20 June and that there was no express reference in the instructions to Cardno to consider the Coffey report suggests that the requirement for the review came later. Of particular significance is the fact that Mr Barnes did not ask Cardno to delay providing their report until the receipt of the second Coffey report made necessary by the inadequacy of the first report which had been discussed at 1.30 on the Friday. It is, I think, likely that it was only on Monday,

23 June that Macquarie decided that Cardno should review the Coffey report.

[76] Mr Ricketts relayed to Mr Van der Merwe the instructions he had been given by

Mr Barnes. Mr Van der Merwe said that Mr Ricketts told him:

'... that he received another call from Macquarie Bank and ... asked me to go ... and inspect the site and that we would be receiving a geotechnical report later in the day and I needed to consider that report in compiling a revised report as a matter of urgency.'

[77] Mr Van der Merwe duly inspected the site in the morning and returned to his office by about midday.

[78] At about 11.13 am on 23 June Mrs Allen responded to Mr Besley's email sent on the Saturday and, in addition, requested that the bank provide an additional cheque in the sum of $139,022.50 to pay stamp duty. Mr Besley took this in his stride and by 11.35 am certified to Macquarie that the transaction was ready to settle from his point of view subject to the bank obtaining and reviewing the further reports from Coffey and Cardno.

[79] At 11.05 am Coffey faxed the report of its subsurface investigations of the site to Mr Rix. Dr Shaw attached to the report the observations made from the test pits which had been dug. Unfortunately in the process of revising the report the original was used as a draft and the second report retained the assertion that 'no subsurface investigations have been carried out in the preparation of this assessment.' The error was obvious from the report itself which said, under the heading, 'Subsurface Conditions':

'Four excavated test pits were carried out at selected locations over the site to assess subsurface conditions. The test pits were excavated in the full time presence of a senior geotechnician who was responsible for logging the soil and weathered rock profiles and retrieving representatives samples of soils and weathered rock.

The test pits indicated that subsurface conditions are relatively consistent ... and costs (sic) of a surface layer of around .2m of top soil underlain by very stiff to hard silty clay grading to extremely weathered metasiltstone. ...'

[80] It is not clear who detected the error or why it was thought that the second report could not be redirected immediately to Macquarie, the misstatement being obvious from the content of the report and its attachments. Either someone in Coffey detected the error and decided to correct it or Mr Rix (who did not give evidence) asked for a corrected version of the report. In any event the further report was received from Coffey at 12.37 pm. The erroneous statement was omitted and in its place the report stated:

'A consultant from our Brisbane office visited the site on the morning of 19 June 2003 to carry out a walk-over assessment of the site conditions. Excavated test pits were carried out on 23 June 2003.

All of the soils encountered ... are residual and are not expected to be potential acid sulphate soils. ...

Shallow excavations for bulk earthwork should be feasible using conventional earthmoving equipment but would need to be confirmed by site specific investigations. The excavated soils would be suitable for use as engineered fill but may require moisture conditioning due to the relatively shallow ground water levels over much of the site.'

[81] This report with its attachment was sent by Questband to Macquarie at 1.05 pm and to Cardno three minutes later. Two hours had elapsed between the receipt of the second Coffey report by Questband and the communication of the corrected report to Macquarie and Cardno. Mr Van der Merwe began work to produce his own report upon receipt of the second Coffey report. He explained that his task involved an examination of the recorded observations from the excavation pits which was 'the most important part of the information' contained in the report. He had to relate the information to the location of the pits on the site to make an assessment of the subsurface conditions which might impact upon the engineering works for the subdivision. He explained that he had to relate the capacity of the machine used to dig the pits to the capacity of machines which would be engaged in the subdivisional engineering works to assess whether those machines could remove the rock encountered on the site. He had also to make an assessment of the suitability of the material for fill to 'take this information in the report back to the design and ... my cost estimate and see whether this information provided might have an impact on the cost ...'.

[82] Having analysed the content of the Coffey report Mr Van der Merwe produced his own report which in accordance with Cardno's internal quality control requirements was reviewed by another engineer before being put into final form and faxed to Macquarie at 3.59 pm.

[83] Mr Van der Merwe testified that his examination of the Coffey report and the preparation of his own report were done quickly and could not have responsibly been done any faster. To express his own opinion in accordance with the retainer Cardno had accepted from Macquarie and to form a proper professional opinion took the time, three hours, which elapsed between receipt of the Coffey report and the transmission of his own.

[84] Mr Van der Merwe was subjected to some criticism in cross-examination and address. It was submitted that he should have produced the report sooner so as to allow Macquarie to proceed with the administrative arrangements for settlement. I see no basis for rejecting Mr Van der Merwe's evidence that the proper discharge of his professional responsibilities required him to do the things he did by way of examination and analysis of the content of the Coffey report. Three hours does not seem an excessively long time for the compilation of a report from a consulting engineer. Indeed it seems remarkably prompt. Mr Van der Merwe was asked to give his professional assessment of the likely impact upon the cost of subdivision of a project worth more than $9,000,000. It was to be expected, and hoped, that he would consider the questions put to him carefully.

[85] In the meantime Macquarie's officers, and its solicitors, were working assiduously to fulfil the arrangements necessary for settlement. There was an error in the instruments of transfer which Mrs Allen had sent to Mr Besley. He noted the error, notified Mrs Allen of it and requested her to correct it. Mr Besley and Mrs Allen were in frequent contact to arrange settlement times. Under the Facility Agreement Questband was required to give Macquarie a draw-down notice if it wished to borrow the money. The notice acted as a 'trigger' for Macquarie's obligation to advance the money in accordance with the notice. The agreement required two clear banking days notice of the draw-down. No-one at Questband turned his mind to this requirement. An officer of Macquarie sent a draft draw-down notice to

Mr Anderson at 1.44 pm for his consideration. The draft notice specified more than 20 cheques which would have to be drawn and delivered on settlement. The executed draw-down notice was not returned to Macquarie until 2.48 pm.

[86] Earlier still, at about 11.30 am, Mr Barnes had noted that as part of the contracts for purchase Questband had agreed to acquire a palm tree nursery from one of the vendors for a price of $145,000. This amount had not been included in the amount sought by Questband by way of loan funds. This additional consideration would require a variation to the loan transaction. The increase was within Mr Wiltshire's own authority to approve subject to an endorsement by Mr Dennis, an employee in the risk management division, finance section, of Macquarie. Mr Barnes spoke to Mr Wiltshire who agreed to approve the increase and Mr Barnes commenced work on the preparation of a variation to the funding allowed by the Facility Agreement. The formality of approval involved the preparation of a memorandum to be posted on the computerised credit approval system. Mr Barnes spoke to Mr Dennis who agreed to approve the increase. Mr Barnes explained that:

'The formal process of completing this memo and getting it approved on our system was done in the spare moments where I was waiting on information to come through from Mr Ingles or (Mr Besley).'

[87] At about 1.20 pm Mr Barnes sent documents which comprised the 'loan settlement package' to Ms Wyer in Sydney by facsimile transmission These documents were meant to convey to Ms Wyer that the conditions precedent for the advance had been satisfied. In a covering memorandum Mr Barnes reported that he had just received the 'updated report' from Coffey.

[88] The memorandum sent by Mr Barnes to Ms Wyer at 1.25 listed each of the conditions precedent and a comment upon whether they had or had not been satisfied. Against the project requirement for a certifying engineer Mr Barnes had written:

'(Macquarie's) appointed certifying engineer, Cardno ... have provided a report confirming the construction costs are ... less than the ... construction costs adopted in the Feasibility.'

[89] Mr Barnes explained he did this to save time. He prepared the document prior to receipt of the Cardno report on the assumption that on its receipt the report would be satisfactory. To delay preparation of the memorandum until receipt of the report would have consumed valuable time which was, obviously, in short supply.

[90] At 1.54 pm Mr Barnes emailed Ms Homann who was responsible for preparing the disbursement instructions for the cheques required for settlement. At 3.25 pm

Mr Barnes emailed Ms Wyer the variation memorandum to increase the amount of the loan. At 3.40 pm he telephoned Cardno to ask when he might receive the report and was told it had been completed and 'would be faxed ... as soon as possible.' Between 3.42 pm and 3.47 pm Mr Barnes spoke to Mr Dennis and obtained his approval for the variation. Having received the Cardno report Mr Barnes sent it on to Ms Wyer at 4.06 pm. Shortly afterwards he telephoned her to confirm that the report was acceptable to her.

[91] It was suggested by Questband that the memorandum in fact shows that Macquarie was satisfied with the fulfilment of the conditions precedent at about 1.30 pm, without the Cardno report. The suggestion cannot be accepted. It is contrary to all the indications of fact, and the events, of the afternoon of 23 June. Ms Wyer was informed that the Brisbane office was waiting for the Cardno report. When it came it was sent to her. She was telephoned to ask if it was acceptable. Macquarie did not in fact proceed to issue cheques for settlement until the report was received. Moreover in another memorandum, also required to record prudential approval for the advance, sent to Ms Wyer at 4.06 pm, Mr Wiltshire, one of the three signatories to the memorandum, wrote the qualification 'subject to final letter from Cardno' against the notation that all conditions precedent had been met. There is no reason to doubt Mr Barnes' explanation for the composition of the earlier memorandum, or that Macquarie in fact required the Cardno report as a condition precedent to making the advance.

[92] There was also a suggestion that Mr Barnes delayed excessively in not seeking approval for the increased advance until late in the afternoon when the shortfall had been identified in the morning. The explanation is clear enough. Mr Barnes dealt with the variation in the same documents which recorded final satisfaction with all conditions precedent sent to Ms Wyer after receipt of the Cardno report. The variation, and the need for it, was not itself productive of any delay. Had that been the only impediment to certification and final prudential approval it would have been dealt with late in the morning of 23 June. Mr Wiltshire could have given the necessary credit approval and Mr Dennis the prudential approval. Both indicated their assent to the variation immediately it was asked for. The administration of the variation was not causative of any delay beyond that which was caused by tardy delivery of the Cardno report. There is no reason not to accept Mr Barnes' evidence that he dealt with both points in the one document and the timing of his memoranda and their transmission was dictated by the delivery of the report, not the need for the variation. The absence of an account of his dealing with the variation from his statement is explained by the fact that the point did not assume any importance until trial. It did not emerge in the pleadings.

[93] The settlement cheques were drawn by about 4.30 pm in Brisbane. Macquarie had no facilities for drawing cheques on the Gold Coast. Mr Wiltshire collected them in the banking chamber and met Mr Besley's assistant who had come to the bank's premises. She took the cheques to where Mr Besley was waiting in his car in

Queen Street. He set off at 4.36 pm with the result I described earlier.

[94] Some other questions of fact need to be addressed before an analysis of the evidence and an examination of principles of law are undertaken. The facts concern a conflict of testimony between Questband's witnesses and Macquarie in relation to statements made about the achievement of settlement on time. The evidence was presumably led by Questband as admissions by Macquarie that it was responsible for the failure to settle by 5 pm.

[95] Mr Ingles said in his statement that he spoke by telephone to Mr Wiltshire on the morning of 23 June. During their conversation Mr Wiltshire 'made reference to the need for the further geotechnical report (and) ... said words to the effect that settlement at 3.30 pm was all under control.'

[96] Mr Wiltshire denied making that statement. He made a note of the conversation. It refers only to discussions about the geotechnicians working on the site and the issues which the further reports would have to address to satisfy the conditions precedent. Mr Wiltshire points out that he would have had no reason to assert confidently that settlement at 3.30 pm was under control when he was waiting upon several reports to satisfy outstanding conditions without which the loan could not be advanced.

[97] Nothing turns on the dispute though logic supports Mr Wiltshire's position. Even had he made the statement attributed to him, what he said could not amount to an admission of liability or responsibility for failure to make settlement on time. This statement could have been no more than a confident expression of opinion which turned out to be wrong.

[98] The second dispute concerns a conversation between Mr Besley and Mrs Allen at about 1.20 pm on the 23rd. Mr Besley spoke to Mr Barnes who told him that the second Coffey report had just arrived and that he might have the cheques drawn by 2.30 but not earlier. He thought it more likely that the cheques would have been drawn by 3.00 pm. Mr Besley made a note of the conversation and then spoke to Mrs Allen to relay the essence of his conversation with Mr Barnes, in particular that the geotechnical report had just been received and there would consequently be some delays in settlement. He suggested that it be put back to 4.15 pm. Mrs Allen spoke to the vendor's solicitor and rang back a little later to confirm settlement at 4.15 pm. In a memorandum written for her supervising partner about five days after the failed settlement, Mrs Allen recounted the conversation and added that

Mr Besley had said that the delay 'was nothing to do with (Questband) and that was not the hold up.' Mr Besley denies having made such a statement.

[99] Again nothing turns upon the dispute. Assuming that Mr Besley made the statement imputed to him the remark has no consequence. There must be considerable doubt about Mr Besley's authority to make an admission against his client's interest by exonerating an opposing party to a transaction from responsibility for delays in satisfaction of conditions precedent to the settlement of the transaction. But even if Mr Besley were authorised to make the statement, and made it, it is an admission which, on the facts, was wrong. In any event it can only have been Mr Besley's opinion which, as I say, was falsified by the actual events which have been proved.

[100] I think it unlikely that Mr Besley made the remark. It is an unlikely thing for an experienced and competent solicitor, which Mr Besley was, to volunteer a remark critical of his client which was contrary to the facts as he understood them.

[101] Questband's submissions are set out with admirable brevity and succinctness. It submitted:

(a) in consideration of the payment of the application fee under the mandate, the defendant was under an implied obligation to reach a decision as to whether or not to offer the proposed facility within a reasonable time and that time expired prior to 19 June; and

(b) in breach of the mandate, the defendant failed to make the decision whether or not to offer the proposed facility before 19 June.

1. Further, the plaintiff contends that having entered into the facility agreement on (the evening of) Friday 20 June in circumstances where:

(b) Cardno had been retained by the defendant as engineer to report on costs and timing in respect of paragraph (xiv) of item 25 of the schedule to the facility agreement on 18 June;

(c) the defendant had received the first report by Coffey but considered it to be unacceptable;

(d) the plaintiff and defendant had agreed that the plaintiff would arrange for test pits to be dug;

(e) a further geotechnical report could not be obtained until test pits were dug;

(f) from about 4 pm on 20 June the defendant, by Mr Barnes, was aware that the test pits and a further report could not be provided until Monday; and

the defendant was obliged to use its best or reasonable endeavours to obtain the report it desired from Cardno in sufficient time for a decision to be made to permit the initial advance to be made.

(a) at 5:58pm on 20 June, the defendant received a report from Cardno;

(b) at 1:05pm on 23 June, the plaintiff provided the defendant with a further Coffey report which was in accordance with the discussions on 20 June and the discussion at 8:30 on 23 June;

(c) in those circumstances, the parties orally agreed that the conditions precedent were satisfied at 1.20pm on Monday 23 June; and

(d) the defendant became obliged to make the initial advance available to the plaintiff in order to allow it to settle the contracts.

1. Alternatively, if the defendant did not come under that obligation at that time, the plaintiff alleges that:

(a) the condition under paragraph (xiv) of item 25 of the schedule to the facility agreement was not satisfied at 2:30pm on 23 June because of the defendant's default in

(i) not requiring Cardno to inspect the land before providing its report on 20 June; and

(ii) not requiring Cardno to provide its final report on the assumption that there were no subsurface conditions that would affect the construction costs or time to complete; or

(iii) not arranging for or requiring that Cardno read the further Coffey report and provide any further report before 2:30pm to enable the settlement to proceed on 23 June; and

(b) the defendant failed to take reasonable steps (in circumstances where it desired to wait for a second written report from Cardno) whether by:

(i) not requiring Cardno to inspect the land before providing its report on 20 June; and

(ii) not requiring Cardno to provide its final report on the assumption that there were no subsurface conditions that would affect the construction costs or time to complete; or

(iii) not arranging for or requiring that Cardno read the further Coffey report and provide any further report before 2:30pm to enable the settlement to proceed on 23 June; or

(iv) failing to ensure that the necessary cheques would be available at settlement by:

(A) drawing those cheques prior to receipt of the second Cardno report;

(B) providing those cheques to its representative in time to attend settlement;

(C) providing those cheques to its representative attending settlement to be held by him pending communication to him that prudential approval had been given and that it was in order to effect settlement;

(D) drawing those cheques from its Gold Coast branch;

A term will not be implied into a contract if the implication is contrary to or inconsistent with an express term of the contract or with the intention of the parties as revealed by the terms of the contract. Tamplin (FA) Steamship Co Ltd v Anglo-Mexican Petroleum Products Co Ltd [1916] 2 AC 397 at 422; Castlemaine Tooheys Ltd v Carlton and United Breweries Ltd v Tooth & Co Ltd [1987] 10 NSWLR 468 at 487; BP Refinery (Western Port) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 at 26 (condition 5).

When a contract provides that something is to be done but does not fix a time for the act the law implies a term that the act must be done within a reasonable time. York Air Conditioning and Refrigeration (A/SIA) Pty Ltd v The Commonwealth [1949] HCA 23; (1950) 80 CLR 11 at 62.

When by a contract an act is required to be performed within a reasonable time what is a reasonable time is a question of fact which depends upon the circumstances including the context in which the contract was made. The limit of a reasonable time is determined by reference with what is fair to both parties. Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 567-8. Whether a reasonable time, or more than a reasonable time, has elapsed must be decided at the point when the lapse of time is said by one party to have become unreasonable. It cannot be determined at the date of the contract. Rudi's Enterprises Pty Ltd (1987) 10 NSWLR 568 at 576. A relevant fact is delay by the party complaining about the lapse of time. Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1988-1989) 166 CLR 623 at 638-9. When what is in issue is the exercise of a right or the giving of a notice what is a reasonable time is to be determined by reference to the circumstances when the right is to be exercised (Business and Professional Leasing Pty Ltd v Akuity Pty Ltd [2008] QCA 215 at [46] or when the notice is given; Australian Blue Metal Ltd v Hughes [1963] AC 74 at 99.

The term implied by law into every contract that each party agrees to do all such things as are necessary on his part to enable the other party to have the benefit of the contract (Butt v M'Donald (1896) 7 QLJ 68 at 70-71) extends to contractual promises but not to a commercial benefit which a party to a contract expected to obtain from its performance. Jackson Melanese Pty Ltd v Hansen Building Products Pty Ltd [2006] QCA 126 at [50] - [51]; Australia Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 at 124-5.

Terms may be implied by law or because the contracts in question belong to a particular class; or to give business efficacy to the particular contract the parties made. Breen v Williams (1995-1996) 186 CLR 71 at 102. The implied terms here are of the second type.

When the terms of a contract confer upon one of the parties to it an absolute or unfettered discretion to do or refrain from doing an act the term must be given effect and the words conferring the discretion their full force. Murphy v Zamonex Pty Ltd (1993) 31 NSWLR 439; Australian Mutual Providence Society v 400 St Kilda Road Pty Ltd [1991] VicRp 80; [1991] 2 VR 417. The conferral of an absolute discretion on a party to a contract excludes an obligation to act reasonably in the exercise of the discretion. Vodafone Pacific Ltd v Mobile Innovations Ltd (2004) NSWCA 15 para 195.

[103] It will be noted that the implied terms relied on by the plaintiff are quite precise. The allegations are not of general obligations to perform specified acts within a reasonable time but, in the case of the first implied term, to make the offer of finance prior to 19 June 2003 and, in the case of the third and fourth implied terms to make the funds available in time to allow Questband to pay for the land and obtain conveyances of it before 5 pm on 23 June 2003. In applying the legal principles, and in particular the first, one must have regard to the precise term pleaded and not to some more abstract term that Macquarie had to act within a reasonable time.

[104] Questband's first complaint is that the Facility Agreement offered by Macquarie on 20 June 2003 came too late. As paragraph 12 of its submissions make clear it alleges an implied term by which Macquarie had to decide whether or not to offer the facility prior to 19 June.

[105] It is not asserted that Macquarie had to make a decision to lend. The implied term is that Macquarie had to make the decision whether or not to lend prior to 19 June. Such an implied term would not achieve anything for Questband. Had Macquarie decided prior to 19 June not to offer the advance Questband could not have complained that the advance was not made in time. Its case on this point necessarily involved Macquarie deciding to lend, and the implied obligation that it had to do so earlier than 19 June.

[106] The short answer is that the term to be implied is inconsistent with the express terms of the mandate. By that agreement Macquarie promised, in return for the payment of $25,000, to prepare a submission to its credit committee for consideration whether to provide funding for Questband's development. The disclaimer (which is set out in paragraph 15) makes it clear that Macquarie undertook no obligation to make any offer of finance at all. It stated that until all formalities had been completed and all conditions precedent satisfied Macquarie would not be under any legal obligation whatsoever to 'provide the Facility', i.e. to offer to lend money to Questband. The term which Questband seeks to imply is one which would oblige Macquarie to make a decision to lend by 19 June, that being a reasonable time, whether or not the contractual conditions were satisfied. It is an obligation which the contract itself expressly forbore to impose.

[107] An alternative argument, that Macquarie had to decide whether to offer the loan within a reasonable time after the satisfaction of the conditions precedent, would not assist Questband because the condition as to the provision of a geotechnical report was not satisfied until 23 June. The first, defective, Coffey report was not given until 20 June, after the date designated as the end of the reasonable time.

[108] A term that Macquarie, should it have decided to offer finance to Questband, must have done so by 18 June cannot be reconciled with the express terms of the mandate that Macquarie might not make an offer of finance at all and that it came under no obligation whatsoever to Questband until all required documents had been executed and that Macquarie was satisfied it should make the advance. The whole tenor of the mandate agreement was that Macquarie would prepare a submission for its credit committee which might accept, reject or amend the submission as it saw fit. This collides with, and excludes, an obligation to make a decision to lend (on the terms submitted) by reference to a time extraneous to the contract, fixed by the needs of the would-be borrower to effect a transaction of its own.

[109] If this conclusion is wrong and it be right that Macquarie was obliged to make a decision whether or not to lend (in this case to lend) within a reasonable time an examination of the evidence leads to the same answer: the bank did not delay beyond a reasonable time in making the offer to lend.

[110] The contracts of purchase were executed in August 2002. It was not until eight months later, on 1 May 2003, that Mr Ingles approached Macquarie about the possibility of it funding his development. Having obtained a preliminary positive response nothing further was done by Questband until 20 May 2003.

[111] On 22 May Mr Wiltshire sent the proposed mandate agreement by facsimile transmission marked 'urgent'. It clearly was, and a response was required very promptly. It was not until 26 May that Mr Anderson communicated Questband's acceptance of the mandate to Macquarie. The cheque paid in consideration of Macquarie's preparation of a credit submission was posted on 26 May and did not arrive at Macquarie's offices until 27 May. At about that time it was known or expected that the loan would be required in about a month and that the timeframe for settlement was tight. There would be difficulty in meeting all of Macquarie's requirements within that period, though both Mr Wiltshire and Mr Ingles were confident by reason of their past experience of working with each other that it could be achieved. Nonetheless there was no time to waste.

[112] There was no explanation as to why Questband should have taken so long to transmit its acceptance of the mandate and its cheque to Macquarie especially at a time when it was known time was short. A weekend intervened, but three days were lost.

[113] Equally significant is the fact that on 22 May Mr Ingles instructed Questband's solicitors to waive the benefits of special conditions 3 and 4. By this conduct

Mr Ingles committed Questband to complete the contracts in a month's time even though he had not obtained finance and he knew that there was a risk that Macquarie might not be able to provide finance in time. The decision put both parties under considerable pressure. But it was Questband's doing, and it was unnecessary.

[114] Clause 3 of the mandate which I set out earlier (paragraph 18) provided that progress of the finance application depended upon Questband providing specified information. Questband was aware of the requirements upon receipt of the mandate on 22 May. Mr Anderson did not begin to respond until 4 June when what he sent by way of a 'group structure diagram' and balance sheets and profit and loss accounts for all corporate guarantors for the previous two financial years was deficient. When Mr Barnes pointed out the deficiency on 6 June Mr Anderson did not deliver further information until 10 June and even that was inadequate. Another item of information required was a breakdown of the costs of development. That was not given to Ms Degotardi until 12 June, in response to a request she made of Mr Anderson. One important item of information was the geotechnical report. It was not until 17 June 2003 that Questband first approached Coffey to provide such a report.

[115] A reasonable time for making an offer of finance could not have elapsed until Questband had provided the information required by clause 3 of the mandate letter. The geotechnical report was not furnished until 20 June. It was unsatisfactory but that, for the moment, is beside the point. It cannot be the case that by the implication of a term that Macquarie should make an offer of finance within a reasonable time, the bank became obliged to make an offer before it was provided with the information which, by the express terms of the contract, it was to have before it had to decide whether or not to offer a loan. Yet this is what the submission comes down to. Although clause 3 of the mandate does not preclude by itself the implication that Macquarie should act within a reasonable time, fixing the expiration of a reasonable time before clause 3 could operate according to its tenor is clearly beyond the legitimate scope of any implied term.

[116] Apart from this telling consideration the evidence more generally does not establish that a reasonable time expired prior to 19 June. As I mentioned, the authorities show that delays by one side are relevant to the determination of what is a reasonable time, and that determination must be fair to both parties to the transaction. The constraint of time which overlay the making of the loan was the consequence of Questband's unilateral actions. It waited eight months to make the application for finance. It made the contracts unconditional so that settlement was due within 30 days. It did not supply information promptly. It put Macquarie under pressure to perform in a shortened period. It normally took the bank between six and eight weeks to process such an application. Questband delayed in obtaining a necessary consultant's report.

[117] Questband's submissions ignore the background and focus on the time between

22 May when the mandate letter was sent to it and 20 June when the Facility

Agreement was offered and accepted. Its argument is that the known purpose of the loan was to enable it to complete the purchases and to give effect to the agreements, mandate and Facility Agreement, which the parties made, it was necessary that the loan funds be made available by 5 pm on 23 June. To effect the purpose Questband submits the alleged terms must be implied into the agreements.

[118] But the context in which agreements are made are relevant to deciding what is a reasonable time for the performance of the contracts. The relevant context is a substantial delay by Questband in approaching Macquarie for finance and a unilateral decision by Questband which had the consequence that only a month was allowed to Macquarie to undertake such investigations as it thought appropriate to decide whether to lend or not and, should it decide to lend, to implement all necessary arrangements to secure an advance of about $9 million.

[119] In determining when a reasonable time expired one cannot ignore the context or the background. One must take account of Questband's delays and the consequences of its waiver of the special conditions.

[120] In fact Macquarie made the offer of finance before Questband had supplied the information required by Macquarie for the purposes of making its decision. It is impossible in that circumstance to say that Macquarie delayed beyond a reasonable time in offering the loan.

[121] Moreover it is not fair to Macquarie that it should bear the consequences of Quesband's actions, which put a high premium on time, with the result that it becomes legally liable for the results of the delay.

[122] The second implied term relied upon by Questband is one said to be found in the Facility Agreement and is to the effect that each party would do all things reasonably necessary to enable the other to have the benefit of the Agreement. The benefit, not particularised in the amended statement of claim, is presumably the making of the advance to enable Questband to complete the purchases. The loan would no doubt have been a commercial benefit to Questband but implied terms of the type pleaded by Questband are limited to contractual promises.

[123] Macquarie was obliged to co-operate and to do what was within its power to give Questband the benefit of what it promised. It did not promise to lend money unconditionally, or in time for the settlement. What it promised was to make the loan 'subject to ... the receipt by (Macquarie) of the conditions precedent listed in item 25', one of those conditions being 'confirmation from a certifying engineer' as to 'the cost of the proposed ... project.'

[124] Moreover by clause 5.5 Macquarie was given an absolute discretion whether to be satisfied of the form and substance of any consultant report provided to it. (Clause 5.5 is set out at paragraph 27).

[125] No doubt clause 5.5 obliged Macquarie to act honestly in the exercise of its discretion but there is no suggestion that it was not honest.

[126] To the extent that Questband relies upon an implied term that Macquarie would do all things necessary to give it the benefit of the contract it must be remembered that the 'benefit' was Macquarie's obligation to act honestly in the exercise of its discretion whether or not it was satisfied with the consultant's reports. That was what Macquarie promised to do. It did not promise to lend money other than on satisfaction of that condition. It did not promise to give Questband a particular, or any commercial benefit. Such a benefit may or may not have accrued to Questband had the advance been made, the purchases completed, and the subdivision built and sold. Macquarie's promise was only to honestly consider whether it should lend.

[127] The obligation of Macquarie to make an advance under the Facility Agreement only arose upon its satisfaction, in its discretion, of the conditions precedent. But the essence of the second, implied term is that Macquarie was obliged to advance the purchase monies to Questband in time for it to attend settlement by 5 pm on

23 June. The implied term cannot stand with the express terms which did not oblige Macquarie to make an advance at all until satisfied of the contents of the reports.

[128] The third and fourth implied terms can be discussed together because they are, in essence, identical. They were that Macquarie was obliged to use its best or reasonable endeavours to obtain the engineer's report in sufficient time to effect settlement and to make reasonable endeavours to make the advance in time for settlement.

[129] Each of the terms contradicts the express terms I have just discussed: that any loan was subject to receipt of a satisfactory engineer's report as to which Macquarie had a complete discretion whether or not to be satisfied. While it may be possible to imply a term that the bank would act within a reasonable time to express its satisfaction or dissatisfaction with an engineer's report, the implied term advanced by Questband would have obliged Macquarie, on the facts of this case, to express that satisfaction before it had a report with which it was in fact satisfied.

[130] The implied term necessarily curtails the contractual discretion conferred on Macquarie to consider the report and decide whether it should make the advance. Questband's argument is that Macquarie could not exercise the discretion other than in its favour if to do so meant that cheques could not be drawn in time for settlement. Questband's submission is that Macquarie had to express its satisfaction with the Cardno report, as well as expressing that satisfaction in time to effect settlement.

[131] Had Macquarie honestly thought that the report was unsatisfactory the Facility Agreement provided that it was not bound to make the loan. Questband's case depends upon the curtailment of the contractual discretion.

[132] No matter how it is put Questband's argument comes down to the proposition that Macquarie was obliged to make an advance at a time, no later than about 2.30 pm on 23 June 2003, whether or not it was satisfied with the reports given to it by the consultants. This is to imply a term, or terms, contrary to what the Facility Agreement expressly provided.

[133] It is clear as a matter of fact that Macquarie was not satisfied with Coffey's first report or Cardno's first report, both delivered on 20 June. It required more complete reports from both consultants. It did not receive the second Coffey report until 1 pm on 23 June. It did not receive the second Cardno report until 4 pm on

23 June. Upon receipt of that report it was satisfied that all conditions precedent had been fulfilled and moved to issue the cheques for settlement. It follows from the express terms of the Facility Agreement that it was not obliged to make the advance prior to 4 pm. By then, as is common ground, it was too late to effect settlement by 5 pm even without the added delay and frustration caused by the traffic blockage on the motorway. Questband's case that the bank was obliged to make the loan in time to effect settlement before 5 pm ignores the terms of the contract and seeks to replace express terms with implied ones.

[134] If one assumes, contrary to this conclusion, that in some more general way Macquarie was obliged to act reasonably, or within a reasonable time, with respect to its decision to make the advance, Questband can still not succeed in the action. The evidence does not prove that Macquarie did not act reasonably, or within a reasonable time, in making the decision.

[135] The provision, and the timing of delivery, of the Coffey report was Questband's responsibility. It seems extraordinary that it did not provide an acceptable report until 1 pm on the day of settlement. No explanation was attempted as to why it was not done earlier. Coffey could easily have been retained earlier than 17 June. It could have been told what was required when it was retained. It may be that Macquarie's requirement that the Coffey report be shown to Cardno for its consideration was not communicated to Questband until the morning of 23 June but that requirement was not unreasonable, indeed it was to be expected if the Cardno report was to have any value at all. It was within the discretion conferred by clause 5.5. The fact is that upon receipt of the second Coffey report Macquarie and its engaged consultant, Cardno, acted with great despatch. In my opinion the lapse of three hours to provide a report on which a lender could rely shows that Cardno acted with great celerity. The need for urgency was a consequence of Questband's delays in engaging a geoscientist. It is not possible to criticise the passage of three hours, or to categorise it as unreasonable.

[136] In deciding whether the passage of time was unreasonable one recalls that the Facility Agreement was executed in the early evening of 20 June and by 4 pm the next working day Macquarie had obtained the requisite reports, considered them, approved the advance and drawn the cheques. The Facility Agreement did not usually require it to do such a thing in fewer than five working days. This suggests what is a reasonable time for the satisfaction of conditions precedent and the provision of funds. Indeed five days was the minimum usual time. That Macquarie managed to achieve the process in less than one day shows the impossibility of characterising its conduct as dilatory.

[137] As with the first implied term the determination of what is a reasonable time takes into account delays by the party who alleges that more than a reasonable time has elapsed, and by reference to fairness by both parties. It is demonstrably unfair to visit upon Macquarie the consequences of Questband's delays and to require it to shoulder the burden of performance made impossible by Questband's conduct.

[138] Questband's submissions were put in an alternative form. This form worked backwards from the assumption that Questband was to have the benefit of the loan in time for settlement. Therefore it argued that Macquarie had to make the decision to lend in time for it to draw cheques and transport them to Southport for the settlement.

[139] On the evidence the submission is that Macquarie had to declare itself satisfied with the conditions by no later than 2.30 pm. The obtaining of final prudential approval, the transmission of a draw-down notice and the drawing of cheques would have taken about an hour. Mr Besley had to allow about an hour and a half for his journey to the coast.

[140] To require Macquarie to have proceeded to make the final arrangements for the loan at about 2.30 would mean that it could not require its engineers, Cardno, to consider the geotechnical report. The evidence shows that there was insufficient time from receipt of the second Coffey report for Cardno to consider it and have cheques drawn in time for settlement. The implied term advanced by Questband would deprive Macquarie of the operation of an express term of the Facility Agreement. It was not required to lend until it was satisfied with the report of its engineer. The contract made by the parties allowed Macquarie to receive the report before deciding whether to make the advance. The implied term cannot stand against the express provision.

[141] But even if it were somehow possible to imply the term it would not be reasonable to require Macquarie to waive the benefit of the condition that it receive the engineer's report before proceeding to make the loan. The need for the waiver, the need for an urgent approval of finance, was occasioned by Questband's delays particularly in not getting its geotechnical report to the bank before 1pm on the day of settlement. It is distinctly unreasonable to regard the contract, by an implied term, as imposing liability against Macquarie for not acting more promptly when it was Questband which created the need for urgency by its inaction.

[142] The submission set out in paragraph 14 of the plaintiff's submission (reproduced in paragraph 101 of these reasons) is wrong in fact. There was no oral agreement that upon receipt of the Coffey report at about 1.00 pm on the 23rd that Macquarie was satisfied that all conditions precedent had been fulfilled. The submission presumably relies upon the contents of Mr Barnes' memorandum sent at about that time to Ms Wyer but as I have pointed out the memorandum did not express Macquarie's position. It was written in anticipation of satisfaction, not to record the fact that the bank was satisfied with the report. It was not then satisfied, as

Messrs Wiltshire and Barnes and Ms Wyer all knew. Moreover Questband knew it too because of the earlier intimation that Cardno was required to review the second Coffey report.

[143] The submissions advanced in paragraph 15 are also wrong in fact. On a matter of detail Macquarie did not have a branch at the Gold Coast which could draw and issue cheques. Secondly, as Mr Wiltshire explained cheques could not be drawn in Brisbane in advance of Macquarie's actual satisfaction with the conditions precedent because part of the process of issuing the cheques was the allocation of funds by the bank's treasury department to support the cheques when presented. The third point is that Cardno should have been asked to give its report on the basis of assumptions as to subsoil conditions rather than wait for a report about actual conditions. There are two answers. The first is that the submission cannot stand with the terms of clause 5.5. The second is that it was Questband's delays in obtaining the Coffey report which prevented the issue of cheques in time for settlement. Had a sufficient report been obtained on 20 June or even if the Coffey report faxed to Questband at 11.05 on the 23rd had been sent immediately to Macquarie and Cardno the cheques would have issued in time. That omission was, in the end, critical.

[144] The analysis required by Questband's submission has required an examination of hours and parts of hours. It would always, I think, have been a hard case to make out that a lapse of hours rather than days was unreasonable. The law, with obvious exceptions, does not ordinarily have regard to fractions or parts of a day as distinct from whole days (Marks v Frogley [1898] 1 QB 888 at 896) and computes days, not moments, and regards 'days taken as a whole irrespective of whether an event happens actually at one particular hour ... or ... another' (Official Receiver and Liquidator of Jubilee Cotton Mills Ltd v Lewis [1924] AC 958 at 969). The assessment required of what in a particular case is a reasonable time is not ordinarily so precise as to allow the dissection of hours.

[145] Much is made in Macquarie's submissions of other failings by Questband and its officers in not providing information timeously or adequately. There is substance in the criticisms but in the end they come to nothing because, despite them, Macquarie would have been in a position to make the advance in time for settlement. What prevented that occurrence was the late arrival of the Coffey report and, consequently, the Cardno report.

[146] Enough has been said to reveal my conclusion that Questband's claim fails both in law and in fact. The terms which it must prove cannot stand against the express agreements made by the parties: it has not proved that Macquarie took an unreasonable time to perform the asserted implied contractual obligations.

[147] Macquarie's counter-claim was not the subject of discussion during the trial. The counter-claim is for the loss of fixed fees and interest which Macquarie would have earned from the advance, had it been made to Questband. They are said to be recoverable pursuant to the breach of an implied term that Questband would do all things reasonably necessary to enable Macquarie to have the benefit of the Facility Agreement. The breach is said to consist of Questband's failure to provide the second Coffey report in sufficient time to allow Macquarie to review it, accept it, and make the advance in time for settlement, in breach of the implied term.

[148] The counter-claim fails for the same reason as Questband's claims. The implied term is inconsistent with the express term which gave Macquarie a discretion not to lend until satisfied with the report. The term is inconsistent with an obligation that it be provided by a particular time.

[149] There will be judgment for the defendant against the plaintiff on the claim and for the defendants by counter-claim on that claim.