Raphael Shin Enterprises Pty Limited v Waterpoint Shepherds Bay Pty Limited

Proceedings 1By its further amended Commercial List Statement filed with leave on 31 March 2014 (FACLS) and amended summons filed 14 February 2012, the plaintiff Raphael Shin Enterprises Pty Ltd (RSE) seeks damages from the defendant Waterpoint Shepherds Bay Pty Ltd (Waterpoint) for breach of various alleged agreements and representations as to certain works (such agreements being partly written, partly oral and partly implied), or pursuant to the Trade Practices Act or alternatively the Australian Consumer Law, or by reason of an alleged estoppel. The plaintiff also seeks an order that the defendant return a deposit and other ancillary orders. 2By its cross claim summons and Commercial List Cross-Claim Statement filed 2 March 2012, the defendant/cross-claimant seeks damages from the plaintiff, Raphael Shin and Rebecca Yi Jeong Shin (the cross-defendants), the latter two as guarantors. The cross-claimant also seeks a declaration that the second and third cross-defendants are jointly and severally liable for any loss or damage suffered, and an order that they indemnify the cross claimant in certain respects. 3The claim concerns two properties that formed part of a residential and retail/commercial development at Meadowbank. The two properties are a stratum lot (Lot 4 in DP1092972) which will be referred to as the Restaurant Lot, and a strata lot (Lot 178 in SP76502) which will be referred to as the Storage Lot. The Storage Lot is located directly below the Restaurant Lot, separated by a concrete slab that is partly common property owned by the relevant Owners Corporation of Strata Plan 76502.

Background Facts 4Mr Raphael Shin is one of two directors of the plaintiff. His wife, Mrs Rebecca Yi Jeong Shin, is the other director. Mr Shin is a licensed builder and property developer. I set out his various business interests, so far as they are relevant to these proceedings, later in this judgment. 5Mr Edward Kim, a real estate agent, had been appointed by Waterpoint to sell properties in the Meadowbank development. In early 2008, Mr Kim was requested by a Mr Josef Ristway of Waterpoint to find a buyer for the restaurant. 6Mr Ristway describes himself as having been a finance consultant for Waterpoint, originally, but became a director and secretary of that company from 25 February 2004 until January 2006 and also acted as secretary of the company from June 2010 until March 2012. The plaintiff asserts he was the officer said to be responsible for negotiating sales of the lots and giving instructions to Mr Kim as the agent appointed by the defendant. 7In or about February 2008, Mr Raphael Shin asserts he was approached by Mr Kim regarding the development at Meadowbank, and Mr Shin indicated his interest in creating an upmarket Korean restaurant. There is no dispute that Mr Shin "was an experienced restaurateur and an experienced builder and developer of properties" (T17/46). Mr Shin had dealt with Mr Kim before but had never had any previous dealings with Waterpoint or its principals. 8Negotiations between the parties then ensued, in relation to Mr Shin acquiring the Restaurant Lot and in turn the Storage Lot. In particular, it appeared that Mr Shin required a long settlement date so that once the restaurant commenced trading, a period of six months would elapse and the financial results would assist Mr Shin in obtaining finance for the purchase (under what became the exercise of either a Put or Call Option). 9Mr Kim recorded, in a file note dated 26 February 2008, that Mr Shin made an offer of $2 million for what the defendant alleges was the Restaurant Lot alone. A number of draft sales advices, one of which was dated 1 March 2008 but which appears to be ultimately faxed on 28 May 2008 to RSE's solicitor, were prepared by Mr Kim. In the last version of these and in addition to the words typed into the advice, there was also a handwritten notation "+ storage as at cost agreed". A factual issue of some significance arose at the trial as to whether Mr Shin ever offered to purchase the Restaurant Lot separately from the Storage Lot. 10A cheque was provided to Mr Kim in the sum of $55,000. It may be observed that this constitutes 2.5% of $2.2 million. On its face, the cheque was dated 10 March 2008 but no payee was provided. Mr Kim gave evidence that when he received the cheque it was post-dated and was given to him by Mr Shin as a sign of his commitment. The cheque was never banked, but it was contended by Waterpoint that this supported the proposition that RSE was prepared to purchase the Restaurant Lot alone. 11As part of the alleged ongoing negotiations, there were discussions between Mr Shin, Mr Kim and Mr Ristway, many of the terms of which are disputed. There are also disputes as to when such discussions took place. What is not in issue is that Mr Kim and Mr Shin always it seems conversed in the Korean language. A further issue that arose was whether and if so when Mr Ristway was also present when Mr Kim and Mr Shin met. 12Mr Shin alleges he and Mr Kim had a conversation at a building site at Campsie, which is set out in paragraphs [59]-[60] of Mr Shin's affidavit dated 25 May 2012 (the Shin Affidavit). Mr Shin asserts at some little length the detailed requests he alleges he made of Mr Kim. The requests entailed a good deal of work to be done for example at the vendor's expense and the obtaining of all relevant consents and approvals. Mr Shin asserts Mr Kim subsequently informed Mr Shin all of his detailed requests had been agreed to. 13Mr Kim denies that permits, approvals or certificates were discussed and denies entirely that Mr Shin's requests had been agreed to. 14In June and July 2008, there was correspondence between the solicitor for RSE, Mr Ben Johnston of Fidelity Legal (Mr Johnston) who had acted for Mr Shin for some twenty five years, and the solicitor for Waterpoint, Ms Phillippa Russell (Ms Russell). 15In a letter dated 6 June 2008, Mr Johnston wrote to Ms Russell noting that there would be a side letter in relation to the creation of a set of stairs and a dumb waiter, necessitating penetrations between the two lots, and for the provision of a construction certificate. The relevant terms of the letter were as follows: I refer to your recent correspondence enclosing draft contracts and licences. My client is ready to exchange subject to clarification and agreement of the following matters: [...] 5. The parties to exchange a side letter concerning the vendor's obligation to:

• complete expeditiously the stairs between the restaurant and the storage lot,
• cut a 1m2 access point for a dumb waiter lift between the storage area and the kitchen
• provide the certifier to issue the construction certificate for the purchaser's works 6. Parties to exchange put and call options in lieu of exchanging contracts. Unless your client requires you to do the drafting, I hold instructions to submit draft deeds. [my emphasis] 16In a letter dated 10 June 2008, Ms Russell wrote to Mr Johnston, confirming that penetrations for the stairs and dumb waiter would be provided by Waterpoint. The terms of the letter are relevantly as follows: I am instructed to respond to your 6 June 2008 letter as follows: [...] 5. I am instructed my client will cut the hole for the stairs, but will not be constructing the stairs. I am instructed my client will cut the hole for the stairs, and for the dumb waiter lift, expeditiously after the locations are indicated by your client. I am also instructed my client will provide details of the certifier. I am instructed a letter settling [sic] out these arrangements will be provided separately. 6. I am instructed to agree to put and call options, and that this firm will prepare them. I am instructed to proceed with the preparation of the put and call options as soon as I receive from you or your client the initial deposit of $20,000.00, to be held in my trust account pending exchange of the put and call option. [my emphasis] 17In an email dated 10 June 2008, Mr Johnston wrote to Mr Kim and attached the correspondence just described. The terms of the letter are relevantly as follows: There are 2 matters of concern to Mr Shin - 1. He would like to avoid the payment on 30 September 2008 and pay the balance of the deposit in one payment by 31 December 2008 (as per item 1 of my letter). 2. Mr Shin's understanding was that the vendor would construct the stairs between the storage area and the restaurant area (first dot point of item 5 of my letter). Mr Shin has today provided the deposit cheque of $20,000.00 to me and I will send it to Phillippa Russell as suggested by her. Could you find out whether the vendor will agree to items 1 and 2 above? [my emphasis] 18On 11 July 2008, Waterpoint issued a letter to RSE (the Side Letter) stating that after exchange of put and call options for the purchase of the Restaurant Lot and the Storage Lot, Waterpoint would now agree to carry out the creation only of a penetration and stairs connecting the lots, subject to engineering acceptance of the proposed location and design, at their own expense. The letter is on the letterhead of Billbergia, but it was not contested that it was issued by Waterpoint (see the discussion at T20/32) and its contractual force is not in contest in these proceedings. The relevant terms of the letter are as follows: Please take this letter as confirmation the following works will be carried out (at no expense to your client) after exchange of Put & Call Options by your client for the purchase of the above properties: 1. an additional fire exit - including 3 additional fire rated openings in the car park lobbies on Level 3, tower A (the division walls will be constructed of 2 hour fire rated hebel); 2. the installation of an additional fire door at the end of the passage facing inwards to the restaurant area; and 3. creation of a penetration and stairs connecting the restaurant with the storage lot (subject to our engineers acceptance of the proposed location and design). [my emphasis] 19However, at some point between 11 July 2008 and 25 July 2008 and perhaps not for the first time, the plaintiff asserts a conversation took place between Mr Shin, Mr Kim and Mr Ristway. The plaintiff contends that Mr Ristway confirmed, notwithstanding the terms of the letter, that Waterpoint knew they must ("as previously agreed") cut four holes or whatever number of holes Mr Shin wanted as part of the contract for purchase. Mr Ristway accepts that he said Mr Shin could have as many holes as he wanted, provided a structural engineer certified that it was safe to do so. 20On or about 25 July 2008, the parties executed a number of transactional documents as described below. 21On that day, a put and call option was executed in relation to the Restaurant Lot and separately in relation to the Storage Lot (collectively the Put and Call Options), with a final date to exercise the call option of 31 December 2008 and a final date to exercise the put option of 30 April 2009. The purchase price was $2.42 million for the Restaurant Lot and $330,000 for the Storage Lot (including GST). The settlement date of both contracts was 30 June 2009, and a total of $20,000 was paid on or about that date as a deposit (which would form part of the deposit in the event the options were exercised). Mr Shin and Mrs Rebecca Shin were guarantors of RSE's obligations under the option agreements. 22The Put and Call Options include entire agreement clauses and make no reference to the Side Letter. The side letter makes mention of the Put and Call Options. The significance of this issue was a matter of some debate at the trial, and I will return to this in due course. 23The parties also executed licences to facilitate occupation of the lots so as to permit RSE to carry out a fit out and permit the operation of the restaurant business prior to settlement (the licences). 24In or about August 2008, RSE retained Space Con Pty Ltd (Space Con) to undertake the fit out work. Space Con is a related company of RSE, with Mr Shin as its sole director and shareholder. The contract price was stated to be $1.2 million (CB10/3988) plus GST. 25In or about August 2008, cut out plans for the penetrations were prepared and provided to a Mr Rob Allen of Billbergia Group, a related entity of Waterpoint which was to be ultimately responsible for cutting the penetrations. 26On or about 12 August 2008, Mr Allen emailed Space Con and Mr Kim to advise that the penetrations as required could not be cut as they involved common property and permission from the Owners Corporation was required. 27Discussions then ensued between Mr Shin, Mr Kim, Mr Ristway and Mr Allen, however in any event the penetrations were not cut at this point. 28On or about 23 December 2008, it is contended that due to the delay in cutting the penetrations, RSE and Waterpoint executed a Deed of Variation to extend the date for the exercise of the call option by one month to 30 January 2009. However the call option was not exercised by this date. 29On or about 10 March 2009, RSE obtained a construction certificate in respect of the fit out of the Restaurant Lot. 30On or about 20 April 2009, RSE was sent two letters by Waterpoint purporting to exercise the put option for both lots and requiring completion by 30 June 2009. Further correspondence ensued between the parties as to the validity of the purported exercise of the put option, and settlement did not occur on the nominated date. 31Finally, on or about 4 September 2009, there was a meeting between Mr Shin, Mr Kim, Mr Ristway and a Mr Bassam Aflak (of Waterpoint). Waterpoint it seems suggested the parties walk away from the sale and purchase, but Mr Shin did not wish to walk away and advised that he was ready to start his fit out as soon as the penetrations had been cut. 32In October 2009, the vendor undertook a number of penetrations and constructed the staircase between the Restaurant Lot and Storage Lot. According to the report of Mr John Bottaro, registered surveyor, the penetrations between the two lots were "the stair well, the lift shaft, the dummy kitchen waiter, two vent penetrations and a small penetration with copper piping leading into it" (CB2/673). 33On or about 29 October 2009, Ms Russell sent a letter to Waterpoint Asset Management Pty Ltd on behalf of the building management committee, seeking the consent of the Owners Corporation in respect of the work that had been carried out. No consent was ever provided. 34In or about January 2010, the fit out works for the two lots were undertaken by Space Con and completed. 35On or about 15 January 2010, the restaurant commenced trading. 36Following the completion of the fit out, Mr Shin sought the provision of an occupation certificate from the private certifier, Mr Geoffrey Pearce of the McKenzie Group. On or about 19 January 2010, Mr Pearce informed Mr Shin that no approval had been obtained for the staircase between the two lots. This was confirmed in writing on 22 January 2010. 37Between January and July 2010, Mr Shin asserts he and Mr Kim had various conversations to the effect that unless Waterpoint obtained all the necessary approvals and certificates, RSE would not settle on the contracts. 38On or about 8 November 2010, a building certificate was issued in relation to the Restaurant Lot only in connection with the construction of the stairway. The certificate did not concern the Storage Lot or common property, nor any other penetrations between the two lots. 39On or about 15 November 2010, an interim occupation certificate was issued in relation to the Restaurant Lot. The certificate did not concern the Storage Lot or common property. 40By letter dated 25 November 2010, Ms Russell issued a Notice to Complete on behalf of Waterpoint, such completion to be effected by 10 December 2010. 41On or about 29 November 2010, a final occupation certificate was issued in relation to the Restaurant Lot. Again, the certificate did not concern the Storage Lot or common property. 42Further correspondence was exchanged between the parties concerning the validity of the Notice to Complete. 43On or about 13 December 2010, Mr Johnson lodged a caveat over the Restaurant and Storage Lots. 44By letter dated 17 December 2010, Ms Russell issued documents purporting to be Notices of Termination of the contracts arising from the 20 April 2009 exercise of the Call Option and the licence agreements. 45RSE continued to trade from the Restaurant Lot and the Storage Lot until 5 August 2011, when it finally vacated the premises taking a good deal of equipment with it.

Legal Principles 46The parties contend a number of diverse, and in one respect somewhat exotic, legal principles are engaged in the resolution of the dispute between them. It is convenient to set some of those out in advance of a consideration of the factual controversies. Some issues covered for example are well travelled areas: construction of contracts, partly oral contracts, the relevance of post contractual conduct. On the other hand, RSE relied upon the authority of Flight v Booth.

Construction of Contracts 47In Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7, French CJ, Hayne, Crennan and Kiefel JJ observed in relation to contracts more generally at [35]: Both [parties] recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties ... intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". [footnotes omitted] 48In Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382 at [90], Campbell JA stated the principles in deciding whether an agreement that parties have entered is one that is wholly in writing, or partly written and partly oral, include the following: (1) When there is a document that on its face appears to be a complete contract, that provides an evidentiary basis for inferring that the document contains the whole of the express contractual terms that bind the parties; (2) It is open to a party to prove that, even though there is a document that on its face appears to be a complete contract, the parties have agreed orally on terms additional to those contained in the writing. Conversely, it is open to a party to prove that the parties have orally agreed that a document should contain the whole of the terms agreed between them. (3) The parol evidence rule applies only to contracts that are wholly in writing, and thus has no scope to operate until it has first been ascertained that the contract is wholly in writing. (4) Where a contract is partly written and partly oral, the terms of the contract are to be ascertained from the whole of the circumstances as a matter of fact. (5) In determining what are the terms of a contract that is partly written and partly oral, surrounding circumstances may be used as an aid to finding what the terms of the contract are. If it is possible to make a finding about what were the words the parties said to each other, the meaning of those words is ascertained in the light of the surrounding circumstances. If it is not possible to make a finding about the particular words that were used (as sometimes happens when a contract is partly written, partly oral and partly inferred from conduct) the surrounding circumstances can be looked at to find what in substance the parties agreed. (6) A quite separate type of contractual arrangement to a contract that is partly written and partly oral is where there is a contract wholly in writing and an oral collateral contract. [extensive references to case law omitted] 49Debate took place as to the use that may be made of post-contractual conduct in resolving the question of the existence of a contract or its terms, especially in the context of a contract which is said to be partly in oral form. 50In Lym International Pty Ltd v Marcolongo [2011] NSWCA 303, Campbell JA additionally observed: [139] Third, where a contract is oral, post-contractual conduct may be used to ascertain the subject matter of the contract. Such use of subsequent conduct is justified when it is "relevant, on an objective basis, to the identification of the subject matter of the contract or the determination of the necessary terms, as distinct from deciding the meaning of words". Such subsequent conduct is relevant in that way when "what was done later [is] a basis for inferring what was agreed when the contract was made, or as establishing later additions or variations", citing Browne LJ in Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 at 1229. [140] I respectfully agree with Spigelman CJ's analysis. Other authority that where a contract is partly written and partly oral, the terms of the contract are to be ascertained from the whole of the circumstances as a matter of fact is collected in Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 at [90]. [141] There is a vast difference between the task that is involved in interpreting a wholly written contract, and the task involved in finding what has been agreed in a contract that is not wholly in writing. The difference between those tasks in itself makes a vast difference between the circumstances in which post-contractual conduct can be relevant for the respective tasks. [142] Where there is a contract that is wholly in writing, there is no doubt what the contract is - it is the writing. The task of interpretation is ascertaining the meaning that the bystander who knows all the relevant surrounding circumstances would understand from the parties using the words in that writing. The admissibility of evidence for interpreting a wholly written contract is decided by reference to whether it is able to assist in ascertaining the meaning that the bystander who knows all the relevant surrounding circumstances would understand from the parties using those words. Save in the case of post-contractual events providing retrospectant evidence of a surrounding circumstance that was known to the parties at the time of contracting, the view favoured in this court is that post-contractual conduct cannot assist in that task, and thus is not admissible, or if admitted cannot legitimately be used in that task: the cases cited by McColl JA in County at [161] ([118] above). [143] By contrast, the task in ascertaining what are the terms of a contract that is not wholly in writing is quite different - the task is finding as a fact what the parties have agreed. A range of post-contractual conduct could be relevant to ascertaining what the parties have agreed. For example, their conduct in carrying out the contract could itself be objective evidence of what they had agreed, an admission of one of the parties could assist in ascertaining what they have agreed, and business records created to record or report on the contract rather than carry it out could also assist in that task. 51The statement in James Miller & Partners v Whitworth Street Estates Ltd [1970] AC 583 at 603 per Lord Reid that "it is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made" was reaffirmed in Agricultural and Rural Finance Pty Limited v Gardiner (2008) 238 CLR 570 at [35] per Gummow, Hayne and Kiefel JJ. 52More recently, in Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 the Court of Appeal considered the issue of post-contractual conduct. Basten JA observed (Gleeson JA agreeing) at [120]-[121]: [120] There are difficulties attending the use of post-contractual statements to construe the terms of a contract. It is an accepted principle that anything which the parties said or did after a contract was made cannot be used "as an aid in the construction of" the contract: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; 238 CLR 570 at [35] (Gummow, Hayne and Kiefel JJ), referring to the statement of Lord Reid in James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 at 603. That principle derives from the "objective" theory of contract, which provides that the legal obligations of the parties to the contract do not depend upon their subjective beliefs but upon the view of the reasonable bystander informed as to the surrounding context and circumstances, which in practice means the view of the court based on the evidence before it: Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 at 775 (Lord Hoffmann); Wilson v Anderson [2002] HCA 29; 213 CLR 401 at [8] (Gleeson CJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 at [16] (Lord Hoffmann, PC); and see Lewison and Hughes, The Interpretation of Contracts in Australia (Law Book Co, 2012) at [2.04]-[2.05]. [121] On the other hand, where it provides evidence of facts, the assertion of which is against the interests of one party, it may be admissible as an admission by that party. However, to the extent that the evidence reveals an opinion as to a question of law rather than fact, the admission may be irrelevant or valueless. (The relevant authorities were collected by Campbell JA in Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; 261 ALR 382 and in Lym International Pty Ltd v Marcolongo [2011] NSWCA 303.) Alternatively, the evidence may establish contextual facts in existence at the time the contract was executed.

Collateral Contracts and Entire Agreement Clauses 53The plaintiff alleges the written contractual arrangements were supplemented by an oral agreement. Indeed he says the side agreement of 11 July 2008 operates in conjunction, and collaterally, with the Put and Call Options and was in turn supplemented by an oral arrangement. 54A further question which arose was one of construction as to whether what may be described as an entire agreement clause sat comfortably or not with the side letter plus the alleged oral agreement. Such clauses appeared in a number of documents the parties executed or on one view promised to execute. I will return to the detail later. 55However, in Hoyt's v Spencer (1919) 27 CLR 133, the High Court held that a collateral agreement cannot operate inconsistently with the principal contract. Knox CJ observed at 139 that: ...a distinct collateral agreement, whether oral or in writing, and whether prior to or contemporaneous with the main agreement, is valid and enforceable even though the main agreement be in writing, provided the two may consistently stand together so that the provisions of the main agreement remain in full force and effect notwithstanding the collateral agreement. 56In McMahon v National Foods Milk Ltd (2009) 259 ALR 20, an authority relied upon heavily by RSE, the Victorian Court of Appeal considered a merger provision and the issue of collateral contracts. However in my view it is clear that in each case, whether the clause is described as an entire agreement clause or a merger provision, the resolution of the operation of any collateral contract will turn upon the scope of such a provision. 57Nettle JA (Neave and Dodds-Streeton JJA agreeing) observed at [38]-[41]: [38] But, as was observed by Peden and Carter in an article entitled Entire Agreement - and Similar - Clauses, because proof of a collateral contract is an exception to the parol evidence rule, a merger provision should not be permitted to stand in the way of proof of a collateral contract unless the merger provision is clearly expressed to have that effect. I do not consider that clause 33 is sufficiently clearly expressed to have the effect of preventing proof of the collateral contract for which the McMahons contended. ... [41] It is true, as counsel for the respondent submitted, that allegations of collateral contract have often been dismissed on the basis that, if the parties truly intended the alleged collateral promise to be binding, they would have set it out in their written agreement. But that is not a principle of law. The test is what was said and done and how it would be discerned objectively - and the fact is that business people are not infrequently inclined to trust other business persons who make promises to them to the point that they do not insist upon having those promises reduced to writing. If such situations are to be looked at objectively with an informed knowledge of all of the circumstances, the honest and reasonable business person observer may not hesitate to conclude that a deal had been done. 58McMahon was referred to by the New South Wales Court of Appeal in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 per Hodgson JA (Allsop P and Macfarlan JA agreeing) at [212]: Usually, so-called 'merger clauses' are expressed in more expansive terms, stating that all prior agreements and negotiations are merged in a final written contract: see, for example, McMahon v National Foods Milk Ltd [2009] VSCA 153; (2009) 259 ALR 20 at 39-41 [37]- [43]. When expressed in this broad way, merger clauses are thought to achieve the same purpose as 'entire agreement' clauses, so that the final written contract embodies the whole agreement between the parties: see E Peden & J W Carter, 'Entire Agreement-and Similar-Clauses' (2006) 22 Journal of Contract Law 1 at 10. 59In Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 482-484, a unanimous High Court held: [33] The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it. The parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents' case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither. [34] There are reasons why the law adopts this position. First, it accords with the "general test of objectivity [that] is of pervasive influence in the law of contract". The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions. [35] Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time-consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here. In a time of growing international trade with parties in legal systems having the same or even stronger deference to the obligations of written agreements (and frequently communicating in different languages and from the standpoint of different cultures) this is not a time to ignore the rules of the common law upholding obligations undertaken in written agreements. It is a time to maintain those rules. They are not unbending. They allow for exceptions. But the exceptions must be proved according to established categories. The obligations of written agreements between parties cannot simply be ignored or brushed aside. [footnotes omitted] 60In Skyrise Consultants Pty Ltd v Metroland Funds Management Ltd [2011] NSWCA 406, MacFarlan JA held (Beazley and Meagher JJA agreeing) at [13]-[15]: [13] If a prior oral agreement is consistent with the terms of a later written agreement, the proper conclusion may be that the agreement is partly oral and partly in writing. One issue to be addressed in that context is whether the written terms were intended to be an exhaustive statement of the parties' rights (see State Rail Authority (NSW) v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 191 - 2). If they were, the parol evidence rule will preclude the conclusion that the contract is partly oral and partly in writing. [14] Moreover where, as here, the terms of the prior oral arrangement contradict the terms of the written arrangement the conclusion that the contract is partly oral and partly in writing will not be available. As was said in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at 484 in relation to the facts there under consideration: "In another case it may leave open the possibility that the contract is partly oral and partly in writing. But that cannot be so here. The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties' agreement recorded in the writing they executed. It is the written loan agreement which governed the relationship between Rural Finance and each respondent." (citations omitted) [15] The appellants did not contend that the oral agreement constituted a collateral contract. Such a contention would plainly not have been successful as a collateral contract may not contradict the terms of the main contract (see Hoyt's Pty Ltd v Spencer [1919] HCA 64; 27 CLR 133 and Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; 160 CLR 1). 61In Lewison and Hughes' The Interpretation of Contracts in Australia at [3.03], the authors observe that a document executed contemporaneously with, or shortly after, the primary document to be construed may be relied upon as an aid to construction, if it forms part of the same transaction as the primary document. The authors cite a number of authorities that have approved this observation. In the present case, however, although the negotiations resulted in both the Side Letter and the option agreements, it is not so much a question of construing the latter in terms of the former but rather whether the terms of the Works Agreement as alleged (including the Side Letter of 11 July 2008) are somehow incorporated as terms into the option agreements executed on 25 July 2008. 62As a result of the observation of Hodgson JA in Macquarie International Health Clinic, it is necessary to make some additional specific comments about entire agreement clauses. 63Entire agreement clauses may, in the absence of fraud, be effective to provide that express contractual representations constitute the totality of the obligations. 64There are entire agreement clauses for the Restaurant Lot (CB13/4648 and CB13/4947) and identical clauses appear for the Storage Lot (CB6/2013 and CB6/2234). 65Clause 16.3 of the Restaurant Lot Put and Call Option is in the following terms: 16.3 Entire agreement (a) This Deed constitutes the entire agreement of the Parties and supersedes all prior discussions, undertakings and agreements. (b) Each Party has entered into this Deed without relying on any representation by any other Party or any person purporting to represent that Party. 66Clause 6.2 of the Additional Clauses attached to the standard contract for the sale of land in relation to the Restaurant Lot (and clause 5.1 in relation to the Storage Lot) is in the following terms: 6.2 Entire agreement The provisions set out in this contract contain the entire agreement between the parties for the sale of the Property despite any: (a) negotiations or discussion held; (b) Documents signed or brochures produced, before the date of this contract. 67Evidence of pre-contractual terms are admissible where a document is only a partial or provisional record. In Hoyt's v Spencer (1919) 27 CLR 133 at 143, Isaacs J observed: If the parties agree to commit their agreement to writing, what is written is the conclusive record of their agreement, and, unless the document was not intended as the complete record of their bargain, no oral evidence can be admitted to qualify it. 68Therefore, in Cheshire and Fifoot at [10.7], the authors observe that if a document that appears ostensibly complete must be accepted as such, an entire agreement clause conclusively establishes that the document is a final and complete record of the contract. 69As was memorably observed by Lightman J in Inntrepreneur Pub Co (GL) v East Crown Ltd [2000] 2 Lloyd's Rep 611 at 614: The purpose of an entire agreement clause is to preclude a party to a written agreement from threshing through the undergrowth and finding, in the course of negotiations, some (chance) remark or statement (often long-forgotten or difficult to recall or explain) upon which to found a claim, such as the present, to the existence of a collateral warranty. The entire agreement clause obviates the occasion for any such search, and the peril to the contracting parties posed by the need that may arise in its absence to conduct such a search. 70However, an entire agreement clause does not generally prevent the implication of specific terms to give business efficacy to a contract (Hart v McDonald (1910) 10 CLR 417, where a clause 'that there is no agreement or understanding between us not embodied in this tender' held not to preclude implication) or the implication of generic terms implied by law: see GEC Marconi Systems v BHP Information Technology [2003] FCA 50. 71On the other hand, where it is sought to imply a term into a contract, it is necessary to turn to the requirements set out in the well-known passage from BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283, where Lord Simon of Glaisdale delivered the majority judgment and observed: ...for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract. 72An express term such as an 'entire agreement' clause, providing that there is no term other than those stated in a contractual document, may therefore prevent the implication of a term as otherwise the requirement that the implied term not contradict any express term may not be satisfied. See, for example, Australian Guarantee Corp Ltd v Ross [1983] 2 VR 319 at 321-2 per Young CJ (no implied term that owner would have title to goods hired at time of hiring where express provision negatived and excluded all conditions and warranties which might be implied); Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190 at 196 per McLelland J (in the absence of fraud, but subject to statute, an 'entire contract' clause will bind the parties and gives rise to an estoppel). 73However, it is well established that an entire agreement clause may be ineffective to defeat a misleading or deceptive conduct action. In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83, the clause was in the following terms at 87: The parties hereto further agree that no promise, representations, warranties, undertakings or conditions shall be deemed to be implied herein or to arise between the parties hereto by way of collateral or other agreement or by reason of any promise, representation, warranty or undertaking given or made by any party thereto to the other on or prior to the making of this agreement. The existence of any such implication or collateral or other agreement is hereby expressly negatived. 74Lockhart J observed at 98-99: Irrespective of the construction of these two special conditions it does not matter ultimately whether the impugned conduct with which this case is concerned falls literally within them or not. Section 52 is a section in the consumer protection provisions of an Act concerned to protect the public from misleading or deceptive conduct and unfair trade practices which may result in contravention of the Act. It has been held that exclusion clauses, of which special conditions 6 and 7 are examples, cannot operate to defeat claims under s 52. It may be, as the judgment of Sweeney J in P J Berry Estates Pty Ltd v Mangalone Homestead Pty Ltd (1984) 6 ATPR 40-459 at 45,638 suggests, that such exclusion clauses will generally be ineffective because they cannot break the nexus between the conduct in contravention of s 52 and the making of the agreement in issue. Where the conduct of the defendant is alleged to be fraudulent in character, then an exclusion clause will be no more effective to defeat the action than it would be effective if the action were brought in the tort of deceit in relation to conduct antecedent to the contract: Commercial Banking Co of Sydney Ltd v R H Brown & Co (1972) 126 CLR 337, per Menzies J at 344; Petera Pty Ltd v E A J Pty Ltd (1985) ATPR 40-605, per Wilcox J at 46,887: see also Terry: "Disclaimers and Deceptive Conduct" (1986) Australian Business Law Review, p 478 at 486. There are wider objections to allowing effect to such clauses. Otherwise the operation of the Act, a public policy statute, could be ousted by private agreement. Parliament passed the Act to stamp out unfair or improper conduct in trade or in commerce; it would be contrary to public policy for special conditions such as those with which this contract was concerned to deny or prohibit a statutory remedy for offending conduct under the Act. There are various judgments of judges of this court where this approach has been adopted and they are collected in the judgment of the trial judge, so I need not repeat them. 75In Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367 at 371, Sheppard J stated that: But the remedy conferred by s 52 of the Trade Practices Act will not be lost, whatever the parties may provide in their agreement. If a vendor of goods has engaged in misleading or deceptive conduct, the law makes him accountable for loss and damage suffered as a result of his unlawful conduct. That conduct will usually have been committed, as in this case, prior to the signing of any contract. If, as a result of the conduct, a person is induced to enter into a contract and suffers loss, an action to recover it lies. The terms of the contract are irrelevant. 76An entire agreement clause is a factor to be considered in determining whether the plaintiff has been misled: Netaf Pty Ltd v Bikane Pty Ltd (1990) 26 FCR 305. 77Furthermore, in Kewside Pty Ltd v Warman International Ltd [1990] FCA 7, for instance, French J commented at [82] that an exclusion clause or disclaimer may 'deprive conduct of [its misleading or deceptive] quality or [break] the causal connection between conduct and loss'. Perhaps the most striking illustration to date of an exclusion clause having the latter effect is Keen Mar Corporation Pty Ltd v Labrador Shopping Centre Pty Ltd [1989] FCA 89, in which the applicants' written acknowledgment that no pre-contractual statements had been made inducing them to enter the contract in issue led to a finding that the misrepresentations made by the respondent during the contract's negotiation had not been relied on. The combination of this evidence and the failure of the applicants to refer to the alleged contravention of s 52 in complaints made after entry into the contract led Morling and Wilcox JJ to hold that reliance had not been established. 78However an entire agreement clause does not prevent the admission of evidence of pre-contractual conduct in support of a claim of rectification (Macdonald v Shinko Australia [1999] 2 Qd R 152) or equitable estoppel (Budget Stationary Supplies v NAB (1996) 7 BPR 14,891; Branir v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [446] per Allsop J, Drummond and Mansfield JJ agreeing). 79In Saleh v Romanous [2010] NSWCA 274, Handley AJA (Giles JA and Sackville AJA agreeing) observed at [57] that "these remedies and defences [such as promissory estoppel] trump the legal rules about parol evidence and entire contracts" and at [63] that "enforcement of a pre-contractual promissory estoppel is not barred" by Hoyt's v Spencer.

What Gives Oral Representations Contractual Force? 80In Lewison and Hughes' The Interpretation of Contracts in Australia at [3.12], the authors suggest that a representation made by one of the prospective parties in the course of negotiations becomes a term of the contract if the totality of the evidence shows that it was the intention of the parties that the representation be promissory in character: see JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 at 442. 81The authors suggest that later cases have identified a number of features that assist in reaching a conclusion that a representation was promissory in character. These features include a representation being put into writing, if the statement of fact is within the knowledge of one party but not the other, if the representation was made for the purpose of inducing entry into the contract, if the representation is one of fact rather than a statement of opinion, and finally where the representation was made close in time to the time that the contract was made (conversely, if made some time before it is less likely to be promissory). 82In Cheshire and Fifoot's Law of Contract (9th Australian edition), the authors note at [10.21] that "no comprehensive account of the nature of promise is to be found in the cases [and that] a miscellany of criteria has been identified as relevant in determining whether a statement has a promissory character". Those criteria are largely similar to those identified by the authors of Lewison and Hughes and set out above. The application of those criteria may depend "on niceties of language in conversations recounted, often years afterwards, by persons who would not have been conscious of the significance of the particular words used": Ross v Allis-Chalmers Australia Pty Ltd (1980) 32 ALR 561 at 569 (per Aickin J).

When do Contractual Terms Give Rise to Express or Implied Representations? 83Counsel for the defendant directed my attention to McWilliam's Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723 and the consideration of an implied representation said to arise from a contractual relationship between parties. Giles J held that a carrier of wine, pursuant to a contract of consignment, had represented that the carriage of wine and the legal rights and obligations would be regulated by the terms of the contract. As such, conduct in the performance of the contract did not amount to misleading or deceptive conduct. Giles J observed at 730: The possibility of breach of contract on its part was there, and the responsibility for the potential loss or damage was what Booth sought to exclude. By presenting the tankers it did not represent that the drivers would always drive carefully, or that a valve would not spring a leak; it did not represent that there had been no carelessness in the servicing of the tankers or prime movers whereby they were not fully roadworthy; and it did not represent that there had not been carelessness in cleaning the tankers. McWilliams could not have been led to expect any such thing. What it represented was that the carriage of the wine, and the legal rights and obligations of it and McWilliams, would be regulated by the terms of the contract of carriage. 84There is authority for the proposition that where representations do no more than mirror contractual terms, it may be the case that the appropriate consequences stemming from a breach of those terms is damages for breach of contract rather than a claim under the Trade Practices Act or the Australian Consumer Law. 85In Concrete Constructions Group v Litevale Pty Ltd [2002] NSWSC 670, Mason P held that not all contractual terms are to be regarded as representations. His Honour observed: [152]...It is not the law that every contractual promise has a superimposed representation as to ability to perform, either as at the time of contract or some future date. ... [168] But when one turns to an alleged implicit representation as to capacity to perform things are not so simple, nor should they be. There are policy reasons for restraint. The law arms the parties to a contract with rights to damages and other forms of relief if breach occurs or is threatened. A complex set of common law, equitable and statutory rights are superimposed on the terms of the bargain chosen by the parties. That bargain may have the simplicity as a contract to sell a loaf of bread or the complexity of a building agreement such as the one in question in this case. [169] Why should the parties be found or presumed to have intended more by what they expressly represented and understood? Of course, s52 goes beyond intentionally misleading or deceptive conduct, but it does not follow that the innocent party understood or relied upon anything more than the express representations and the usually adequate consequences stemming from breach of them stemming from the law touching the mutually chosen regime, ie contract. [emphasis added] 86Furthermore, an express contractual promise or representation will only constitute a representation for the purposes of section 52 of the Trade Practices Act if the party making the promise or representation had no intention or capability of carrying it out at the time it was made: Coles Supermarkets Australia Pty Ltd v FKP Limited [2008] FCA 1915 at [68]-[69] per Gordon J, citing Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 238-239. 87In Lane Cove Council v Michael Davies & Associates and Others [2012] NSWSC 727, I considered the relationship between contractual terms and misrepresentations at [25]-[48] in the context of the adoption of a referee's report. I agreed with the view of the referee (The Honourable R.V. Gyles QC), and did not accept the submission of the plaintiff in that case that the Referee's findings were contrary to principle because they imposed a limitation on the application of s 52, were not supported by authority or were contrary to public policy. Instead I observed: [38] There were no alleged promises additional to the conduct which one would expect in the carrying out of MDA's contractual obligations. That is clearly what prompted the Referee to comment that "to scour what was done in performance of the contract in order to tease out actionable representations is not appropriate". ... [46] The Referee found that there was little scope for the statutory provisions to apply because of the nature of those representations and the fact that they were not different in kind from the contractual obligations, and were based on the same facts and circumstances. The Referee did not find in my opinion that the contract ousted the statutory norm, but rather as a fact no promises were made additional to the contractual obligations which had been entered into. Hence the promises did not amount to actionable representations, as a matter of fact.

Reliance 88Mr Shin's case in a number of respects depends upon his asserting he relied and was thereby induced to do certain things because of representations made, for example, by Mr Kim and Mr Ristway. This will always give rise to questions of fact. 89During the trial I drew counsel's attention to the decision of the Court of Appeal in Van Dyke v Sidhu (2013) 301 ALR 769 and noted that oral argument had occurred in the High Court the previous day (T191/17-T191/35). 90RSE relied heavily upon the notion of presumed reliance as articulated by the Court of Appeal in their decision. The matter was conducted, appropriately, on the basis that such a decision was binding on me. 91After I had reserved judgment, the High Court on 16 May 2014 unanimously upheld the result of the Court of Appeal but rejected as erroneous any notion of presumed reliance: Sidhu v Van Dyke [2014] HCA 19. French CJ, Kiefel, Bell and Keane JJ (Gageler J agreeing) observed: [55] Nothing in the judgments in Gould v Vaggelas suggests that the onus of proof in relation to detrimental reliance shifts to the defendant in any circumstances. [56] The line of English authority on which Barrett JA relied was founded on the statement by Lord Denning MR in Greasley v Cooke that "[t]here [was] no need for [the promisee] to prove that she acted to her detriment or to her prejudice." In the present case, this statement was treated as involving a shift in the burden of proof on the issue of detrimental reliance. [57] Lord Denning's view is contrary to observations of high authority in Smith v Chadwick by Lord Blackburn, with whom the Earl of Selborne LC and Lord Watson agreed. Lord Blackburn spoke of the circumstances in which a fair inference of fact might be drawn in terms substantially repeated by Wilson J in the passage from Gould v Vaggelas set out above; but his Lordship expressly rejected the suggestion that a defendant might be obliged to disprove inducement once the making of a material representation had been proved. [58] In point of principle, to speak of deploying a presumption of reliance in the context of equitable estoppel is to fail to recognise that it is the conduct of the representee induced by the representor which is the very foundation for equitable intervention. Reliance is a fact to be found; it is not to be imputed on the basis of evidence which falls short of proof of the fact. It is actual reliance by the promisee, and the state of affairs so created, which answers the concern that equitable estoppel not be allowed to outflank Jorden v Money by dispensing with the need for consideration if a promise is to be enforceable as a contract. It is not the breach of promise, but the promisor's responsibility for the detrimental reliance by the promisee, which makes it unconscionable for the promisor to resile from his or her promise. In Giumelli v Giumelli, Gleeson CJ, McHugh, Gummow and Callinan JJ approved the statement of McPherson J in Riches v Hogben that: "It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise." [59] It may be that Lord Denning's view will no longer be understood in England in the way it seems to have been understood by the Court of Appeal in this case. In Steria Ltd v Hutchison, Neuberger LJ said: "I very much doubt whether it could be right to hold that in every case where a representation is established, the onus must always be on the representor to show that it was not acted on. As a matter of normal principle it seems to me that, as a matter of law, the onus must be on the person alleging the estoppel to establish unconscionability or, to put it another way, to establish, in the case of estoppel by representation, the three essential ingredients of representation, reliance and detriment. In many cases, and I think that the Greasley case was one of them, it can fairly be said that, once it is established that the representation was made, the representation together with all the other facts of the case enables the claimant to say that, unless the defendant can elicit some further evidence to the contrary, the claimant will have discharged the onus. I am inclined to think that the Greasley case went no further than that." [60] It may also be that the application of Lord Denning's view would not lead to an outcome in the present case different from that which follows from the application of the orthodox approach. [61] Be that as it may, this aspect of the appellant's submission must be accepted. The approach suggested by Lord Denning should not be applied in Australia. The legal burden of proof borne by a plaintiff did not shift. To speak of a shifting onus of proof is both wrong in principle and contrary to authority. The respondent at all times bore the legal burden of proving that she had been induced to rely upon the appellant's promises. [footnotes omitted; emphasis added] 92In a separate judgment, Gageler J also observed at [90]-[93]: [90] Paraphrasing Dixon J in Thompson v Palmer, the respondent bore the onus of establishing that she believed the appellant's representations and that, on the faith of that belief, she took a course of action or inaction which would turn out to be to her detriment were the appellant to be permitted to depart from those representations. The respondent did not need to establish that the belief to which she was induced by the appellant's representations was the sole or predominant cause of the course of action or inaction she took but, in the language of Rich, Dixon and Evatt JJ in Newbon v City Mutual Life Assurance Society Ltd, she did need to establish that the belief was a "contributing cause". [91] To establish that the belief to which she was induced by the appellant's representations was a contributing cause to the course of action or inaction which she took, the respondent needed to establish more than that she had the belief and took the belief into account when she acted or refrained from acting. She needed to establish that having the belief and taking the belief into account made a difference to her taking the course of action or inaction: that she would not have so acted or refrained from acting if she did not have the belief. [92] The need for the respondent to establish such a difference stems from what Dixon J described in Grundt v Great Boulder Pty Gold Mines Ltd as the "indispensable" condition that a party asserting an estoppel "must have so acted or abstained from acting upon the footing of the state of affairs assumed" that the party asserting the estoppel "would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption". That is to say, "the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted". There can be no real detriment if the party asserting the estoppel would have been in the same position in any event. [93] The question of causation is therefore ordinarily appropriately framed, as it was implicitly framed by the primary judge in the present case, as being: "Despite any other contributing factors, would the party seeking to establish the estoppel have adopted a different course (of either action or refraining from action) to that which [the party] did had the relevant assumption not been induced?" [footnotes omitted] 93I invited the parties to make any further or additional submissions they wished to make given the determination of the High Court.

Credit and Failure to Complain 94As will appear later in my judgment, a number of credit issues arose for determination. 95Generally speaking a trial judge is in no way restricted in his or her assessment of a witness; he or she is not bound to accept any of that which the witness attests to or indeed may only accept part thereof: Cubillo v Commonwealth of Australia [2000] FCA 1084; (2000) 174 ALR 97 at [118]- [123]. 96The court is not obliged to accept evidence, even in the absence of cross-examination. In Ali v Nationwide News Pty Ltd [2008] NSWCA 183, Tobias and McColl JJA observed at [112]: There can be no doubt that where factual evidence is not cross-examined upon, prima facie it should be accepted. However, it ought not necessarily be accepted where, as Tobias JA said in Multiplex, there is a credible body of evidence of a substantial character in direct contradiction of the non cross-examined evidence. 97In Fox v Percy (2003) 214 CLR 118, Gleeson CJ, Gummow and Kirby JJ observed at 129: [31] Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical. 98In Ellis v Wallsend District Hospital (1989) 17 NSWLR 553, the NSW Court of Appeal considered, inter alia, the question of causation in the context of a medical negligence claim, and particularly whether a patient would have refused surgery if properly informed of the possible adverse consequences. Meagher JA agreed with Samuels JA entirely, and Kirby P agreed substantially (at 559-562), with what Samuels JA observed on the issues relevant to causation. In particular, Kirby P observed at 560 that: Although Cole J stated that he would reach the same conclusion whether the "subjective" or "objective" test were applied, his correct specification of the "subjective" test made all the more important the accurate ascertainment of what Mrs Ellis, herself, would have done, had she been properly advised of the risks involved in the operation. It is true that answering that question involves an exercise in retrospective reasoning. The patient cannot, when the mishap leading to damage and litigation has occurred, determine the answer authoritatively by the response in court to the question of what he or she would have done had only full and proper advice been given. However honest the patient may try to be, self interest and the knowledge of the misfortunes that have followed the treatment will necessarily colour the patient's response to that question. Nonetheless, the answer remains an important ingredient in the decision by the fact finding tribunal as to what it thinks the patient, subjectively and at the time before operation, would have done if properly and fully advised. [emphasis added] 99Samuels JA, in a similar vein, observed at 581: It is, of course, true that a patient's evidence about what he or she would have done if told of certain risks may be coloured by the fact that the risks did in fact eventuate; but it is open to a court to disbelieve evidence found to be tainted by hindsight. Obviously, in endeavouring to ascertain what the plaintiff's response would have been to adequate information had it been conveyed at the appropriate time, a court will be greatly assisted by evidence of the plaintiff's temperament, the course of any prior treatment for the same or a like condition, the nature of the relationship between patient and doctor including pre-eminently, so far as it can be established, the degree of trust reposed in the doctor by the patient. The extent to which the procedure was elective or imposed by circumstantial exigency and the nature and degree of the risk involved will all be matters of considerable importance. [citations omitted] 100In Rosenberg v Percival (2001) 205 CLR 434, the issue of causation and the plaintiff's response to advice of risk was discussed at 441-442 per Gleeson CJ, at 443 per McHugh J, at 461-462 per Gummow J, at 485-486 per Kirby J (who referred to Ellis) and at 501-502 per Callinan J. From these passages, it is observed that the natural tendency of a plaintiff to assert that he or she would have taken a different course must be recognised. Furthermore, although the relevant question is subjectively what would the plaintiff have done, matters relevant to an objective assessment such as the remoteness of the risk, the confidence reposed in advice received from an expert, and whether or not there were strong reasons in favour of pursuing the course of action in fact taken need to be taken into account: per Gleeson CJ at [14] and [16], per McHugh J at [89], per Kirby J at [155]-[156]. 101In Fabcot Pty Ltd v Port Macquarie-Hasting Council [2011] NSWCA 167, Sackville AJA (Beazley and Campbell JJA agreeing) at [184]-[185] made reference to Ellis v Wallsend District Hospital and Rosenberg v Percival and observed: Mr Smith criticised the primary Judge's reliance on these cautionary observations on the ground that they were made in medical negligence cases. But similar warnings have been given in commercial cases about the use of evidence given with the wisdom of hindsight. In Cackett v Keswick [1902] 2 Ch 456, for example, Farwell J noted (at 463-464) that: "It is easy to be wise after the event, and many men can honestly persuade themselves when a company has failed that they would have been influenced by a circumstance which in all probability would have made no impression whatever on their mind when considering an investment ..." Writing extra-judicially Heydon J has expressed the view that Farwell J's comments have application to questions of causation arising under the Trade Practices Act 1974 (Cth): J D Heydon, Trade Practices Law (Looseleaf Service), at [18.1290]. 102In any event in any case involving oral representations, it is important always in my view to keep in mind the observations of McLelland CJ in Equity in Watson v Foxman (1995) 49 NSWLR 315 at 318-319: Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. ... Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration. ... What I have said above as to the cause of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act) is equally applicable, mutatis mutandis, to the causes of action based on contract and on equitable estoppel (with the added requirements, in the case of contract that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding, and in the case of equitable estoppel that any representation alleged was clear and unequivocal and was relied on to the substantial detriment of the representee). [emphasis added] 103The difficulties involved in a case constructed on the basis of perception and memory, which are amplified by the passage of time, were alluded to by the then Chief Justice Spigelman, in J J Spigelman, "Truth and the Law" (2011) 85(11) Australian Law Journal 746 (at 756-759). These difficulties associated with reliance upon spoken words as a foundation of a cause of action in the absence of some reliable contemporaneous record or other satisfactory corroboration, have been noted in several other cases (see for example Pennimpede v Pennimpede [2009] NSWSC 85 at [29] per Bryson AJ and Murtagh v Murtagh [2013] NSWSC 926 at [105]-[109] per Hallen J). 104Another issue related to credit is that the reaction (or lack thereof) of witnesses, and especially principal witnesses, to important events can often be of some significance. 105It is well established that remaining silent when speech could have been expected, or failing to raise a matter in correspondence where the relationship between the parties is such that a particular reply might be expected, may amount to an admission, and is at least relevant evidence (Young v Tibbits (1912) 14 CLR 114 at 122 per Griffith CJ and 128 per Barton J; Lustre Hosiery Ltd v York (1935) 54 CLR 134 at 143 per Rich, Dixon, Evatt and McTiernan JJ; Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 at 230 per Gibbs CJ; Thomas v Hollier (1984) 156 CLR 152 at 157 per Gibbs CJ). 106A failure to complain may constitute evidence suggesting no actual reliance was placed on misleading and deceptive conduct (see, for example, the failure to complain having this effect in Keen Mar above). 107The plaintiff's failure to complain regarding the breach after becoming aware of the true facts may enable the court to infer that the conduct was not relied on: Jones v Acfold Investments Pty Ltd (1984) 6 FCR 512 at 521-522 per Sheppard, Morling and Spender JJ (Full Fed Ct). 108See, to the same effect, Dukemaster Pty Ltd v Bluehive Pty Ltd [2002] FCAFC 377 at [79]-[80] per Sundberg and Emmett JJ; Otrava Pty Ltd v Mail Boxes Etc (Aust) Pty Ltd [2004] NSWSC 1066 at [72]-[73]; Cordelia Holdings Pty Ltd v Newkey Investments Pty Ltd [2004] FCAFC 48 at [71]- [77]; ACN 070 037 599 Pty Ltd v Larvik Pty Ltd [2008] QCA 416 at [134] per McMeekin J (McMurdo P and White AJA agreeing). 109A failure to complain may adversely affect the credibility of a witness: see, for example, the decision of the NSW Court of Appeal in Textralian Enterprises v Perpetual Trustees (Victoria) Ltd [2000] NSWCA 176 at [85] (per Heydon JA): There were other grounds for the trial judge's conclusions about Mr Slattery's credibility. In many places he did appear argumentative, evasive and prone to volunteer material not responsive to the question. Under cross-examination he sometimes gave potentially important evidence which would appropriately have appeared in his affidavits if it proceeded from genuine recollection. Mr Slattery also appeared to lack genuine recollection in other respects and to be defensive about answering without first having access to whatever document might help. In addition, there was a substantial lack of credibility in his assigning to the cinema centre and food court representations, whatever the detail of what was said, a central role in view of his years of failure to complain about non-compliance with them despite the many occasions on which it would have been appropriate to - not only 23 February 1993 (after Mr Slattery noticed disparities between the letter of offer and Mr Levin's representations), not only occasions when LLPM's pre-contractual and contractual documentation ought to have stimulated some statement about the representations, but also the many post-contractual occasions when Mr Slattery was remonstrating with LLPM about what he saw as its role in the losses which the shop was suffering. [emphasis added] 110Of course, lack of complaint before such knowledge is obtained is unlikely to be significant: see, for example, Abigroup Contractors Pty Ltd v Sydney Catchment Authority (2004) 208 ALR 630; [2004] NSWCA 270 at [78]; Bovino Group Pty Ltd v Casey Group Holdings Pty Ltd [2010] VSC 391 at [61]. 111A failure to complain may also be relevant for the element of reliance in estoppel, or the adoption of the relevant assumption: see Civoken Pty Ltd & Anor v Madden Grove Developments Pty Ltd & Ors [2006] VSC 283. 112Finally, in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115, the High Court considered, inter alia, the relevance of a failure to complain in relation to contractual breaches (however this was in relation to repudiation). Gleeson CJ, Gummow, Heydon and Crennan JJ observed at [67]: ...The legal significance of the conduct of the Koompahtoo representatives on the Management Committee, in not complaining about Sanpine's failure to adhere to the requirements of the Agreement, and in acquiescing in some aspects of the failure, is said to be, as held by Giles JA, that it is a circumstance which tends against a finding that Sanpine evinced an intention to perform the Agreement only in a manner that suited it and in no other way...

Unauthorised Building and the Principle in Flight v Booth 113In relation to the penetrations and their lack of appropriate approval, the parties rely on differing principles of misdescription and the presence of unauthorised building works undertaken between exchange and anticipated completion to resolve the question of whether the plaintiff was properly able to refuse to complete the contracts. I set out at the end of this section of the judgment the legislative framework dealing with the penetrations which I consider to be uncontroversial. 114There are of course, provisions in the Conveyancing Act 1919 dealing with damage between exchange and completion: see Part 4, Division 7, and in particular sections 66L (power to rescind contract where land substantially damaged) and 66M (abatement of purchase price where land damaged). These provisions are used, for example, when fire damage occurs between exchange and completion: see Bakhos v Fenner [2007] NSWSC 641 and Urban House Pty Ltd v Purnell Bros Pty Ltd [2007] NSWSC 1248. In the present case, however, no claim was made under either section, either at the time or in the present proceedings. 115There are also cases in which completion was explicitly conditional on the obtaining of a building certificate by the vendor: see, for example, Maloy v Jelacic [2003] NSWSC 23. 116It is first necessary to set out standard clauses 6 and 7 of the contracts for the sale of land (2005 edition) that were attached to the Put and Call Options for both lots: 6 Error or misdescription 6.1 The purchaser can (but only before completion) claim compensation for an error or misdescription in this contract (as to the property, the title or anything else and whether substantial or not). 6.2 This clause applies even if the purchaser did not take notice of or rely on anything in this contract containing or giving rise to the error or misdescription. 6.3 However this clause does not apply to the extent the purchaser knows the true position. 7 Claims by purchaser The purchaser can make a claim (including a claim under clause 6) before completion only by serving it with a statement of the amount claimed, and if the purchaser makes one or more claims before completion... 117The plaintiff relies on the principle in Flight v Booth (1834) 1 Bing (N.C.) 370. In that case, Tindal CJ held at 377 that: ... we think it is, at all events, a safe rule to adopt, that where the misdescription, although not proceeding from fraud, is in a material and substantial point, so far affecting the subject-matter of the contract that it may reasonably be supposed, that, but for such misdescription, the purchaser might never have entered into the contract at all, in such case the contract is avoided altogether, and the purchaser is not bound to resort to the clause of compensation. 118Whilst sometimes quoted for its succinct statement of principle, it is salutary to consider the facts of Flight v Booth. They are both quaint and unlikely to ever occur in the modern era for obvious reasons. Of course, what is or is not substantial and material requires a factual analysis in each case. 119The particulars of sale of certain leasehold premises in Covent Garden which were being auctioned stated that under the original lease from the Duke of Bedford "no offensive trade was to be carried on; they cannot be let to a coffee house keeper, or working hatter". There does not seem to be any indication of the length of the lease in the judgment. 120It would emerge that the particulars provided at the auction were misleading, and comprised a cryptic and inaccurate summary of the full restrictions placed on any party seeking to trade from the premises. 121The sixth condition of sale provided that if, through any mistake, the estate should be improperly described or any error or misstatement be inserted in that particular, such error or misdescription should not vitiate the sale, but the vendor or purchaser should pay or allow a proportionate value according to the average of the whole purchase money, as a compensation either way. 122The original lease was not required by the plaintiff's solicitor, although the plaintiff purported to rescind the contract and sought to recover a deposit paid. 123The original lease was produced at the trial, and contained a proviso which provided, inter alia, that "if, at any time during the continuance of the said term, the trades or businesses of a brewer, baker, sugar-baker, vintner, victualler, butcher, tripe-seller, poulterer, fishmonger, cheesemonger, fruiterer, herb-seller, coffee-house keeper, distiller, dyer, brazier, smith, tinman, farrier, dealer in old iron, pipe-burner, tallow-chandler, soap-boiler, working hatter, or any or either of them, shall be used or exercised in or upon the said demised premises...it shall be lawful for the said duke, his heirs and assigns, to re-enter". 124It was not proved that the plaintiff had ever seen the lease or heard it read, or was aware of the terms of the proviso, until the day of trial. The headnote suggests that the lease was produced at the sale and that the proviso was publicly read, but this evidence was objected to and the arbitrator received it only to negative any wilful concealment or misrepresentation on the part of the defendant: at 373. Nevertheless, in the judgment, Tindal CJ accepted that the reading of the lease at the auction by the auctioneer was no excuse for a misdescription of the terms of the lease in the particulars of sale: at 379. 125Tindal CJ adopted the express finding of the arbitrator that the misdescription of the premises stood clear of any fraud and must be taken "to have originated either from ignorance, inadvertence, or accident": at 376. 126Tindal CJ began the analysis of the legal question by noting "it is extremely difficult to lay down, from the decided cases, any certain definite rule which shall determine what misstatement or misdescription in the particulars shall justify a rescinding of the contract, and what shall be the ground of compensation only". His Honour identified discrepancies between various cases before setting out at 377 the well-known rule quoted above. 127However, Tindal CJ continued to give further consideration to the terms of the lease and stated that the particulars at the auction would lead any person to conclude "that he was not prevented by the terms of the lease from carrying on any trade in it, except those which were of a class generally acknowledged to be offensive, and the two enumerated trades of coffee-house keeper and working hatter": at 377-378. The actual restriction in the lease "would extend to prevent trades of the most innocent and inoffensive kinds from being exercised on the premises": at 378. 128Critically, Tindal CJ observed that: ...indeed, the very terms of the sixth condition of sale scarcely apply to a case where the difference of value is so uncertain and arbitrary as in the present case. The condition, that the parties are to pay or allow a proportionate value according to the average, will comprehend a case where there is half an acre more or less than is described, or cases which resolve themselves into simple calculations of that nature; but how will it govern such a misstatement as the present? [emphasis added] 129To my mind, a fuller and careful reading of Flight v Booth would seem to suggest that the rule which is said to arise from it has two key aspects; first and foremost, the identification of the misdescription that is so substantial and material that it may be reasonably supposed that the purchaser might never have entered into the contract at all and the purchaser is not bound to resort to the clause of compensation. The second aspect, however, is that where the difference of value is so uncertain and arbitrary as a result of the misdescription, it is clearer that compensation will not be sufficient and the contract must be avoided altogether. 130While the observation of Tindal CJ that a compensation clause "comprehends a case where there is half an acre more or less than is described" of course begs the question of the size of the property to which half an acre is being compared, it seems to me that where differences of value based on a claim of misdescription can be calculated with reasonable precision (although they not be "simple calculations") and especially in circumstances where the evidence of such valuation is uncontested, the principle in Flight v Booth may not have much work to do in the modern era. 131The principle in Flight v Booth is considered in Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (4th edition, 2002) at [20-230] as authority for the proposition that "if under a contract for sale the vendor contracts to sell more land than he can give title to or if he misdescribes the land by, for instance, stating a dimension to be larger than it is, this does not necessarily render the contract performance". The learned authors then consider the position when either the vendor or purchaser is seeking specific performance. 132In Young, Croft and Smith's On Equity (2009) at [11-400], the rule in Flight v Booth is described as providing a right to rescind that will be justified by a 'gross misrepresentation'. However, no further consideration is given. 133In Snell's Equity (31st edition, 2005), the learned author notes at [15-34] that "misdescription consists of an error in the terms of the contract itself, as opposed to a misrepresentation that merely induces the contract" and identifies two classes of cases; namely, cases where the misdescription is of a substantial character which will not in justice admit of compensation, and cases where the misdescription is such as fairly to admit of compensation. Flight v Booth is cited as authority for the proposition that if the effect of the misdescription is to prevent the purchaser from really getting the property which he bought, there is no enforceable contract. 134In Hanbury and Martin's Modern Equity (19th edition, 2012), the authors describe the rule as being "that a purchaser will not be forced to take something which is different in substance from that which he agreed to buy" (at 24-040). 135In Spry's Equitable Remedies (8th edition, 2010), further consideration is given to Flight v Booth at 293-301 and in particular that the rule is to be applied in circumstances where the contract in question contained a clause expressly providing for rights to compensation. Such a clause providing for the payment of compensation "is often relevant when it is asked whether it may reasonably be supposed that, but for the material misdescription, the parties might never have entered into the agreement at all". 136In Donnelly v Weybridge Construction Ltd [2006] EWHC 2678, Justice Ramsey considered the application of the principle in Flight v Booth in circumstances where the claimants contended that the defendant was not entitled to require completion because of, inter alia, unauthorised departures from plans and a failure to comply with the requirements of the relevant planning authority. His Honour held at [233]: In relation to the failure to comply with the condition of the planning permission in terms of screening, I consider that this would not amount to a substantial misdescription. It appears that it did not come to light until later and there has been no sign that the local authority is treating that condition as preventing occupation. It does not seem to me that this matter was of any concern to the claimants and I do not consider that it can be said that the purchaser might never have entered into the contract at all on that account. 137Although the present case is similar in respect of the response, or lack thereof, by the relevant planning authority (i.e. no action taken to prevent occupation nor any insistence on rectification), it is clear that this issue was indeed of some concern prior to the issuing of the Notice to Complete. 138The plaintiff asserts that the principle in Flight v Booth continues to apply notwithstanding the existence of clauses 6 and 7 of the standard contract for the sale of land. In support of this proposition, I was referred to a number of cases such as Jennings v Zilahi-Kiss (1972) 2 SASR 493 at 510-511 (per Bray CJ). 139In Higgins v Statewide Developments (2010) 14 BPR 27,293; [2010] NSWSC 183, Barrett J considered the application of Flight v Booth: [45] ...A threshold question, however, is whether there is any scope for the operation of the rule where, as here, the parties have addressed in their contract the possibility of such discrepancy. [46] That question was noted by Brereton J in Kannane v Demian Developments Pty Ltd (above). But since the rule in Flight v Booth is frequently applied in the face of a provision to the effect that no error or misdescription shall annul the sale, it is preferable to proceed on the basis that it will not be ousted by the contract except by very clear words or very clear implication. I therefore proceed to consider the Flight v Booth claim made by the plaintiff. ... [51] As Professor Butt pointed out in "The Standard Contract for the Sale of Land in New South Wales", 2nd edition (1998) at [6.51], Flight v Booth came, over time, to reflect a more general principle, namely, that purchasers cannot be forced to accept (even with compensation) a property that is substantially or materially different from that which they contracted to buy. In Fletcher v Manton [1940] HCA 32: (1940) 64 CLR 37, Rich ACJ, after mentioning Flight v Booth, referred to the "wholesome doctrine 'that a purchaser shall have that which he contracted for, or not be compelled to take that which he did not mean to have'". [52] The focus is upon what the purchaser contracted for, that is, the subject matter of the sale as described in the contract. Determination of what the purchaser did or did not "mean to have" (Fletcher v Manton) or whether the subject matter available to be conveyed makes the purchase "altogether useless for the purposes for which it was made" (Dykes v Blake) directs an inquiry into what is involved in due performance of the contract. It is a matter not of what the purchaser thinks in his own mind he is buying or what he would like to be buying but of what the contract requires him to take. It is that that must be compared with what the vendor proposes to convey by way of completion of the contract. 140The dismissal of the Flight v Booth claim was not challenged on appeal: Statewide Developments Pty Ltd v Higgins [2011] NSWCA 35 at [30]. 141The defendant refers to cases in which it was held that unauthorised building work may not constitute a defect in title that prohibits a prospective vendor from demanding completion of the contract. 142In Carpenter v McGrath (1996) 40 NSWLR 39, the Court of Appeal held that the potentiality of a demolition order that had not been issued under local government legislation does not constitute a defect in title and is a risk that passes under the contract (per Clarke JA at 41, Sheller JA at 55, Cole JA at 68). 143Each of the judges confirmed approval and adherence to a decision of the High Court in Fletcher v Manton (1940) 64 CLR 37, where each member of that Court referred to the well-established rule of equity that when a valid contract for the sale of land is made and the vendor in the event makes good title then as from the date of contract the purchaser is to be considered the owner of the land and by consequence must suffer whatever loss or detriment may after that time befall the property or be placed by the law on the person filling the character of the owner. 144Sheller JA said at 55: Of the authorities to which I have referred we are bound only by the decision of the High Court in Fletcher v Manton. The reasoning in that case points to the conclusion that in the present case at the date of the agreement for sale the title to the property was good and that any subsequent action by the council affecting the ownership by a notice for demolition or alteration was the affair of the "owner" at the time namely the appellants. 145Cole JA approached the matter similarly to Sheller JA and in particular embraced the notion that the mere existence of circumstances which created the possibility or probability or risk that the property will at a future date be subject to a statutory charge or burden does not constitute a latent defect in title. 146By reason of the principle enunciated in Fletcher v Manton the Court was at pains to indicate even though for example the particular property had stables and sheds erected upon it without council approval and was thereby susceptible to a notice from the council, pursuant to the then section 317B(A) of the Local Government Act 1919 specifying the demolition or alteration as the case may be, the unauthorised building works could not be regarded as a defect in title. There was therefore an obligation on the part of the purchaser to complete. 147In Szanto v Bainton [2011] NSWSC 278, White J applied Carpenter v McGrath in an interlocutory application to extend a caveat over a property. His Honour considered a purchaser's refusal to complete a sale of land contract on the basis of unauthorised building works, being an illegal connection of the storm water to the sewerage system. The purchaser was claiming that the unauthorised works constituted a defect in title or alternatively were in breach of certain statutory warranties and therefore the vendor's Notice to Complete and subsequent termination of the contract was invalid. 148In that case, the mere possibility that Sydney Water may exercise a statutory power to enter and do work on a property was held not to be a defect in title, although the position may be different if notice had been given of the intended exercise of power: at [39]. 149White J also held that although the purchaser would be entitled to rescind for breach of a certain statutory warranty under section 52A(7) of the Conveyancing Act 1919, "such a breach would not mean that the vendors were not able to proceed to completion at the time they served the notice to complete, where the purchaser had not made a claim, nor sought rescission": at [44]. 150It is also clear from his Honour's judgment that standard condition 7 of the Sale of Land Contracts gave the purchaser the right to have served a claim on the vendor in respect of the unauthorised works (which may lead to having the contract rescinded). However this clause provided that such claim had to be served prior to completion and no such claim under the section had been served. 151If the vendor's breach of obligation only sounds in damages, then the vendor may still demand a right to complete if it offers appropriate compensation to the purchaser: Alexus Pty Ltd v Pont Holdings Pty Ltd (2000) 10 BPR 18,371 per Young J at [23]. 152However, Young J then observed at [24]: On the other hand, where there is a substantial defect and the purchaser is entitled to an abatement of the purchase price it is not open to the vendor to give a notice to complete or to force specific performance without at least offering compensation: see Ping v Pearce Paradise Pty Ltd (1982) 2 BPR 9419, 9426, a case where the vendor was in breach of its duty to take reasonable care of the property between contract and completion. Other examples are cases where the vendor has promised to build a house on the property sold and there have been grave defects in the building; see Tildesley v Clarkson [1862] EngR 422; (1862) 30 Beav 419; 54 ER 951 and Doyle v East [1972] 1 WLR 1080. 153The Standard Contract for Sale of Land provides a compensation procedure for breach of obligations by the vendor: Nassif v Caminer (2009) 74 NSWLR 276 at [76]. In Gogard Pty Ltd v Satnaq Pty Ltd [1999] NSWSC 1283 at [289], [294]-[295], Santow J held that the terms of the contract operated so as to make the proffering of compensation by the vendor unnecessary. 154Reference was made by counsel for the defendant in closing submissions (T321-322) to Golding v Vella [2001] NSWSC 567 (Golding), and further reference was made in written submissions provided with leave after I reserved judgment. 155In Golding, the purchaser claimed the vendor had represented that they would do certain building works in respect of a domestic residence (completing a kitchen island bench and completing brick paving) prior to completion. The contract had an entire agreement clause, and Barrett J considered whether that clause precluded the purchaser's claim that the vendor was not entitled to insist upon completion before that promise had been complied with. 156The defendant contends that Golding is instructive on the basis that an entire agreement clause was successful in precluding the vendor's agreement to do certain works from being a term of the sale of land contract (similar to the present case). 157Barrett J set out the entire agreement and observed, at [22]-[23]: [22] Clause 10.1.5 of the contract is as follows: "The purchaser cannot make a claim or requisition or rescind or terminate in respect of ... a promise, representation or statement about this contract, the property or the title, not set out or referred to in this contract." [23] This is effectively an "entire agreement" clause as regards the vendor's commitments and there is no reason why it should not be applied at face value, at least in so far as rights and remedies under and in relation to the contract itself are concerned, including termination. While the unwritten and collateral representations about the island bench and the paving may attract some other remedy (a matter which was not argued and on which I express no view), clause 10.1.5 precludes reliance upon them as a basis for terminating the contract itself. 158Barrett J saw "no room for the operation of the principle in Flight v Booth" at [27] but did not elaborate further. Nevertheless, the defendant accepts the contention of the plaintiff that Golding does not affect the operation of the Flight v Booth principle. 159The plaintiff asserts that Golding supports the proposition that where there is a substantial defect in the property and the purchaser is entitled to an abatement of the purchase price, it is not open to the vendor to give a notice to complete without at least offering compensation (Plaintiff's Submissions of 11 April 2014, [3]). 160The defendant submits that since it never refused any request for compensation from RSE, who never sought to avail itself of the entitlement to compensation arising from clauses 6 and 7 of the contract, Waterpoint is not in the same position as a vendor who did in fact refuse to pay compensation (as in Ping v Pearce Paradise Pty Ltd (1982) 2 BPR 9419).

The Legislative Framework Governing Alterations to the Restaurant and Storage Lots 161The legal requirements to obtain Council's consent to the penetrations, and to obtain the consent of the Owners Corporation, are set out in Appendices B and C of the plaintiff's final submissions and are briefly summarised below. 162In relation to the Council, it has the power to order, inter alia, that a building be restored to the condition it was in before any unlawful work was conducted: section 121B, Environmental Planning and Assessment Act 1979 ('EPA'). 163Section 76A of the EPA provides: If an environmental planning instrument provides that specified development may not be carried out except with development consent, a person must not carry out the development on land to which the provision applies unless: (a) such consent has been obtained and is in force, and (b) the development is carried out in accordance with the consent and the instrument. 164Definitions for 'building', 'development', 'use of land', 'erection of a building' and 'carrying out of a work' are defined in section 4 of the EPA but it is unnecessary to set them out, given the defendants agreed that there was no development approval in respect of the penetrations (see T267/34). 165In relation to the Owners' Corporation, the first aspect to consider is the by-laws (CB12/4563) (BL). 166The by-laws prohibit owners and occupiers from interfering with common property (BL 5.1c) and require compensation for any damage to common property (BL 8.1). 167Building Works must not be carried out without approval of the Owners Corporation (BL 24.1). 'Building Works' are defined to mean, inter alia, alterations to, additions to, removal, repair or replacement of any part of the common property (BL 1.1). 168The Owners Corporation must approve the plans and specifications of any Building Works and owners and occupiers must procure all relevant consents from the relevant authorities (BL 24.2). 169Under section 140 of the Strata Schemes Management Act 1996, the consent of the Owners Corporation may be ordered by an Adjudicator if the consent has been unreasonably refused. Alternatively, an order may be made under section 140(2) to approve alterations or repairs that have already been made if consent was unreasonably refused. 170In addition to obtaining the consent of the Owners Corporation, an exclusive use by-law was necessary to secure RSE's ongoing lawful use of the penetrations and the stairs through the common property. Such a by-law may also be ordered by an Adjudicator under section 158 of the Strata Schemes Management Act. 171RSE asserts that a failure to comply with the requirements to obtain consents could result in injunctive orders requiring rectification of the penetration work. In their submissions, RSE sets out a number of bases upon which such orders might be made, including section 88H of the Conveyancing Act 1919, sections 138 and 160 of the Strata Schemes Management Act 1996, section 50 of the Strata Schemes (Freehold Development) Act 1973 and the Supreme Court's injunctive power. 172It is not necessary to set out any of these bases for injunctive relief, other than to note that, first, I am satisfied that such avenues may have been pursued, but second that no such application was made by either the Owners Corporation or the Council up until the point at which the contract was terminated by Waterpoint (see T267) or any point following. There was not only a serious intimation such would be sought.

Witnesses - Overview 173Both sides in this matter filed a number of witness statements both lay and expert. In the end only four witnesses were required for cross examination. They were Mr Raphael Shin and his solicitor Mr Ben Johnston for the plaintiff. Mr Josef Ristway, a former director of the defendant, was called along with Mr Jun Kim, a real estate agent who assisted in brokering the arrangements between the plaintiff and the defendant. 174For reasons that will emerge in greater detail later in this judgment I must say that I found none of the witnesses entirely satisfactory. 175Mr Shin the principal of the plaintiff gave his evidence with the assistance of an interpreter. He was however apparently able to comprehend and understand his initial and lengthy affidavit filed in the proceedings but not read (dated 15 February 2011) sufficiently to swear it without the assistance of an interpreter (evidence of Mr Johnston at T129/26-T130/14). His then solicitor Mr Johnston who had acted for him for the best part of 25 years assisted Mr Shin in the preparation of that affidavit. The subsequent affidavits filed by him were each prepared with the assistance of an interpreter. 176I have little doubt that he is well able to understand the English language such that although he may not speak it entirely fluently nor understand the finer details of its grammar he has suffered no impediment over the years in dealing with his solicitor who does not speak Korean nor developing and establishing a series of successful businesses in Australia. He has clearly signed a number of agreements at least for the sale or purchase of land or building work that on the evidence would all appear to have been in the English language. 177In my view his use of an interpreter in the course of giving his evidence was out of some sense of self preservation or protection and not truly out of necessity. He said as much in his evidence (T68/12-T68/19). I do not mean to suggest that he simply relied upon the interpreter in order to prevaricate in the answering of questions although I did gain this impression from time to time. My distinct impression, having observed him carefully, is that on occasions he somewhat opportunistically used the presence of the interpreter to give himself time to compose an answer he thought best suited his case. That said, no objection was taken to his use of an interpreter, other than requests by counsel for Waterpoint from time to time that Mr Shin answer questions without the aid of an interpreter if he was able to, which it seemed to me he substantially achieved. 178Mr Shin had no practice or habit it seems of making any contemporaneous notes or sending emails either in the English or Korean language of any conversation, negotiations and/or dealings with any parties generally but certainly not in relation to any aspect of the transaction the subject of this litigation. He did not apparently keep a diary. This has weighed heavily upon my ability to regard him in crucial respects as a reliable historian. He of course always it seems had his solicitor Mr Johnston acting for him and corresponding on his behalf and I am of the view Mr Shin relied upon him to keep track of the progress of transactions. 179I also gained the impression when he gave his evidence that on occasions he was anxious to distance himself from communications made on his behalf and clearly on his instructions by his long time and obviously trusted solicitor. His attempts in that regard did not reflect well on his credit. I will return to these in some detail later. This, taken with his lack of contemporaneous notes, led me to having little if any confidence in his asserted accounts of crucial events, notwithstanding some concessions made by other witnesses. 180He may well have a sense of grievance, but a sense of grievance coupled with self interest can be a potent force, made even more potent by affidavits fashioned years after the event. Even with the best will in the world, over the years recollections become blurred and skewed and it is unsurprising that a contemporaneous document will often trump oral testimony even when the latter is given with apparent clarity and conviction. 181So far as Mr Johnston, solicitor, is concerned I have real reservations about some of the evidence given by him and in particular what I perceived to be his attempts to qualify or disavow suggestions that his long time client Mr Shin had instructed him to send a number of the important communications in this case. 182In circumstances involving a solicitor of his experience and apparent standing I would have expected no less than unequivocal acceptance that each communication he made on behalf of his client was on instructions and yet on occasions he paused or dithered in answering questions for reasons that I can only infer were because he did not want to adversely affect his client's interest. His hesitation to immediately agree that each of the communications the detail of which I shall come to were written on instructions only caused me to be somewhat sceptical in general about some of his evidence. 183Mr Ristway was retained by the defendant as a finance consultant and indeed for a period of approximately two years was a director or secretary of the defendant. 184He had no contemporaneous notes of the conversations he purported to give evidence about, and he did not have a diary to assist him. I am certain this hampered his ability to give accurate and coherent evidence about the various events. 185Some of the recollections he ventured were at variance with contemporaneous documents of others which in the end I prefer to look to as more reliable indicators of what and when things occurred rather than his testimony. To my observation he adopted a somewhat cavalier approach when he gave his evidence, which may have been a reflection of the fact that he really had a poor memory and has since left the defendant's employ. However I consider he did his best. 186Mr Kim is a real estate agent and is also Korean. However he gave his evidence without the aid of an interpreter. Although there are some unsatisfactory aspects of his evidence on balance I thought he gave his evidence carefully and thoughtfully with the unquestioned benefit of a few but in my view important contemporaneous notes supporting both his version and/or his sequence of events. 187Needless to say his recollection in relation to a number of the events portrayed some inconsistencies and failings. However he did not labour under the difficulties of other witnesses in that at least he had kept some contemporaneous notes and was a person with the least apparent interest in the outcome of the litigation.

Mr Shin 188Mr Shin of course is the only person called on behalf of the plaintiff who was privy to the alleged oral representations said to have been made to him and which induced RSE as he alleges to act by entering into the various agreements as alleged. It is therefore important to analyse his evidence in some detail. 189Mr Shin emigrated to Australia from South Korea in May 1988. Since 2001 he has been an Australian citizen. 190Before coming to Australia he had worked in the building industry since about 1981 in South Korea, Saudi Arabia and Libya. In South Korea he worked as a labourer and supervisor on commercial and residential building sites. In Saudi Arabia he was a superintendent of several projects. As such he was expected to check building works and review them for the purposes of correcting any defects. Whilst in Libya he did similar work but again as a superintendent. From his descriptions he held what appears to be management roles on a number of sites in these countries. 191When he arrived in Australia he asserts that he could speak very little English, although he had to speak English on building sites in Saudi Arabia and Libya. After about three or four years of being in Australia he accepts that he was able to understand conversational English very well. He said he occasionally had difficulties in understanding technical language. However he accepts that he had little difficulty in understanding conversations on various building sites that he worked on. At present he suggests that he understands approximately 90% of everything he reads but he still has some difficulty with his spelling and grammar (Shin Affidavit at [13]-[14], T68/8-T68/19, T76/33-T76/42, T85/11-T85/24). 192After he arrived in Australia he commenced working on building sites in Geelong and remained there until about 1990. He appears to have been a carpenter by trade but whilst working in Geelong he also worked as a superintendent. He however obtained a formal carpenter's licence in about 1992. He then commenced working in the shop fit-out industry. 193From 1994 he operated a building company on a 50/50 basis with an Australian, a Mr Henry Taudian. There is no evidence Mr Taudian was or spoke Korean. The company traded until about 1998. 194In 1997 he attended Granville TAFE and undertook a builders licence course which took approximately 6 months. The course was I infer conducted in English. He then became a licensed builder and has held a licence since 1997. In 1997 he commenced working as a property developer. He nominates his first project as the purchase of land and the construction and sale of eight villas in Eastwood. 195In about 1998 he opened his own company Base Design and Construction Pty Limited. He ran this company in partnership it seems with his brother-in-law until 2003. In or about that year he incorporated a company called Spacecon Pty Limited of which he is the sole director and shareholder. The company holds a licence as a builder, drainer, gas fitter, plumber and roof plumber. 196RSE is the trustee of the Shin Family Trust. It or other related companies has undertaken various property development projects and owns some other businesses including 15 Japanese restaurants, a Korean daily newspaper and an education company for Korean students which also brings Korean cultural performers, including singers, dancers and other artists to Australia. Mr Shin's wife Rebecca is responsible for managing the day to day operations of these businesses. He is also involved in researching and testing new building projects. Without giving any detail he also asserts that he has business interests in Indonesia carrying out building and infrastructure work in partnership with Indonesian companies. For that purpose he has incorporated two companies in that country. 197On any view Mr Shin is (and was at the relevant time) an experienced, successful, self-made and obviously a sophisticated businessman, given his achievements and the diversity of his businesses. He has built what appears to be a substantial empire since his arrival in Australia. He accepted in evidence that in the period since he arrived in Australia he has either built or helped build by way of fitout what he described as "less 100" for which he accepted he had contracts in writing for almost all of the work undertaken (T69/4-T69/20). This was amplified by his solicitor who indicated that over approximately 20 years he had acted for Mr Shin in "hundreds" of transactions (T130/25). 198Mr Shin asserts that in or about February 2008 he was introduced to the property the subject matter of this case by Mr Kim whom he had known for some years. Mr Shin asserts that Mr Kim said that he would like to introduce him to a good site at Meadowbank for a new restaurant and asked whether he was interested. He also gave Mr Shin some details about the scale of the development comprising some 750 apartments and a shopping centre and that a DA had already been approved for a restaurant from the site, although it had not been fitted out. Mr Shin says that he simply responded that he was interested. Mr Kim confirms that a conversation took place to that general effect and insists that he informed Mr Shin that although a DA had been approved with conditions, a proper fitout was required after the construction certificate was obtained. He asserts that he gave Mr Shin a copy of the DA floor plan. 199There is very little difference at least in substance between the two versions of events and I am satisfied that Mr Shin was introduced to the property, that is the restaurant lot, in about February 2008 as asserted by him. 200Mr Shin then asserts that within a day or two of that conversation Mr Kim took him to the site to inspect it although he was broadly familiar with it, having previously visited it in 2006 whilst the project was under construction. Mr Kim cannot recall such a visit in 2006. Mr Shin was clearly familiar with the site and was well aware of its existence. 201Mr Shin asserts that during the visit in 2008 Mr Kim informed him that the restaurant was a stratum whereas the other properties adjacent to the restaurant were on a strata title. Mr Shin asserts that whilst he was familiar with strata title and operations of the Owners Corporation he was not familiar with stratum title until the matter had been mentioned by Mr Kim. Mr Kim agrees with Mr Shin's version in general terms but also asserts that he made comment about the stratum title being less controlled in comparison to a strata title. 202Again there is very little if any difference between these two versions and I am inclined however to accept Mr Kim's assertion of the terms of the discussion. 203Mr Shin then asserts that after the inspection he was asked by Mr Kim whether he was interested and he said he was subject to price. Mr Kim, according to Mr Shin, indicated the price was negotiable and that he would negotiate the best that he could and would get back to Mr Shin. 204In the meantime Mr Kim, who agrees that a conversation along the lines suggested by Mr Shin took place, asserts that he spoke to Mr Ristway and informed him that he thought $3 million (which the defendant was then asking) was too much for the restaurant and that although it would be a good site for an a la carte restaurant the location was a bit quiet. Mr Kim, whose evidence I accept, asserts he told Mr Ristway that he had a potential buyer who was interested. He thought however $2.5 million should be the asking price for the restaurant. 205There is no issue it would appear but that two or three days later Mr Kim communicated with Mr Shin indicating that the owner would accept $2.5 million as a result of which Mr Shin indicated that he would check with his wife and get back to Mr Kim. 206Mr Shin asserts that after discussing the price with his wife he spoke with Mr Kim and indicated that he was only prepared to offer $2 million as he believed there was some risk with the site as it was quiet and isolated and accordingly the price should be reduced. Mr Kim again does not deny that this conversation took place and agrees that in general terms it did. 207As a result of Mr Shin apparently only being prepared to offer $2 million for the restaurant site Mr Kim indicated that he would arrange a meeting with the vendor. According to Mr Shin, Mr Kim did so in about February 2008. Mr Shin says he attended the site with Mr Kim where they met Mr Joe Ristway. Mr Shin had never met Mr Ristway before. During the course of the meeting the sale of a nearby restaurant at $1.68 million was discussed and Mr Kim again suggested at the meeting that $2.5 million for the restaurant was a very good price. Mr Shin asserts that he responded by saying however there were risks which he had identified and he would like to offer $2 million. Mr Ristway indicated that he would speak to his board and get back to Mr Shin. 208Mr Kim asserts that he sought instructions from Mr Ristway who told him that the defendant was not prepared at that stage to go lower than $2.5 million and he communicated that to Mr Shin. Again there is no real difference in substance in the recollections of Mr Shin and Mr Kim in relation to this event. I am satisfied that such an exchange took place. 209Mr Shin however in his affidavit asserts that the next event which took place was that in about mid February Mr Kim allegedly said to him that Mr Ristway had invited him to meet and he had a proposal that Mr Shin might be interested in. At a time not specifically identified by Mr Shin he asserts that he and Mr Kim visited the restaurant site and met with Mr Ristway who showed Mr Shin the storage underneath the restaurant site indicating that he could purchase the storage area together with the restaurant. I will return to this meeting. 210For the reasons that follow, I do not consider that this is an entirely accurate account of events. Mr Kim denies ever telling Mr Shin in mid February that Mr Ristway wanted to see him and had a proposal that he wanted to put to him. However Mr Kim asserts that there were many conversations in late February with both Mr Shin and for that matter Mr Ristway separately, obviously trying to broker some arrangement. That much I am prepared to accept. 211For various reasons I do not consider that Mr Shin's account as to the events in relation to when the storage unit was first raised could be correct and I am satisfied indeed that it is not. My view is based on partly the contemporaneous records made by Mr Kim and also some evidence given by Mr Shin himself. Generally I accept Mr Kim's account as to these events. 212Mr Kim gave evidence that following his conversations with Mr Ristway and having been informed that the defendant would not go any lower than $2.5 million he had a number of conversations with Mr Shin and Mr Ristway separately. I accept that evidence. Credibly I also accept that Mr Kim was unable to give any indication as to the precise content of those conversations however he states that he made a contemporaneous note which I took to reflect a conversation or conversations perhaps he had with certainly Mr Shin and perhaps Mr Ristway. The note is dated 26 February 2008 and refers to a selling price of $2.42 million which is stated to be inclusive of $220,000 for GST. It was noted the settlement was to take place on or before 1 December 2008 with occupation taking place prior to exchange. Further 2.5% was to be paid by way of deposit on exchange. There are other details included in the note, but there is little doubt that the note only refers to the restaurant lot. Notwithstanding any evidence to the contrary from Mr Shin I am satisfied that on or about at least the 26 February 2008 conversation with Mr Kim, Mr Shin indicated that he was prepared to acquire the restaurant lot for $2.2 million plus GST. Insofar as Mr Ristway in his evidence did not recall there being an offer for the restaurant lot, it seems to me the contemporaneous note of Mr Kim alone together with his recollection, albeit limited, are both reliable and I am satisfied accurate. 213At or about this time or possibly 1 March Mr Kim drafted what was the first of a number of sales advices. The first one he drafted was in his handwriting. He noted the contract price of $2.2 million plus GST and that $55,000 would be received by way of deposit. He also noted on that sales advice (CB2/580) that Mr Ben Johnston was Mr Shin's solicitor. The settlement date was amended to 2 March 2009. The earlier note of Mr Kim's created on 26 February had it seems erroneously noted the settlement date of 1 March 2008 but I am satisfied that indeed was an error and it should have been 1 March 2009. This advice only refers to the restaurant lot. 214Mr Kim identified a further handwritten draft of a sales advice (CB2/581) as being the next in point of time he created. Again there is no change in the basic details and again it clearly only refers to the restaurant lot. 215The first typed sales advice which is partially incomplete was next created. It does not set out the contract price or the deposit received (CB2/582). There is no issue but that Mr Shin at some point provided a cheque to Mr Kim for $55,000 apparently post dated to 10 March 2008. In my view the $55,000 cheque is clearly referable to the $55,000 deposit identified in the handwritten drafts. The last sales advice prepared by Mr Kim when typed clearly only referred to the restaurant lot but he has added in handwriting the words "+ storage as at Cost agreed" (CB2/579). There is certainly no way of telling from the face of the document which does indeed bear a typed date of 1 March 2008 when Mr Kim put those handwritten additions on the sales advice. However clearly it was done at a time when Mr Shin had indicated he was prepared to acquire the storage lot. However there was no change made in handwriting or otherwise on that sales advice to the contract price. 216Ms Phillippa Russell, a solicitor who at the time acted for the Billbergia Group of Companies which included the defendant, had been retained to act on the proposed sale of the restaurant. She said in her affidavit evidence that on 5 March she had a meeting with Mr Ristway in which she was instructed to prepare a contract of sale only for the restaurant. She made enquiries of a Mr Allen who worked for the Billbergia Group to obtain certain details to include in the contract of sale. Her email to Mr Allen of 5 March and his response on 6 March corroborate entirely Ms Russell's account. Further on 6 March she made some notes for her own purposes to assist her in the preparation of the contract. 217By 10 March she had prepared a letter which she had proposed would be sent to Mr Johnston, solicitor for the plaintiff, including a copy of the contract and other documents referred to in her covering letter. 218Ms Russell further says that following the preparation of the contract and other documents relating to the restaurant she received instructions to prepare a contract for the potential sale of the storage lot. She asserted that these instructions occurred sometime after 6 March but she has no documentation or diary notes suggesting precisely when that might have occurred. 219The letter which she had prepared to send with enclosures to Mr Johnston was dated 10 March. She however says that it was not issued on that date and suggests that it may not have been sent until shortly after 19 March 2008. Ms Russell was not cross-examined and she has contemporaneous documents supporting her alleged sequence of events. I accept her evidence. 220Mr Johnston in an affidavit prepared by him had no recollection of receiving the letter of 10 March 2008, however he did locate the letter and the draft of the contract on his file. Mr Johnston also indicated that he had no recollection of receiving instructions from Mr Shin about purchasing the restaurant lot alone. 221In his evidence before me, Mr Shin accepted that he had offered $2 million plus GST to purchase the restaurant lot at a time when he was not aware of the availability of the storage lot. He also agreed that the offer of $2 million was made two or three days after having first seen the restaurant (T56/37). As I have already observed notwithstanding the sequence of events asserted by Mr Shin I am satisfied that the evidence of Mr Kim, corroborated as he is in my view by Ms Russell and in particular their contemporaneous documents, provides ample support for the finding that Mr Shin prior to him being introduced to the storage lot was clearly prepared to acquire the restaurant lot alone. 222There is also little doubt that at some point, perhaps in late February or more likely March, Mr Shin did become aware of the storage lot and at some other point also made a decision to make an offer to purchase it as well. 223Mr Shin asserts that at the meeting he had as a result of an invitation from Mr Ristway at which Mr Kim was also present, Mr Ristway informed him that if he purchased the storage lot together with the restaurant lot the areas would be useful and there would be created a synergy which would give Mr Shin a great deal of potential. He asserts that at the same meeting Mr Kim spoke about the possibility of using the storage space as a karaoke bar and further discussion took place about whether the two could be consolidated as one stratum lot. Mr Shin asserted that Mr Kim suggested he might discuss matters with Ms Russell the solicitor for the defendant who is an expert in the field. Further Mr Shin asserts that he as always continued discussions with Mr Kim in Korean and further requested Mr Kim ask Mr Ristway whether four holes could be cut in the ceiling of the storage area for a staircase, a lift shaft, a dumb waiter for the kitchen and a hole for a ventilation system. Mr Shin asserts that Mr Ristway said they could easily be done and that he could have as many holes as he wanted but he would have to mark where he wanted the holes to be created. At this point Mr Shin asserts that Mr Kim indicated that the storage unit was valued at $500,000 but he could buy the restaurant and the storage lot for a total of $2.7 million to which Mr Shin said he would give the matter some thought. 224Mr Shin further asserts that Mr Kim had a conversation in his presence with Ms Phillippa Russell about the possibility of consolidating the restaurant and storage lots. 225Mr Kim denied the conversation which allegedly took place between himself, Mr Shin and Mr Ristway concerning the storage unit and which Mr Shin had asserted had taken place sometime in February 2008 (Shin Affidavit at [46]-[48] at CB2/461; Kim affidavit of 21 June 2012 at [35]-[40] at CB2/569). Mr Kim asserts that he did not visit the restaurant site with Mr Shin and/or Mr Ristway at that time. He does agree the conversation about such matters did take place, he thought in or about mid March to April. At that time Mr Kim asserted that Mr Shin told him that Mr Shin had negotiated directly with the vendor to buy the storage lot for $300,000 to which Mr Kim replied that he did not expect the vendor to have dropped the price from $500,000 to $300,000. However he agrees that he did have a conversation with Mr Shin in the same period (mid March to April) about the possibility of consolidating the lots (Kim affidavit of 21 June 2012 at [37]-[39] at CB2/570). I accept Mr Kim's version of events and the substance of the conversations he alleges took place. He impressed me as telling the truth on this issue. To some extent I consider his handwritten note on the sales advice "$300,000 as at cost agreed" also provides some corroboration he was simply told an agreement was reached rather than his having brokered one directly. 226Mr Ristway on the other hand denied speaking about the possibility of synergy, but does agree that at some point he indicated that "We" were prepared to sell the storage with the restaurant simply because it was useless to anybody else (Ristway affidavit of 26 June 2012 at [21] at CB2/590). Mr Ristway does recall discussing with Mr Shin the possibility of development approval for the use of the restaurant during one of these conversations. Further Mr Ristway does accept that a meeting did take place between himself, Mr Shin and Mr Kim in which both Mr Shin and Mr Kim spoke to each other in Korean (Ristway affidavit of 26 June 2012 at [24] at CB2/591). In relation to any discussion about holes Mr Ristway asserted in his evidence (without being specific as to time) that he did recall that he told Mr Shin via Mr Kim that Mr Shin could have as many holes as he wanted but that the holes would have to be approved by a structural engineer and if Mr Shin were to mark out where he wanted them a structural engineer would have to be consulted to see whether they could be done in the locations he required them (Ristway affidavit of 26 June 2012 at [26] at CB2/591). I am satisfied Mr Ristway's version is broadly accurate and in particular I accept his evidence when he denies speaking of synergy at the meeting with Mr Shin and I accept he said that any holes would have to be approved by a structural engineer. 227Under cross-examination, Mr Shin agreed that he made an offer of $2 million two or three days after he initially saw the restaurant (T56/37), although earlier he had denied this (T55/29). It was suggested to Mr Shin that he had not made any offer to purchase the storage lot until after 10 March 2008 but he replied that he made an offer in the middle of February, although no records, emails or notes were made by him or sent to his solicitor to support such an allegation (T60/45-T61/44). 228Mr Ristway, under cross-examination, agreed that a meeting had been organised between himself, Mr Kim and Mr Shin to see what could be "worked out" (T153/45) but denied that the storage lot had been raised at that stage (T154/3). To that extent again I accept Mr Ristway, but it was clear his recollection of some events was vague. 229It was put to Mr Kim in cross-examination that Mr Ristway had suggested the purchase of the storage lot in a conversation between the three men in February 2008, but Mr Kim replied as follows (T187/34): Q. In the course of one of these discussions in February 2008 between Mr Shin, yourself and Mr Ristway, Mr Ristway suggested to Mr Shin the purchase of the storage area below the restaurant, correct? A. I didn't know. I was not attended on that. I aware of that - they had meeting very initially to introduced by someone, but I realised later on was Ristway, introduced. But I heard from Mr Raphael Shin they met on site without knowing me. 230Mr Kim agreed that he was a party to conversations with Mr Shin and Mr Ristway about the storage lot (T188/7) but suggested "it might be much later" than February 2008. He reiterated that some private negotiations had occurred between Mr Shin and Mr Ristway to the effect that the figure of $500,000 for the storage lot had been reduced to $300,000 (T188/25, T189/13). Mr Kim was not challenged on this assertion of these private negotiations. 231Neither Mr Shin, Mr Kim or Mr Ristway for that matter have any notes of any of these later conversations or meetings. Mr Kim had his note however of 26 February together with his sales advices. I am however satisfied some conversation or conversations took place between the participants in the February/March/April period although it is near to impossible to fix precisely those dates, or for that matter precisely what was said. There may have been more than one discussion by telephone and there was probably more than one meeting, but I am simply not able to make any clear findings. I am satisfied it is likely Mr Shin raised the question of some form of penetration between the two lots. He may well have raised the possibility of multiple holes. Mr Ristway's evidence corroborates that at least. The parties were obviously attempting to negotiate a price. Beyond that I am simply not satisfied as to the precise content of any of the conversations as alleged by Mr Shin. Indeed generally I reject his versions and where indicated I prefer the evidence of Mr Kim or Mr Ristway. 232In his evidence Mr Shin asserted that he formed the opinion that although the restaurant site was in a prominent part of the project it had low passing traffic and the shopping centre in the development was not well patronised. He also asserts that he formed the view that the residents of the complex might consider the restaurant was too expensive and would not be regular patrons and therefore concluded that an upmarket restaurant would be a high risk venture. He also asserts that he was prepared to take the risk provided the price was right because there was no other up market Korean or Japanese restaurant in the area and he formed a view about the expected population in and around the restaurant site over a period of 5 - 10 years. He also asserts in his evidence that in his opinion the venture would have been a better opportunity if the restaurant site and the storage area were inter connected. 233He was not asked questions about his assessment of the risk but it seems to me that as an experienced developer and restaurateur he had carefully considered all of the various factors that might affect the ultimate viability and hence profitability of the restaurant and made his own mind up as to these risks. He was however as I have found quite prepared to buy the restaurant independently of the storage lot in any event. Mr Shin does however say in his evidence that had the two lots been sold as separate unconnected properties he may have purchased the two however he would have offered less than the offer he made and which was ultimately agreed to. I am simply not satisfied that that is a credible assertion on his part. It is self serving and highly speculative. As a shrewd and experienced businessman I am assuming having made his assessment of the risks he ultimately paid what he thought was an appropriate price to pay for the two lots. 234Mr Shin asserts that he had a further conversation with Mr Kim (Shin Affidavit at [59]). The structure of the preceding paragraphs of that affidavit would tend to suggest that the conversation he alleges occurred also took place in February 2008. That is also made relatively clear by reference to paragraph [62]. In any event, Mr Shin asserts that at a meeting with Mr Kim he indicated that he was prepared to offer $2.3 million, being $2 million for the restaurant and $300,000 for the storage lot, indicating as he suggested to Mr Kim that the asking price of $500,000 was simply too high. He alleges that in the course of this conversation he told Mr Kim he would pay the combined price of $2.3 million provided the vendor undertook a significant amount of work at its own expense. 235Thereafter in a long paragraph he asserts he discussed with Mr Kim are at least 7 or 8 or more items which include the construction of a staircase, a lift shaft and a dumb waiter and provision for air ventilation which he required to be done at the expense of the vendor. He also alleges he requested that the vendor provide all relevant permits and approvals and after all the works were done he would then commence fitting out the restaurant. 236Mr Shin asserts that he imposed a further condition that after the fitout works were complete he should have the right to trade from the site for at least six months prior to completion at a nominal licence fee although he would reimburse the vendors rates and taxes. 237Mr Shin asserts that Mr Kim said he would speak to the vendor and get back to him. Subsequently he asserts Mr Kim did get back to him and told him simply the vendor had agreed to all of the requests however not at the price of $2.3 million. Mr Shin indicated he would consider the price again. 238I am unable to accept this evidence. It is entirely without any objective or contemporaneous support from Mr Shin or for that matter in my view anyone else. I do not regard this account as credible. 239Mr Shin did accept for example that one reason for a lengthy settlement and a trading period was that he desired to minimise his cash payments by paying for the fitout and the services into the storage lot himself without the need of bank finance. Once the fitout was completed and the restaurant had traded for at least six months he formed a view that any valuation obtained by a bank would be higher, hence his borrowing capacity would be greater (Shin Affidavit at [61]). The structure of the deal was to enable him to settle the purchase in due course obviously on the most favourable terms. Although he does not say so in terms and it was not explored at the trial, I infer that his commercial strategy was to get the restaurant trading profitably and then link the security for the raising of finance to the property alone without recourse to any other of his or RSE's assets. 240In any event Mr Shin asserts that later again in February in a conversation with Mr Kim he indicated that he would increase his offer to $2.5 million which would be his final offer. Mr Kim apparently indicated to him that although he thought the vendor would agree there would need to be some further discussions and the agreement in relation to cutting holes in the floor would have to go in a side letter. Mr Shin indicated that he told Mr Kim that he would prefer all conditions relating to the holes and other works to be placed in the main contract and not in a side letter but he was rebuffed by Mr Kim and pliantly accepted the structure proposed by the vendor. 241Mr Kim certainly agrees that some of the things mentioned by Mr Shin in these conversations indeed occurred but does not accept that Mr Shin mentioned authorities, permits or council approvals or construction certificates in relation to the proposed stairway. He denies talking to Mr Shin and indicating that the various requests made by Mr Shin were all agreed to subject to price. However Mr Kim agrees that there was a discussion about a side letter but rather than it being in late February such a conversation did not take place until March or April. Mr Kim further denies indicating to Mr Shin that the vendor preferred to have the conditions in relation to cutting of the holes in a side letter. 242I am again inclined to accept the version of these conversations given by Mr Kim and in particular his specific denials of speaking about consents and approvals. I also accept his denial that he told Mr Shin all of his requests were agreed subject to price. In addition, given that Mr Shin had retained a solicitor to act for him in respect of the acquisition and given the multitude and variety of the various requests he was making in respect of all manner of things to be undertaken at the vendor's expense, I find it implausible that if true he neither confirmed his instructions in relation to all of those supposed matters with Mr Johnston or alternatively sent an email to either Mr Kim or perhaps more importantly Mr Ristway recording the so called discussions and arrangements. He left the requests and the supposed agreement itself entirely presumably to Mr Kim's memory. If these requests were so important as Mr Shin asserts, to my mind this strikes me as improbable. However much he may have dealt previously with Mr Kim, he had never dealt with Mr Ristway or Waterpoint before. For an experienced and successful businessman this was a most unbusinesslike approach. He simply did not impress me as prone to that kind of behaviour. 243There is no doubt that at some point there was clearly a discussion about requiring the vendor to perform certain work and there was clearly a discussion about a side letter. I am satisfied of that. But I do not accept Mr Shin's evidence otherwise. 244Mr Shin was clearly concerned about using a side letter as a matter of principle because he understood that there were risks to him in documenting the transaction in that way. He said in his evidence quite explicitly (T77/44) that one concern he had about the side letter was that the owner might be able lawfully to ignore any agreement to cut holes before he was required for example to complete the contract of the purchase. 245He had apparently previously been advised by his solicitor in relation to another transaction that a side letter may not be enforceable against a vendor. Mr Johnston could not recall giving Mr Shin specific advice about the potential perils associated with a side letter in relation to this particular transaction but he accepted that Mr Shin by reason of prior dealings well understood in his own mind the risks associated with such side agreements (T141/15-T141/35). 246In summary I am not satisfied that matters that Mr Shin asserts were discussed with Mr Kim about his various requirements were indeed outlined in that level of detail or in some aspects at all. I am also not satisfied for example Mr Kim conveyed in effect Waterpoint's blanket approval of all of Mr Shin's requests. The more compelling view is that the correspondence to which I shall now refer is the most accurate guide as to precisely what was being discussed and indeed what Mr Shin was requiring be undertaken. Another view is of course that Mr Shin requested all of these matters as part of negotiations and in the end settled for much less, but I consider that unlikely given the correspondence I will shortly refer to. 247In passing, I note that in paragraph [10] of the Amended Commercial List Statement, it is asserted that in or about February 2008, at or about the time that the other representations were made, the defendant orally represented to the plaintiff that the proposed contracts to purchase the Restaurant Lot and the Storage Lot would not need to be completed until the Works (defined in paragraph [7] as the penetrations, supply and installation of the staircase and the installation of fire doors) had been completed. The particulars state that such a representation was made during conversations between Mr Kim and Mr Shin in February 2008. Of the materials read (particularly the Shin Affidavit and his other affidavits dated 24 September 2012 and 30 July 2013), there is no reference to any such conversation that I can detect. In particular, in the Shin Affidavit I would expect to see such a conversation recalled at paragraphs [59]-[65], but it does not appear. 248Furthermore, the cross examination of Mr Shin at T76-T77 (to the effect that Mr Shin understood he could be forced to complete the contract) saw him make no mention of any purported oral representation in the manner set out in paragraph [10] of the Amended Commercial List Statement. 249I should also say in passing, and consistently with my earlier impressions of Mr Shin as set out above, I would have found such a representation difficult to accept in the absence of contemporaneous material and I am not satisfied any such representation was ever made to Mr Shin as alleged. 250Importantly however in my mind, on 6 June 2008 the plaintiff's solicitor sent a letter to the solicitor for the defendant. The letter, which I have previously set out in part, clearly sought to convey that Mr Shin was agreeable to the use of a side letter subject to the vendor acknowledging an obligation to complete the stairs between the restaurant and the storage lot, cut the relevant one metre squared access for the dumb waiter and to provide details of a certifier (item 5). It seems to me that it is couched in the language of negotiation rather than seeking confirmation of a position already agreed. I am satisfied the letter was sent by Mr Johnston on instructions from Mr Shin, indicating what he needed clarified or agreed to. The letter does not support Mr Shin's alleged detailed requests in his conversation with Mr Kim, let alone Waterpoint's agreement to them. 251When he gave evidence before me however and when asked about the letter of 6 June, Mr Shin, with the assistance of an interpreter, asserted unequivocally that he was seeing the letter for the first time "today" (T66/40). Indeed he specifically denied ever having given Mr Johnston instructions to write the letter of 6 June (T67/25) and further that he never had any idea about the letter (T69/34). I do not accept that evidence. 252Mr Shin clearly knew about the letter and I am satisfied was responsible for its terms. That is, I am satisfied that that letter truly reflected Mr Shin's requirements and state of mind at the date it was sent. 253Mr Johnston was cross examined about that letter and whilst he said he could not recall precisely getting instructions to that effect he accepted that as a matter of practice that unsurprisingly the contents of letters would reflect instructions he had received, and that it would be most unlikely for him to have sent such a letter without instructions from Mr Shin (T130/45, T131/5). Mr Johnston also accepted that it was his practice that if Mr Shin had told him he was relying on some particular or important statement that an owner or owner's agent had made to him he would have included it in any letter (T132/7). 254Contrary to the evidence he gave before me and in which he asserted he never previously saw the letter of 6 June before going into the witness box in his affidavit Mr Shin accepts that he gave Mr Johnston instructions in March 2008 to act on RSE's behalf to negotiate an agreement for the occupation and purchase of the restaurant and storage lots but he asserts that the letter of 6 June did not accurately set out the entirety of his requests. In particular he asserts it missed out the requirement to include a reference to the other two holes that he asserts were discussed. Again I do not accept Mr Shin's evidence in this regard as accurate or for that matter truthful. I am satisfied it is a reconstruction after the event, having realised the letter did not assist his case. 255It may well be that Mr Shin made many demands and requests during his negotiations for all manner of things including multiple penetrations at the defendant's expense. But requests are not agreements. No doubt he was attempting to negotiate a deal with the maximum benefits to RSE; of that there could be little controversy. 256However many conversations he had with Mr Kim or Mr Ristway, or however many holes Mr Ristway mentioned in negotiations, one thing is abundantly clear, at some point prior to 6 June Mr Shin was told that the arrangement on these items was going to be set out in a side letter. By that date at least Mr Shin, grudgingly or otherwise, had accepted the regime. 257This signalled clearly that whatever discussions had taken place between the parties they were going to "exchange" a side letter setting out the vendor's obligations. That served in turn to identify the means by which they would deal with each other on the proposed works. Mr Shin may not have liked the idea but he agreed and instructed his solicitor to formally adopt that procedure. 258In any event on 10 June, Ms Russell on behalf of the defendant responded to Mr Johnston's letter of 6 June. In particular in relation to item 5 she informed Mr Johnston that her client would cut the hole for the stairs but would not construct them. She also informed him that her client would cut the hole for the stairs and the dumb waiter after locations were indicated as to where they might be required. She also confirmed that her client would provide details of a certifier. 259Mr Johnston on 10 June sent an email to Mr Kim, attaching both his letter of 6 June and Ms Russell's letter to him of 10 June (CB5/1972A). In that email Mr Johnston indicated that Mr Shin had two concerns, the first was that he would like to avoid the payment on 30 September 2008 and pay the balance of the deposit by 31 December 2008 and importantly what he described as Mr Shin's understanding that the vendor would construct the stairs between the storage area and the restaurant area. There is no mention of multiple holes. 260Mr Shin was asked about Ms Russell's letter of 10 June and again insisted that his solicitor did not tell him about the letter at the time it was received (T70/22, T71/16). However, Mr Johnston agreed that he had discussed Ms Russell's reply with Mr Shin and that arising from that discussion there were these two matters that he sought to raise with the owner (T137/40-T137/46). Whether or not Mr Shin saw the precise terms of it, again I am satisfied that Mr Johnston sent the email of 10 June with instructions to do so. 261Mr Kim asserts he had a meeting with Mr Shin, Mr Ristway and Mr Allen on 9 July. He has a contemporaneous file note on Waterpoint letterhead in the following terms (CB5/1970): a hole at kitchen area ] ] a side letter cut exit ] bal 10% by Dec 2008 settlement by 30/6/2009 262The note does refer to quite specific penetrations, and that such matters would be the subject of a side letter. 263In his affidavit evidence at [51], Mr Kim accepted that he had no independent recollection of this meeting beyond his note. 264Mr Kim was cross-examined on the note and, despite acknowledging that he was basing his recollection of the meeting on the note, maintained that there was no reference to consents or approvals at the meeting, nor cutting the other penetrations (T246/26). I accept Mr Kim's evidence as candid and truthful. 265Mr Shin made no reference to this meeting in the Shin Affidavit. However in his affidavit in reply dated 24 September 2012 at [37]-[39] he gives, for the first time, an extensive account of what he says occurred at the meeting. 266Mr Shin asserts he told those present that he wanted 4 or 5 holes cut in the slab, a fire door, emergency access and "more holes if necessary". Mr Ristway is asserted to reply "We are going to cut holes so 4 or 5 or even more holes won't make a lot of difference to the construction". Importantly, however, Mr Shin asserts there was no discussion of a side letter. 267However, Mr Shin was not cross-examined on his evidence of the meeting. 268Mr Ristway makes no mention of the meeting in his affidavit of 26 June 2012. Under cross-examination, Mr Ristway gave evidence he could "vaguely recollect the meeting" but does not recall the matters in Mr Kim's file note (T169/8). 269Mr Kim's contemporaneous note is the best evidence in my view of what took place at the meeting of 9 July. It is reasonable to infer that although a hole in the kitchen and exit were discussed, there was no note taken by Mr Kim of multiple holes or anything like Mr Shin's previous version of events. 270Because it is a note of a meeting only two days before the issue of a side letter, which in turn does not mention multiple holes, those two contemporaneous documents taken together are not only broadly consistent as to the scope of work which was discussed but also clearly at substantial variance to the version of events asserted by Mr Shin. Without the benefit of any contemporaneous notes taken by Mr Shin to corroborate his version of events, I simply reject his evidence as to what he asserts took place at the meeting. His account I consider on this issue given only in reply is untenable, and so at variance with what I regard to be a reliable contemporaneous note, as likely to amount to a concoction. 271On 11 July a Mr Lum (who it seems had no previous dealings with Mr Kim) or for that matter Mr Shin sent a letter on behalf of Waterpoint in relation to this transaction directly to RSE which stated relevantly: Please take this letter as confirmation the following works will be carried out (at no expense to your client) after exchange of Put and Call Options by your client for the purchase of the above properties. ... 3. Creation of a penetration and stairs connecting the restaurant with the storage lot (subject to our engineers acceptance of the proposed location and design). 272I note that it was not of course until 25 July that the Put and Call Options and licences were executed and exchanged. 273However after reading the letter of 11 July Mr Shin asserts that he had a conversation with Mr Kim in Korean but in the presence of Mr Ristway. Mr Shin says he explicitly raised his perceived deficiencies in the letter in that it only referred to one hole yet he asserts there was an agreement that the vendor would at its expense cut four holes. Mr Shin asserts that Mr Ristway told Mr Shin not to worry that the letter only referred to one hole because it was the largest and that he accepted that the vendor would have to cut the four holes in total. Indeed Mr Shin asserts that Mr Ristway said "whatever number of holes you want we can construct". Mr Shin also asserts that during the course of this conversation Mr Kim made comments about how the additional holes would enhance the potential business from both parties point of view. 274Mr Kim says he does not recall the terms of any conversation taking place in relation to the alleged deficiencies in the letter of 11 July but denies speaking about the business as being enhanced by the drilling of the holes. I accept Mr Kim's evidence. 275Mr Ristway on the other hand says that he did not in fact become aware of the letter of 11 July until he was handed a copy of it after the proceedings in the current matter were in fact commenced. He was not challenged on this assertion. Certainly on its face the letter was not sent or forwarded to Mr Ristway. He says he was not responsible for the issue of such a letter, nor did he have any discussions with anyone prior to the letter being sent. In particular he denied that any meeting agreeing with Mr Shin that the letter was deficient in any way but he does accept that he had told Mr Shin that he could have as many holes as he wanted provided a structural engineer certified them as safe. 276I am satisfied Mr Ristway had nothing to do with the terms of the letter and I otherwise accept his denial such a meeting took place at which the so-called deficiencies of the letter were discussed. I accept Mr Ristway on this matter and I reject Mr Shin's version of this so called meeting. 277Again neither Mr Shin, Mr Kim nor Mr Ristway has any contemporaneous notes of any discussions about the letter of 11 July. 278I am simply not satisfied that Mr Shin had the conversation he asserted in which he pointed out various deficiencies in the letter and was told in particular not to worry. It is simply in my mind incredible that, having been dissatisfied in the first place with the whole notion of a side letter and then allegedly worried and concerned about the deficiencies of it, although a meeting might be a logical step a letter or email from him or his solicitor was clearly called for. He did no such thing, nor did he instruct his solicitor to write to Waterpoint. However in any event the earlier correspondence to which I have referred to and from the solicitors also runs quite contrary to Mr Shin's evidence about the so called deficiencies. 279His evidence before me on the letter was confusing, inconsistent and implausible. In cross examination Mr Shin at first agreed that he got the letter of 11 July at or about the date it bears and he regarded it as an important document which he discussed with his solicitor (T79/5-T79/20). He also agreed he discussed it with his solicitor before he signed the Put and Call Options (T79/29). He also asserted that he told his solicitor about the conversations he had with Mr Kim and about the deficiencies in the letter. However it seems he did not tell his solicitor what Mr Kim had apparently agreed to during the course of the meeting (T80/45). 280A little later in his evidence however he appeared to indicate that he did recall speaking with his solicitor about what he and Mr Kim had discussed about the letter of 11 July (T82/15). However again an answer or two later he seemed to be saying that he had not told everything to his solicitor but only told him some of the detail of the discussion he had with Mr Kim (T82/28). I regard this evidence (which was given with the benefit of an interpreter) as unreliable and in effect a prevarication on his part when he found himself in an untenable situation. He found it difficult to give a consistent and I consider truthful account of his reaction to the side letter. 281Mr Shin did assert however that he told his solicitor, between possibly March and June (T82/50), that the vendors had agreed to get all the relevant consents and approvals for the penetration works. I am simply not satisfied that he did. Mr Johnston's evidence (at least that which was read) is entirely silent on the side letter. 282However Mr Shin was further cross examined about the side letter. Frankly I found Mr Shin's later answers again were internally inconsistent. It was put to him directly that he must have told his solicitor that the letter of 11 July for example wrongly did not say that the owner was to obtain relevant consents and approvals. The answer he gave was entirely confusing. He insisted that he was agreeing with or wanted to act in accordance with what Mr Kim had said but that he did not think that he should be too "serious" about the letter at the time (T83/45). He confirmed that he did not think the letter was too important and he proceeded on the basis that he could "trust them" (T84/2). 283At yet another point in his cross examination he accepted he read the letter carefully when he received it and discussed it with his solicitor and agreed that he did not raise the absence of any promise to obtain consents and approvals from the owners point of view with his solicitor (T84/24). Mr Shin agreed that nowhere in the letter of 11 July was it suggested that any consents or approvals would be obtained (T84/49). Of course both in his affidavit evidence and his oral testimony Mr Shin was at pains to allege that the letter of 11 July was quite inconsistent with things Mr Kim had told him and that he appreciated that when he read the letter. 284When asked quite explicitly why he did not tell his solicitor that the letter was not the same as what Mr Kim had said at the meeting his response was as follows (at T86/16-T86/18): Sometime my solicitor does not understand. Different nationality with some custom, I am sorry talking this way. But usually Korean discuss something else without any evidence and talk in the trust. 285The cross examiner attempted to persist in asking further questions, but in my view Mr Shin prevaricated in giving his responses with or without the aid of an interpreter. He had stated unequivocally in evidence in chief that having received the letter of 11 July he immediately appreciated amongst other things that it did not refer to the number of holes he had been promised would be made at the vendor's expense. He was so concerned apparently that he felt the need to raise the matter with both Mr Kim and Mr Ristway. However when he gave his evidence his account as to why he did not raise any concerns with his solicitor varied from him not taking the letter seriously to believing his solicitor of some twenty odd years would not understand his concerns by reason of some vague, ambiguous and frankly implausible cultural differences. At an earlier point in his evidence (T76/5) he even tried to suggest that he did not know what the side letter meant at the time he received it, and later he thought it was like some sort of special condition (T84/35). 286His evidence on the matter of the side letter in large measure and his alleged reaction to it is both implausible and improbable and I regret to say having observed him carefully untruthful. Mr Shin readily appreciated that he at no time sought any further clarification in writing notwithstanding the fact that he alleges he had a conversation with Mr Kim about the deficiencies of the letter. He was wary of the existence of a side letter and concerned that the term or terms had not been incorporated in the Put and Call Agreement. 287One thing that is clear is that he was obviously in regular contact with his solicitor who it seems was never instructed to reply to the letter of 11 July at all. That is in my mind compelling evidence it satisfied his requirements. 288But the inconsistencies however do not stop there. In the Shin Affidavit when dealing with the period in August 2009, Mr Shin purports to set out a conversation he had with Mr Kim about the updating of contractual materials. Mr Shin asserts that Mr Kim said during the course of such a meeting that the side letter would not be renewed and that there would be no side letter going forward. In paragraph [111], Mr Shin asserted that he said in response to this: The side letter is binding and I will not agree to change it. 289There is no doubt that the side letter that he was referring to in his evidence was indeed the side letter of 11 July. He does not suggest that in the conversation that he told Mr Kim he also relied upon any oral representations. Quite the contrary, it seems to me that it is a clear concession that the letter was self contained and suited his purposes entirely. 290Mr Kim on the other hand does not recall the conversation with Mr Shin about the updating of contractual documents. It was put in oral submissions that at [111], Mr Shin was not attempting to be exhaustive in describing the relevant contractual obligations. In fairness I observe he was not cross examined on [111]. I however do not accept that interpretation of the evidence. I do not consider he had forgotten the so called all important oral representations, but rather it should be considered as an unguarded and candid account of his view of the side letter. 291I would have expected Mr Shin given his very long association with Mr Johnston and their discussion in the first place about the undesirability of such a side letter to have discussed the terms of the 11 July letter and to have discussed its deficiencies, if any. A shrewd experienced businessman like Mr Shin who bothered to retain a solicitor to act in hundreds of property transactions would do exactly that. If he were dissatisfied with any aspect which he thought would materially affect his interests not only would he have raised it with his solicitor but he would have insisted that a clarifying letter go back. But this did not happen. 292Yet again I am left with the position where Mr Shin's version of history is so unreliable that I am simply unable to accept what he had to say about the alleged conversations with Mr Kim and or Mr Ristway about the letter. I am simply not persuaded that he had the conversations he suggested he had prior to 11 July with Mr Kim and Mr Ristway nor am I persuaded he raised as he asserts he did with Mr Kim or Mr Ristway the so called deficiencies in that letter. 293In passing I observe that not only did the letter of 11 July not mention the so-called extra holes that had apparently been promised but it made no mention of the six months rent free trading period. Mr Shin again implausibly in my view said that he did not raise that issue with Mr Kim even though he asserts he raised the question about the holes because he did not think about it (T91/3-T91/9). I reject his evidence in this regard. It seems more than a little odd, given the economic significance as he now would have it of such an arrangement on his financial planning, that he simply forgot it. 294On 25 July the parties exchanged Put and Call Options for contracts for the sale of the restaurant and storage lots. The parties also entered into licence agreements in respect of these lots that allowed the plaintiff to occupy, fitout and trade from the lots after exchange of the option agreements. 295The terms of the options agreements had a "Whole Agreement" clause that provided that the Deed constituted the entire agreement between the parties and "supersedes all prior discussions, undertakings and agreements". There was a further representation that each party had entered into the deed without relying on any representation by any party or "any person" purporting to represent that party. 296The sale of land contracts annexed to the option agreements also included a special condition to similar effect of the entire agreement clause in the Put and Call Options. In the sale of land contract there was included clause 10.1.5 of the standard conditions that prohibited the purchaser from rescinding or terminating in respect of a "promised representation or statement about the contract or property". Clause 7 of the standard form of contract allowed the purchaser to make a claim for compensation but only if such a claim was served before completion. 297Shortly after the exchange of the Put and Call Options and on 12 August 2008 Mr Allen on behalf of the defendant sent an email to Mr Shin's employees at Spacecon and also to Mr Kim. By this stage the defendant was in receipt of Mr Shin's proposed cut out plan for the restaurant. Mr Allen informed the recipients of the email that he was unable to cut into the slab for a number of reasons but importantly because it was common property and would require permission from the strata body. There was thereafter an attempt by the architect retained by the plaintiff to arrange a meeting between Mr Shin to discuss the difficulties. The email of 12 August makes no mention of multiple holes being drilled through the slab. 298Mr Shin agreed that on or about 12 August 2008 he was indeed informed about the difficulty in carrying out the penetration work. When asked whether he was aware that there may be problems with the Owners Corporation Mr Shin indicated that at the time he did not consider that would be a difficulty (T99/6). He certainly had no recollection of having any meeting with Mr Allen or anybody else about this issue. 299It was put to Mr Shin that notwithstanding that he understood there were difficulties with the Owners Corporation he instructed another Mr Kim (his employee) to tell Mr Allen to go ahead and do the penetrations anyway. Mr Shin denied this (T99/30). 300Mr Shin was shown an email dated 10 September 2008 from Mr Allen to a number of Mr Shin's employees at Spacecon, Mr Kim and a copy further sent to Mr Ristway. It is plain from this email (CB8/2799) that one of Mr Shin's employees forwarded the email to him. The email records that Mr Allen had simply been told to proceed to cut five holes by a Mr Kim when Mr Allen clearly had some concerns and required an urgent site co-ordination meeting. When asked who the Mr Kim was referred to in the email Mr Shin indicated that he did not believe that it was Mr Kim, the real estate agent, but rather another Mr Kim who worked for his company Spacecon. 301It was then put to Mr Shin that although he was aware from the email from Mr Allen that the Owners Corporation consent was not forthcoming to the penetrations he nonetheless directed Mr Kim to go ahead and mark the holes and directed Mr Allen to do so notwithstanding there was no consent. It was put to him explicitly that notwithstanding the lack of consent he was prepared to do the work anyway. His answer or answers were I consider a prevarication (T102/4). I consider he was clearly quite prepared to direct the work be done notwithstanding the consequences. He did not care about the lack of consent or approval in my view. 302I consider this rather indicates that technically consent or no consent, nor indeed who was responsible for seeking and obtaining it, was not a matter of any concern to Mr Shin. He was prepared to press on regardless. 303It is uncontroversial that no work was done or correspondence was entered into by the parties in relation to the works the subject of the "side letter" between 12 August 2008 and 20 April 2009. Mr Shin claims he was verbally contacting Mr Kim about all these matters but Mr Kim does not recall such conversations taking place. However Mr Shin never once put anything in writing to Mr Kim or anyone else, even in Korean. I am unable to accept the extent to which Mr Shin alleges he was making contact. I consider he was grossly exaggerating. 304As I have already observed for the last half of 2008 nothing if anything much appears to have occurred. But according to Mr Shin at [91], [93] and [94] of the Shin Affidavit he was aware that there were difficulties in the defendant performing the work and/or some alleged dispute internally between Mr Ristway and Mr Allen over what, if any, work was going to be undertaken by the defendant. Again, none of this prompted Mr Shin to approach his solicitor to formally record his concerns or complain. 305It is clear that the parties agreed to vary by way of formal extension the Put and Call Options to provide that the last day for the exercise of the call option was varied from 3pm 31 December 2008 to 3pm Friday 30 January 2009. Mr Shin asserts that this occurred in the context of a discussion with Mr Kim in which Mr Kim indicated that the vendor required an extension for the purposes of cutting the holes in the slab. However I consider that cannot be correct. I consider the variation in the Call Option was clearly to enable the purchaser to have an additional period in which to make a call. Mr Kim does not recall any conversation in relation to the extension being requested for the purposes of making the penetrations. It seems unlikely however that it was done to suit anyone but the purchaser. Again the evidence on this issue is at best vague, and hence unsatisfactory. 306On 20 April 2009 the defendant purported to exercise its rights under the put option in relation to both the Restaurant and Storage Lots. Letters between solicitors then passed making assertions and counter assertions about the respective rights of the parties to either complete or refuse to complete the arrangements. Leaving aside the question of who was right and who was wrong it is certainly true that Mr Shin had not had an approval for finance to complete the purchase. 307Mr Shin says that in a conversation with Mr Kim he asked that the whole question of "new target dates" be raised subject to the penetration works being done (Shin Affidavit at [110]). Again Mr Kim does not recall this conversation, and again there was no confirmation in writing. 308By August 2009, knowing fully well that the penetration holes had not been undertaken, Mr Shin asserts that in a conversation with Mr Kim (a matter to which I have already made reference), Mr Kim suggested that there should be some new updated documentation by way of a new contract. Mr Shin asserts that Mr Kim said that the "side letter" will not be renewed or "there will be no side letter". Mr Shin asserts, as I have already mentioned, that he resisted any change in documentation especially the side letter because of its "binding" nature. This is hardly the expected reaction to a letter which exhibited serious alleged deficiencies. 309Mr Shin says ultimately that he would not agree to the issue of any new contractual documentation and although Ms Russell forwarded under cover of a letter of 31 August 2009 a new contract for the sale of land he refused to sign it. Indeed he says at [118] that he told Mr Kim one of the reasons that he would not sign the proposed contract was because the side letter was not attached. 310By 4 September 2009 both sides had been sparring with each other for some considerable time. Mr Shin suggests that the vendor was delaying the penetration works because of the failure to obtain consent or approval. On the other hand he appears to concede that Mr Kim told him at [120] that the vendor was worried that they would do the penetration works and then Mr Shin would go slow with the fitout and delay completion further. 311Mr Kim asserts that he had a conversation with Mr Ristway at or about this time (September) in which Mr Ristway expressed his concern that if the defendant were to go ahead and make the holes which would "cost a lot" Mr Shin might then refuse to settle and they were left with holes in the floor. Mr Ristway was concerned that Mr Shin had done very little towards the fitout and had only paid a deposit of $20,000. Both Mr Shin and Mr Ristway agree that a conversation did take place about the parties walking away from the arrangements. There is no doubt that the defendant harboured concerns as to whether Mr Shin really intended to complete the purchase. It may well be that Mr Shin was at the time negotiating with prospective financiers but again as at September 2009 he had not arranged finance to complete. He confirmed under cross-examination that he had not organised an unconditional offer of finance as at June 2009 (T116/13), nor even by 25 November 2010 (T125/21) or 10 December 2010 (T125/38). 312There is some accord in Mr Shin's account of the 4 September meeting, set out in the Shin Affidavit at [120]-[124], and Mr Kim's account in his affidavit of 21 June 2012 at [69] which largely confirms the substance of the conversations except in respect of whether it occurred in Korean or English and the demeanour of Mr Shin, or Mr Ristway's affidavit of 26 June 2012 at [38]-[44] which places greater emphasis on Mr Ristway conveying the wishes of Mr John Kinsella, but there is no suggestion that Mr Shin asserted that Waterpoint had breached any contractual obligations. 313It seems uncontroversial that some discussion took place at the September meeting about whether Mr Shin would pay an additional sum of money towards a deposit as an act of good faith. In any event the parties seemingly agreed at this meeting that the defendant would create a number of penetrations upon the undertaking by Mr Shin to commence fitout works within 28 days of the completion of the stairs (see Shin Affidavit at [121]). I infer although it was not the subject of any express reference that the balance of the holes (other than the staircase) would be created at the expense of the defendant. No document was prepared by the parties recording what was it seem then agreed. My impression is that the defendant decided to undertake the work partly out of frustration and pragmatism and also to force Mr Shin's hand. 314In or about October, after Mr Shin marked the places where he wanted the holes to be made, the vendor completed a number of penetrations and constructed the stairs. Mr Shin inspected the works and it seems was content with them. He was well aware at the time that the Owners Corporation had not been asked for or had not consented to the work. 315On 29 October 2009 Ms Russell on behalf of the defendant sought the consent of the Owners Corporation for the works but only two of the holes one of which at least comprised the stairs. She also asked for a special privilege and exclusive use by law in relation to the works that had or were being carried out at the time. It is not plain from Mr Shin's evidence whether he knew of this letter but as I have said I am satisfied on the evidence he certainly knew no consent had been obtained at or by the time the holes were penetrated nor had it been obtained by the time he commenced his fitout and yet he never at this point suggested any breach of contract for example. 316The restaurant fitout works were commenced in late 2009 it seems and completed in early January 2010. The restaurant began trading on 15 January 2010. 317Mr Shin asserts that he had a conversation with Mr Kim in which he informed him that Mr Geoffrey Pearce of the McKenzie Group (a private certifier) could not issue an occupation certificate for the restaurant because a section 96 modification for the staircase and penetrations had not been obtained. He asked Mr Kim to have the vendor resolve the issue. Mr Shin says Mr Kim said he would speak to Mr Ristway. Mr Kim agrees that such a conversation took place. Mr Shin also asserts that he was told by Mr Kim that Mr Ristway had arranged to obtain an interim certificate however Mr Shin indicated that a final certificate was necessary otherwise the property could not be sold and he would not be settling on the contract. Again Mr Kim accepts that such a conversation took place. Mr Ristway says, on the other hand, that he did not have any direct contact with Mr Shin but asserts that he would only have told Mr Kim that he would investigate such approvals as may be necessary. 318Between January and July 2010 Mr Shin asserts that he met with Mr Kim several times a week and continuously asked where the occupation certificate was. He knew none had been issued and traded through the whole period. During this time, he does say that he told Mr Kim that the vendor should obtain all approvals and certificates and Mr Kim does not deny that this was said by Mr Shin. Nothing was resolved however at this point and again neither Mr Shin nor his solicitor put anything in writing about these alleged conversations, nor it seems did Mr Shin raise any such matters with Waterpoint directly. 319At or about this time Mr Shin asserts that Mr Kim told him that the Owners Corporation was not very happy that the work had been done and that was the reason why they were not giving their consent. That did not seem to perturb Mr Shin who kept trading in his restaurant. 320For a good portion of July and August 2010 the parties' respective solicitors corresponded with each other for the purposes of attempting to resolve the outstanding question of certification. However Mr Shin asserts that he told Mr Kim that the vendor had to provide the "owners consent" for the staircase. Mr Kim does not recall such a request. On 31 August 2010 Mr Shin asserts that his solicitor told him that Ms Russell believed that the Owners Corporation was hostile and that there would be no approval or exclusive use by-law. Mr Shin asserts that having had previous experience with such matters if the Owners Corporation had not consented and if various by-laws had not been complied with in relation to building work, it was very difficult to obtain approvals for work already carried out because the Owners Corporation could seek a rectification order requiring the removal of the non approved work. He asserted that he was also aware that a Council being asked to issue an occupation certificate would generally wish to be satisfied that the Owners Corporation had approved or consented to the work. It should be noted that neither the Owners Corporation nor any local authority has ever taken any step against the defendant. At the date of the trial nothing had emerged from either the Owners Corporation or local authority to suggest they had any intention whatsoever of taking any action in relation to the unauthorised penetrations. There is no evidence either had ever complained in writing making any formal objection. 321Somewhat remarkably given his evidence otherwise Mr Shin volunteered in the Shin Affidavit at [158] that he had a conversation with Mr Kim in October 2010 in words as follows: If the vendor is not prepared to obtain the owners consent I am prepared to settle on the contract for $2,200,000. I will then take the risk of any rectification notice issued by the Owners Corporation in relation to a failure to obtain or comply with a development consent. 322Mr Kim substantially agrees that such an offer was made however he asserts that Mr Shin offered $2.2 million upon which he would enter into an unconditional agreement to settle within three months. In his affidavit in response to Mr Kim (dated 24 September 2012) at [47] Mr Shin agrees that he indicated that he would settle within 3 months of an exchange as he said it would take him that long to finalise the finance for the purchase. 323Mr Shin concedes that on 8 November 2010 a building certificate was issued for the staircase and on 17 November 2010 an interim occupation certificate was issued. On 29 November a final occupation certificate was issued. 324Notwithstanding the fact that the Owners Corporation had not consented, and despite the fact that no section 96 certificate was issued, by October 2010 Mr Shin was therefore nonetheless prepared to make a reduced offer to $2.2 million to complete the agreement and take all risks associated (i.e. rectification) with the alleged failure on the part of the vendor to obtain Owners Corporation consent. For a reduced price he was prepared to face the consequences legally and or commercially of there being no consent from the Owners Corporation. In my view he had likely assessed they would do nothing. In any event, the risk did not unduly phase or perturb him as long as he could opportunistically and cynically use it to RSE's commercial advantage.

Mr Johnston 325Mr Johnston had acted for Mr Shin and/or his corporate entity or entities for 25 years. He did not speak Korean, though he and Mr Shin clearly were able to understand each other without any apparent difficulty over countless transactions. Like any other practitioner of his experience (having been admitted in 1974), he would have sought to protect and preserve his client's interests if he thought or was told they may be materially and adversely affected. 326I have already made comments about the unsatisfactory nature of some aspects of Mr Johnston's evidence. I am however satisfied that he consulted with Mr Shin regularly during the course of this particular transaction and where appropriate obtained instructions as to what he required to be placed in the various letters that passed between the relevant parties. 327I have no doubt Mr Johnston received explicit instructions in relation to the letter of 6 June 2008 and his email of 10 June, and was further instructed to pursue the request that the vendors pay for the construction of the staircase. 328I am also satisfied that Mr Johnston and Mr Shin discussed the letter of 11 July 2008 and that if Mr Johnston had been told by Mr Shin that the letter did anything other than satisfy Mr Shin's then requirements Mr Johnston would have advised that a further letter issue before exchange of contracts if he thought he should preserve his position. In the absence of anything like that occurring I am satisfied the 11 July letter accorded with the agreement Mr Shin made, and he said nothing to the contrary to his solicitor.

Mr Ristway 329Again as I have already commented I have found Mr Ristway a somewhat unsatisfactory witness. 330However, for example I accept his evidence that he was not aware of the letter issued by the defendant on 11 July 2008 until the commencement of the present proceedings. I also accept he played no role in relation to it and I accept he was never party to discussion with Mr Shin about it or its so called inadequacies. 331Whatever discussions might have taken place beforehand, it was the side letter which contained the formal offer being made on behalf of Waterpoint. Mr Ristway gives no evidence about any conversations he had with Mr Lum who signed that letter, nor was asked if he had had any. He says he did not instruct Mr Lum to send the letter nor did he discuss any of the matters with him at any time (affidavit of Mr Ristway dated 26 June 2012 at [31]). I accept that evidence.

Mr Kim 332Again as I have already said on balance I consider Mr Kim tried, consistent with his diary notes and recollection otherwise, to recreate a history as accurately and truthfully as he possibly could. Mr Kim says nothing about any involvement with Mr Lum nor any knowledge about how the letter of 11 July came into existence. It certainly does not appear to have come into existence as a result of anything said by Mr Kim to Mr Lum or vice versa. Oddly perhaps (although it was not explored) he asserted in his evidence he was asked to deliver the side letter to Mr Shin (T249/26). 333Mr Kim has the real advantage of some contemporaneous notes of important events from which he obviously refreshed his memory.

The Contract 334There is a modest degree of accord between the parties as to what the contract or contracts comprise in this case. Both parties obviously accept that the Put and Call Options and licences had contractual force. Both also agree that the side letter of 11 July 2008 had contractual force. 335RSE however submits that the contract comprises the Put and Call Options, the licences, the side letter of 11 July together with the various oral and written representations, some express and some implied. 336As is obvious from what I have said above I am not satisfied that the various alleged oral representations as pleaded have been proved by RSE. 337In particular I have rejected the so called works representations. I have also specifically rejected the conversation set out in the Shin Affidavit at [71]. Having rejected those representations there are no implications accordingly which arise as pleaded from those materials and I have also rejected the contracts completion representation. 338It also follows that I reject the Works Agreement as pleaded, save in one respect. I am satisfied that the side letter is a source of contractual obligations, the only question being what if any implications arise. 339A more important question of construction which arises is whether the side letter and any implication arising should be seen as creating separate and distinct contractual obligations from the Put and Call Options and licence agreements. 340In my view the only sensible and businesslike construction of the side letter is that it was intended by the parties to give rise to quite separate and distinct contractual obligations to those to be found in the Put and Call Options and licences. That was the whole rationale it seems to me for the parties agreeing to a side letter in the first place as opposed to a variation to the Put and Call Options. There was no reason such as time constraints or otherwise which could possibly have militated against a variation to the Put and Call Options if that is what the parties wanted to do. It must be said that the side letter after all concerned on any view some relatively minor construction work which I could fairly infer was of modest value as opposed to what was otherwise a multi million dollar transaction, involving a substantial expenditure on the fit out and a substantial purchase price. In my view the parties did not want this to be a commercial distraction from the main transactions. 341There is no reference of course in the Put and Call Options or licences to the side letter. On the other hand, the only reference in the side letter to the Put and Call Options are the words in the opening sentence which are in the following terms: Please take this letter as confirmation the following works will be carried out (at no expense to your client) after exchange of Put and Call Options by your client for the purchase of the above properties:... 342Counsel for RSE submits as I understood him that even in the absence of the oral representations the words just quoted are sufficient to render the two contracts interdependent upon each other. I disagree. 343The parties could clearly have chosen a form of words in the side letter which would have made it plain that the various contractual obligations travelled together and were interrelated with those contained in the Put and Call Options and/or licences. The parties could have chosen words which expressly connected the proposed works with the timing of the fitout and/or the completion of the purchase, but they did not. 344The most sensible construction in my view to be given to the words quoted is that the parties, more particularly Waterpoint, was simply making it clear that the works the subject of the side letter would not be "carried out" prior to the exchange of the Put and Call Options. In other words, the only connection which the parties decided to forge between the two agreements was one which related to the timing of the works being undertaken at Waterpoint's expense, and in particular that they would be undertaken at some (unspecified) time after the Put and Call agreements had been executed. 345In addition in my opinion Waterpoint correctly calls in aid the express terms of both the Put and Call Options and the sale of land contracts annexed which state that the written contracts constitute the entire agreement between the parties and supersede all previous negotiations or signed documents (Put and Call Options: CB13/4648 (Restaurant) and CB6/2013 (Storage); and Sale of Land Contracts CB13/4947 (Restaurant) and CB6/2234 (Storage)). As I have said in addition I observe that the licence agreement which deals with the fitout is not made contingent upon Waterpoint doing any of the work the subject of the side letter and of course does not mention any topic which was the subject of the alleged representations (see clause 12.1 at CB8/2751 for the Restaurant Lot and CB8/2785 for the Storage Lot). 346There is no reference to the fit out in the side letter which in my view is telling. So far as RSE's case in part depended upon the alleged knowledge of Waterpoint (by reason of an alleged conversation) that RSE would only commence the fit out after the "Works", again as pleaded, had been completed, such an allegation fails for a number of reasons. First I have rejected Mr Shin's account of the various conversations from which the promises were said to emerge and there is simply in my view no basis otherwise in the evidence from which to draw that conclusion. It does not arise from any of the contractual documents. Likewise in the absence of the alleged oral representations there is no representation, express or implied, to the effect that RSE was not obliged to complete the purchase until the Works had been done. 347In the Put and Call Option in relation to the Restaurant Lot, there is an additional clause 4.11 attached to the contract for the sale of land relating to the fitout works (CB13/4943). Both parties acknowledge that the Licence is for the purposes of enabling the Purchaser to carry out the Fit Out Works, and importantly, in clause 4.11(b): (b) The Purchaser agrees: (i) it will carry out the Fit Out Works in accordance with its obligations in the Licence as though the provisions of the Licence relating to the Fit Out Works were set out at length in this contract; 348Fit Out Works is defined as 'Works proposed to the Property by the Purchaser to enable it to fit out the Property' (CB13/4963), and Licence is defined as 'the licence between the Vendor and Purchaser to enable the Purchaser access to the Property to fit out the property' (CB13/4964). 'Works' are not defined. 349The Licence for the Restaurant sets out the obligation on the licensee, RSE, regarding the Fit Out Works in clause 12.1 (CB8/2751), which provides: 12.1 Obligation on Licensee a) The Licensee must have substantially commenced the Fit Out Works no later than the 21st day after the date of this deed. b) After commencing the Fit Out Works, the Licensee must continue to diligently pursue the completion of the Fit Out Works, with a view to completing them as soon as practicable after the date of this deed. 350'Fit Out Works' is defined as meaning the works to the Licensed Property by the Licensee to enable it to conduct its business from the Licensed Property (CB8/2731). 351The License for the Storage Lot contains an identical clause and definition (CB8/2785). 352From the clear words chosen by the parties, there was no attempt to link in any way the fit out with the penetration of any holes. More to the point there was an explicit obligation on the licensee under clause 12.1. 353The "entire agreement" clause in this case (clause 16.3 of the Put and Call Options) is relevantly in the following terms: This Deed constitutes the entire agreement of the Parties and supersedes all prior discussions, undertakings and agreements. 354RSE contends that such a clause would not prevent it from relying upon oral representations if conveyed prior to the execution of the Put and Call. RSE relies upon the decision of the Victorian Court of Appeal in McMahon v National Foods Milk (supra) especially the judgment of Nettle JA at [38]. 355Waterpoint is critical of this decision for various reasons, as articulated in its written submission of 8 April, and submits that the clause that the Court was looking at there is in contradistinction to the clause set out relevantly above. 356Because I have found none of the alleged oral representations were relevantly made this question does not arise for consideration. 357In these circumstances it seems to me that the parties objectively intended that the Put and Call Options and those documents attached would comprise a self contained set of contractual obligations intended to be separate and apart from those contained in the side letter. There is simply no hint of any intention objectively viewed which indicates that the two contractual regimes be construed together, with or indeed in any way qualifying the obligations that arise clearly and in my view independently from those in the Put and Call Options. The parties relegated a relatively small part of the arrangements to a letter agreement, deliberately in my view leaving the Put and Call Options and licences otherwise self-contained. 358In addition it was put by Waterpoint that the side letter may be read consistently with the sale of land contracts only if the side letter is understood as creating a right to damages for breach of that contract for RSE and not as an incorporation of those terms into the sale of land contracts so as to entitle RSE to refuse completion of those contracts because a breach of the side letter. I consider that is the only tenable construction to be placed on that document. The parties were carving out a discrete exercise to be undertaken by Waterpoint at its cost but at a time after the Put and Call Options had been executed and exchanged. 359RSE submitted as I understood it that there was an inconsistency thereby created between the terms of the sale of land contracts and the side letter. I do not agree. As is pointed out by Waterpoint, to the extent that the purchaser is required to complete the purchase in respect of the property in which works had been undertaken, the parties had their respective rights for compensation governed by clause 7 of the standard terms of the sale of land contract. 360RSE contends that the side letter contained an implied term that the work referred to would be done lawfully and would if required comply with relevant statutes and other requirements. I consider that to be clearly correct. On the authorities I consider the implication to be necessary, obvious and reasonable. 361However, Waterpoint submits that there are only two possible constructions of its letter of 11 July which are either that the parties simply did not turn their attention at all to the question of who was to obtain the necessary consents and/or approval or alternatively it was to be the responsibility of RSE. 362It is submitted that in either event RSE's claim that there was somehow an implicit representation that the defendant would obtain all necessary consents and approvals must therefore fail. I do not agree. It seems to me as a matter of commonsense that it should be recognised both parties were experienced builders and developers. Both parties would have appreciated and understood that there may well be relevant consents and approvals that would have to be obtained either from the Owners Corporation and/or the local authority. What Waterpoint was offering in its letter of 11 July was that at its expense it would do various things including the creation of a penetration and stairs connecting the restaurant and storage lot. True it made that that offer "subject to our engineers acceptance of the proposed location and design" but therein lies clear recognition on the part of Waterpoint about a level of formality which would have to be undertaken for the purposes of constructing the stairs. 363Waterpoint however contests that the term would be necessary to give business efficacy to the contract. It submits that the contract would still have business efficacy even if Waterpoint was not responsible for obtaining these consents and approvals because RSE could equally have obtained these approvals and consents. I disagree. 364In addition, Waterpoint further suggests that the surrounding circumstances militate against such an implied term. It submits that RSE was responsible for obtaining the construction certificate for its fitout of the restaurant and further had requested that Waterpoint provide a certifier for certain works. 365I am unable to agree with Waterpoint that these surrounding circumstances militate against an implied term. 366It seems to me, given the experience of both parties and indeed the knowledge of both parties as to the relevance of such legal requirements, that a term must sensibly arise from the 11 July letter by way of implication to the effect that Waterpoint was representing that it would create the stairs subject consistent with its legal obligations, if any. 367Insofar as the relevant consent or approval was not obtained that would in my view give rise to a breach of the agreement, which may sound in damages for breach of contract. The measure of that damage would be the cost of obtaining the authorised penetrations or alternatively the difference in value between the two lots connected by authorised building works and not connected. However the relevant approval and/or consents would only necessarily apply to the itemised work identified in the side letter on my findings. I will return to this later. 368In summary then I consider that there were two discrete and standalone sets of contracts. The Put and Call Options and licences on the one hand, and the side letter and its implied term on the other. However for completeness I should say that absent some oral contractual terms, which I have rejected, Waterpoint did not promise that RSE need not complete the purchase until the works that were the subject of the side letter were completed. No such term could be implied from the side letter or any other contractual document. Nor is there any room (absent some oral promise) that RSE was not obliged to commence the fitout until the works in the side letter were completed. RSE was obliged in accordance with clause 12.1 of the Restaurant and Storage Lot licences alone. The express terms of the Put and Call Options and licences and the side letter are simply incapable of supporting such a contention and an implication or implications to that effect in my view is on the authorities untenable.

Post Contractual Conduct 369There is little doubt on the authorities that post contractual conduct, particularly when an oral conduct contract is contended for, may be taken into account to determine the existence of contractual obligations. 370In this case however I have determined that none of the oral representations relevantly relied upon have been satisfactorily proved and hence the scope of any relevant post contractual conduct is rather limited. 371I should observe there is little doubt on the history of the matter that after 25 July and for some considerable time thereafter the parties were jockeying for positions as it were and sparring with each other over various issues. 372A complete lack of any written complaint emanating from either Mr Shin or his solicitor in the latter part of 2008 and into early 2009 is also telling in my view. 373However I do not consider any evidence to which regard may be had after the exchange of the Put and Call Options in July 2008 as corroborative of any contractual obligation of the sort pleaded by RSE or amounts to any admission when viewed in context. 374There is simply a real absence of evidence about what the relevant participants were doing on a day to day basis. Most relevantly in my view apart from solicitors letters flying back and forwards from time to time, at the meeting of 4 September for example even on Mr Shin's version of what occurred there is no suggestion that Mr Shin asserted that Waterpoint was contractually bound to perform penetrations. Nor does he assert that anyone on behalf of Waterpoint admitted they were contractually bound to do so, nor is there a contention that such a meeting gave rise to any contractual obligations in and of itself or any other cause or causes of action. He says in a self serving way which I reject at [123] of the Shin Affidavit that in his mind the "vendor affirmed our original agreement". He gives no evidence of anything said to that effect however. It is evidence of nothing but his thoughts. 375As I have already commented previously what Waterpoint decided to do after that meeting in my view is best characterised as done out of both frustration and pragmatism. It cannot be gainsaid that Waterpoint had the contractual obligations of the side letter, but to do them at an unspecified time. 376Waterpoint had serious doubts as to whether or not RSE would or could complete the purchase. Ultimately an arrangement was arrived at by which Waterpoint would simply do the penetrations and that Mr Shin on behalf of RSE undertook to commence the fitout within 28 days. This material in my view is at best neutral, but when objectively viewed I do not consider it supports the existence of an earlier contract to the effect pleaded and asserted by RSE. It certainly does not amount to an admission on the part of Waterpoint.

Australian Competition and Consumer Claim 377RSE relies on representations which are identical to contractual promises both express and implied which it alleges gave rise to what it describes as the relevant agreement(s). 378However, the pleaded TPA/consumer law case relies upon silence in that it is asserted that Waterpoint failed or neglected to inform RSE that the works were not permitted by the DA, that Waterpoint had not obtained a modification of the DA, Waterpoint did not have proper authority to undertake the works and that it intended to press for completion regardless of formal approval (FACLS at 35, (b), (c) and (d)). 379It is then pleaded that the works representations, the implied representations, the contracts completion representation, the second implied representation and the side letter were all representations as to future matters (FACLS at [36]). 380It is not clear to me what the conduct in paragraph [35] has to do with the case for two reasons. 381First, the evidence is that at all times Mr Shin and hence RSE it seems to me knew that there was no consent or approval of any kind and RSE proceeded to do the fit out and trade knowing there was no consent or approval. It also knew by reason of the side letter itself and the independent contractual obligations in the Put and Call Options that Waterpoint could lawfully and indeed did press for completion regardless of there being no consent or approvals. RSE's written submissions would appear to acknowledge this by implication. It is difficult to see on the facts how the case on silence could ever get off the ground. 382In addition, both in its written outline in opening (dated 27 March 2014 at [112]-[120]) and in its final submissions (also dated, I assume incorrectly 27 March 2014) RSE relies solely upon the alleged representations as to the future set out in the FACLS at [36]-[38], and not a case based on silence. 383RSE relevantly asserts that it can rely upon section 51A because the term implied by the side letter (which on my findings is all it has left) involved a representation as to the future which Waterpoint did not have reasonable grounds for making. That is, to do the works lawfully and with the requisite consents and approvals. 384It may be generally asserted that a promise to do something in the performance of a contract is a promise to a future matter, per Ormiston J in Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 241. 385If the defendant who then bears an onus cannot show it had a reasonable basis for making the representation a breach of section 52 would arise. 386I am satisfied the representation to lawfully carry out the works was a representation as to the future. Waterpoint simply says it did not make such a representation. It says it never accepted any responsibility for such approvals and/or consents for the side letter works, and in my mind it follows it did not have a reasonable basis for making the representation at the relevant time. That position did not change at the trial and Waterpoint never did obtain approvals or consents. 387However for reasons I have already advanced the materials and Waterpoint's conduct are incapable in my view of giving rise to a representation that a breach by Waterpoint in failing to obtain consent gave RSE any basis for failing to complete the sale of land contracts or commence and complete the fitout. Those representations do not arise in my view, either expressly or by implication, from the contractual documents and is no oral representation I have found to that effect. Therefore RSE fails on that contention. 388Nonetheless, RSE however submits that it was entitled to rescind the Put and Call Options and was also entitled to damages. That assertion of course was predicated on the case based upon the oral representations as well and not just the on the side letter. 389Whilst the side letter and its implicit representation do, on my analysis, give rise to a claim in damages on the part of RSE I do not consider it had a right to rescind. That is because it is important in determining the ultimate remedy available to consider the offending conduct in context: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [37] per Gleeson CJ, Hayne and Heydon JJ and at [109] per McHugh J. 390In this case, when one looks at the independent and discrete contractual obligations in the side letter and those in the Put and Call Options and licences it is apparent that RSE's only right for a breach of the side letter is in damages and not a right to rescind the Put and Call Options and licences. 391In any event it did not act on the misrepresentation and complete the contract. It was not on my view of the evidence induced to enter the Put and Call Options and licences on the basis of a misrepresentation emanating alone from the side letter. That is not pleaded and in my view untenable in any event for the reasons set out above.

Estoppel 392The estoppel case follows the pattern adopted throughout the pleadings in relying on the existence of the various components including the representations. 393Because of my findings on the oral representations the estoppel is limited to an argument that RSE relied upon the side letter and the implied representation to enter the Put and Call and relevant licences, and hence acted to his detriment. Again no promise or representation was made to that effect for reasons already advanced. Hence it was not promised as such nor did anything Waterpoint do or say entitle RSE to make such an assumption. 394It follows in any event that RSE cannot rationally submit in my view that its detriment was the entry into the Put and Call Options and the licences and the incurring of expenses of fitting out the restaurant and storage lot. RSE had two contractual regimes it and Waterpoint were bound by. 395On my findings and for the reasons already given, Mr Shin could not have reasonably supposed that a failure on the part of Waterpoint to obtain the relevant consents and approvals would provide any basis for non-completion of the purchase, or relieve him of responsibility to do the fitout. He could only reasonably have supposed he would have a claim in damages or, as he attempted to do anyway, acquire the properties by negotiating a lower price without the relevant consents and approvals and taking any associated risk. 396The reality is that RSE was the entity that chose to ignore its obligations because it did not suit it commercially to perform them it seems due to a lack of finance.

Reliance 397RSE asserts that it may not have offered to purchase the storage lot if the alleged representations that are set out in Mr Shin's evidence had not been made. However I have not found reliable evidence which would support any of the critical representations said to have been made to Mr Shin and hence RSE. 398RSE also pleaded that in reliance on various matters it entered into the Put and Call Options. I have rejected all except the Second Implied Representation and the Side Letter Representation. But the case as pleaded fails and the Second Implied Representation and or the Side Letter Representation are not independently relied upon. In any event as I have said I am unable to find any representation, promissory or otherwise, suggesting anything other than the side letter and the Put and Call Options and licences were quite separate and discrete arrangements. 399That said, the side letter agreement gave rise to contractual obligations, express and implied. Mr Shin, being a shrewd, experienced and sophisticated businessman to my observation, undoubtedly would made his own assessments of the risks associated with entry into the Put and Call and associated agreements. He was well aware that the restaurant was in a quiet location. He was equally well aware how much he would have to spend, at least in broad terms, to create the up market restaurant he had in mind. He negotiated a deal which provided for a very modest deposit to secure the property to permit him an opportunity to fit out the restaurant and to commence trading. I am unable on the facts to come to a view that the existence of the side letter alone had anything to do with his entry into the Put and Call Options. He did not like the idea of the side letter for the reasons I have outlined. He was told unequivocally that the side letter was to deal with those works and he could not reasonably have relied upon it to enter into the Put and Call Options and licences. 400In RSE's final submissions at [49], counsel for the plaintiff suggests that Mr Shin's evidence of reliance appears at [61] of the Shin Affidavit and the transcript at T88/26 to T91/46. 401However, paragraph [61] sets out Shin's reasons for requiring the works (the conversion to stratum title, that it would be simpler and quicker for vendor to gain approvals, his desire to minimise cash payments by fitting out then trading for 6 months to gain greater borrowing capacity, and the unsafe and incomplete balustrade) and does not indicate that he relied on those representations to enter the Put and Call Options. 402Under cross-examination, on one view of his evidence Mr Shin said that in reaching his decision to sign the Put and Call Options he had relied on the side letter (T88/26). He could not recall whether he had relied on anything else (T88/36), but a moment later he said there was (T89/19). These passages are somewhat confusing, but at no point in his evidence does Mr Shin give clear evidence of what else he had relied upon. I do not accept that Mr Shin relied upon the side letter alone in entering the other agreements and I reject his evidence in this regard. He clearly in my view appreciated that the side letter was a separate contractual arrangement to the Put and Call Options and agreed that the matter was to be dealt with as such. 403It was clear in my view when Mr Shin was first introduced to the property he was quite prepared to buy the restaurant lot alone. Of course he knew of its existence years before. He made an offer on it before he knew of the existence of the storage lot. A man of his experience and sophistication having simply been made aware of the existence of a storage lot beneath for sale would not need the likes in my view of Mr Kim or Mr Ristway to enlighten him as to how he might exploit the situation. He was a highly successful restaurateur and property developer. When one examines his level of experience and astuteness and one looks at the empire he had built since coming to this country it is implausible, bordering on the absurd, that he would have relied upon a real estate agent or a salesman like Mr Ristway whom he did not know for the purposes of making his commercial assessments and decisions. The matter that he was concerned to negotiate and indeed achieved was that Waterpoint execute and pay for the access via the stairs between the two lots. I cannot accept that anything Mr Kim or for that matter Mr Ristway said about the two lots had any effect and made any difference in Mr Shin and hence RSE entering into the Put and Call Options and licences. 404As I have earlier said I consider it is telling that he was prepared in October 2010 to take all the risks associated with obtaining any consent from the Owners Corporation provided Waterpoint was prepared to further reduce its price. This is a clear indication in my mind that Mr Shin on behalf of RSE at all relevant times had his own views about the deal and was then clearly trying to improve his commercial position.

Was the Plaintiff Required to Complete the Sale of Land Contracts? 405I have accepted that the terms of the side letter were not intended to be incorporated into the sale of land contracts. It seems to me that what follows is that breach or non performance of those terms could not be constituted as a reason on the plaintiff's part for failing to complete despite being required to do so on 10 December 2010. 406It also seems to me that any complaint that RSE may have had with unauthorised building works was not by itself a reason for the plaintiff to have refused to complete those contracts. 407Waterpoint submits and I agree that here the unauthorised works did not constitute a defect in title and to the extent that they constituted a breach of statutory warranty RSE could have sought compensation or (in certain circumstances) exercised a right to rescind but has done neither. Waterpoint submits and again I agree that Waterpoint was entitled to demand that RSE complete the contract (see the discussion at [141]-[160]). 408RSE further contends as I understand it that Waterpoint was in breach of its obligations under the side letter and therefore not entitled to issue the notice to complete. I have already determined however that the side letter in my opinion was not incorporated into the sale of land contracts and therefore that submission must fail. 409Although academic on my findings even assuming however the side letter was so incorporated it does not follow that even if Waterpoint were in breach of such a contract it could not serve and rely upon a notice to complete. It seems to me that if it could be argued that the vendor's breach of obligation only sounded in damages then the vendor could still demand completion if he offers appropriate compensation. Clause 7 of the standard form of contract here provides a compensation procedure for breaches of obligations by the vendor. Indeed there is authority for the proposition that the vendor is entitled to serve a notice to complete even if compensation has not in fact been offered: Alexus Pty Ltd v Pont Holdings Pty Ltd (2000) 10 BPR 18,371 at [23] per Young J and Gogard Pty Ltd v Satnaq Pty Ltd [1999] NSWSC 1283 at [289] and [294]-[295]. It would also follow that this would be the position in my view even if it could be suggested that Waterpoint was not in the position to transfer the property in good and proper repair. Again I think this is a matter of principle (if it amounted to a breach) that would be compensated by an appropriate reduction in purchase price.

Flight v Booth 410The plaintiff relies on the general principle that a purchaser cannot be forced to accept (even with compensation) a property which is substantially different to that which they contracted to buy. It relies upon the comments of Tindal CJ in Flight v Booth. It is as well to recall the words of Tindal CJ to which I have earlier referred. The principle only had application where the property is "substantially different to what the purchaser agreed to even with compensation". It should be observed here that RSE wanted a hole or holes and a staircase constructed at Waterpoint's expense. It achieved that goal. Obviously the position of the holes and the manner in which they were done was acceptable to RSE. Essentially RSE says the unauthorised work impacted on a potential resale and exposed it to claims from the Council and Owners Corporation. 411Waterpoint refers to a number of authorities where questions have been raised about whether the principle endures in circumstances where the parties have contractually determined that the only rights of a purchaser are in damages. I have earlier referred to a number of these. Waterpoint however contends that this is the effect of the arrangements here. 412The notion or concept that was being discussed by Tindal CJ of course was in the context of a misdescription which could be properly described as "in a material and substantial point", and that such misdescription had it been made obvious to the purchaser he might not ever have entered the contract at all. Here on the facts but for the question of consent the physical changes effected were on any view precisely what RSE wanted. The only questions were consents and approvals and even then Mr Shin was content to purchase the properties in their absence at a reduced price. In the words of Tindal CJ at 378, this is not a case 'where the difference of value is so uncertain and arbitrary' but rather a case where the relevant condition of sale would 'comprehend a case where there is half an acre more or less than is described, or cases which resolve themselves into simple calculations of that nature'. Clearly such a calculation had already been done by Mr Shin. 413As I have already noted Barrett J by reference to the early case of Dykes v Blake thought the property needed to be described as "altogether useless" for the purposes for which it was made. This is simply not so on the facts of this case. 414However Waterpoint points to a number of additional difficulties in applying Flight v Booth. First it submits, correctly in my view, that RSE had indicated that it would have purchased the restaurant even without penetrations to the storage room. Waterpoint submits and again I agree that it should at the very least have completed the contract of sale of the restaurant and sought compensation. 415Further Waterpoint submits that the evidence supports the fact that RSE offered $2.2 million for the restaurant without penetrations as at 26 February 2008 and therefore it clearly had not been made to accept a property at that point in a condition that it would never have contracted for. 416Waterpoint additionally contends that RSE was willing to enter into the side letter knowing that this could mean that it would be unable to enforce the obligations of the letter prior to settlement demonstrating (it is submitted objectively) that RSE was prepared to accept the properties without lawfully constructed penetrations and with only the available remedy of damages. I agree. 417Waterpoint further submits and again I agree that unauthorised building works for which a demolition order has not been issued does not constitute a defect in title as already noted or any other basis that incapacitates Waterpoint from demanding completion of the contract. It is obvious that until a demolition order as an example had in fact been served it could not conclusively be stated what if any alterations would be required to be undertaken 418Lastly Waterpoint submits that the plaintiff had been trading from the property since January 2010, the penetrations having been completed in 2009 without any complaint in writing by the local Council or the Owners Corporation. Further it is submitted that there was no evidence that the Owners Corporation could not be persuaded to consent to the works or in the alternative that the purchaser could not have obtained such consent by a statutory appeal. Again I agree. 419However, there is a degree of unreality I think about RSE's case in any event. RSE clearly wanted the penetrations and was content that they were done and the manner in which they were done. The only point is the failure to obtain relevant consents and approvals. RSE traded for a significant period to the knowledge of all concerned, including the Owners Corporation and the Council. It seems to me that Waterpoint was obliged pursuant to the side letter to obtain consent for the stairs and in so far as necessary the fire doors. The fact that Waterpoint got on and in fact did the penetrations would have left both it and RSE in a position where I consider either could have applied for consent. 420More to the point as I have made reference more than once before Mr Shin volunteered in the Shin Affidavit at [158] that subject to a price reduction he was quite prepared to complete the contract take the risk of any rectification notice issued by the Owners Corporation. In the circumstances I do not think RSE could be heard credibly to say that the failure to obtain consent or approval, on whatever basis, could amount to such a material or substantial misdescription as to relieve it of the obligation to complete as opposed to make a claim relevantly for damages. 421For those reasons I do not consider the principle in Flight v Booth assists RSE in the present case.

Miscellaneous 422There is one miscellaneous matter to which attention should be directed, if for nothing more than out of an abundance of caution and for completeness, namely the challenge to the building certificate. 423RSE submitted that the building certificate issued on 8 November 2010 related only to the Restaurant Lot, but the work it purports to approve is contained largely within the common property (the certificate appears at CB12/4461). 424RSE asserts that in the circumstances, the Owners Corporation was a necessary applicant for that building work and therefore the building certificate was issued contrary to sections 149A to 149E of the EPA Act. RSE asserts that it was issued ultra vires and is invalid. 425In Owners Strata Plan 37762 v Pham and Ors [2005] NSWLEC 500, Cowdroy J found that the excavation into common property (both in the floor and ceiling), although authorised by the relevant local Council, occurred without the consent of the Owners Corporation and in the absence of such consent the Council had no power to grant consent to the development. 426The plaintiff also cites Owners Strata Plan No 50411 v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5 and Twist v Randwick Municipal Council (1976) 136 CLR 106, the latter presumably in support of the uncontroversial proposition that an owner is entitled to be heard by the Council before it exercises a power that affects their rights, but without further explanation. 427However, in light of the agreement by counsel for the defendant that "to the extent that the penetrations are involved they were not consented to by the owners corporation and there was no development approval in respect of those works and there is no evidence that either the owners corporation or the council is taking any action in respect of that" (at T267/34), it is unnecessary to further elucidate these principles, nor to come to a decided view on whether the building certificate was indeed invalid.

Damages 428Having found against RSE on the oral representations, contractual, consumer law and estoppel cases the question nonetheless arises what if any damages RSE would be entitled to as a result of the breach of the side letter. Clearly it would be entitled to damages for breach of contract had it completed the contract, but it did not. 429The measure of that damage however in my view would have been the difference between the value of the two properties with a hole or a staircase compared to the combined value of the two individual lots without a hole. 430Waterpoint relies upon the evidence of Mr David Bird in his report dated 20 August 2012. On Waterpoint's evidence the amount of the difference is $120,000 as at 10 December 2010 and $70,000 as at 20 August 2012. I should observe however that the figure of $120,000 appeared to be predicated on the basis of breach which would involve all of the penetrations ultimately executed by Waterpoint. However on my findings the side letter only gave rise to a contractual obligation to lawfully execute the penetration in relation to the stairs. No separate calculation having been undertaken by Mr Bird or anyone else for that matter on that limited basis. 431The plaintiff on the other hand alleges loss and damage were in the alternative to statutory rescission pursuant to a number of causes of action. This raises the question of whether the plaintiff's loss, being the loss of the restaurant fitout which has been agreed by the parties to be $1,166,221 less $197,932 for the value of that fit out retained by RSE, was caused by the failure by the plaintiff to complete the sale of land contracts on 10 December 2010 and the subsequent termination of those contracts by Waterpoint on 17 December 2010. 432In my view, my findings that the defendant was in breach of the terms of the side letter to obtain all necessary consents and approvals for the penetration work outlined in that letter did not entitle the plaintiff to refuse to complete the contracts for the purchase of the restaurant and the storage lot. 433It seems to me that the plaintiff's loss of the fitout was incurred by its own decision not to complete the sale of land contracts. If that is correct then it seems to me the plaintiff's claim in contract for these damages must fail. Waterpoint did nothing to cause such a loss. 434I have rejected the plaintiffs contention that it would never have purchased the properties without them being connected by authorised penetrations. There are numerous reasons why I have rejected that contention but in summary the plaintiffs own evidence is that it was prepared to purchase the restaurant without being connected to the storage lot for $2 million being $200,000 less than the contract price. The evidence which I have accepted especially that of Ms Russell supports the view that the plaintiff had increased this offer to $2.2 million for the restaurant independently of the storage lot. It seems to me the only conclusion that can be drawn from this evidence is that the plaintiff would have purchased the restaurant without the authorised penetrations at the same price as the contract price or alternatively at $200,000 less but in either event the plaintiff's contention that it would not have purchased the restaurant without authorised connections must fail. 435However it is also clear on the unsolicited evidence from Mr Shin that he was prepared to buy the two lots with unauthorised penetrations for $300,000 less in any event. 436RSE well knew when it commenced and completed the fitout that no consents or approvals had been obtained. The plaintiff was not phased by any of this but was prepared to undertake an expensive fitout and run the restaurant and more to the point run the risk. 437It does seem to me that the plaintiff has lost the value of the fitout as a direct result of it failing to complete the contracts and that this was not an act which Waterpoint caused. RSE decided to cut its losses. It took all the equipment it could out of the restaurant and refused to complete the purchase partly if not perhaps solely because it could not arrange finance, again something Waterpoint did not cause. 438Insofar as the plaintiff makes claims for damages and/or equitable compensation on the basis of other causes of action (misleading conduct or estoppel) in my view these should clearly fail because as I have already indicated I do not consider the operative representations were proven or that there was any reliance by the plaintiff on any representation by Waterpoint that caused it to execute the Put and Call Options or licences. The defendant's only obligation in relation to the penetrations arose from the side letter. 439The parties conducted the case on the basis that the difference in value between the restaurant and storage lot when connected by approved works compared to their value when not connected by approved works is $120,000. However RSE did not of course suffer this loss because it never completed the contract. 440It follows that RSE's case fails and it is not entitled to any damages.

The Return of the Deposit 441RSE claims the $20,000 deposit both as damages and pursuant to section 55(2A) of the Conveyancing Act 1919, which provides: (2A) In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon. 442In Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367, the High Court observed that the evidence must establish that it would be unjust or inequitable to allow the vendors to retain the deposit: at [27] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ. 443In Havyn Pty Ltd v Webster [2005] NSWCA 182, Santow JA (Tobias JA and Brownie AJA agreeing) explained the operation of section 55(2A) at [173]: [173] By way of summation, I would conclude as follows: (a) Section 55(2A) confers upon the Court a statutory jurisdiction to return forfeited deposits which was not previously available either at common law or in equity. Therefore, it would be wrong to seek to confine the jurisdiction conferred by the words of the statute by analogy with the jurisdiction of common law and equity to relieve against penalties or forfeiture. (b) Notwithstanding this, it is important for a Court in considering the scope of the discretion conferred by s55(2A) to bear in mind that a deposit is an earnest of performance. That fact forms part of the context in which the discretion falls to be exercised, and means that a Court will not lightly be moved to order the return of a deposit paid as an earnest of performance, and forfeited in accordance with the express terms of the contract when performance does not occur. (c) That context is significant when considering the justice and equity of the case, and whether the Court "sees fit" to order the deposit to be returned. It does not involve putting a gloss on the words of the statute requiring the applicant to show "special circumstances" (or satisfy any like test) before a deposit will be returned. (d) In particular, this principle mandates against characterising a forfeited deposit as a windfall to the vendor, merely because it is forfeited. (e) In considering an application under s55(2A), it will often be material for the Court to consider a number of factors, including (though not exhaustively) the nature of a deposit, the terms of the contract providing for its forfeiture and the circumstances in which the deposit was forfeited. (f) Considering the circumstances of this case, the factors enumerated above and the relative unreasonableness of the conduct of the vendor compared to the purchaser following the former's misrepresentation, it is appropriate for the deposit to be returned, although for different reasons than those adopted by the trial judge. 444In Baird v Chambers [2010] NSWSC 272, Ball J considered Havyn Pty Ltd v Webster and Romanos v Pentagold Investments Pty Ltd and refused to order that the deposit be returned, and observed that a higher price on resale of a property does not establish that a profit has been made (particularly where the resale has not yet been completed): see [14]-[17]. Another relevant factor was the conduct of the party seeking the exercise of the discretion under section 55(2A) in their favour: see [18]. 445In Coppa v Barnett [2012] NSWSC 490, Stevenson J refused the return of the deposit under section 55(2A) in circumstances where the purchaser alleged she had become mentally ill, and there was a special condition in the contract dealing with that circumstance. Stevenson J was not satisfied it would be unjust or inequitable for the vendor to retain the deposit, even though this constituted a 'windfall' to the vendor given the later sale of the property: see [84]-[115]. 446In passing I observe that in Carpenter v McGrath (1996) 40 NSWLR 39, the Court also held that the deposit paid under a contract for the sale of land subsequently forfeited on termination for failure to complete is to be set-off against other general claims for damages for breach of contract flowing from the failure to complete: at 45 per Clarke JA, 61-64 per Sheller JA; cf 73-75 per Cole JA. 447In the circumstances where RSE's predicament was entirely of its own making I do not consider it appropriate to order that the deposit be returned to RSE. However, such a deposit should be taken into account, in accordance with Carpenter v McGrath, against other general claims for damages by Waterpoint.

Cross Claim 448Waterpoint says by reason of RSE wrongfully failing to complete the purchase it lost the purchase price of the properties, or putting it another way the deficiency on a resale. That is clearly correct as a matter of principle. Waterpoint puts it as being the difference in value between the contract price of the "whole with a hole" and its current value. 449Waterpoint in its cross claim at paragraph [21] asserts it is entitled to recover $437,933 by way of damages. This amount is calculated by reference to a deficiency on resale of $300,000 and loss of rent between 17 December 2010 and 5 August 2011 of $137,933. Waterpoint does not press its claim for continuing payment on loans nor outgoings. 450These damages are largely calculated on the basis on a report by Mr David Bird dated 20 August 2012 (CB4/1607). Evidence was adduced from Mr Bird, the defendant's valuer, to provide market values of the Restaurant Lot and the Storage Lot. I note that Mr Bird was not required for cross-examination and the plaintiff did not rely on any evidence in relation to valuation of the lots themselves (as opposed to the dispute over the cost of RSE's fit out which nonetheless was eventually agreed by the parties to be $1,166,221, less $197,932 for the value of that fit out retained by RSE). 451Mr Bird was retained to provide valuation advice on the two lots in a number of permutations, namely as at 10 December 2010 on the basis they had not been fitted out (both together and separately) and as at the date of the report inclusive of existing fitout (both together and separately). Mr Bird also gave a valuation of monthly market rental for the period between 10 December 2010 and 5 August 2011, the rent being calculated upon the assumption that the tenant would have had the benefit of the fitout that existed as at the date of the report. 452Mr Bird acknowledges the stairway and a dumb waiter lift at CB4/1619. There does not appear to be consideration of the cost of any possible rectification, and the internal access is listed as a strength of the properties at CB4/1620. 453The report provided the following market values at CB4/1633. As at 10 December 2010 and on the basis that the property had not been fitted out, Mr Bird regarded the fair market value of the Restaurant Lot as $2.2m, the Storage Lot as $180,000 and a combined value of $2.5m. The difference between the aggregate of the two lots separately ($2.38m) and combined ($2.5m) was therefore $120,000. 454As at the date of the report (20 August 2012), Mr Bird regarded the fair market value of the Restaurant Lot as $2.25m, the Storage Lot as $180,000 and a combined value of $2.5m. 455There are four issues which it is necessary for me to deal with in relation to the cross claim, namely the quantum of damages for deficiency on resale of the properties, the quantum of damages for loss of rent between 17 December 2010 and 5 August 2011, and whether those amounts should be reduced given my determination that there was an implied term that the works explicitly set out in the side letter would be done lawfully which had been breached. The final issue relates to the status of Mr and Mrs Shin as guarantors under the Put and Call Options. 456In the defendant's final submissions at [53(a)] there is a calculation in relation to the deficiency on resale (explained as the contracted value of $2.75m including GST less current value) of $300,000. There is no reference to supporting evidence in the submissions for the current value. In the Cross-Claimant's Schedule of Damages, the evidence in support of paragraph 21(a) refers to a value of the properties as at 14 March 2014 of $2.45 million and gives "Bird 14.3.14" as the reference. I note that the list of agreed affidavits (via an email to my chambers from counsel for the plaintiff dated 16 April 2014 in response to a request made at the hearing) only refers a report of Mr David Bird dated 20 August 2012. 457I invited further written submissions on this point from the parties. 458The defendant acknowledged that the report of Mr Bird dated 14 March 2014, although served on the plaintiff, was not ultimately read and was not admitted into evidence. It accepted that as a result, the evidence of the combined value of the property at $2.5m as at 20 August 2012 (CB4/1633) should be utilised so that its damages for deficiency on resale would be $250,000 (rather than the figure of $300,000). 459I consider that Waterpoint should be entitled to damages on this basis. 460On the issue of damages for loss of rent, Mr Bird also gave a valuation of monthly market rental for the period between 10 December 2010 and 5 August 2011, the rent being calculated upon the assumption that the tenant would have had the benefit of the fitout that existed as at the date of the report. Mr Bird gave his opinion that $206,900 per annum was an appropriate assessment of market rent (CB4/1634), and therefore the 8 month period from 10 December 2010 to 5 August 2011 would be valued at approximately $137,933. 461RSE submits that Waterpoint has not established an entitlement to loss of rent arising from the termination of the licence agreements. RSE does not dispute the evidence of rental value provided by Mr Bird, but submits the restaurant has been vacant since August 2011. RSE further submits there is no evidence there was any prospective tenant available to lease it (see Plaintiff's Final Submissions at 148). 462RSE denies that Waterpoint lawfully terminated the Restaurant licence and Storage Lot licence pursuant to clause 13.2 (CB8/2751 and CB8/2786 respectively). That clause provided that: If the Contract is rescinded or terminated for any reason then at any time after the rescission or termination the Licensor may terminate the Licence by written notice to the Licensee, in which event the provisions of clauses 13 and 14 apply. 463Written notices were provided in a letter dated 17 December 2010 from Ms Russell to Mr Johnston (CB12/4487). 464Given my findings above that Waterpoint was entitled to demand completion, and therefore entitled to terminate the contracts once completion failed to occur, it would seem that Waterpoint was also entitled under the relevant clause to terminate the licence agreements. 465RSE contends in its response to the cross claim that Waterpoint failed to mitigate its loss in this regard by failing to rent the properties since 17 December 2010, or sell the properties after 8 August 2011 or alternatively after 23 December 2011. The period between 17 December 2010 and 23 December 2011 is a period in which Waterpoint asserts that RSE claimed a proprietary interest in the properties. I note that a relatively poor copy of a caveat appears at CB12/4485. 466Nevertheless, at the hearing it was uncontroversial that RSE had remained in occupation between 17 December 2010 and 5 August 2011 (T40/9-T40/23). Rent is only claimed for that period, so the failure to sell after that point is irrelevant. Furthermore, it appears uncontroversial that RSE paid no rental during that period and there is no evidence of any agreement that RSE could remain in occupation of the premises rent-free once the licences had been lawfully terminated. 467In my view the proposition that Waterpoint is not entitled to rent for the relevant period is without substance. To suggest that for some reason RSE should not pay is both illogical and unfair. I therefore agree that Waterpoint is entitled to the amount as determined by Mr Bird. 468Waterpoint accepts that had I determined that it was responsible for obtaining "all" necessary consents and approvals for the penetration work then the cross claimant's loss caused by the plaintiff's failure to complete the contract would have to be reduced by $120,000. 469In final submissions at [33], Waterpoint submitted that the difference in value between the two lots when connected by approved works to their value when not connected by approved works is that figure of $120,000. 470The plaintiff in final submissions at [114]-[115] submitted the relevant assessment of damages is the difference between the value of the two lots with approved penetrations compared to unapproved penetrations. 471On the fifth day of the trial, the following exchange occurred (T315/31-T316/36): [ASHHURST]: But the arguments we are going to put, assume for the moment against us that we were obliged, what, then, was the plaintiff's cause of action? The plaintiff's cause of action was to complete the contract and either have claimed compensation pursuant to standard term 7 of the contract, or alternatively have sued the defendant, if they could establish it for the breach of the implied term in the side agreement, that those works would have been carried out with approval and consents; that is, a claim for damages. We even know how much that would have been. We have agreed on figure, it is $120,000. Where that figure comes from is from Mr Bird who has calculated the different in value between the two units connected by authorised penetrations and the two units unconnected. HIS HONOUR: Does the $120,000 cover all holes or just the stairs? Because as I would understand you, you say the side letter only dealt, relevantly, with the stairs, and the oral representations either were not made or relied upon, so, therefore, if there is a side letter which has contractual force, it only goes to the stairs? Am I right about that? ASHHURST: Yes. HIS HONOUR: That being said, however, your client at the end of the day decided to assume responsibility for drilling all of the holes, presumably all of those which Mr Shin had asked to be drilled. But I wondered whether the $120,000 was just the staircase or each of the holes or the difference between all of the holes being drilled and none of them being drilled. ASHHURST: Mr Bird describes it, that the two units were effectively functional as a combined unit. That would seem to suggest all of the holes rather than just one of them. But I don't think Mr Bird was really asked to make it that specific. HIS HONOUR: Well, it may make a difference. Mr Fernon, what does the agreement amount to, in your mind? Does it amount to the difference between no holes and all holes or the staircase or no staircase? FERNON: One is all holes and the other one is just the staircase. HIS HONOUR: What's your submission as what Bird has done? FERNON: It makes no difference between whether it is one hole or six holes. He has simply drawn a valuation of the two operating together versus the two operating separately. HIS HONOUR: I'm sorry, does that mean to suggest that if they operate separately it is worth X dollars, or if they operate together, whether by 1, 2, 3, 4, 5, 6 holes, the value is Y? FERNON: Exactly. HIS HONOUR: Thank you. Therefore, it is immaterial whether it is only the stairs or whether it is something else, if they can be operating together in whatever manner, whether it be via the staircase, plus the lift or just the staircase and, therefore, they are practical conveniences, then the value is one thing opposed to the other. Thank you. 472I invited further written submissions on this matter. 473RSE submits that if Waterpoint is entitled to damages on its cross claim for loss of its bargain, the amount of $120,000 (being the accepted difference between the properties with approved and unapproved works) should be deducted from its claim. Waterpoint agrees with this submission. 474As the plaintiff accepts, the best and only evidence of the difference between the properties with approved works and the properties with unapproved works is $120,000. I am unconvinced that the evidence of Mr Bird supports that proposition, but the parties appear to have accepted it and the trial was conducted accordingly. 475Finally, RSE's obligations under the Put and Call Options were guaranteed by Mr and Mrs Shin. Pursuant to clause 14, they guaranteed RSE's obligations under the agreements, indemnified Waterpoint against all liability or loss arising from breach of the agreements and the liability was joint and several for any loss or damage caused by RSE. 476The commercial list response to the cross claim filed on 13 April 2012 did not admit that as I understand it the option agreements had been signed by both parties including Mr and Mrs Shin as guarantors. However the original documents Exhibit D1 and Exhibit D2 (which are the Put and Call Option for Restaurant Lot and Storage Lot respectively) show they were signed by both parties including Mr and Mrs Shin as guarantors. 477In cross examination Mr Shin accepted that this was his signature and that he recognised the signature of Mrs Shin (T87/20). It seems to me to follow that Mr and Mrs Shin should be made jointly and severally liable to the cross claimant for those damages I have outlined above.

Conclusion 478Having concluded that Waterpoint was in breach of an implied term to lawfully conduct the works explicitly set out in the side letter, and damages would theoretically have been available for that breach, but as it failed to complete it is not entitled to any damages on that basis. In addition I do not believe that RSE is entitled to recover damages for the cost of its fit out because that is damage for which Waterpoint is not in law responsible. In accordance with my reasons otherwise there is no other basis upon which RSE is entitled to damages. 479Therefore RSE fails in its claim for damages. 480I have also concluded that RSE was not entitled to refuse to complete the contracts which came into existence as a result of the exercise of the Put and Call Options. Therefore Waterpoint is entitled to succeed on its cross-claim as outlined above. For the sake of clarity, I should indicate that I have come to the view that $120,000 is the appropriate amount that should be deducted from the damages otherwise obtainable by Waterpoint. 481I invite the parties to prepare short minutes to give effect to my reasons, and to relist the matter if necessary so that the question of costs may be determined.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 June 2014