Sanpine v Koompahtoo Local Aboriginal Land Council

Aboriginal Land Rights Act 1983 Aboriginal Land Rights Amendment Act 2001 Aboriginal Land Rights Regulations 1996 Corporations Act 2001 (Cth) Environmental Planning and Assessment Act 1979 Environmental Planning & Assessment Regulation 1994 LEGISLATION CITED : Interpretation Act 1987 Judicature Act 1873 (UK) Land Tax Management Act 1956 Public Finance and Audit Act 1983 Real Property Act 1900 Threatened Species Conservation Act 1995

Abrath v The North Eastern Railway Company (1883) 11 QBD 440 Abrath v The North Eastern Railway Company (1886) 11 App Cas 247 Australian Broadcasting Commission v Australasian Performing Right Assn Ltd (1973) 129 CLR 99 Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 Byrne v Australian Airlines Limited (1995) 185 CLR 410 Chapman v Wade [1939] SASR 298 Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 Commercial Union Assurance Co of Australia Ltd v Beard [1999] NSWCA 422; (1999) 47 NSWLR 735 Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693 Crowley v Glissan (No 2) (1905) 2 CLR 744 Dorsatville v Loumbos, Bryson J, 16 March 1990, unreported Fileman v Liddle (1974) 2 BPR 9192 Galaxidis v Galaxidis [2004] NSWCA 111 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669 Hume v Monro (No 2) (1943) 67 CLR 461 Hutt Valley Properties Limited v Gamages (NZ) Limited (1952) NZLR 296 Illawong Village Pty Limited v State Bank of New South Wales [2004] NSWSC 18 Industrial Equity v G and C Consolidated (1974) 2 NSWLR 456 Interpool v Kapal Pacifico (KP) (1982) 7 ACLR 243 J Kitchen & Sons Pty Ltd v Stewart's Cash and Carry Stores (1942) 66 CLR 116 Jaques v Withy and Reid (1788) 1 H Bl 65; 126 ER 40 Jones v Sutherland Shire Council (1979) 2 NSWLR 206 Kok Hoong v Leong Cheong Kweng Mines Limited [1964] AC 993 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 CASES CITED : Lombard North Central Plc v Butterworth [1987] QB 527 Lush v Russell (1850) 5 Exch 203 Mackay v Dick (1881) 6 App Cas 251 Massoud v NRMA Insurance Ltd (1995) 8 ANZ Insurance Cases 61-257 Overmyer Industrial Brokers Pty Limited v Campbell's Cash and Carry Pty Limited [2003] NSWCA 305 Owners - Strata Plan No 51487 v Broadsand Pty Ltd [2002] NSWSC 770 Paric v John Holland (Constructions) Pty Ltd [1984] 2 NSWLR 505 Paric v John Holland (Constructions) Pty Ltd (1985) 62 ALR 85 Pollnow v Garden Mews-St Leonards (1984) 2 ACLC 511 Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589 The Progressive Mailing House Pty Limited v Tabali Pty Limited (1985) 157 CLR 17 Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60 Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834 Shevill v Builders Licensing Board (1982) 149 CLR 620 Smart v Allen (1980) 91 WN 241 Smith v Butler [1900] 1 QB 694 Southern Foundries (1926) Limited v Shirlaw [1940] AC 701 Spiers v Hunt [1908] 1 KB 720 Stocznia Gdanska SA v Latvian Shipping Co & Others (1998) 1 WLR 574 Subdivisions Limited v Payne [1934] SASR 214 Tan Hung Nguyen & Anor v Luxury Design Homes Pty Limited & 2 Ors [2004] NSWCA 178 TCN Channel Nine Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Todd v Parker [1953] NZLR 39 Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Wilson v Carnley [1908] 1 KB 729 Wongala Holdings Pty Limited v Mulinglebar Pty Limited (1994) 6 BPR 97481

Sanpine Pty Ltd - Plaintiff Koompahtoo Local Aboriginal Land Council - First Defendant PARTIES : Terry Lawler - Second Defendant Koompahtoo Local Aboriginal Land Council Property Investment Pty Ltd - Third Defendant

T S Hale SC; J White - Plaintiff COUNSEL : B Coles QC; G Sirtes - First & Second Defendants No appearance - Third Defendant

Solari Legal - Plaintiff SOLICITORS : Bartier Perry - First & Second Defendants No appearance - Third Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

4606/04 SANPINE PTY LIMITED v KOOMPAHTOO LOCAL ABORIGINAL LAND COUNCIL JUDGMENT HIS HONOUR: PART A - INTRODUCTORY Nature of the Case 1 This is the trial of a preliminary question concerning whether a Joint Venture Agreement between the plaintiff and the first defendant relating to the development of land of the first defendant remains on foot. The affairs of the first defendant came to be under the control of an administrator, the second defendant, who wrote a letter to the plaintiff on 12 December 2003 purportedly terminating the Joint Venture Agreement. The issue in the present case relates to the validity of that purported termination. The trial of the preliminary question has been granted an expedited hearing, partly because its outcome may affect other litigation which is on foot. Events Leading to the Joint Venture Agreement 2 The first defendant ("Koompahtoo") is a Local Aboriginal Land Council incorporated under the Aboriginal Land Rights Act 1983. As a result of claims made under that Act, various parcels of land near Morisset came to be vested in Koompahtoo. Three of those parcels are relevant to this case. The first of them is the land in folio 556/729949 ("Lot 556"). That folio was first created, showing Koompahtoo as registered proprietor, on 27 October 1997, pursuant to a Request under the Real Property Act 1900 by the State of New South Wales for a transfer by it to Koompahtoo of the land in Lot 556 to be registered. However, it was known prior to then that a grant would issue. Lot 556 has an area of approximately 850 ha. It includes the land on which the Morisset Hospital was formerly conducted, and a large area of bushland. The second relevant parcel of land is that in Aboriginal land claim 3386, which resulted in Koompahtoo being granted 23.27 ha on 5 October 1999. The third relevant parcel is the land in Aboriginal land claim 6165, which was granted to Koompahtoo on 22 March 2000, and contains 12.26 ha. The second and third parcels adjoin Lot 556, and are near the township of Morisset. 3 All the land lies in the area controlled by the Lake Macquarie City Council ("LMCC"). 4 Koompahtoo developed a plan whereby part of the land it was granted, which was not of ongoing Aboriginal cultural significance, would be developed, in conjunction with a developer, into a residential subdivision and sold. The profits of Koompahtoo from the development would be kept to provide ongoing benefits and, it was hoped, economic independence for the people whom Koompahtoo had as its members. The balance of the land was to be retained by Koompahtoo for conservation and recreational use, with the development of limited areas for the purposes of a cultural meeting place, a tourist accommodation facility and recreational activities. The development project was to be a self-funded one. It was, it seems, the first such project to be undertaken in New South Wales by a Local Aboriginal Land Council. PART B - THE JOINT VENTURE AGREEMENT 5 On 14 July 1997 a Joint Venture Agreement was entered between the plaintiff and Koompahtoo. That Agreement identified, by a map, an area of 64 ha which was described as the Stage One Land, and a further area of 45 ha which was described as the Stage Two Land. Each of those areas lay in the northern part of Lot 556 and the other two parcels of land which have been granted to Koompahtoo. There was provision for Koompahtoo to add areas to each of the Stage One Land, and the Stage Two Land, if it chose, in its absolute discretion, to do so. The "Joint Venture Site" was defined to be the Stage One Land (as added to if Koompahtoo chose to), and the Stage Two Land (also as added to, if Koompahtoo chose to). 6 Clause 1.1 of the Joint Venture Agreement defined "Development" as meaning the rezoning of the Joint Venture Site by LMCC to permit residential development, the application for and obtaining of approvals for its subdivision, the carrying out of the subdivision works required to comply with any development consent issued by LMCC concerning the subdivision, and any other work required to prepare residential lots in the subdivision for sale, the registration of the plan of subdivision at the Land Titles Office, the marketing and sale of the lots in the subdivision, and anything incidental to these matters. 7 Other relevant definitions in Clause 1.1 included a definition of "Development Assets" as meaning: "(a) the Joint Venture Site; (b) all improvements constructed on, over, under or in respect of the Joint Venture Site; (c) all design drawings, layouts, specifications, working drawings, feasibility studies, sale proposals, valuations, plans, development approvals, building approvals, subdivision approvals, rezoning certificates and any other documents in the possession or control of the Venturers relating to the Joint Venture Site or the Development; (d) any development consent granted with respect to the Joint Venture Site; (e) the Joint Venture Account; (f) all plant, equipment and supplies acquired by the Venturers in connection with the Development from time to time; and (g) all other assets of whatsoever nature relating to the Development." 8 The Joint Venture Agreement contained the following provisions: 2.1 Establishment of Joint Venture As from the date of this Agreement there is established an unincorporated joint venture between the Venturers to be known as the "Morisset Land Subdivision Joint Venture" with each Venturer holding a 50% Percentage Interest as at the date hereof. The Joint Venture shall continue until it is terminated in accordance with this Agreement. 2.2 Objects The objects and extent of the Joint Venture are: (a) to undertake the Development; (b) to determine the scope of the Development; (c) to carry out the design of the Development; (d) to apply for and obtain consents, approvals and authorisations from the Council and all other relevant statutory and regulatory authorities for the Development to the extent that this has not been done prior to the date of this Agreement; (e) to arrange funding for the Development at the most commercially advantageous terms; (f) to engage all such architects, town planners, valuers, environmental experts, engineers, excavators, civil works contracts, builders, tradesmen, consultants, real estate agents and all other relevant persons that may be necessary to carry out the Development in the most economic, efficient, workmanlike and professional manner; (g) to carry out the Development to the best commercial advantage of the Venturers and within the shortest practicable time; (h) to identify and procure purchasers for the Residential Lots; (i) to sell the Residential Lots upon commercial terms and at not less than market value (subject to clause 22) on the terms and subject to the conditions provided for in this Agreement; (j) to do all such things as shall be incidental or conducive to the attainment of the foregoing but only as shall be determined by the Management Committee. 2.3 Achievement of Objects The Venturers agree and acknowledge that they will take all steps and do all things necessary to achieve the objects of the Joint Venture on arms' length terms and to the commercial advantage of the Joint Venture (subject to clause 22). 2.4 No Transfer of Joint Venture Site Notwithstanding anything to the contrary contained in this Agreement, Koompahtoo does not by virtue of any provision in this Agreement transfer to Sanpine any legal or beneficial interest in the Joint Venture Site, other than by virtue of any mortgage that may be granted by Koompahtoo to Sanpine. 9 Clause 3.1(l) contains a representation and warranty by Koompahtoo to the plaintiff that: "to the best of its knowledge, information and belief the rezoning of the Joint Venture Site to permit residential development will occur within a reasonable time of the date of this Agreement and that all approvals for the Development and the subdivision of the Stage One Land and the Stage Two Land may be obtained within a reasonable time."

While the Agreement contains various warranties and representations given by the plaintiff to Koompahtoo, they do not include any warranty resembling Clause 3.1(l). 10 The Joint Venture Agreement was subject to a condition precedent, which included the Crown grant of the Stage One Land and the Stage Two Land to Koompahtoo. It is common ground that the conditions precedent to the Agreement had all been satisfied once the land in Aboriginal land claim 6165 was granted to Koompahtoo on 22 March 2000. 11 The Joint Venture Agreement was amended by a Supplemental Agreement made on 17 October 2000. The Supplemental Agreement arose from circumstances described in its recitals as: "B. It was envisaged by the Agreement that the Joint Venture Site would be developed in two stages. C. Sanpine and Koompahtoo have decided to develop the Joint Venture Site as a staged, integrated community development covering a total area of approximately 162.5 hectares. The size and timing of stages will be established by market demands as determined by Sanpine in consultation with Koompahtoo." 12 The Supplemental Agreement made various consequential changes to the Joint Venture Agreement. It provided that any references to the "Stage One Land" or "Stage Two Land" would be deemed to be simply a reference to the Joint Venture Site. It inserted a new definition of "Joint Venture Site", and defined it as being an area of approximately 162.5 ha, defined by a plan attached to the Supplemental Agreement, together with any other land which Koompahtoo might in its discretion choose to contribute to the Joint Venture. 13 The significant size of the land development involved in the Joint Venture can perhaps be better appreciated by some readers by pointing out that 162.5 ha is a little more than 400 acres. 14 Clause 4.2 of the Joint Venture Agreement, as varied, which was described as a condition subsequent, provided that the Agreement was conditional upon LMCC granting development consent to: "the subdivision for an integrated community development incorporating but not limited to residential, medium density, commercial and business lots and any other form of development approved by relevant authorities on terms and conditions reasonably acceptable to Sanpine after consultation with Koompahtoo." 15 Other relevant provisions of the Joint Venture Agreement, as varied, are as follows: "4.3 Sanpine's Right of Waiver The conditions precedent and subsequent contained in this clause are for the sole benefit of Sanpine alone and Sanpine may in its discretion agree to waive in writing all or any of those conditions without affecting any other condition or provision of this Agreement. … 4.5 Termination Following Failure to Meet Condition Subsequent Should the conditions subsequent referred to in clause 4.2 fail to be satisfied or waived by Sanpine, Sanpine may by notice served on Koompahtoo terminate this Agreement in which case the obligations of the Venturers under this Agreement shall be at an end subject to Koompahtoo repaying to Sanpine the amount of the advance referred to in clause 15.2 and neither Venturer shall have any claim against the other Venturer arising out of this Agreement or its termination. … 5.1 Upon satisfaction of the condition precedent referred to in clause 4.1(a), Koompahtoo shall make the [Joint Venture Site] (as it exists at the date of this Agreement) available to the Joint Venture for the purposes of the Development in accordance with this Agreement. … 6.1 Appointment as Development Manager Each of the Venturers appoint Sanpine as the development manager for the Development. 6.2 Obligations of Sanpine Sanpine agrees to: (a) co-ordinate the overall Development; (b) negotiate with, effect the appointment of, instruct and monitor the performance of all professional consultants required to provide services to the Joint Venture during the course of the Development (including any contractors or sub-contractors providing building, civil works, construction or associated services) including without limitation solicitors, architects, surveyors, real estate agents and marketing consultants; (c) seek funding for the Development from recognised, reputable and experienced project financier including preparation of all applications, information memorandums and supporting documents required and negotiating the finance facility offered by a project financier which the Management Committee agrees to accept; (d) arrange all necessary or desirable insurances for the Development Assets and the Development generally; (e) engage bookkeeping and accounting services for the Joint Venture and the Development and maintain all records and documents of the Joint Venture to the extent that the Management Committee does not require the records or documents for the purposes of the Works and prepare tax returns for the Joint Venture if tax returns are required to be lodged; (f) arrange the provision of security and patrol services for the Joint Venture Site; (g) coordinate and instruct solicitors and surveyors concerning the proposed plans of subdivision of the [Joint Venture Site] being solicitors and surveyors carrying on business in the Newcastle or Lake Macquarie area, … ; (h) supervise and co-ordinate marketing arrangements and exchange and completion of contracts for sale of Residential Lots forming part of the Joint Venture Site and co-ordinate discharges of mortgage in respect of the Joint Venture Site with the financiers to the Joint Venture; (i) formulation of a Development Program showing the manner in which Sanpine expects the Development to proceed including a timetable for the completion of each of the stages of the Development and the envisaged cost to complete each of the stages of the Development; (j) regular updating of the Development Program to take account of events or circumstances which affect the progress of completion of the Development; (k) co-ordinate monthly meetings of the Management Committee, take minutes of those monthly meetings and distribute to the Venturers a copy of the minutes; and (l) make recommendations concerning the Development and its progress to the Management Committee." 16 Clause 1.1 of the Agreement had defined "Development Program" as meaning: "… the program prepared by Sanpine setting out each of the stages of the Development and the estimated timetable and cost for each stage of the Development in accordance with clause 6.2(i) and updated from time to time in accordance with clause 6.2(j)."

That definition needs to be taken into account in considering the scope of the obligations arising under Clause 6.2(i) and (j). 17 The Agreement continued: "6.3 Development Manager's Discretion Except where the Management Committee otherwise is required to control a particular aspect of the Development or the determination of certain matters is reserved to the Management Committee, Sanpine shall be entitled to act without specific instruction from the Management Committee but only to the extent that Sanpine acts within the parameters of the stated objectives of the Joint Venture. Sanpine must follow all instructions of the Management Committee where instructions are issued. … 7.1 Initial Project Manager The Venturers agree to appoint the project manager nominated by Sanpine after the date of the Agreement as the first project manager of the Joint Venture." 18 Clause 8 made provision for the appointment of an Aboriginal Liaison Officer for the Joint Venture from within the membership of Koompahtoo, whose task it was to explain the Development and the benefits it would bring to members of Koompahtoo, and act as a conduit for communication between members of Koompahtoo and the Management Committee. 19 The Agreement continued: "10.1 Formation of Management Committee The Venturers shall form a Management Committee to manage the affairs of the Joint Venture and to consider and make decisions in relation to all aspects of the Development including, without limitation, financial issues and aboriginal culture and aboriginal employment issues. The Management Committee shall have the authority and power to act on behalf of the Venturers in relation to all matters with respect to the Joint Venture except as otherwise provided for in this Agreement. Without limiting the generality of the foregoing the Management Committee shall have the following functions: (a) approval of the Approved Development Program and Approved Budget; (b) preparation of the Annual Accounts; (c) appointment of the Auditors; (d) approval of financing for the Development in accordance with clause 11; (e) approval of the Project Manager and any replacement Project Manager; (f) approval of architects, engineers, civil works contractors, builders, consultants and advisors to the Development; (g) approval of the marketing and sale arrangements for the Residential Lots; (h) overall supervisory control and authority over the activities of the Project Manager; …" 20 Clause 10.2 made provision for the Management Committee to comprise four representatives of each Venturer, unless they otherwise agreed. It named the four initial representatives of each Venturer. There was provision in Clause 10 for a Venturer to remove any person as its representative and replace him, and for the appointment of alternate representatives. The quorum for any meeting of the Management Committee was four, with two representatives of each Venturer. The Management Committee was to meet every month, unless the Venturers otherwise agreed. Matters considered at meetings of the Management Committee were required to be determined by a resolution passed by a majority vote of all representatives. The Management Committee was to have joint chairmen, one appointed by each of the Venturers. There was provision that: "… In the event of an equality of votes cast on any matter a Chairman shall only have a casting vote as follows: (a) The Chairman appointed by Koompahtoo shall have a casting vote on matters which arise during the course of the Development and have a significant impact on aboriginal culture and environmental matters; and (b) The Chairman appointed by Sanpine shall have a casting vote on all other matters which arise during the course of the Development including, without limitation, the financing of the Development, design and scope of the Development and the marketing of Residential Lots." 21 Clause 10.10 provided: "(a) The Venturers shall appoint a Secretary approved by the Management Committee who shall keep minutes and records of the following matters: (i) all appointments and changes of representatives and alternate representatives; (ii) the names of representatives present at all meetings of the Management Committee; (iii) details of all resolutions made by the Management Committee; (iv) generally all details of the proceedings and discussions of the Management Committee. The Management Committee may at any time terminate the appointment of a Secretary previously approved by the Management Committee. …" 22 The Agreement, as varied, continued: "11.1 Management Committee to Determine Project Financier The Management Committee shall determine from time to time the manner in which the Development is to be funded by a project financier. The funding of the whole of the Development must be on terms and subject to conditions approved by the Management Committee and shall be without recourse to any assets of the Venturers other than the Development Assets. 11.2 Use of Joint Venture Account All funds advanced by project financiers for the purposes of the Development shall be immediately deposited in the Joint Venture Account to be used solely for the purposes of the Development, subject to any special arrangements for the advance of the funds provided by project financers and approved by the Management Committee. 12. DEVELOPMENT PROGRAM AND BUDGETS 12.1 Approved Programs and Budgets As from the date of this Agreement until the termination of the Joint Venture, all activities of the Joint Venture from time to time shall be carried out pursuant to and in compliance with Approved Development Programs and Approved Budgets relating to such activities for the time being. 12.2 Approval Procedure (a) Within 90 days of the date of this Agreement and thereafter at least 30 days prior to the last day of December and June in each year, or at such other times as the Management Committee may determine, Sanpine as development manager for the Development must prepare and submit to the Management Committee with respect to: (i) the period to the earlier of the next following 30 June or 30 December; and (ii) the period to the date on which the Joint Venture is expected to be completed, a Development Program and cost and revenue budget outlining a program for the overall Development and the costs and revenues expected to be associated with the Development and their timing. (b) Each such Development Program and cost and revenue budget shall be prepared and submitted as determined by instructions of the Management Committee. (c) A meeting of the Management Committee shall be convened no later than 7 days after the submission of the last to be received of the Development Program and cost and revenue budget referred to in clause 12.2(a). At that meeting the Management Committee shall consider the Development Program and cost and revenue budget submitted and may approve those programs and budgets or any of them and reject others of them. (d) Upon approval by the Management Committee of any Development Program or cost and revenue budget, those programs and budgets for the period to which they relate shall become the Approved Development Program and the Approved Budget. 12.3 Alterations to Approved Programs and Budgets Sanpine as development manager may at any time and from time to time submit to the Management Committee any proposed alterations to an Approved Development Program or an Approved Budget which, on approval by the Management Committee, shall form part of such Approved Development Program or Approved Budget (as the case may be). 13. EXPENDITURE REIMBURSEMENTS 13.1 Sharing of Liabilities (a) The net amount of any Project Costs or any other expenditures, disbursements or other liabilities incurred in relation to the Development Assets or the Development shall be borne and paid by the Venturers in the proportions equal to their respective Percentage Interests, which at the date of this Agreement are: Sanpine 50% Koompahtoo: 50% (b) Each Venturer hereby indemnifies … the other against all damages, losses, … suffered … with respect to the obligation of the Venturer to meet and satisfy its proportionate share of expenditures, disbursements and other liabilities relating to the Development Assets or the Development, as provided for in clause 13.1(a). (c) Notwithstanding paragraphs (a) and (b) of this clause, the liability of Koompahtoo shall be limited to recourse against the [Joint Venture Site]. 13.2 Monthly Report A monthly report shall be submitted by Sanpine to the Management Committee on or before the fifteenth day of each month showing in reasonable detail the net expenditure of the Joint Venture and progress of the Joint Venture on the Development including: (a) total Project Costs during the preceding month; (b) total estimated Project Costs for the current and the next month; (c) accumulative cost to date and cost to complete reports progressively updated; (d) a detailed account of all moneys deposited in the Joint Venture Account during the preceding month and all moneys paid out of the Joint Venture Account during the preceding month; (e) cash flow forecasts for the Development Assets and the Development for the current and next six months including any funds to be made available under any existing project finance facility; (f) unusual charges and credits during the preceding month (which shall be separately identified and described in detail); (g) income and revenue derived by the Joint Venture during the preceding month; (h) design and construction including progress to date comparison of progress with the Approved Development Program, details yet to be resolved and existing or potential problem areas; (i) comparison of Project Costs and revenue of the Joint Venture during the preceding month with the Approved Budget and details of existing or potential problem areas; and (j) such other matters as the Management Committee may determine from time to time or as any Venturer may reasonably request from time to time. 13.3 Obligation to Make Contributions It is acknowledged that it is the intention of the Venturers that: (a) Koompahtoo's obligation to make contributions to the Joint Venture be limited to the obligation to make the Stage One Land and the Stage Two Land available to the Joint Venturer and not to make any contribution by way of cash payment to fund the Development; and (b) Sanpine's obligation to make contributions to the Joint Venture be limited to providing expertise as a development manager for the Development and where Sanpine considers it appropriate (in its discretion) to provide limited funding to the Joint Venture to enable certain preliminary negotiations with Council, potential project financiers, potential project managers and other persons who will be required to perform a role in the Development. Notwithstanding the above, either of the Venturers at any time may offer to provide finance to the Joint Venture to assist the completion of the Development in the shortest practicable time. In such event the Venturer making a cash contribution required by the Joint Venture shall be entitled to have that cash contribution included in either Koompahtoo's Contribution or Sanpine's Contribution, as the case may be. … 13.5 Initial Project Costs Each Venturer agrees that to the extent there are Project Costs which have been incurred by that Venturer prior to the date of this Agreement, that Venturer will be solely responsible for and pay those Project Costs and cannot require contribution from the other Venturer for any share of those Project Costs. 23 Clause 16.1(a) provides: " The Venturers agree and undertake that as soon as possible following the date of this Agreement they will establish a bank account in their name with Australia and New Zealand Banking Group Limited at its 20 Martin Place, Sydney, New South Wales branch for the purposes of the Joint Venture to be titled the "Morisset Land Subdivision Joint Venture Account". The bank will be instructed to forward copies of all periodic bank statements to each of the Venturers." (emphasis added) 24 Perhaps inconsistently, Clause 1.1 defines "Joint Venture Account" as meaning: "the bank account or accounts to be established by Sanpine pursuant to clause 16.1". (emphasis added) 25 There was provision for each of the Venturers to nominate a signatory to the Joint Venture Account. 26 The Agreement continued: "16.3 Deposit of Funds Except as provided in clause 15.1, the Venturers agree that all cash and other funds received from time to time by the Venturers concerning the Development, the Development Assets or the Joint Venture will be promptly deposited in the Joint Venture Account before any disbursement or use of those funds is made for any purpose. Unless financing arrangements require an alternative treatment or the Management Committee approves otherwise, the funds to be deposited in the Joint Venture Account will include all funds advanced by third parties to the Joint Venture as contemplated by clause 11. 16.4 Withdrawal of Funds The Venturers agree that payments will 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. 16.5 Maintenance of Books (a) Sanpine shall ensure that proper Books are kept so as to permit the affairs of the Joint Venture to be duly assessed. Financial records comprised in the Books shall be kept in accordance with generally accepted accounting principles and in such a manner as enables the Venturers to extract from the Books any information in relation to the affairs of the Joint Venture as that Venturer may reasonably require from time to time. …" 27 Clause 16.6 obliged the Management Committee to prepare annual accounts of the Joint Venture as at 30 June each year. Clause 16.7 required those annual accounts to be audited, and a written report provided by the auditors certifying their opinion concerning various listed matters. Clause 16.9 made the costs of the audit a Project Cost. It was the Management Committee, under Clause 17, who had the obligation to appoint the auditors, and the power to remove and replace them. 28 Clause 19 set out certain provisions which applied if there was a breach of the Agreement: "19.1 If: (a) a Venturer (the "Defaulting Party") commits any material breach of this Agreement and shall decline or neglect to remedy the breach within 30 days after receipt of a written notice from the other Venturer requiring such remedy; … THEN the Venturer which is not the Defaulting Party (the "Non-Defaulting Party") shall have the right, exercisable by written notice to the Defaulting Party ("Purchase Notice"), to purchase the Percentage Interest of the Defaulting Party on the following terms and conditions: …" 29 Clause 20 provided: "20.1 The Joint Venture shall continue until the completion of the Development and the sale of all the Development Assets by the Venturers to a third party or parties or the sale by one Venturer to the other Venturer of all that first mentioned Venturer's Percentage Interest, unless sooner terminated by mutual agreement in writing by the Venturers. … 20.3 The Joint Venture shall terminate when all Development Assets shall have been disposed of and the net proceeds and liquid assets, after satisfaction of liabilities to all Joint Venture creditors and the setting aside of reserves determined by the Venturers, or if applicable, the Non-Defaulting Party, to be appropriate to meet unmatured contingent and/or unforeseen Joint Venture liabilities, shall have been distributed among the Venturers in accordance with this Agreement. 30 Clause 27 provided: "27.1 The Joint Venture is based on the figures annexed as "Outline Feasibility" to the letter contained in Annexure "C" prepared by Borough & Partners and which were examined by Mr Richard South as advisor to Koompahtoo. 27.2 The parties acknowledge and agree that Sanpine gives no warranty or representation as to the accuracy or otherwise of any of the figures in Annexure "C" either as at the date of this Agreement or as at the date of preparation of the figures. 27.3 Koompahtoo acknowledges it has been independently advised by Mr Richard South as to the figures in Annexure "C". 27.4 The figures in the "Outline Feasibility" to the letter in Annexure "C" were prepared by Borough & Partners as at January 1997 based on what it believes are reasonable estimates as at that time and have not been updated since that time and neither party has requested that they be updated." 31 The "Outline Feasibility" was a one-page document which estimated that the total value of the profit, interest and land which Koompahtoo received from the development would be $7,250,000, while the total of the profit, interest and development profit (or fee for acting as manager) which the developer would receive would be $6,025,000. It envisaged a project extending over a period of two years. PART C - PRACTICAL PRELIMINARIES TO THE JOINT VENTURE WORKING

The Town Planning Status of the Land 32 At the time the Joint Venture Agreement was entered the use of land in the LMCC area was controlled by the Lake Macquarie Local Environmental Plan 1984 (as amended) ("LEP 1984"). The site proposed for development was mostly zoned rural "A", though a small part of it was zoned "open space "A" (Public Recreation)", and another small part was zoned to permit coal mining. In the rural A zoning, construction of residential flat buildings and shops was prohibited, and there was a minimum allotment size of 40 ha. In the open space zoning, the description of the prohibited developments was such that residential development was prohibited. Thus, achieving a rezoning, to a zoning which would permit the proposed development to go ahead, was essential. Statutory Framework for Achieving the Rezoning 33 The Environmental Planning and Assessment Act 1979 ("EPA Act") gives power to make environmental planning instruments of various kinds, including local environmental plans ("LEPs"). A draft LEP can be prepared as the result of a council deciding to do so (section 54(1)), or as the result of the Minister directing the council to do so (section 55(1)). If a council decides itself to prepare a draft LEP, it must inform the Director-General of its decision to do so (section 54(4)). In either case, the Council is required to prepare an environmental study of the land to which the draft LEP is intended to apply (section 57(1)), in accordance with such specifications as the Director-General notifies (section 57(2)). The draft LEP is required to have regard to that environmental study (section 61). 34 In preparing either an environmental study, or a draft LEP, the council is required to consult with various public authorities or bodies who might be affected by that draft LEP, and any other people that the council determines to consult with (section 62). State public authorities are required to provide councils with information which might be relevant to the environmental study or draft LEP (section 63). 35 Once a draft is prepared, the council submits a copy of the draft to the Director-General, together with a statement of the bodies who have been consulted under section 62 (section 64). Upon receipt of the draft LEP, the Director-General either issues a certificate permitting the draft plan to be publicly exhibited, or else returns the plan to the council giving reasons why the certificate was not issued, and directing the council to amend the draft plan, or take other action, (section 65). Once a section 65 certificate has been received, the council gives public notice of how the environmental study and draft LEP may be inspected by the public, and puts them on public exhibition (section 66(1)). The draft LEP must be publicly exhibited for a period of not less than twenty eight days (section 66(2) and Clause 12 Environmental Planning & Assessment Regulation 1994), but there is nothing to stop the council from putting the study and draft LEP on public exhibition for a longer period than the prescribed minimum. Any person may make submissions to the council about the draft LEP, within a period which the council notifies (section 66(1)(c), section 67). The council can, in certain circumstances, hold public hearings into issues raised in a submission (section 68). The council considers the various submissions, and the report of any public hearing there has been, and can make alterations to the draft LEP in consequence (section 68(3)). The council then submits to the Director-General details of all submissions, the report of any public hearing, the draft LEP and the reasons for any alterations made to the plan following its public exhibition, and certain other matters (section 68(4)). The Director-General then furnishes a report to the Minister concerning how the proposed LEP fits in with other legal controls on land use, whether the necessary procedural steps to that stage of the process for making a LEP have been complied with, and any other matters the Director-General thinks appropriate (section 69). It is then for the Minister to decide whether to make the LEP as submitted by the council, make it with alterations, require further public exhibition, or decide not to proceed with the draft LEP (section 70). 36 The procedure which I have just outlined is one for the initial making of a LEP. In the present case, at the time that the Joint Venture Agreement was entered, Lot 556, and the two other lots of land which were later added to the Joint Venture area, were already subject to planning controls under LEP 1984. What was needed, to enable the Joint Venture to proceed, was therefore not the allocation of zonings to the land by an initial LEP, but the alteration of the zoning which already applied to the land. Section 74 EPA Act provides that the procedures which I have just outlined also apply to a subsequent environmental planning instrument, with two exceptions. One of those exceptions, under section 74(2)(b) applies where the subsequent instrument is a LEP, in which case the provisions of sections 57 and 61 shall not apply, unless the Director-General directs to the contrary. Obtaining Initial Finance for the Joint Venture 37 In the course of 1998 Mr Steer, a director of the plaintiff, and Mr Scott, a consultant assisting the plaintiff, made enquiries of forty or fifty lenders or finance brokers, seeking project funding. Many lenders refused to grant the funding, expressing concern about the proposed mortgage being a third party mortgage, and about the possibility of having to exercise a power of sale against the land of an Aboriginal Land Council. The provisions of the Joint Venture Agreement concerning finance (in particular Clauses 11.1, 13.1 and 13.3) had the effect of requiring that the project be fully funded by external finance, and also that, while Koompahtoo would make the Joint Venture Site available by way of mortgage to the developer, Koompahtoo would not be required to give a personal covenant to repay the monies borrowed. Thus, it was an inevitable part of the agreement which the parties had entered that the security for finance which would be offered to a possible lender would be a third party mortgage. 38 On 26 October 1998 a letter of offer of finance was signed by Koops Martin Financial Services Limited, relating to a loan proposed to be given by Inteq Custodian Limited ("Inteq"). It related to a loan under which the plaintiff was the only borrower, security was given by Koompahtoo over the whole of the land in Lot 556, and there were personal guarantees totalling $600,000 from various people connected with the plaintiff. The loan money was to be made available in two tranches, as follows: "Tranche 1 - $780,000 (60% of "as is" valuation of $1.3 million) for all costs, including interest for 12 months, associated with the pre-approval development work; and Tranche 2 - funds up to 60% of valuation of the land after development approval has been obtained from the Local Council to enable development works to be completed up to and including registration of the plan of subdivision." 39 The loan repayment date was: "12 months from the date of the Tranche 1 advance. The loan can be extended for further 12 month periods by agreement between the parties and subject to the Lender being satisfied as to the manner in which the obligations of the Borrower have been performed and that the security remains adequate and less than the stipulated loan to valuation ration."

Interest was payable at 14% pa reducible to 11% pa if paid promptly. The lender was to hold back enough money to pay the first twelve months interest from the advance. As well, fees and expenses estimated to total $24,514 were to be deducted from the first tranche. 40 The four guarantors, and representatives of the plaintiff and Koompahtoo, signed the Letter of Offer on 2 November 1998, thereby accepting it. A loan agreement stating the terms with somewhat greater formality was later executed, relating only to a principal sum of $780,000, with no covenant to make the second tranche available. It is not suggested, however, that the obligation on Inteq to make the second tranche advance was thereby dispensed with. 41 Some members of Koompahtoo were concerned that Inteq required a mortgage over the whole of Lot 556, when the land to be developed under the Joint Venture was only a comparatively small part of Lot 556. However, it is hardly surprising that a lender would want a registered mortgage as security for its loan, and no subdivision of Lot 556 had at that stage occurred, so it was not possible for Inteq to acquire a registered mortgage over only that part of Lot 556 which was proposed to be developed. On 20 November 1998 the plaintiff, Koompahtoo and the four guarantors executed an agreement which said: "1. As soon as the Stage One Land and Stage Two Land referred to in the joint venture agreement have been re-zoned to residential land then the mortgage to Inteq Custodians Limited will be discharged so that a subdivision of the land can take place so that only the Stage One Land and Stage Two Land will be subject to any mortgage. 2. Although Koompahtoo is required to give a mortgage over the whole of the land the parties are aware that if there is a default with respect to the loan agreement with the Inteq Custodians Limited that steps may be taken to sell the land being subject to the mortgage the parties do not wish this to happen and it has been further agreed that Sanpine and its Directors, in their personal capacity will take all necessary steps to repay the mortgage so that the land is not sold. 3. The Directors … agree that they will personally take all the necessary steps to pay out the debt and substitute other assets in place of the land." 42 Mr Scott gives evidence that by February 1999 funding had been obtained "for $3,000,000". While I accept that evidence, no loan agreement has been produced which contains any such obligation, nor has any account been given of particular conversations with a lender which amount to a contract to lend $3,000,000. I do not take Mr Scott's evidence to mean anything more than that a lender had indicated a preparedness to lend $3,000,000, not necessarily that anyone had a binding obligation to lend $3,000,000 under any particular circumstances, beyond the obligation of Inteq to make the second tranche of loan money available. 43 On 15 February 1999 Koompahtoo executed a Real Property Act mortgage over Lot 556, in favour of Inteq. That mortgage was stamped to $780,000, and registered as dealing 5629518Y. 44 At a later time Inteq changed its name to Cardinal Financial Securities Limited. Role of New South Wales Aboriginal Land Council 45 Section 40B(2) Aboriginal Land Rights Act 1983 ("ALR Act 1983") enabled a Local Aboriginal Land Council to change the use of land vested in it with the approval of the New South Wales Aboriginal Land Council ("NSWALC"). 46 Section 40D ALR Act 1983 provides that a Local Aboriginal Land Council may sell or mortgage land vested in it if, amongst other things, the NSWALC has approved of the transaction. As the Joint Venture Agreement between the plaintiff and Koompahtoo had as its inevitable effect that land vested in Koompahtoo would be changed in use from being open space and bushland to the site of a residential subdivision, and provided for both the mortgaging in the first instance, and the ultimate sale, of the land the subject of the Joint Venture, there was a practical necessity to obtain the consent of the NSWALC at a very early stage. 47 On 8 December 1998 Mr Docker, a representative of the NSWALC, attended a meeting of Koompahtoo which was also attended by some representatives of the plaintiff. Mr Docker explained to the meeting that in deciding whether to give approval NSWALC looked at the risk involved, the value of the land, and whether what was being done in relation to the land involved working within the value. There was some discussion at that stage about how it was expected that borrowing of $780,000 would take the project past the rezoning stage. 48 On 19 January 1999 Mr Docker, who had responsibility for preparing a report on the transaction for the NSWALC, wrote to Koompahtoo asking numerous searching questions aimed at finding out about the history of the Joint Venture and the obtaining of finance for it, what legal obligations existed concerning those matters, and what risks were associated with the project. 49 The matter was on the agenda of NSWALC for a meeting held from 2 February 1999 to 5 February 1999. The briefing papers for members of NSWALC for that meeting included the following: "If the rezoning application is successful it is intended that the mortgage over the whole of the land will be discharged and another mortgage taken out over the part of the land to be developed. This is feasible because once the land is zoned for residential development its value will substantially increase. Following this the plan is for the residential land to be subdivided into residential blocks, services to be connected to the blocks, and the blocks be sold in stages to maximise return. … Under the proposal the most risky part of the development for the LALC is the period before the LMCC decides whether or not to approve the rezoning of part of the land. In other words, there is a risk for Koompahtoo LALC that it will lose all the land if something goes wrong such as the application for rezoning is refused by LMCC or substantially delayed. Once the land is rezoned and only the part of the land zoned for residential development is under mortgage then only this land will be at risk. It is NSWALC's role in its approval function for the mortgage to consider the risk of Koompahtoo LALC losing its land if Cardinal (previously Inteq) are not repaid their loan in time and it decides to act on the mortgage from Koompahtoo LALC to get its money back. The risks to Koompahtoo LALC include: 1. The mortgage is for $780,000 and the valuation asked for by Inteq stated that the land is good for a mortgage for $845,000; 2. If there is a problem with the repayment of the loan, the lender, Cardinal (previously Inteq), is most likely to firstly rely on the mortgage to get its money back; 3. There is no guarantee LMCC will approve the rezoning, nor any guarantee of when it will make a decision on the application for rezoning. A refusal or delay is likely to increase the risk of the loan not being able to be repaid in time and therefore of Koompahtoo LALC's mortgage being foreclosed;" 50 On 4 February 1999 NSWALC approved the use of Lot 556 for residential development, and approved the mortgage of the land in Lot 556 to Inteq. 51 The forecast which was provided to the members of NSWALC of the areas of risk for Koompahtoo has proved accurate, though events have not yet reached the stage where Koompahtoo has had its land sold to repay a mortgage debt. The rezoning still has not been achieved, and the town planning evidence in this case is that considerable time, work and expense will still be required to enable rezoning to be achieved, if it is ever achieved. The whole of Lot 556 remains subject to a registered mortgage (though not to Inteq), which the mortgagee claims secured a debt of at least $2.36m as at 30 June 2004. The validity of that mortgage is in contest in other proceedings, and nothing I say in this judgment should be taken as prejudging the question of the validity of that mortgage. If the mortgage is valid, the amount secured under it would inevitably have increased after 30 June 2004 by the addition of interest at a default rate, and perhaps by the addition of enforcement expenses. PART D - CIRCUMSTANCES OF DELAY IN ACHIEVING REZONING, UP TO FEBRUARY 2001 52 One of the grounds on which the defendant seeks to justify its termination of the Joint Venture Agreement relates to the circumstances in which the rezoning of the land has been delayed. I will consider the legal basis for that complaint later (paras [213] - [222] below), and will first trace the circumstances in which the delay came about. Sanpine Pty Limited 53 The plaintiff has never carried on any business other than entering and carrying on the Joint Venture with the defendant. There is evidence from Mr Scott that the shareholders in it are Amabowl Pty Ltd (a company which acts as the trustee of a trust for the benefit of the family of Mr Graham Steer), Erolvase Pty Ltd (a company associated with the family of the late Mr Charles Perkins AO and Mr Adam Perkins), Lesley Molony (the domestic partner of Mr Robert Scott), and three other companies who hold a very small shareholding of some ten percent between the three of them. All the assets of the plaintiff are held on the trusts of the Sanpine Unit Trust. I have some doubt, arising from Mr Steer's evidence, about whether Mr Scott's evidence of the shareholdings in Sanpine is really evidence of the shareholdings in the corporation, or whether it should be taken as identifying the holders of units in the unit trust, or whether the corporate structure is such that the holder of a certain number of shares in the corporation also holds that number of units in the Unit Trust. Subject to that qualification, which the evidence does not enable me to resolve, I accept Mr Scott's evidence on this topic. At one time in 1997 Mr John Leece and Mr John Landerer CBE AM were either shareholders in Sanpine, or the holders of units in the Sanpine Unit Trust, or both. Events Before 4 February 1999 Related to Possible Rezoning 54 The Joint Venture Agreement had a long gestation period. On 10 July 1996 a general meeting of Koompahtoo endorsed in principle a proposal to develop "Morisset 200 acres" by Joint Venture with Sanpine. A special meeting of Koompahtoo on 18 December 1996 resolved that Koompahtoo enter a Joint Venture project with Sanpine. Koompahtoo had engaged Gardner Brown, a planner, to advise it in relation to development of the land. 55 After the Joint Venture Agreement was executed on 14 July 1997, a draft written agreement came into existence between Smith & Sons Consultancy Pty Ltd on the one part, and Sanpine and Koompahtoo on the other. Smith & Sons Consultancy Pty Ltd is a company associated with Mr Bill Smith. He has at all relevant times been the Chairman of Koompahtoo. The draft agreement made provision for Smith & Sons Consultancy Pty Ltd to provide the services of Aboriginal Liaison Officer to the Joint Venture, for a period of three years from 1 September 1997, at a fee of $4,717 per month plus provision of a motor vehicle. While the agreement does not appear to have been executed by all parties, Mr Smith provided the services of Aboriginal Liaison Officer to the Joint Venture at least until a time in 2003, and his company was paid for those services. 56 Soon after the execution of the Joint Venture Agreement Mr Scott began to perform the role of Project Manager. There is no evidence of either a written agreement, or a minute, authorising his appointment at that time, and no account has been given of any oral arrangement under which he came to be appointed. 57 Notwithstanding that the Joint Venture Agreement made provision for the appointment of a Management Committee, nominated the four representatives that each of the venturers was to have on that Committee, and required the Committee to meet every month, there is no record of it having met until 29 January 1998, with its next meeting being on 16 February 1999. 58 On 13 October 1997, in response to an application for rezoning of Lot 556 that Koompahtoo had made in December 1996, LMCC passed a resolution that: "(1) Council advise the applicant that it supports limited residential development adjacent to the existing urban area of Morisset township and including the Crown Land area currently under claim subject to supporting conclusions of a Local Environmental Study over the whole site including Crown Land to the north west; (2) Council advise the applicant that they will be responsible for the cost of preparation of the Local Environmental Study, and further if the applicant wishes to advance processing of a rezoning application prior to the end of the Lifestyle 2020 Project they will be required to fund Council's administrative costs in processing the application." 59 On 6 November 1997 a planner from LMCC wrote to Koompahtoo saying that a rezoning fee of $7,500 was payable immediately, and that the cost of LMCC engaging consultants to complete the necessary studies associated with the local environmental study had not yet been fully detailed, but may well be in the order of $70,000 to $100,000. As well, an amount of the order of $50,000 would be payable to enable LMCC to employ a Project Co-ordinator who would work in house for a period of up to two years on a part-time basis to manage the overall project operation. 60 On 19 February 1998 LMCC wrote to Koompahtoo saying that, notwithstanding that Koompahtoo was eager to have a local environmental study commence, the EPA Act required the preparation of the local environmental study to be done by LMCC, not by Koompahtoo or agents employed by it. Further, LMCC could not start preparing a brief for the local environmental study until specifications for such a study were issued to it by the Director General of the Department of Urban Affairs and Planning ("DUAP"), which had not yet happened. 61 This letter led Mr Scott and Mr Bill Smith to seek and obtain a meeting with the Director General of DUAP, Ms Holliday. On 4 April 1998 she wrote to LMCC saying that (contrary to LMCC's opinion) an environmental study over the whole of the site owned by Koompahtoo was not necessary given that large parts of it were proposed to be zoned open space. Further, the Director General saw no reason why Koompahtoo should not "directly manage preparation of the required studies in order to ensure the on time achievement of the timeframe/milestones". To enable that to happen, the Director General directed, pursuant to section 74(2)(b) of the EPA Act, that sections 57 and 61 EPA Act would not apply. She said that Koompahtoo should now be encouraged to proceed to prepare the necessary studies in satisfaction of LMCC's requirements. 62 One problem with the proposed development site was that there were underground coal leases under a part of it. Mr Scott had been making efforts to obtain clearance, from the lessee of that coal, and the Department of Mineral Resources, to residential development occurring above the site of the leases. On 4 April 1998 the Director General was also able to pass on to LMCC advice that the coal underlying the immediately relevant part of the land had been found to be uneconomic, in consequence of which the Department of Mineral Resources did not object to development within that area. 63 On 5 June 1998 LMCC wrote to Mr Scott confirming that a local environmental study was no longer required, and an "environmental assessment" of the rezoning proposal, prepared by Koompahtoo and/or consultants on its behalf, would be sufficient to commence the draft LEP making process. An "environmental assessment" is not necessarily a less complex thing than a local environmental study. It is just that a "local environmental study" is something was has a statutory basis, and operates within statutory parameters. 64 As well, LMCC's letter of 5 June 1998 provided a list of consultants who might be suitable to engage. It stated that the environmental assessment should look beyond the boundaries of the area proposed to be rezoned as urban, so that that area could be assessed in its context. A map "illustrating the contextual issues which should be considered" was, it seems, provided. As well, LMCC's letter gave a list of topics which the environmental assessment would need to provide information on. One of those topics involved how the other particular topics all related to the need to create a more sustainable town centre for Morisset. LMCC was holding a planning workshop on that topic from 29 June to 1 July 1998, the outcomes of which would need to be considered by LMCC along with the results of the environmental assessment. 65 Notwithstanding this encouragement from LMCC, the joint venturers did not immediately engage consultants to carry out the environmental assessment. Sensibly, they took the view that there was no point in doing so until both finance had been arranged for the development, and approval of the NSWALC had been obtained. 66 The National Parks and Wildlife Service ("NPWS") had two different roles in relation to the rezoning of Koompahtoo's land. One role concerned whether items of cultural or heritage significance (which in this context meant particularly items of Aboriginal cultural or heritage significance) would be affected by the types of development which could be permissible following a rezoning. The other role concerned the way in which the rezoning would have effects upon the flora and fauna in the area. 67 On 29 January 1999 Mr Bill Smith wrote to the appropriate officer at NPWS confirming that there were no sacred sites, middens or Aboriginal artefacts on Lot 556, and that the land had been thoroughly inspected and had nothing of Aboriginal cultural significance upon it. The letter stated that he signed it under authority of Koompahtoo, and in Mr Smith's roles as Chairman, traditional custodian and Komilaroi elder. 68 In response, on 5 February 1999 NPWS wrote to the solicitors for Koompahtoo saying it was satisfied that no Aboriginal relics could be found on the surface of the property, but that relics may continue to exist in the subsurface soil. It proposed that this possibility be dealt with by having members of Koompahtoo invited to monitor any works which required excavation in excess of 30 cm, and that if relics were discovered during such work then the work should cease immediately and NPWS should be notified. It was implicit in this letter that NPWS would not require a survey of cultural and heritage items before the land was rezoned. Events 4 February 1999 to 12 December 2003 Concerning Rezoning 69 Once NSWALC had given approval to the change of use and disposal of the land, on 4 February 1999, the pace of work stepped up. Work started to identify consultants for the environmental assessment, and Mr Scott began to have regular meetings with LMCC to establish what consultants were required and for what purposes. Gardner Brown ceased to be the planner engaged by Koompahtoo in February 1999, and Mr Martin Johnson was appointed as planner for the Joint Venture.

The Project Management Agreement with Bronzewing 70 On 15 February 1999 a Project Management Agreement was entered between the plaintiff and Bronzewing Property Holdings Pty Ltd ("Bronzewing"). Bronzewing is a company of Ms Molony, and was the company through whom the services of Mr Scott were provided to the Joint Venture. In that agreement the plaintiff was referred to as "the Principal". The Project Management Agreement expressly stated that the plaintiff was entering into it on its own behalf and for the benefit of Koompahtoo pursuant to and in accordance with the provisions of the Joint Venture Agreement. A copy of the Joint Venture Agreement was initialled by the parties. The Agreement stated that Bronzewing was the project manager nominated pursuant to Clause 7.1 of the Joint Venture Agreement, and was appointed in accordance with the provisions of Clause 6.2(b) of the Joint Venture Agreement. The term of the Agreement was fifteen years, or the time taken to carry out the project, whichever was shorter. Topics on which Bronzewing was to advise and make recommendations to Sanpine included the implementation and carriage of any rezoning application to LMCC and DUAP and any other competent authority (Clause 4.9). Clause 4.11 obliged Bronzewing, as soon as reasonably practicable, to provide Sanpine with a Project Management Plan and a progressively updated Initial Works Program containing (inter alia) the following information: "(a) rezoning schedule (b) design and pre-construction program (c) construction program (d) list of equipment (e) cost budget, cost control systems and cash-flow (f) reporting and administration procedures (g) quality controls" 71 The "Initial Works Program" was defined, in Clause 3.1, as being: "the draft program of Works as annexed to this Agreement and marked "A" as updated from time to time (and in any event not less than once in every 6 month period during the Term) by the parties on the recommendation of the Project Manager to the Principal."

Notwithstanding the definition, there was no draft program of works annexed to the Agreement. Even so, Bronzewing's obligation to provide a document called an Initial Works Program, containing the information set out in Clause 4.11(a)-(g), and to update it not less than once in every six months, is clear enough. 72 Concerning the rezoning, Bronzewing's duties were stated, by Clause 4.14, to be to: "a) liaise with staff of Lake Macquarie City Council and establish clear rezoning parameters; b) liaise with all relevant statutory authorities and government departments, in particular the Department of Minerals and Energy and the Department of Urban Affairs and Planning; c) use best endeavours to ascertain the rules and regulations of any other relevant Authorities not previously ascertained; d) use best endeavours to obtain approvals required by all relevant Authorities; e) appoint Consultants and Professional Service Providers to carry out specific studies as and when required, including, but not limited to, survey, urban planning flora and fauna, flooding and drainage, noise, soil assessment, geotechnical, archaeological, transport, bush fire assessment, landscape, finance, social impact and market considerations; f) enter into Consultancy Agreements and contracts with Consultants and Professional Service Providers as the disclosed agent for the Principal; g) co-ordinate the work of Consultants, Contractors and Professional Service Providers in order to complete rezoning in an efficient manner and reasonable time frame; h) advise the Principal of the progress of rezoning on a regular basis." 73 Clause 4.18 required the plaintiff and Bronzewing to meet not less frequently than monthly (unless otherwise mutually agreed upon and noted in writing), and Bronzewing's duties included to: "b) arrange, conduct, keep records and issue minutes of all meetings. d) regularly review the Initial Works Programme and the project management plan and report to the Principal on any matters affecting it. e) as required by the Principal (but not more than once a month), furnish an updated cost report showing; - monies paid to date - amounts of current contracts - sums still listed as provisional - cash flow forecast - the number, description and estimated value of approved variations - any other matters relevant to project expenditure" 74 For those duties, Bronzewing was to be paid a monthly fee of $6,500, indexed annually by the CPI, unless otherwise agreed in writing.

The Management Committee 75 On 16 February 1999 a Management Committee meeting was held at Peppers Terrigal. 76 From the time of that meeting, the membership of the Management Committee remained constant until the death of Mr Charles Perkins in November 2000. The representatives of the plaintiff were Mr Charles Perkins, Mr Adam Perkins, Mr Steer, and Ms Molony. Mr Scott was appointed to act on behalf of Ms Molony, and invariably he attended the Management Committee meetings in that capacity, as well as on behalf of the Project Manager, and Ms Molony did not attend. The representatives of Koompahtoo were Mr Bill Smith, Mr Malcolm Smith, Mr Edward Smith, and Mr Stephen Griffen. Mr Bill Smith was at all times the Chairman of Koompahtoo. Mr Griffen was Treasurer of Koompahtoo at least from 8 January 2001. Indeed, he executed the mortgage given to Inteq on 15 February 1999 in the capacity of Treasurer, which I accept as an admission by the first defendant that he held that office at that date. I infer that Mr Griffen was Treasurer continually from February 1999 until December 2003.

Steps to Advance the Rezoning February 1999 to April 2002 77 The minutes of the meeting of the Management Committee held on 16 February 1999 record Mr Steer's advice "that a bank account had been established at the National Australia Bank - 101 Pitt Street Sydney and that the signatories to the account were:" (three named people on behalf of the plaintiff, and three named people on behalf of Koompahtoo). The minutes continued: "Two signatories are required for this account and are to be one member from Sanpine and one from Koompahtoo". 78 Mr Steer reported to the meeting that the Aboriginal Liaison Officer's salary would now be paid by bank transfer, and the Aboriginal Liaison Officer's vehicle would be replaced every three years, with the vehicle that was being replaced being retained by the Aboriginal Liaison Officer. Payments for attendance at meetings were to be brought up to date, and future meeting payments would only be paid on attendance. Those eligible for meeting payments were Messrs Malcolm and Edward Smith, and Mr Griffen. (Presumably, it was thought that when Mr Bill Smith's activities as Aboriginal Liaison Officer were paid for, he should not be entitled to any separate payment for attendance at meetings.) Throughout succeeding years, payments to these Aboriginal representatives on the Management Committee continued to be made at the rate of $100 per meeting attended. As well: " A timetable for the various studies required to be undertaken for the rezoning was presented and it was indicated that these studies could possibly be presented to Council at its May/June meeting. It was advised that a meeting with Martin Johnson was taking place immediately following this meeting and that a detailed time table for the rezoning would be provided to the next management committee meeting." 79 On 9 March 1999 Mr Johnson gave a list of proposed consultants to LMCC. An understanding seems to have been reached with LMCC, at least by this time, that the way in which the Environmental Assessment would proceed would involve various consultants in particular specialisations each giving reports which related to their own area of specialisation, and those reports would be drawn upon and integrated into a single document, prepared by Mr Johnson, which dealt with the overall effects of the proposed rezoning on the environment. 80 On 18 March 1999 the Management Committee met. The minutes record that a schedule of payments for meetings had been processed, and payments made to the relevant members of the Management Committee. Mr Scott presented a list of potential consultants in the various disciplines that were relevant to the environmental study. A rezoning schedule timeline was tabled. It was a one-page document, which listed various tasks which needed to be done before a rezoning could be achieved. It did not deal with the entirety of that process, however - it only took it up to the stage of the drafting of a LEP and a Development Control Plan, and review by LMCC. It showed the LMCC review being achieved by 14 June 1999. Mr Scott also presented a written project management report, which said, concerning this schedule: "The timetable is most ambitious - and is so for a very sound reason. This tight schedule has been prepared for the sole purpose of keeping consultants well and truly on track. On that basis I do not expect to ever be advised that I am running behind if for some reason beyond my control things do not happen exactly as per schedule." 81 Mr Scott gives evidence, which I accept, that immediately after the schedule was put out LMCC required that studies be done over not just the proposed development site, but over some 320 to 340 ha. That change, he says, altered the time expected to be required for the various studies, and resulted in the program being revised. As will be seen, it was revised by being extended by only two weeks. 82 On 29 March 1999 there was a general meeting of Koompahtoo. It was the first occasion, so far as the evidence discloses, where dissension between members of Koompahtoo concerning the Joint Venture project was expressed. Later events showed that that dissension never completely went away, and caused significant disruption to the carrying through of the Joint Venture. Mr Scott's evidence about the meeting, which I accept, was: "I think I was only about a third of my way through my report to the meeting and because of a couple of dissidents who threatened uproar and the police were called and they were jumping out windows and I left the meeting. I remember that vividly. There were baseball bats put through car windows and people arrested and everything … the meeting was in an uproar from the time we got there. The handfull of dissidents brought in a few people who were, all I can say were drunk and disorderly, and the meeting broke up and there were fights going on. There were honestly people, women unfortunately, very sad, jumping out windows with about a 12 foot drop below … and I just left, got out of the place real quick." 83 On 14 April 1999 the Management Committee met. A Project Manager's report was tabled. Mr Scott reported on what studies had been started, and what still remained to be started, and the timeline was discussed. He reported that no archaeological and heritage study had been commissioned, as the letter from NPWS (of 5 February 1999 - para [68] above) fulfilled the requirements of LMCC in the first instance. 84 It was in May 1999 that studies for the environmental assessment began to be carried out. 85 A further Management Committee meeting on 16 May 1999 included a report from Mr Bill Smith concerning how the Joint Venture was receiving damaging adverse publicity from a minority breakaway group. Mr Scott's written Project Management report included: "The recent events within the Koompahtoo Local Aboriginal Land Council by some of its members need to be discussed and consideration given to Sanpine and/or Sanpine and Koompahtoo taking legal action against the offending parties. The type of undermining that is currently being exercised by this small group WILL do irrepairable damage to the development if not stopped immediately."

An amended rezoning schedule was presented, which showed the council review continuing to 21 June 1999, with the last event shown being completion of a final environmental study a week after that. 86 On 20 May 1999 LMCC had the public launch of its Lifestyle 2020 Study. This was a draft strategic land use plan relating to the whole of the area controlled by LMCC. Strategic planning involves the thinking through and adoption of policies, which have no particular statutory basis, but which articulate the objectives which the council wants to achieve through the adoption of particular planning instruments, like a LEP, which have statutory force. Mr Scott reported to the Management Committee on 9 June that: "The highlight of the launch was the fact that the Joint Venture parcel of land is to be the only major release area within the whole Morisset - Cooranbong - Wyee precinct. The 2020 Study Report is still being printed and will not be available till Friday of this week. This has delayed the completion of some of the planning studies that we are carrying out. The studies will be completed however within a few days of the release of this document." 87 On 27 May 1999 an extraordinary general meeting of Koompahtoo occurred. Mr Scott reported to a Management Committee meeting held on 9 June 1999 that that general meeting: "… unfortunately turned into a complete fiasco. It is my firm belief that unless this problem within Koompahtoo is not [sic] rectified quickly then the success of the Joint Venture is being placed at enormous risk." 88 At the meeting of the Management Committee held on 9 June 1999, the minutes record: "Graham [Steer] advised that he was contacted by a reporter from the 60 Minutes program investigating the Joint Venture and the actions of Small [sic] dissident group associated with the KLALC. He confirmed that information was relayed to the reporter after consultation with all members of the Joint Venture. Adam Perkins then advised the meeting that Charles [Perkins], Graham and himself had meet with the reporter and the reporter confirmed that based on his research that there were only a handful of troublemakers that were not representative of the aboriginal community and the Land Council. Billy [Smith] and Bob [Scott] then raised the issue of the upcoming Audit and in particular the cost to the Joint Venture. The chairman [Graham Steer] advised that whilst there is a requirement under the Joint Venture for an audit, he believed that if the expenses were not incurred until the rezoning then the audit of the Joint Venture could be deferred. He confirmed that Sanpine has no requirement for an audit. After much discussion it was agreed by all members of the committee that because of the expense of the audit and the fact that at present the expenses of the JV are being incurred by Sanpine Pty Limited on behalf of the Joint Venture, that the audit of these expenses could be deferred until the rezoning. The meeting resolved to defer the appointment of an auditor of the Joint Venture until the rezoning." 89 Another meeting of the Management Committee occurred on 14 July 1999. A project manager's report reported that significant delays had been experienced in carrying out a survey of Pourmalong Creek. That creek runs through Lot 556, and soon after leaving Lot 556 empties into Lake Macquarie. A hydrology study which LMCC required needed a cross-sectional survey of Pourmalong Creek to be carried out from its headwater to its mouth. The thickness of the vegetation along the creek, and the fact that "the site is a quagmire as a result of the incessant rain" had delayed the survey. In consequence Mr Scott's projection of March 1999 was running about one month late. 90 Problems with dissidents within Koompahtoo had continued. The minutes noted that there had been an incident, during a march to LMCC, "… when the Aboriginal Flag was being raised the small group of dissidents attempted to disrupt the ceremony and pull the flag down. This ugly incident appeared on Prime Time television in the evening News and Front page of the Newcastle Herald the next day." 91 Mr Scott referred to these in his report as "disgraceful demonstrations", and wrote: "I MUST STRESS ONCE AGAIN IN THE STRONGEST POSSIBLE TERMS - THESE INCIDENTS AND CONTINUING INTERNAL PROBLEMS WITHIN KLALC WILL HAVE A DEVASTATING AND DETRIMENTAL EFFECT ON THE SUCCESS OF THE DEVELOPMENT. I am personally convinced that all the "Education Meetings" in the world will not put a stop to the problems that currently exist. The whole fiasco is a people problem - a "bad blood" problem - in other words an Aboriginal problem and will only ever be sorted out by Aboriginals". 92 Mr Bill Smith reported to the meeting that the disruption was "under control" and that: "The KLALCs committee's plan is to increase the education about the development and squash the votes of no confidence once and for all."

The minutes noted: "Billy confirmed that both the board of the KLALC and the Project Manager had spent an enormous amount of time trying to relieve the concerns of the dissident members on a daily basis. Billy further confirmed that whilst the problems were associated with the KLALC it was definitely having an effect on the JV. The committee expressed their support to the current proposals and acknowledged the difficult position Billy and his committee were having." 93 At the meeting of the Management Committee on 11 August 1999 Mr Scott reported that difficulties continued with the survey of the creek, which had "effectively placed the project some two months behind the original optimistic timeframe". At that stage, it was expected that the rezoning proposal could go to a meeting of LMCC in late September 1999. Mr Bill Smith reported that he had: "spent a lot of time ensuring [sic] the members of the KLALC that the project was on track … advised that the members were now behind the committee and the vote was now 67/11. They are looking at the legal alternatives and the removal of the disruptive elements." 94 By the time of the Management Committee meeting on 8 September 1999, the surveying of the creek was complete. Mr Bill Smith reported that he had had an "extremely busy month putting out fires and keeping the joint venture on track", and that there had been an extraordinary meeting called by the break-away group, "… who did not stand by their conviction and attend the meeting they requested …", in consequence of which the meeting was ineffective for lack of a quorum. Another meeting had been called for 13 September 1999 to expel the break-away group. 95 At a Management Committee meeting on 13 October 1999 Mr Scott reported that he had met with the Chief Town Planner of LMCC and had prepared a timetable, which was most ambitious, which would see the land rezoned in early February 2000. Mr Smith reported "that there were some difficulties within the KLALC with a break-away group causing some problems that had taken a lot of time away from the Joint Venture." Mr Scott reported that he was negotiating with the council about how long it should take them to review the various studies, and hence what fee the LMCC should receive for that review. The target rezoning date of February 2000 was dependent upon LMCC accepting the low number of hours for review, which Mr Scott was urging upon them. 96 At a Management Committee meeting on 10 November 1999 it was noted: "The dissidents still appear to be jeopardising the future of the whole JV. … the Project Manager's time was almost totally involved in the continuous information distribution requested by the KLALC for the purposes of meeting the requests of the dissident members and their associates including meetings with the Registrar of the Aboriginal Land Rights Act and the Director General of the Department of Aboriginal Affairs together with various members of the NSW Aboriginal Land Council". 97 Mr Smith's written report included a paragraph thanking Mr Scott "for your time and especially when yourself and good wife give up your family time at various nights & days weekend to make sure we keep on keeping on & staying on top." No mention was made of the meeting to expel dissidents, which was supposed to have been called for 13 September, so I infer that it either did not occur, or did not result in their expulsion. There was, however, mention of a meeting being set up with a QC concerning the "break-away members". 98 In November 1999 the environmental study prepared by Mr Johnson was given to LMCC. (Both Mr Johnson and LMCC had slipped into referring to this work as an "environmental study" by this time.) His study related to approximately 343 ha, including the area of approximately 110 ha proposed to be rezoned for urban usage. 99 On 16 November 1999 LMCC wrote to Mr Johnson confirming receipt of his environmental study, and other investigations as requested in the council's letter of 5 June 1998. LMCC sought the payment of $30,000, for its administration costs in processing the application, before it took the matter any further. It enclosed an amended project schedule, which showed an initial assessment of the investigations being due to be completed by mid-December 1999. However, it noted that the schedule might be delayed if revision of studies was needed, if issues arose from consultation with government authorities, other organisations and the wider community, if the Council itself (as an elected body) decided to defer or delay it, or if DUAP delayed in considering it. As well, the letter stated, with tantalising imprecision, "It is considered that a Master Plan/Plan of Management be prepared for the proposed urban development area. The Master Plan/Plan of Management would address many elements of the proposed development, rather than being constrained to development control, and incorporate a Master Plan of the site or precincts within the site. Master Planned communities provide many benefits, such as marketing, staging and development control in a more flexible and user friendly way. Your thoughts on this matter are requested."

LMCC had not previously mentioned any possibility that a Master Plan be prepared for the area. 100 Notwithstanding that LMCC said that it required payment of the fee for investigating the project before it would start that investigation, some of the council's officers began to examine Mr Johnson's study and the other subsidiary studies which accompanied it. In particular, Ms Rebecca Moroney, the LMCC Development Planner (Flora and Fauna) had reviewed the flora and fauna assessment by 14 December 1999. Two items of flora which proved important in the subsequent unfolding of the story are Tetratheca Juncea ("TJ") (commonly known as Black-Eyed Susan), and Angophora Inopina ("AI"), (commonly known as the Charmhaven Apple). 101 On 20 December 1999 a meeting took place between various officers of LMCC (including Ms Moroney), Mr Scott and Mr Johnson. By that time, the banking records related to the Joint Venture show that the fee of $30,000 had still not been paid to LMCC. Indeed, it was not paid until 14 February 2000. When Mr Scott was not cross-examined about this meeting (due, no doubt, to the fact that the council's file containing a record of it was subpoenaed only late in the proceedings, and after Mr Scott had given evidence) I am not prepared to make findings about precisely what transpired at that meeting. 102 An undated project management report which from some references in it seems to have been written towards the end of 1999 or in 2000 prior to 24 January 2000, reported on a major change to the area of the Joint Venture: "… at a three day Urban Design Workshop attended by Bill Smith (Chairman KLALC) and Robert Scott, the planning team decided that the Joint Venture land should be a major urban release area for the Shire. As a result of this decision the Joint Venture land is in fact the major urban release area for the entire western side of Lake Macquarie. At the three day workshop a working plan was created over the Joint Venture land. This resulted in the housing density/mix being increased substantially. Originally the area for rezoning was projected as 109 hectares (269 acres). The area now, as a result of the increase is 162.5 hectares (401.5 acres). The development will now comprise:- * 1245 residential lots * 439 medium density sites including a retirement village site * 16.25Ha (40 acres) mixed development being retail, commercial, childcare, etc. * 16.25Ha (40 acres) dedicated open space * 2.5Ha (6 acres) primary/high school Discussions are underway in relation to locating a TAFE College on the site which in turn would require an increase in area for educational purposes."

Even though it took until 17 October 2000 for the increased area of the joint Venture to be documented by the Supplemental Agreement (para [11] above) it was at least from the time of this project management report that the larger area was being considered by the Joint Venture parties as the site for development. 103 At a meeting held around late January or early February 2000, LMCC planners told Mr Scott that they wanted to increase the density of the development from twelve lots to the hectare to fifteen lots to the hectare. It took some time for that issue to be sorted out. 104 On 29 February 2000 another Management Committee meeting was held. It was reported that the fee to the LMCC had by then been paid. Mr Scott stated that further studies would be needed, that some plants and animals were causing concern, and that a meeting with NPWS had been held on 14 February 2000 concerning flora and fauna studies. A table, prepared by LMCC setting out the comments of various authorities concerning the studies, and the comments of LMCC's own officers concerning the studies, was tabled. Some of the more significant comments included, in substance: · Department of Land and Water Conservation - documents do not adequately address the issue of land capability, site rehabilitation or the sequence and timing of development. A site specific soil and water management plan was needed. Site vegetation management during development was not addressed. · Hunter Water Corporation - a statement in the study about an existing pipeline having been designed with capacity for the proposed development was incorrect. A servicing strategy for the development was needed. · NPWS - some species identified on the site may be of local or regional significance, but this has not been assessed. The extent to which the various communities and habitats found in the northern section occurs in the southern area had not been assessed, and hence one could not say whether protection of the land to the south would offset or ameliorate development impacts on the northern part. A more detailed assessment of AI was needed, and a targeted survey of TJ was required during its flowering season. Other shortcomings were identified. · LMCC section 94 co-ordinator - information used is out of date. · Rebecca Moroney - "inadequate level of investigation of [TJ]. Needs to be done." A species identification survey was required for identified threatened flora and fauna species. The "action required" column noted "time running out for TJ investigation - may affect ability to go on exhibition until next flowering season. Rebecca informed that Robert Payne has recently completed survey of area for TJ. He will supply a copy of this to Council as flowering season now over on the site." · Principal engineer - "The water quality study for the development is inadequate and not satisfactory. It is required that water quality modelling involving pre-development catchment and developed catchment shall be carried out using a computer model such as AQUAM and a report prepared … The water quality study shall be carried out prior to any rezoning to satisfy that the development will satisfy all current government policies and standards."

It can be seen that substantial work, on many topics besides flora and fauna, remained to be done. 105 On 1 March 2000 a stakeholder meeting was held, attended by various representatives of the Joint Venture, LMCC, DUAP, NPWS and Shortland Wetlands (who had carried out the flora and fauna assessment). 106 At that meeting a representative from NPWS said: "We would very much appreciate it if you would be prepared to tear up our letter dated 5 February 1999 which stated that no cultural and heritage study was required. We believe that the development is of such significance that we should cover all aspects of the development process and furthermore we would like our own people to be involved in that study because we want the study to become the benchmark of all future studies carried out in NSW."

As well, NPWS representatives said that they believed that a further Flora and Fauna Study should be carried out over the entire site - that is, over an additional area of more than 500 ha. 107 Mr Scott tried to talk NPWS out of these requirements. He had some powerful arguments in his favour: that it was unfair for NPWS to change its mind about the need for a Cultural and Heritage Study when the environmental assessment had gone on, over the better part of a year, on the basis that no such study would be needed; that it was doubly unfair in those circumstances for NPWS to decide to make this development the guinea pig which NPWS would use to conduct a study which could be the benchmark for its future Cultural and Heritage Studies; that it was unfair to require the additional Flora and Fauna Studies, over a huge area like 500 ha, when the Director-General of DUAP had specifically said on 4 April 1998 (para [61] above) that an Environmental Study over the whole of the site owned by Koompahtoo was not necessary, and the environmental assessment had proceeded on that basis. 108 Any force in these arguments was lost when Mr Smith said that the additional studies should be done, "because we must be seen to be working in harmony with the community". 109 Mr Scott was furious with Mr Smith, and accused him of putting back the development by twelve to eighteen months. As well, Mr Scott was extremely disappointed that Shortland Wetlands had not argued in favour of the adequacy of their own study. He had heard that Shortland Wetlands were in financial difficulties, and suspected that their silence sprang from a desire to get a significant new assignment. Whatever the reasons, the practical reality was that, by the end of the meeting, the joint venturers were stuck with a requirement to carry out the extra two studies. 110 At a number of meetings held with Ms Moroney, including at a meeting held on 9 March 2000, she drew Mr Scott's attention to the possible existence of TJ and AI on the site. They discussed the methodology to be adopted for both the Aboriginal Heritage Study, and the further Flora and Fauna Study. 111 On 28 March 2000 LMCC wrote to Mr Scott identifying, in summary form, the topics it had previously pointed to, in discussions since November 1999, as being ones concerning which it required further information. It said "council now anticipates receipt of this information or direction from you that the information will not be supplied. This direction will allow us to assess your proposal as it currently stands." 112 The Aboriginal Heritage Study was started in April 2000, and was complete by 7 December 2000. Mr Bill Smith had a significant role in its preparation. No problems arose about the adequacy of that study, and the need to perform it did not bring about any consequential delays in the carrying out of other studies. 113 It was otherwise with the Flora and Fauna Study. A prerequisite to carrying out the expanded Flora and Fauna Study was to do site survey work to establish grid patterns over the entire site over which the study would be conducted, so that particular species of flora and fauna could be identified as falling within particular cells within those grid patterns. That survey work could be adequately carried out by aerial photogrammetry, provided that there were three or four markers on the ground which could be identified by a plane flying over the site and taking photographs. However, even carrying out this comparatively simple type of survey was significantly delayed, because there were lead times of six weeks or so to book a plane which carried the appropriate equipment, and two attempts to book the plane were aborted when there was bad weather on the day for which it was booked. 114 At a meeting of the Management Committee held on 27 March 2000 Mr Scott in effect blamed Mr Smith for the extra delay and cost which would be involved in carrying out the extra studies, which "could so easily have been avoided". The minutes noted: "It was recognised that as the Project Manager and the Liaison Officer were conducting meetings on an almost daily basis there was not need for written voluminous reports. The meeting agreed unanimously to dispense with the requirement that written reports from the Project Manager and Aboriginal Liaison Officer be replaced by detailed verbal reports." 115 As well, at the Management Committee meeting on 27 March 2000: "It was agreed that we would appoint Umwelt (Australia) Pty Limited to complete the revised preliminary Flora and Fauna Study as required."

As well, the problem with the dissidents continued: "The issues associated with George Parry, Dargin etc continue to frustrate the time requirement to complete the JV." 116 The next Management Committee meeting was held on 15 June 2000. By that time the Flora and Fauna Study was yet to get into the field. The minutes said it was expected to commence on 18 July 2000, and to cost more than $20,000. The heritage and cultural study was expected to take another four months at least, and was expected to cost $15,000. 117 The next Management Committee meeting was held on 11 September 2000. The Flora and Fauna Study was, according to the minutes, currently being prepared, but delayed by weather. The minutes record that: "The issues associated with George Parry, Dargin etc continue to frustrate the sensible operation of the Land Council. Billy Smith confirmed to the meeting that the KLALC members at various meetings have discussed the possibility of transferring the Joint venture land to a separate Koompahtoo Trust. He confirmed that they are currently seeking independent legal advice."

As well: "Future meetings. As discussed previously it has become apparent that as all of the members of this committee are meeting and talking on the telephone on an almost daily basis that there is not the necessity to convene these meetings as often as previously. This has come about because of the continued delays from both actions within the KLALC and the extra studies required. Bob and Billy agree to keep each party informed and will advise when a regular meeting structure will be required. In the meantime and considering the regular updates the members of the committee agreed to defer the monthly meetings to be quarterly or half yearly." 118 There are minutes of a Management Committee meeting held on 16 October 2000, signed by Mr Steer as Chairman. Inexplicably, the text of those minutes is identical to the text of various paragraphs of the minutes of the meeting of the Management Committee of 11 September 2000. 119 These Management Committee minutes are inaccurate in reporting that the Flora and Fauna Study was under way. Notwithstanding the resolution at the March 2000 Management Committee meeting, Umwelt (Australia) Pty Limited ("Umwelt") had not been engaged to carry out the study. Mr Scott had had some meetings with Umwelt, and found out what their requirements were for carrying out a study (including the need to have the site surveyed), but it was not until February 2001 that Umwelt submitted a written proposal and quotation for a Flora and Fauna Study. Mr Scott agrees that it was only around February 2001 that Umwelt was formally appointed to carry out the study. PART E - ONGOING FINANCING OF THE JOINT VENTURE 120 It is appropriate at this stage, before completing the account of events leading to delay in the rezoning, and before considering whether these events concerning the rezoning show any breach of contract on the plaintiff's part, to pause and trace another series of events which was occurring, concerning the finances of the Joint Venture.

Bank Accounts Operated 121 The Management Committee meeting of 16 February 1999 had been informed about the opening of a bank account at the National Australia Bank in connection with the Joint Venture (para [77] above). In fact what had happened was that two separate accounts were opened at the National in February 1999. On 15 February 1999 account number 46 363-6065 was opened. It was called "Sanpine Pty Ltd as trustee for the Sanpine Unit Trust Business Management" I will refer to it as "The Unit Trust Account". 122 The first deposit into it was an amount of $670,036, on 16 February 1999. This was the net proceeds of the borrowing from Inteq. By 19 February 1999 the amount standing in that account had shrunk to $219,598.78. This was because, according to Mr Steer, various people who had paid creditors direct, for the Joint Venture, were repaid what were in substance loans made, by that procedure, to the Joint Venture, and various outstanding creditors of the Joint Venture were paid. No representative of Koompahtoo was a signatory on the Unit Trust Account. 123 A second account, number 46 433-3102, entitled "Koompahtoo Local Aboriginal Land Council Business Management" was opened on 17 February 1999 (in the sense that this is the first date which appears on a bank statement - it is perfectly possible that the documentation required to open it had been submitted, and stated to be acceptable by the bank, earlier than this, so I do not find anything improper in the Management Committee being told, on 16 February 1999, that the account had been opened). I will refer to that account as "the Joint Venture Account". It was that account which had authorised signatories coming from both parties to the Joint Venture. The Joint Venture Account operated as a "sweep" account, so that whenever a debit was to be made to it, enough money to cover that debit would be transferred into it, on the day the debit was due to be made, from the Sanpine Unit Trust Account. The effect of this way of operating it (including a few occasions when what I take to be administrative mistakes were made in carrying through the "sweep" arrangements) was that the balance at the close of any day was always either zero, or a balance within a few tens of dollars of being zero. The amounts which were debited to it were cheques (mainly for the payment of the meeting fees to the Koompahtoo representatives on the Management Committee), bank fees and monthly transfers of fees to Smith & Sons. That account was closed on 13 December 2000. 124 Amounts which were debited to the Sanpine Unit Trust Account included not only amounts which were transferred to the Joint Venture Account under the "sweep" arrangement, but also monthly transfers of fees to Bronzewing, cheques to consultants and finance companies, and various other expenses connected with the Joint Venture. 125 By 31 December 1999 the amount remaining in the Unit Trust Account was a little less than $3,000. A list of unpaid accounts which Mr Scott faxed to Mr Steer on 17 December 1999, totalled $7,990. A list of unpaid accounts as at 15 February 2000 totalled $32,100. 126 Various credits, which I infer were monies raised by the plaintiff from sources other than the mortgaging of the Joint Venture land, were paid into the Unit Trust Account over the period from 13 January 2000 to the end of March 2001. It is not possible to give a comprehensive summary of the dealings in that account over that period, because not all the bank statements relating to the period were tendered in evidence. I infer that it was a temporary lack of funds in the Unit Trust Account which caused the delay until 14 February 2000 in paying to LMCC the fee it required to consider the results of the environmental investigation (paras [99], [101] above).

Transfer of Lot 556 to Investment and Mortgage of Lot 556 to LKM 127 I have not so far mentioned the third defendant in this case. It has not played an active role in the case. It was incorporated on 7 July 1999, under a name different to its present one, and with Mr Steer as one of its initial directors, and its initial secretary. It changed its name on 23 March 2001 to its present name, KLALC Property & Investment Pty Ltd ("Investment"). On 4 April 2001 there was a mass appointment of people connected with Koompahtoo as directors. An undated Unit Trust Deed, which was stamped with stamp duty on 30 March 2001, established a unit trust of which Investment was the trustee. Broadly, the trust thereby established had thirty class "A" units, intended to be held by the members from time to time of the council of Koompahtoo. Those units conferred all voting rights. There were "B" and "C" class units, which conferred sole rights to distribution of trust income or profit, and capital, respectively. All those units were held by Koompahtoo itself. There was provision for the issuing of class "D" units to ordinary current registered members of Koompahtoo, but they do not seem to have conferred any rights, and none were issued. 128 The purpose of creation of the trust is stated in the file note of the solicitor involved in its creation: "Sanpine Pty Limited and the Land Council [ie Koompahtoo] wish to increase the loan which exists over the Land Council's property to continue with the next stage of the development. The mortgagee and the Land Council want the property to be alienated from the Land Council before the new mortgage or additional advance. The reason for the alienation is that the Land Council is fearful that in the event an administrator is appointed to take over the affairs of the Land Council that joint venture will be at risk and the development may not proceed … The purpose of this trust is to alienate the land from the clutches of an administrator for a period of at least 15 years so that the subdivision can be well and truly in place by that time."

A letter from those solicitors, Baldwin Oates & Tidbury, to Mr Steer dated 8 March 2001 in substance confirms this purpose. 129 The 9 March 2001 Management Committee minutes contain a Project Manager's Report stating: "The loan facilities are in the process of being extended based on the current budget to $1.65 with LKM Capital. These funds are required because of the extra studies. These expenses will be submitted as Joint Venture expenses when the rezoning is completed. LKM will hold a Mortgage on the KLALC land as security."

The minutes have appended to them a cashflow, dated 13 February 2001, showing anticipated expenditure over the months February to July 2001, but not beyond July 2001. The outgoings included items said to be repayment of loans from Bronzewing, Welsh, Erolvase, and Amabowl. The total estimated expenditure over those months was a little more than $1.38 m. 130 On 24 March 2001 Baldwin Oates & Tidbury reported to "the Secretary, Sanpine Pty Ltd" that Mr John Waters, barrister had: "… expressed doubts as to whether the transfer of the land to a trust would achieve your stated result, ie protect the land if an administrator were appointed … You have indicated that despite John's advice, you are proceeding with the transfer." 131 On 28 March 2001 LKM Capital Limited ("LKM") (a company associated with Koops Martin) sent to the directors of Sanpine and Investment a letter of offer relating to a loan of $1.65 m, for the purpose of refinance and residential subdivision development, with a loan repayment date of 30 June 2002, subject to extension for further twelve month periods if certain conditions were met. The interest rate was 14% pa reducible to 11% for prompt payment, and twelve months interest would be deducted on settlement. 132 On 30 March 2001 Koompahtoo transferred its interest in Lot 556 to Investment. 133 On 2 May 2001 a transfer to LKM of Inteq's mortgage over Lot 556 (along with many other mortgages) was registered. On 5 June 2001 a discharge of that mortgage 5629518 was registered, and a new mortgage 7612294P, from Investment to LKM over the whole of the land in Lot 556, was registered. 134 A loan agreement, the date of which can not be readily ascertained, was executed by the plaintiff, relating to a borrowing of $1,650,000 by Investment and the plaintiff, supported by mortgage over Lot 556, and first registered charges over both the plaintiff and Investment. It is not clear whether Investment ever executed it. However, an annexure to the registered mortgage over Lot 556 given by Investment contains a personal covenant on the part of both the plaintiff and Investment. 135 These transactions with LKM resulted in an additional amount of $300,000 being paid by LKM into the Unit Trust Account on 23 May 2001. 136 Transferring the land to Investment did not, however, allow the development of the land to proceed smoothly. Mr Scott explains why: "After this occurred, a couple of members within the KLALC and the regional Councillor, Veronica Graf of the NSWALC claimed that Bill Smith, Chairman of KLALC had transferred the land to his own company and that KLALC had lost the land. I was informed that the NSWALC had been provided with a copy of the minutes of the relevant meetings and all of the Trust documentation. I was asked by the Executive of KLALC and Sanpine to assist the KLALC with the NSWALC problem. I subsequently attended many meetings along with Bill Smith and Members of the Management Committee and the CEO of the NSWALC and other representatives of NSWALC in an endeavour to separate the facts from the politics. Meetings between me, KLALC Joint Venture Management representatives and the KLALC Executive were being held in one form or another on an almost daily basis." 137 On 27 June 2001 Mr Jeff Bradford, Chief Executive Officer of NSWALC, wrote to Mr Smith, requesting that he explain certain of the real property dealings which had been registered in early June 2001. 138 On 13 September 2001 a Management Committee meeting was held, at which: "Bob [Scott] and Billy [Smith] then tabled a copy of the new mortgage document that will be stamped … confirming the increase in the mortgage facility to $1.95 m." 139 The Project Manager's report gave details of a meeting which Mr Scott, Mr Smith and other members of Koompahtoo had had at the NSWALC with Mr Bradford and others. He reported how an officer of NSWALC had telephoned Mr Koops, of LKM, seeking information, which caused Mr Koops to ring Mr Scott "to express his grave concerns in this matter in particular the prospect of external interference in the project." Mr Scott also reported that the Umwelt study was now complete and would be submitted shortly to NPWS. 140 Mr Smith made clear that the ongoing trouble was taking its toll on him: "Billy advised that he was gutted by the continual harassment that was delaying the progress of this whole development and destroying the KLALC. Billy then confirmed to the meeting that the offices of the KLALC had been severely damaged by fire on the 5th September under very suspicious circumstances. The fire has had very detrimental effects as it has destroyed most of the records of the Land Council and has delayed the completion of the annual audit. This in turn has meant that there is a delay in the funding for the KLALC. As far as the dispute with the NSWALC he confirmed that there would be a coming to an agreement … He went on to confirm that the board of the KLALC would call a meeting of the members shortly to ratify the motions required to confirm the transfer of the land. He thanked Sanpine on behalf of all the true members of the KLALC for their continued support and assistance in this troubled time. He then led the meeting in a short prayer." PART F - RETURN TO THE EVENTS CAUSING DELAY IN REZONING November 2001 to April 2002 141 The Umwelt study was completed in November 2001. It was given to LMCC at that time. LMCC considered the study itself, and also referred it on to NPWS. 142 On 3 December 2001 LMCC wrote to Mr Scott. It confirmed that investigations remained to be provided, before the rezoning application was progressed, on the following topics: · Hydrology and water quality · Acoustic assessment · Traffic and transport · Population projections and community profiles · Opportunity and constraint mapping 143 The letter went on to draw particular attention to the need for a further water quality study involving modelling, as had been advised in the comments of the Principal Engineer which were sent to Mr Scott in February 2000 (quoted at para [104] above). Mr Scott says that nothing in that letter was new, apart from the request for water quality modelling. I do not agree that the request for water quality modelling was new - it was a reiteration, in exactly the same words, of the requirement which had been notified in February 2000. I accept that some studies on each of these topics had already been provided to the council, by the end of 1999, except for the acoustic study, so that all bar one of the extra studies which were being requested were updates or expansions. Further, the Acoustic Study was one which it was not practical to carry out immediately, and would not take very long to carry out in any event. 144 There was a further Management Committee meeting on 18 December 2001, at which Mr Smith continued his optimism that the factional troubles were nearly over. "Billy advised that a meeting of members held on the 8th October the three motions required by the NSWALC were presented and passed. He further confirmed that the resolutions had all been forwarded to Mr Jeff Bradford and was advised that this would be the end of the matter." 145 Another Management Committee meeting took place on 26 March 2002. The present situation was summarised by Mr Scott: "Bob informed the meeting that the Joint Venture was at a standstill. The turmoil within the KLALC and its effect on the Trust has caused considerable delay and frustration and ceased all studies. Bob is working full time with the Trustees to assist in a suitable settlement that will allow the development to proceed. He confirmed that at present the only studies still outstanding are Flora and Fauna, Water Quality, Noise and Traffic."

Mr Smith's report was: "Internal problems within the KLALC continue to frustrate the development. Billy advised that one of the ring leaders had resigned his position as Coordinator on the 5th March. Billy advised that a smear campaign had been launched against him and stated that it is all completely untrue. He advised that the AGM for the KLALC would be held in April and hopefully this would settle all the issues. The meeting wished him well." 146 On 3 April 2002 NPWS wrote to LMCC concerning the Umwelt flora and fauna report. In summary, NPWS was not happy with it. Some of the more significant points made by the letter were:

(a) NPWS agreed with the report that parts of the site were of regional conservation significance;

(b) parts of the reasoning in the report were inadequate to justify the conclusions about the conservation values of particular areas within the site;

(c) there might be some threatened species on the land which had been added to the list of threatened species since the report was compiled;

(d) some flora species which might occur on site were not targeted - in particular TJ and AI;

(e) the proposed development site could be reconfigured;

(f) it was not good enough to say that development within an area was unlikely to have a significant impact on threatened species - rather, the assessment should be carried out in relation to a proposed development whose footprint, density and potential impacts were reasonably well defined;

(g) NPWS needed further information before approving the flora and fauna study;

(h) NPWS made suggestions for a supplementary study.

It was indeed true that the Umwelt report had not involved Umwelt in carrying out their own survey to ascertain the presence of TJ. The report had simply accepted as accurate earlier work done by Payne in 2000 on that topic. 147 NPWS's letter of 3 April 2002 was passed on to Mr Smith in mid-April 2002. At the beginning of April 2002 there was a little over $114,000 standing to the credit of the Sanpine Unit Trust bank account. However, nothing more was done, ever, to produce reports which would enable the rezoning process to continue. April 2002 to December 2003 148 The cause of this inactivity was that on 26 April 2002 the Registrar General placed a caveat, under section 12 of the Real Property Act 1900, on the title of Lot 556. This was done, it seems, at the instigation of one of the dissidents, Mr Dargin, who had obtained some legal assistance from Allens Arthur Robinson, solicitors. As Mr Scott saw it, the practical effect of the caveat was to prevent any more drawing down of money for the project, and that work had to cease because of a lack of funding. 149 Over the period from April 2002 to February 2003 Mr Scott spent an enormous amount of time trying to have the caveat removed. 150 In June 2002, NSWALC appointed an investigator of Koompahtoo. 151 The attitude of LKM can be ascertained from a letter which Koops Martin, lawyers for LKM, wrote to Allens Arthur Robinson on 19 June 2002. Salient points include: "The mortgagee continues to be satisfied with the value of the security it holds and that the Joint Venture is moving towards its objective of a development consent being granted for the subdivision; … The loan fell due for renewal in April 2002 and the existence of the caveat lodged by your clients prevents the registration of a variation of mortgage by which additional funds need to be advanced to bring the project to a stage where development consent can be granted; … Our client is of the view that the current circumstances surrounding the caveat and the inability to enter into a variation of mortgage with the mortgagee may give rise to a default pursuant to the terms of the mortgage. In those circumstances, if not remedied by a resolution of the dispute between the mortgagor and the other parties, notices may need to be issued by the mortgagee to the mortgagor and the mortgagee may potentially have to exercise its power of sale in relation to the security. It is not the desire of the mortgagee to take such actions. However, it will not tolerate any continuing uncertainty surrounding this matter and requires that it be brought to a resolution between the parties in a timely and orderly fashion."

That letter also made clear that it was the mortgagee which had instigated the transfer of the land to Investment, so as to make the security more acceptable, and that the mortgagee was of the view that the relevant provisions of the ALR Act 1983 had been complied with. This letter did not result in the removal of the Registrar General's caveat. 152 Mr Koops' letter might have been wrong in saying that the loan fell due for renewal in April 2002 - according to the letter of offer it would fall due for repayment on 30 June 2002 (para [131] above) - unless Mr Koops meant that the lodging of the caveat had triggered an event of default. But this is a comparatively unimportant detail. What matters is that, as Mr Scott saw it, at the time the caveat was lodged the Joint Venture was in imminent danger of running out of money, and so could not advance the rezoning while the caveat was in place. 153 Another hoped-for way out of the difficulties afflicting the development came to nothing on 11 October 2002, when NSWALC declined to pass a motion to approve the transfer of the land to Investment. It did this without expressing any view about the merits of the transfer, acting simply on the basis that it had no power to grant approval retrospectively. 154 On 25 February 2003 the second defendant was appointed as administrator of Koompahtoo. This caused LKM to serve a notice under section 57(2)(b) Real Property Act 1900 on Investment on 7 March 2003, requiring the payment of $2.147 m. That notice was not complied with. On 10 April 2003 LKM became mortgagee in possession of Lot 556, by appointing itself controller under section 429(2) Corporations Act 2001 (Cth). That remains the position today. 155 The administrator spent some time seeking to gather together documents which would enable him to understand the transactions of Koompahtoo. On 13 March 2003 he wrote to the plaintiff saying that no drawings were to be made on the facility without his express written approval, and that the mortgagee had been notified of this. 156 The $114,000 which was in the Sanpine Unit Trust bank account at the beginning of April 2002 had been dwindling. Bronzewing Pty Ltd continued to receive $6,500 per month for its activities as Project Manager. The February 2001 four month cashflow (para [129] above) showed Smith & Sons Pty Ltd being paid $5,100 per month, and $750 per month being expended for the lease of Mr Smith's motor vehicle. I infer those payments continued. There were also, no doubt, other expenses. 157 The result was that at the time the second defendant was appointed administrator the Sanpine Unit Trust account had only a shade more than $500 in it. That, together with the fact that the facility had in any event been fully drawn and expired, meant that the practical effect of the second defendant's letter of 13 March 2003 was that his approval would be needed if any more money was to be spent on the Joint Venture at all. He never gave any such approval. 158 As well, I accept evidence of Mr Steer, which is uncontradicted by the second defendant, that they and Mr Scott had a meeting on 2 May 2003. At that meeting the second defendant said: "I feel the joint venture favours Sanpine against the KLALC. I believe that the joint venture is not even 50/50 split and it favours Sanpine. I will do all that I can to get out of this agreement."

Mr Scott argued with the proposition that the agreement was unduly favourable to Sanpine, but no consensus was reached on that topic. The second defendant then said: "There is to be no further expenditure incurred on behalf of the joint venture." Mr Steer pointed out that delays were continuing, and interest on the loan was mounting. To that, the second defendant said: "I believe that the loan is either a Sanpine cost or the mortgage is unenforceable." 159 Mr Scott gives evidence of the second defendant saying, as early as February 2003, that he did not want any further monies expended on the project. This evidence of Mr Scott was given in cross-examination, and had not been mentioned in his affidavit. I prefer Mr Steer's evidence concerning when the second defendant actually prohibited further expenditure on behalf of the Joint Venture. 160 On 24 March 2003 Koompahtoo (acting by the second defendant) itself lodged a caveat over Lot 556, asserting a beneficial interest in it on the ground that the transfer to Investment was void. It did this even though the Registrar General's caveat was still on the title. 161 In the course of 2003 the second defendant made efforts to obtain documents relating to the Joint Venture. To some extent his enquiries were made more difficult by the fact that, at the same time, an enquiry by the Independent Commission Against Corruption, apparently into certain of the affairs of Koompahtoo, was under way. 162 By September 2003 the administrator was expressing dissatisfaction to Mr Scott about the time the rezoning had taken, and stated that he was not satisfied that Sanpine had "gone about their job in a proactive manner". Mr Scott disputed that suggestion. Mr Scott had, on previous occasions, made no secret of the fact that he regarded the second defendant (who is an accountant) as having insufficient experience of the land development process to be able to make judgements about it. Because that view had been expressed in the past, the second defendant told Mr Scott that he had engaged a planner, Mr Kovats of GHD Newcastle, to advise him. 163 Mr Scott met with Mr Kovats on 11 November 2003. Mr Scott gave Mr Kovats a summary of the events relating to the development, in the course of which he: "… pointed out where the council and the NPWS had moved the goalposts and the other delays that had been caused by the political in-fighting within the KLALC, the NSWALC, the Office of the Registrar, the Office of the Department of Aboriginal Affairs and the Executive Staff of the Office of the Minister for Aboriginal Affairs." 164 The next event, so far as Sanpine was concerned, was receipt of the letter dated 12 December 2003 from the administrator terminating the Joint Venture. Its terms are as follows: "Without any admission that KLALC is bound by the joint venture agreement dated 14 July 1997 ("the joint venture"), it is KLALC's position that Sanpine Pty Limited has repudiated that arrangement 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; 1. Failing to ensure that proper books of account have been kept; 2. Failing to provide or update proper development programs; 3. Failing to provide half yearly reports to the management committee; 4. Failing to arrange sufficient funding for the development; 5. Failing to co-ordinate and manage the development properly, efficiently, adequately or impartially or otherwise in accordance with its obligations; and 6. Failing to co-ordinate and manage the development so as to achieve the objects of the joint venture within a reasonable time or at a reasonable cost. KLALC accepts that repudiation. It will not be proceeding with any joint venture in relation to the land with Sanpine Pty Limited and reserves its right to damages." PART G - THESE PROCEEDINGS 165 It was not until 20 August 2004 that these proceedings were started, after the solicitors for Koompahtoo gave notice that they proposed to withdraw an undertaking which they had given, on 9 February 2004, not to enter a binding arrangement with a third party without prior notice to the plaintiff. Once the proceedings had been commenced, the first and second defendants consented to interlocutory undertakings to preserve the status quo. 166 The relief sought by the plaintiff in the Statement of Claim is, so far as is presently pressed: "1. A declaration that the Joint Venture Agreement dated 14 July 1997, as varied by the Morisset Joint Venture Supplemental Agreement dated 17 October 2000 made between the Plaintiff and the First Defendant is valid and subsisting. 2. An order that defendants be restrained from entering into any agreement for the development of the Joint Venture Site, otherwise [than] in accordance with the Morisset Joint Venture Agreement. 3. An order that, until further order of the Court, the Council be restrained [from] transferring any legal or equitable interest in the Joint Venture Site (or any part thereof), including by creating any secured interest in the Joint Venture Site (or any part thereof) whether by way of mortgage, charge, lien, pledge, hypothecation or in any manner whatsoever."

As well, it sought damages, and costs. 167 The pleadings in the case do not articulate the issues as fully as the Rules require. In the Statement of Claim Koompahtoo is referred to as "the Council". Two of the relevant allegations in the Statement of Claim are: "11. Pursuant to the Joint Venture Agreement, Sanpine commenced the discharge of its obligations to assist the Council to develop the Joint Venture Site as development manager, and as otherwise provided for in the Joint Venture Agreement. … 20. At the time that the Council purported to terminate the Joint Venture Agreement, Sanpine was not in breach of the Joint Venture Agreement, as alleged by the Council in the Termination Letter, or at all." 168 To those, the defence of the first defendant gives the following responses: "5. In answer to paragraph 11 of the claim, the first defendant: 5.1 admits that the plaintiff undertook certain acts in purported discharge of its obligations under the joint venture agreement; 5.2 says, in general answer, that the plaintiff has failed to fulfil its obligations under the said agreement. … 13. In answer to paragraph 20 of the claim, the first defendant: 13.1 denies the allegations contained therein; 13.2 says, in general answer thereto, that as at the date of its termination, the plaintiff had: a) engaged in gross delay in performing its obligations under the joint venture agreement; b) repeats paragraph 5.2 hereinabove."

Neither the Statement of Claim, nor the Defence, contains particulars of the paragraphs which I have quoted. 169 There was, however, an exchange of letters, which gave particulars, as follows: "Q1. In relation to paragraph 5.2 of the defence please specify with precision: (a) which of the "obligations" of the plaintiff it is asserted that the plaintiff has failed to fulfil under the joint venture agreement; and (b) all of the facts and circumstances upon which the first defendant relies in its assertion that the plaintiff has "failed to fulfil its obligations" under the joint venture agreement." "A1.(a) Our clients rely upon the following express obligations contained in the joint venture agreement; · Clause 6.2(a), (c), (e), (i) and (j); · 12.2(a) · 13.2; · 16.1(a); · 16.3; · 16.4; and · 16.5(a) and say it was implicit from the joint venture agreement and the relationship between the plaintiff and the first defendant that the plaintiff had an obligation to the first defendant to coordinate and manage the Development properly, efficiently, adequately and impartially, including to purposefully undertake the rezoning of the joint venture site within a reasonable time period and at a reasonable cost. (b) The plaintiff failed to undertake the matters set out in 1(a) in a timely manner, or at all;

· Clause 6.2(a); The plaintiff failed to coordinate the overall Development so as to achieve a timely completion of stages of the Development, including the rezoning of the joint venture site within a reasonable time period and at a reasonable cost. · (c); The plaintiff failed to obtain funding for the Development on terms consistent with the provisions of clauses 13.1(c) and 13.3 of the joint venture agreement, or as appropriate for the actual timing of the progress with the Development. · (e); The plaintiff failed to properly maintain proper records of the joint venture and the Development, such that no such records could be provided to the first defendant to permit the first defendant to fully and properly assess the joint venture, to provide a proper understanding of the financial position of the joint venture. · (i) The plaintiff did not prepare Development Programs and revisions of same so as to provide an ongoing assessment of time for completion and the costing of the Development. · (j) Refer to (i) · 12.2(a) Refer to 6.2(i) above · 13.2; The plaintiff did not submit monthly or other periodical reports to the Management Committee providing the information required by clause 13.2 · 16.1(a), 16.3 and 16.4; The plaintiff did not establish a bank account in the joint names of the plaintiff and the first defendant, and instead conducted banking through accounts opened and operated in its own name. Moneys received for the purpose of the joint venture, including moneys advanced on the security of the first defendant's land, were paid into and disbursed from the plaintiff's bank accounts by the plaintiff. Funds were applied for purposes other than the joint venture in accordance with approved development programs and budgets. · 16.5(a) Refer to 6.2(e) above

Further, the plaintiff failed to obtain the rezoning of the joint venture site within a period of about 18 months or such other period as is a reasonable time period for such rezoning and failed to undertake work associated with the rezoning at a reasonable cost." "Q3. In relation to paragraph 13.2(a) please advise all of the facts and circumstances upon which the first defendant relies in asserting that the plaintiff "engaged in gross delay" in performing its obligations under the joint venture agreement." "A3. The first and second defendants rely upon the failures by the plaintiff to undertake each of its express obligations under the joint venture agreement as set out at 1(b) above, and the failure by the plaintiff to progress with and achieve a rezoning of the joint venture site within a reasonable time period."

As well, the parties have litigated certain questions relating to waiver or estoppel, scope of authority, and ultra vires, even though they were not articulated in the pleading, or particulars. The defendants did not press the allegation that the plaintiff had breached its obligations concerning the obtaining of funding. PART H - ONUS OF PROOF OF VALIDITY OF TERMINATION 170 The plaintiff alleged that the defendants bore the onus of proving that the Agreement had been effectively terminated. The first and second defendants submitted that that was not so - they submitted that the plaintiff had alleged in the Statement of Claim that it was not in breach of the Joint Venture Agreement, that "he who asserts must prove" is a principle of general application in litigation, and in particular that the onus of proving a negative proposition is on the person who asserts it (cf Illawong Village Pty Limited v State Bank of New South Wales [2004] NSWSC 18 at [208]). To that, the plaintiff pointed out that the declaration it sought (para [166] above) did not involve any negative proposition. The topic was not otherwise elucidated by either principle or authority, so I must work it out as best I can. 171 In a civil suit the onus lies on the plaintiff to prove all facts which are an essential part of its cause of action, or in some other way an essential part of its case. Thus, in a civil suit in which it is part of the cause of action on which the plaintiff sues, or in some other way an essential part of the plaintiff's case, to establish a negative proposition, the onus lies on the plaintiff of proving that proposition. For example, in an action for damages for the tort of malicious prosecution one of the elements of the tort is that there was no reasonable or probable cause for instituting the prosecution - the plaintiff in such an action bears the onus of proving absence of reasonable or probable cause: Abrath v The North Eastern Railway Company (1883) 11 QBD 440 at 457; Abrath v The North Eastern Railway Company (1886) 11 App Cas 247 at 249; Crowley v Glissan (No 2) (1905) 2 CLR 744 at 754 per Griffith CJ, 762 per Barton J. Similarly, an action where a plaintiff who has contracted to purchase real estate seeks to recover from a vendor a deposit paid, on the ground that the contract has been terminated, proof of the termination of the contract is an essential part of the plaintiff's case, and so the onus lies upon the plaintiff to prove that there has been an effective termination: Smith v Butler [1900] 1 QB 694 at 699, referred to with approval by Mahoney J in Fileman v Liddle (1974) 2 BPR 9192 at 9202-9203. 172 Applying this principle necessarily involves an analysis of what are the essential ingredients of a plaintiff's cause of action, or otherwise an essential part of the plaintiff's entitlement to the relief it claims. In J Kitchen & Sons Pty Ltd v Stewart's Cash and Carry Stores (1942) 66 CLR 116 a manufacturer of goods had entered into a contract with a retailer to supply it with goods. The contract included a term that the retailer not resell those goods to the public at less than a stipulated price. The manufacturer sought an injunction to restrain breaches of the term. The retailer alleged that the contract had been terminated. In that context, Latham CJ and McTiernan J, at 126 said that: "When the existence of a contract has been established the onus of proof of an allegation that it has been rescinded by mutual consent or that it has been determined by one party rests upon the party making the allegation."

Because proof of absence of termination was not an essential part of what the plaintiff needed to prove to establish its entitlement to relief, the plaintiff did not, in that piece of litigation, have the onus of proving there had been no termination. 173 Similarly, if an employee sues his employer for wrongful dismissal, the onus of proving that the dismissal was justified lies on the employer: Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66. This is because lack of justification for the dismissal is not one of the elements of the cause of action for breach of contract by wrongful dismissal from employment. 174 As always happens in our system of law, the substantive law concerning who bears an onus of proof finds expression in the rules of procedure governing pleadings. The principle that in an action for damages for breach of contract it is the defendant who bears the onus of proving that there was a justification for the termination of the contract finds expression in pleading, by the plaintiff in such a suit pleading the entering of the contract, that the defendant has failed to perform the contract, and damage. It is for the defendant to raise, in its defence, any matters of justification for the termination upon which it seeks to rely. 175 Other statements that it is for the party who alleges a contract has been terminated to justify that termination are to be found in Southern Foundries (1926) Limited v Shirlaw [1940] AC 701 at 729 per Lord Wright, and Lombard North Central Plc v Butterworth [1987] QB 527 at 545 per Nicholls LJ. In using that proposition to decide whether it is a plaintiff or a defendant who bears that onus, one must bear in mind the particular cause of action being asserted and relief claimed in the litigation in which they occur. As Smith v Butler (para [171] above) shows, there are some causes of action where a plaintiff who is suing in relation to a contract bears the onus of proving that the contract has been terminated, while, as the wrongful dismissal cases show, in other cases concerning a contract it is the defendant who has the onus of proving the termination. 176 Where, as in the present case, the only remedy the plaintiff seeks is a declaration, the plaintiff's cause of action (in the sense of the facts which it must allege and prove to make out its entitlement to the relief claim - cf Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589 at 610-611 per Brennan J) depends on the precise form of the declaration which it seeks. In such a situation the principles have been described as follows by McLelland CJ in Eq in Massoud v NRMA Insurance Ltd (1995) 8 ANZ Insurance Cases ¶61-257, at 75,876-75,877. "These decisions illustrate what I consider to be the principles by which the incidence of the onus of proof is to be determined, namely: (1) a party who seeks relief has the burden of satisfying the Court of facts which (in the absence of proof of other facts) would justify the grant of that relief; (2) what those facts are depends principally upon: (a) the nature of the relief sought; and (b) the operation of any relevant presumptions; (3) in the case of relief by way of declaratory order, the precise terms of the declaration assume particular significance in that (subject to any relevant presumption) the party seeking the declaration has the burden of proof of any matter which is necessary element of the declaration sought (even if in proceedings by that party for relief of another kind, or in proceedings by the other party, that matter would not arise unless raised (and the burden of proof consequently assumed) by the other party)." 177 That passage was quoted by Davies AJA (with whom Meagher JA and, in this respect, Foster AJA agreed) in Commercial Union Assurance Co of Australia Ltd v Beard [1999] NSWCA 422; (1999) 47 NSWLR 735 at [11], 740. The cases discussed by McLelland CJ in Eq in his illuminating judgment (Hume v Monro (No 2) (1943) 67 CLR 461; Smart v Allen (1980) 91 WN 241; Industrial Equity v G and C Consolidated (1974) 2 NSWLR 456; Jones v Sutherland Shire Council (1979) 2 NSWLR 206; Interpool v Kapal Pacifico (KP) (1982) 7 ACLR 243; Pollnow v Garden Mews-St Leonards (1984) 2 ACLC 511; Dorsatville v Loumbos (Bryson J, 16 March 1990, unreported)) provide illustrations of the application, in the context of different causes of action or relief sought, of the general principles identified by his Honour. His Honour's judgment provides a neat example of the way in which legal reasoning often proceeds by ostensive definition - where the giving of examples of the practical operation of the law provides understanding of what its principles are, which is not fully captured by what purports to be an abstract statement of the principle itself. The process at work is to some extent like the process at work when a child comes to understand what "red" means by having red things pointed out. For this reason I would recommend that anyone who seeks a fuller understanding of these principles reads all of the discussion of principle in his Honour's judgment, the relevant parts of which are too long to quote here. 178 One case quoted by McLelland CJ in Eq , Hume v Monro (No 2) (1943) 67 CLR 461, makes clear, in particular, that if the claim which a plaintiff makes is for a declaration that some particular right does not exist, the onus is on the plaintiff to exhaust the possibilities of how such a right might exist, and show that a claim that such a right exists cannot possibly be supported. 179 In Massoud the plaintiff had been issued with an insurance policy by the defendant, which the defendant had cancelled, alleging that the plaintiff had made knowingly false statements to it concerning a claim. At the end of the evidence, his Honour's state of mind was that he was "not satisfied that the plaintiff's claim under the policy was not false". Thus, the plaintiff had failed to discharge his onus of proof, and his Honour therefore declined to make a declaration that the defendant's purported cancellation was wrongful and without proper foundation. 180 McLelland CJ in Eq contrasted a prayer for relief seeking a declaration of that kind with a prayer for relief seeking a declaration that the insurance policy remained in full force and effect. His Honour said (at 75,877) that although this latter declaration includes: "… an implicit assertion that nothing has happened since the issue by the defendant of the plaintiff's policy to terminate its operation, and the plaintiff has the burden of satisfying the Court of the truth of that assertion, that would in the circumstances involve no more than proof that the policy was issued in respect of a period which has not expired by effluxion of time, since there is a presumption that a contract once made continues in existence. (Such a presumption may of course be rebutted by proof of termination of the contract eg by a valid cancellation thereof, but the burden of proof of such a termination would rest on the party alleging it). A presumption of continuance of this kind is ordinarily relied on in any proceedings to enforce a contract, since the making of the contract invariably precedes its enforcement, and generally speaking the plaintiff has the burden of proving the making of the contract whereas the defendant has the burden of proving any matters alleged to have resulted in the termination of the contract subsequent to its formation. It is immaterial in such a case whether declaratory relief is claimed or not: for example, an order for specific performance of a contract is traditionally preceded by an order declaring the present existence and/or enforceability of the contract." 181 In the present case, the only relief which the plaintiffs seeks is a declaration that the Joint Venture Agreement remains on foot, injunctions to restrain an alleged breach of contract, and damages for breach of contract. To obtain each of those types of relief, so far as the element of the cause of action involving proof that the contract exists is concerned, all that the plaintiff need do is to prove that the contract was entered, that its terms are such that it has not come to an end through effluxion of time, and otherwise to rely upon the presumption of continuance. In relation to each of those causes of action, if the defendant wanted to prove that the contract had come to an end through being validly terminated, it would be for the defendant to allege and prove that matter. Thus, the allegation in paragraph 20 of the Statement of Claim (para [167] above) is an unnecessary allegation for the plaintiff to make. If the plaintiff had never made that allegation, it would be quite clear that the onus of proving a justification for termination of the contract was on the defendant. 182 I do not see how the plaintiff having made the unnecessary allegation makes any real difference. Of course, having made it, if at the end of the case the plaintiff is still urging the Court to make a declaration, or a positive finding, that there was no justification for the termination of the contract, the plaintiff would bear the onus of establishing it. But if it fails to discharge that onus, or if, as happened here, the plaintiff was asserting from the time of its opening submission at the hearing that it was the defendant who had the onus of proving there was a justification for termination of the contract, so far as obtaining a declaration that the contract is on foot, an injunction to restrain a breach of it, or damages for its breach, the plaintiff is back in the same situation it would have been in if it had never made the allegation in the first place. 183 The present situation is somewhat like the situation which arose in Lush v Russell (1850) 5 Exch 203. That case was a common law action for damages for wrongful dismissal. The plaintiff filed a declaration - and here "declaration" means the type of pleading document in which a nineteenth century pre Judicature Act 1873 (UK) plaintiff set out the allegations which made up his cause of action, not the type of relief a court can grant which declares the rights of the parties. The plaintiff included in that declaration an allegation that his dismissal was "without any reasonable or probable cause whatsoever". The judgment of the Court, delivered by Parke B said, at 207: "There is no doubt that the plaintiff might have omitted the allegation that the defendant dismissed him "without reasonable cause", and that the averment of his having done so, was, in the declaration, immaterial and surplusage, and ought not to have been put in issue; and that the plea, in form at least, throws the burden of the proof of the want of reasonable cause on the plaintiff, which the defendant, on proper pleadings, ought to have borne; and on these grounds, the plea is clearly demurrable; but it not having been demurred to, the matters which it does put in issue , though immaterial in that stage and improperly put in issue, must be disposed of by the jury, under the direction of the Judge."

Parke B dealt, at 210, with how the judge and jury would then deal with it: "We think, however, that on the trial of the issue the onus probandi would be on the defendant, on the ground that he had the affirmative of the proposition to maintain, and that the defendant ought to justify the act of dismissal, which is prima facie a breach of covenant." 184 Though the reasoning in that case was strongly influenced by the common law rules of pleading, the substance is that, even though the plaintiff has made an unnecessary allegation that he had engaged in no conduct warranting his dismissal, the onus of proving justification for the termination of the contract rested with the defendant. 185 In the present case, where the remedy of declaration which the plaintiff seeks is in the particular form it is, the defendants bear the onus of establishing that the termination of the contract was justified, even though the plaintiff has made the unnecessary allegation in paragraph 20 of the Statement of Claim (para [167] above). 186 I said earlier, (para [1] above) that this is the trial of a preliminary question. The precise terms of that preliminary question are: "Whether, on the proper construction of the agreement entitled "Morisset Joint Venture Agreement" between the plaintiff and the first defendant, dated 14 July 1997, as amended by the "Morisset Joint Venture Supplemental Agreement" dated 17 October 2000 ("Agreement"), and in the events which have happened, the Agreement was validly terminated by the first defendant by its letter to the plaintiff dated 12 December 2003."

When a preliminary question is decided as part of a set of proceedings, the answer to that preliminary question should be determined in the same way as it would be if it had been answered in the course of hearing the entire proceedings. Thus, in answering the preliminary question now before me, I shall proceed on the basis that the onus of proving validity of the purported termination lies on the first and second defendants. PART I - EXPERT EVIDENCE ON SPEED OF REZONING 187 One way in which the first defendant seeks to prove that the plaintiff has acted with insufficient speed concerning the rezoning is by calling expert evidence from the planner it engaged in 2003, Mr Tibor Kovats. Mr Kovats has over twenty years of planning experience in New South Wales, including a rezoning application in the period 1997 to 1999. He gives evidence that, in his view, the steps required to be undertaken to achieve the rezoning of the Joint Venture Site would, if undertaken purposefully and with application, have taken about eighteen months, and would have incurred consultant and management fees (excluding Aboriginal Liaison fees) in the approximate sum of $500,000. 188 That view of Mr Kovats is one which is dependent upon various assumptions, namely, "(i) all parties to the joint venture would work co-operatively together, to the extent that such co-operation was needed to procure the necessary studies and reports required by LMCC; (ii) the joint venture had access to the required level of finance and was able to engage without undue delay professional consultant resources, including planners and environmental consultants and other specialists; (iii) the LMCC extending its co-operation to the joint venture in arranging for the necessary directions to be given on content of studies and providing staff resources, which may rely on funding by the joint venture; (iv) the studies and reports provided to LMCC would be of such quality that, when presented to LMCC, would provide an adequate level of justification for a re-zoning plan; (v) the public authorities outside of LMCC were co-operative in response to enquiries by consultants engaged in investigations and studies; (vi) there were no unforseen changes in legislative requirements or political delays at LMCC; (vii) that a high level of support and cooperation would be available from relevant State Government authorities and there would be no major objections requiring additional investigation as a result of the exhibition of the draft local environmental plan." 189 He treats that period of eighteen months as running from the date of receipt of the letter of 5 June 1998 (referred to in para [63] above). He estimates that it will now take at least six months to carry out the tasks which remain to be carried out to achieve a rezoning, and expenditure of a further sum of approximately $500,000. That estimate of six months is based upon the following assumptions: "1. that the consultants to carry out investigations, planning and reporting would be engaged by the joint venture without undue delay and the consultants would carry out their work in a coordinated manner, with focus on the production of a full justification for a re-zoning of the joint venture site. 2. that the engagement of consultants would not be constrained by any management issues and that suitable consultants, selected in terms of their best value for money and demonstrated ability to meet the timeframe, were readily available. 3. that there would not be any unforseen changes in legislation or controls or that there would be political issues either amongst the joint venture or at Council level and that cooperation would be maintained between Council and all other relevant public authorities. 4. that issues in relation to the undertaking of ecological surveys at the appropriate time would not cause delay, however I note that this is a possibility." 190 Mr Kovats accepts that the length of time it takes for a rezoning to come into effect depends on many factors, including political circumstances within the local council, the attitude of DUAP, the attitude of the Minister, how vocal some of the local opponents are, the attitude of various government instrumentalities, whether government instrumentalities change their minds about their attitude to the rezoning, and whether the site is one with ecological difficulties. 191 In the present case, LMCC was ready to organise itself (provided its costs were paid) so that the studies which related to the rezoning could be evaluated promptly. It was prepared to put on extra staff so that that could be done. While it inevitably took the planners and other staff of LMCC some time to evaluate the studies, there was no undue delay on their part. While the rezoning proposal never reached the stage of a draft LEP being put to the Council, the evidence suggests that the councillors of LMCC were sympathetic to the proposal. Thus, Mr Kovats' assumptions were ones which had application so far as the responsiveness of LMCC was concerned. 192 However, other important assumptions which Mr Kovats made were not borne out. There were significant financing difficulties. Mr Johnson's report of November 1999 was not one which LMCC accepted as providing an adequate level of justification for a rezoning plan. Neither did the Umwelt report satisfy LMCC or NPWS. It has not even been suggested that Mr Johnson, or Umwelt, were consultants whose level of expertise was such that they should not have been engaged in the first place. As well, there were some changes in legislative requirements, arising from the addition of threatened species to the lists. 193 Further, there was a relevant change in planning practice during the period that the rezoning was being considered. Flora and fauna studies involved in rezoning applications now "tend to be far more rigorous and detailed than was the case in the mid-1990s". The Threatened Species Conservation Act 1995 came into effect on 1 January 1996. It enabled species of flora and fauna to be added to a list of threatened species by means of a resolution of a scientific committee set up under the Act. Towards the end of the 1990s and in the early part of 2000 and 2001 various species were added to the list through this procedure. As we have seen (para [146] above), one of the problems which, by April 2002 NPWS had come to see in the Umwelt report is that it had not investigated some species which had been added to the list of threatened species in the time since the report was compiled. 194 Finally, the starting point from which Mr Kovats treats that period of eighteen months as running, namely 5 June 1998, is not one which ought be regarded as the appropriate time from which diligent attention to the rezoning process should have started. Rather, the relevant time period should have started from 4 February 1999. When there is evidence of both legislative changes, and changes in practice amongst planners, over the last few years of the 1990s, I would not be prepared to assume that this difference of eight months in the starting date makes no difference. 195 In these circumstances, the assumptions upon which Mr Kovats has based his opinion do not apply. While an expert opinion can sometimes be accepted even if the assumptions the expert has made do not correspond with complete precision to the facts which are proved in the case (Paric v John Holland (Constructions) Pty Ltd (1985) 62 ALR 85; Paric v John Holland (Constructions) Pty Ltd [1984] 2 NSWLR 505 at 509-10), in the present case the discrepancy between the assumptions made by Mr Kovats and the facts which have been established is so great as to deprive his opinion of weight. Consequently, I do not accept his opinion about how long the rezoning would have taken, if gone about purposefully and with application. 196 Ms Janet Thomson is a planner called by the plaintiff. She has significant experience of rezoning, both in a senior position in the State Public Service and as a consultant in the private profession. 197 Ms Thomson explained that a practical effect of the introduction of the Threatened Species legislation was to alter the role which flora and fauna studies played in the rezoning process. Before the legislation came into effect, the usual practice was to make an application for rezoning supported by a study of flora and fauna. Once the threatened species legislation had come in, and was being properly followed by councils and planners (which took a little time) the order of events was altered, so that "by 2000 a flora and fauna study became one of the major and one of the first studies done prior to establishing the parts of the land that could be rezoned." 198 Ms Thomson, after reviewing the history of the rezoning application, expresses the view that the failure to achieve a rezoning of the land by 2003 resulted from a number of factors. One was her speculation that LMCC would not have had adequate resources to process the application when it was also engaged in its own major planning exercise, resulting from the Lifestyle 2020 project, of preparing a new LEP for the entire local government area. For reasons given at para [191] above, I do not accept that in the present case this actually was a factor which influenced the delay. Second, she points to the significant changes during the time the application was being pursued in the emphasis which was placed on matters such as the protection of flora and fauna. Third, she points to another significant change in planning practice during the time the attempt to achieve the rezoning was under way, concerning LMCC's introduction in its letter of 16 November 1999 (para [99] above), of the possibility of a requirement for Master Planning, which LMCC had never previously mentioned. The fact that LMCC was carrying out its Lifestyle 2020 project at the same time, which had the planning of communities as a major part of the matters discussed, would, she says, naturally emphasise to LMCC the importance of Master Planning. 199 Master Plans are a concept which some councils in New South Wales started to adopt in about 1999 or early 2000. Ms Thomson explained that a Master Plan was quite different to the identification of zones in a planning instrument, because: "… a Master Plan talks about the details of what happens in the zone, how the buildings are going to be, where the roads are going to be, and that was the sort of planning that was going on in the Lifestyle 2020 process." 200 While the second and third matters to which Ms Thomson points are ones which are appropriate to take into account in deciding whether there has been any breach by the plaintiff of its obligations relating to the advancing of the rezoning, they do not suffice to answer that question. 201 Ms Thomson is of the view that, from where the rezoning process now is, it will take somewhere between nine and eighteen months to complete the process, providing LMCC supports the proposals and there is no local opposition to it. She also is of the view that the consultant studies to complete the exercise would cost in the order of $500,000.

PART J - WHETHER THERE IS A RIGHT OF TERMINATION AT ALL 202 The plaintiff submits that there is no common law right to terminate the Joint Venture Agreement. It submits that the parties have set out in their agreement a mechanism, in Clause 19, whereby the agreement can be brought to an end when one party is in default. However, that procedure, providing as it does for the service of a notice of default, and a purchase notice, has not been activated. Clause 20.1 of the agreement expressly requires the Joint Venture to continue until it is completed, or there is a sale by one venturer to the other venturer, or unless the Agreement is terminated by mutual agreement. The plaintiff submits that this clause covers the field, by saying that the Agreement shall continue unless one of three possible ways of bringing it to an end has occurred, and so there is simply no room for a termination of the kind which the second defendant purported to make here. Principles for Whether Common Law Right of Termination Exists has been Dispensed With 203 The right of one party to a contract to terminate it if the other party repudiates is a right given by the common law. It is, however, open to the parties to a contract to agree that it will not apply to their particular contract: The Progressive Mailing House Pty Limited v Tabali Pty Limited (1985) 157 CLR 17 at 30 per Mason J, (with whom Wilson J agreed, "substantially", with whom Deane J was "in general agreement", and Dawson J agreed.) In deciding whether the parties have agreed to dispense with this common law right, one applies: "the familiar principle of construction that clear words are needed to rebut the presumption that a contracting party does not intend to abandon any remedies for breach of the contract arising by operation of law": Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 at 717 per Lord Diplock; Stocznia Gdanska SA v Latvian Shipping Co & Others (1998) 1 WLR 574 at 585 per Lord Goff of Chieveley; Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693 at [23], 699) per Gleeson CJ, Gaudron and Gummow JJ.

In consequence: "An express provision for termination for breach in certain circumstances may be regarded as designed to augment rather than to restrict or remove the rights at common law which a party otherwise would have had on breach: Holland v Wiltshire (1954) 90 CLR 409 at 415-16; Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117 at 135": per Gleeson CJ, Gaudron and Gummow JJ, Concut Pty Ltd v Worrell at [23], 699-700 of ALR." 204 When there is a clause in a contract which expressly states the consequences of a default, one asks whether the parties intended that clause "to cover the field, in the sense that the common law rights to relief for repudiatory conduct were excluded.": Tan Hung Nguyen & Anor v Luxury Design Homes Pty Limited & 2 Ors [2004] NSWCA 178 at [85] per Einstein J, with whose reasons Hodgson JA substantially agreed, and McColl JA essentially agreed. Application of Principles re Whether Right of Termination Exists 205 Applying these principles to the Joint Venture Agreement, I do not conclude that the parties have expressed an intention that the common law right to terminate following repudiation shall not apply. There is no clause which expressly excludes the common law right to terminate following a repudiation. While Clause 2.1 provides that "the Joint Venture shall continue until it is terminated in accordance with this Agreement", that is not saying that the Agreement can be terminated in no other way than pursuant to an express term of the Agreement. While Clause 20.1 (para [29] above) provides that the Joint Venture shall continue until one of three types of events happen, that clause is understandable as a statement of the mutual expectation of the parties expressed to each other. They were not contemplating that there would be a breach serious enough to amount to a repudiation, and hence, did not deal with the consequences of such a circumstance. 206 The first and second defendants point out that Clause 19 does not expressly say that if its procedures are gone through, the Agreement is terminated. However, Clause 20.2 assumes that going through the Clause 19 procedure results in the contract being terminated. 207 Clause 20.2 sets out the consequences of termination, as follows: "If the Joint Venture is terminated, then the Venturers or the Non-Defaulting Party (as defined in clause 19), in the event that termination is attributable to an event of default with respect to the Defaulting Party under clause 19, shall proceed to sell or otherwise liquidate all remaining Development Assets at such prices, on such terms and at such time or times as the Venturers, or if applicable, the Non-Defaulting Party, reasonably deems advisable, provided that the termination of the Joint Venture shall in no way affect the validity of, or the term of, any lease, mortgage, contract or other obligation entered into by or on behalf of the Joint Venture. The full rights, powers and authorities of the Venturers shall continue so long as appropriate and necessary to complete the process of winding up of the business and affairs of the Joint Venture."

When Clause 20.2 provides that the Venturers together will liquidate the assets in some circumstances where there is a termination, and the Non-Defaulting Party shall be the one to liquidate them when there is a termination under Clause 19, it contemplates that termination might occur in circumstances other than ones attributable to an event of default with respect to a Defaulting Party under Clause 19. That is consistent with termination being possible other than through operation of the procedure under Clause 19. The same can be said of Clause 20.3, set out at para [29] above. 208 Clause 23.5 says: "Without limiting any rights arising hereunder from the breach of any of the provisions of … this Agreement, a Venturer committing a breach of any of the foregoing stipulations hereby indemnifies and undertakes to hold harmless the other Venturer against all damages, losses, costs, expenses and liabilities claimed, suffered or incurred as a consequence and [sic] any failure by that Venturer to perform its obligations hereunder. …"

The closing phrase just quoted clearly should read "as a consequence of any failure by that Venturer to perform its obligations hereunder" . Clause 23.5 makes clear that Clause 19.1 is not an exhaustive statement of the legal rights which will arise when there is a default - as Clause 23.5 provides an extra remedy, not allowed for in Clause 19. 209 Most importantly, Clause 25.6 provides: "The rights, powers, authorities, discretions and remedies arising out of or under this Agreement are cumulative and do not exclude any other right, power, authority, discretion or remedy."

That express statement removes, in my view, any basis there otherwise might be for an argument that, by implication, the common law right to terminate the Agreement following a repudiation had been excluded. 210 The first and second defendants also rely upon the unattractive consequences which would arise if the plaintiff's argument in this respect were right. The first and second defendants point out that if Sanpine was in significant breach of the Agreement, and if the only way of terminating the Agreement was by exercising the procedure under Clause 19, the first defendant could only bring about a termination by purchasing Sanpine's interest in the development, thereby bestowing a benefit on the plaintiff in circumstances where the plaintiff may have caused the first defendant substantial damage and deprived it of the means of effecting any such buy-out. To make matters worse, Sanpine would also receive, pursuant to Clause 19.1(f) a release from, and indemnity against, "all liability under all third party financing arranged under Clause 11, and all other Joint Venture liabilities." These consequences would arise even if the plaintiff's breach was a particularly serious one, such as a fraudulent misappropriation of the assets of the Joint Venture. 211 It is well established that a contract should be read in a way which will result in a sensible and businesslike meaning: Australian Broadcasting Commission v Australasian Performing Right Assn Ltd (1973) 129 CLR 99 at 109; Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 at 300 per Isaacs J; Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437; Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834 at 843-8. A particular application of that approach to construction is that if a contract is open to two constructions it will receive that construction which will avoid consequences which are capricious, unreasonable, unjust or inconvenient: TCN Channel Nine Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130, at 146. 212 I accept that the consequences of the plaintiff's submission being right, to which the first and second defendants point, are ones which would result in the contract operating in an uncommercial and capricious way. This provides an additional reason for rejecting this submission of the plaintiff. PART K - THE PLAINTIFF'S OBLIGATIONS CONCERNING REZONING Obligations Under Express Terms 213 One aspect of the facts and circumstances upon which the first and second defendants rely to make out breach of the Agreement is that the plaintiff failed to obtain the rezoning of the Joint Venture Site within a period of eighteen months or such other period as is reasonable. 214 That aspect of their case can be disposed of quickly. The plaintiff simply did not have an obligation to achieve or obtain a rezoning, whether within eighteen months, a reasonable period, or at all. The nature of the rezoning process is such that, for reasons which are completely outside the control of the plaintiff, a rezoning might never be achieved. The plaintiff has not, in the Joint Venture Agreement, given a promise to achieve a result which might prove impossible. 215 Rather, the plaintiff's obligation concerning rezoning is one which is of a type which requires it to carry out activity for the purpose of achieving an objective, not actually to achieve that objective. When Clause 2.2(g) states an "object" of the Joint Venture as being "to carry out the Development to the best commercial advantage of the Venturers and within the shortest practicable time", that encompasses (because of the definition of "the Development") an object of achieving the rezoning within the shortest practicable time. While Clause 2.3 involves an obligation on Koompahtoo to take all steps and do all things necessary to achieve that object, it also imposes an obligation on Sanpine to take all steps and do all things to achieve that object. In construing that obligation, "to achieve" means "for the purpose of achieving". 216 The Agreement must, however, be read as a whole - Sanpine's obligation to take all steps and do all things necessary to achieve the rezoning within the shortest practicable time is one which is construed as obliging Sanpine to take those steps and do those things within the framework of the various procedures and divisions of responsibility laid down by the Joint Venture Agreement itself. The obligations of Sanpine particularly relevant to the object of achieving the rezoning within the shortest practicable time are its obligations to co-ordinate the overall Development (Clause 6.2(a)) formulate a Development Program containing the information required by Clause 6.2(i), and regularly update it under Clause 6.2(j). Greater detail of the plaintiff's obligation to formulate and update a Development Program is given in Clause 12.2(a). Clause 13.2 contains a further obligation on the plaintiff to prepare a monthly management report containing information on identified topics. On the proper construction of the Joint Venture Agreement, each of those specific obligations must be carried out by the plaintiff in a manner which does all things necessary to achieve the object of obtaining the rezoning in the shortest practicable time. 217 Though I have so far focused on that aspect of the object of the Joint Venture stated by Clause 2.2(g) which is concerned with speed, the object is in fact a dual one. It concerns not only speed, but also "the best commercial advantage of the Venturers". The Agreement does not require the plaintiff to proceed with all speed regardless of the cost. The plaintiff is not obliged to proceed in a way which is swift, but financially wasteful or imprudent. 218 The reader will recall the Management Committee is a body made up of equal numbers of representatives of the plaintiff and of Koompahtoo. 219 While Clause 10.1 confers on the Management Committee authority and power to act on behalf of the Venturers in relation to all matters with respect to the Joint Venture, that grant of authority and power is "except as otherwise provided for in this Agreement". In other words, the general authority of the Management Committee does not detract from the plaintiff's obligations to carry out the specific activities required by Clause 6.2(a), (i) and (j), Clause 12.2 and 13.2, in the manner which I have explained as being required by Clause 2.2(g) and 2.3. 220 While Clause 7 contemplates the appointment of a Project Manager, and Clause 10.1(h) gives the Management Committee overall supervisory control and authority over the activities of the Project Manager, the Joint Venture Agreement does not state what the scope of the responsibilities of the Project Manager will be. In that circumstance, I do not see the provision for appointment of a Project Manager as detracting in any way from Sanpine's obligations under Clause 6.2(a)(i) and (j) nor Clause 12.2 and 13.2. Neither does it detract from Sanpine's obligation to carry out each of those obligations in a way which involves Sanpine taking all steps and doing all things necessary to achieve the object of obtaining the rezoning within the shortest practicable time. 221 Even though the agreement which the plaintiff entered with Bronzewing (para [70] ff above) confers on it, as Project Manager, responsibility to carry out tasks which have a considerable overlap with Sanpine's obligations relevant to obtaining the rezoning, the entry of that agreement does not mean that Sanpine is relieved of any of these contractual obligations under the Joint Venture Agreement. 222 In deciding what is "the shortest practicable time", once again the Agreement must be read as a whole. Three clauses - 11.1, 13.1 and 13.3 - make clear that it is only the Development Assets (which includes the Joint Venture Site, and money in the Joint Account) which are to be the source of funding for the development. While either Venturer is free to make other assets available if it chooses to do so, it is made quite clear that there is no obligation on either Venturer to do so. Thus, the obligation of the plaintiff to advance the rezoning process, through performance of the particular obligations which I have earlier identified, is constrained by the need to do so within the mechanisms for raising finance which the Joint Venture Agreement sets up. Obligations Under Implied Terms? 223 The first and second defendants' preferred position is that it is implicit in the Agreement, in the sense of being something which emerges as a matter of the proper construction of the express terms, that the plaintiff has obligations to advance the development diligently and promptly. To the extent which I have already set out at paras [213] - [222] above, I accept that submission. 224 The first and second defendants also have alternative submissions, that a similar obligation can be found to exist as an implied term arising as a matter of law (Mackay v Dick (1881) 6 App Cas 251 at 263; Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 447 - 553) or alternatively as a term which must be implied in fact to give the contract efficacy (BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266). The term contended to arise through these alternative methods of analysis was "an obligation to progress the rezoning within a reasonable time". That formulation of an implied term is imprecise, about whether the obligation of the plaintiff is to actually achieve the rezoning, or to strive to achieve it. I do not accept that by either of these methods of analysis a term is implied into the Agreement that the plaintiff will actually achieve the rezoning within a reasonable time, or at all. Insofar as any implication would be of an obligation for the plaintiff to make diligent effort to achieve the rezoning, the implied term is no different in content to the obligation which arises as a matter of construction of the express terms of the agreement. For that reason, the implication would not be made. Some of the Alleged Breaches of Obligation to Advance the Rezoning 225 The first and second defendants point to various occasions when they allege the plaintiff did not act promptly enough to advance the rezoning. 226 The first period concerning which the plaintiff is criticised is the period from July 1997 to February 1999. I am not persuaded that the plaintiff engaged in any undue delay during this period. It was engaged in obtaining finance for the project, and in obtaining approvals from NSWALC. It obtained from DUAP what amounted to an overruling of LMCC's insistence that it (LMCC) supervise the consultants carrying out an environmental investigation, and that the whole of Lot 556 should be investigated. Furthermore, the potential problem concerning the existence of underground coal leases was resolved. There was simply no point in engaging consultants to carry out any environmental investigations until it was known that essential preconditions for the project advancing, namely that finance was available and that NSWALC consented, were fulfilled. That did not happen until 4 February 1999. 227 The next period concerning which the first defendant criticises the rate of progress is from February 1999 to December 1999. The only substantial criticism made in relation to that period, however, is that part of the time was taken up engaging consultants. For reasons already given, I do not regard it as practicable to have appointed consultants any earlier than was done. Once the consultants were engaged, there is no basis for concluding that the preparation of their studies during 1999 took longer than was reasonably necessary, either through any lack of diligence on the part of the plaintiff, or at all. 228 The period from December 1999 to March 2000 was in large measure a period when LMCC, and other statutory authorities, were considering and providing their responses to the environmental investigation, and communicating those responses to the joint venturers. There was no lack of diligence on the plaintiff's part during that period. 229 The complete change of mind by NPWS about whether it wanted an Aboriginal Heritage Study to be carried out, and the joint requirement of LMCC and NPWS in March 2000 to have a Flora and Fauna Study conducted over the entirety of Lot 556 were very significant causes of delay in achieving a rezoning, which were not attributable to any breach of contract on the part of the plaintiff. I should also say, in fairness to Mr Smith, that even though Mr Scott has blamed him for the delay because Mr Smith went along with the express desire of NPWS and LMCC for the extra studies, I am not satisfied that greater firmness on the part of Mr Smith would have made any difference. If in March 2000 the Zeitgeist was moving in a direction of requiring, in particular, more extensive Flora and Fauna Studies before a rezoning was permitted, I doubt that one extra man's opposition would have made any difference to it continuing on the course it was already set on. 230 The first and second defendants next criticise the plaintiff and Mr Scott for not having acted on the resolution of the Management Committee of 27 March 2000 to engage Umwelt, and for having delayed until around February 2001 before appointing Umwelt. I accept that delays in obtaining usable results from aerial photogrammetry to be able to start the process of creating a grid pattern over the site (para [113] above) would have contributed to a delay of some eighteen weeks in the appointment of Umwelt, to around mid-August 2000. But that does not explain the whole of the delay in appointing Umwelt. 231 The picture which Mr Scott presents in his affidavit is that, by the time NPWS made known in March 2000, its desire to have a survey of the entire site for (amongst other things) TJ, the flowering season of TJ was over for the year. Mr Scott's evidence is that he was told by Ms Moroney that she believed the flowering time of TJ was about three days in the middle of February. He also says, and I accept, that the Flora and Fauna Study was unable to be conducted "during the winter months" as some of the threatened species were either not detectable or in hibernation. As well, Shortland Wetlands had data relating to the site which was not included in their written report, and which Mr Scott spent some time trying to obtain from them. I would accept these two reasons as covering the period to the end of September 2000. I am not able to accept, however, that the limited flowering season of TJ was a significant contributor to the delay in appointing Umwelt. This is because, even when appointed, Umwelt did not carry out their own survey of TJ, but merely relied on Mr Payne's results. In my view, Sanpine was in breach of its obligations to co-ordinate the Development in the manner required by the contract, by failing to appoint Umwelt in sufficient time to enable the survey to commence after the end of September 2000. That involved a delay of the order of five months. 232 Another way in which Sanpine has been criticised is that it failed to carry out the various studies which LMCC's letter of 3 December 2001 identified, and failed to commence the process of Master Planning to which LMCC had alluded in its letter of 16 November 1999 (para [99] above). 233 I am not satisfied that Sanpine was in breach of its obligations concerning these matters. The process of carrying out the studies which are necessary for a rezoning to be achieved is - or at least, has become - a sequential one. By 2000, as Ms Thomson said, the usual practice was to carry out a Flora and Fauna Study first, obtain the agreement of the relevant authorities as to its adequacy, and on the basis of that Flora and Fauna Study decide what will be the footprint of the proposed development. This sequence is adopted so that the development can avoid completely locations which the Flora and Fauna Study shows are particularly sensitive, and so that the development is allowed to take place on areas where there are species of some sensitivity only if appropriate arrangements can be made for the protection of those species in nearby land which is not within the footprint of the development. Even though Mr Johnson's report of 1999 identified an area within which it was then proposed that the development should take place, I accept Mr Scott's evidence that, subsequently, that footprint came to be not fixed. I accept that it was not practicable to carry out studies which dealt with the details of how development would occur, or the effects it would have - such as the precise location of roads within the development, the effects of water run-off from it, and the nature and amount of noise to which it would be subject - until the precise location of the development had been fixed. All the studies identified in LMCC's letter of 3 December 2001 were of that type. Likewise, Master Planning could not take place until the precise outlines of the development were known. 234 One consequence of this is that, while Mr Scott was told, in February 2000, about the need to have modelling of Pourmalong Creek for the Water Quality Study (para [104] above), and did nothing about it, it has not been shown that his inaction in that respect is likely to have actually made a difference to the date on which a rezoning might have been achieved. Indeed, while the first part of a Water Quality Study (which dealt with the water quality and run-off characteristics prior to the development) could have been commenced, it would not have been possible for the second part of the study, showing how those matters would be affected by the development, to be completed until the footprint of the development became fixed. 235 Sanpine was not in breach of its obligations in failing to initiate these studies at a time when LMCC and the other relevant statutory authorities had not accepted a Flora and Fauna Study.

PART L - DOCUMENT PRODUCTION AND MAINTENANCE Breach of Obligations Concerning Development Programs and Monthly Reports? 236 A Development Program of the kind contemplated by Clause 6.2(i) of the Joint Venture Agreement was never prepared. Though Mr Scott presented a schedule to the Management Committee meeting on 18 March 1999 (para [80] above) which set out various tasks and the time they were expected to take, it dealt only with tasks involved in the development up to LMCC completing its consideration of the environmental studies. There were many other steps to be gone through before a rezoning was achieved, and a rezoning was only one of the steps involved in the entire Development. What Clause 6.2(i) of the Joint Venture Agreement required was a timetable for the completion of every single one of the stages of the entire Development. 237 Further, even the schedule which Mr Scott presented on 18 March 1999 was not Mr Scott's or Sanpine's real estimate of how long the steps set out in it were likely to take. Rather it was a document for the "sole purpose" of imposing time disciplines on the consultants. 238 Another respect in which the timeline presented to the meeting of 18 March 1999 failed to comply with the requirements of Clause 6.2(i) of the Joint Venture Agreement was that it was completely mute about the envisaged costs to complete any part of the Development. 239 Updated versions of the same schedule which Mr Scott presented at later meetings at the Management Committee suffered from the same deficiencies. 240 When Sanpine's obligation under Clause 6.2(i) to formulate a Development Program had never been performed in the first place, it was impossible for Sanpine to perform its obligation under Clause 6.2(j) to regularly update the Development Program. 241 Likewise, Sanpine did not comply with its obligation under Clause 12.2 to prepare and submit a Development Program and cost and revenue budget within ninety days of the date of the Agreement. It also failed, in the period immediately prior to December 1997, and regularly twice each year in 1998, 1999, 2000, 2001, 2002 and 2003, to perform its obligation under Clause 12.2(a). Thus, it breached that provision fourteen times. 242 Sanpine's obligation under Clause 13.2, to prepare a Monthly Report containing the information listed in Clause 13.2, was never performed. There were some Management Committee meetings, over the period February 1999 to March 2000, when Mr Scott presented a written Project Manager's Report. However, those reports (a) were, as their title suggested, from the Project Manager, not from the plaintiff as Development Manager, and (b) contained an account of whatever developments Mr Scott thought worthy of bringing to the attention of the Management Committee, but did not even attempt to cover all the topics listed in Clause 13.2(a). 243 The plaintiff submits that, even if it has not carried out a strict and literal performance of its obligations under these clauses, it has carried out steps which lead to much the same practical result as would have been achieved by a strict and literal performance of the obligations. Mr Scott says that cashflow projections were presented by him to the Management Committee meetings. He says that they were distributed at the meetings, but were collected and returned to him at the conclusion of each meeting. This happened because Mr Bill Smith had said to him: "We can't have this information leak out into the community (Aboriginal) as the Breakaway Movement might get their hands on them and try to use it against me. We will have to treat these documents as commercial in confidence."

To similar effect, Mr Steer gave evidence that: "… Every joint venture committee meeting had a cash flow of expenses incurred to date presented to it. It was at the direction of the Koompahtoo members of the Management Committee that that cash flow be taken back and not be included as part of the minutes. That was their request not ours. … Every meeting had a cash flow presented of all expenses, every meeting." 244 Nobody tendered any particular cashflow documents as being the ones which were presented to the Management Committee in this fashion. Mr Scott identified, in an affidavit, a large bundle of documents as "material relating to the work undertaken by Bronzewing as Project Manager of the joint venture". It included a bundle of cashflow documents, many of which had as the bottom line a figure which related to Sanpine's interest in the venture - the cumulative total of its receipts, the internal rate of return of its interest, its profit, or the value of its interest in the project. Even in these documents, lines above the bottom line could be used to ascertain quite detailed financial projections relating to the development as a whole, or Koompahtoo's interest in it. Others appear to relate to the development as a whole, not just Sanpine's interest. 245 As well, Mr Scott says that he was in constant communication (almost daily) with Mr Bill Smith and other members of the Management Committee. 246 Unusual though this story of Mr Scott and Mr Steer is, they were not cross-examined to suggest it was false, and no member of the Management Committee coming from Koompahtoo gave evidence which contradicted it (or, indeed, gave evidence at all). In these circumstances, I accept it. Though Mr Steer's evidence suggested that the cashflow documents were an account of past expenditure, Mr Scott is explicit that they were "cash flow projections". That cashflow documents were presented to the Management Committee in this way is something to be taken into account in assessing the seriousness of the plaintiff's breaches of its obligations under 6.2(i) and (j), 12.2(a) and 13.2. That cashflow documents were "presented" to the meetings says nothing about what discussion there was of them, or consent to items contained in them. Estoppel Concerning Breaches? 247 Concerning these breaches, the plaintiff says that no member of the Management Committee asked for anything different to the documents which were provided, and it was at the express request of Mr Smith that the cashflow documents were taken back at the end of each Management Committee meeting. In those circumstances, the plaintiff says, the defendant cannot now complain about breaches it has either condoned or instigated. That submission amounts to an allegation that the first defendant is estopped from relying upon the breaches. Sometimes the plaintiff referred to it as being that the first defendant had waived the breaches. Neither estoppel nor waiver was pleaded (concerning which the plaintiff completely lost the enthusiasm for sticking to pleaded and particularised issues which it had expressed in relation to the allegations of breach of contract), and some complaint was made by the first defendant about the fact that it was not pleaded. Ultimately, however, the parties conducted the case on the basis that this estoppel or waiver claim was one of the issues being decided. It was not submitted that this is one of the cases where there might be a difference between the principles which govern waiver, and the principles which govern estoppel. Hence I shall not give separate consideration to the claim of waiver. 248 In response to the estoppel allegation, both in relation to the breaches I am now considering, and other breaches, the first defendant disputes that the elements of an estoppel are made out. As well, it makes three related submissions. The first is that it would be ultra vires of Koompahtoo to agree to or encourage a departure from the relevant provisions of the Joint Venture Agreement. The second is that the Koompahtoo representatives on the Management Committee did not have authority from Koompahtoo to alter the relevant provisions of the Joint Venture Agreement. The third is that no estoppel can arise in the face of a statute, and giving effect to the estoppels relied upon would involve a contravention of ALR Act 1983. 249 The elements of this type of estoppel are stated in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-9 by Brennan J as follows: "… it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs."

That passage is one described, in Meagher, Gummow and Lehane's Equity Doctrines and Remedies , 4th ed, paragraph 17-050 at 550 as one in which "the current state of authority in Australia as to equitable or promissory estoppel is encapsulated …" . I note that the wording of the first element of the estoppel, as reported in (1988) 76 ALR 513 at 542, differs slightly from the wording in the CLR. I have used (and Meagher, Gummow and Lehane have approved) the wording as set out in the CLR version of the decision. 250 I do not accept that the elements of an estoppel concerning breach of these obligations concerning development programs and monthly reports are made out. For the estoppel to operate, in relation to these particular breaches, it would be necessary for the plaintiff to establish that it assumed that a particular relationship - namely, that the requirements of Clause 6.2(i), 6.2(j), 12.2 and 13.2 would not be insisted upon - then existed between the plaintiff and Koompahtoo. The plaintiff did not give any evidence to that effect, and I would not infer it is so. The evidence is consistent with the plaintiff having gone about the development project in a way which seemed to it to be a good idea at the time, regardless of the requirements of the contract. 251 Concerning the second element of the estoppel, the type of conduct on the part of Koompahtoo which would be relevant as inducing the assumption, is a representation, either by words or conduct, that those clauses would not be insisted upon. Clause 25.4 of the Joint Venture Agreement says: " Waiver (a) Waiver of any breach or provision of this Agreement must be in writing and signed by the party granting the waiver. (b) A breach of this Agreement is not waived by a failure to exercise, a delay in exercising or the partial exercise of any right or remedy available under this Agreement or in law or equity. (c) Any right or remedy created by, or arising upon, a breach of or a default under this Agreement, or upon an event of default, is not waived by any failure to exercise or delay in the exercise, or a partial exercise, of that right or remedy." 252 Though I would accept that, if there were to be a clear representation by Koompahtoo, orally or by conduct, that a provision of the Joint Venture Agreement would not be insisted upon, and that representation was relied upon, an estoppel could arise notwithstanding the terms of Clause 25.4, it is appropriate to take into account the existence of Clause 25.4 in deciding whether there has been a sufficiently clear representation, orally or by conduct, that the provisions of the Joint Venture Agreement concerning development programs and monthly reports would not be insisted upon. 253 The test for the degree of clarity and freedom from ambiguity which a representation should have to give rise to a promissory estoppel has been stated by Tobias JA (with whom Giles and Hodgson JJA agreed on this matter) in Galaxidis v Galaxidis [2004] NSWCA 111 at [93]: "… even if a representation is insufficiently precise to give rise to a contract (as in the present case), that fact does not necessarily disqualify the representation from founding a promissory estoppel. Much will depend upon the circumstances in which the representation is made and the context against which it is to be considered. In its context, the representation is sufficiently clear and unambiguous if it is reasonable for the representee to have interpreted the interpretation in a particular way being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely. In these circumstances, it would be unconscionable for the representor to deny responsibility for the detriment that arises because of that reliance."

I do not accept that, merely by failing to ask for anything better than the documentation which was provided to them, the Koompahtoo representatives on the Management Committee made a representation that the provisions of the Joint Venture Agreement concerning development programs and monthly reports would not be insisted upon. 254 Further, concerning the third element, I do not accept that it was in reliance upon anything that the Koompahtoo representatives on the Management Committee said or did, or failed to say or do, that the plaintiff continued to breach its obligations concerning development programs and monthly reports. 255 When the first three of the elements identified by Brennan J for an estoppel are not made out, there is no point in considering whether the remaining three elements apply. 256 A resolution of the Management Committee on 27 March 2000 (set out in para [114] above) resolved to dispense with the requirement for written reports from the Project Manager (ie, Bronzewing). That resolution says nothing about dispensing with any requirement for reports or development programs from the plaintiff. The resolution of 11 September 2000 concerning future meetings (set out at para [117] above) deals only with the adequacy of oral communication between members of the Committee between meetings - it says nothing about what documentation is required to be presented when meetings are actually held. I do not regard either of those resolutions as giving rise to any estoppel. 257 In circumstances where these basic elements for an estoppel are not made out concerning the breaches now under question, it is not necessary to examine the other three submissions which the first defendant makes in relation to estoppel allegations (para [248] above). PART M - ALLEGED BREACHES RELATING TO BANKING AND SPENDING OF MONEY Opening the Bank Accounts 258 The plaintiff submits that it is impossible for it to breach Clause 16.1(a) (para [23] above) because it imposes an obligation on "the Venturers" collectively, not on the plaintiff alone. I do not agree that the Agreement as a whole, properly construed, has that effect. The definition of "Joint Venture Account" (para [24] above) needs to be read with Clause 16.1(a) , and when they are read together the result is that it is the plaintiff who is to be the intermediary through which the Venturers collectively will open the Joint Venture Account. As well, the plaintiff's obligation under Clause 6.2(e) to maintain all records and documents of the Joint Venture and the plaintiff's obligation under Clause 16.5(a) to ensure that proper Books are kept, are consistent with it being Sanpine which has the obligation to open the Joint Venture Account. 259 The first and second defendants also sought to gain comfort from a concession extracted in cross-examination from Mr Steer, that it was the plaintiff who had the obligation to open the Joint Venture Account. While it is always open to a party to make an admission of a proposition of law, or of a mixed question of fact and law, in a pleading, differing views have been expressed about whether such an admission, extracted in cross-examination, is of any use or can properly be relied upon: Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669 at 675-6 per Glass JA, cf 684-5 per Mahoney JA. I reach my conclusion purely as a matter of construction, without relying on Mr Steer's admission. 260 The plaintiff has breached Clause 16.1(a) because (i) the Joint Venture Account was not opened "as soon as possible following the date of this Agreement", and (ii) it was opened at the National Australia Bank, Pitt & Hunter Streets Sydney, not at the ANZ Bank, 20 Martin Place. In circumstances where there was no special reason for choosing one major bank rather than another, the second of these breaches is trivial, and I will not consider it further. Failure to Pay Money Raised into Joint Venture Account 261 When money raised on the security of Lot 556 was deposited into the Unit Trust Account, rather than the Joint Venture Account that was a breach of Clause 16.3. This was because the money raised on security of Lot 556 counted as "funds received … by the Venturers concerning the Development, the Development Assets or the Joint Venture". In that phrase "the Venturers" means "the Venturers or either of them", for three reasons. The first is that there is an interpretation provision in Clause 1.2 of the Joint Venture Agreement, which includes provision that "words importing the singular include the plural and vice versa". The second is that the Agreement contemplated, in Clauses 11.1, 13.1 and 13.3 that the principal means of financing would be by raising money on the security of Koompahtoo's land, without Koompahtoo giving a personal covenant to repay it, which in the ordinary course of events would mean that it was the plaintiff which was the sole borrower from a lender, and hence the entity which would receive the money from the lender. The third is that Clause 11.2 is consistent with such a construction. The money advanced by Inteq on security of Lot 556 counted as "funds advanced by third parties to the Joint Venture as contemplated by Clause 11", and Clause 11.2 specifically required such money to be placed into the Joint Venture Account. The Joint Venture Agreement required that the money be placed into the Joint Venture Account notwithstanding that the plaintiff was the only borrower, in the sense of the only entity which gave an express personal covenant to repay the money. This is because it was the combined effect of Clause 11.1, 13.1 and 13.3 that the way in which funds would be advanced by third parties "to the joint venture" included by being raised on the security of Koompahtoo's land, but without Koompahtoo giving a personal covenant. Though the first defendant has not identified Clause 11.2 as one of the clauses it asserts was breached, Clause 11.2 can still be looked to as an aid to construction, in deciding whether Clause 16.3 has been breached. 262 The Unit Trust Account received four credits of money raised on the security of Koompahtoo's land - of approximately $670,000 in February 1999 from Inteq, of $300,000 in May 2001 from LKM, of a little less than $279,000 in June 2001 from LKM, and a further amount of roughly $280,000 in November 2001 from LKM. Each of those credits involved a breach of Clause 16.3. As well, there were various items of borrowed money which were credited to the Unit Trust Account in 2000, and which Clause 16.3 required to be credited to the Joint Venture Account. Breaches of Obligations Concerning Payment of Joint Venture Money 263 There was no Approved Development Program, no Approved Budget, and no "payment guidelines previously approved by the Management Committee". It follows that, when monies were withdrawn from the Joint Venture Account (after being placed there through the "sweep" arrangement which was not contemplated in the Joint Venture Agreement) Clause 16.4 was also breached. 264 Given the terms of Clause 16.4, it could not be breached by money being paid from the Unit Trust Account other than in accordance with an Approved Development Program, Approved Budget and payment guidelines previously approved by the Management Committee. However, one of the matters on which the defendants rely in their particulars of breach of Clause 16.1(a), 16.3 and 16.4 is that funds were applied for purposes other than the Joint Venture in accordance with approved development programs and budgets. It is legitimate to look at what funds have been applied for purposes other than the Joint Venture, or other than in accordance with approved development programs and budgets, in assessing the significance of the breaches of Clause 16.1(a) and 16.3. 265 The plaintiff submits that these breaches of Clause 16.1(a), 16.3 and 16.4 are technical, and certainly not repudiatory, when the plaintiff conducted no business other than being involved in the Joint Venture, and, it says, the Unit Trust Account fulfilled very nearly the same function as the Joint Venture Agreement had intended for the Joint Venture Account. 266 In contesting this submission, the first and second defendants focused their attention on payments which were made from the Unit Trust Account in February 1999. Those payments are also relevant to some other alleged breaches of the Joint Venture Agreement. 267 Within three days of the $670,036 which had been raised on security of Lot 556 being placed in that account on 16 February 1999, the following withdrawals were made: A Perkins $31,249.50 Bronzewing Pty Limited $75,353.64 Amabowl Pty Limited $124,519.60 Erolvase Pty Limited $18,000.00 Mrs E Perkins $183,314.48 Spencer Steer $18,000.00 Total $450,437.22

268 Mr Steer explains all these withdrawals as being for payment of expenses of the Joint Venture incurred before mid-February 1999. In some cases, he says, the people to whom payments were made had made payment, direct, to creditors of the Joint Venture. In others, he says, the people who were paid were themselves owed money by the Joint Venture, and had not pressed for payment until the Joint Venture was in funds. 269 Some rudimentary documentation vouching some of the expenses has been produced. Concerning the amount paid to Mr A Perkins, there is a payment voucher which gives a break-up into heads of expenditure (such as meeting expenses, Consultancy, Aboriginal liaison, motor vehicle, etc) for the entire amount. As well, there is a statement identifying individual payees or purposes of payment, dates and amounts totalling nearly $30,800 relating to a period up to 30 June 1998. The largest number of payments in this statement are payments made to Mr Bill Smith, for wages. The largest individual item is a payment to Mimiga Wajaar of $5,500 for "ceremony & welcome". (The cash payment voucher categorises that amount as "advertising".) 270 There is no documentation to support the payment to Bronzewing, nor the payment to Erolvase. 271 Concerning the payment to Amabowl, a detailed list of individual dates, payees and amounts is available. The most frequent item appearing in that list is "Smith consult". 272 Spencer Steer is an accounting firm of which Mr Steer is a member. The $18,000 paid to Spencer Steer is supported by a fees memorandum dated 24 February 1999 (after the payment had been made) for "services for the period from 1996 to 31/01/1999 based on a calculation of $1,500/month for 12 months". 273 The payment to Mrs Perkins is particularly problematic. The cheque payment voucher relating to it itemises it as made up of: "Loan Parramount Land $112,808.91 Loan Amabowl $70,505.57" 274 On 23 June 1997 Mr Steer wrote to "Mr Adam Perkins, Sanpine Pty Limited" a letter which included the following: "Further to our recent discussions it was agreed that I detail on behalf of Bob Scott and Associates (BSA) the arrangement for the acquisition of 80% of the issued capital in your company Sanpine Pty Limited. 1. The current structure of the company is as follows: A & C Perkins 33% Landerer 33% Leece 33%

2. It is your intention to dispose of 80% of the capital of the company to BSA for the following sums: Purchase from Landerer and Leece of their capital $150,000 (3 months from date of contract) Purchase of the remaining 13.34% from A&CP $500,000 (from first residual funds) Contribution to Koompahtoo Morisset Land Subdivision development ($200,000 refundable) $250,000 (100,000 on signing and $150,000 on rezoning Total 80% share acquisition $900,000

3. BSA will nominate two directors of Sanpine Pty Limited who will act with Messrs A and C Perkins in the development." 275 As well, there is a letter dated 18 September 1997 amongst the accounting documents which Mr Steer maintained, on the letterhead of "Scott Group of Companies", addressed to Messrs Charles and Adam Perkins, and saying: "Further to our discussions earlier we hereby advise that the $148,780 which you are paying on our company's behalf to Mr John Leece and Mr John Landerer will be repaid as a loan within one month of the date of this letter. This loan is to acquire the shares held in Sanpine Pty Limited and the share transfers will be held as collateral for this loan. The purchasing shareholders will be advised at the time of paying the loan."

Mr Steer signed that letter on behalf of Mr Scott. Mr Steer says, however, that he wrote that letter based on a mistake. 276 On 30 April 2003 a trial balance of the Sanpine Unit Trust was produced, which showed a debit of $150,000 for "establishment fees". When the second defendant was enquiring into the transactions of Koompahtoo and the Joint Venture soon after his appointment, he enquired of Mr Steer what that $150,000 of "establishment fees" related to. Mr Steer at the time was unaware. In cross-examination, Mr Steer said that the amount of $183,000-odd which was paid to Mrs Perkins consisted of about $150,000 of principal, plus interest. He says that the $150,000 was paid to Mr Leece and Mr Landerer "to establish the joint venture documentation and arrangements as far as the Koompahtoo were concerned", and denied it was to buy out their shares in the company. 277 Mr Steer gave evidence that once he got certain documentation from Adam Perkins (of a type not clearly identified, and at a time not clearly identified), he was advised by Mr Perkins that the money was establishment fees, and to treat it as establishment fees, not a loan. At first Mr Perkins explained to Mr Steer that "that original $148,000" was a loan, but a document which Mr Steer produced to him (the tender of which was not pressed when it became clear it was not stamped) in some fashion caused him to change his mind. By the time he came to give evidence, Mr Steer stated that the amount paid to Mrs Perkins related to establishment costs, plus interest on those establishment costs. As well, though, he said that the establishment costs were ones which arose from before the time that the Joint Venture Agreement was signed. 278 In my view, it is more likely that the amount paid to Mrs Perkins was repayment of an amount connected with the acquisition of shares of Mr Leece and Mr Landerer, plus interest. The basis on which Mr Steer gave his oral evidence about the nature of that payment was never made clear, and I regard the contemporaneous documents as more reliable. If that is right, the payment to Mrs Perkins is not an expense of the Joint Venture. 279 However, even if I were to accept the account Mr Steer gave in evidence, the payment to Mrs Perkins would still be a liability which was a Project Cost incurred prior to the date of the Joint Venture Agreement, and hence, pursuant to Clause 13.5 of the Joint Venture Agreement (para [22] above), not chargeable against the Joint Venture's funds. 280 In answer to this allegation of breach of Clauses 16.3 and 16.4, the plaintiff asserted that there was a waiver or estoppel in relation to the breaches. As that response is one which the plaintiff made in an impromptu fashion, in the course of the hearing, it was not developed as fully as it might have been. 281 I do not conclude that the Koompahtoo representatives on the Management Committee knew about there being a Unit Trust Account, as well as the Joint Venture Account. Nobody gave specific evidence to that effect, and I do not infer that it is the case. Nor do I conclude that they knew, in February 1999 or the months shortly thereafter, about the payments which had been made in February 1999. Mr Steer gave evidence as follows: "Q. In your affidavit of 21 December 2004 you say that it was as a consequence of a meeting on 9 June 1999 that expenditure for the joint venture was paid out of Sanpine's own account? A. Yes, that is the only reference I could find in the minutes. As I stated earlier, I was sure it was discussed at earlier meetings, I think as far back as the time the money was drawn down in February." 282 In the light of the absence of documentary confirmation, which would be expected for something as important as this, and of the unreliability of Mr Steer's recollection, I do not accept that the February 1999 expenditure was discussed at any meeting earlier than 9 June 1999. Nor (as will appear in para [310] below) am I satisfied it was discussed on 9 June 1999. 283 Mr Steer gives evidence that all the February 1999 expenditure was included in cashflows, which were discussed at meetings of the Management Committee. No specific cashflow document has been identified as being one discussed at a Management Committee meeting. On no occasion do the minutes of Management Committee meetings refer to the tabling, or discussion, of any such cashflow document. However, with some reluctance and hesitation, I accept his evidence to that effect. 284 Even so, accepting that there were cashflow documents recording the February expenditure presented to a meeting of the Management Committee, and accepting there was some discussion of such a cashflow document at the meeting, that falls a long way short of the Management Committee members as a whole having knowledge of and approving those particular items of expenditure. In particular, it is not a representation by anyone on behalf of Koompahtoo that it consents to the Joint Venture Agreement being departed from by $183,314.48, which had been raised on the security of Koompahtoo's land, being applied in a way not authorised by the Joint Venture Agreement. Nor am I satisfied that the plaintiff has acted in reliance on any such representation. 285 In these circumstances, where departure from the procedures required by Clauses 16.3 and 16.4 has been involved in over $183,000 of money raised on the security of Koompahtoo's land being misapplied, I do not regard those breaches as trivial. 286 Part of the reason why the February 1999 payments were made at all arises from the breach of Clause 16.1(a), in that the Joint Venture Account was not opened as soon as possible following the date of the Joint Venture Agreement. While money could not be raised by the Joint Venture on the security of Lot 556 until NSWALC had granted its approval, the plaintiff says that significant expenditure was taking place for the purpose of the Joint Venture before NSWALC gave that approval. The plaintiff says that that expenditure was financed by people friendly to the project making what amounted to unsecured loans by paying the creditors direct. There is some contemporaneous confirmation of this in a memorandum which Mr Scott wrote to Messrs Charles and Adam Perkins on 24 January 1999, in which he said, "To date around half a million dollars has been spent, borrowed or committed to this project …". If the letter of the Joint Venture Agreement had been observed, the expenditure which was made prior to February 1999 would have been made by the friends of the project making an unsecured loan, which was paid into a joint venture bank account, from which expenses of the Joint Venture were then paid. Adopting that procedure would have meant that proper accounting records relating to the payment could have been maintained, and proper accounts of the Joint Venture drawn up periodically. The situation which in fact arose in February 1999, when very large sums of money were paid from the Unit Trust Account, in many cases on the basis of no documentation or scrappy and inadequate documentation, and in one case for what has been proved to be not a Joint Venture purpose, would not have arisen. For these reasons I do not regard the breach of Clause 16.1(a) involving failure to open the Joint Venture bank account as trivial. PART N - ALLEGED FAILURES TO MAINTAIN PROPER BOOKS Sanpine's Obligations 287 Sanpine's obligations in Clauses 6.2(e) and 16.5(a) of the Joint Venture Agreement need to be read together, and need to be read with the definition of "Books" in Clause 1.1. Read in this way, they impose an obligation on Sanpine to ensure that proper accounting, financial and other documents and records of the Joint Venture are kept, and are kept in such a fashion as to permit the affairs of the Joint Venture to be duly assessed. Sanpine must engage bookkeeping and accounting services for the Joint Venture. Insofar as financial records are part of the Books, Sanpine must keep them in accordance with generally accepted accounting principles. Sanpine must also keep them in such a manner as to enable the Venturers to extract from the Books (ie, not only from the financial records, but also from the other documents and records) any information in relation to the affairs of the Joint Venture as that Venturer may reasonably require from time to time. 288 The content of Sanpine's obligation concerning the maintenance of these documents is also influenced by other provisions in the Joint Venture Agreement. While it is the function of the Management Committee, under Clause 10.1, to prepare the Annual Accounts and appoint the Auditors, and Clause 16.6(b) states the standard that the Annual Accounts should reach, and Clause 16.7 sets out the matters upon which an auditor is to enquire, it is a necessary implication in the Agreement that the Books will be maintained in such a way as enables those tasks to be done.

Mr Lawler's Difficulties in Ascertaining Information as Proof of Breach? 289 When the second defendant was appointed as administrator of Koompahtoo he had meetings with Mr Steer and Mr Scott in the course of March 2003 and early April 2003. He had received some documentation relating to the Joint Venture from Mr Steer by 14 April 2003, all of which related to the Sanpine Unit Trust. On 17 April 2003 he wrote making the following requests: "1) The financial information provided is for the Sanpine Unit Trust. I was not aware that a unit trust was involved in the joint venture and would appreciate a copy of: - Sanpine Pty Limited constitution - The Sanpine Unit Trust deed 2) The information does not provide the details of expenditure that occurred to 30 June 1999. I request a copy of the financial statements as at 30 June 1999; general ledger reports and detail of expenditure and receipts to that date from the initial loan advance on 16 February 1999. 3) I require a copy of the general journal from the date of commencement of the venture to April 2003. 4) For the year ended 30 June 2001 there were no general ledger reports nor the bank account receipts and payments details. A copy of this information is requested. For this financial year would you also advise: · what the miscellaneous income of $100,000 related to. · who "Villaworld" are and what advice they provided to KLALC, Bronzewing P/L and Smith & Sons. · background and details of the loan to KLALC of $50,000 during the year. 5) In the year ended 30 June 2002 there is a motor vehicle lease being paid. What are the details of the vehicle and who it was provided to." 290 Mr Steer wrote back on 30 April 2003 saying: "Please find enclosed the following information relating to the Sanpine Unit Trust: · Sanpine Unit Trust Trust Deed; · Sanpine Pty Ltd constitution; · Sanpine Unit Trust trial balance and general ledger 30 June 1999; · Sanpine Unit Trust general ledger 30 June 2001; · Sanpine Unit Trust general journals for the years ending 30 June 1999, 2000, 2001, 2002, and the period ending 31 March 2003; and · Project Management Agreement between Sanpine Pty Ltd and Bronzewing. We do not have copies of the Aboriginal Consultancy Agreement between Sanpine and Smith & Sons nor the Villaworld reports. We are also not aware of the existence of a formal agreement with Erolvase Pty Ltd nor of a transfer agreement between KLALC and KLALC Property and Investment Pty Ltd. The initial cash flow budgets and LKM mortgage documents will be posted to your office separately." 291 Mr Steer and Mr Lawler met again on 2 May 2003, following which Mr Lawler wrote to Mr Steer on 13 May 2003, as follows: "I understood from our meeting of 2 May 2003 that the majority of the outstanding records I had requested were with the ICAC. We reviewed the documents they had on 9 May 2003 and as a result we still request access to the following: 1. Details of cheque payments from the Sanpine Pty Limited as trustee for the Sanpine Unit Trust bank account from 16 February 1999 to 30 June 1999. I understand from you that the majority of the payments made during this period (and especially those to 30 March 1999) were reimbursements relating to expenses incurred relating to the rezoning of Lot 556. I again request details of the payees together with the documentary evidence of the expenses these reimbursements related to concerning Lot 556. 2. I again request documentary evidence of all payments made from the Sanpine Pty Limited as trustee for the Sanpine Unit Trust bank account from commencement to today's date. 3. You have stated that you do not have copies of the Aboriginal consultancy agreement between Sanpine and Smith & Sons. Would you advise whether such agreements were ever done and if so, any suggestion where I may obtain a copy. 4. You advised that you do not have copies of the Villaworld reports. Would you advise where I may obtain copies of these reports considering the material level of expenditure that was incurred by the joint venture to have them prepared. 5. I still await receipt of the initial cashflow budgets and LKM Mortgage documents which you stated you would forward to my office separately. 6. Copies of the documents referred to in the joint venture agreement relating to: · Approved development program which was prepared by Sanpine setting out each of the stages of the development and an estimated timetable and cost for each stage. · Details of who was appointed secretary of the joint venture. · Copies of minutes of the monthly management committee meeting. · Copies of the half yearly report to the management committee by Sanpine Pty Limited for the prior 6 months and for the period the date which the joint venture is expected to be completed. These reports were also to provide the development program and cost and revenue budget. Approval was to be provided by the management committee of any development program or cost and revenue budget. · Details of any proposed alterations to the approved development program or approved budget provided by Sanpine as development manager for approval of the management committee. · Copies of monthly reports prepared by Sanpine to the management committee as provided for at Clause 13.2 of the joint venture agreement. · Details of why audited annual accounts were not prepared in accordance with Clauses 16.6 and 16.7 of the joint venture agreement. I would appreciate your immediate attention to this matter. As previously stated I will attend your office to review the above documents if this would assist." 292 On 28 May 2003 the solicitor for Mr Lawler wrote to the solicitor for the plaintiff saying: "I refer to our meeting on 2 May 2003 with our respective clients. At the conclusion of that meeting Mr Lawler was promised copies of various documents relating to the Joint Venture to develop part of the land comprised in Certificate of Title Folio Identifier 556/729949. Your clients stated that the documents would be available during the week commencing 12 May 2003. No such documents have been provided, despite the further written request by Mr Lawler on 13 May 2003. A copy of Mr Lawler's letter to Mr Steer of your client is attached. Accordingly, I am instructed to demand that your client make good its promise to provide these documents. Should your client continue to withhold this information KLALC will take such action as is advised to protect its position without further notice." 293 The solicitor for the plaintiff responded promptly, saying he was no longer instructed. 294 On 4 June 2003 Mr Lawler wrote to "The Directors, Sanpine Pty Ltd", saying: "I refer to my letter of 13 May 2003 to which I have not had any response. In particular, you have not provided me with access to or copies of the documents and records listed in that letter. Kindly take this as a formal demand that you remedy that default. Further, as you know, LKM Capital Limited has purported to enter into possession of the whole of Lot 556 in DP 729949, as a result of an alleged default in payment of interest pursuant to the loan from LKM Capital Limited to Sanpine Pty Limited and KLALC Property & Investment Pty Limited. So far as I am aware, Sanpine Pty Limited has done nothing to satisfy LKM Capital Limited's demands, arrange repayment of the loan from LKM Capital Limited or otherwise take steps to end LKM Capital Limited's possession of the land or avoid the exercise of a power of sale of LKM Capital Limited. Sanpine Pty Limited should promptly remedy the position. Would you also kindly provide me with the updated development program to take account of these events and circumstances which should have been prepared in accordance with clause 6.2 of the Joint Venture Agreement, and provide me with the monthly report which was due by 15 May 2003." 295 Mr Lawler and Mr Steer spoke on the telephone on 13 June 2003. They discussed whether the legal difficulties concerning LKM could be settled. Mr Lawler indicated he was prepared to have a meeting, but that before any meeting could be held he required the further information he had been asking for since May. To that, Mr Steer said: "I am not prepared to give you any further information than has previously been provided as I understand that you in your capacity as administrator of the LALC have been running around the countryside bagging Sanpine and the Joint Venture."

Mr Steer offered, however, to send Mr Lawler copies of the minutes of the Management Committee of the Joint Venture (and that offer was promptly made good). Mr Lawler also enquired for details of the $150,000 worth of establishment fees, concerning which Mr Steer said: "I am unaware as to what the money was used for and will have to confirm the situation with you and get back to you at some time later." 296 In cross-examination it was suggested to Mr Steer that he never got back to Mr Lawler, to which Mr Steer replied "I'm not sure that I never did", and "I think I did get back to him". Certainly at some stage Mr Lawler came to be in possession of such documentation supporting the payments made in February 1999 from the Sanpine Unit Trust Account as I have mentioned in paras [266] and following above. In his affidavit Mr Lawler identifies that documentation as having been received from Sanpine. It is not documentation which enables Mr Lawler (as the then alter ego of Koompahtoo) to assess the affairs of the Joint Venture in that respect. 297 After Mr Lawler's solicitors had sent a letter demanding the information to Sanpine's then current solicitors, Mr Steer wrote to Mr Lawler on 27 June 2003 saying: "In reference to your letter dated 13 May 2003, please find below responses to the documents requested by you:- 1. A full detailed general ledger for Sanpine Pty Ltd, acting in its capacity as trustee for the Sanpine Unit Trust, from 16 February 1999 to 30 June 1999 is enclosed. 2. A full detailed general ledger for Sanpine Pty Ltd, acting in its capacity as trustee for the Sanpine Unit Trust, from 1 July 1999 to the account's closure in December 2000 is enclosed. Please note that both of these first 2 items have been previously provided in electronic format to ICAC, hence our belief that you would have accessed them at ICAC. 3. An agreement between Smith & Sons and Sanpine does exist but a copy of this is not in our possession. I suggest you contact Bob Scott to see if he has a copy as I think the only copy was with Bill Smith. 4. There were numerous reports and meetings with Villaworld during this process, however I am not in possession of written reports relating to Villaworld. The monies were remitted by Villaworld at the completion of works both on their behalf and our behalf. 5. Enclosed are copies of the LKM mortgage deed of charge and loan agreement. Please advise us if there were additional documents that you require with regards to LKM. 6. o The development program was discussed in detail at each management meeting o The secretary was appointed at each meeting o You have copies of the management committee meeting minutes. o The reports were included by agreement in the minutes of the management committee. o Alterations to the development program or budget were agreed as part of the management meeting. o Monthly reports prepared by Sanpine are attached to the committee minutes. o I have discussed the reasons for the non-completion of audited annual accounts with you in detail previously." 298 On 8 July 2003 Mr Lawler wrote to Mr Steer as follows: "I refer to your letter of 27 June 2003 received at our Sydney office 2 July 2003 and comment as follows: 1) I have still not received details of cheque payments from Sanpine Pty Limited as trustee for the Sanpine Unit Trust that were made from the bank account from 16 February 1999 to 30 June 1999. The information you have provided appears to relate essentially to the additional trust account that you advised me was subsequently closed as it was no longer relevant. The information I require relates to the bank account (A/C No.46 363 6056) where Inteq custodians initial loan was deposited and approximately $570,000.00 expended prior 30 June 1999. As stated in my previous correspondence I understand from you that the majority of the payments made during this period were reimbursements relating to expenses occurred [sic] regarding rezoning of Lot 556. I again request details of the payees together with the documentary evidence of the expenses these reimbursements related to concerning Lot 556 which you have previously advised is available. 2) I again request documentary evidence of all payment made from the Sanpine Pty Limited as Trustee for The Sanpine Unit Trust bank account from the commencement to today's date. Again you have advised that documentary evidence is available for the vast majority of the payments however I am yet to sight evidence of this. 3) I will contact Bob Scott and Bill Smith requesting a copy of this document. 4) Would you advise who would have copies of the numerous reports relating to Villaworld. I would also appreciate the details of how the Villaworld correspondence of 24 November 2000 to Sanpine Pty Limited which was included with the Sanpine/KLALC Property and Investments Joint Venture minutes reconciles with your statement regarding numerous reports. 5) I have still not received a copy of the initial cash flow budgets or sighted any cash flow information relating to the initial mortgage loan or increases that were subsequently arranged. The Joint Venture minutes state that for each of these increases they were based on cash flow information which I am yet to sight. … 8) You have also advised me on a number of occasions that all expenses were being incurred by Sanpine Pty Limited, on behalf of the joint venture and that these would become joint venture expenses when the land was rezoned. I would appreciate the details of your basis for this view." 299 On 14 July 2003 Mr Steer replied: "In reference to your letter dated 8 July 2003, please find responses to your queries:- 1 & 2. As discussed with you, the supporting documentation for cheque payments by Sanpine Pty Ltd and Sanpine Unit Trust is substantial. For this reason, we confirm that you have one of your staff make an appointment with Richard Green at our office to review the documentation and select documents to be copied at your expense. 3. As detailed previously, a copy of the final agreement between Sanpine and Smith & Sons Consultancy Pty Ltd is not to hand. Please find enclosed a copy of a draft service agreement between those parties. Given the time since the document was finalised, I am not able to recall what changes, if any, were made subsequent to this draft. 4. This point has been followed up with Bronzewing, Project Managers for the Joint Venture, and my original assertions have been corrected in that the Villaworld activities did not require a written report but more to the point required expert assessment and most importantly extensive negotiations with both the Hunter Water Corporation and the Lake Macquarie City Council. Detailed verbal reports were provided almost on a daily basis on the impact, benefits, disadvantages or otherwise of the proposed rising main that were pertinent to the Koompahtoo, Sanpine the Joint Venture, Lake Macquarie City Council and the wider community. If further information is required, I suggest you contact Mr Bob Scott. 5. Cash flow documents will be available for your staff to copy at our office. … 7. I do not have to hand any Management Committee minutes subsequent to those on January 2003. We are intending to convene a Management Committee meeting wit you when you are ready. I assume you would want to attend. 8. As discussed in our telephone conversation on 10th July 2003 and on numerous occasions prior to then. If you have any queries on the enclosed information or require further documentation, please do not hesitate to contact either Richard or myself at this office. I trust this now allows us to have a meeting to settle this matter in a timely and commercial fashion. I look forward to your early response." 300 A representative of Mr Lawler never took up the invitation to attend at Mr Steer's office to inspect documents there. 301 In fact, there were no separate sets of accounts relating to the Joint Venture, in the sense of a ledger, journal, and cashbook. 302 So far as accounts in the sense of financial statements in the nature of a balance sheet and profit and loss account are concerned, a set of accounts for the Joint Venture, stamped "draft" was drawn up for the year ended 30 June 1999. That draft was provided by Mr Steer to Mr Lawler. No finalised set of accounts for the Joint Venture relating to the year ended 30 June 1999 has ever been produced to the Court, or to Mr Lawler. While Mr Steer says he is sure they have been finalised, I do not accept that evidence. The draft accounts for the year ended 30 June 1999 do not show any of the expenditure in February 1999 which I have referred to at para [266] above. They do not show the regular ongoing payments to Bronzewing, or to Mr Smith's company, or for Mr Smith's motor vehicle, all of which were being paid from the money raised for the purposes of the Joint Venture on the security of Koompahtoo's land. Indeed, they show only expenditure by the Joint Venture in that year of the order of $36,000, comprising in large part of Aboriginal liaison fees to Mr Smith, meeting expenses to other Koompahtoo representatives on the Management Committee, and an amount paid to LMCC. The draft accounts show Sanpine as being a creditor for the total amount of $36,000-odd which those accounts show as being expended by the Joint Venture in the year. 303 If the accounts for the Joint Venture for the year ended 30 June 1999 were prepared on an accrual accounting basis (and it will appear from para [318] and [325] below that an accrual accounting basis was required for those accounts by section 32 ALR Act 1983 and section 41B(1)(b) Public Finance and Audit Act 1983), not all of the expenditure of February 1999 which I have been discussing appears to have accrued in the year ended 30 June 1999. However part of that expenditure, at least, the repayment to Mr Perkins of that amount which was not part of his list of expenditure to 30 June 1998, some of the amounts claimed by Amabowl, and some of the fees of Spencer Steer & Associates, accrued during the year ended 30 June 1999, and so should have been included in the accounts for that financial year. 304 In these circumstances, the draft accounts for the year ended 30 June 1999 are more than manifestly inadequate - they are wrong. 305 No accounts at all were drawn up for the Joint Venture for any year prior to 30 June 1999. Thus, that part of the expenditure made in February 1999 which related to expenses of the Joint Venture which had accrued on or prior to 30 June 1998 was never included in any set of financial statements in the nature of a balance sheet and profit and loss account for the Joint Venture. 306 Accounts of the Joint Venture for financial years after 1999 were prepared in draft form. Those accounts were never made available to Mr Lawler, and were produced in Court for the first time on the third day of the hearing. They show zero activity in each of those years. They do not record any of the outgoings connected with the Joint Venture which resulted in the expenditure, over the years, of more than $2.3m. Those draft accounts are also wrong. 307 Mr Lawler's ongoing puzzlement about the affairs of the Joint Venture, notwithstanding the information which he was provided by Mr Steer, provides some evidence that the standard required by Clause 16.5, namely that the Books shall be kept "in such a manner as enables the Venturers to extract from the Books any information in relation to the affairs of the Joint Venture as that Venturer may reasonably require" had not been adhered to. However, the weight of that evidence is limited by the fact that Mr Lawler did not inspect all of the books. In consequence, I do not rely upon his actually having failed to achieve an understanding of the affairs of the Joint Venture from inspecting such of the documents as he inspected, as being in itself adequate proof that the Books failed to meet the contractual standard. 308 The first and second defendants also rely upon Mr Lawler's difficulties in ascertaining information in another way. Mr Steer's evasion and prevarication in attending to Mr Lawler's requests is, I accept, a strong admission by conduct that the books of the Joint Venture had not been kept in the way the Joint Venture Agreement required. 309 It is not necessary, however, to rely upon any such admission. The total failure to keep books of original entry for the Joint Venture, on the basis of which annual accounts could be drawn up and audited each year, is a gross departure from the terms of the Joint Venture Agreement. I do not accept that it is just a matter of detail whether the books of original entry were kept in the name of the Joint Venture or in the name of the Sanpine Unit Trust. The payment to Mrs Perkins in February 1999 might possibly have been a proper payment to include in the accounts of the Sanpine Unit Trust, but it was not properly chargeable to the Joint Venture. As well, as mentioned at para [286] above, if proper accounts had been kept from the outset in the Joint Venture the occasion for there being scrappily recorded loans, which were repaid in February 1999, would simply not have arisen. 310 The plaintiff says that the justification for the way it treated the accounts of the Joint Venture is to be found in the resolution of the Management Committee on 9 June 1999 (para [88] above). I accept that, on 9 June 1999, faced with the prospect of dissension within Koompahtoo, all the members of the Management Committee reached a consensus that they would not have an audit of the Joint Venture until after the rezoning was complete, and that it would be Sanpine that would incur the expenses until the rezoning was complete. This consensus was one example of a repeated theme in the operations of the Management Committee over subsequent years, namely, that the Management Committee were united in wishing the Joint Venture to go ahead, and if necessary would achieve that objective by keeping details of the operation of the Joint Venture away from the members of Koompahtoo, NSWALC, or anyone else who might create problems. I do not conclude, however, that the discussion on 9 June was one which involved the Koompahtoo representatives on the Management Committee agreeing that it would be money which had been raised on the security of Koompahtoo's land which would be expended by Sanpine. The resolution is quite consistent with Sanpine deciding (as the Joint Venture Agreement contemplated might possibly happen, and as had actually happened before February 1999) that it would use money raised from sources other than Koompahtoo's land to pay those expenses. The resolution of 9 June 1999 is not one which, in terms, authorises a departure from the requirements of the Joint Venture Agreement that proper accounts be kept for the Joint Venture. Nor, on any reading, does it have anything to do with the plaintiff's failure to maintain accounts for the Joint Venture for nearly two years before 9 June 1999. Nor does it authorise any particular expenditure which has been made in the past. 311 If I were wrong in taking this limited view of the proper scope of the resolution of 9 June 1999, it would be necessary to examine the three submissions which the first defendant makes (para [248] above) as to why that resolution is ineffective to do away with the plaintiff's obligation to keep books for the Joint Venture. To consider those arguments, it will be necessary to examine the ALR Act 1983 and the Regulations made under it, in the form that they had at the relevant times. Date as at which to Consider Aboriginal Land Rights Legislation 312 Some amendments were made to the ALR Act 1983 by the Aboriginal Land Rights Amendment Act 2001, which commenced on 25 October 2002. In deciding both whether a contract will not be enforced because of illegality, and whether an estoppel will be held not to arise because it is contrary to a statute, the Court looks at the law as at the date of the alleged contract, or as at the date of the conduct alleged to give rise to the estoppel: Jaques v Withy and Reid (1788) 1 H Bl 65; 126 ER 40; Hutt Valley Properties Limited v Gamages (NZ) Limited (1952) NZLR 296 at 300; Todd v Parker [1953] NZLR 39 at 43, 47; Chapman v Wade [1939] SASR 298; Subdivisions Limited v Payne [1934] SASR 214 at 221 per Napier J; Spiers v Hunt [1908] 1 KB 720; Wilson v Carnley [1908] 1 KB 729, at 734. The explanation for the law being so is that if a contract is contrary to a statute or public policy at the time it is made, it would be subversive of the observance of the law if the court were to enforce that contract merely because the law later changed (at least in circumstances where the change in the law was not expressed to be retrospective). Likewise, it would be subversive of the policy which underlies non-recognition of an estoppel which is contrary to a statute if the statute in question was any other than a statute in the form it had at the time of the conduct said to give rise to the estoppel. As the conduct said to give rise to the estoppel in the present case occurred before 25 October 2002, I shall consider ALR Act 1983 in the form it had before the amendments came into operation in 2002. Relevant Provisions of Aboriginal Land Rights Legislation 313 The ALR Act 1983 adopts the drafting device, now comparatively unusual, of including a preamble in the Act. It is: "WHEREAS: (1) Land in the State of New South Wales was traditionally owned and occupied by Aborigines: (2) Land is of spiritual, social, cultural and economic importance to Aborigines: (3) It is fitting to acknowledge the importance which land has for Aborigines and the need of Aborigines for land: (4) It is accepted that as a result of past Government decisions the amount of land set aside for Aborigines has been progressively reduced without compensation." 314 Section 5 empowers the Minister to constitute an area as a Local Aboriginal Land Council ("LALC") area. Section 6 provides: "(1) There is hereby constituted for each Local Aboriginal Land Council area a Local Aboriginal Land Council which shall be a body corporate. (2) The corporate name of a Local Aboriginal Land Council shall be "Local Aboriginal Land Council" preceded by the name of the area of the Council. (3) All adult Aborigines who are listed in the Local Aboriginal Land Council roll for a Local Aboriginal Land Council area shall be members of the Local Aboriginal Land Council for that area." 315 Section 7 makes provision for the preparation and maintenance of LALC rolls. Section 8 requires a LALC to hold meetings, including ordinary meetings at least once in every three months, and annual meetings. Section 9 requires the members of a LALC to elect, each year, a Chairperson, a Secretary and a Treasurer. Section 12 sets out various functions of a LALC, including: "(a) in accordance with any regulations, to acquire land and to hold or dispose of, or otherwise deal with, land vested in or acquired by the Council …

(d) to implement the wishes of its members (as decided at a meeting of the Council) with respect to: (i) the acquisition, management, use, control and disposal of land, and (ii) the acquisition, establishment and operation of enterprises … (f) to make claims to Crown lands." 316 The ALR Act 1983 also makes provision for the formation of Regional Aboriginal Land Councils, and the NSWALC. Section 23 provides that the functions of the NSWALC include: "(a) to administer the [NSWALC] Account and the Mining Royalties Account established under this Act,

(b) to grant funds for the payment of administrative costs and expenses of Regional and Local Aboriginal Land Councils …

(h) to make grants or lend money to, or invest money for or on behalf of, Aborigines, … (j) to ensure that Regional and Local Aboriginal Land Councils comply with this Act in respect of the establishment and keeping of accounts and the preparation and submission of budgets and financial reports." 317 Section 29 required the establishment in a bank, building society or credit union an account named the "New South Wales Aboriginal Land Council Account", into which all money received by the Council, and which is not required by some Act to be paid into another account or fund, must be paid. Section 28 provided that there would be paid into that account in 1984 and each succeeding year up to and including 1998 7.5% of the amount which had been paid in the State as land tax under the Land Tax Management Act 1956 in respect of the previous year. 318 Other provisions relating to accounting were: "31(1) Each Local Aboriginal Land Council shall establish in a bank, building society or credit union an account into which shall be deposited: (a) money received from the New South Wales Aboriginal Land Council for or in respect of the acquisition of land, and (b) any other money received by the Local Aboriginal Land Council and not required by or under this or any other Act to be paid into any other account or fund, and from which shall be paid: (c) amounts required for the acquisition of land by the Council where that acquisition has been approved in accordance with this Act, (d) amounts required to meet expenditure incurred by the Council in the execution or administration of this Act, and (e) any other payments authorised by or under this or any other Act. … 32(1) Each Local Aboriginal Land Council … must cause proper accounts and records to be kept in relation to all its operations. (2) Each such Council must prepare financial statements for each financial year of the Council in accordance with section 41B(1) of the Public Finance and Audit Act 1983 . (3) The financial statements must be submitted for verification and certification to an auditor selected by the Council from a list of auditors compiled in the manner prescribed by the regulations. (4) The financial statements must be prepared and submitted to the auditor not later than 6 weeks after the end of the financial year to which they relate. (5) Each such Council must furnish to the New South Wales Aboriginal Land Council and to the Minister the audited financial statements and a certificate of the auditor, in a form prescribed by the regulations, not later than 4 months after the end of each financial year. … 34A(1) Each … Local Aboriginal Land Council must, not less than 6 weeks before the commencement of each financial year, prepare and submit for the approval of the New South Wales Aboriginal Land Council a detailed budget relating to its proposed operations during that financial year. (2) The New South Wales Aboriginal Land Council may seek information relating to the budget from a … Local Aboriginal Land Council at any time. 34B An Aboriginal Land Council which receives funds directly or indirectly from the New South Wales Aboriginal Land Council in a financial year must, if directed to do so by the New South Wales Aboriginal Land Council, prepare and submit to it within 4 weeks of the end of each quarter of the financial year, a report certified by the Treasurer of the … Local Aboriginal Land Council as to the expenditure of those funds. 34C(1) The New South Wales Aboriginal Land Council must cease immediately to provide any funds to a … Local Aboriginal Land Council if the … Local Aboriginal Land Council: (a) fails to obtain a certificate, or is unable to obtain a satisfactory certificate, of an auditor under section 32, or (b) otherwise fails to comply with section 32, 34A or 34B, or (c) is the subject of a report by an investigator appointed in accordance with section 56D recommending that funds should cease to be provided to the Council. (2) The New South Wales Aboriginal Land Council may not resume providing funds to such a … Local Aboriginal Land Council until: (a) the … Local Aboriginal Land Council obtains a satisfactory certificate of an auditor under section 32 or otherwise complies with section 32, 34A or 34B, or (b) the Minister, after consideration of a report of: (i) an investigator appointed in accordance with section 56D, or (ii) an administrator of the area of the Council, notifies the New South Wales Aboriginal Land council in writing that the provision of funds may be resumed." 319 Sections 35 to 39 provide several different ways in which an Aboriginal Land Council can acquire land. Section 36 enables a LALC to make a claim for land which is "claimable Crown lands" - that is, broadly, Crown lands which are not lawfully used or occupied, not likely to be needed for residential purposes or an essential public purpose, and not land over which native title exists. When a LALC makes a claim for such land, a Crown Lands Minister can grant it to that LALC. It was through that process that Koompahtoo came to acquire Lot 556, and the other two parcels of land which are relevant to the Joint Venture. 320 Division 4 of Part 6 of the ALR Act 1983 runs from section 40 to section 42 inclusive. Section 40 provides that an LALC: "(1) … may not sell, exchange, lease, dispose of, mortgage or otherwise deal with land vested in it, except in accordance with this Division. (2) Any sale, exchange, lease, disposal or mortgage of, or other dealing with, land in contravention of this Division is void." 321 Section 40B provides: "(2) A Local Aboriginal Land Council may, subject to the provisions of any other Act and with the approval of the New South Wales Aboriginal Land Council: (a) lease or change the use of land vested in it, and (b) grant an easement over land vested in it, and (c) release an easement benefiting land vested in it, but only if the lease, change of use or the grant or release of the easement has been approved at a meeting of the Local Aboriginal Land Council specifically called for that purpose at which a quorum was present. (3) The New South Wales Aboriginal Land Council may not refuse to give an approval of a lease or change of use under this section except on the ground that the terms or conditions of the lease are inequitable to the Local Aboriginal Land Council concerned or that the change of use would be detrimental to the interests of other Local Aboriginal Land Councils." 322 Section 40D provides: "(1) A Local Aboriginal Land Council may, subject to the provisions of any other Act, sell, exchange, mortgage or otherwise dispose of land vested in it if: (a) at a meeting of the Council specifically called for the purpose (being a meeting at which a quorum was present) not less than 80 per cent of the members of the Council present and voting have determined that the land is not of cultural significance to Aborigines of the area and should be disposed of, and (b) the New South Wales Aboriginal Land Council has approved of the proposed disposal, and (c) the Minister has been notified of the proposed disposal, and (d) in the case of the disposal of land transferred to an Aboriginal Land Council under section 36, both the Crown Lands Minister referred to in that section and the Minister have been notified of the proposed disposal. … (3) For the purposes of this section, land is of cultural significance to Aborigines if the land is significant in terms of the traditions, observances, customs, beliefs or history of Aborigines." 323 Section 41 provides: "Subject to this Act, an Aboriginal Land Council may do or suffer in relation to its property any act or thing that it could lawfully do or suffer if it were a natural person having, in the case of land, the same estate or interest in the property as the Council and, in particular, but without prejudice to the generality of the foregoing, it may do or suffer any such act or thing to enable it to: (a) improve, or cause to be improved, any land vested in it, or (b) explore for and exploit, or cause to be explored for or exploited, mineral resources, or other natural resources, vested in it." 324 Section 65 provides: "An Aboriginal Land Council is not, for the purposes of any law, a statutory body representing the Crown." 325 Section 41B(1) Public Finance and Audit Act 1983, which is incorporated by reference into section 32(2) ALR Act 1983 (para [318] above), states: "(1) The financial statements referred to in section 41A of a statutory body: (a) shall be prepared having regard to current accounting standards and industry practices relating to the statutory body, (b) shall, except as provided by subsection (2), be prepared on an accrual accounting basis, (c) shall consist of: (i) in the case of a statutory body which is not engaged in manufacturing or trading activities, an income and expenditure statement or a statement of receipts and payments, (ia) except as provided by subsection (3), in the case of a statutory body which is engaged in manufacturing and trading activities, manufacturing, trading and profit and loss statements, (ib) except as provided by subsection (3), in the case of a statutory body which is engaged in trading activities only, trading and profit and loss statements, (ii) except as provided by subsection (3), a balance sheet or a statement of balances, (iii) except as provided by subsection (3), consolidated accounts, (iv) a statement of cash flows, (v) proper and adequate notes to the statements referred to in subparagraphs (i)-(iv), (va) a statement of all exemptions, omissions, modifications and variations made by the Treasurer under section 41BA which apply to the statutory body, and a summary of the reasons for them, and (vi) such other information, if any, or particulars, if any, as may be prescribed, (d) shall be accompanied by: (i) a summary of the land owned or occupied by the statutory body classified according to the actual use of the land, and (ii) where it is appropriate to value the land and the value can readily be established, a statement of the value of the land within each classification, or otherwise, a statement giving the reasons why it is inappropriate to value the land or why the value cannot readily be established, (e) shall exhibit a true and fair view of the financial position and transactions of the statutory body … and (f) (Repealed) (g) shall be prepared in such manner, if any, and such form, if any, as may be prescribed." 326 Certain provisions of the Aboriginal Land Rights Regulations 1996 are relevant. Even though those Regulations have now been replaced, it is the version of the Regulations which were in existence at the time of the relevant events which needs to be considered. Clause 25 prescribes certain rules set out in Schedule 1 as model rules for each LALC. The earlier version of the regulations, made in 1983, contained model rules in terms which were identical, so far as presently relevant, to those contained in the 1996 Regulation, apart from some completely inconsequential stylistic differences. The 1996 model rules include the following clauses: "5. The objects of the Council are as follows: (a) to improve, protect and foster the best interests of the Council's members and all Aboriginal people within the Council's area, (b) to acquire land in any way authorised under the Act, (c) to obtain or construct housing for Aboriginal people within the Council's area and to repair and maintain that housing, (d) to purchase, commence and engage in any business enterprise, including those which promote employment and employment training, as a means of obtaining self-sufficiency for Aboriginal people. (e) to obtain financial assistance, by written submission, from the New South Wales Aboriginal Land Council, (f) to obtain financial assistance from any other source for the provision of facilities for the Council and its projects, (g) in recognition of the fact that land is of spiritual, social and cultural importance to Aboriginal people, to commence, support and carry out proposals designed to protect and preserve the sites and culture of the traditional peoples of the Council's area, (h) to ensure that no part of the income or property of the Council is transferred directly or indirectly by way of dividend, bonus or otherwise by way of profit to members of the Council (nothing in this object prevents the payment in good faith of remuneration to any officer or servant of the Council). (i) to do all things permitted by the Aboriginal Land Rights Act 1983 and to work with and encourage all Aboriginal organisations and people generally to obtain land rights for Aboriginal people. 6 Powers The Council: (a) may take proceedings and be proceeded against in its corporate name, and (b) may, for the purpose of enabling it to exercise its functions, purchase, exchange, take on lease, hold, dispose of and otherwise deal with property so far as is permitted by the Act, and (c) may do and suffer all other things that bodies corporate may, by law, do and suffer and that are necessary for, or incidental to, the exercise of its functions.

… 30 Duties of Chairperson (1) The primary duty of the Chairperson is to ensure the successful functioning of the Council and achievement of its objectives. (2) Accordingly the Chairperson must: (a) uphold the rules of the Council, and (b) preside at Council meetings, and (c) represent and act, subject to the instructions of a Council meeting, on behalf of the Council in the interval between meetings. … 32 Duties of Treasurer The Treasurer must: (a) maintain proper accounts and records of all transactions in relation to the operations of the Council (in a manner approved by the New South Wales Aboriginal Land Council), and (b) ensure that all money received is deposited as soon as possible in the Council's account with a bank, building society or credit union, and (c) ensure that the accounts and records of financial transactions of the Council are inspected and audited by an auditor appointed by the Council immediately after 30 September each year, and (d) ensure that a statement of accounts, together with an auditor's certificate in relation to the statement, is submitted to each annual meeting and to the New South Wales Aboriginal Land Council as early as possible after 30 September each year, and … (g) represent and act, subject to the instructions of a Council meeting, on behalf of the Council in the interval between meetings, and …" 327 In the Regulations, Clause 91 prescribed the form of a certificate of an auditor, required under section 32(5) of the Act, as follows:

"For the purposes of section 32(5) of the Act, the prescribed form of the certificate of the auditor is a certificate: (a) stating that the auditor has audited the accounts caused to be kept by the Local or Regional Aboriginal Land Council for that financial year, and

(b) indicating whether the financial statements comply with section 41B(1) of the Public Finance and Audit Act 1983 , and

(c) setting out any qualifications subject to which the certificate is given." 328 Section 13(6) ALR Act 1983 provides that until a LALC makes its first rules, its rules shall be the rules prescribed by the Regulations as model rules. Thus, when Koompahtoo came into existence, the objects and powers contained in the model rules became applicable to it. 329 Section 50 Interpretation Act 1987 provides: "(1) A statutory corporation: (a) has perpetual succession, (b) shall have a seal, (c) may take proceedings and be proceeded against in its corporate name, (d) may, for the purpose of enabling it to exercise its functions, purchase, exchange, take on lease, hold, dispose of and otherwise deal with property, and (e) may do and suffer all other things that bodies corporate may, by law, do and suffer and that are necessary for, or incidental to, the exercise of its functions. … (4) This section applies to a statutory corporation in addition to, and without limiting the effect of, any provision of the Act by or under which the corporation is constituted." 330 Even though pursuant to section 65 ALR Act 1983 a LALC is not a statutory corporation representing the Crown, it is still a statutory corporation, and so section 50 Interpretation Act 1987 applies to it.

Ultra Vires 331 The first argument which the first and second defendants advance is that, regardless of the scope of the consensus reached on 9 June 1999, Koompahtoo simply did not have power to dispense with its statutory obligations to maintain accounts and have audits. The argument is that the provisions of the Joint Venture Agreement creating obligations to maintain accounts and have them audited cover much the same ground as the statutory obligations, and hence even if the Koompahtoo representatives on the Management Committee had purported to agree to a doing away with the contractual obligations concerning accounts and auditing, it would not be binding on Koompahtoo. 332 Section 41 ALR Act 1983 (para [323] above) shows a legislative intention that the powers of a LALC like Koompahtoo will be broad, but not unlimited. The limits are to be found in the opening words of section 41, "subject to this Act". If there is a mandatory requirement imposed on a LALC by the ALR Act 1983, that LALC does not have power to do away with it. This policy concerning the extent of the powers of a LALC is carried through by Clause 5(i) of the model rules (set out in para [326] above), when the only non-specific object of a LALC is restricted to "things permitted by the Aboriginal Land Right Act 1983". It is also carried though in the extent of the powers conferred by Clause 6(b) and (c) of those model rules, where the scope of the general powers conferred on a LALC is restricted by reference to "its functions" - and its functions could never include acting in a way which was in disobedience of a positive requirement of the legislation which had created it. Nor does section 50 Interpretation Act 1987 confer unlimited legal capacity on a statutory corporation like Koompahtoo. Rather, it has such capacity as is "necessary for, or incidental to, the exercise of its functions". Dispensing with a mandatory statutory requirement imposed on a LALC is neither necessary for, nor incidental to, the exercise of the functions of a LALC. 333 The mandatory obligations imposed on a LALC which are relevant for present purposes are the obligations concerning accounting and auditing arising under section 32 of the ALR Act 1983 (set out in para [318] above). 334 The conduct of the Joint Venture to which Koompahtoo was party was a part of "its operations", within the meaning of section 32(1) Aboriginal Land Rights Act 1983, and hence Koompahtoo was under a statutory obligation to cause proper accounts and records to be kept "in relation" to that Joint Venture. 335 In Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 at 84 Giles CJ Comm D said: "The phrase "in relation to" is wide, satisfied by a connection or association between the two things in question: R v Murphy (1985) 158 CLR 596 at 611. It should not be read down unless there be compelling reason to do so: Fountain v Alexander (1982) 150 CLR 615 at 629. That it may be read down recognises that the context of the phrase or the purpose it serves may require that the relationship be of a particular kind, sometimes described as an appropriate or relevant relationship: Perlman v Perlman (1984) 155 CLR 474 at 484; R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 196-197, 210; O'Grady v Northern Queensland Co Ltd (1989) 169 CLR 356 at 367. This has been seen as a difference between a "mere", "remote and merely incidental", or "coincidental" connection and an appropriate or relevant relationship: R v Ross-Jones, ex parte Green at 210; O'Grady v Northern Queensland Co Ltd (at 365, 367). Other forms of words may be found intended to express what is ultimately a question of degree ( O'Grady v Northern Queensland Co Ltd at 364) which words can not readily express, and reference to an appropriate or relevant relationship may not be particularly helpful. However, a notion of directness will normally be illicit: O'Grady v Northern Queensland Co Ltd (at 364, 377); cf (at 374) where the context of "arising" was considered to call for a direct connection." 336 When the Joint Venture involves the mortgaging of the land of Koompahtoo, the expenditure of the money raised by that mortgage, and, ultimately, the prospect of Koompahtoo deriving benefit from the development carried out by the Joint Venture, section 32 requires proper accounts and records to be kept of the money raised and expended in connection with the operations of the Joint Venture. That includes not only money raised on the security of Koompahtoo's land, but also money which is an unsecured borrowing by Sanpine for the purpose of the Joint Venture, which will need ultimately to be repaid from monies raised on the security of Koompahtoo's land, or in some other way taken into account in working out the obligations and entitlements of the venturers concerning the Joint Venture. There is a statutory obligation under section 32 for those accounts and records to be kept in sufficient detail to enable financial statements to be prepared in accordance with section 41B(1) of the Public Finance and Audit Act 1983. There is a statutory obligation under section 32(3) for those financial statements to be audited. Even if there had been a unanimous resolution at a general meeting of Koompahtoo that it not keep accounts and have them audited, that resolution would have been void. Similarly, Koompahtoo simply did not have legal capacity, by either contract or estoppel, to free itself from those statutory obligations. For this reason, the resolution of the Management Committee on 9 June 1999 could not provide any legal justification for the plaintiff, as against Koompahtoo, to depart from the requirements of the Joint Venture Agreement concerning the maintenance of books and records.

Authority of Members of the Management Committee 337 The second argument which the first and second defendants put forward is that the Koompahtoo representatives on the Management Committee did not have authority, on behalf of Koompahtoo, to agree to any departure from the statutory requirements for accounting and audit relating to the Joint Venture. Even though Mr Bill Smith as Chairman of Koompahtoo had a broad authority under model rule 30, and even though Mr Griffen as Treasurer had a broad authority under model rule 32(g), those authorities were not so wide as to permit them to bind Koompahtoo to act in a way contrary to its mandatory statutory obligations under section 32 ALR Act 1983. This provides a second way of arriving at the conclusion that the resolution of 9 June 1999 did not entitle the plaintiff, as against Koompahtoo, to dispense with the requirements of the Joint Venture Agreement concerning accounting and audits. I accept that that argument is correct.

Estoppel in the Face of a Statute 338 The third way in which the first and second defendants submit that the resolution of 9 June 1999 does not have the effect for which the plaintiff contends is that it would involve there being an estoppel in the face of a statute. The plaintiff accepts the principle stated in Kok Hoong v Leong Cheong Kweng Mines Limited [1964] AC 993, at 1015, that: "The … principle which appears in our law in many forms [is] … that a party cannot set up an estoppel in the face of a statute."

The plaintiff also accept the general proposition appearing in Spencer Bower's Estoppel by Representation , 4th ed, para VII.1.1 at p.161, as follows: "If a representee establishes all the requisite elements of an estoppel, then the only affirmative answers open to the representors are that the estoppel either would deprive him of rights or protections of which the law, as a matter of public policy, will not allow him to be deprived, or would prevent him performing a public duty which the law will not allow him to disable himself from performing, or would give him a power which the law denies him." 339 Consistently with this, it is not every statutory requirement which is incapable of being overcome by an estoppel. Rather, one should ask: "… whether the law that confronts the estoppel can be seen to represent a social policy to which the Court must give effect in the interests of the public generally or some section of the public, despite any rules of evidence as between themselves that the parties may have created by that conduct or otherwise …": Kok Hung v Leong Cheong Kweng Mines Limited [1964] AC 993 at 1016-1017.

See also the authorities referred to by Hamilton J in Owners - Strata Plan No 51487 v Broadsand Pty Ltd [2002] NSWSC 770 at paras [19] - [22]; Overmyer Industrial Brokers Pty Limited v Campbells Cash and Carry Pty Limited [2003] NSWCA 305 at paras [51] - [54]; Wongala Holdings Pty Limited v Mulinglebar Pty Limited (1994) 6 BPR 97481 at 13,534 - 13,535. 340 In the present case, the requirements for accounting and audit which are imposed upon a LALC are ones which are imposed not only for the protection of the members of the LALC, but also to achieve wider public purposes which underlie the ALR Act 1983. Under the ALR Act 1983, significant assets can come to be under the administration of various kinds of Aboriginal land corporations to give effect to the policy explicitly stated in the preamble to the ALR Act 1983 (para [313] above). Those significant assets derive in part (as happened with the land vested in Koompahtoo) from Crown land being handed over to the corporation. In part, those assets might also derive from grants made by NSWALC from its accumulated funds, which themselves in turn derive in large part from the capital endowment given to NSWALC under section 28 ALR Act 1983, of a significant proportion of all the land tax raised in New South Wales over fifteen years, and in part from land which might be granted, from public sources, to NSWALC itself. All these capital items which come to be under the control of Aboriginal land corporations are clearly intended to provide a one-off transfer of capital which will be of on-going benefit to Aboriginal people. 341 A policy inherent in the legislation is that the ongoing benefit to Aboriginal people is to be achieved not by transferring assets to individual Aboriginal people, but by transferring the assets to specially created Aboriginal land corporations. Further, while these assets are handed over to Aboriginal land corporations to administer, and the Aboriginal land corporations are given considerable autonomy in deciding the precise uses which will be made of the assets, there is a requirement that, whatever they might decide, their operations be carried out in a businesslike fashion, with proper keeping of accounts, auditing of them, and with LALCs submitting their accounts and audit certificates to both NSWALC and the Minister. Further, under section 34A NSWALC has a supervisory control over the ongoing expenditure of a LALC, through the requirement that a LALC submit a budget to NSWALC relating to its proposed operations during that financial year, and with NSWALC having the controls provided by section 40B and section 40D over the activities of a LALC. This statement of the means by which supervisory control is exercised is not exhaustive. Ultimately, there is power to appoint an administrator of a LALC. 342 It is also relevant that the ALR Act 1983 makes provision for the setting up of numerous Aboriginal land councils, wherever they might be needed, and for their integration, through structuring them as LALCs, Regional Aboriginal Land Councils, and the NSWALC. By having this integrated structure of corporations and set of procedures for administering the property which is vested in them, the legislation gives effect to a social policy which is in the interests of a section of the public, namely Aboriginal people. By handing over significant public assets on the basis that they will be administered within this structure, the legislation also gives effect to Parliament's evident view that it is in the interests of the public generally for what would otherwise be public assets to be handed over to remedy the situation set out in the preamble to the ALR Act 1983. 343 When the requirements for accounting and audits are an essential part of the carrying through of these important social policies they are not the sort of statutory provision which can be circumvented by an estoppel. 344 There is another way of reaching the same conclusion. Underlying the legal principles concerning whether there can be an estoppel in the face of a statute are two separate considerations. One is equity's refusal to countenance unconscionable behaviour, which is a significant motivator of the law of equitable estoppel. In the context of the promissory estoppel which is relevant to this case, the version of unconscionability that is involved is, in broad terms, that, if a person in legal relations with another has led that other to believe that strict legal rights will not be insisted on, and the other has acted in reliance on that belief, it is unfair for the person who has brought about that situation to insist that strict legal rights shall govern their relations, without giving the other person a reasonable opportunity to recover his position - and if recovery of the position is not possible at all, then the estoppel is one which applies permanently. 345 The second consideration is that the law of estoppel exists as part of an integrated legal system, and if there is a sufficiently important statutory requirement, which would be infringed if the estoppel were to be given effect to, the requirement of public policy, that the statute be observed, is regarded as more important for the law to enforce than the fair dealing between individuals which motivates the law of estoppel. 346 In the present case, when considering whether the law of estoppel can have the effect that Koompahtoo cannot now assert that the provisions of the Joint Venture Agreement concerning keeping of accounts are binding, I do not see any unfairness, of the type which the law of equitable estoppel is concerned, in Koompahtoo now asserting that the letter of the Joint Venture Agreement concerning the keeping of accounts has been broken by the plaintiff. The Koompahtoo representatives on the Management Committee apparently decided, for reasons of cost saving and also as a means of keeping information about the Joint Venture out of the hands of people who might be hostile to the Joint Venture, to do away with a mandatory statutory requirement under which Koompahtoo operated, which happened also to be a requirement of the Joint Venture Agreement. 347 One of the statutory means by which responsible administration of LALC is enforced, to achieve the broad public objectives of the ALR Act 1983, is by there being provision for an appointment of an administrator to the affairs of an LALC. I see no behaviour of a type which equity would regard as unconscionable in the administrator, once appointed, insisting that those proper statutory controls be observed, and asserting legal rights on the basis that those statutory controls are not ones which can be departed from. In other words, the present is not a situation where there is a conflict between what the requirements of fair dealing between contracting parties would suggest, and a statute, which needs to be resolved by giving effect to the statute. Rather, it is a situation where there is nothing unconscionable in Koompahtoo, by its administrator, now denying that the resolution of the Management Committee of 9 June 1999 had any binding legal effect so as to excuse the plaintiff from performance of its obligations to maintain proper books and financial records. Separate Breaches of Obligation to Keep Books? 348 The first and second defendant allege yet another type of breach of the plaintiff's obligations concerning keeping Books. It relates to the adequacy of the documentation for expenditure of joint venture funds. Three particular groups of transactions are relied upon here. The first is the group of payments made from the Sanpine Unit Trust Account in February 1999, discussed at para [266] ff above. The documentation in relation to the payment to Mrs Perkins of $183,314.48 was not such as enabled a Venturer "to extract from the Books" information about the purpose of that payment - and information about the purpose of that payment was "information in relation to the affairs of the Joint Venture", within the meaning of Clause 16.5(a) of the Joint Venture Agreement. Nor were the records concerning that payment "proper Books … so as to permit the affairs of the Joint Venture to be duly assessed". The same can be said, the first and second defendants submit, concerning the payments made in February 1999 to Bronzewing, and Erolvase. Before the Bronzewing Project Management Agreement was signed in February 1999 there is no evidence of any agreement being on foot which fixed any particular rate of pay for the work which Mr Scott performed. Even though I have found that Mr Scott did work in connection with the Joint Venture before the Bronzewing Project Management Agreement was signed, the documentation does not make clear whether the payment was for work done or something else, if it was for work done, for what work Bronzewing was being paid, or by reference to what principles of calculation was the amount arrived at. 349 The second example which the first and second defendants focused upon was the vouching for some payments made to Mr Adam Perkins. These consisted of a payment of $50,000 on 21 August 2001, and $71,097.03 on 30 August 2001 (each according to the Sanpine Unit Trust general ledger). The vouching for those payments appears to be a one-page document (which became exhibit 7). It contains entries for "Bill wage", each such narration followed by the name of a month, over a period from February 2000 to May 2001. I would infer that these were payments to Mr Bill Smith of the fee for acting as Aboriginal Liaison Officer. As well, though, there were six entries, over a period December 2000 to April 2001, entitled 'Billy pipeline". Four of those entries were for $6,666.66. The other two (whose narration was "Billy pipeline (part)") were for $1,333.33, and $1,200 respectively. When Mr Steer was asked what was meant by "Billy pipeline" the following evidence was given:

"A. I would have assumed that is something to do with the Villaworld transaction, I am not sure.

HIS HONOUR: Q. What is the Villaworld transaction. A. There was a transaction where Villaworld were doing a development down by the lake and there were moneys that were paid into Sanpine which were then remitted and paid out to people who had to carry out some studies associated with those. To be honest with you, I was not a party to that actual contract so my knowledge is fairly limited on this whole project. COLES: Q. Where in the books and records, the financial books and records of the joint venture do we find that transaction correctly recorded and explained? A. I think there is - any income there is $100,000 income coming into Villaworld and I am sure there is consulting fees of 100,000 going out.

Q. On which document or piece of paper or back of an envelope or whatever it may be-- A. In the Sanpine books of account.

Q. Have they been produced to the Court? A. I think so, attached to my affidavit.

Q. So if they exist if at all, in some document attached to your affidavit is your current belief? A. I think so."

No submission was ever made which pointed to any document which had been produced to the Court and which explained in any greater detail the purpose of the payments for "Billy pipeline" . I infer that no such document exists in the Sanpine books of account. 350 I observe that these payments to Mr Adam Perkins were a reimbursement to him of expenditure which he had made, supposedly for the purposes of the Joint Venture, during a period when the Joint Venture had run out of money borrowed from a mortgagee. Not adhering to the discipline of the Joint Venture Agreement, by having unsecured loans paid into the Joint Venture Account, and Joint Venture expenses paid from that account in a way which enabled them to be properly accounted for, has led, concerning these payments to Mr Perkins in 2001, to problems of the same type as arose concerning the payments in February 1999. 351 The third example which the first and second defendant pointed to involved a line in a listing of expenditure of the Joint Venture which Mr Steer annexed to his affidavit. That line showed an outgoing of $18,000, in each of the years 2000, 2001 and 2002, attributed to "Aboriginal management fee - Erolvase". Concerning that entry, the following evidence was given by Mr Steer: "Q. What is the item Erolvase Management - Aboriginal Management fees - Erolvase? A. Initially there was an Aboriginal management fee, it was agreed to by all parties in the Management Committee to be paid to Erolvase to handle liaison not only with the Koompahtoo but all other Aboriginal departments, et cetera, for which Erolvase was receiving a fee. That was subsequently dispensed with as wasted accounting fee.

HIS HONOUR: Q. Who or what is Erolvase? A. That is Mr Perkins' company.

COLES: Q. Mr Adam Perkins? A. I think it is both actually.

Q. There is no service agreement or the like with Erolvase of the same kind as we have seen, for example, in Bronzewing, is there? A. I don't think there was. There was a letter of appointment, from memory. I haven't seen it in a long period of time.

Q. Was there anything in the management committee meetings to suggest that it resolved to engage Erolvase? A. I don't think so.

Q. I am suggesting to you that that probably isn't the case and it would be very hard for you to tell us what it was that Erolvase was drawing these funds for? A. They were involved in assisting in the whole lot of areas associated with the Aboriginal side of things. I can't confirm exactly what they were doing, no.

Q. Did they supply invoices? A. They would have.

Q. Fee notes or-- A. There would have been invoices, I would have thought.

Q. They are not been provided or discovered in these proceedings; is that right? A. I would have thought they were attached to the cash payments vouchers, but I may be wrong.

Q. If they have we can find them, if they haven't, they haven't? A. That's correct." 352 Neither an invoice, nor a cash payment voucher, relating to those payments totalling $54,000, to Erolvase is in evidence. Nor is any letter of appointment of Erolvase. As at 30 April 2003 Mr Steer told Mr Lawler that we was not aware of the existence of a formal agreement with Erolvase (para [290] above). I conclude that no such agreement exists. 353 I accept that these additional matters to which the defendants point are all examples of breach of Clause 16.5(a). PART O - RETURN TO WHETHER PLAINTIFF WAS IN BREACH BY REASON OF DELAY 354 I did not finish examining whether the plaintiff was in breach of its contractual obligations by reason of delay in advancing the rezoning, because the first and second defendants' arguments relating to the period after April 2002 required an understanding of the financial and accounting matters I have just been discussing. The final criticism those defendants make of the plaintiff's progressing with the rezoning concerns the total lack of progress after April 2002. Even though there was an additional amount of a little more than $280,000 which had been paid into the Sanpine Unit Trust Account on 16 November 2001, as a consequence of the mortgage by Investments to LKM over Lot 556 being varied to a capital amount of $1.95 m, the amount in the account had dwindled to $114,200 at the start of April 2002. The defendants criticise the plaintiff for not having spent that money on consultants who may have satisfied the requirements of LMCC and NPWS, rather than have it eroded over the balance of the year, largely in payment of fees to Bronzewing and for fees and other benefits to Mr Smith or his company. As well, the defendants submit that, if the payment which was not properly a Joint Venture expense had not been made to Mrs Perkins in February 1999 from the Sanpine Unit Trust Account, there would have been an additional $183,000 there, to enable consultants to be retained. 355 I do not accept that last proposition. The Unit Trust Account was topped up, with monies borrowed from Inteq or LKM, on four separate occasions - see para [262] above. During 2000 various borrowed monies were also credited to the account, which were repaid from the June 2001 borrowing from LKM. Mr Koops was at all times willing to continue to cause LKM to lend money to the venture, so long as he was satisfied with the security available. If the payment to Mrs Perkins had not been made from the borrowed funds, it seems to me that there would not have been a need to borrow as much money as was borrowed from LKM in 2001. I cannot conclude that, if the payment to Mrs Perkins had not been made from the Unit Trust Account, the balance standing in that account in February 2002 would have been any greater than it in fact was. 356 The defendant has not persuaded me that failure to expend the $114,000 standing in the account in April 2002 on consultant's fees was a breach of contract. The Joint Venture had an ongoing contractual commitment to Bronzewing, to make monthly payments, which could not simply be ignored. It likewise had ongoing commitments to Mr Smith and his company. There has been no examination of the detail of what consultancy services could have been obtained for $114,000, or how far the expenditure of $114,000 on consultancy services would have taken the project towards rezoning. The evidence of Mr Kovats and Ms Thomson that around $500,000 still needs to be spent to achieve a rezoning suggests that $114,000 would not have been nearly enough. 357 As I have earlier said, one of the limits on Sanpine's obligation to advance the Joint Venture was whether the advancing of the Joint Venture could be done within the financing constraints which the Joint Venture Agreement itself imposed. Faced with the Registrar General's caveat, which made the raising of additional finance for all practical purposes impossible, I do not accept that the plaintiff was in breach of contract in failing to advance the Joint Venture between April 2002 and the time of appointment of the administrator. As well, the attitude of the Management Committee, as revealed in its minutes, did not change from that summarised in the minutes of 26 March 2002 (para [145] above) - they accepted that the Joint Venture was at a standstill and would remain so until the political and legal troubles besetting Koompahtoo were sorted out. In these circumstances I am not persuaded that the plaintiff was in breach of any of its obligations to advance the rezoning between April 2002 and the time of appointment of the administrator. 358 Once the administrator was appointed, his prohibition on drawing money down without his approval coupled with his not giving any such approval, followed by his prohibition on spending any money on the Joint Venture at all, had the effect that Sanpine was not in breach of its obligations to advance the Joint Venture after the appointment of the administrator. PART P - REPUDIATION - THE LAW 359 So far, I have examined whether there have been breaches by the plaintiff of the Joint Venture Agreement. That there have been breaches is not sufficient to establish that there has been a repudiation. 360 The term "repudiation" is used by lawyers in various different ways: Carter: Breach of Contract, 2nd ed, para [701] - [705]. I shall use it as referring to conduct by a contracting party which, as a matter of common law, entitles the other contracting party to terminate the contract. 361 Sometimes a contract contains a provision whereby, if a certain type of breach occurs, or certain type of circumstance arises, a party has a right to terminate the contract. Such a termination is one pursuant to the contractual power thereby conferred; it is not a termination arising from repudiation. Repudiation arises in circumstances which the common law itself recognises, without any express statement by the parties, as conferring an entitlement to terminate a contract. 362 There are different classifications of the circumstances in which the common law recognises such a right. A common element in them is to recognise a right to terminate as arising when there is a breach of an essential term (sometimes called a "condition") of a contract. Sometimes the classification recognises the right to terminate as sometimes arising when there is a breach of a term which is not an essential term of the contract (any breach of which, no matter how small, gives rise to a right to terminate) nor is it a breach of a mere warranty (a contractual promise, but one the breach of which only ever gives rise to a right to damages, not a right to terminate) but rather of an "intermediate term" (a term the breach of which in one way can give rise to a right to terminate, but the breach of which in another way gives rise only to a right to damages). Thus, Professor Carter, in Breach of Contract, 2nd ed, para [308] states that a right to terminate performance of a contract exists at common law: "(a) for breach of condition; (b) for a sufficiently serious breach of an intermediate term; and (c) in respect of an absence of readiness or willingness to perform constituting a repudiation of obligation or capable of being treated as an anticipatory breach of contract." 363 Because the second of the items in this taxonomy depends upon whether a breach is "sufficiently serious", it does not provide a self-contained test for when a right to terminate exists. Rather, further explanation of when a breach is "sufficiently serious" is needed. 364 In contrast, Cheshire and Fifoot's, Law of Contract" 8th Australian ed, para [21.10] classifies the circumstances where termination is justified as: · "Repudiation. This is breach consisting of a manifestation of unwillingness or inability to perform the contract in substance or at all … · Breach of essential term. This is breach consisting of failing to perform a term designated as essential by the contract or by the law … · Breach causing substantial loss of benefit. This is breach consisting of a failure to perform which has the effect of depriving the injured party of the substantial benefit of the contract …" 365 In the present case, both parties gave only passing attention to the differing items in these taxonomies. Rather, they focussed attention on specific judgments of the High Court of the last twenty five years. From those judgments, I take the following propositions as being established. 366 In Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-6 Gibbs CJ said that: "… contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract … or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way …"

That passage has been referred to with approval in The Progressive Mailing House Pty Limited v Tabali Pty Ltd (1985) 157 CLR 17 at 33 (per Mason J) and 40 (per Brennan J), and again in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 634 per Mason CJ, 643 per Brennan J, and 664 per Gaudron J. 367 A repudiation can arise either from a party showing an intention not to be bound by the entire contract, or by showing that it does not intend to be bound by a term or terms which are of sufficient importance in the contract: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 634 per Mason CJ, 641-642 per Brennan J. The question of whether the party in breach has shown the sort of intention which enables termination to occur is decided not by reference to that party's subjective intentions, but rather by reference to how its conduct would appear to a reasonable person in the position of the other contracting party: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 643, 647-8 per Brennan J, 657-8 per Deane and Dawson JJ, 666 per Gaudron J. It is well established that "repudiation of a contract is a serious matter, not to be lightly found or inferred": (per Lord Wright, Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60 at 71, Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 643 per Brennan J, 657 per Deane and Dawson JJ. PART Q - REPUDIATION - APPLICATION TO FACTS 368 I record that the first and second defendants have submitted that various of the obligations which they have found were breached were essential terms of the contract, and hence that termination of the contract was justified regardless of the seriousness of the particular breaches. I will not pause to examine that argument. Rather, I shall assume, without deciding, that all the terms which have been breached in the present case are intermediate terms. 369 To recapitulate, I have found that the following breaches have occurred: · Delay of the order of five months in appointing Umwelt (para [231]). · Breach of the obligation in Clause 6.2(i) to prepare a Development Program (para [236]). · Breach of the obligation in Clause 6.2(j) to regularly update the Development Program (para [240]). · Breach, on fourteen occasions over seven years, of the obligation under Clause 12.2 to prepare and submit a Development Program and a cost and revenue budget (para [241]). · Breach of the obligation under Clause 13.2 to prepare a Monthly Report, containing the information listed in Clause 13.2. This breach occurred every month that the Joint Venture Agreement was on foot. Even if one regards the period from and including March 1999 to January 2003 as the more important part of that time, it involves breaches on forty six occasions (para [242]). · Breach of its obligation under Clause 16.1(a) to open the Joint Venture Account as soon as possible following the date of the Joint Venture Agreement (para [260]), [286]) · Breach of the obligation in Clause 16.3 to pay money into the Joint Venture Account (para [261]). · Breach of Clause 16.4, concerning manner of application of funds withdrawn from Joint Venture monies (para [263]). · Failure to maintain proper books and records (para [301] - [309], [348] - [353]. 370 No waiver or estoppel is effective to take away the significance which these breaches have. They are breaches which extend over the entire period during which the Joint Venture operated. 371 The Joint Venture Agreement was one which set out a clear and coherent set of procedures to be followed for the administration of the Joint Venture. The Agreement is one which, if carried through according to its letter, would have imposed upon the joint venturers the discipline of considering, each month, the type of information contained in the Monthly Reports, and of receiving and giving consideration at regular intervals to projections which involved the entire Development (not just part of the rezoning stage of it). It would have resulted in all the money which was raised on the security of Koompahtoo's land or otherwise for the purposes of the Joint Venture being paid into the Joint Venture Account, and only drawn on for proper purposes, and by a procedure which checked actual expenditure against expenditure which had been predicted to be required. All the expenditure would be from the Joint Venture Account, which had representatives of both Venturers as signatories. There would be full documentary records of the expenditure of the money, and accounts kept, giving considerable detail, and in a form fit for auditing. 372 The departures from this way of running the joint venture have been gross and repeated. The total failure to adhere to the accounting obligations, ever since the Joint Venture began, is alone sufficient to amount to a repudiation. Even accepting that some information was given to the Koompahtoo representatives on the Management Committee relating to the Joint Venture (although verbally, and of a type and with a frequency which it is now not possible to ascertain) there is still an extremely serious departure from the obligations imposed by the Agreement. Even if (contrary to my view) the resolution of the Management Committee of 27 March (para [114] above) was effective to dispense, thenceforth, with any obligation on the plaintiff to provide Monthly Reports the remaining and continuing breaches were sufficient to amount to a repudiation. 373 The unexplained delay of five months in appointing Umwelt, at a time when all parties must have known that significant monthly costs continued to be running up for fees to Bronzewing and Mr Smith's company, and Mr Smith's vehicle, and for interest on borrowings, only makes the repudiation worse. 374 The second defendant was entitled to terminate the Joint Venture Agreement, as he did on 12 December 2003. Orders

The text of the separate question is set out at para [186] above. I make the following orders:

2. Order the plaintiff to pay the costs of the first and second defendant of the hearing of this separate question.

3. Direct that the parties obtain, within 14 days of the date of delivery of these reasons for judgment, an appointment with my Associate for a further hearing to consider whether any additional orders ought be made, and what steps should be taken concerning the balance of the proceedings not disposed of by this separate question. **********

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