3 On 1 February 2007 there was a telephone conversation between Mrs McCann and Joe. The plaintiffs say that an agreement was made between Mrs McCann and the plaintiffs by their agent, Joe (the Prima Agreement). The plaintiffs say that the terms of the Prima Agreement were that Mrs McCann and Prima Homes would do all things required to realign the boundary between the two blocks so the Prima Boundary would form the boundary between the two lots. The plaintiffs say that further terms of the agreement were that Mrs McCann and Prima Homes would take all such steps as were necessary to convert the existing built strata and pass all necessary strata company resolutions so that the new titles for the lots would include the Prima Boundary. The plaintiffs say it was further agreed that Prima Homes and Mrs McCann would share equally all of the survey and other costs associated with the registration of the new boundary including the costs of conversion. Mrs McCann denies that any agreement was made.

4 There was another telephone conversation between Joe and Mrs McCann on 9 February. The plaintiffs say that Mrs McCann and the plaintiffs by their agent, Joe, agreed that the titles to lots 1 and 2 would be converted from built strata to strata survey. Mrs McCann denies that any agreement was made.

5 Meanwhile on 2 February the first plaintiff, who is the daughter of Tony, had made an offer to purchase lot 2 for $610,000. The first plaintiff was then named Karina Secola. She has since married and changed her name to Karina Lawson. For convenience I will refer to her as Karina. The offer was accepted. The plaintiffs say that Karina purchased lot 2 on behalf of Prima Homes. On 9 February Prima Homes paid a deposit of $5,000.

6 On 15 February Mrs McCann drew and signed a document entitled 'Agreement of Strata Lot 1816' (the McCann Proposal), which proposed an agreement to divide lots 1 and 2 by a straight line from the southern boundary at a point 3.5 m west of the outside wall edge of the games room on lot 1 to a point on the northern boundary 19.5 m west of the eastern block edge and convert the lots from built strata to survey strata. Mrs McCann sent the McCann Proposal to Joe by fax. The boundary and other terms proposed in the McCann Proposal are significantly different from the Prima Boundary and the Prima Agreement. The plaintiffs say that by sending the McCann Proposal to Joe, Mrs McCann repudiated the Prima Agreement. The plaintiffs say that they did not accept Mrs McCann's repudiation of the Prima Agreement and the agreement remains in force and effect.

7 Mrs McCann says that no binding agreement was made between her and Karina or Prima Homes. Further, Mrs McCann says that if any agreement was made it was an oral agreement relating to an interest in land, was not signed in writing by the defendant or her agent and by reason of the provisions of s 4 of the Statute of Frauds 1677 (Imp) (as amended by s 2 of the Law Reform (Statute of Frauds) Act 1969 (WA)) such agreement was, and is, unenforceable against the defendant.

8 The plaintiffs deny that the Prima Agreement was an agreement relating to an interest in land and that it is unenforceable. The plaintiffs further say that if the agreement was required to be reduced to, or evidenced by, writing to be enforceable then the Prima Agreement is enforceable by reason of acts of part performance of the agreement. Further, the plaintiffs say that Mrs McCann is estopped from asserting that the Prima Agreement is not enforceable through an absence of writing. The alleged estoppel is said to arise from Mrs McCann's representation to Joe, on behalf of the plaintiffs, that upon the plaintiffs purchasing lot 2 she would do all such things as would be required to convert the titles to strata survey and to realign the boundary in accordance with the Prima Boundary. The plaintiffs say that the defendant's representation gave rise to an expectation or assumption by the plaintiffs that upon their purchase of lot 2 the defendant would be contractually bound, and would do all such things as would be required, to realign the boundary in the agreed manner. The plaintiffs say that by making the representation Mrs McCann induced the plaintiffs to adopt the assumption and the plaintiffs acted in reliance on that assumption in that but for the assumption they would not have purchased lot 2. The plaintiffs say that by her action in seeking to resile from that assumption Mrs McCann has caused detriment to the plaintiffs in that the plaintiffs purchased lot 2 with a view to Prima Homes making profit from a resale and building contract after the boundary had been realigned and had Mrs McCann not resiled from the Prima Agreement Prima Homes would have earned that profit. The plaintiffs say that Mrs McCann's refusal to perform the Prima Agreement is an unconscientious departure from the assumption.

9 On 9 November 2007 the plaintiffs, Karina and Prima Homes, commenced the present action against Mrs McCann. The plaintiffs claim specific performance of the Prima Agreement and damages or alternatively damages in equity in lieu of specific performance.

10 Mrs McCann denies the plaintiffs are entitled to any relief. Mrs McCann has brought a counterclaim against Karina, Prima Homes and Joe. Mrs McCann's claim against Karina arises from a caveat lodged by Karina on 14 April 2009 which prevents Mrs McCann dealing with lot 1 except for dealings which are subject to Karina's claim that she is entitled to obtain specific performance of the Prima Agreement. Mrs McCann claims damages against Joe and Prima Homes for misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (TPA) and s 10 of the Fair Trading Act 1987 (WA) (FTA). The misleading or deceptive conduct is said to arise from representations by Joe that the Prima boundary would not impinge on or pass through the defendants' residence, when in fact it does.

11 On 11 February 2011 I ordered that the trial of this action should deal with all issues except damages in the claim and counterclaim which will be assessed separately after the determination of the other issues. On 9 May 2011, by consent, I further ordered that the issue of whether Mrs McCann is entitled to compensation under s 140 of the Transfer of Land Act 1893 (WA) (TLA) in relation to the lodgement of the caveat by Karina be tried (if necessary) after the other liability issues have been determined.

12 The first issue is whether a legally binding agreement, or agreements, was, or were, made between Mrs McCann and either or both of the plaintiffs on 1 February and 9 February 2007. I will first outline some relevant legal principles and then consider the facts and the application of the law to the facts.

13 The first issue in determining whether a final, binding agreement was made is whether the parties intended to make a concluded agreement. That intention is ascertained objectively by reference to what a reasonable observer would have concluded.

14 In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 the joint judgment of a plurality of the High Court held that there must be a complete and certain agreement and there will be no legally binding contract unless the parties intend to enter into legal relations. Gaudron, McHugh, Hayne and Callinan JJ said:

It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet '[t]he circumstances may show that [the parties] did not intend or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts' [24].

15 The search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour. The word 'intentions' describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties: Ermogenous [25].

16 The issue of whether a final, binding agreement was made involves the overlapping requirement of certainty as well as the requirement of intention to create legal relations. If a contract is legally uncertain, this might indicate that the parties did not intend to create legal relations. Furthermore, there can be no binding and enforceable contract unless the terms of the agreement, or at least its essential and critical terms, have been agreed upon: Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597, 607 (Menzies J). An agreement to agree does not create a contract because it is incomplete and lacking essential terms: United Group Rail Services Ltd v Rail Corporation New South Wales [2009] NSWCA 177 [56] (Allsop P).

17 For there to be a valid and enforceable contract, the court must be able to attribute to it a sufficiently precise and clear meaning and to identify the scope of the rights and obligations to which the parties have agreed. In the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant areas in respect of which the parties have failed to reached agreement, the slower a court will be to conclude that they had the requisite contractual intention: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 547 548 (Gleeson CJ).

18 Where the intention of the parties is equivocal, conduct subsequent to the making of the alleged agreement is admissible in evidence to show whether or not a contract was concluded: Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd; RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128 [65].

19 The court may also look to such factors as whether an informal agreement that is alleged to constitute the contract would accord with the expectations of the parties in a contract of the kind that is in dispute: Sinclair Scott & Co Ltd v Naughton [1929] HCA 34; (1929) 43 CLR 310, 316 317 (Knox CJ, Rich & Dixon JJ); Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] VicRp 55; (1994) 2 VR 106, 131 (Brooking J); Foxtel Management Pty Ltd v Seven Cable Television Pty Ltd [2000] FCA 1159; (2000) 175 ALR 433 [143] (Full Federal Court). In relation to alleged agreements in relation to interests in the land the court may have regard to the fact that such agreements are generally made in writing.

20 In Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360 Dixon CJ, McTiernan and Kitto JJ said that when parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any one of three classes:

(1) it may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect;

(2) the parties may have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document; or

(3) the parties do not intend to make a concluded bargain at all, unless and until they execute a formal contract.

A fourth category, by way of variation of category (1), has been added:

(4) where the parties intend to be bound immediately by the terms which they have agreed upon, whilst expecting to make a further contract in substitution for the first contract containing, by consent, additional terms: Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628 (McLelland J).

21 In the first, second and fourth cases there is a binding contract. Cases in the third category are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own. The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed: Masters v Cameron (361). In Masters v Cameron the court referred to Rossiter v Miller (1873) 3 App Cas 1124 where Lord Blackburn said:

[P]arties often do enter into a negotiation meaning that, when they have (or think they have) come to one mind, the result shall be put into formal shape, and then (if on seeing the result in that shape they find they are agreed) signed and made binding; but that each party is to reserve to himself the right to retire from the contract, if, on looking at the formal contract, he finds that though it may represent what he said, it does not represent what he meant to say. Whenever, on the true construction of the evidence, this appears to be the intention, I think the parties ought not to be held bound till they have executed the formal agreement (362).

22 In Masters v Cameron, the court pointed out that whether there is a concluded agreement depends upon the intention disclosed by the language the parties have employed, and no special form of words is essential to be used in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape (362). In that case the court was considering the case where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract. Nevertheless, their Honours' observations are relevant to cases where, following negotiations, there is doubt about whether a legally binding agreement has been made.

23 In determining whether communications between parties amount in law to a binding agreement, care must be taken in determining the weight given to the use by the parties of words such as 'agree'. Gleeson CJ in Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551, observed:

In a case such as the present, there are two, sometimes related, questions which require to be considered. The first is whether the parties to the putative contract intended to make a concluded agreement.

The second is whether they succeeded in doing so ...

As the decision in [Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540] illustrates, the fact that parties to negotiations have agreed upon the major matter under discussion, confidently believing that the remaining matters to be decided will be sorted out later between them or their lawyers, without any difficulty, can sometimes create a misleading appearance of consensus. Such parties may well believe that they have a 'deal' or a 'bargain', and speak and act accordingly, whilst at the same time knowing and intending that further and more detailed agreement is necessary. For that reason, conduct such as shaking hands, or using the language of agreement, can be ambiguous. The resolution of the ambiguity may require more detailed factual and legal analysis (14,552).

24 The court, in determining whether a concluded contract has been reached, is not confined to a consideration of the terms or manner in which the communications are made, but may also consider the subject matter and the surrounding circumstances: Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251, 9255.

25 Before considering the dealings between the parties it is convenient to consider some features of strata titles and the parties' understanding of the nature of a built strata and a survey strata and the conversion of a built strata to a survey strata.

26 Mrs McCann bought lot 1 in 1994. At that time the only form of strata plan was the form commonly called a building or built strata. The Strata Titles Act 1985 (WA) was amended in 1995 to introduce a new form of strata plan called a survey strata plan. In essence, a built strata scheme relates to a plan for a subdivision by reference to a building or buildings and the lots are primarily defined by reference to the building. A survey strata scheme relates to a plan for a subdivision that is not by reference to buildings. Under a survey strata plan lots are defined by survey dimensions.

27 Before January 2007 Mrs McCann was interested in converting the titles for lot 1 and lot 2 from built strata to survey strata. In December 2006 and January 2007 Mr and Mrs McCann thought that they would like to build a new house on their lot if they could convert the strata plan to survey strata. Mrs McCann had prepared some drawings showing possible layouts of a house.

28 Mrs McCann had undertaken research and obtained information about the nature of the different types of strata title and about converting from built strata to survey strata. Mrs McCann had approached Mrs Shepherd, or her daughter, about converting the strata titles to survey strata but Mrs Shepherd did not wish to do so. As a result of her research Mrs McCann understood that a unit entitlement in the strata plan did not equate to an entitlement to any particular area in square metres in a survey strata plan. She understood that the existing unit entitlement was relevant to voting rights and insurance responsibilities and would have been derived by a valuer at the time when the original owners strataed the property.

29 Conversion from a strata scheme to a survey strata scheme requires a number of steps to be taken by the strata unit owners. The process of conversion is outlined in a document entitled 'Conversion from strata scheme to surveystrata scheme by resolution' downloaded by Mrs McCann from the Department of Land Administration website on 16 December 2002. The document outlines eight steps. Step one is for the unit holders to agree to the ownership changes. Step two involves employing a licensed surveyor to prepare and certify a survey strata plan. Step three involves obtaining a valuer's certificate to set each owner's unit entitlement. Mrs McCann highlighted the following sentences:

Unit entitlement is set by a Licenced Valuer and is based on the relative unimproved value of the land in a surveystrata scheme. This differs from strata schemes, where the unit entitlement is based on the value of land and buildings in the scheme ... This conversion option may have the effect of changing the unit entitlement of the owners, which will affect your rights and responsibilities (eg higher or lower contributions to levies).

Step four requires all unit holders to pass a unanimous resolution to convert the strata scheme to a survey strata scheme. Step five requires the completion of a 'notice of resolution of conversion to a surveystrata scheme' document. Step six is the preparation of a 'Disposition on merger of land or conversion to a surveystrata scheme' document. This document has a number of purposes including transferring common property to individual ownership and allowing individual encumbrances, such as mortgages, to cover the land owned by the individual owner after the change of ownership has happened. Step seven is to obtain consent from the unit owner's bank or other person. The document explains that any bank, mortgagee or other person having an interest registered against any unit in the scheme must give their written consent to the new unit entitlement schedule. Step eight is to lodge the documents at the Department of Land Administration, that is, the notice of resolution document, Disposition on merger of land or conversion to a survey strata scheme, any separate letters of consent from encumbrance holders, the survey strata plan and the valuer's certificate and surveyor's certificate.

30 Before meeting with Joe and Tony in January 2007 Mrs McCann was aware of the steps that had to be taken to convert a strata scheme to a survey strata scheme. She understood that prior to that happening many other matters needed to be attended to such as agreement about sewerage, overshadowing and what sort of buildings would be allowed.

31 Part III div 3 of the Strata Titles Act deals with conversion of strata schemes to survey strata schemes. Sections 31A to 31K deal with the allocation of common property into existing lots and the creation of certain supporting easements. Sections 8 to 8C deal with resubdivision of schemes. Strata plans may be resubdivided to reflect changes that have been agreed to by the unit holders and strata company. These types of plans are for boundary realignment. If the owners of lot 1 and lot 2 wished to realign the boundary between the lots in such a way that the boundary cut through an existing building then a strata plan of resubdivision would need to be registered prior to the conversion to survey strata.

32 Prior to her meeting with Joe and Tony, Mrs McCann believed that a conversion from built strata to survey strata could, in effect, allocate parts of the common property to each lot but could not change the existing lots defined by the existing buildings. In her witness statement Mrs McCann said in relation to her meeting with Joe and Tony in January 2007:

The Secolas didn't ever suggest that the boundary line they were proposing might go through my Lot. I believed that in a conversion to survey strata you only divide up the shared land: the lots are sacred. I knew I owned my Lot and the neighbour had no share in it.

33 In his witness statement Joe said that Paul Menezes, the agent selling lot 2, told him that the property was a built strata:

... which I understand to be a type of title by which the boundaries will at least in part coincide with the exterior of a building. My understanding is that any part of a building that forms part of a boundary of a built strata title cannot be improved, demolished or extended unless it is agreed with the adjoining building owner and any subdivision of the land cannot be undertaken without the agreement of the adjoining building owner.

In crossexamination Joe said that he understood that lot 2 was a built strata, that the land outside of the building was owned jointly and that the only additions or alterations the lot owner could make to the property was internal. He understood that the lot owner could not 'cut through' the building without the consent of the adjoining owner. Joe said that prior to 2 February 2007 he would have phoned his subdivision consultant, James Teo, and asked him what he could do with the property. Joe said that at the end of January 2007 he understood that in a built strata plan any part of the building that formed part of the boundary could not be improved, demolished or extended without the neighbours' approval. He understood that any subdivision of the land could not be undertaken without an agreement of the adjoining land owner. He understood that in built strata the common property is owned by all the proprietors of the lots on the strata plan.

34 Tony said in his witness statement that in late January Joe told him that lot 2 had recently come onto the market 'but that it was only a built strata which was not a very useful type of title'.

35 Joe first became aware of lot 2 on or about 25 January 2007 when he drove past it and saw a 'For Sale' sign in front of it. He telephoned the agent, Mr Menezes, and asked him about the property. Mr Menezes said words to the effect that it was a built strata. Joe asked Tony to have a look at the property because he thought it may be a good investment opportunity. Tony drove past the property and later informed Joe that the adjoining land looked suitable for development and asked him to make some further enquiries.

36 On or about 26 January Joe met Mr Menezes at the property and inspected it. Joe said in evidence that he asked Mr Menezes if he was aware whether the owners of the adjoining property might be interested in converting the title to strata or green title. Joe said that Mr Menezes said words to the effect that he understood from the owners of the adjoining property that they would be interested in a title conversion and that Mrs McCann had approached his client to convert to strata title previously. Mr Menezes said in evidence that he said something like: 'Listen, we are dealing with a very very difficult case here. The next door neighbour is going to make it very tough to survey strata'. I accept that Mr Menezes said words to that effect.

37 Joe went to Mr Menezes' office. He collected some plans that showed a proposed boundary between lots 1 and 2 for the purposes of conversion to survey strata. The plans had been given to Mr Menezes by Mrs Shepherd's daughter who had received them from Mrs McCann. Mr Menezes also gave Joe Mrs McCann's phone number.

38 Mr Menezes telephoned Mrs McCann. He told her that someone was interested in buying lot 2 but only if Mrs McCann wanted to convert to survey strata. Mr Menezes asked whether the interested party could meet with her and she said yes.

39 On 30 January Joe telephoned Mrs McCann. During that conversation Mrs McCann said that she did not want to divide the lots in a straight line east west or a straight line north south and that her preference was to follow historical use lines. Joe said words to the effect that that was not suitable in his opinion. They arranged to meet at lot 1 on the afternoon of 31 January 2007.

40 At the start of the meeting Joe, Tony and Mrs McCann were present. Mr McCann arrived after the meeting had begun. He went in and out of the front room where the meeting was being held. He had a shower. He made drinks. He participated in the meeting and says that he was able to hear what was said except for the time he was in the shower. What occurred at the meeting was important. I will refer to the evidence of each of the people who were there.

41 Joe's evidence is that during the meeting words were said to the following effect. Joe said that they were builders and he hoped they would be able to come to an agreement to improve the value of both properties by converting the title to green title or survey strata and agreeing on a new boundary line. Joe told Mrs McCann that it may require the demolition of both properties and if they could not come to an agreement then 'we' would not buy the property. Mrs McCann said that it was their intention to build a new home on the land and that they had plans prepared which would require demolition of the existing home. They showed the Secolas the plans on a laptop computer. Mrs McCann said that she agreed with the title conversion idea. Joe said that it was important for them to have a straight boundary line between the two properties as this would be required to enhance the values of the two properties. There was some discussion on various ways in which new boundaries might be created as a part of the subdivision. Mrs McCann said that neither a straight line boundary from north to south or from east to west would suit her. Tony said that the combined land should be divided 50/50 so that they each had an equal share in the overall property. Mrs McCann said that they were not entitled to 50% as the unit entitlement for lot 2 was only 9/19ths and on her calculations that meant that 520 sqm would be allocated to lot 2 and 580 sqm to lot 1. Joe or Tony said that was okay. Mrs McCann showed them some plans of the two lots with proposed boundary lines to divide the two properties. Joe or Tony said that those boundary lines would not work because it meant that the property would have an odd shape that would not be suitable for building on.

42 Joe outlined another option, that is a straight line boundary which would start at the Cranford Avenue end at a point which matched the midpoint of the two garages and then proceed in a straight line to the southern boundary to a point which was about 2 m to 2.5 m from the McCann's games room. Mrs McCann asked Joe to draw the line. Joe drew a line on the plan using a pencil or pen and a ruler. Joe said that the point of the rear was only approximate and that they would need to get a registered survey to determine the exact finishing point which would be based on the unit entitlement formula which would mean that Mrs McCann had approximately 580 sqm and the Secolas would have approximately 520 sqm. When Joe drew the line he did not notice whether any part of the line went through any part of the McCann's existing dwelling. Joe did not take any notice of whether the line went through any part of Mrs McCann's existing dwelling because he understood from what she had said at the meeting that she was keen to demolish the existing dwelling and rebuild. Mrs McCann said that this was a marvellous proposal. They discussed how the proposal would affect Mrs McCann's design of her garage and storeroom. She said that she had no objection provided she was able to build a parapet wall on the boundary for her garage and storeroom. She said it would need to be about 14 m long. Tony or Joe said that they had no objection provided it conformed to design and building regulations. Joe said that all costs related to conversion to strata title or green title should be shared equally. Mrs McCann said that that was fair. At the end of the meeting Mrs McCann said that she liked the idea very much but needed some time to think about it.

43 Tony's evidence of the meeting is broadly the same as Joe's. Tony says that Joe said he had an idea by which the northern boundary would commence at a point that was opposite the midpoint of the common wall between the garage and the study on the McCann's property and then proceed in a straight line to a point along the southern boundary. Tony said the land split should be 50/50. Mrs McCann said that it could not be half each because under the unit entitlements her block was entitled to 10/19 and lot 2 was entitled to 9/19, which translated to an area of 580 sqm for her block and 520 sqm for lot 2. Joe drew a line on a plan to show the suggested boundary line position. Mrs McCann said that was a fantastic idea and the only problem she could see was that the line would mean that part of her garage in her new home would have to go. Mrs McCann produced her laptop computer and showed them plans of her proposed garage and storeroom. Joe or Tony said that the only impact would be that her proposed storeroom on the side of her proposed garage would be a little bit smaller and have a triangular shape, otherwise she would still have the full use of the garage.

44 Mrs McCann said she would need to think about it. Joe said she should let them know as soon as possible as they were keen to purchase lot 2. Joe said that they wanted to purchase lot 2 and be in and out as soon as possible. Joe asked Mrs McCann when she had planned to demolish. She said that the design of their new home was almost complete and she was ready to build. Mrs McCann said that she wanted to build a parapet wall along the garage and wanted the Secolas to agree to its construction. Tony said words to the effect that they had no problem with the construction of a parapet wall as long as it conformed to the building regulations. Joe or Tony said that they should share all of the survey costs and all other costs associated with getting new titles issued with the new boundary. Mrs McCann said she was happy to share all of the costs. Mrs McCann said she would have to give more thought to the proposed boundary, given the issue about the proposed garage and storeroom. She said she would get in touch with the Secolas soon.

45 Mrs McCann's evidence is mostly broadly consistent with that of the Secolas, although, as one would expect, there are differences in emphasis and in the description of how the conversations unfolded. I will refer to some aspects of Mrs McCann's evidence of the meeting. Mrs McCann says that words to the following effect were spoken.

46 Joe suggested dividing the lots by an angle line and mentioned the northern point of this line being fixed with reference to the centre of the two garages. Joe said it would go from the midpoint of the garages to somewhere around the point he indicated by waggling his finger over a portion of part of the plan that depicted the southern boundary. Joe mentioned that it was something like 2 m to 3 m or 2.5 m to 3 m to the west of the games room, not 2 m to 2.5 m.

47 Mrs McCann did not say that she was entitled to 580 sqm and lot 2 to 520 sqm. Joe said something like 'You are entitled to 580 sqm and ours is 520 sqm because of' and mentioned a fraction. Mrs McCann corrected Joe with the actual fraction, 9/19ths, and Joe said something like 'so we just get a surveyor and a surveyor could work it out'. Mrs McCann said that was not right, that is not what unit entitlement means. The Secolas ignored her, they just repeated their point that the portions should be 580 sqm and 520 sqm. Each time Joe or Tony asserted that the division would be 580 sqm and 520 sqm Mrs McCann said that was not right.

48 Mrs McCann said that if she were to consider an angled line it would have to be with the Secolas' support for a longer than average garage parapet wall so that the McCanns could access their storage. One of the Secolas said that the council would let them have 8 m or 9 m and the McCanns would not need their support for that. Mrs McCann said they would need a longer parapet wall and mentioned 14 m. Mrs McCann said that agreeing to the Secolas' type of boundary line would be conditional on their support on the McCanns' application. Tony said that the council would not allow longer than the figure mentioned. Mrs McCann asked if the Secolas would consent to a variation. The Secolas did not answer.

49 One of the Secolas asked if the McCanns were planning to knock down and rebuild. Mrs McCann said that they would like to. Joe asked when. Mrs McCann said as soon as we can. Mr McCann said that was two years away or that it was a way away.

50 One of the Secolas said that their surveyor was really good. Mrs McCann said they should both get quotes. One of the Secolas said they should share the costs. Mrs McCann said that they would share the costs. There was no discussion of which costs would be shared or how. No one indicated that they would be shared equally.

51 There was a discussion of the impact Joe's angled line would have on the plans for a new house that the McCanns had drawn. The Secolas did not ever suggest that the angled line they suggested might go through the existing building on lot 1.

52 Mr McCann's evidence is broadly consistent with that of the Secolas and Mrs McCann. Mr McCann says that words to the following effect were spoken.

53 Mr McCann mentioned that his main concern was what if their side (lot 2) of the garage went, what would happen to the McCanns side and how could the McCanns keep their side safe and secure. He said that they may need a wall built. Joe or Tony said they could not see a problem with it but that it could be discussed later. Mr McCann said he would be doing most of the work on the new house himself and with his business he would not be able to do it quickly. Either Mr McCann or his wife said that realistically it could take two years. They did not say to the Secolas that they were ready to demolish and rebuild. Mr McCann said that they were far from ready.

54 It was Joe who insisted that the next door area would be 520 sqm but Mrs McCann said something like 'That's not how it works, its not cut and dried, its not an entitlement, you need to negotiate and discuss it. There is no formula'. Mr McCann says that his wife made this point three or four times but Joe and Tony did not appear to accept it.

55 During the meeting Mrs McCann showed them some sketch plans and said that if they rebuilt they wanted to do something like that. They talked about the McCanns' idea to put a storage area and garage on the western boundary. Someone suggested that the wall for the garage and storage could be a parapet wall. Mrs McCann said it would be a 14 m long wall. Joe said that would not be possible.

56 There was consensus that the Secolas and the McCanns would like to convert the built strata titles to survey strata or green titles. There was no consensus on whether the conversion should be to survey strata or green title.

57 Some plans were produced at the meeting which showed a proposed division of the lots and on which Joe indicated his suggested angled line and drew the line on a plan. There is some difference between the witnesses about which plans were produced, which lines were on the plans and which line was drawn by Joe. It is not necessary to resolve those differences. It is sufficient to find, and I do find, that Mrs McCann said that her preferred division was on historical lines of use altered so as to reduce the number of lines or angles. The line indicated by Mrs McCann is that shown by the red line on the plan at page 147 of the trial bundle. The line drawn by Joe was a straight line commencing at the same point on the northern boundary as Mrs McCann's preferred line and proceeding in a straight line to a point on the southern boundary some distance west of the McCann's games room. Joe said that the point on the southern boundary would be in that vicinity but would be determined by a surveyor so that the area of the lots would be approximately 580 sqm for lot 1 and 520 sqm for lot 2.

58 The McCanns did not agree to Joe's angled line, that is the Prima boundary, in the course of the meeting. In his witness statement Tony says that Mrs McCann said she would have to give more thought to the proposed boundary, given the issue about the proposed garage and storeroom, and that she would get in touch with the Secolas soon. Mr McCann said that at the end of the meeting the Secolas and the McCanns were both to go away and to work out what they thought an equitable solution could be for the division of the land. He said that at the end of the meeting it was agreed that they would both go away, put something in writing to each other and would negotiate from there. At the end of the meeting the Secolas may well have thought that the McCanns were going to give further consideration to the lots being divided by an angled line to be determined in accordance with the formula put forward by Joe. However, that was not the only possible angled line of division. The meeting did not conclude on the basis that the only line of division to be further considered was a line determined in accordance with Joe's formula.

59 I accept the evidence of Mrs McCann that she did not say that she was entitled to 580 sqm and lot 2 to 520 sqm. I accept her evidence that it was Joe who said, in effect, that Mrs McCann was entitled to 580 sqm and the owner of lot 2 to 520 sqm. Mrs McCann's research had disclosed to her that conversion from built strata to survey strata may have the effect of changing the unit entitlement of the owners. It would have been misleading for Mrs McCann to have said that she was entitled to 580 sqm and the owner of lot 2 to 520 sqm. In the McCann Proposal Mrs McCann proposed a separation of the lots that would not equate to 580 sqm for lot 1 and 520 sqm for lot 2. In his draft letter to Mrs McCann which he drafted for the purpose of instructing his solicitor Joe stated:

We have the rightful and lawful ownership and use of approximately 520 sqm of land based on the unit entitlement on the title irrespective of the definition of the boundary lines.

I find that that reflected Joe's state of mind when he wrote the draft letter and on 31 January 2007. Mr McCann, whose evidence I generally accept, was firm on this point. I find his evidence persuasive. Mrs McCann had not agreed to a division of the land in the ratio of 580 to 520. Mrs McCann did not agree to a new boundary line that would divide the lots so that their area was in the ratio of 580 to 520. She did not agree, or say that she agreed, with a boundary line with the southern point to be determined so that the area of the lots would be in their ratio of 580 to 520.

60 Mrs McCann said that she said that agreeing to an angled line of the sort suggested by Joe would be conditional on their support for the McCann's application for a parapet wall in the order of 14 m. I accept that Mrs McCann said that she wanted the support of the Secolas for an application to the council for a parapet wall of that order. The garage and storage area in the McCann's planned new house was a matter of importance to her. It was important to her that they be able to build up to the boundary. A parapet wall would be necessary for that. In the McCann Proposal Mrs McCann included provisions relating to four matters. One of those was the parapet wall. Joe swore an affidavit on 29 May 2009. In that affidavit Joe swore that at the meeting on 31 January he outlined his suggested angled boundary line. He then says:

Mrs McCann said that this was a marvellous proposal and she said she was surprised she had not thought of it previously. We discussed how this proposal would affect her design of her garage and storeroom. She said she had no objection provided she was able to build a parapet wall on the boundary for her garage and store. She estimated about 14 m long. We said we had no objection provided it conformed to design and building regulations.

In crossexamination Joe agreed that his suggested angled line of division would affect the garage and storeroom on Mrs McCann's plans. Joe said that Mrs McCann said that she would require a 14 m parapet wall. Joe went on to say that in his experience 8 m or 9 m was probably the maximum the council would allow. He agreed that Mrs McCann said she needed longer than that, about 14 m and he said that they would support her application for a 14 m wall.

61 I find that there was no consensus reached at the meeting about when the McCanns would demolish their existing house. Mrs McCann said that it was their intention to build a new home on the land and showed the Secolas her sketch plans. That would require demolition of the existing house. I do not accept that Joe said that converting the title to survey strata and agreeing on a new boundary line may require the demolition of both properties. I do not accept Joe's evidence that he told Mrs McCann that converting to survey strata and agreeing on a new boundary line may require the demolition of both properties. I do not accept Tony's evidence that Mrs McCann said that the design of their new home was almost complete and she was ready to build. I do not accept that either Mr or Mrs McCann said words to the effect that they would immediately, or within any defined period, demolish their existing house and commence to build a new one. The McCanns had sketch plans for a new house. If the lots were resubdivided in accordance with the angled line suggested by Joe then the plans would have to be altered. The plans were only sketch plans. A lot more work would have to be done before they could commence building. Mr McCann said that Joe did not say that a new boundary line may require the demolition of the existing properties on lots 1 and 2. Mr McCann gave his evidence in a straightforward way. He made appropriate concessions and I generally find his evidence persuasive. I accept his evidence on this point.

62 In his witness statement Mr McCann said that Joe said that they wanted to be sure the McCanns were interested in converting to survey strata. Mrs McCann said that they were interested but that there were problems and they would need to discuss how the land could be divided up. Mr McCann then says:

I mentioned that my main concern was what if their side of the garage went, what would happen to our side and how could we keep our side safe and secure? I said we may need a wall built.

Joe or Tony said that they couldn't see a problem with it but that it could be discussed later.

I said I would be doing most of the work on a new house myself and with my business I wouldn't be able to do it quickly. Either Katherine or I said realistically it could take 2 years.

We did not say to the Secolas that we were ready to demolish and rebuild. We were far from ready.

Joe and Mrs McCann's telephone calls on 1 February

63 Mrs McCann says that 1 February, that is the day after the meeting, was a teaching day and she was at school. She received a call from Joe on her mobile phone. Mrs McCann says that she had to return Joe's call and did so. Telstra records confirm that Mrs McCann telephoned Prima Homes office at 1.17 pm on 1 February.

64 Joe says that on the morning of 1 February Mrs McCann telephoned him at his office. Tony says that on the morning after the meeting he was in the office with Joe and heard Joe's side of a conversation with Mrs McCann. Tony says that after Joe ended the telephone conversation he said to Tony words to the effect that Mrs McCann had said that she was happy with the proposal and wanted to go ahead.

65 Tony says that after that conversation he telephoned his accountant, Peter Kinsman, and said words to the effect that they wanted to buy a property and develop it and then sell it, that they wanted to put the property in Karina's name but wanted to make sure that Karina holding the property for Prima did not create any tax issues for Karina or any insurance issues for Prima. Tony says he instructed Mr Kinsman to arrange a declaration of trust in anticipation of the purchase of lot 2. Tony says Mr Kinsman said he would get the solicitors, Chan Galic to prepare the deed.

66 On 1 February 2007 Mr Kinsman recorded a telephone call in starting at 12.15 pm and ending at 12.20 pm. The note describes the conversation:

Tony rang to advise that they can buy an old house in Mount Pleasant for $610K, apply for green title and sell. Need to know if required for ins purposes to be in Prima's name or not. suggest that we do a declaration of trust for ins purposes and the reason being to have a price edge by buying and selling it in Karina's name rather than in Prima's name. Tony will do so, he will fax the O & A to Seng Fai and me and I can inst Seng Fai then.

67 It was not put to Tony in crossexamination that his telephone conversation with Mr Kinsman had occurred before Joe's telephone conversation with Mrs McCann which occurred whilst Tony was in Prima's office on 1 February. In closing submissions counsel for Mrs McCann submitted that, contrary to Tony's evidence, his telephone call to Mr Kinsman took place before Joe's telephone conversation with Mrs McCann on 1 February. Counsel said that it went to the credibility or reliability of Tony's evidence and further that it should be inferred that Joe and Tony had decided to go ahead with the purchase of lot 2 before the telephone conversation between Joe and Mrs McCann on 1 February. I raised with both counsel the difficulties that arose from the submissions of counsel for Mrs McCann when those matters had not been put to Tony in crossexamination. Neither counsel for Mrs McCann nor counsel for the defendants applied for Tony to be recalled to give evidence about the matter. Counsel, in effect, invited me to make findings of fact based upon Tony's evidence and Mr Kinsman's file note notwithstanding that the file note, and its implications, had not been put to Tony.

68 I declined that invitation. I determined that the rule of practice, known as the rule in Browne v Dunn, had not been complied with and it was within the discretion of the trial judge to determine what, if any, steps should be taken to ensure that the trial is resolved fairly and properly. I directed that Tony be recalled for further crossexamination. When Tony was recalled and crossexamined he said that he did not remember what time the telephone conversation between Joe and Mrs McCann occurred but he thought that it had been in the morning. Tony said that Mr Kinsman's note was an accurate record of his message but he did not recall at what time he had made the phone call. Tony maintained that he had phoned Mr Kinsman after the telephone conversation between Joe and Mrs McCann.

69 After Tony had given his further evidence the plaintiffs sought leave to reopen the plaintiff's case and call Mr Kinsman to give evidence. I granted that leave. Mr Kinsman gave evidenceinchief by way of a witness statement. Mr Kinsman is in business with the Secolas. They have had a newsagency business at Centrepoint since about 1996.

70 In his witness statement Mr Kinsman said that he had provided accounting services to Tony and Joe and Prima Homes since around 1988. He said that he used computer software to record time spent on matters. Mr Kinsman said:

1. When I receive calls the system enables me to open the client file, and then click a button for the system to record the commencing of the call, and its completion.
2. However, I do not use the system in that way. Rather, I make a handwritten note of the call, and at the end of the day I open my electronic diary on the computer screen and I make file notes based on various handwritten notes of incoming calls during the day. Sometimes my handwritten notes record the length of the call, in which case I type in that information. If the handwritten note doesn't include the length of the call, then I estimate the length of the call when I type in the file note. Once I have made the electronic file note, I discard the handwritten notes.
3. The electronic time recording system requires that I enter the starting and finishing times of the call, from which the length of the call is generated. However, I don't take any steps to ensure that the times that I enter are accurate. I enter the starting and finishing times for calls at any place in the electronic diary where there is a blank, and while I have some regard to the approximate time of the call, the starting and finishing times that I select may be incorrect by an hour or two. This is because my handwritten notes often do not include starting and finishing times. In any event the starting and finishing times of calls are not important to me, as it is the length of the call that is used for billing purposes.

71 In his witness statement Mr Kinsman said he had a vague recollection of the conversation with Tony. He says:

1. The file note shows the time of the call as 12:15 to 12:20. I cannot now recall when the telephone conversation started, and when I made the electronic file note.
2. Based on my usual practice as set out in paragraphs 9 and 10 above:

13.1 I probably made a handwritten note of the call during and immediately after the call. I cannot say whether I made a note of the times when the call came in and when it finished, or of the length of the call.

13.2 I most likely did not make the electronic file note during or immediately after the call. I probably made the entry at the end of that day, or possibly the next morning, together with various other electronic time entries I made from a batch of handwritten file notes I had made during the day. I did not keep the handwritten file note that I used to make the entry.

13.3 The times noted for the start and end time of the call are not likely to be accurate. It is quite possible that the call took place more than a couple of hours after, or before, the times recorded in the file note.

72 In crossexamination Mr Kinsman said that he knew before the trial that the file note would be placed before the court and at the time he would have probably thought that the time recorded on the note was probably about the time it could have taken place.

73 I am unable to determine whether Tony telephoned Mr Kinsman before or after Joe's telephone conversation with Mrs McCann. On the one hand Tony maintained that he telephoned Mr Kinsman after the telephone conversation between Joe and Mrs McCann. Tony was not shaken in crossexamination. On the other hand, Mr Kinsman's file note records that his telephone conversation with Tony took place at 12.15 pm, that is before the telephone conversation between Mrs McCann and Joe. Mr Kinsman's evidence is that it is quite possible that the call took place more than a couple of hours after, or before, the times recorded in the file note. I find it surprising that the phone call could have taken place 'more than a couple of hours after, or before, the times recorded in the file note'. However, Mr Kinsman maintained that evidence in crossexamination.

What was said in the 1 February 2007 telephone discussion

74 Joe's evidence is that words to the following effect were said in his telephone conversation with Mrs McCann on 1 February. Mrs McCann said that their proposal was accepted. Joe said he would go through again to make sure they knew what had been agreed. Joe said that the new boundary line would commence at a point matching the centre of the two garages on the Cranford Avenue boundary and finish at a point on the opposite boundary. Joe said that that point was to be determined by a registered survey based on the unit entitlement formula, which would mean that Mrs McCann would have approximately 580 sqm and 'we' would have approximately 520 sqm. Joe said that they would need to agree whether to convert green title or survey strata and that they would share all costs equally. Mrs McCann said that she agreed to all of those matters and was happy to proceed.

75 Joe has given a number of different versions of the words spoken in the telephone conversation. In his affidavit sworn 29 May 2009, Joe said that in the telephone conversation words were spoken to the following effect:

She said that our proposal was accepted.

I said I would go through it again to make sure we knew what had been agreed, and I outlined the approach to determining the precise boundary line in precisely the same way that I had explained it at her home on the previous day. I said that we would share all of the costs.

She said, again, that she was happy with that approach to determine the precise boundary line, and was happy to proceed.

76 In his witness statement Joe gives a subtlely different description of the words spoken. Instead of 'I outlined the approach to determining the precise boundary line in precisely the same way that I had explained it at her home on the previous day' Joe says that 'I said that the new boundary line would commence' and described the point at which it was to commence and how it was to be determined. Instead of saying 'she said, again, that she was happy with that approach to determine the precise boundary line and was happy to proceed' Joe said 'she said that she agreed to all of those matters, and was happy to proceed'. The account contained in his affidavit is closer to the evidence of Mrs McCann. Mrs McCann's evidence is that she said 'we would like to go ahead'.

77 Some time shortly after 15 February 2007 Joe drafted a four page letter to Mrs McCann that set out his account of relevant events. In evidence Joe said that it was not meant to be a draft letter that he was sending to Mrs McCann but rather it was meant to be his account of his discussions with Mrs McCann that he could give to his solicitor, Mr O'Toole. In his draft letter Joe gave the following account of his telephone conversation with Mrs McCann on 1 February:

You phoned me the next morning, Thursday 1 February 2007 and confirmed that you and Ian had discussed it and thought it was a great proposal and were in agreement with it. I once again confirmed that the allotment of land would be equal to the unit entitlement shown on the title and the rear boundary length would be calculated by a surveyor based on the starting point at the centre of the adjoining driveway. You confirmed it was satisfactory.

When the draft letter was put to him in crossexamination Joe accepted that the centre of the adjoining driveway and the centre line of the adjoining garages were two different points. He said that the reference to the centre of the adjoining driveway was 'just a clerical error'. The front of the garages consists of two doors with a brick column down the middle. When it was put to him in crossexamination Joe said that he could not recall whether the doors are a different size but they appeared to be of a different size in the photograph in evidence. The following crossexamination then occurred:

COUNSEL: Was there a discussion about whether it would be halfway between the brickwork in the centre of the garage doors?

JOE: It was the centre point of the garages, so I assume that to be the centre point of the brickwork between the two doors.

COUNSEL: That's what you've assumed, but you didn't discuss that with anyone?

JOE: I discussed that with Katherine McCann, the centre point of the two garages.

COUNSEL: The comment you just made was, 'I assumed this'. Now, 'assume', I would suggest to you means you didn't discuss it, otherwise you'd have no need to assume it?

JOE: We discussed the centre point of the two garages, which is the brick pier.

COUNSEL: Could 'half way between' mean 'half way between the outer portion of each of the garage doors?'

JOE: No, it's the brick pier, the centre point is the centre point of the brick piers (ts 189).

78 In his witness statement Tony said that he was in the office with Joe on 1 February and heard what he said in his telephone conversation with Mrs McCann. Tony says he heard Joe say words similar to:

I just want to confirm the position because we would like to make an offer. You are happy with the boundary that we discussed, on the basis that we have 520 sqm and your block is 580 sqm, we share the subdivision costs equally.

If you are happy with that then we will go ahead and make an offer this evening.

In answer to leading questions in crossexamination Tony said that Joe had spoken of a boundary with the northern part fixed by reference to the midline of two garages and the rear point by reference to unit entitlement or to 520 to 580.

79 In her evidence Mrs McCann gave a different account of the telephone conversation with Joe on 1 February. Her evidenceinchief is:

Joe said to me something like, So, are you sure you would like to go ahead? I said, Yes of course we would like to go ahead. ... I think Joe said something like, If you're sure you would like to survey strata its likely we'll put an offer on. I said something like, That's good.

80 I am not satisfied that Joe has an accurate recollection of the words that were spoken in the telephone conversation. In crossexamination Joe agreed that he did not remember the exact words spoken but that Mrs McCann said words to the effect that the proposal was accepted and she was happy to proceed. I am not satisfied that Mrs McCann used the words 'your proposal is accepted' or some variation of those words and I am not satisfied that Joe said that the new boundary line would commence at a point matching the centre of the two garages on the Cranford Avenue boundary and finish at the point on the opposite boundary that was to be determined by a registered survey based on the unit entitlement formula of approximately 580 sqm to 520 sqm.

81 The meeting on 31 January was the first time that Mr and Mrs McCann had considered an angled boundary line. Joe had not identified precisely where the angled boundary line would lie. At the meeting there was discussion about conversion to green title or survey strata, the Secolas supporting the McCanns' application for approval for a parapet wall of approximately 14 m and the impact of Joe's suggested boundary on the McCanns' plan for a new home on lot 1. The effect of the evidence of each of Mr and Mrs McCann is that after the meeting they discussed the idea of converting to survey strata with an angled boundary line but did not reach a consensus between themselves about it. I accept their evidence on that point. I do not accept that Mrs McCann then telephoned Joe the next day and said that his proposal was accepted. That is the language of offer and acceptance. Joe may believe that in the telephone conversation Mrs McCann assented to his idea of converting to survey strata and dividing the lots by an angled boundary line that he had outlined at the meeting. Joe has reconstructed what was said in the telephone conversation to fit that belief. That is illustrated by Joe's evidence concerning the northern point of the angled boundary line. In crossexamination Joe said that it was discussed that the boundary point would be the centre point of the garages which is the brick pier. However, in his draft letter to his solicitor Joe wrote that in the telephone conversation he confirmed that the boundary point would be the centre of the adjoining driveway.

82 I do not find Tony's evidence on this point to be at all convincing. Tony's evidence initially was that Joe said words to the effect that:

You are happy with the boundary that we discussed on the basis that we have 520 square metres and your block is 580 square metres.

In crossexamination when it was put to Tony that Joe did not say that the northern point of the boundary is fixed by reference to the midline of two garages facing north, Tony said that it was. I find that Tony has no actual recollection of what Joe said in his 1 February phone conversation with Mrs McCann. Tony has reconstructed the conversation to fit what he believes was the effect of the conversation.

83 Mr and Mrs McCann had not agreed between themselves to convert the titles to survey strata on a boundary line to be determined in precisely the way suggested by Joe. Mrs McCann did not think of Joe's suggested method of determining a new boundary line to be a 'proposal'. Mrs McCann was concerned about what effect Joe's suggested boundary line would have on her plans to build a new house, especially the effect on the garage and storage room in her plans. Mrs McCann was intent on being able to build a 14 m parapet wall along the boundary and wanted the Secolas support for that application. Mrs McCann did not accept that the lots had to be divided so that lot 1 would be 580 sqm and lot 2 520 sqm. Mrs McCann's actions after 1 February show that she thought there were things still to be agreed between herself and the Secolas. It is unlikely that Mrs McCann would have stated to Joe that his proposal was accepted without any qualification or explanation. I find that Mrs McCann said words to the effect that 'we would like to go ahead'.

84 Tony says that shortly prior to 1 February he asked Karina whether she would be prepared to become the owner of lot 2. In his witness statement he said that he told Karina words to the effect that he would arrange for a simple deed of trust to be prepared, to make it clear that she would be holding the land on trust for Prima. She said words to the effect that she was happy to proceed with these arrangements. On the evening of 1 February Karina signed the offer and acceptance to purchase lot 2.

85 On 1 February Tony spoke to Mr Kinsman about a deed of trust. Mr Kinsman said he would get the solicitors, Chan Galic, to prepare the deed. Karina's witness statement is brief. She says that in early February her father asked her if he could put a property in her name and said something about signing a trust document. She said she was happy to do what he asked of her in relation to the property. She signed the offer and acceptance on 1 February. She believes she signed the declaration of trust on or shortly after 17 February 2007. The declaration of trust is dated 1 February. The date is not her handwriting. She signed a loan offer from Westpac Bank at her father's request to assist in the purchase of the land.

86 Karina also signed a document entitled 'Concessional Assessment of Stamp Duty for a Home Mortgage'. The document contains false statements.

87 Karina did not at any time ask or authorise anyone to negotiate on her behalf with the McCanns about where a boundary might go.

88 On 2 February Joe telephoned Mrs McCann and said words to the effect that they had entered into a contract to purchase the property. Joe said words to the effect that he would get a quotation for the surveyor's work. Mrs McCann said words to the effect that he should proceed to do that. Mrs McCann essentially accepts that telephone conversation took place.

89 Mrs McCann says that there were a number of telephone calls with the Secolas in early February. She cannot say what was discussed in each but in a number of them Joe said things about dividing the land in the ratio of 580 to 520 and without exception she said something like 'you can't do that, that's not legitimate. It's a possible method but not a default method'.

90 Joe obtained a quote from Tuscom for converting the titles to survey strata. On 9 February Joe telephoned Mrs McCann. He told her he had obtained quotes from Tuscom for converting to survey strata and to green title. Joe said words to the effect that it would be too expensive to proceed with the green title option and that the survey strata would be good enough. Joe says Mrs McCann said words to the effect that she agreed and approved the survey strata option. Mrs McCann agrees that Joe said that the green title option was too expensive but she says that she did not respond to that statement and she did not agree that they should reject the green title idea.

91 Mr McCann's evidence, which I accept, is that after Joe had delivered the quote for converting to survey strata he still wanted to explore the idea of green title. Mr and Mrs McCann had not agreed between themselves to convert to survey strata rather than green title. It is unlikely that Mrs McCann would have agreed with Joe to convert to survey strata rather than green title without seeing the quotes and without discussing it with her husband. I find that Mrs McCann did not say words to the effect that she agreed and approved the survey strata option.

92 On 14 February Mrs McCann drafted the McCann Proposal. The essential elements of the proposed agreement were:

1. The titles would be converted from built to survey strata.
2. The new boundary would extend in a straight line from the southern boundary at a point 3.5 m west of the games room outside wall edge to a point on the northern boundary 19.5 m west of the eastern block edge (a point which represents an extension of a line which halves common use car facilities).
3. The McCanns may build a parapet wall up to the agreed line of separation at the front of the block, the wall to be no higher than 3 m and as long as council will permit but not more than 14 m.
4. Both parties would engage Tuscom Subdivision Consultants and pay half each of their quoted figure plus the McCanns 'own bank indorsement fees'.
5. The McCanns would not be required to contribute to the realignment of the first 14.48 m of the fence line and the fencing expenses for any additional length would be shared equally.

93 Mrs McCann signed the document and faxed it to Joe. Joe says he telephoned Mrs McCann that evening. Mrs McCann says that Joe telephoned her whilst she was at school that day and again that evening. Nothing turns on that difference. Joe's evidence is that he said that the document did not reflect what they had previously agreed. He said that the boundary was in the wrong position because the respective areas based on that boundary were not in accordance with the unit entitlements of 10/19 and 9/19 but had the result that the Secolas' block would be reduced by 25 sqm, the McCanns' block would be the same amount larger and that this would not equate to unit entitlement shown on the title. Mrs McCann said it was reasonable to reduce the area of lot 2 to 500 sqm because that was the area at which the property had been advertised. She said that the surveyor had told her that the combined land could not be apportioned on the basis of the respective entitlements. Joe said that they should apply some commonsense and reasoning to resolve their differences. Mrs McCann said commonsense and reasoning could not be used in matters like this. Mrs McCann said it was too late to discuss the matter further. Joe asked when it would be convenient to discuss it again and Mrs McCann said she did not want to discuss it further.

94 Mrs McCann's evidence is that Joe said that his concern was the southern point of the proposed boundary line. Mrs McCann said that Joe's exact words were:

I note that 9/19ths of 1,100 sqm is 521.05 sqm. Mrs McCann says she said something like:

It doesn't matter what you think you own. If that was the case you might just as easily rely on what the agent told you, that the land is 'around 500 sqm'. The fact is, neither of us owns a defined square metreage, we jointly own the common property ... Even your own surveyor James Teoh told me that the land doesn't have to be apportioned in proportion to the respective unit entitlements of the owners. He told me that the land could be apportioned on that basis, but that was not the only way, or the default way, of doing it.

Mrs McCann said that she was not comfortable talking about it. Joe asked her when she wanted to talk. She said she would more comfortable if Joe put his position in writing and she would see what he had in mind.

95 Thereafter the parties each instructed solicitors.

96 Mr Menezes is a real estate agent. He was instructed by Mrs Shepherd's daughter on behalf of Mrs Shepherd to sell lot 2. Mr Menezes' evidence is to the following effect. Joe phoned Mr Menezes and said he wanted to see the property. Mr Menezes took Joe to the property and Joe inspected it. Mr Menezes told Joe that the next door neighbour would make it difficult to convert to survey strata. Joe came to Mr Menezes' office and took copies of the title search and may have taken copies of plans of a possible redivision of the two lots drawn by Mrs McCann. Mrs Menezes phoned Mrs McCann and told her he had a buyer who wanted to make an offer for lot 2 and wanted Mrs McCann to discuss matters with the potential buyer. Mr Menezes did not attend the meeting between the Secolas and the McCanns on 31 January. The following day Mr Menezes had a telephone conversation with Joe. Mr Menezes said something like:

How did the meeting go? Did she agree to do it the proper way?

No, she's not, she's talking about the encroachment you know.

Paul, it was very difficult. She was very very difficult as you already said to me. She is a difficult lady. She told me exactly what she wants. She'll allow it if she gets that piece of land.

I want my share and what I'm supposed to have by law. She can't ask for that piece too. It would be done according to the strata people.

Joe said he did want to make an offer. He said he would sort this matter after he bought it. He said:

The law is, it's divided according to law, not what you want: Strata Regulations. It's nothing to do with what next door want. You've got to do it with the strata authorities. Then if need be, I'll take her to court.

97 Mr Menezes says that Joe gave him some information that he needed to write up the offer. Joe told him that the amount of the offer was $610,000. He said words to the effect that this was 'because of these problems to sort out. I'm taking a risk on this and I can't give you more'. On the evening of 1 February Mr Menezes took the offer to the Secolas to sign. He met Karina. Karina signed the offer and acceptance.

98 In crossexamination Mr Menezes denied that on 1 February Joe had telephoned him and told him that they had reached an agreement with Mrs McCann. In general, I accept the evidenceinchief of Mr Menezes given by way of witness statement (exhibit N). I accept that on 1 February Mr Menezes asked Joe how the meeting the previous evening had gone and whether Mrs McCann had agreed to 'do it the proper way?' In context that would have been understood by Joe to mean: did Mrs McCann agree to convert to survey strata in the proper way? I accept that Joe replied to the effect that Mrs McCann had not agreed and that she had said what she wanted which involved an encroachment or her asking for a piece of land.

99 Mr Menezes had signed an earlier statement prepared by the plaintiffs' solicitors. In that statement he said that any comment made by Joe about taking Mrs McCann to court may have been made some weeks after 2 February 2007. I am not satisfied that Joe said on 1 February that if need be he would sort the matter out in court. I make no finding whether Joe made that statement on 1 February or at some later time.

100 In the telephone conversation on 1 February Mrs McCann said in effect that she would like to go ahead. Neither Joe nor Mrs McCann expressly addressed the question of whether or not the parties had reached an immediately legally binding agreement. I find that there was no final, legally binding agreement made on 1 February.

101 Whether the parties intended immediately to be contractually bound is to be determined objectively, according to the intention disclosed by their words and conduct. It must be remembered, however, that the required intention is not a general intention at some time to enter into a contract but an intention to make an immediately binding contract. Parties may agree upon terms and conditions for a contractual relationship but not intend immediately to be contractually bound on those terms and conditions. This may be pending negotiations on other matters or until execution of a formal contract or at least a written summary of the essential terms of their agreement.

102 I find that viewed objectively Mrs McCann and Joe, on behalf of Prima Homes, did not intend to create contractual relations. Objectively viewed what Mrs McCann said did not convey, having regard to the circumstances in which the telephone conversation took place, that she intended to enter into an immediately legally binding agreement. I reach that conclusion for three principal reasons.

103 First, the alleged agreement lacked the formality that an ordinary reasonable person in the position of Joe and Mrs McCann would expect if an immediately legally binding agreement was intended. While it is not, of course, necessary to have terms of an agreement reduced to writing, the importance of there being some written record of the consensus reached in an agreement allegedly made in a telephone conversation is obvious. Had there been an agreement reached which both parties intended to be legally binding I would have expected the parties to take the ordinary precaution of reducing their agreement to writing, at least in the form of a heads of agreement, essential terms or note of what had been agreed.

104 The agreement alleged by the plaintiff is an agreement concerning land. It was more complex than a simple agreement for the sale and purchase of suburban land. It involved, at least, resubdivision, identifying a new boundary, demolishing existing buildings and other matters such as the Secolas' support for an application to construct a parapet wall on the boundary. It is unlikely that parties would reach an agreement of the nature alleged by the plaintiff without anything being reduced to writing. That would be contrary to common expectation.

105 Secondly, Mrs McCann and Joe, on behalf of Prima Homes, had not reached agreement or a consensus on essential matters which required agreement. At the meeting on 31 January the McCanns and the Secolas told each other that they would like to convert the titles to survey strata or green titles. No binding agreement was made. That is common ground. The McCanns and Secolas had discussed a number of matters in respect of which they had not reached agreement.

106 In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd Gleeson CJ said:

In a case where a court is required to make a judgment concerning the intention of the parties in relation to what might broadly be described as a Masters v Cameron ((1954) [1954] HCA 72; 91 CLR 353) dispute, it will normally be of importance that the court have an understanding of the commercial context in which the dispute arises, and a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract. In some cases, such as transactions involving the sale and purchase of land, or leases, courts may properly feel well equipped to form a view on such matters without the need for much evidence. In many cases, however ... there is a need for evidence in one form or another as to what subjects would be regarded as requiring agreement between the parties. In this case the best evidence on that subject is to be found in the actual communications between the parties and, in particular, in the issues which they in fact addressed when they set about drafting their detailed contract (548).

107 The subjects which the parties regarded as matters to be covered by an agreement, if an agreement was made, must include at least those matters addressed at the 31 January meeting and those necessary in a practical sense for an agreement. They include at least the following. First, whether the titles were to be converted to survey strata or green title. Secondly, the boundary to divide the lots. Thirdly, the area of the respective lots. This is, of course, connected with the boundary line. Fourthly, the costs of converting the titles. Fifthly, when the McCann's house was to be demolished. Sixthly, the Secolas support for the McCann's application to the council to build an extended parapet wall in the order of 14 m.

108 I will consider each of those matters. First, it is common ground that no agreement had been made whether the title should be converted to survey strata or green title. That was a fundamental matter yet to be agreed. It could not be assumed that they would agree. If they did not agree then the alleged agreement could not proceed.

109 Secondly, no agreement had been reached as to the new boundary. The evidence of Joe and Tony is, in effect, that at the meeting on 31 January Joe suggested a boundary line by identifying the northern point of the line and a formula for determining the southern point. I find that Mrs McCann did not say at the meeting that she agreed with that boundary line or that she was 'happy' with that approach to determine the precise boundary line. I find that she did not say in the telephone conversation of 1 February that she agreed with that boundary line or that approach to determine the precise boundary line. In any event, the southern point of the new boundary line had not been identified. Even on the account of Joe and Tony a surveyor would have to make calculations to determine where the point on the southern boundary would be. It is unlikely parties in the position of Mrs McCann and the Secolas would agree to a new boundary without knowing precisely where the boundary would be.

110 The third matter, which is related to the boundary line, is the areas of the lots after resubdivision. There was no agreement, or consensus, about the respective areas of lot 1 and 2 after resubdivision. At the meeting Joe and Tony said that the lots were to be divided so that lot 1 would be 580 sqm and lot 2 520 sqm. The McCanns did not agree to that at the meeting. Mrs McCann did not say in the telephone conversation of 1 February that she agreed to the lots being resubdivided so that their areas would be 580 sqm and 520 sqm respectively.

111 The fourth matter is the costs of converting the titles. I find that agreement had been reached on that subject. The evidence of Mr McCann is that Mrs McCann agreed at the meeting to meet the costs equally. I find that at the meeting Mrs McCann said words to the effect that the costs should be shared and that would have been understood by an ordinary and reasonable person to mean shared equally.

112 The fifth matter is when the McCanns' house was to be demolished. They had not agreed that the buildings would be demolished, or if they were to be demolished then when that was to occur. There was no agreement about that at the meeting. It was assumed by Joe and Tony that the McCanns would immediately demolish their house. However, Mrs McCann did not say that. Mr McCann said at the meeting that the McCanns were not ready to demolish their house and proceed to build a new house immediately. It may be that neither the McCanns nor the Secolas had thought that it was necessary to specify when the McCanns would demolish their existing house or at least that part, if any, that protruded over the new boundary because the McCanns thought that approximate boundary line identified by Joe did not go through the McCann's existing house and Joe and Tony did not turn their minds to that matter.

113 The sixth matter was whether the Secolas agreed to support Mrs McCann's application to the council to build a parapet wall in the order of 14 m. There had been no resolution of the McCann's request that the owner of lot 2 support their application for an extended parapet wall along the boundary. Although Joe said at one time in his evidence that he indicated his support at the meeting I find that neither Joe nor Tony agreed to that during the meeting. Nothing was said about it in the telephone conversation.

114 In those circumstances words spoken by Mrs McCann to the effect that she wanted to go ahead would not have objectively conveyed that she intended to enter into a final, binding agreement to convert the existing titles to green title or survey strata with a boundary to be determined in the way set out by Joe at the meeting and to meet equally the costs of conversion, including survey costs. Even if, contrary to my finding, Mrs McCann said in the telephone conversation with Joe on 1 February that she was happy with the boundary that had been discussed and sharing the subdivision costs equally that would not have conveyed to an ordinary reasonable person in Joe's position that she intended to enter into a final, binding agreement to convert the existing titles to green title or survey strata with a boundary to be determined in the way suggested by Joe at the meeting.

115 Thirdly, I find that the conduct of the parties immediately after the telephone conversation of 1 February does not show that they intended to, and did, reach a final binding agreement on 1 February. Neither Joe nor Mrs McCann took any steps to record their alleged agreement in writing or make any written record of even the basic terms of the agreement. Joe proceeded to obtain a quote for the costs of converting to survey strata. He did not instruct the surveyors to draw up a plan showing the angled boundary line he had suggested or take any steps towards effecting the conversion to survey strata. Joe says that on 9 February Mrs McCann agreed to the survey strata option. Again, the alleged agreement was not reduced to writing or the subject of any note. Joe took no steps to effect the alleged agreement such as instructing the surveyors to draw the alleged agreed boundary line. It is true that a settlement of the purchase of lot 2 was not completed until April. However, the contract was unconditional and Joe and Tony said they wanted to proceed with the project as soon as possible.

116 I find that no final, binding agreement was made between Mrs McCann and Karina or Prima Homes on 1 February or 9 February 2007. It is strictly unnecessary to consider whether Karina was a party to the alleged agreement or whether the agreement, if it was made, was unenforceable because it is a contract for sale of land or an interest in land and is not in writing as required by s 4 of the Statute of Frauds. However, I will briefly set out my findings in relation to those issues.

117 If, contrary to my finding, Mrs McCann made a legally binding agreement with Joe on 1 February and 9 February then Joe did not make that agreement or agreements on behalf of Karina. Karina did not at any time ask or authorise Joe or anyone else to negotiate on her behalf with Mrs McCann about where a boundary might go or in relation to any other matter.

118 The plaintiff's case is that Karina was an undisclosed principal. The doctrine of the undisclosed principal is that if a contract is negotiated between A and B and B does not reveal that he is acting as C's agent then C may nevertheless intervene and take B's place if C can show that B was acting throughout as C's agent. However, Karina was not an undisclosed principal. Joe did not act as Karina's agent in his negotiations with Mrs McCann.

119 The defendant relies on s 4 of the Statute of Frauds 1677 (Imp) as amended by the Law Reform (Statute of Frauds) Act 1962 (WA) s 2. The plaintiffs plead that the alleged agreement does not amount to a disposition of an interest in land and does not otherwise come within the Statute of Frauds.

120 The defendant submits, and I accept, that the alleged agreement does amount to a disposition of an interest in land for the following reasons. The Statute of Frauds s 4 applies to any 'contract or sale of lands, tenements or hereditaments, or any interest in or concerning them'. An agreement dealing with the demolition and rebuilding of a party wall has been held to be within the section: McManus v Cooke (1887) 35 Ch D 681.

121 Where proprietors hold an interest in land under 'built strata' titles each proprietor owns the land comprised within the relevant individual lot. The agreement alleged by the plaintiffs would oblige the defendant to transfer a part of her lot to Karina, to give up some of the common property that is presently used by her, to lose her undivided ownership rights in some of the common property, to execute various documents to be registered under the TLA and to demolish her house even if she did not wish to do so. That amounts to a contract for the disposition of an interest in or concerning land.

122 The plaintiffs say that if, as I have found, the alleged agreement is caught by s 4 of the Statute of Frauds the court may grant a decree of specific performance where there is sufficient part performance of the alleged agreement.

123 The authors of Cheshire and Fifoot's Law of Contract (9th ed, 2008) [16.58] say that the basis for the doctrine of part performance is that the defendant, who allows the plaintiff to commit himself or herself in some material way by performing obligations under, or because of, the contract will be acting unconscionably if he or she then tries to escape the contract by resort to the Statute of Frauds. This is what is meant by saying that the defendant is 'charged' upon the equities resulting from acts done by the plaintiff in execution of, or because of, the contract.

124 In McBride v Sandland [1918] HCA 32; (1918) 25 CLR 69 Isaacs and Rich JJ stated certain elements of part performance essential to raise the equity:

(1) The act relied on must be unequivocally and in its own nature referable to 'some such agreement as that alleged.' That is, it must be such as could be done with no other view than to perform such an agreement.

(2) By 'some such agreement as that alleged' is meant some contract of the general nature of that alleged.

(3) The proved circumstances in which the 'act' was done must be considered in order to judge whether it refers unequivocally to such an agreement as is alleged ...

(4) It must have been in fact done by the party relying on it on the faith of the agreement, and further the other party must have permitted it to be done on that footing. Otherwise there would not be 'fraud' in refusing to carry out the agreement, and fraud, that is moral turpitude, is the ground of jurisdiction.

(5) It must be done by a party to the agreement.

These requirements must be satisfied before the actual terms of the alleged agreement are allowed to be deposed to.

Further, when those terms are established, it still remains to be shown:

(6) That there was a completed agreement.

(7) That the act was done under the terms of that agreement by force of that agreement (78 79).

See Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520, especially Buss JA at [70].

125 The plaintiff says that the relevant acts of part performance are as follows:

1. The purchase by the first plaintiff of [lot 2]. The purchase was a precondition to the Agreement being performed; it does not matter that there was no obligation to make the purchase;
2. The subsequent request made by [Joe] to Tuscom for quotes for work involved in procuring the realignment. The quotes were requested with the knowledge of the defendant, and [Joe's] fax dated 5 February 2007 included a plan showing the approximate position of the new boundary;
3. The copying of the fax of 5 February 2007 to the defendant, as had been requested by her;
4. The making of the further agreement with the defendant to proceed with the survey strata option; and
5. The delivery by [Joe] of the Tuscom quote to the defendant's home, for her to sign so that Tuscom could commence work.

126 I find that the purchase by the first plaintiff of lot 2 is not a sufficient act of part performance.

In my opinion, on the authority of McBride (78) (Isaacs and Rich JJ), Cooney (222) (Knox CJ) and Regent v Millett [1976] HCA 40; (1976) 133 CLR 679, 683 (Gibbs J, with whom Stephen, Mason, Jacobs and Murphy JJ agreed), the phrase 'some such agreement as that alleged' in the speech of the Earl of Selborne LC in Maddison (479) means some contract of the general nature of that alleged, and the phrase 'unequivocally, and in their own nature' in that speech requires that the acts in question must be such as could be done with no other view than to perform some contract of the general nature of that alleged (479). This approach must be followed unless and until the High Court decides otherwise. See Khoury v Khouri [2006] NSWCA 184; (2006) 66 NSWLR 241 [88], [90] (Bryson JA, Handley and Hodgson JJA agreeing); Riches v Hogben [1986] 1 Qd R 315, 330 (Williams J); McMahon v Ambrose [1987] VicRp 66; [1987] VR 817, 847 (Marks J); Gors, 91,036.

128 Buss JA further said that the observations of Gibbs J in Regent v Millett [1976] HCA 40; (1976) 133 CLR 679, 683 684 indicate that the acts of part performance on which the plaintiff may rely are not confined to those acts which the plaintiff is obliged to perform under the alleged contract, but may include acts which the plaintiff has performed in the exercise of a right conferred by that contract [74]. Buss JA then continued:

In McBride (77), Isaacs and Rich JJ noted the statement of Lord O'Hagan in Maddison (469) to the effect that the proper course in a proceeding in which the plaintiff relies on the doctrine of part performance is that of 'seeking to establish primarily such a performance as must necessarily imply the existence of the contract, and then proceeding to ascertain its terms'. His Lordship held that the court below had erred in reversing that order. Isaacs and Rich JJ then commented:

'No harm can arise from reversing the order as a matter of convenience in taking evidence, provided the necessary elements of part performance are borne in mind and properly applied to the circumstances when the facts come under consideration. But if the terms of the oral bargain are first ascertained and then the alleged acts of part performance are judged of merely by their consistency with and applicability to that bargain, grievous error may result' (77 - 78).

In Thwaites v Ryan [1984] VicRp 7; [1984] VR 65, Fullagar J (with whom Starke J agreed) followed the approach of Lord O'Hagan in Maddison, as approved by Isaacs and Rich JJ in McBride, and said that:

'[I]t is wrong first to postulate the contract pleaded and then to ask if the alleged acts were a part performance of it, or of a contract of its general nature ... One must first seek to find such a performance as much imply a contract, and then proceed to ascertain the general nature of such contract as the performance implies, and then to compare that result, if one gets to it, with the general nature of the contract pleaded (77).' [emphasis in original]

Also see Francis (340). Compare the views expressed in Millett v Regent (73) (Glass JA).

In my opinion, the approach of Lord O'Hagan in Maddison, as approved by Isaacs and Rich JJ in McBride, should be followed unless and until the High Court decides otherwise [75] [77].

129 The purchase by the first plaintiff of lot 2 is not unequivocally, and in its own nature, referable to some such contract as that alleged by the plaintiffs. It may be accepted that acts of part performance do not have to be referable to particular contractual obligations. However, the act of the first plaintiff purchasing lot 2 is neither referable to an obligation under the alleged contract nor something permitted by the alleged contract. There is nothing about the purchase of lot 2 by the plaintiff that is unequivocally, and in its own nature, referable to some such contract as that alleged by the plaintiffs.

130 I find that the request made by Joe to Tuscom for quotes for converting the title to survey strata and green title and providing the facts of 5 February 2007 to the defendant are not unequivocally, and in their own nature, referable to some such contract as that alleged by the plaintiffs. Joe did not instruct Tuscom to convert the titles to strata survey or to take steps to accomplish that. He merely obtained quotes for converting the titles. That does not point to the existence of any contract. The same observations apply to the delivery by Joe of the Tuscom quote to the defendant's home.

131 The plaintiffs also rely, as an act of part performance, on the making of the further agreement with the defendant to proceed with the survey strata option. I have found that there was no such agreement made.

132 The plaintiffs argue that Mrs McCann is estopped from asserting that the Prima Agreement, if such a legally binding agreement was made, is not enforceable by reason of an absence of writing.

133 The central principle of the doctrine of estoppel by conduct is that the law will not permit an unconscionable or, more accurately, unconscientious departure by one party from the subject matter of an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission which would operate to that other party's detriment if the assumption be not adhered to for the purposes of the litigation: Commonwealth v Verwayen (1990) 170 CLR 394 (Deane J). Deane J said that the question whether such a departure would be unconscionable relates to the conduct of the allegedly estopped party in all the circumstances and explained:

That party must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were now to depart from it. The cases indicate four main, but not exhaustive, categories in which an affirmative answer to that question may be justified, namely, where that party: (a) has induced the assumption by express or implied representation; (b) has entered into contractual or other material relations with the other party on the conventional basis of the assumption; (c) has exercised against the other party rights which would exist only if the assumption were correct; (d) knew that the other party laboured under the assumption and refrained from correcting him when it was his duty in conscience to do so. Ultimately, however, the question whether departure from the assumption would be unconscionable must be resolved not by reference to some preconceived formula framed to serve as a universal yardstick but by reference to all the circumstances of the case, including the reasonableness of the conduct of the other party in acting upon the assumption and the nature and extent of the detriment which he would sustain by acting upon the assumption if departure from the assumed state of affairs were permitted. In cases falling within category (a), a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption (444 - 445).

134 The plaintiff's case is that in the course of the telephone conversation between Mrs McCann and Joe on 1 February, Mrs McCann represented that upon the plaintiffs purchasing lot 2 she would do all such things as would be required to realign the boundary. I find that Mrs McCann did not make such a representation. I have found that Mrs McCann said words to the effect that 'we would like to go ahead'. In the circumstances of, and preceding, the telephone conversation it is not unconscionable for Mrs McCann not to take all steps necessary to realign the boundary in accordance with Joe's angled line, including resubdividing the land and converting to survey strata. I find that Mrs McCann did not know or intend nor ought she to have known that Prima Homes, or the plaintiffs, would be induced by her conduct to adopt, and act on the basis of, an assumption that she would do all such things as would be required to realign the boundary in accordance with Joe's angled line. Further, it was not reasonable for Joe, or the plaintiffs, to act upon the assumption that upon their purchasing lot 2 Mrs McCann would be contractually bound to do all such things as would be required to realign the boundary in accordance with Joe's angled line. The proposed realigned boundary had not been pegged or drawn on a surveyed diagram or identified with any reasonable degree of precision. No agreement had been reached concerning the Secolas' support for an application by Mrs McCann for a parapet wall in the order of 14 m. No consensus had been reached about when the McCanns would demolish their existing house. Nothing had been reduced to writing even though the alleged agreement was one of some complexity.

135 There were a number of other issues aired by the parties at trial which are unnecessary to further consider because of my findings in relation to the alleged agreements of 1 February and 9 February. However, it is necessary to address the defendant's claim of misleading or deceptive conduct.

136 Mrs McCann claims that Joe engaged in misleading or deceptive conduct in contravention of s 52 of the TPA and s 10 of the FTA. The alleged misleading or deceptive conduct was twofold:

1. Joe represented to Mrs McCann that the boundary Prima Homes was proposing would not impinge on, or pass through, Mrs McCann's residence, that is lot 1; and
2. Prior to 28 February 2007 Joe gave no indication to Mrs McCann that the realigned boundary proposed by Prima Homes would, or might, impinge on, or pass through Mrs McCann's residence.

137 Mrs McCann's primary submission is that she does not rely on the 'mere silence' of Joe. She submits that there is no need to establish that Joe's omission to advise her that his proposed boundary would or might impinge on, or pass through Mrs McCann's residence was deliberate to satisfy s 4(2) of the TPA or s 5(4) of the FTA. Mrs McCann submits that 'the most telling conduct was the line drawn by' Joe but it is also relevant that the parties discussed the mooted development as if the residence on lot 1 would remain apart from the garage, and that Joe remained silent, when told that Mrs McCann was not planning to demolish for about two years, about the prospect that the residence would need to be demolished sooner.

138 In Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 a plurality of the High Court restated the principle that 'conduct' with which s 52 of the TPA deals is not confined to 'representations'. The plurality stated:

References to misrepresentation or reliance must not be permitted to obscure the need to identify contravening conduct (here, misleading or deceptive conduct) and a causal connection (denoted by the word 'by') between that conduct and the loss and damage allegedly suffered. As McHugh J also pointed out in Butcher, with particular reference to s 52 of the Trade Practices Act, but with equal application to s 42 of the Fair Trading Act:

'The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced form the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document.' [102].

139 For the purposes of s 52 of the TPA or s 10 of the FTA, the reference to 'engaging in conduct' includes not only doing an act but also refusing to do any act. A reference to 'refusing to do an act' includes a reference to 'refraining (otherwise than inadvertently) from doing that act': s 4(2)(c)(i) TPA; s 5(4)(c)(i) FTA.

140 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 concerned claims arising from a fire which destroyed commercial premises owned by Clambake. Clambake leased part of the premises to Tipperary, a company owned and controlled by Mr Anderson. Stored in the premises was a collection of antiques owned by Owston, another of Mr Anderson's companies. Owston claimed against Clambake for misleading or deceptive conduct arguing that when Mr Anderson inspected the premises prior to leasing them he had observed sprinkler heads and had concluded, based on his observations and previous commercial experience, that the premises fire protection system included an operational sprinkler system. Owston argued Clambake had represented that the building had a functional sprinkler system and that the absence of explanation by Clambake that the old sprinkler system was not operational and was not part of the current fire protection system amounted to misleading or deceptive conduct. The Court of Appeal held that Clambake had not engaged in misleading or deceptive conduct. McLure P referred to the requirement of a clear identification of the conduct said to be misleading or deceptive, a consideration of the things done by a defendant and the context in which they occur. Her Honour said:

Thus, the identification of the defendant's contextual conduct and what it conveys or communicates to the persons to whom it is directed must be assessed having regard to all relevant surrounding circumstances. Not all surrounding circumstances are relevant in the identification process. In particular, conduct cannot be attributed to the defendant unless it had actual or constructive knowledge of the circumstances that affect its content. In other words, contextual circumstances of which the defendant had no actual or constructive knowledge that alter the scope of what would otherwise be attributed to it, are irrelevant: see Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 [27]. This specific proposition is but an aspect of the wider and well-established proposition that the identification of the defendant's actual conduct, the relevant surrounding circumstances and what is capable of being conveyed is to be undertaken by reference to the actual, objectively determined, circumstances. Reasonable inferences, reasonable assumptions and reasonable expectations arising from the objectively determined circumstances will be in the constructive knowledge of the parties. An objective test excludes from consideration subjective matters (knowledge, intention) not known to the parties. I leave open the question whether an objective test applies in circumstances where the only relevant conduct of the defendant is a deliberate failure to disclose.

The requirement that the defendant have actual or constructive knowledge of matters to be taken into account in determining the conduct properly attributable to it is consistent with the definition in s 4(2) which requires an act or deliberate omission. Moreover, it is not inconsistent with the well-established principle that an intention to mislead or deceive is not an element of the statutory claim: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11; (1978) 140 CLR 216.

When identifying the defendant's contextual conduct, regard can and should be had to all the actual conduct of the defendant which encompasses acts and omissions (including silence). Ordinarily, the role of silence is negative in the sense that it confirms there is nothing to prevent a representation arising, as in Fraser, Demagogue and Henjo. If the surrounding circumstances alter what the actual conduct would otherwise convey, it is the defendant's contextual conduct that must satisfy the definition of 'engage in conduct' in s 4(2). The making of a representation is an act.

A defendant's non-disclosure can, because of common assumptions or established practices or other relevant surrounding circumstances, give rise to an implied representation by the defendant that an undisclosed fact did (or did not, as the case may be) exist. The making of such an implied representation by the defendant is the doing of an act and is thus within s 4(2). The satisfaction of the 'reasonable expectation' test can result in the defendant doing an act.

The need to establish a deliberate omission will only arise if the defendant's actual conduct together with all the relevant surrounding circumstances are (objectively) incapable of giving rise to the misleading or deceptive contextual conduct complained of. In that event, the circumstances in which deliberate non-disclosure may be misleading or deceptive conduct will be limited; perhaps where the defendant is aware of another's misapprehension in the type of situations where relief is available for unilateral mistake (Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422) or where the plaintiff's misapprehension is caused by, but is not objectively attributable to, the defendant's conduct [62] [66].

141 At the meeting on 31 January Joe suggested an angled boundary line from the midpoint of the garages to a point on the southern boundary. Joe indicated the point on the southern boundary by waggling his finger over an area on the plan. Joe said that the point was 2 m to 3 m or 2 m to 2.5 m to the west of the games room. Joe said that the point was only approximate. Joe drew a pencil line on the plan. He said that the line would be 'roughly, something like that'. Joe said that where the exact point would be would depend on a surveyor. Joe said that Mrs McCann was entitled to 580 sqm and lot 2 to 520 sqm and, in effect, the surveyor would determine the point on the southern boundary so as to achieve that land area division. Joe's evidence is that he did not take any notice of whether the line he drew went through any part of Mrs McCann's existing dwelling because he understood, from what she had said at the meeting, that she was keen to demolish the existing dwelling and rebuild. I have found that Mrs McCann did not say at the meeting that she intended to immediately demolish her existing house. However, I accept Joe's evidence to the extent that he believed Mrs McCann would demolish her existing dwelling and he did not turn his mind to whether or not his suggested angled boundary line passed through any part of Mrs McCann's existing dwelling.

142 Joe did not engage in misleading or deceptive conduct. He said that the point on the southern boundary would have to be determined by a surveyor so as to effect a land division in the proportion of 580 sqm to 520 sqm. He indicated that the point could be as close to the games room as 2 m. Mrs McCann assumed that the angled line would not pass through any part of her existing building, but she did not say so during the course of the meeting or her telephone conversation with Joe on 1 February. Mrs McCann's belief or assumption that Joe's angled line did not pass through any part of her existing residence does not determine the objective question of whether Joe represented that it did not and does not support a finding of misleading conduct.

143 Joe did not know that Mrs McCann believed or assumed that his angled line would not pass through any part of her existing building. Joe's actual conduct, together with all the relevant surrounding circumstances do not objectively give rise to the misleading or deceptive conduct complained of. Mrs McCann's assumption was based upon her own beliefs and intentions. Joe's conduct would not have caused a reasonable person in the position of Mrs McCann to understand that when the southern point of the new boundary was determined in accordance with Joe's suggested formula, the boundary line would not pass through any part of Mrs McCann's existing dwelling. The discussion between the McCanns and the Secolas was concerned with the location of the suggested boundary line in relation to the games room and the new house the McCanns wanted to build on lot 1.

144 If Joe's conduct was misleading or deceptive as alleged, Mrs McCann is not entitled to any relief as a result of that contravention of TPA s 52 or FTA s 10. Mrs McCann did not suffer loss or damage by Joe's conduct. There was no final and binding agreement entered into between Mrs McCann and Prima Homes or Karina, as alleged by the plaintiffs, and hence she did not suffer any loss or damage as a result of entering into such a contract. Mrs McCann has incurred legal costs and disbursements as a result of this action having been brought against her by the plaintiffs. Mrs McCann has not incurred those costs, disbursements and expenses by any conduct of Joe in leading Mrs McCann to assume or believe that his angled line did not pass through any part of her residence. Those costs have been incurred by reason of the plaintiffs bringing this action against Mrs McCann and Mrs McCann is entitled, if at all, to recover those costs and expenses as costs of the action.

145 Any restriction on Mrs McCann's ability to use and enjoy, develop or refinance or sell lot 1 was a result of the plaintiffs' claim that there was a legally binding and enforceable agreement between them and subsequently by the lodgement of the caveat. The issue of whether Mrs McCann is entitled to compensation under s 140 of the TLA in relation to the lodgement of the caveat by Karina is to be tried, if necessary, after the other liability issues have been determined. Joe's alleged misleading conduct, if he did engage in such conduct, did not cause or contribute to Mrs McCann's restricted ability to use and enjoy, develop, refinance or sell lot 1.

146 There is no contract between the plaintiffs or any of them and Mrs McCann as alleged by the plaintiffs. The plaintiffs' claim for relief should be dismissed. I will hear from the parties as to the form of any declaration that there is no contract between the plaintiffs, or any of them, and the defendant in relation to lots 1 and 2. Mrs McCann is not entitled to damages or any other relief for misleading or deceptive conduct under the TPA or FTA. The question of whether Mrs McCann is entitled to compensation under s 140 of the TLA in relation to the lodgement of the caveat by Karina is to be tried separately. I will hear from the parties as to any directions for the determination of that issue.