374 The second defendant was entitled to terminate the Joint Venture Agreement, as he did on 12 December 2003."
98 It is, with respect, not entirely clear whether the trial judge took up termination for sufficiently serious breach of intermediate terms, or termination because Sanpine had shown a repudiatory intention. His Honour's emphasis on the importance of the relevant terms and the significance of failure to adhere to them could suggest that he came to his decision on the basis of sufficiently serious breaches of the terms. I do not think, however, that he did. If that had been so, however, the nature of the terms - which could have been less than intermediate terms - would not have been left as an assumption, and the trial judge was clearly enough applying the propositions in his [366]-[367] directed to showing "the sort of intention which enables termination to occur". In those propositions he included intention not to be bound by a term or terms which are of sufficient importance in the contract, and regard to their importance as a matter relevant to repudiatory intention explains the emphasis on the importance of the relevant terms and the significance of failure to adhere to them.
99 That his Honour rested his decision upon termination for repudiatory intention is also consistent with Koompahtoo's reliance on the Administrator's letter of 12 December 2003. Paragraph 12 of Koompahtoo's defence to Sanpine's statement of claim alleged that the Agreement "was properly terminated by [Koompahtoo] by letter dated 12 December 2003, through [the Administrator]". The letter alleged that Sanpine "has repudiated [the Agreement] by breaching the joint venture in at least the following ways (which breaches remain unremedied), thus evincing an intention not to be bound by it … " (emphasis added).
Repudiation - the breaches found against Sanpine
100 The propositions set out in the trial judge's [366]-[367] were not controversial. The nature of repudiatory conduct has been expressed in other ways. In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Deane and Dawson JJ (at 658) and Gaudron J (at 666) noted the words used by Fullagar J in Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 at 351, that it was such that "a reasonable man could hardly draw any other inference than that the building owner does not intend to take the contract seriously, that he is prepared to carry out his part of the contract only if and when it suits him". In the present case the repudiatory conduct was not inability to perform or declarations of disavowal of performance, but the breaches found against Sanpine which were held to show a repudiatory intention apart from, or perhaps as well as, being breaches; so there could be termination by acceptance of a repudiation even if the breaches themselves did not entitle Koompahtoo to terminate the Agreement by reason of breaches of essential terms or sufficiently serious breaches of intermediate terms.
101 On any view, Sanpine did not show an intention not to be bound by the Agreement in the sense of a wholesale renunciation of its obligations thereunder, and the trial judge did not find repudiation on that basis. Dominant in the evidence were Sanpine's persistent endeavours to obtain rezoning of the land, against many difficulties, and his Honour's decision was based on the breaches found against Sanpine which, from his reference to the judgment, he appears to have regarded as within the second case described by Mason CJ in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 634 -
"There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party's obligations and not in any other way."
102 Whether the party in breach has by its conduct "shown the sort of intention which enables termination to occur" (from the trial judge's [367]) requires evaluation of the conduct in all the circumstances. For example -
· if a builder is in breach of contract for failure to progress the works, it is relevant to whether the builder showed that it did not intend to be bound by the contract that the weather seriously impeded performance: Carr v J A Berriman Pty Ltd at 359 per Fullagar J;
· a party acting on an incorrect interpretation of the contract may nonetheless "be willing to recognise his heresy once the true doctrine is enunciated or … to accept an authoritative exposition of the correct interpretation", in which events an intention to repudiate the contract could not be attributed to him: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 432 per Stephen, Mason and Jacobs JJ; see also Ross T Smyth & Co Ltd v T D Bailey, Son & Co (1940) 3 All ER 60 at 71-2 and Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd (1997) 42 NSWLR 462 at 479;
· even wrongful termination in mistaken reliance on a contractual right to terminate is not necessarily a repudiation: DTR Nominees Pty Ltd v Mona Homes Pty Ltd; Woodar Investment Development Ltd v Wimpey Construction UK Ltd (1980) 1 WLR 277 (but cf Mersey Steel and Iron Co Ltd v Naylor Benzon & Co (1884) 9 App Cas 434);
· a fortiori, if both parties act on an incorrect interpretation of the contract "it is difficult to infer repudiation from a party's assertion that it intends to perform the contract by doing what both parties erroneously believe to be required to perform it, at least until the mistake is exposed": Dainford Ltd v Smith (1985) 155 CLR 342 at 366 per Brennan J.
103 The conduct of the party not in breach is part of the circumstances in which the intention of the party in breach is to be found. A stark illustration is joinder in the incorrect interpretation of the contract, see the passage from Dainford Ltd v Smith, but also in DTR Nominees Pty Ltd v Mona Homes Pty Ltd at 432 their Honours said -
"In this case the appellant acted on its view of the contract without realizing that the respondents were insisting upon a different view until such time as they purported to rescind. It was not a case in which any attempt was made to persuade the appellant of the error of its ways or indeed to give it any opportunity to reconsider its position in the light of an assertion of the correct interpretation. There is therefore no basis on which one can infer that the appellant was persisting in its interpretation willy nilly in the face of a clear enunciation of the true agreement."
104 So it is relevant in determining whether Sanpine showed an intention not to be bound by the Agreement, or to fulfil it only in a manner inconsistent with its obligations and not in any other way, to consider how it came about that the Agreement was not being adhered to in the respects found against Sanpine, and to consider Koompahtoo's awareness of and response to the breaches. The breaches remain, unexcused by waiver or estoppel. But the reasonable person in the position of Koompahtoo would take into account, in evaluating Sanpine's breaches as repudiatory or otherwise, the extent (if any) to which Koompahtoo had been complicit or acquiescent in the departures from the Agreement and their continuance. It should be remembered that the repudiatory intention must be to fulfil the contract "only in a manner substantially inconsistent with his obligations and not in any other way" (from Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625- 6, emphasis added), or not to take the contract seriously and carry it out "only if and when it suits him" (from Carr v J A Berriman Pty Ltd at 351). Breach can accompany a manner of performance of a contract which the other party appears to accept but which, if that party protested, would be remedied. This does not mean that the innocent party must have called for performance before repudiation will be found, but that will commonly be the case.
105 I have noted the trial judge's emphasis on the importance of the relevant terms and the significance of failure to adhere to them, with his reference to an intention not to be bound by "a term or terms which are of sufficient importance in the contract". In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 634 Mason CJ referred only to the circumstances "including the terms of the contract". The trial judge cited also the judgment of Brennan J in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 641-2, where his Honour observed that a right to rescind a contract may arise when the other party repudiates a contract generally, but also where the other party repudiates a term of the contract and the right to rescind "depends on the importance of the term repudiated". Brennan J regarded the term as "an essential promise in the sense that an outright repudiation of the promise would have entitled Laurinda to rescind", but time was not of the essence in its performance and so it was necessary to decide whether delayed performance was repudiatory. I understand his Honour to have been referring to importance in connection with termination for breach of an essential term, not termination for repudiation.
106 The trial judge's citations may not have truly supported his proposition. Nonetheless, in considering all the circumstances of allegedly repudiatory conduct by reason of breaches of the contract, the importance of the terms breached and of the breach must be relevant, even if the terms are not essential terms breach of which would of itself entitle the opposite party to terminate the contract. Breach of an insignificant term, or an insignificant breach of a term, would (depending on all the circumstances) be less likely to show a repudiatory intention than breach of a significant term or a significant breach of a term.
107 Thus in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 659 Deane and Dawson JJ referred to procrastination or non-performance marking the stage of conveying to a reasonable person in the position of the other party "repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it". In Honner v Ashton (1979) 1 BPR 97049 at 9492 Mahoney JA said that the right to terminate for repudiation of part only of a contract has been "based on the significance of the portion of the contract in respect of which failure or default has occurred". His Honour went on to say that not every breach of a non-essential term will constitute a repudiation, and that the breach must "go to the root of the contract", and to consider what kind of breach did so. After citing from a number of cases, his Honour said (at 9493) -
"In each of these formulations, the court determines the consequences of the parties' failure or default and then, by reference, inter alia, to the effect of it upon the expectations of the parties under the terms of the contract, determines whether the innocent party must continue to be bound. The measure of the court's judgment in this regard remains indeterminate."
108 Since it is an evaluation of the conduct of the party in breach, no hard and fast rules can be stated. But in the evaluation the party's performance of the contract, as well as its failure to perform, is material to whether it intends to carry out the contract only as and when it suits it; or as better expressed for the present case, in the manner that suits it, so also are the importance of the term and the breach, and how the breaches came about and the other party's awareness of and response to the breaches (which may also bear upon the importance of the terms and the breaches).
109 Respectfully differing from the trial judge, in my opinion the breaches found against Sanpine did not amount to a repudiation; they did not in all the circumstances show an intention to carry out the Agreement only in a manner substantially inconsistent with its obligations and not in any other way. The appeal is by way of rehearing, and Sanpine must do more than invite this Court to reappraise the evidence for itself and come to a conclusion. Even as to inferences from the evidence and characterisations made, it must satisfy the Court that the trial judge was in error, which requires more than showing that there was an available conclusion which the trial judge did not come to: see Williams v Minister, Aboriginal Land Rights Act 1983 (2000) Aust Torts Reports 81-578; [2000] NSWCA 255 at [60] per Heydon JA, with whom Spigelman CJ and Sheller JA agreed, citing in particular the Full Federal Court in Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359 at 369 per Beaumont J. I consider that it has done so.
110 While Sanpine was in breach of its obligation with respect to development programs and monthly reporting, banking and spending of money, and maintenance of books, it put great effort into the necessary first stages of obtaining funding, then engaging consultants and seeking to obtain rezoning of the relevant area of the land. It did so in the face of difficulties which hampered progress, and ultimately the joint venture was brought to a standstill by the lodgement of the caveat and the ensuing appointment of the Administrator. The fact that it was working to achieve the central objective of the joint venture, the development and sale of part of Koompahtoo's land, cannot be doubted, and cautions against evaluation of the breaches found against it as repudiatory. There is a qualification to this, the delay in the appointment of Umwelt. For reasons earlier given, the trial judge may have been a little hard on Mr Scott, but overall Sanpine endeavoured to meet the new requirements of the NPWS and, although with delay in appointing Umwelt, provided the studies to the Council; by December 2003 matters had significantly moved on, and that delay was long past. I do not think it detracts from the overall endeavour by Sanpine to achieve the Development.
111 There was failure strictly to comply with the Agreement in relation to development programs and monthly reporting. Sanpine submitted to the effect that, in the circumstances of constant communication and informal provision of information orally and by the cash flow documents, lack of formal adherence to the Agreement in the respects presently in question was not repudiatory. It said that there was no complaint of failure to adhere to the Agreement, or request for formal adherence, by either the Management Committee or Koompahtoo (and it said that there was no practical difference, because at all times Mr Bill Smith was the chairman of Koompahtoo and from at least February 1999 Mr Griffin was its treasurer). At the stage which the development had reached, with the first tasks being the obtaining of finance and then the rezoning of the land, and with uncertainty in time and costing until the re-zoning had been achieved, the manner of conducting the Development as to programming and cost and the budgeting and reporting were regarded by all concerned as sufficient; the immediate task of obtaining re-zoning of the land was in hand, and little forward planning could be done until it was known with some certainty when and if it was likely to be achieved, which did not come about.
112 In my view there is substance in these submissions. A cl 6.2 development programme should have been formulated and updated, and cl 12.2 revenue budgets could have been prepared and submitted "as determined by instructions of the Management Committee" although it is not clear that instructions were ever given. Whether for lack of instructions or because Mr Scott "kept the Management Committee up to date … on all but a daily basis and provided all relevant information", the Management Committee was content, and functioned, without them. Similarly for the cl 13 .2 monthly reports; and the minuted agreement on 27 March 2000 to dispense with written reports from the project manager and the Aboriginal liaison officer and replace them with detailed verbal reports, while not specifically directed to these requirements, indicates an acceptance of less formal communication evident also in Mr Scott's evidence of his constant communication with members of the Management Committee. Although an overall development program, six-monthly programs and budgets and monthly reporting would, as I have accepted, be important aids to a well-managed joint venture development, a joint venture development can be less than well managed without renunciation of the joint venture agreement or the obligations thereunder for its management if insisted upon.
113 This seems to me significant in evaluating whether, by its breaches in relation to development programs and monthly reporting, Sanpine was showing an intention to perform the Agreement only in a manner that suited it and in no other way. From the lack of complaint, indeed compliance, the manner also suited Koompahtoo. The notion of "and in no other way" is important. There is no sufficient reason to think that, if Koompahtoo had called for adherence to the Agreement, Sanpine would have refused.
114 As to banking and spending of money, Sanpine submitted that the circumstances of constant communication and informal provision of information orally and by the cash flow documents, without any complaint of failure to adhere to the Agreement or request by either the Management Committee or Koompahtoo for compliance, were relevant to repudiation. It submitted to the effect that the banking and spending of money was regarded by all concerned as sufficiently and acceptably handled, that the fact that payments were being made for the purposes of the joint venture must have been obvious, and that the fact that they were being made otherwise than in accordance with an Approved Budget (for example) must also have been obvious because there was no Approved Budget; so also it must have been known and accepted that in the other respects there was not adherence to the Agreement. It was accepted as expedient, although not in accordance with the Agreement, that no Joint Venture Account be immediately opened because there was informal assistance from the friendly people, and when finance was obtained that the Unit Trust Account should be the primary account for the joint venture. Koompahtoo did not have control as a necessary signatory, but it was not shown that the cash flow documents and other information provided to the Management Committee failed to report the payments made from the Unit Trust Account (including that to Mrs Perkins).
115 In my opinion, there is also substance in these submissions. There was acquiescence in the departures from the Agreement, graphically apparent in the case of the breach of cl 16.4. To repeat, by that provision the joint venturers agreed that payments would only be made from the Joint Venture Account in accordance with the Approved Development Program and Approved Budget and payment guidelines previously approved by the Management Committee. The obligation was not only that of Sanpine, but also that of Koompahtoo; and the Management Committee had to approve guidelines, so the Sanpine and Koompahtoo representatives must have known that it had not done so. A Koompahtoo signatory was necessary for the Business Management Account, and the Koompahtoo signatories must have known the usage of that account and that the Agreement was not being adhered to. There was no complaint.
116 The breach in relation to failure to maintain proper books is in a rather different position. Sanpine did not keep Books, relevantly financial records of the Joint Venture, in that prior to January 1999 expenditure was by payment direct by the friendly persons, and thereafter receipts and expenditure were through the Unit Trust Account; so the joint venture itself had effectively zero financial activity. It was not submitted that the trial judge was in error in his view that there was failure to keep proper Books, being of that view (it seems) because even as transactions through the Unit Trust Account the Books should have recorded that financial activity and the financial records were inadequately kept.
117 The breach was in the adequacy of the financial records, and the minutes of the meeting of the Management Committee on 9 June 1999, even as amplified by Mr Steer's evidence, did not excuse inadequacy in recording the financial activity on the Unit Trust Account. Sanpine's submission that the minutes of 9 June 1999 excused the breach was misdirected. On the judge's view, not contested on appeal, the problem was not the absence of the joint venture's own Books. It was the adequacy of the surrogate Books, the financial records of Sanpine's transactions through the Unit Trust Account.
118 It remains, however, that the adequacy of Sanpine's accounting for those transactions was not questioned at the time. Under cl 16.6 of the Agreement, the Management Committee was to "prepare annual accounts of the receipts and expenses of the Joint Venture" for each financial year. Translating the trial judge's view of cl 16.5(a) to cl 16.6, the annual accounts should have extended to Sanpine's transactions through the Unit Trust Account. Apart from the terms of the Agreement, the Management Committee had an obvious interest in there being adequate financial records of those transactions, and so did Koompahtoo. It does not appear that the Koompahtoo representatives on the Management Committee, or anyone on behalf of Koompahtoo, expressed interest or concern as to Sanpine's accounting; and this over many years, and to the extent that in June 1999 auditing of the expenses of the joint venture was deferred. The reasons were the expense and "the fact that at present the expenses of the Joint Venture are being incurred by Sanpine Pty Ltd on behalf of the Joint Venture", but there clearly arose for consideration, if the Koompahtoo representatives had wished, the adequacy of the records and verification of the expenses as expenses incurred by Sanpine; the expenses would in due course, as Mr Steer said and was in any event plain, be "transferred across to the joint venture". But Sanpine's accounting was left unquestioned. In my view, this is relevant in the evaluation of whether its conduct was repudiatory.
119 The Management Committee was not the same as Koompahtoo. But there were four representatives of Koompahtoo on the Management Committee; and one of them, Mr Bill Smith, was the chairman of Koompahtoo and from at least February 1999 another of them, Mr Griffin, was the treasurer of Koompahtoo. These gentlemen were obvious persons to appreciate failure to adhere to the Agreement (in the case of Mr Griffin in particular to appreciate that Koompahtoo was disadvantaged by lack of financial accountability) and to cause Koompahtoo to call for adherence. It seems that Mr Bill Smith and the other Koompahtoo representatives were concerned to limit dissemination of information within the Aboriginal community, but it was not suggested that they were acting in fraud of Koompahtoo or delinquently in its interests and in my opinion Koompahtoo knew, through Mr Bill Smith and Mr Griffin, of the position in relation to development programs and monthly reporting, banking and spending of money and maintenance of books. No evidence was called by Koompahtoo, from Mr Bill Smith or anyone else, to the contrary, or to express reasons why Koompahtoo was disadvantaged.
120 When regard is had to all the circumstances, I am respectfully unable to agree with the trial judge's conclusion. The departures from the Agreement were repeated in the sense that there were monthly or other periodical occasions for things to be done, but any repudiatory intention is in this case found more in how the departures came about, regard to Koompahtoo's response, and the overall circumstances. It does not seem to me appropriate to say, for example, that there were forty-six breaches of cl 13.2 in the period from March 1999 to January 2003, in the light of the evidence of constant communication and that by April 2002 the joint venture had stalled; there was in substance one failure to adhere to the Agreement, in the way the performance of the Agreement evolved, with the apparent acquiescence of the Management Committee including the Koompahtoo representatives. While accepting the importance of the Agreement's provisions for "running the joint venture" (the trial judge's [372]), I do not think that in all the circumstances the description of the departures from it as gross is warranted.
121 The trial judge does not appear to have attributed significance to repudiatory intention of the matters on which Sanpine relied for waiver or estoppel, perhaps because the focus was otherwise in the submissions before him, and regarded the terms breached and their breaches as of determinative importance. I differ from his Honour in these respects. As earlier stated, I do not think that the delay in the appointment of Umwelt detracts or was intended to detract from the overall endeavour by Sanpine to achieve the Development, and I do not think that, taken together with the other breaches, it makes out a repudiatory intention on its part. On my evaluation, Sanpine did not evince an intention to perform the Agreement only in a manner substantially inconsistent with its obligations and not in any other way.