Sydney Attractions Group Pty Ltd v Frederick Schulman

Index Introduction [1] Background facts [7] Contentions of the parties [29] General principles applicable to construing the Deed [34] Construction issues [42] Dependency of relevant rights and obligations in the Deed [45] Plaintiff's claim for excess Skywalk Capital Expenditure [58] Proper construction of clause 13.7 [59] Legal principles relevant to proof of Skywalk Capital Expenditure [78] Business records provisions in the Evidence Act [79] Corporate books provisions in the Corporations Act [90] Relevant general principles of evidence [99] Discussion of evidence of Skywalk Capital Expenditure [105] Conclusion as to plaintiff's claim for excess Skywalk Capital Expenditure [171] What if Skywalk Capital Expenditure had exceeded $5 million? [172] Breach of "reasonable endeavours" obligation under clause 13.1(a)? [174] Plaintiff taking advantage of own breach? [187] Plaintiff's claim for interest on excess Skywalk Capital Expenditure [195] Plaintiff's claim for negative Skywalk Final Component [202] Proper construction of clause 5.12 [203] Incorrect calculation of Skywalk Final Component [222] Proper construction of clause 5.23 [229] Relevance of surrounding circumstances to construction of clause 5.23 [259] Relevance of finding of no breach of clause 13.1(a) [262] Defendant's claims of breaches of the Deed by the plaintiff [263] Breach of "good faith" obligation under clause 13.9? [271] Sponsorship efforts [281] Advertising and marketing efforts [299] Summary of findings as to defendant's allegations of breach [316] Conclusion [321]

Introduction 1The proceedings involve a number of disputes between the parties as to certain terms and conditions of a share sale deed dated 5 July 2004 (the Deed), entered into by Frederick Schulman (the defendant), JGS Dover Corp (a United States corporation), Sydney Skytour Limited, and Sydney Aquarium Limited (now Sydney Attractions Group Pty Limited, the plaintiff). 2Pursuant to the Deed, a company associated with the defendant (JGS Dover Corp) sold its shareholding in Sydney Tower Observatory Pty Ltd (the Company) to the plaintiff. 3Each party to these proceedings alleges that, on the facts as they contend them to be and on a proper construction of the Deed, each owes the other money pursuant to the Deed. 4The plaintiff, in its amended summons filed on 27 September 2012, claims judgment for $4,912,879 (as at 12 April 2010), or alternatively damages, plus interest. It also seeks a declaration of right and an order that the defendant release the plaintiff from the share mortgage arrangement outlined in the Deed. 5The plaintiff's claim arises from its assertion that the defendant became liable to pay the plaintiff the following amounts pursuant to the terms of the Deed: (1)all "Skywalk Capital Expenditure" (as defined in the Deed), being capital expenditure in relation to the construction and completion of "Skywalk", which exceeded $5 million, plus half the cost of uniforms less $350,000; and (2)the "Skywalk Final Component" (as defined in the Deed) which the plaintiff alleges was payable by the defendant according to a formula based on earnings from Skywalk over 3.5 years and interest of 9% per annum. The formula included a provision that the defendant was liable for 50% of the first $5 million of the Skywalk Capital Expenditure incurred in constructing Skywalk. 6The defendant on the other hand contends that he is owed $2,685,884. The defendant asserts that this is so for a number of reasons. First, that the Skywalk Capital Expenditure (as defined) did not exceed $5 million and/or that the plaintiff cannot prove that it did. Second, that the adjustments otherwise made by the plaintiff purportedly in compliance with the Deed are inaccurate. Third, that the plaintiff breached clauses 5 and 13 of the Deed. The defendant further asserts that the plaintiff, by reason of its obligations under the Deed, is not entitled to be released from the share mortgage over the shares in the Company until it has fulfilled its obligations under the Deed.

Background facts 7In or about the latter part of 1998, Mr Zalman Silber, who had had extensive experience in the United States with the concept of attractions, including an attraction located in the Empire State Building, incorporated a company called Sydney Skytour Pty Ltd. He developed the concept and set up the business known as Sydney Skytour to be operated from Sydney Tower in the centre of the city. 8The original attraction devised by Mr Silber was located on the podium level (level 4 above ground) of the Sydney Tower. It involved a simulated helicopter ride over Australia with special effects. What was called the Skytour attraction took about half an hour in total and amongst other things involved patrons walking through a themed walkway after the simulated ride. 9At or about that time, AMP (the then lessors and owners of Sydney Tower), were operating a business known as the observation deck. In about 2001, Mr Silber renegotiated the lease with AMP and took over the ownership of the business of operating the observation deck. 10Mr Silber was intimately involved in the marketing of the business and obtained sponsorships from Telstra and Cadbury Schweppes amongst others. 11In or about 2002, a Mr Frederick Schulman, a New York attorney and investor, became interested, and in due course invested, in Mr Silber's Sydney Skytour business. Mr Schulman was familiar with Mr Silber's business activities in the United States, especially his activities in relation to attractions. 12In or about the beginning of 2003, Mr Silber devised and developed the concept of Skywalk, which involved taking guided walks outside the perimeter of the observation deck of Sydney Tower. 13On 4 March 2003, the Company submitted a development application (number D03/00145) to the City of Sydney Council (the Council), seeking approval for the construction of an observation deck, involving a pedestrian walkway, viewing platform and internal alterations, among other things. The Council resolved on 28 July 2003 to allow the development in accordance with the application, subject to certain conditions, and issued a notice of determination accordingly on 15 August 2003. 14It was decided to market and sell the business of Skytour and the concept of Skywalk during the latter part of 2003. 15On 5 July 2004, the Deed was entered into. At the time of the Deed, the Company's assets included: (1)a business known as "Skytour" which included operating the observation deck at the top of Centrepoint Tower in Sydney (Skytour); and (2)a proposed extension to the Skytour business known as "Skywalk", which included external walking paths and platforms on the Centrepoint Tower (Skywalk). 16The Deed included an agreement in clause 5 that in consideration for the defendant agreeing to provide a certain release of a charge the plaintiff would pay certain amounts to the defendant. These amounts included a "Deferred Component", which was payable over a three and a half year period described as the "Earn Out Period" following the launch of the Skywalk business on 19 October 2005 (the Skywalk Launch Date). 17The Deferred Component relevantly included: (1)Skywalk Quarterly Components, being $500,000 for each of the September, December and March quarters (other than the final quarter) in the three and a half year Earn Out Period; (2)a "Skywalk Adjusted Payment" for each June quarter and the final quarter during the Earn Out Period, calculated by reference to the profits earned by the Skywalk business. In substance it comprised 50% of the annual profit or loss of the Skywalk business during the Earn Out Period; (3)a "Skywalk Final Component" payable following the expiry of the Earn Out Period. In substance this comprised 50% of 6.5 times the average annual profit or loss of the Skywalk business less 50% of the Skywalk Capital Expenditure (capped at $5 million) and interest on that expenditure; (4)"Skytour Annual Components" calculated by reference to the number of visitors to the Skytour attraction that exceeds 690,000 visitors in each of the financial years 2005 to 2008; and (5)the "Skytour Final Component" which was calculated by reference to the average annual number of visitors to Skytour. 18The Deed recorded a number of promises, including: (1)a promise by the plaintiff to use reasonable endeavours to procure that the construction work necessary to conduct the Skywalk business was completed as expeditiously as possible and to commence the operation of the Skywalk business as expeditiously as possible (clause 13.1(a)); (2)a promise by the plaintiff to pay all capital expenditure in relation to the construction and completion of Skywalk (i.e. Skywalk Capital Expenditure) up to $5 million and a promise by the defendant to pay or reimburse such capital expenditure which exceeded $5 million (clause 13.7); (3)a promise by the plaintiff to act in good faith and use its commercial judgment to maximise economic returns from the Skywalk business and the Skytour business until the deferred payments had been made by the plaintiff to the defendant (clause 13.9); and (4)a promise by the defendant that if the Skywalk Launch Date was delayed beyond 31 March 2005, then for every complete calendar month of delay beyond 31 March 2005, the Skywalk Quarterly Component payable by the plaintiff will be reduced by an amount of $75,000 per month (clause 5.23). 19Following entry into the Deed, the Company made three applications to the Council to amend the Council's development consent in respect of Skywalk. The Company first made application on 6 January 2005 to modify the original development consent. It sought to allocate "preparation spaces" and relocate disabled toilets to be closer to existing toilet facilities (this application was approved by the Council on 19 January 2005, subject to certain conditions). 20On 4 March 2005, the Company submitted a second application to modify the development consent, involving a relocation of the toilets (the application was approved by the Council on 10 March 2005, subject to certain conditions). 21On 16 March 2005, the Company applied for a construction certificate in relation to the construction works the subject of the development application (as modified by the 10 March 2005 development approval). 22On 18 March 2005, a registered quantity surveyor, Ms Fiona Doherty of Apex Consulting Group, prepared a detailed cost report estimating development costs for the works the subject of the application for the construction certificate at $3,582,877 (including GST). That estimate was based on an assessment of the quotations received by the Company for the constructions, as well as a budget estimate of the cost of the podium works, and estimated consultants' fees and charges. 23On 5 April 2005, an independent quantity surveyor engaged by the Council, Rider Hunt, estimated the total development costs of the works at $3,798,820 (including GST). 24On 6 April 2005, the Council notified the Company that the cost of the development for the purpose of calculating the section 61 contribution was $3,798,820 (broadly, a s 61 contribution is a cash contribution required by the City of Sydney Act 1988 amounting to 1% of the total development cost, payable to the Council when carrying out building projects that exceed $200,000 which are within a certain geographical area. The contribution was to assist the Council in the provision of public infrastructure, community projects and facilities, and is payable prior to the release of a Construction Certificate). 25On 8 April 2005, a construction certificate was issued, and construction work commenced. All construction work was completed and the plaintiff commenced to operate the Skywalk business on or about 19 October 2005. Concurrently with its construction works in respect of Skywalk, the plaintiff was also undertaking capital works at other attractions it owned, including: (1)refurbishing Skytour in the podium areas, using the same contractors and consultants as used in the Skywalk works; (2)constructing a new attraction, Sydney Wildlife World (that development cost more than $50 million, was completed in September 2006, and involved the engagement of about 6 to 12 contractors that were also engaged on the Skywalk development); and (3)rebuilding the admissions and restaurant area at the Sydney Aquarium (about $2.3 million was spent by the plaintiff on this project in financial year 2005). 26On 19 October 2005, Skywalk opened for business. 27On 5 October 2007 the Council approved a third application which had previously been made by the Company to modify the development approval. This modification allowed for the construction of two staircases to replace the moving platform between the upper and lower walkways and changing the use of a theatrette and security gates. 28On 31 July 2008, the plaintiff made a demand of the monies it alleges were incurred in excess of the $5 million cap and asserts the Skywalk Final Component is likely to be a negative amount. The disputation between the parties begins.

Contentions of the parties 29It is common ground that the Skywalk Launch Date did not take place until 19 October 2005. It is also common ground that there were delays in the construction of the external walkways and platforms and other items. The plaintiff contends that as the Skywalk Capital Expenditure exceeded $5 million by $2,009,407, the excess amount is payable by the defendant to the plaintiff pursuant to clause 13.7. The defendant challenges this claim on a number of bases, including the construction of the clause and the adequacy of the evidentiary material tendered in support of the claim. 30The plaintiff also claims an amount of $2,657,198, said to be owing by the defendant to the plaintiff as the "Skywalk Final Component". This would appear to be based upon calculations undertaken internally by the plaintiff's officers. Again, the defendant challenges this, and the plaintiff concedes that some errors have crept into the calculation. 31The defendant denies he is liable to pay those moneys or indeed any monies to the plaintiff and asserts that the plaintiff is liable to pay money to him. The defendant, in his cross-claim, alleges for a number of reasons that the plaintiff is in breach of clause 13.9 by failing to appropriately and expeditiously commercialise the Skywalk business and hence is liable in damages to the defendant. 32The parties are also in dispute about the proper construction of clause 5.23. That clause deals with the effect of delayed completion on the quantum of the plaintiff's liability to pay Skywalk Quarterly Components to the defendant. In addition to the parties' contention about what clause 5.23 actually means, the defendant contends that clause 5.23 has no room to operate because of an alleged breach by the plaintiff of clause 13.1(a). The plaintiff denies any breach of clause 13.1(a). 33As is clear from the above, there are four clauses of the Deed which are the subject of special attention by the parties. They are clauses 5.23, 13.1(a), 13.7 and 13.9. As will also become clear, the construction of clauses 5.23 and 13.7 will lead, potentially, to a significant difference in the amount which the plaintiff may owe to the defendant, and vice versa. The construction of clause 13.9 is, as I have said, relevant to the defendant's cross-claim and whether the plaintiff is in breach of that provision such as to be liable to compensate the defendant in damages.

General principles applicable to construing the Deed 34The principles to be followed in relation to the proper construction of a written contract have recently been summarised in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 in which Bathurst CJ (with whom Macfarlan and Meagher JJA agreed) said at [52]: [52] The principles underlying the construction of written contracts are well established and it is not necessary to deal with them at length. A contract is to be construed by reference to what a reasonable person would understand by the language in which the parties have expressed their agreement having regard to the context in which the words appear and the purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; Toll (FGCT) Pty Limited v Alphafarm Pty Limited [2004] HCA 52; (2004) 219 CLR 165 at [40]; International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 at [53]. At least in the case of ambiguity, resort can be had to the surrounding circumstances known to the parties in interpreting the particular provision: Codelfa Construction Pty Limited v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 352; Western Export Services Inc v Jireh International Pty Limited [2011] HCA 45; (2011) 282 ALR 604. 35A commercial agreement should be given a businesslike or commercially sensible construction. However, generally speaking, if the language used is unambiguous a court must give effect to that language unless to do so would give the contract an absurd operation. As Macfarlan JA said in Jireh International Pty Ltd t/as Gloria Jeans Coffee v Western Exports Services Inc [2011] NSWCA 137 at [55]: [55] In my view the primary judge erred in taking this approach. So far as they are able, courts must of course give commercial agreements a commercial and business-like interpretation. However, their ability to do so is constrained by the language used by the parties. If after considering the contract as a whole and the background circumstances known to both parties, a court concludes that the language of a contract is unambiguous, the court must give effect to that language unless to do so would give the contract an absurd operation. In the case of absurdity, a court is able to conclude that the parties must have made a mistake in the language that they used and to correct that mistake. A court is not justified in disregarding unambiguous language simply because the contract would have a more commercial and businesslike operation if an interpretation different to that dictated by the language were adopted. 36The court should have regard to all words used in the agreement to ensure the congruent operation of the various components as a whole (Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 at [16] per Gleeson CJ and McHugh, Gummow and Kirby JJ). 37The court can resort to surrounding circumstances where there is an ambiguity or in circumstances where the words are susceptible of more than one meaning (Codelfa Construction Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337 at 352). However, there are strict limitations on the sort of materials that can be used for the purposes of detecting the objective intention of the parties. In Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 each of the judges expressed their respective views on the type of materials that would fall within the notion of surrounding circumstances. The judges were unanimous in rejecting subsequent conduct as admissible on the question of construction. 38On surrounding circumstances however Allsop P expressed the following view at [24]: [24] The High Court authorities to which I have referred and in particular Pacific Carriers v BNP Paribas and Toll (FGCT) v Alphapharm, and the recognition of the significance of the objective theory assist in appreciating the scope of the evidence that is admissible. The evidence, to be admissible, must be relevant to a fact in issue, probative of the surrounding circumstances known to the parties or of the purpose or object of the transaction, including its genesis, background, context and market in which the parties are operating. What is impermissible is evidence, whether of negotiations, drafts or otherwise, which is probative of, or led so as to understand, the actual intentions of the parties. Such evidence might be legitimate, however, if directed to one of the legitimate aspects of surrounding circumstances. The distinction can be subtle in any particular case. As Macfarlan JA and I said in Kimberley Securities Ltd v Esber [2008] NSWCA 301 at [5]; (2008) 14 BPR 26,121: "[5] The possible subtlety of the distinction can be seen in Lord Wilberforce's reasons in Prenn v Simmonds at 1384-1485, and the recognition that the objective commercial aim may, possibly, be ascertained from some aspect of what has passed between the parties. The distinction can also be seen in what Mason J said in Codelfa at 352 about prior negotiations and their legitimate use 'to establish objective background facts which were known to both parties and the subject matter of the contract', and their inadmissibility 'in so far as they consist of statements and actions of the parties which are reflective of their actual intentions or expectations'." 39Giles JA said at [51], [52] and [53]: [51] Regard can not be had to evidence of "the antecedent oral negotiations and expectations of the parties" in order to construe the contract: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 606, taken up by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (at 352). His Honour there said, in part of a passage cited by Campbell JA: "...Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract." [52] This was preceded by his Honour's observation that evidence of surrounding circumstances is not admissible to contradict the language of a contract when it has a plain meaning. Although ambiguity need not be found before going to context and purpose in the construction of the contract, I do not think that what his Honour said in the words extracted above has been displaced. [53] Consistently with this, if there is an ordinary grammatical meaning of the words used in a written contract, that meaning must be given significant force although read with the admissible evidence of surrounding circumstances. Words are ordinarily used in a conventional and grammatical way, and a formal written contract prepared over a period, with drafts exchanged, referred for instructions and varied as in the present case, has considerable claim to adherence to the ordinary grammatical meaning. It comes down to a determination in each case whether the words are to be understood otherwise in the light of the context and purpose revealed by the admissible evidence, including whether they are intractable and do not admit of departure from the conventional and grammatical use. I take the adjective from the judgment of Mason J and Wilson J in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320, a case of statutory construction in which their Honours described the rules of construction as rules of common sense designed to ascertain the legislative intention by reference to the language of the instrument viewed as a whole but postulated that the language may be "intractable". 40Campbell JA said at [337]: [337] The sort of surrounding circumstances that can be taken into account are ones that enable the meaning of the words used in the document in question to be ascertained as that meaning would appear to a reasonable person who knew the facts concerning those circumstances. Statements by contracting parties about their subjective intentions in entering the agreement do not assist in ascertaining the meaning of the words. 41There is another rule of construction that is called in aid in these proceedings and that is that unless a contract expressly permits a party to do so the party will not be permitted to take advantage of its wrong (Alghussien Establishment v Eaton College [1991] 1 All ER 267 at 270). In the absence of clear words, a contractual entitlement arising from the occurrence of a particular event will not be enlivened if the event came about through the breach of the party seeking to rely upon it (Ruthol Pty Ltd v Tricon (Australia) Pty Ltd (2005) 12 BPR 98,225 at [19] to [25] per Giles JA with whom Santow JA and Hunt AJA agreed). As will become apparent, this principle is invoked by the defendant as part of his defence against the plaintiff's claims.

Construction issues 42There is a general question of construction that arises in the case, namely what is said to be the dependency of the plaintiff's rights and obligations. 43Secondly, there are a number of specific clauses the construction of which the parties dispute and which, as I have already observed, would have a significant impact on the outcome of the litigation. Each in turn will, in order to assess the ultimate impact of the clause, require a consideration of factual issues, again some of which are disputed. 44Clauses 5.23, 13.1(a), 13.7 and 13.9 are at the centre of the dispute between the parties. I will first consider the defendant's arguments as to whether certain rights and obligations in the Deed are dependent on each other, and then deal with the construction of each of the contentious clauses in the logical order in which they arise in the parties' claims.

Dependency of relevant rights and obligations in the Deed 45The principles relevant to determining whether the relevant rights and obligations in the Deed are dependent on each other are: (1)the question is one of construction; (2)the more closely the obligations are linked to the rights, the easier it will be to construe the rights as qualified by due observance of the obligation; (3)if the obligation constitutes a substantial part of the consideration for the contract or right the court is likely to construe it as a dependent obligation. That is, to construe the right as qualified by due observance of the obligation; and (4)a practical approach prevails, whereby the presumption is that obligations are dependent in character. 46As Dixon J said in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 463-464: In certain forms of executory contract where the promise of one party is to pay the other money in consideration of his transferring property, of his doing work, of his serving the former as his master, and, perhaps, of his providing other tangible things or definite services, the money to be paid is regarded as the price of or reward for the property or service when and so often as the transfer of the one or the performance of the other affords an executed consideration. In these contracts the promise to pay the price or reward is not construed as a simple obligation to pay a sum or sums at a future date supported solely by a consideration consisting in the corresponding promise to transfer the property, do the work, serve, or provide the things or services by the other party, so that a mere readiness and willingness on the one side of the latter to perform his part is enough to entitle him to the payments, notwithstanding that, whether owing to the fault of the former, or without fault on either side, the property is not transferred, the work is not done, the relation of master and servant ceases, or the things or services are not provided. The most familiar example is that of the sale of goods. There the common understanding of an agreement to sell is that it is the goods and not the promises to deliver that are to be paid for. The result is that, if the seller tenders goods in accordance with his contract but the buyer rejects them in breach of his contract, the seller cannot sue for the price; his remedy is for unliquidated damages for non-acceptance: Cp. Plaimar Ltd. v. Waters Trading Co. Ltd. 47In Aalders v PA Putney Finance Australia Pty Ltd [2011] NSWSC 756 at [57] to [61] Ward J summarised the modern authorities both here and in the UK: [57] There seems to be no dispute that, as a general principle, the question whether promises in a contract are independent of, or mutually dependent on, each other is one of construction. In Tito v Waddell (No 2) [1977] Ch 106; 3 All ER 129, Megarry VC said: If an instrument grants rights and also imposes obligations, the court must ascertain whether on the true construction of the instrument it has granted merely qualified or conditional rights, the qualification or condition being the due observance of the obligations, or whether it has granted unqualified rights and imposed independent obligations. In construing the instrument, the more closely the obligations are linked to the rights, the easier it will be to construe the instrument as granting merely qualified rights. The question must always be one of the intention of the parties as gathered from the instrument as a whole. (my emphasis) [58] In Lewison, The Interpretation of Contracts (4th edn) at [15.15], the author notes that whether a contractual obligation is a dependent or independent obligation is a question of construction but goes on to add that: ...if the obligation constitutes the whole of a substantial part of the consideration for the contract, the court is likely to construe it as a dependent obligation. noting that the distinction between the two types of obligation is often linked to the order in which contractual obligations are to be performed. It is in that context that Carter, Peden and Tolhurst, Contract Law in Australia, at [28-05]-[28-06] consider the distinction. There, the authors note (at [28-07]) that: The rationale for construing promises as independent was that, in the absence of clear words to the contrary, the court would presume that each party had bargained for the other's promise, rather than the performance of the promise. This meant that if either party failed to perform the other would have a remedy, in damages, on the promise. But reliance could not be placed on the other party's failure to perform as a ground for not performing. However, towards the end of the 18 th century the courts took a more practical approach and were less willing to apply a presumption of independency. Accordingly, the existence of a relation of independency of obligation was said to depend on the good sense of the case' [citing Campbell v Jones (1796) 6 TR 570 at 572; 101 ER 708 at 709] and not on any 'formal arrangement of the words' [citing Ritchie v Atkinson (1808) 10 East 295 at 306;103 ER 787 at 791]. The more practical approach prevailed, with the result that, today, the presumption is that obligations are dependent in character. [59] There are, of course, as Lewison notes, areas in which obligations will ordinarily be seen as dependent (such as the vendor's obligation to convey and the purchaser's obligation to pay the purchase price in the context of a sale of land - as considered in Heard v Wadham (1801) 1 East 619) or alternatively as independent (such as the obligation of the tenant to pay rent and that of the landlord for quiet enjoyment or the like - Edge v Boileau (1885) 16 QBD 117). [60] Carter, Peden & Tolhurst go on to note that where dependency of obligation exists "one party's obligation to perform is dependent on the occurrence of an event termed a 'condition precedent'". To construe clause 1 as dependent on the obligations contained in a raft of other provisions in the Terms of Settlement, as is Paul's position, would thus seemingly require a construction of that particular contract term as one performance of which was to be conditional on the performance of other obligations some at least of which relate to matters that might be expected to arise (if at all) after the date on which payment was required under clause 1 to be made (such as the ongoing indemnity). [61] In that regard, I note that in Lewison, it is submitted that in the case of a contract which is not wholly executory the court is less willing to hold that obligations are dependent (reference there being made to Carter v Scargill (1875) LR 10 QB 564, where the question for construction arose some four years after the sale of a business). Lewison cites the following dicta of Field J in Carter v Scargill: Now, whatever might have been the question if it had been raised while the agreement was executory, we are clearly of opinion that, the defendant having received a substantial portion of the consideration, it is no longer competent to him to rely upon the non-performance of that which might have been originally a condition precedent. 48In this context I have already noted (at [41] above) a further rule of construction, namely, that a party, unless expressly permitted to do so, will not be permitted to take advantage of its own wrong and that in the absence of clear words a contractual entitlement upon a particular event will not be enlivened if the event came about through breach of the party seeking to rely upon it. 49The plaintiff of course has opposing arguments on the question or questions of construction to those contended by the defendant in respect of the disputed provisions of the Deed. However, the plaintiff accepts that the Deed does impose numerous obligations upon it. The plaintiff contends however that those that were intended to be dependent are clearly expressed to be so at least by necessary implication. Hence it is submitted that the obligations of each party on "completion" are set out in sequential clauses within clause 8. On the other hand, those dealing with the conduct of the business after completion set out in clause 13 are a miscellaneous mixture of non-interdependent obligations. In any event there is no direct connection of dependency to be drawn between any one or more of those obligations in clause 13 and the defendant's obligation to pay. 50The defendant contends, however, on a proper interpretation of the Deed, the plaintiff's rights to be paid 100% of the excess Skywalk Capital Expenditure under clause 13.7 and to be paid 50% of the first $5 million of the Skywalk Capital Expenditure under clause 5.11(c), were: (1)dependent on the plaintiff performing its obligations under clause 13.1(a) to use reasonable endeavours to procure that the construction work necessary to conduct the Skywalk business was completed as expeditiously as possible and commenced operation as expeditiously as possible; and/or (2)not enforceable because the plaintiff's breach of clause 13.1(a) was a cause of increased Skywalk Capital Expenditure and therefore caused the plaintiff's right to be paid that increased Skywalk Capital Expenditure to be enlivened. 51It seems to me that the proposition of dependency contended for by the defendant must be correct. The arrangement between the parties involved the existing owner who had established the Skytour business and had taken all necessary steps by way of development application and the like to both conceptualise and identify a further commercial opportunity to be exploited in the Skywalk business. However, both purchaser and vendor were to benefit from the existing and the proposed business. The very nature of the transaction, including the time within which certain things were to occur and the very notion of the Earn Out Period, seems clearly in my mind to point towards the purchaser who was then in possession of the business and its physical location being under an obligation pursuant to clause 13.1(a) to use "reasonable endeavours" to procure that the construction work necessary to conduct the Skywalk business was completed as expeditiously as possible. It is in that context clause 13.7 (capital expenditure) must necessarily be seen, coupled with the obligation in clause 13.9 to act in good faith to use its "commercial judgment to maximise economic returns from the Skywalk Business". It is unsurprising, given the purchaser's exclusive possession, that it agreed to carry out those various promises. As I say, the very nature of this contract fortifies my view that the plaintiff's right to obtain certain payments as herein described must clearly be dependent upon it performing the various obligations referred to efficiently, expeditiously and competently. 52The defendant further contends that, on a proper interpretation of the Deed, the plaintiff's right under clause 5.23 to deduct amounts from Skywalk Quarterly Components payable to the defendant by reason of delay to the Skywalk Launch Date beyond 31 March 2005 was also a right that was: (1)dependent on the plaintiff performing its obligations under clause 13.1(a) to use reasonable endeavours to procure that the construction work necessary was expeditiously completed; and/or (2)not enforceable because the plaintiff's breach of clause 13.1(a) was a cause of the delay to the Skywalk launch date beyond 31 March 2005 and therefore caused the plaintiff's right to make the claim deduction under clause 5.23 to be enlivened. 53Again, it seems difficult to resist such a construction of dependency. It would seem inconceivable that objectively the parties intended that a delay caused by the plaintiff would nonetheless, pursuant to clause 5.23, permit the plaintiff, as it contends, to effect a very substantial reduction in the amount paid to the defendant by reason of its own default. 54The defendant also contends that on proper construction of the Deed, the plaintiff's right to be paid any Skywalk Final Component, as adjusted under clause 5.11 pursuant to the last sentence of clause 5.12, was a right that was dependent on the plaintiff performing its various obligations under clause 13.1(b), (c), (d), (e), 13.9 and 5.9. The defendant submits that those clauses regulated the manner in which the plaintiff was required to conduct the Skywalk business during the Earn Out Period and imposed requirements for the auditing of the Company's accounts by an independent auditor and the regular reporting about the performance of the business to the defendant during the whole of the Earn Out Period. The defendant contends that the performance of those obligations was a substantial part of the consideration for the defendant's obligations under clause 5.1 to release the charge and in clause 5.12 to pay a negative Skywalk Final Component (after adjustments under clause 5.11) after the Earn Out Period had ended. 55It is also submitted that the plaintiff's right to be paid the Skywalk Final Component as adjusted is not enforceable because of the plaintiff's breaches of those various provisions which it is contended were causes of the Skywalk Final Component being materially reduced, and therefore caused the plaintiff's claim to be paid the negative Skywalk Final Component to be enlivened. 56I think these propositions as to dependency are in part correct. In particular, my view is that the plaintiff's entitlement to receive any negative Skywalk Final Component must be dependent on it having fulfilled its own obligation to make the relevant Skywalk Quarterly Payments under clause 5.9. On the other hand however, on the relevant authorities referred to above, I do not think that non-compliance with the provisions which are merely administrative in nature (namely clauses 5.4, administrative aspects of 5.9, 13.1(b)(i), 13.1(b)(ii), 13.1(b)(iii), 13.1(c), 13.1(d) and 13.1(e)) would deprive the plaintiff of any entitlement it may have to be paid a negative Skywalk Final Component. 57My conclusions above as to whether the relevant rights and obligations in the Deed are dependent on each other will be relevant when considering some of the defendant's defences to the plaintiff's claims. However, I think it is important that each of the key provisions be considered in some little detail in due course.

Plaintiff's claim for excess Skywalk Capital Expenditure 58As already stated, the plaintiff claims it is entitled under clause 13.7 to a reimbursement of any Skywalk Capital Expenditure it has incurred in excess of $5 million. The plaintiff alleges it incurred Skywalk Capital Expenditure in excess of $5 million by $2,009,407 and that this excess amount is therefore payable to it by the defendant pursuant to clause 13.7. To assess the plaintiff's claim, it is necessary to consider the proper construction of clause 13.7, the relevant principles of evidence and the plaintiff's evidence of relevant expenditure.

Proper construction of clause 13.7 59Clause 1.1 defines "Skywalk Capital Expenditure" as follows: "Skywalk Capital Expenditure" has the meaning attributed to that expression in subclause 13.7... 60Clause 13.7 provides: Capital expenditure 13.7 The Purchaser and the Releasor agree that the Purchaser must pay all capital expenditure incurred by the Company and by the Purchaser after Completion up to $5 million in relation to the construction and completion of Skywalk, such capital expenditure to include but not be limited to: (a) the construction of the works detailed in the Development Approval for the Premises, a copy of which is contained in Annexure C; (b) all costs directly relating to setting up the Skywalk Business to allow it to be fully operational (including but not limited to costs such as uniforms (up to $350,000), safety equipment, training materials, relevant licences and approvals, electrical and communication equipment and insurance relating to construction of the works); and (c) all necessary upgrades required by the plans for the Skywalk Business, being the ("Skywalk Capital Expenditure"). The Releasor must pay (or reimburse the Purchaser where applicable) all Skywalk Capital Expenditure which exceeds $5 million plus half the cost of uniforms less $350,000. If the Releasor does not pay any amount due and payable under this subclause 13.7 within 30 days of written notice providing details of the relevant expenditure with reasonable particularity and requesting payment, the Purchaser may set off the amount due and payable against any other amounts payable by the Purchaser to the Releasor under subclause 5.3, 5.8, 5.5 and 5.10. 61The definition of Skywalk Capital Expenditure is important for determining the rights of the parties under clause 13.7 and also for the calculation of the Skywalk Adjusted Payment and the Skywalk Final Component. The items listed in clause 13.7(a) to (c) are not exhaustive of the definition of Skywalk Capital Expenditure. 62Other relevant definitions (quoted from clause 1.1) are: "Development Approval" means the development approval obtained from the City of Sydney Council, a copy of which is contained in Annexure C; ... "Skywalk" means the proposed attraction to be constructed on the roof of Level 4 of the Premises; ... "Skywalk Business" means the business proposed to be conducted by the Company of offering the opportunity to walk around the Skywalk and related merchandising, sponsorships, sales of photographs and sales of goods; 63There was disagreement between the parties as to the meaning of "capital expenditure" as it appears in the Deed. It is true that the expression "Skywalk Capital Expenditure" has the meaning attributed to it in clause 13.7 (clause 1.1). It is also true, as the plaintiff contends, that clause 13.7 lists certain expenditures intended to be caught by the expression "Skywalk Capital Expenditure". However, those items are, in my opinion, listed merely by way of example, not as expansions to the definition. The defining words within clause 13.7 are "capital expenditure...in relation to the construction and completion". The expression "capital expenditure" is not specifically defined in the Deed. The defendant says that the definition of "capital expenditure" can be taken from the distinction drawn mainly in income tax cases between capital and revenue expenditure. 64In K Lewison and D Hughes, The Interpretation of Contracts in Australia, (2012) Thomson Reuters, the authors state (at [5.08]) that "[w]here a document contains a legal term of art the court should give it its technical meaning in law, unless there is something in the context to displace the presumption that it was intended to carry its technical meaning", and they review a number of authorities establishing that proposition. The principle applies generally to legal documents, and applies to the construction of statutes (Brett v Barr Smith (1919) 26 CLR 87 at 93 per Isaacs J; Webb v McCracken (1906) 3 CLR 1018 at 1027-1028 per O'Connor J; Barker v The Queen (1983) 153 CLR 338 at 341 per Mason J and at 355-356 per Brennan and Deane JJ), wills (Falkiner v Commissioner of Stamp Duties (NSW) [1972] 2 NSWLR 839 at 834-834 per Lord Simon of Glaisdale delivering the judgment of the Privy Council; Gutheil v The Ballarat Trustees, Executors and Agency Company Limited (1922) 30 CLR 293 at 299 per Knox J and at 302-305 per Isaacs J) and contracts (Merewether v Scottish Australian Mining Co Ltd (1907) 4 CLR 953 at 965 per Griffith CJ). 65The passage quoted above from K Lewison and D Hughes was approved in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 by Campbell JA (at [169]). His Honour also said (at [167], [168] and [174]): [167] There has long been a principle of construction concerning words or phrases that have a specialised or technical meaning in the law whereby: "[w]hen technical words or phrases are made use of, the strong presumption is, that the party intended to use them according to their correct technical meaning ...", per Plumer MR Cholmondeley v Clinton (1820) 2 Jac & W 1 at 91 ; (1820) 37 ER 527 at 559. That presumption is rebuttable. To similar effect is Leach v Jay (1878) 9 ChD 42 at 45 per Bramwell LJ; Smith v Butcher (1878) 10 ChD 113 at 114 per Jessell MR, and Re Bostock's Settlement; Norrish v Bostock [1921] 2 Ch 469 at 480 per Lord Sterndale MR. [168] In Sydall v Castings Ltd [1967] 1 QB 302 at 313-314 Diplock LJ explained the principle: Documents which are intended to give rise to legally enforceable rights and duties contemplate enforcement by due process of law, which involves their being interpreted by courts composed of judges, each one of whom has his personal idiosyncracies of sentiment and upbringing, not to speak of age. Such documents would fail in their object if the rights and duties which could be enforced depended on the personal idiosyncracies of the individual judge or judges on whom the task of construing them chanced to fall. It is to avoid this that lawyers, whose profession it is to draft and to construe such documents, have been compelled to evolve an English language, of which the constituent words and phrases are more precise in their meaning than they are in the language of Shakespeare or of any of the passengers on the Clapham omnibus this morning. These words and phrases to which a more precise meaning is so ascribed are called by lawyers "terms of art", but are in popular parlance known as "legal jargon". We lawyers must not allow this denigratory description to obscure the social justification for the use of "terms of art" in legal documents. It is essential to the effective operation of the rule of law. The phrase "legal jargon", however, does contain a reminder that non-lawyers are unfamiliar with the meanings which lawyers attach to particular "terms of art", and that where a word or phrase which is a "term of art" is used by an author who is not a lawyer, particularly in a document which he does not anticipate may have to be construed by a lawyer, he may have meant by it something different from its meaning when used by a lawyer as a term of art. ... [174] If the document in question is drawn by a lawyer, is manifestly intended to effect a legal transaction, and uses an expression that is not an expression in common use but that has a meaning in an area of legal discourse that is relevant to the document in question, that in itself provides a basis for the reasonable reader concluding that that expression is used in its special legal sense, unless there are other factors present that show it is not used in that special legal sense. So understood, the presumption is consistent with the current approach to construction. 66I note at this point that clause 13.7 was drafted by solicitors, for commercially experienced parties, to effect a commercial transaction, and the words "capital expenditure" were used to describe a type of expenditure in connection with a business. The presumption that a word or expression which has a technical meaning in law should be given that meaning by a court, is not easily displaced. In Brett v Barr Smith (1919) 26 CLR 87, Isaacs J said (at 93): It is a cardinal rule of interpretation that technical words must have their legal effect unless the contrary is made perfectly clear. 67In L Schuler AG Wickman Machine Tool Sales Ltd [1974] AC 235, Lord Reid said that "some words used by lawyers do have a rigid inflexible meaning" (at 251). Lord Morris said (at 256): If a word either by reason of general acceptance or by reason of judicial construction has come to have a particular meaning then, if used in a business or technical document, it will often be reasonable to suppose that the parties intended to use the word in its accepted sense. But if a word in a contract may have more than one meaning then, in interpreting the contract, a court will have to decide what was the intention of the parties as revealed by or deduced from the terms and subject matter of their contract. 68Again, in Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249 at [96] Kirby J (though in dissent on the result), in commenting on the use of "technical and common words", said (footnotes omitted): [96] The traditional common law approach to interpreting a basic legal term with an established legal meaning used in a statute was that it should be understood in its legal sense unless the context indicated a contrary intention. Thus, there was commonly a presumption in favour of observing a technical legal meaning. In loan transactions, where technical words are used in documents intended to have legal effect, adherence to technical meanings as between the parties to such transactions may be supported by considerations of business certainty. 69The meaning of "capital expenditure" which is now commonly associated with taxation law did not originate from a specific definition in income tax legislation. It is common knowledge that the meaning of that expression was developed by the common law, and has its origins in the law of trusts, where it was common for trust deeds to distinguish between income beneficiaries and capital beneficiaries. The distinction developed in that body of law has however been picked up and further developed by tax cases, including Sun Newspapers Ltd v FCT (1939) 61 CLR 337, Hallstroms Pty Ltd v FCT (1946) 72 CLR 634, Broken Hill Theatres Pty Ltd v FCT (1952) 85 CLR 423 and Colonial Mutual Life Assurance Society v FCT (1953) 89 CLR 428. Indeed, in Hallstroms Pty Ltd v FCT itself, Dixon J said (at 646): The truth is that, in excluding as deductions losses and outgoings of capital or of a capital nature, the income tax law took for its purposes a very general conception of accountancy, perhaps of economics, and left the particular application to be worked out, a thing which it thus became the business of the courts of law to do. The courts have proceeded with the task without, it is true, any very conspicuous attempt at analysis, but rather in the traditional way of stating what positive factor or factors in each given case led to a decision assigning the expenditure to capital or to income as the case might be. 70For the reasons I have mentioned, I do not think there is any reason, in this context, to necessarily restrict the applicability of the definition of "capital expenditure" as developed by the common law, to tax law. 71The Macquarie Dictionary defines "capital expenditure" as "an addition to the value of a fixed asset, as by the purchase of a new building". The definition in the Oxford English Dictionary is "expenditure from which benefits may be expected over a relatively long period; expenditure on capital or fixed assets". The concepts picked up by these dictionary definitions are certainly included within the judicial definition of "capital expenditure", but are lacking in detail. 72It seems clear to me that the undefined expression "capital expenditure" is broader than that of Skywalk Capital Expenditure. So much is apparent from clause 5.8(c), at integer C. The difference in scope between "capital expenditure" (which is broader) and "Skywalk Capital Expenditure" (which is narrower) arises from the restriction of the latter to a certain type of "capital expenditure", namely, capital expenditure "in relation to the construction and completion" (emphasis added) of the proposed attraction. There is no such restriction on the expression "capital expenditure". 73Having regard to all of this, I am inclined to the view that the expression "capital expenditure" bears the broad meaning commonly associated with tax law. 74The defendant contends that clause 13.7 imposes a number of parameters on the recoverable capital expenditure, including the following: (1)The capital expenditure must be incurred "after Completion", which occurred on or about 5 July 2004. (2)The recoverable capital expenditure is only that "in relation to the construction and completion of Skywalk". "Skywalk" is relevantly defined as "the proposed attraction" (i.e. only what was proposed to be constructed as at 5 July 2004). This therefore excludes any expenditure on an attraction that might be proposed to be constructed at a date after entry into the Deed. (3)Skywalk Capital Expenditure is expressly stated to include "the construction of the works detailed in the Development Approval". The relevant Development Approval describes the development as "Sky walk on roof top of observation level of tower and 2 X protruding glass". (4)Skywalk Capital Expenditure is expressly stated to include "all costs directly relating to setting up the Skywalk Business to allow it to be fully operational (including but not limited to costs such as uniforms (up to $350,000), safety equipment, training materials, relevant licences and approvals, electrical and communication equipment and insurance relating to construction of the works)". The term "Skywalk Business" is defined to mean "the business proposed to be conducted...and related merchandising, sponsorships, sales of photographs and sales of goods". Again, the defendant notes that the relevant business is one which, as at the date of the Deed, is proposed to be constructed. (5)Skywalk Capital Expenditure is expressly stated to include "all necessary upgrades required by the plans for the Skywalk Business". Again, the defendant notes that "the plans" refers to plans existing at the time of entry into the Deed, and that any upgrades required by those plans must be "necessary". (6)The capital expenditure must be incurred up to but not after the Skywalk Launch Date. (7)The recoverable capital expenditure amounts exclude any amount of GST forming part of the expense. 75The defendant also noted in his submissions that the plaintiff, while carrying out works in respect of Skywalk, concurrently undertook capital works in respect of other attractions it owned, including refurbishing Skytour (using the same contractors and consultants as those used in the Skywalk works), constructing Sydney Wildlife World, a new attraction (engaging several contractors which it had engaged for the Skywalk works), and rebuilding the admissions and restaurant area at Sydney Aquarium. 76The defendant's submissions as to the restrictions on recoverability of capital expenditure have, in my view, a sound textual basis in the Deed. There was some debate as to whether the defendant's submission that the recoverable capital expenditure is only that incurred prior to the Skywalk Launch Date is correct. In my view, the defendant's submission is correct. Skywalk Capital Expenditure is "capital expenditure incurred ... in relation to the construction and completion of Skywalk". Therefore any capital expenditure incurred after the construction and completion of Skywalk cannot possibly be Skywalk Capital Expenditure for the purpose of clause 13.7. Practically, the construction and completion of Skywalk must have taken place before Skywalk commenced operation and opened to the public. It would follow that the cut-off date for capital expenditure contemplated by clause 13.7 is indeed the Skywalk Launch Date, at the latest. I give some further consideration to this point of contention later on. 77As I previously said, the defendant noted in his submissions that the plaintiff concurrently undertook capital works in relation to Skytour, and the defendant contended that such expenses are not recoverable under clause 13.7. I think this oversimplifies the position. The fact is, and the parties were aware as at the date of the Deed, that the Skywalk business would be conducted in addition to the existing Skytour business. Capital expenses incurred in respect of Skytour (whether to effect structural modifications or otherwise) to enable Skywalk to operate, may, I think, properly be characterised as being "in relation to the construction and completion of Skywalk" within the meaning of clause 13.7, and would therefore (subject to any other requirements under clause 13.7) be recoverable under that clause as "necessary upgrades required by the plans for the Skywalk Business".

Legal principles relevant to Proof of Skywalk Capital Expenditure 78The plaintiff contends that either or both of s 69 of the Evidence Act 1995 and s 1305 of the Corporations Act 2001 (Cth) entitle it to rely on certain business records or corporate books it has provided in the Court Book to support its claim for the amount of $2,009,407 (which is the amount it alleges is Skywalk Capital Expenditure incurred in excess of $5 million). Having heard debate on what became material central to the plaintiff's claim for excess Skywalk Capital Expenditure (including CB413 and supporting invoices), I indicated during the hearing (at T74.46 and 76.07) that my ruling would be that these materials go to show monies expended in relation to the items described in those documents but not to show that the expenses were capital expenses within clause 13.7. What follows is intended not to detract from the ruling I gave, but to explain in greater detail the approach I have adopted. For reasons which become apparent, I am not persuaded that the plaintiff, by either or both of CB413 or the invoices, has discharged its onus of proof of Skywalk Capital Expenditure incurred, for the purpose of clause 13.7.

Business records provisions in the Evidence Act 79Section 69 of the Evidence Act 1995 provides: 69 Exception: business records (1) This section applies to a document that: (a) either: (i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or (ii) at any time was or formed part of such a record, and (b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business. (2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made: (a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or (b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact. (3) Subsection (2) does not apply if the representation: (a) was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding, or (b) was made in connection with an investigation relating or leading to a criminal proceeding. (4) If: (a) the occurrence of an event of a particular kind is in question, and (b) in the course of a business, a system has been followed of making and keeping a record of the occurrence of all events of that kind, the hearsay rule does not apply to evidence that tends to prove that there is no record kept, in accordance with that system, of the occurrence of the event. (5) For the purposes of this section, a person is taken to have had personal knowledge of a fact if the person's knowledge of the fact was or might reasonably be supposed to have been based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact). Notes: 1 Sections 48, 49, 50, 146, 147 and 150 (1) are relevant to the mode of proof, and authentication, of business records. 2 Section 182 of the Commonwealth Act gives section 69 of the Commonwealth Act a wider application in relation to Commonwealth records. 80The Dictionary in the Evidence Act defines "previous representation" and "business" as follows: Part 1: Definitions ... previous representation means a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced. ... Part 2: Other expressions 1 References to businesses (1) A reference in this Act to a business includes a reference to the following: (a) a profession, calling, occupation, trade or undertaking... ... (2) A reference in this Act to a business also includes a reference to: (a) a business that is not engaged in or carried on for profit... 81The special status accorded by the rules of evidence to business records has long been recognised, albeit in varying and more limited degrees (see for example, Thomas Peake, A Compendium of the Law of Evidence, 3rd ed (1808) Luke Hanfard & Sons at page 92 and Edmund Powell, The Practice of the Law of Evidence, (1856) Law Times Office at page 121 and following). The policy underlying the business records provisions (in what was then Part IIC of the Evidence Act 1898) was explained by Hope JA in Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 (at [6]-[7]) and is relevant to the present form of the business records provisions: [6] ... Pt IIC ... has extended the common law rules of evidence in a way which is of great importance in the search for truth. Any significant organization in our society must depend for its efficient carrying on upon proper records made by persons who have no interest other than to record as accurately as possible matters relating to the business with which they are concerned. In the every-day carrying on of the activities of the business, people would look to, and depend upon, those records, and use them on the basis that they are most probably accurate. This position applies to hospitals, as to any other form of business; indeed, hospital records provide an excellent example of the basis, and of the usefulness, of Pt IIC. If a busy honorary such as the second respondent wished to remind himself what the appellant's precise problem or medical condition was, or to learn what had happened since he last saw her, he would undoubtedly refer to the records, and would act upon the basis that they were correct. If, for some reason, a new honorary had to take over the case, it is to the records that he would go to find out what had happened or what he had to do. No doubt mistakes may occur in the making of records, but I would think they occur no more, and probably less often, than in the recollection of persons trying to describe what happened at some time in the past. When what is recorded is the activity of a business in relation to a particular person amongst thousands of persons, the records are likely to be a far more reliable source of truth than memory. They are often the only source of truth. [7] The purpose of Pt IIC is to bring into the court room a method of establishing the truth which is relied upon by our society outside the court room - to bring into the rules of evidence a reality which they otherwise lacked. A report of the Law Reform Commission which led to the enactment of Pt IIC shows how thorough was the consideration given to reforming the law to this end. Properly understood and applied, Pt IIC makes available to courts, in a way to be found in many other parts of the common law world, a most valuable source of evidentiary material which rules of evidence devised in another age would exclude. 82In Valoutin v Furst (1998) 154 ALR 119, Finkelstein J observed (at 128) that: since the last century the narrow traditional common law view of the admissibility of business records has been the subject of statutory modification to facilitate the admission of those records in almost every common law jurisdiction. This is because the common law rules were recognised as an inhibition to the proper administration of justice in both the civil and criminal courts. 83As summarised in J D Heydon, Cross on Evidence, 9th ed (2013) LexisNexis Butterworths (at [35545]), in essence, s 69(1) and (2) render admissible a previous representation made in a document which is or is part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, provided the representation was made by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or the representation was made on the basis of information supplied directly or indirectly by such a person. There are clearly several hurdles to cross before the documents produced by the plaintiff to prove the amount of Skywalk Capital Expenditure can attract the benefit of s 69. In Lithgow City Council v Jackson (2011) 244 CLR 352, French CJ and Heydon and Bell JJ in a joint judgment (at [17]) noted that the onus of demonstrating the conditions of admissibility of evidence under the Evidence Act lies on the tendering party. 84For the purpose of determining the question of admissibility under s 69, s 183 permits me to draw reasonable inferences from the documents under challenge, as well as from other matters from which inferences may properly be drawn (Ringrow Pty Ltd v BP Australia Ltd (2003) 130 FCR 569 at [10] per Hely J). The Deed provides in clause 13.7 a mechanism for reimbursement to the plaintiff of Skywalk Capital Expenditure that exceeds a specified amount. The plaintiff must have understood, either before or at the time of entering into the Deed, that if at some future time it wished to assert an entitlement to reimbursement of any Skywalk Capital Expenditure in excess of $5 million, it would need to provide "written notice providing details of the relevant expenditure with reasonable particularity" (clause 13.7). I would therefore be prepared to draw the following inferences: (1)The documents produced in the Court Book have been "kept" by the plaintiff as a product of its understanding that it would need to provide "written notice providing details of the relevant expenditure with reasonable particularity" (clause 13.7). Despite earlier controversy in the authorities, it is now established that the word "kept" in s 69(1)(a) takes the broader meaning of "retained or held" and not the narrower meaning of "maintained systematically" (see Australian Securities and Investments Commission v Rich (2005) 216 ALR 320 at [190] per Austin J and the authorities there cited). (2)The documents were kept, and the representations in the documents were made, "in the course of, or for the purposes of, a business". It has been held on a number of occasions that documents received from a third party may be admissible business records if retained in the course of or for the purpose of a business (see Australian Securities and Investments Commission v Rich (2005) 216 ALR 320 at [190] per Austin J and the authorities there cited). As noted in Cross on Evidence, this would include, for example, a statement by a valuer or some other expert who is not actually part of the business, and is not employed by the business, but makes the statement because the business asks him to (at [35550]). (3)The representations contained in the documents were made on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact. (4)None of the representations in the documents was prepared or obtained for the purpose of conducting, or for or in contemplation of proceedings. I accept that the plaintiff may have entertained the possibility that these records may ultimately be used in proceedings as a basis for seeking reimbursement of its relevant expenditure. However, the question is whether it obtained the representation having in mind that legal proceedings were likely or reasonably probable, not merely one possibility (Australian Competition and Consumer Commission v Advanced Medical Institute Pty Ltd (No 2) (2005) 147 FCR 235 at [31]-[43]). 85Assuming therefore that the documents attracted the benefit of s 69, they may go to show the amounts actually expended, to whom the expenditures were paid, the date on which they were paid, perhaps the use to which those expenditures were put, and perhaps even the plaintiff's accounting treatment of those expenditures (whether treated as capital expenses or otherwise). However, the plaintiff contends that the business records establish something further than this. In the joint judgment of French CJ and Heydon and Bell JJ (with which Gummow J agreed) in Lithgow City Council v Jackson, their Honours emphasised that it is necessary to identify precisely the "asserted fact" sought to be relied on (at [17]). 86The plaintiff says that the business records contain a representation that the expenditures constitute "Skywalk Capital Expenditure" or capital expenses for the purpose of clause 13.7. The "representation" to which the plaintiff says the s 69 exception applies is therefore, strictly speaking, not a factual matter. As noted in Cross on Evidence (at [35555]), the precursors to s 69 admitted "statements" or "representations". "Statement" or "representation" included any representation of fact, and "fact" was defined to include "opinion". However, section 69 admits representations of "asserted facts", and there does not appear to be any extension of the application of "asserted fact" to "asserted opinion" in s 59(1) or elsewhere. Yet business records often contain assertions of opinion, both expert and lay. 87It is true that it has been held that "asserted fact" in s 69 includes an opinion in relation to a matter of fact (Ringrow Pty Ltd v BP Australia Ltd at [18]; Australian Securities and Investments Commission v Rich at [206]-[207]), but the correctness of this was seriously doubted by French CJ and Heydon and Bell JJ (with whom Gummow J agreed) in Lithgow City Council v Jackson (at [17]): [17] ... There is authority that ["asserted fact" in s 69 includes an opinion in relation to a matter of fact (Ringrow Pty Ltd v BP Australia Ltd (2003) 130 FCR 569)]. But the construction of "asserted fact" to include an opinion in relation to a matter of fact, though convenient, is a little strained... However, it was not argued in this Court that the authorities which state that "asserted fact" includes an opinion in relation to a matter of fact are wrong. It is not necessary further to deal with this point, which the parties did not debate at any stage... 88Subsequent to this judgment, in Australian Competition and Consumer Commission v Air New Zealand Limited (No 1) [2012] FCA 1355, Perram J regarded the observations of the High Court as dicta and, in any event, did not "accept that the mere fact that an interpretation is 'strained' means inevitably it is wrong" (at [65]). Perram J followed authority that "an opinion as to the existence of a fact falls within the scope of the term 'asserted fact'" (at [62]-[65]). 89In any event, the "representation" which the plaintiff seeks to establish from its business records is not even an opinion in relation to a matter of fact. The plaintiff, it seems, is arguing that its business records contain a conclusion of law that the items of expenditure contained in its business records are "Skywalk Capital Expenditure" or at least capital expenditure for the purpose of clause 13.7. This clearly goes beyond what is permitted by s 69. Therefore although I am prepared to find that the documents are admissible under s 69 as business records, and that the documents do contain various representations (as previously noted), it is my view that the s 69 exception does not apply to any representation that the expenditures recorded in those documents are "Skywalk Capital Expenditure" or capital expenditure for the purpose of the Deed. Even if I am wrong about that, and s 69 should apply to a representation as to the characterisation of certain expenses as capital expenses, I would follow the approach taken by Hely J in Ringrow Pty Ltd v BP Australia Ltd and exercise my discretion under s 135 of the Evidence Act to exclude any such representations as to matters of law to be decided by this court.

Corporate books provisions in the Corporations Act 90Section 1305 of the Corporations Act 2001 (Cth) provides: 1305 Admissibility of books in evidence (1) A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book. (2) A document purporting to be a book kept by a body corporate is, unless the contrary is proved, taken to be a book kept as mentioned in subsection (1). 91The explanatory memorandum to the Companies Bill 1981 (the legislation containing the predecessor to s 1305) noted (at [1200]) that the section was intended to expedite legal proceedings where books were to be introduced in evidence, and that it obviated the need to call witnesses to prove that books were books of the corporation when that fact was not in question or to prove transactions recorded in books when those matters were not in dispute. 92In Australian Securities and Investments Commission v Rich, Austin J said (at [227]) that where it applies, s 1305(1) allows a document properly tendered to become prima facie evidence of any matter stated in it, regardless of whether the stated matter offends an exclusionary rule of the Evidence Act, such as the hearsay rule or the opinion rule. His Honour also said that s 1305(2) avoids the need to prove the authenticity of the document unless the presumption is rebutted, and that s 1306(5) permits the tender of a printout of the recorded information (at [227]). However, while s 1305(1) of the Corporations Act has the effect of making certain material admissible, the court retains its discretion under s 135 of the Evidence Act to actually admit or exclude that admissible evidence (where, for example, admitting the evidence would be unfairly prejudicial or misleading or confusing, see Austin J at [230]). 93Section 1305 appears to contain three requirements. There must be a "book" in the relevant sense, which is "kept" by a body corporate, and it must be so kept under a requirement of the Corporations Act. I will address each requirement briefly. However, for reasons which I will ultimately come to, it is not necessary for me to make a finding or express a view as to whether any of these three requirements are actually met in the present case. 94First, the word "book" is broadly defined in s 9 of the Corporations Act to include a register, any other record of information, financial reports and financial records (however compiled, recorded or stored), and a document. The expression "financial records" is defined to include invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes, vouchers and documents of prime entry. The material in the Court Book, which the plaintiff seeks to rely on to substantiate its alleged capital expenditure, may well be a "book" for the purpose of s 1305. 95Secondly, it may not really be an issue that the records provided in the Court Book were, for the purpose of s 1305, "kept" by the plaintiff. After a detailed review of the competing authorities on the ambit of the word "kept", Austin J preferred the wider construction (at [260]), which includes books retained or held by a company, and not just those required to be maintained in a systematic fashion. 96Thirdly, while the plaintiff may not have identified, with respect to each document, an obligation imposed by the Corporations Act for the maintenance of such a document, s 1305(2) provides a presumption that a document purporting to be a book kept by a body corporate was kept under a requirement of the Corporations Act (at [280]). 97However, even assuming that these three requirements are satisfied, and that the material is therefore admissible in evidence in this proceeding and is prima facie evidence of any matter stated or recorded in that material, there remains the question of what "the matter stated or recorded" precisely is. The plaintiff says that the "matter stated or recorded" is that the expenditures recorded in the material are "capital expenditures" for the purpose of clause 13.7 of the Deed. 98As already noted, in the present case, the difficulty which arises is that the "matter" the plaintiff seeks to establish by its reliance on the documents is that the expenditures were "capital expenses" for the purposes of clause 13.7 of the Deed. I do not think the effect of the documents reaches that far. The reality is that whether or not the expenditures are "capital expenses" for the purposes of clause 13.7 involves a question of law, and is one of the major issues between the parties in this case. Putting, for now, all other difficulties aside, and assuming that the material attracted the benefit of s 1305, I would think, as previously noted, that the material would only go to show the amounts actually expended, the use to which those expenditures were put, and perhaps even the plaintiff's accounting treatment of those expenditures (whether treated as capital expenses or otherwise). The materials do not, nor do they in my opinion even purport to, answer the question of whether, as a matter of legal characterisation, those expenditures should be treated as "capital expenses" for the purpose of clause 13.7 of the Deed. Again, if necessary, I would exercise my discretion under s 135 of the Evidence Act to exclude any representations as to questions of law.

Relevant general principles of evidence 99The plaintiff, as I have observed, claims that the capital expenditure for the purposes of clause 13.7 was $7,009,407. The plaintiff of course bears the onus of proving that its claim comes within that provision of the Deed. There is little doubt that on the authorities the court is entitled to weigh the evidence according to the proof which it was in the power of one side to have produced and in the power of the other side to have contradicted (Blatch v Archer (1774) 1 Coup 63 at 65 per Lord Mansfield). 100Lord Mansfield's view has often been cited with approval in Australia (Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at [36] per Kirby J; Burke & Anor v LFOT Pty Limited (2002) 209 CLR 282 at [134] per Callinan J). 101In Apollo Shower Screens Pty Limited and Anor v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 at 565, Hunt J (as he then was) made the following comment: I do not, however, intend to suggest that only comparatively slight evidence is required for the plaintiffs to discharge their onus in this case as in the case where the facts are peculiarly within the knowledge of the defendant: cf Parker v Paton (1941) 41 SR (NSW) 237 at 243; 58 WN 189 at 192; Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371. That is the so-called "scintilla" doctrine. Obviously, it does not apply to the position here. What I do intend to suggest is that the plaintiffs' burden of proof of the negative proposition for which they contend is not as difficult in this case as it might otherwise have been because of the defendant's greater means to produce evidence which contradicts that proposition. That is a pale reflection of the "scintilla" doctrine. It is but an application of the more general maxim, not restricted to cases where the facts are peculiarly within the knowledge of one party, that all evidence is to be weighed according to the proof which it was in the power of one side to produce, and in the power of the other to have contradicted: Blatch v Archer (1774) 1 Cowp 63 at 65, 66; 98 ER 969 at 970; Stephen's Digest of the Law of Evidence, 12th ed, article 104; Stoney v Eastbourne Rural District Council [1927] 1 Ch 367 at 405; Morgan v Babcock and Wilcox Ltd (1929) 43 CLR 163 at 178; Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64 at 70; 62 WN 15; Hampton Court Ltd v Crooks (at 371-372); R v Guiren (1962) 79 WN (NSW) 811 at 813. 102In Australian Securities and Investments Commission v Hellicar [2012] HCA 17, French CJ (at [165] - [166]) said: [165] Disputed questions of fact must be decided by a court according to the evidence that the parties adduce, not according to some speculation about what other evidence might possibly have been led. Principles governing the onus and standard of proof must faithfully be applied. And there are cases where demonstration that other evidence could have been, but was not, called may properly be taken to account in determining whether a party has proved its case to the requisite standard. But both the circumstances in which that may be done and the way in which the absence of evidence may be taken to account are confined by known and accepted principles which do not permit the course taken by the Court of Appeal of discounting the cogency of the evidence tendered by ASIC. [166] Lord Mansfield's dictum in Blatch that "[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted" is not to be understood as countenancing any departure from any of these rules. Indeed, in Blatch v Archer itself, Lord Mansfield concluded that the maxim was not engaged for "it would have been very improper to have called" the person whose account of events was not available to the court. 103Heydon J made the following comments (at [257] - [258]): [257] However, counsel for the Hellicar respondents submitted that the authorities quoted above support the view that where a witness who could have been called by a party is not called "the direct evidence of that party may be more readily rejected and the inferences for which that party contends may be treated with greater reserve". (This substantially quoted Glass JA's words in his reasons for judgment in Payne v Parker.) They also contended that the trier of fact could make "an assessment of the overall weight of the evidence unfavourable to that party". (This paraphrased part of Austin J's reasons for judgment in Rich.) The better reading of these propositions drawn from Glass JA's and Austin J's reasons is that the weaker one party's evidence, the less adequate that party's evidence as a whole may be to meet a burden of proof. Items of evidence can have a mutually reinforcing character even if they are not strictly corroborative of each other. They can have that character even if they are circumstantial only. But the two quoted propositions do not support or correspond with the Court of Appeal's reasoning. The Court of Appeal did not hold that, in the absence of Mr Robb's evidence, a piece of evidence capable of giving rise to uncertain inferences only was insufficient to satisfy ASIC's burden of proof. Rather it held that an exact proof - the minutes - should be given discounted weight and reduced cogency because of Mr Robb's absence. [258] Members of this court have suggested that Blatch is to be understood as operating against a party in relation to facts "peculiarly within [that party's] knowledge" (Weissensteiner v The Queen [1993] HCA 65; (1993) 178 CLR 217 at 228 per Mason CJ, Deane and Dawson JJ) - a party who is "ordinarily ... the person best able, and ... often ... the only person able, to give information" (Russo v Aiello [2003] HCA 53; (2003) 215 CLR 643 at 647 [10] per Gleeson CJ). ASIC was not a party of that kind. No ASIC representative was present at the 15 February 2001 board meeting. All the respondents were, in person or by telephone. Mr Robb provided no signed or sworn or complete statement. What he provided to ASIC was handed on to the respondents. There was no inhibition on any respondent who wished to call him. 104These authorities were referred to in argument by the defendant as a prelude to what were a series of criticisms made of the plaintiff's attempt to prove on the balance of probabilities what the relevant capital expenditure was.

Discussion of evidence of Skywalk Capital Expenditure 105Having considered the proper construction of clause 13.7 and the relevant principles of evidence, it is now necessary to determine whether the plaintiff has established that it has incurred Skywalk Capital Expenditure in excess of $5 million. 106CB413 was a spreadsheet prepared for the purposes of identifying capital expenditure. The defendant makes a number of criticisms of the document. In final submissions, I should observe however, the plaintiff tendered a schedule of invoices which were available and which totalled $5,891,005.26. There were about 438 invoices analysed. I will return to this item in due course. It was accepted by both sides that CB413 may well prove that monies were expended and/or incurred in relation to items described in the spreadsheet. It did not follow however that each of the items in relation to which there was the purported expenditure fell within clause 13.7 (TT 73-75). 107The plaintiff called a Mr Kevin Bush who provided three statements. Mr Bush is a chartered accountant who for a time from May 2007 became the CEO of the plaintiff, which role involved him overseeing all of the work undertaken by the Company. Previously, from about July 2005 until January 2009, he had been employed in other roles within the group. 108In his July statement, Mr Bush gave evidence of a number of reports which were supplied to the defendant from time to time setting out amounts allegedly owed to the group. He described (at [36] - [49]) in broad terms the process undertaken in relation to expenditure. 109He said (at [37]) that the accounting system of the plaintiff had a special general ledger code specifically for the Skywalk project. When an invoice relating to the project was received it was coded by a Mr Paul Sexton (or a person working under his management) as specific to the project. It was then entered into the general ledger. The general ledger account recorded costs relevant to capital expenditure as referred to in clause 13.7 of the Deed. The invoices were allocated under various sub-headings through spreadsheets. Hence, in due course, the creation of CB413. 110He made plain (at [39]) that the accounts did not include office expenditures (for example salaries for himself, the managing director or other persons not related to the project). He then described (at [49]) what he said were brief details of the various categories, which involved summaries of costs incurred in what he asserted was the development of the "Skywalk Project". In broad terms he then described various amounts which had been incurred. 111His second statement dealt in slightly more detail with communications between himself and Mr Silber and the defendant and demands made upon them. He also dealt (at [23]) with the construction of Skywalk and ultimately the conduct of the Skytour and Skywalk businesses. 112In a third statement from Mr Bush, he gave evidence about invoices received by the plaintiff or the Company and how they were passed on to managers from the plaintiff's marketing operations or maintenance department, whereupon the invoices would in some way or other be separated out as relating to the construction of Skywalk and the operation of the Skywalk business and were marked with a code and entered in the ledger accordingly for Skywalk expenses and capital expenditure. Again, the invoices were allocated under various sub-headings and Mr Bush conducted spot checks in conjunction with the auditors every half year. 113Mr Bush gave evidence orally in chief that the main managers who were involved in allocating the invoices to the Skywalk general ledger were Paul Sexton, Dean Cambridge, Katherine Foreman, James Fulford and Ravini Perera. A Mr Brian Owles, the CFO, had been preparing and maintaining a spreadsheet in relation to what was said to be the Skywalk capital expenditure project. Mr Bush had asked a Mr Regan Cheriton, the financial controller at the time in July 2005, to print off a general ledger report and provide it to Mr Bush with a copy of the material invoices in large amounts for Mr Bush to check against the general ledger. 114Mr Bush, in conjunction with Mr Cheriton, on a monthly basis, printed off the general ledger code for the Skywalk capital expenditure and allocated the new general ledger entries in the spreadsheet to make sure that the spreadsheet agreed back to the general ledger code at the end of each month. 115Every month the finance team reported to Mr Bush by providing complete reconciliations of all the major balance sheet accounts in the general ledger, including the Skywalk capital expenditure account, and Mr Bush would review the work papers that substantiated the general ledger balances. He described CB413 as a summary page of an Excel worksheet which had detailed workings contained in a separate tab which sat behind the summary page. 116Importantly however in cross-examination Mr Bush made a number of important concessions. First at T113.35 where the following evidence was given: Q: So far as you are aware there was never any document given to any employee of the plaintiff or of Sydney Tower Observatory Pty Ltd setting out the approach they should take in deciding whether a cost should be allocated to the Skywalk Cap Xex account, correct? A: Documentation in terms are written? No. In terms of verbal it was self-explanatory for the managers in charge of their functions of what related to Skywalk capital expenditure because it was different to anything we were operating or constructing at the time. 117However, Mr Bush appears to have proceeded upon the assumption that the managers would be able to work out for themselves whether a cost should be allocated to the Skywalk capital expenditure account or not, with a review done by Mr Bush based on some sampling method (T114.03). Mr Bush did not check anywhere near most of the invoices himself (T111.39 - 111.43). Further, someone other than Mr Bush would decide whether invoices received from a contractor were a cost of the Skytour refurbishment works or the Skywalk works and there was never any document given to whoever it was who made that decision setting out the approach that they should take. 118The defendant further submits that there is no clear evidence as to who made the allocations of the amounts in the line items contained in CB413. It is submitted, and I agree, that the evidence seems to suggest that the initial allocation of invoices to the Skywalk capital expenditure ledger was made by one of five managers and the detailed allocation of expenditures into the line items on CB413 was made either by Mr Owles, Mr Bush and/or Mr Cheriton. 119The defendant submits, and again I agree, there appears to be a complete lack of criteria (if any) to be applied by any of those persons in determining what expenditures were to be allocated into the Skywalk capital expenditure ledger and what expenditures were to be allocated into the particular line items in CB413. 120The plaintiff did not adduce any evidence of contracts it or its subsidiary made with the contractors and consultants (recording agreed scopes of work and agreed prices for the work) or the variations to those contracts as agreed and the invoices it received and paid concerning the performance of the contracted works. Those contracts and invoices might have enabled a determination to be made as to the true amount of the clause 13.7 expenditure. 121Apart from Mr Bush, none of the relevant employees was called to explain the methodology adopted and approach they took in allocating expenditures incurred in the various line items in CB413. The absence of contracts made with contractors and consultants recording potentially agreed scopes of work and agreed prices for work and/or variation are particularly important in this context because of at least the three applications to modify the development consent initially obtained. In particular, the third application to amend was made as late as 2007 and approved by the Council on 5 October 2007. There is also no doubt that the plaintiff's post-Deed decision to amend the podium level arrangements caused considerable delay. 122There were other works being undertaken by the plaintiff concurrently with the Skywalk works including works at Skytour, Sydney Wildlife World and Sydney Aquarium. The evidence would tend to suggest that there were contractors who were working on more than one of the projects. In the absence of contracts or at least materials which might prove the basis upon which either quotations were given or work was undertaken there is no way of knowing to what extent the contracted scopes of work included works or services wholly unrelated to the construction and completion of Skywalk. 123The evidence of each of the construction experts underscores the absence, on the part of the plaintiff, of cogent evidence establishing the true cost of the clause 13.7 Skywalk Capital Expenditure. 124Professor Carmichael reviewed the evidence including the Court Book and other documents and expressed the opinions set out in paragraphs 26 to 37 of his report. Professor Carmichael is a highly qualified engineer and a Professor at the University of New South Wales with special areas of expertise in project management, construction management, construction, building and structural engineering. In summary he stated at paragraph 38: Based on the documents viewed it is not possible to establish the true costs of the skywalk capital expenditure. However it can be said that the true cost is less than the $7,900,407 claimed. This is so because expenditure on construction work outside the Skywalk capital expenditure scope of work both in type and timing has been included in the claimed amount. 125This opinion was not challenged in cross-examination. 126The plaintiff's expert, Mr Barrow, is also an engineer. He is the principal of a firm, Evans and Peck, which has been involved in a number of large engineering projects. In his report (at paragraph 119) he indicated that he was unable to determine whether the calculation of "Skywalk Capital Expenditure" contained in Schedule 1 to the letter of Sydney Attractions Group dated 31 July 2008 was correct according to the records available. He, however, expressed a view in his report that he thought capital expenditure was of the order of $6,766,501. 127On the materials, however, he was simply unable to make an assessment of the true costs of the works undertaken within the scope of clause 13.7 (T521-528). Perhaps more importantly he gave the following evidence (at T510.19-510.26): Q: You certainly agree that you have been unable to make an assessment of the true costs of the works undertaken within the clause 13.7 scope? A: No. as I have said, I have stated I have not been able to relate the scope as I have seen in the development consents to this final claim. Q: So you agree with the proposition I have just put to you? A: I agree with the fact that I have not been able to relate the DA and the Section 96s to the claim. 128Mr Barrow made it abundantly clear that the lack of contractual documentation made his task very difficult. Further, he was simply unable to relate plans with the actual expenditure undertaken (T510.15). 129The plaintiff tendered approximately 438 invoices. As I have earlier observed, it made in final submissions a very detailed submission and analysis of those invoices. The first thing to observe about them however is that they do not total anywhere near the $7 odd million claimed to have been involved in the capital expenditure. 130The defendant submits, and again I must say I agree, that the invoices themselves do not support a finding that the clause 13.7 capital expenditure was in fact the $5,783,371.27 or any other amount exceeding $5 million. A number of reasons are given for this. 131First, it is submitted by the defendant that it is not evident from many of the invoices that they relate to the construction and completion of Skywalk. Whilst it is true that some of the invoices specifically refer to Skywalk (e.g. using the schedule of invoices, documents 2, 6 and 15), the great proportion depend upon a code attributed to them and in turn decisions made by members of staff along the lines already described which, for the reasons already described, do not provide a clear and cogent relationship between the invoice and the capital expenditure in clause 13.7. This is particularly underscored by the absence of contractual documentation to which the invoices could relate. 132Secondly, for many of the invoices, it is clearly not possible to know whether the words or products supplied related to works under the section 96 modified development approvals or works in performance of the design variations or works relating to the Skytour refurbishments. 133Thirdly, some of the invoices are dated before 5 July 2004 (being the date of completion of the Deed) and others are dated after the Skywalk Launch Date. In either case they arguably fall outside clause 13.7 expenditure. 134The defendant also submits that very few of the invoices include evidence of actual payment and there is no other evidence from which the court could conclude that the 438 invoices have been paid. It seems to me that the better view is that the invoices do amount to some proof of payment, the question really though is in respect of what. 135I already have given reasons sufficient to dispose of the plaintiff's claim for reimbursement of excess Skywalk Capital Expenditure. However, I wish to make two further general observations in relation to the plaintiff's schedule of invoices. 136First, it is necessary to bear in mind the undenied fact that at the time the plaintiff was carrying out works for the development of Skywalk, it had, and was undertaking works in relation to, other attractions, including Skytour, Sydney Wildlife World and Sydney Aquarium. It will therefore be necessary for each invoice that the plaintiff relies on to display such a degree of specificity as to allow me to make a finding that the invoice is attributable to Skywalk and not another project. Secondly, it is also necessary to bear in mind that not merely any capital expenditure attributable to Skywalk is relevant, because Skywalk Capital Expenditure is defined in clause 13.7 as a particular type of capital expenditure (previously discussed). Again, the information derived from the invoices must enable me to be satisfied that the capital expenditure attributable to Skywalk is indeed "Skywalk Capital Expenditure". 137In submissions, the defendant observed that there were five managers involved in the allocation of invoices to what was described as a Skywalk general ledger. This is perhaps the ledger on which the quantum of the plaintiff's claim for excess Skywalk Capital Expenditure is based. As the defendant noted, it emerged in cross-examination that Mr Bush never personally checked most of the invoices allocated to the ledger and that there was no evidence of a universal document circulated to the five managers responsible for the allocation of invoices to the Skywalk ledger setting out criteria, guidelines or rules they should follow when deciding whether an invoice belonged to the Skywalk Capital Expenditure account or not. 138The critical column in the schedule of invoices prepared by the plaintiff appears to be the column headed "whether invoice relates to Skywalk". Most of the invoices itemised in the schedule are said to bear a code, numbered "106701" (subject to a few exceptions mainly at the end of the schedule). There was no direct evidence of what this code signified. The plaintiff submitted that, whatever the code meant, the consistent coding of "106701" at least shows that the invoices were coded in accordance with a business practice described by Mr Bush, namely, that five managers allocated the invoices to a Skywalk account (and presumably "106701" refers to that Skywalk account, though the evidence on this is imprecise) (T649.5-T649.19 and T84.10-T84.30). 139There are difficulties with that submission. Even assuming, perhaps not unreasonably, that "106701" refers to a Skywalk account internally maintained by the plaintiff, that assumption does not overcome the plaintiff's fundamental difficulty of proving that the sum recorded in each invoice is Skywalk Capital Expenditure within the meaning of clause 13.7. The mere fact that an invoice is assigned a code or allocated to a particular internal account by an employee of the plaintiff does not prove that the sum referred to in that invoice is Skywalk Capital Expenditure within the meaning of clause 13.7 (on its proper construction). 140A number of the invoices expressly refer to "skywalk". Although, in some respects, this is better evidence for the plaintiff (as these invoices expressly refer to the relevant project and presumably the reference to "skywalk" was written by an external contractor), it still does not overcome the plaintiff's fundamental problem of establishing that the expenditure should properly be characterised as "Skywalk Capital Expenditure" within the meaning of clause 13.7. 141In any event, the total sum of the invoices in the plaintiff's schedule of invoices is only $5,891,005.26, not some $7 million or $8 million as contended. Further, when one sums only the value of the invoices containing a reference to code "106701" and those containing an express reference to "skywalk", and those containing an express reference to both, the total figure is $4,982,447.16. Again, that figure is below $5 million. 142For at least the reasons just stated, the schedule of invoices prepared by the plaintiff does not assist to substantiate its claim for reimbursement of its alleged excess Skywalk Capital Expenditure. The plaintiff's contractual right to obtain a reimbursement of excess Skywalk Capital Expenditure under clause 13.7 was plainly dependent on it obtaining material to satisfy the relevant counterparty to the Deed of the fact of such expenditure. The evidentiary material suffered from a number of defects, many of which have been identified. One would have thought, especially given the amount of money potentially involved, that the parties would have had in place by consent some kind of mechanism to ensure a clear and binding identification of what expenditures were Skywalk Capital Expenditures within the meaning of clause 13.7, and what were not. For example, the parties might have managed the risk by inserting provisions in the Deed requiring the plaintiff to periodically submit invoices of relevant expenditures, together with relevant explanations, to a particular individual nominated by the defendant, who would be required to either approve the characterisation of the expense as Skywalk Capital Expenditure from time to time (thereby binding the defendant), disapprove that characterisation (leading to further discussion perhaps), or request further information. This contractual risk management tool would, I think, have forestalled the present dispute. In the absence of any such contractual mechanism or other procedure accepted by the parties, the party on which the risk falls will ultimately be selected by a simple application of the legal rules relating to onus of proof. 143There are further difficulties however associated with this purported expenditure. For example, the amounts in CB413 include amounts being costs of the works comprised in and necessitated by the modified development consents and design changes. For these amounts to be capital expenditure for the purposes of clause 13.7 they either have to fall within the clause per se or for example be necessary upgrades required by the plans for the Skywalk business. For reasons for which I will come to in a moment, in my view, this has been a particularly troublesome issue for the plaintiff. 144The amount of expenditure must exclude all expenses incurred prior to December 2003. CB413 purports to do this in a fashion, but it is by no means clear that they are all the expenses incurred prior to this period. Again it is not clear that CB413 excludes all costs incurred after the Skywalk Launch Date on 19 October 2005. Nor have they been shown to exclude costs incurred in refurbishing the Skytour area on the podium level. 145The defendant makes a number of submissions in relation to these items. 146It is not in dispute that after the Deed was entered into the plaintiff applied for and obtained approval to modify the development approval referred to in clause 13.7(a) of the Deed. Approvals were granted in January 2005, March 2005 and October 2007. 147It is submitted by the defendant, in my view correctly, that the proper interpretation of clause 13.7 means that the cost of and incidental to the carrying out of the works the subject of the section 96 approvals are not part of clause 13.7 Skywalk capital expenditure unless they were "necessary upgrades required by the plans for the Skywalk business" under clause 13.7(c). 148The defendant submits, which again I think is correct, that there is simply no material upon which the court could conclude that the January 2005 and March 2005 development modifications were necessary upgrades required by the plan as opposed to ones that might be regarded as merely desirable. 149Mr Barrow for the plaintiff who has had regard to all relevant documents concerning modifications, expressed the opinion that he was unable to determine whether the proposed works covered by the March 2005 modification approval were a necessary upgrade and therefore he was unable to determine whether or not they should be included in the calculation of the Skywalk Capital Expenditure under clause 13.7. He also expressed the view that the March 2005 modification approval replaced the earlier January 2005 approval. So far as the October 2007 approval was concerned, Mr Barrow described the modifications as comprising the construction of two staircases to replace the moving platform between the upper and lower walkways. As far as he was concerned, the construction of the two staircases became necessary because of management's decision to disuse the moving platform. That in turn seems to have been a decision taken by management in order to reduce payroll and maintenance costs. There is certainly no suggestion however that the modifications were made as a result of any legal requirement rather by reason of a commercial judgment made by the plaintiff in order to minimise its operating costs. On that basis I am certainly of the view that it could not qualify as a necessary upgrade. It was an upgrade, as it were, taken by the plaintiff in its own commercial interests. 150Mr Barrow also described changes to the existing unirail in the October 2007 approval. There is simply no evidence to explain why this was done. Mr Barrow has no idea and said so. Again, apart from it being a unilateral decision, it does not appear to be based on what might be described as some notion of necessity. 151Similarly Professor Carmichael expressed the view that there was insufficient material to enable a conclusion to be made as to whether the modification work the subject of either the January or March 2005 approvals fell within the scope of clause 13.7. 152Insofar as the modifications to the approvals were concerned, they in turn involved a larger number of design changes. These were made after the Deed was entered into. At CB360-366 one finds the variation register. There is a reference to a drawing number, a description of the change and the reason for the change all given in very brief and broad terms. However, it is not possible from that register to determine whether the variations were necessary or were purely for aesthetic, cosmetic or other reasons lying outside the scope of Skywalk Capital Expenditure. 153Professor Carmichael in paragraph 28 of his report suggests that the variation register does not indicate whether the work is within the scope of clause 13.7, simply by reason of the lack of specific details. He observes in passing that the reasons given for many of the variations are "very broad descriptions and tell nothing of the specific work involved". This evidence was not the subject of challenge in cross-examination. 154Mr Barrow gave evidence to the effect that he was unable to determine the extent of the changes listed in the variation register and was equally unable to determine the cost of performing those changes. 155Mr Bush gave evidence that the works the subject of the January/March 2005 section 96 approvals were carried out by the same contractors and consultants who had carried out works under the original development application. This of course adds to the confusion when one tries to disentangle precisely what might relate to clause 13.7 and what might not. He further gave evidence that he understood that invoices from contractors and consultants were allocated to a single Skywalk Capital Expenditure general ledger and therefore that all costs associated with all of the section 96 modifications were included in the claimed amounts which totals $7,009,407. Again, that only compounds the problem. In his report (at paragraphs 73 - 78) Mr Barrow, even upon the assumption that such works were considered by the plaintiff to be enhancements to the Skywalk business, identified an amount of $427,504 which he thought may have been for "Skywalk Enhancements". He, however, observed that there was insufficient detail in the documents to provide any analysis of that amount. Likewise, Mr Bush gave evidence that he had no idea what was comprised in the $427,504 (T118). On this basis it seems to me that I cannot safely conclude that that amount for example was to be regarded as part of the necessary upgrades for the purposes of clause 13.7. 156Further there are no detailed workings in evidence to enable any determination of what comprises the $427,504. In my view, as the defendant submits, it appears to be entirely unknown whether that amount records the true amount of the costs of and incidental to the section 96 modification approvals and/or the design variations. It is therefore not possible to be satisfied that the costs of and incidental to the section 96 development consents and the design changes, including the costs of carrying out the works to implement those modifications and changes, have been excluded from the costs set out in the claim schedule at CB413. 157As I have already observed when dealing with the construction of clause 13.7, Skywalk Capital Expenditure is defined as comprising expenditure incurred "after completion". Completion took place on or about 5 July 2004 and therefore it follows that any costs incurred before that date could not form part of the Skywalk Capital Expenditure for the purposes of the clause. The schedule at CB413 includes an amount of $397,127 described as "pre December 03 Expenses". Mr Bush did not prepare CB413, rather it was prepared by Mr Owles prior to Mr Bush starting at the Company (T114.40). 158However, the "Skywalk Capex Budget" as at December 2004 (CB266) records the amount paid prior to December 2003 as totalling $543,874. On any view, and on those calculations, the difference (being $146,000) would appear to be expenses incurred prior to December 2003 contrary to the requirements of clause 13.7. 159The defendant makes the point that although CB413 includes a deduction for pre-December 2003 expenses it does not include any deduction for expenses incurred between December 2003 and 5 July 2004. This is apparent from the face of the document. 160The defendant submits that from the management reports sent to the defendant during 2006 the Skywalk capital expenditure ledger includes apparently an amount of approximately $401,774 said to have been incurred between 1 January and 30 June 2004 (CB 372, 393 and 400). Mr Bush agreed that the claim at CB413 in all probability also included at least $401,000 of expenditure incurred in the period January to July 2004 (T116.10). However, as the defendant points out, the Skywalk capital expenditure budget as at December 2004 recorded $549,376 as having been paid in the period January to June 2004. Mr Bush gave evidence that that amount of $549,376 would have been included in the final costs of $7,834,037 in the claim schedule CB413. It is clear from Mr Bush's evidence as a whole that he was quite unsure what was in fact included or excluded in relation to the period January to June 2004. 161The defendant submits, and I entirely agree, that the final cost therefore recorded in CB413 of $7,834,037 includes all costs that were allocated to the Skywalk capital expenditure ledger including all costs incurred in the period January to June 2004. It is also tolerably clear that Skywalk capital expenditure totalling $549,376 was paid in the period January to June 2004 (Column E, CB 266). 162The claim at CB413 certainly does not purport to exclude any expenses incurred between the period January to June 2004. It follows that the $549,376 expenditure incurred in the period January to June 2004 is, it seems to me, more probably than not included in the $7,009,407 in CB413 contrary to the requirements of clause 13.7. 163By reason of clause 5.11(c), the Deed imposes an end date (being the Skywalk Launch Date) for the capital expenditure that is included within the $5 million cap. This is the same cap as referred to in clause 13.7. It is clear to me that clauses 13.7 and 5.11(c) should be read consistently to the extent that the express words used allow. It seems to me therefore, on a proper construction, the capital expenditure in clause 13.7 is, when read with clause 5.11(c), intended to include such expenditure that is incurred up to the Skywalk Launch Date but not thereafter. Capital expenditure incurred after that date on a proper construction of the Deed should in my view be brought to account under clause 5.8(c) integer C in the calculation of the Skywalk Adjusted Payments. 164The defendant therefore submits that the amounts said to comprise the Skywalk Capital Expenditure set out in CB413 should exclude any capital expenditure incurred after the Skywalk Launch Date on 19 October 2005. Mr Bush however gave the following evidence (T85): Q: What further transactions were shown on the spreadsheet? In other words how did it progress? A: So what happened is every month Regan Cheraton printed off the general ledger code for skywalk capital expenditure so during every month there were more invoices allocated to that code. What I did was sit down and review those - what was in the general ledger and allocate them in the spreadsheets so updated the spreadsheet every month based on Q: What you personally did that? A: I personally did that in conjunction with Regan to make sure that the spreadsheet at the end of every month agreed back to our general ledger code. Q: How long did that persist, that practice? A: That persisted to 31 July 2008 when the statement was sent out. 165What is apparent from the above evidence is that, according to Mr Bush, amounts were added to the Skywalk capital expenditure ledger on an ongoing basis until 31 July 2008. However there is simply no evidence which identifies the quantum of capital expenditure which is included in CB413 but which was incurred after 19 October 2005. 166A further complication which arises is that during 2005, Skytour, as distinct from Skywalk, was also undertaking some capital expenditure works involving the refurbishment of the podium areas from which the Skytour business operated as well as works relating to graphics for that business and in and around Centrepoint Tower. 167Many of the contractors and consultants used to carry out the Skytour works were the same contractors and consultants used to carry out the Skywalk works. Mr Bush made that abundantly plain (T93.45). It appears that the Skytour works involved expenditure in the order of somewhere between $300,000 and $500,000. Judgments had to be made as to what parts of the Skytour refurbishment costs were to be allocated to the Skywalk capital expenditure ledger. It appears that Mr Fulford and Mr Perera made those judgments. There is no evidence from either of those persons or from anyone else otherwise describing the approach that should be taken when such decisions were being made in respect of the invoices and what the protocol was intended to be in deciding whether an invoice from a contractor or consultant relating to the podium refit should be allocated to Skytour or Skywalk and indeed why. In those circumstances the defendant again submits, and I think correctly, that the court cannot be satisfied that the cost of the podium fit-out works had been appropriately allocated as between Skytour and Skywalk. 168The defendant submits that the best evidence available as to the true amount of the Skywalk Capital Expenditure is the estimate of the development costs made on 5 April 2005 by the independent quantity surveyor, Rider Hunt (that being the amount upon which the section 61 contribution and development approval fees paid to the Council were assessed). The quantity surveyor estimated the total development costs to be $3,798,820 (including GST) which equals approximately $3,453,373 excluding GST. 169The estimate of Rider Hunt was based upon the detailed costs report given by a registered quantity surveyor, Ms Fiona Doherty, of Apex Consulting Group on 18 March 2005. That detailed cost report estimated the total development cost for the works at $3,582,877 (including GST). The estimate it was, so it seems, based on an assessment of quotations received for the construction of the Skywalk structure as well as a detailed budget estimate of the costs of the podium works and estimate consultants' fees and charges. 170On 5 April 2005 an estimate was made by an independent quantity surveyor engaged by the Council. It was likewise based upon a detailed costs report said to have been certified and estimated in accordance with Schedule 2 of the Contributions (Amendment) Plan 2002 approved by the Council. A construction certificate had been applied for on 16 March 2005 and was obtained on 8 April 2005 following which on site construction works commenced. In the application for the construction certificate made on 16 March 2005, the estimated total costs of development was said to be $3,580,000.

Conclusion as to plaintiff's claim for excess Skywalk Capital Expenditure 171On the basis of the above and by reason of the multiple deficiencies, as I see them, and ambiguities in the evidentiary materials and explanations proferred by the plaintiff, and taking into account assessments made by quantity surveyors at relevant points in time, it seems to me that, on the evidence, the plaintiff has failed to discharge its onus of showing that the appropriate amount of the Skywalk Capital Expenditure as defined in clause 13.7 was indeed $7,009,407 or for that matter any amount exceeding $5 million. I am simply unable to find with any precision what the exact amount is but I am certainly satisfied that the plaintiff has not discharged its onus of showing that the relevant expenditure exceeded $5 million.

What if Skywalk Capital Expenditure had exceeded $5 million? 172Had I found that Skywalk Capital Expenditure was in excess of $5 million, it would have been necessary for me to determine whether the plaintiff is entitled to enforce its right of reimbursement under clause 13.7. The defendant contends that if the plaintiff is found to have incurred Skywalk Capital Expenditure in excess of $5 million, it should nonetheless not be entitled to enforce its right of reimbursement provided for under clause 13.7. The defendant bases its contention on the rule of construction that, in the absence of clear words to the contrary, a contractual entitlement arising upon the occurrence of a particular event will not be enlivened if the event came about through the breach of the party seeking the entitlement. In particular, the defendant contends that the plaintiff's breach or breaches of clause 13.1(a) contributed to the increase in Skywalk Capital Expenditure. 173Given that I have not been satisfied that the defendant incurred Skywalk Capital Expenditure in excess of $5 million, it is, strictly, unnecessary to express any view as to whether the plaintiff breached clause 13.1(a) and is thereby disentitled from seeking reimbursement of excess Skywalk Capital Expenditure. However, as the parties prepared submissions addressing this issue, I propose to make a few comments. 174Clause 13.1(a) provides: The Purchaser agrees that ... it will use reasonable endeavours to procure that the construction work necessary to conduct the Skywalk Business is completed as expeditiously as possible and commence operation of the Skywalk Business as expeditiously as possible, subject to compliance with appropriate laws, regulations and safety requirements and standards... 175To assess the defendant's submissions it is necessary to consider in further detail the principle that a party to a contract cannot take advantage of his, her or its own breach. It will also be necessary to consider whether the plaintiff has failed to use "reasonable endeavours" to procure that the construction work necessary to conduct the Skywalk business is completed as expeditiously as possible and commence operation of the Skywalk business as expeditiously as possible. Logically, it is appropriate to consider the latter first.

Breach of "reasonable endeavours" obligation under clause 13.1(a)? 176The defendant alleges the plaintiff has breached clause 13.1(a), has thereby increased Skywalk Capital Expenditure by its own breach, and should therefore not be allowed to obtain reimbursement of excess Skywalk Capital Expenditure, as that would wrongly amount to allowing the plaintiff to take advantage of its own breach. Whether or not the plaintiff has breached clause 13.1(a) turns on the meaning of the expression "reasonable endeavours". In Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83, the High Court considered a "best endeavours" provision in a licence agreement. In that case, Mason J said (at 100-101): ... the words "best endeavours" ... connote "the standard of reasonableness" (Terrell v. Mabie Todd & Co. Ltd. (1952) 69 RPC 234, at p 237, per Sellers J.)... ... In Terrell v. Mabie Todd & Co. Ltd. (1952) 69 RPC 234, where the contract included a "best endeavours" clause, Sellers J. applied these observations, holding that the licensees' obligation "was to do what they could reasonably do in the circumstances" (1952) 69 RPC 234, at p 237. A "best endeavours" clause thus prescribes a standard of endeavour which is measured by what is reasonable in the circumstances, having regard to the nature, capacity, qualifications and responsibilities of the licensee viewed in the light of the particular contract. 177In the subsequent case of Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41, Gibbs CJ said (at 64-65): The implied obligation to use best efforts to promote the sale of the goods necessarily imported the obligation not to take any deliberate steps to damage the market for those goods in Australia. The meaning of terms of this kind has been considered in a number of cases, but it is trite to say that the meaning of particular words in a contract must be determined in the light of the context provided by the contract as a whole and the circumstances in which it was made, and that decisions on the effect of the same words in different context must be viewed with caution. On the one hand, an express promise by an agent to use his best endeavours to obtain orders for another and to influence business on his behalf 'necessarily includes an obligation not to hinder or prevent the fulfilment of its purpose': Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 at 378. On the other hand, an obligation to use "best endeavours" does not require the person who undertakes the obligation to go beyond the bounds of reason; he is required to do all he reasonably can in the circumstances to achieve the contractual object, but no more: Sheffield District Railway Co. v. Great Central Railway Co. (1911) 27 TLR 451, at p 452; Terrell v. Mabie Todd & Co. Ltd. (1952) 69 RPC 234, at p 237. In Transfield Pty. Ltd. v. Arlo International Ltd. [1980] HCA 15; (1980) 144 CLR 83 the licensee of a patented process for the manufacture and erection of a steel pole for the purpose of electricity transmission lines (the Arlo pole) covenanted "to use its best endeavours in and towards the ... selling" of the pole. The actual decision in the case was that this provision of the contract did not prohibit the licensee from using any pole other than the Arlo pole. Stephen J. said, at p.94: "An obligation to use best endeavours to sell Arlo poles implies a prohibition upon the offering for sale and selling of competitive poles, at least to the extent that to do so will prejudice the sale of Arlo poles." Mason J. took a somewhat narrower view of the effect of the words of the relevant clause of the contract. He said, at p.101, that the licensee's obligation was "to use all its efforts and skills towards (inter alia) the selling of the ARLO pole to the extent that it was reasonable so to do in the circumstances and to energetically promote and develop a market for it" and that he could see "no adequate basis for importing into this positive obligation a negative implication that the appellant will not use or for that matter sell a pole which competes with the ARLO pole, whether that pole be manufactured by the appellant or by another". He added, at p.102, that the licensee might do all that was within its power to comply with the clause yet find that it had no practical alternative but to use or sell a competing pole and that the clause did not prohibit or prevent such use or sale. Wilson J. said, at p.107, that the licensee was obliged to do "all that could reasonably be expected of it having regard to the circumstances of its business operations". An undertaking to use best endeavours or best efforts to promote the sale of one product does not necessarily impose an obligation not to sell a competing product (see Van Valkenburgh, Nooger & Neville, Inc. v. Hayden Publishing Co. (1972) 330 NYS 2d 329, at p 333, and cases there cited) although it may do so in some circumstances, as was held to be the case in Randall v. Peerless Motor Car Co. (1912) 99 NE 221. 178In Waters Lane & Anor v Sweeny & Ors [2007] NSWCA 200, Tobias JA (with whom Santow and Giles JJA agreed) discussed the approach taken by the primary Judge in that case and the comments of Gibbs CJ quoted above, and said (at [107]): [107] If this means that there is no relevant difference between the standard constituted by the expression "all reasonable endeavours" and that constituted by the expression "best endeavours" then so be it. However, it is unnecessary to express any final conclusion on that possibility. Suffice it to say that in the present case the description articulated by Gibbs CJ in Hospital Products of what is required to satisfy the obligation to use "best endeavours" is directly applicable to the obligation to use "all reasonable endeavours"... 179In Wolseley Investments Pty Ltd v Gillespie (2007) 13 BPR 98,278, Santow JA (with whom Ipp and Tobias JJA agreed) said (at [50]-[51]): [50] It was common ground that the meaning of the obligation to use best endeavours in the deed should be taken from that adopted by this court in Waters Lane v Sweeney [2007] NSWCA 200; ; BC200706641 in turn derived from the judgment of Gibbs CJ in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 64 [his Honour then quoted part of the passage from Hospital Products which I have quoted above]. [51] As was suggested in Waters Lane (above) there may be no relevant difference between the standard constituted by the expression "all reasonable endeavours" and that constituted by the expression "best endeavours". However as in that case so here it is not necessary to express any final conclusion on that proposition. 180In Centennial Coal Company Ltd v Xstrata Coal Pty Ltd (2009) 76 NSWLR 129, Hodgson JA (with whom Tobias and Campbell JJA agreed) expressed agreement with the reasoning of the primary Judge, Brereton J, at first instance in Centennial Coal Company Ltd v Xstrata Coal Pty Ltd [2009] NSWSC 788. Brereton J said (at [26]): [26] While the content of a "best endeavours" clause depends upon the particular obligation and the circumstances in which it was undertaken, it posits an objective standard to be addressed by reference to what was done or not done in the circumstances that existed; it requires the doing of what can reasonably be done in the circumstances to achieve the contractual object [Hospital Products Ltd v United State Surgical Corporation (1984) 156 CLR 41 at 64-65 91-92 and 118]. It necessarily includes an obligation not to hinder or prevent achievement of the contractual object [Hospital Products, 64-65 (Gibbs CJ), 95 (Mason J)]. The obligation continues until the obligor "should reasonably judge in the circumstances that further efforts would have such remote prospects of success that they are simply likely to be wasted" [Hawkins v Pender Bros Pty Ltd [1990] 1 Qd R 135 at 150-151 and 152]; however, one must allow for events, including extraordinary events, as they unfold, as Lewison J said in Yewbelle Ltd v London Green Developments Ltd [2006] EWHC 3166 (Ch) (at [123]); affirmed [2007] EWCACiv 475 [29], [33], [122], [124]]... 181The defendant contends that the plaintiff did not use reasonable endeavours to procure that the construction work necessary to conduct the Skywalk business be completed as expeditiously as possible. The particulars the defendant alleges and relies on are: (1)Following entry into the Deed on 5 July 2004, the plaintiff decided to amend the design of Skywalk, substantially delaying the construction work. The defendant describes these changes to the development approval as "discretionary changes". (2)The plaintiff's post-Deed decision to amend the podium level arrangements caused an initial delay of two months (from 23 August 2004 to 19 October 2004) in the convening of a meeting of the Council. (3)The initial application for development consent to be modified was lodged more than six months after the Deed was entered into, the second application was made almost eight months after the Deed was entered into, and the application for a construction certificate was only made eight months after the Deed was entered into. 182Given that the defendant is alleging that the plaintiff breached clause 13.1(a), the defendant bears the onus of proof. 183In this particular context, the "reasonable endeavours" clause must be viewed in light of the plaintiff's obligation under clause 13.9: Maximisation of economic returns 13.9 Subject to the terms of this Deed, the Purchaser will, acting in good faith, use its commercial judgment to maximize economic returns from the Skywalk Business and the Skytour Business until all payments required to be made by the Purchaser to the Releasor pursuant to clause 5 have been made. 184Having regard to the terms of the Deed, and in particular to the language of clauses 13.7 and 13.9, it seems to me the plaintiff was given some discretion in making decisions as to the construction and structure of Skywalk. It is clear, from the terms of the clauses referred to and the authorities on the meaning of "reasonable endeavours", that the plaintiff was not under some strict or rigid or absolute obligation to complete the project in the quickest possible way and in the shortest possible time without regard to its quality or design appeal. Perhaps the applications for modification of development consent, and the delays necessarily involved, were a product of an exercise of the plaintiff's commercial judgment to maximise economic returns. The lay and expert evidence as to how the plaintiff should or should not have exercised its commercial judgment was varied, not always consistent, and unsatisfactory. 185Having considered the defendant's submissions and the meaning of "reasonable endeavours", I am not satisfied that the defendant has demonstrated that the plaintiff failed to use reasonable endeavours. It may be true that the plaintiff decided to amend the design of Skywalk, and that this necessitated a Council meeting which took place two months after the date of the Deed, and that there was an eight-month period between the date of the Deed and lodgement of various applications for modification of the development consent. But the mere existence of these intervals of time does not, without more, lead me to the conclusion that the plaintiff failed to take reasonable endeavours to do whatever it was required to do under clause 13.1(a). 186Perhaps the need for the modifications only became apparent some time after entry into the Deed. Perhaps there were design deficiencies needing to be addressed which emerged some time after entry into the Deed. Two to eight months is not a significant delay, and does not speak of lack of reasonable endeavours. In other words, in the absence of cogent evidence on this issue, it is quite possible that the applications for modification and the interval of time between the date of the Deed and the lodgement with the Council of applications for modification are explicable by something or several things other than a lack of reasonable endeavours on the part of the plaintiff. The defendant bears the onus of proof, and there is simply not enough evidence to enable me to sheet home these apparent delays to a failure on the part of the plaintiff to use reasonable endeavours.

Plaintiff taking advantage of own breach? 187Assuming, however, that I had found that the plaintiff breached its obligation to use reasonable endeavours under clause 13.1(a), it is necessary to consider whether, as the defendant contends, such a breach disentitles it from claiming reimbursement of the excess Skywalk Capital Expenditure that it would otherwise be entitled to under clause 13.7. The defendant bases his argument on the principle that a party to a contract is not permitted to take advantage of his own breach. 188The legal principles in this area are not controversial. In Alghussein Establishment v Eton College [1991] 1 All ER 267 the House of Lords was faced with a question of construction. A literal construction of the relevant provision of a lease would have led to an absurd result that a contractor who failed to complete a development without fault could not call for a lease, whereas a contractor who wilfully defaulted could do so. Lord Jauncey's judgment (with which the other Law Lords agreed) was, as noted in the headnote to the report, to the effect that: in the absence of clear express provisions in a contract to the contrary it was not to be presumed that the parties intended that a party should be entitled to take advantage of his own breach as against the other party was not limited to cases where a party was relying on his own wrong to avoid his obligations under the contract but applied also where a party sought to obtain a benefit under a continuing contract on account of his breach. ... The principle that a party in default under a contract cannot take advantage of his own wrong is in general a rule of construction rather than an absolute rule of law and morality, although there may be situations, such as self-induced frustration, where an absolute rule exists. 189The principle was accepted, without much elaboration, in TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 (at 147 per Hope JA, with whom Priestley and Meagher JJA agreed). 190In Brothers v Park (2004) 12 BPR 98,114, Giles JA (with whom Ipp JA Wood CJ at CL agreed) said (at [82]): [82] There was reference ... to a ... principle, described by Lord Diplock in Cheall v Association of Professional Executive Clerical and Computer Staff [1983] 2 AC 180 at 189 that "a man cannot be permitted to take advantage of his own wrong". An application of the principle is that a party to a contract terminating upon an event or conferring a benefit upon an event can not rely on his own breach of contract bringing about the event; many of the cases are discussed in the speech of Lord Jauncey in Alghussein Establishment v Eton College [1988] 1 WLR 587, and a local illustration of this application is TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 147-8, 161. It is applied as a rule of construction (ibid), but has also been seen as an implied term: Thompson v ASDA-MFI Group Plc [1988] Ch 241; [1988] 2 All ER 722. The principle itself has a broader reach, for example in the interpretation of statutes (Grozier v Tate (1946) 16 LGR (NSW) 57 at 61; Allen v Bega Valley Council (NSWCA, Full Court, No CA 40500 of 1994, 22 December 1994, unreported, BC9403478)) and in the common law rules that an arsonist cannot recover under a fire insurance policy and murderer cannot claim in the estate of his victim. 191Giles JA, in the later case of Ruthol Pty Ltd v Tricon (Australia) Pty Ltd (2005) 12 BPR 98,225 gave further consideration to the principle and said (at selected passages from [19]-[24], Santow JA and Hunt AJA agreeing): [19] ... the principle is not concerned with arriving at compensatory damages for breach by the wrongdoer, but with whether the wrongdoer can enforce its contractual right. [20] ... in the absence of clear words, a contractual entitlement upon a particular event will not be enlivened if the event came about through breach of the party seeking to rely on it... [21] ... But ... the operation of the principle is qualified ... [citing Hooper v Lane (1859) 6 HL Cas 443 at 460-461 per Bramwell B]: ... that rule only applies to the extent of undoing the advantage gained, where that can be done, and not to the extent of taking away a right previously possessed. Thus, if A lends a horse to B, who uses it, and puts it in his stable, and A comes for it and B is away, and the stable locked, and A breaks it open, and takes his horse, he is liable to an action for the trespass to the stable, and yet the horse could not be got back, and so A would take advantage of his own wrong. [22] Thus a party in breach of contract may be precluded from relying on a contractual entitlement arising from the breach, but will not be precluded from relying on a contractual entitlement which does not arise from the breach. ... [24] ... the maxim only applies to the extent of undoing the advantage gained by the wrongdoer and not the extent of taking away a right previously possessed. 192Ruthol involved a breach of a contract for the sale of land by the vendor. The vendor did not complete a contract for sale of land on the date fixed for completion. The purchaser was in possession as lessee. The vendor/lessor claimed arrears of rent from the date of contractual completion to the date of actual completion. The purchaser submitted that the vendor was prevented from relying upon its own wrong. The purchaser claimed damages for breach by the vendor. After discussing the principle that a party cannot take advantage of its own breach (see quoted passages above), Giles JA held that the principle had no application to the case (at [25]): [25] In my opinion, the principle did not apply to preclude the appellant from recovering the rent claimed. The respondent was obliged from the beginning to pay the rent to the appellant for the term of the lease and while holding over as a monthly tenant, and to pay it without any set-off or deduction. The respondent remained in possession of the property, and its right to possession was referable only to its position as lessee and then as tenant holding over; it did not have a right to possession under the uncompleted contract for sale. The appellant's breach of contract by failing to complete the contract for sale on 19 July 2001, or its breach of a contract found in the lease with its option to purchase rather than the contract for sale (which I doubt is correct), meant that the respondent was obliged to pay the rent for longer than would otherwise have been the case; but the obligation to pay the rent did not arise from the breach of contract. 193The defendant appears to suggest in his submissions that if he establishes that the plaintiff breached clause 13.1(a) by failing to take reasonable endeavours, it necessarily follows that the plaintiff is completely disentitled from claiming any amount of Skywalk Capital Expenditure incurred in excess of $5 million. The defendant argues this is so because his obligation to reimburse excess Skywalk Capital Expenditure under clause 13.7 is dependent on the plaintiff performing its obligations under clause 13.1(a). 194To the extent that the defendant's submission is based on the principle of construction that a party cannot take advantage of its own wrong, the submission is not entirely correct. As Giles JA noted in Ruthol, the operation of the principle is qualified. Assuming, contrary to my previous comments, that the plaintiff breached clause 13.1(a), the plaintiff's resulting disentitlement to reimbursement extends only insofar as the plaintiff's breach increased Skywalk Capital Expenditure, but does not deprive the plaintiff of reimbursement altogether. "[T]he maxim only applies to the extent of undoing the advantage gained by the wrongdoer and not the extent of taking away a right previously possessed" (Ruthol, at [24]).

Plaintiff's claim for interest on excess Skywalk Capital Expenditure 195As a result of my findings, there is no amount owing by the defendant to the plaintiff under clause 13.7. Although it is therefore unnecessary for me to consider the plaintiff's claim for interest, I will nonetheless make a few observations. 196The defendant makes the point that although no claim is contained in the plaintiff's letter of 31 July 2008 for interest, one of the experts called by the plaintiff in a report served on 20 September 2012, comments as to whether the plaintiff is entitled to interest calculated under clause 6 of the Deed on any amounts payable pursuant to clause 13.7. 197A calculation has been undertaken purportedly in pursuance of clause 6 of the Deed on the amount said to have been payable under clause 13.7. The defendant contends, and I do not understand the plaintiff to suggest to the contrary, that the expert, in making the calculation, has assumed the amounts were payable as claimed in various demands dated 16 June 2006, 4 May 2006, 28 August 2006 and 31 July 2008. 198The defendant's basic proposition is that clause 6 which deals with interest and acceleration especially provides for interest on amounts payable under clauses 4 or 5 (clause 6.1). 199The defendant, in my view, correctly contends that this clause does not apply to any amounts payable under clause 13.7, and the plaintiff's concession in this regard is appropriate. 200The defendant further points out that nowhere in the pleading has there ever been a suggestion that demands were made in 2006. 201It seems to me that, properly construed, clause 6.1 could not give rise to a claim for interest payable pursuant to any amounts that may otherwise be payable under clause 13.7. It would follow therefore that the plaintiff has no entitlement to any interest prior to the letter of demand of 31 July 2008 or on any amounts found to be payable by the defendant under clause 13.7.

Plaintiff's claim for negative Skywalk Final Component 202The plaintiff claims to be owed $2,657,198 which it claims is the amount of the Skywalk Final Component under clause 5.10 as adjusted under clause 5.11. The plaintiff relies upon its letter dated 28 September 2009 which sets out the plaintiff's calculations. The defendant has a number of arguments as to why the amount is not due, but essentially because, it is submitted, that the obligation to pay has not arisen.

Proper construction of clause 5.12 203The defendant submits that an express condition precedent to the defendant's obligation to pay any Skywalk Final Component was not fulfilled. He points out that the Deed contains obligations on the plaintiff to pay the Deferred Component (including by clause 5.2, the Skywalk Final Component) to the defendant in clause 5.1 and 5.12(b). 204Further, the defendant contends that the only obligation to pay the Skywalk Final Component to the plaintiff is contained in the last sentence of 5.12. Clause 5.12 relevantly reads: 5.12 Within 30 days of the last day of the Earn Out Period the Purchaser must: a. procure the Company to calculate the Skywalk Final Component and give a certificate to the Releasor signed by two directors of the Purchaser setting out the calculation of that Skywalk Final Component; ... The Releasor must, if the certificate given by the Purchaser to the Releasor in accordance with clause 5.12(a) shows that the Skywalk Final Component is a negative amount, pay the corresponding inverse amount to the Purchaser within 30 days of the date on which the Purchaser gives the Releasor the certificate. 205The defendant contends that it is common ground that the last day of the Earn Out Period was 30 June 2009, and therefore 30 days after that date was 30 July 2009. It is further contended that the plaintiff did not give any certificate to the defendant signed by two directors of the plaintiff setting out any calculation of the Skywalk Final Component on or prior to 30 July 2009. 206The defendant contends that in those circumstances there was no certificate in accordance with clause 5.12(a). The defendant contends that the terminology of the clause means that the certificate should be given in conformity with or consistently with the clause. Accordingly, the condition precedent (as asserted by the defendant) to the defendant's obligation to pay was not satisfied. It follows therefore that the obligation as set out in the last sentence in clause 5.12 did not arise and therefore there is no obligation on the part of the defendant to pay any Skywalk Final Component contained elsewhere in the Deed. 207The defendant contends, especially by reason of the use of the word "if" in clause 5.12 in the context of other words, that the act of the plaintiff giving a certificate to the defendant in accordance with the clause should be regarded as a condition precedent to the existence of an obligation on the part of the defendant to pay any negative Skywalk Final Component. The defendant contends that as such strict adherence to such a condition precedent is required. The defendant calls in aid remarks made by Samuels JA in Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 at 703G - 705F. 208Samuels JA in that case (at 704D) commented that if a provision is expressed in terms of a condition precedent this gives the clause or provision a character of essentiality. The defendant further contends that a condition precedent that includes a time stipulation enables the party to know where it stands contemporaneously and cannot be retrospectively satisfied. The defendant also relies upon Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 (at [95] per Bathurst CJ). 209In addition, the defendant contends that whether a time stipulation in a contract is an essential term is a question that needs to be answered in order to decide whether a party is entitled to terminate the contract for a breach of an essential term. No issue of termination of course arises in the current case. 210The plaintiff on the other hand submits that the certificate was not a condition precedent to the entitlement for payment. It submits the certificate was given but not within the time prescribed but that that only affected the time within which the defendant was obliged to pay. 211The plaintiff submits that the terms of the certificate are to be determined by the terms of clause 5.12. It is said by the plaintiff that the clause only requires that the certificate certify that a calculation has been undertaken by the Company. Further, that the directors are not certifying anything more than that the Company has calculated the Skywalk Final Component which is then set out in the certificate. 212In furtherance of the proposition that the certificate is not a condition precedent to liability to pay, the plaintiff relies upon clause 5.1 which provides that the plaintiff agrees to pay the Deferred Component and implicitly the defendant is to pay if the result is negative. Clause 5.10 provides for the calculation of the Skywalk Final Component at the end of the Earn Out Period and for adjustments. The plaintiff submits that the language is cast in such a way that assumes a likelihood that the defendant will be entitled to payment of the Skywalk Final Component. 213The plaintiff further submits that according to clause 5.12 the procedure to be adopted is the same whichever party is entitled to the payment of the Skywalk Final Component. It further contends that there is nothing to suggest that it only becomes a condition precedent in the event that the plaintiff is the party so entitled. Further, it submits the right is not conditional on the certificate and the calculation in accordance with clause 5.12. It is therefore submitted that the right to payment of a negative Skywalk Final Component would not depend on the giving of the certificate within the specified time. 214The plaintiff also contends that it is apparent from the language that the obligation to give the certificate within 30 days is not a condition for the entitlement of either party to payment. Rather, the time for the giving of the certificate creates an obligation on the plaintiff to notify the defendant promptly, and, assuming the defendant is to be paid the Skywalk Final Component, specify a time within which the payment must be made. Failure to give the certificate within 30 days or failure to pay the defendant any Skywalk Final Component within 30 days of the giving of a certificate would amount to a breach of the clause and hence lead to a right to damages. The plaintiff further contends that if it is the defendant who is to be paid, the late certificate would have no legal consequence and that time for payment would still run from the time the certificate was given. 215In addition to the above, and on the basis of the evidence, the defendant also submits that the certificate was not one in accordance with clause 5.12(a) for the reason that the certifiers do not investigate the facts and satisfy themselves as to the correctness of the matters certified (Shomat Pty Ltd v Rubenstein (unreported) Young J, 4 December 1995 and National Australia Bank Limited v Samson (No 2) (unreported) Young J, 9 September 1991). 216The defendant submits that, in cross-examination, Mr Squirrel conceded that there were many errors contained in the certificate which were not corrected and unsigned by the two directors of the plaintiff. Further, he agreed that it would not be possible to satisfy oneself about the correctness of the calculations that he prepared without a least considering the Deed together with the Skywalk general ledger for each of the financial years 2006 to 2009 inclusive (T157.45). 217Mr Squirrel's evidence was that Mr Driscoll made no enquiries of him at the time Mr Driscoll signed the document nor did Mr Squirrel have any recollection of Mr Harden asking for a copy of the Deed. 218The defendant also submits that none of the errors conceded by Mr Squirrel was corrected by the directors who made the certificate and that in turn supports the inference that the directors did not do anything to investigate the facts for themselves and satisfy themselves as to the correctness of matters in that certificate. The defendant submits that there is an inherent unlikelihood that the directors investigated the matters for themselves and coincidentally made the same errors that Mr Squirrel made which supports the conclusion that the directions did nothing except rely upon what Mr Squirrel had done and certainly did nothing to satisfy themselves as to the correctness of the matters in the certificate. 219The evidence discloses that Mr Driscoll certainly has been and remains an employee of a company associated with the plaintiff and that the court should draw the inference that he was not called because he would not have assisted the plaintiff's case on the question of whether or not he had performed any investigation of the facts to satisfy himself as to the matter certified. The defendant's short answer so put to the plaintiff's claim is that the condition precedent to the defendant's obligation to pay the Skywalk Final Component has not been fulfilled in which case the obligation did not arise. 220The defendant submits that the plaintiff's argument on the certificate should be rejected because it is based on the false premise that the giving of a certificate in accordance with clause 5.12(a) is stated in the Deed to be a condition precedent to an obligation on the plaintiff to pay the defendant. The obligation, the defendant contends, of the plaintiff to pay the defendant arises simply if the "Skywalk Final Component is a positive amount". I think that is correct. It is true, as the defendant submits, that the obligation does not depend upon the giving of the certificate by the plaintiff. It arises if in fact the calculation produces a positive amount irrespective of whatever the plaintiff may or may not have certified. Clearly, the certification is as to the calculation whatever the outcome might be. If positive then there is an obligation of payment on the part of the plaintiff, but if negative there is an obligation of payment by the defendant. 221I am of the view that the plaintiff has the better argument in relation to the construction of clause 5.12, namely, that the obligation arises not because of the certificate but because the calculation is either positive or negative. That is not to say that a party could not challenge the correctness of the calculation, quite to the contrary. But once correctly calculated then, subject to whether it is positive or negative, the obligation relevantly arises.

Incorrect calculation of Skywalk Final Component 222As an alternative argument the defendant contends that if he had an obligation to pay the Skywalk Final Component, the plaintiff's calculations in its 28 September 2009 letter are incorrect. Whilst there seems to be a measure of agreement about this there remains disagreement about the correct quantum of the adjustments to be made to the Skywalk Final Component under clause 5.11, and as to the correct amounts of the Skywalk Quarterly Components that were payable by the plaintiff to the defendant under clause 5.8. 223The defendant makes the point that there are three areas of error in relation to the calculation. 224First, the plaintiff's calculations included excessive allocation, it is submitted, of Skywalk revenue to the Skytour business. The defendant contends that the Deferred Component included payments calculated by reference to the revenues earned from the Skywalk business and payments based on the number of visitors (rather than revenues or other financial performance) of the Skytour business. The Deed, it is submitted by the defendant, contemplated that the plaintiff would sell combined tickets enabling a customer to attend both Skytour and Skywalk attractions. Accordingly, it was necessary for the parties to decide how revenues from the sale of combined tickets would be allocated to the Skywalk business for the purposes of the calculation of the Deferred Component. The defendant submits that this is dealt with in the definition of "Actual Revenues" in the Deed, which provides that the whole of the revenue from the combined ticket sales less $15.50 (escalated for CPI in later years) would be attributed to the Skywalk business. Contrary to that provision, when allocating revenue from sales of combined tickets, the defendant submits that the plaintiff deducted $24.50 from each adult ticket sale before allocating the balance to Skywalk thus understating the Skywalk revenue. 225The plaintiff accepts that the combined ticket revenue allocation of $24.50 to Skytour should have been $15.50 increased by the CPI rate (as defined) for each year after 30 June 2005 during the Earn Out Period. 226The defendant submits that secondly, the plaintiff's calculation of the Skywalk Final Component erroneously uses EBITDA data in respect of a period longer than the 14 quarter period referred to in the definition of integer B of clause 5.10 of the Deed. In its calculations, the plaintiff used the EBITDA for the last 16 quarters of the Earn Out Period contrary to the definition in integer B in clause 5.10 and thereby overstated the loss in its calculations. 227Again, the plaintiff accepts that this was an error in applying 16 quarters for the Earn Out Period. 228Thirdly, the defendant contends that the plaintiff's calculation includes erroneous adjustments under clause 5.23 of the Deed associated with the delayed completion of the Skywalk capital works. For reasons that I express below, I regard that the defendant's construction of clause 5.23 is correct and therefore the Skywalk Final Component has been erroneously adjusted in the plaintiff's calculation by reason of the plaintiff's misconstruction of clause 5.23. Therefore the plaintiff's basis for its claim for the negative Skywalk Final Component is unsound.

Proper construction of clause 5.23 229Clause 5.23 of the Deed provides: Delay in completion of Skywalk 5.23 Despite the provisions of this clause 5 the Releasor and the Purchaser agree that if the Skywalk Launch Date occurs after 31 March 2005 then, for every complete calendar month that the Skywalk Launch Date is delayed beyond 31 March 2005 the Skywalk Quarterly Components will be reduced by an amount of $75,000 per month. 230"Skywalk Launch Date" is defined in clause 1.1 to mean the date on which the Skywalk business commences in operation and the Skywalk is opened to the public. 231"Skywalk Quarterly Component" means, in relation to each respective quarter, the amount determined in accordance with clause 5.8. The issue between the parties is relatively straight forward. On the one hand, the plaintiff contends that the deduction of the $75,000 per month for every complete calendar month in which there is a delay should apply to each and every one of the ten Skywalk Quarterly Components under clause 5.8(b). 232The plaintiff's construction turns upon, straightforwardly, the use of the plural in terms of the Skywalk Quarterly Components. 233The defendant, on the other hand, contends that the plaintiff's approach is not in accordance with the proper construction of clause 5.23 and does not give a businesslike construction to the clause. 234The defendant contends that the words used in clause 5.23 do not include words indicating that the reduction is to be made to every one or each of the clause 5.8(b) and 5.8(c) Skywalk Quarterly Components (but not to any of the clause 5.8(a) Skywalk Quarterly Components). It is submitted the text of the clause is inconsistent with the plaintiff's construction. 235In addition, the defendant contends that the Skywalk Quarterly Components are, as the name suggests, amounts payable in respect of each quarter (or each three month period). The defendant suggests that it makes little commercial sense for a reduction calculated by reference to a six month delay period to be made to each of the fourteen Skywalk Quarterly Components under clause 5.8(b) and (c) each of which is payable in respect of a three month period and which altogether comprise a three and a half year period after the delay. 236In addition, the defendant contends that, assuming a six month delay, the plaintiff's interpretation of clause 5.23 has the effect that the defendant's entitlement to be paid the Skywalk Quarterly Components is reduced by a total of $1.8 million or $300,000 per month of delay notwithstanding the agreed reduction of $75,000 per month of delay specified in clause 5.23. 237The plaintiff has in its calculation: (1)deducted $450,000 from each and every of the ten Skywalk Quarterly Components under clause 5.8(b); (2)deducted $450,000 from each and every of the four Skywalk Quarterly Components under clause 5.8(c); and (3)made no deductions from the three post - 31 March 2005 Skywalk Quarterly Components under clause 5.8(a). 238The defendant contends that a reasonable person would understand the language in clause 5.23 to mean that the Skywalk Quarterly Components payable during the period in which the Skywalk Launch Date is delayed beyond 31 March 2005 will be reduced by $75,000 per complete calendar month of delay. Again, assuming a six month delay, this interpretation would have the effect that the defendant's entitlement to be paid Skywalk Quarterly Components is reduced by a total of $450,000 (being 6 times $75,000). 239The defendant contends that a slightly different interpretation which has an identical effect is that the calculated delay amount (in this case $450,000) is deducted from the first Skywalk Quarterly Component(s) payable under clause 5.8(b) or 5.8(c) following the Skywalk Launch Date (in this case the Skywalk Quarterly Component under clause 5.8(b) for the quarter ended 31 March 2006). 240In either case, the calculated delay amount is deducted once from the totality of the Skywalk Quarterly Components (and the deduction is not reversed out by the operation of integer D in clause 5.8(c)). 241Whilst the plaintiff relies upon the phrase "Skywalk Quarterly Components" being plural, the defendant says that this is an entirely appropriate phrase to be used because the clause contemplates the possibility that there might be a delay which exceeds one quarter (as there was in the present case), and therefore that more than one Skywalk Quarterly Component might need to be reduced. 242In addition, the defendant submits that there is more than one Skywalk Quarterly Component payable as there is more than one quarter in the Earn Out Period. Referring to the Skywalk Quarterly Components in the plural, it submits, does not have the consequence that each and every one of them (as opposed to those of them that are payable during the period of the delay, or alternatively the totality of them) is to be reduced. 243In my view, the construction to be placed upon clause 5.23 is that contended for by the defendant. 244The Deed, as I have indicated previously, was predicated upon consideration being paid as an up-front component and a Deferred Component. The Skywalk aspects of the Deferred Component of course were not to be paid at all if the construction of Skywalk had not been completed by 30 June 2008 so long as the purchaser used all reasonable endeavours to complete the construction by that date. Equally, the same applied if the operation of the Skywalk business had not commenced by 30 June 2008 by reason of circumstances out of the control of the purchaser and/or in circumstances where the purchaser "reasonably" considered that the completion or construction is no longer commercially viable. This is expressly provided for in clause 5.1. 245The Deferred Component, on the other hand, was to comprise two components related to the Skytour business and three as it were relating to the Skywalk business. 246The two components in relation to Skytour (clauses 5.3, 5.4, 5.5, 5.6 and 5.7) were all to be calculated by reference to an amount of $6 and upon the assumption that more than 690,000 visitors attended the Skytour attraction. 247The first of the Skywalk components is described as the "Skywalk Quarterly Component" (clause 5.8). It is made clear from this clause that there were going to be payments in relation to each quarter over a three and a half year period. 248The overarching commercial objective for this arrangement was clearly to permit both vendor and purchaser to convey an existing business and jointly to commercially exploit proposed business. As I have said previously, once in the total control of the purchaser the parties have clearly intended that there be an expeditious creation and hence exploitation of the proposed Skywalk business in circumstances where the vendor received a tangible but necessarily limited ongoing financial benefit so far as the proposed business was concerned. 249The various adjustments which comprise the integers for the Deferred Component of the payment in their own ways sought to strike a balance between on the one hand the purchaser being entitled to get on with its business and the making of money from it, but on the other, affording the vendor reasonable opportunity to commercially realise in a tangible sense the concept of the Skywalk business. This is particularly so not only because he invented the idea, but also because he went to the point of seeking and obtaining development approval. That business also came with the imprimatur of an experienced attractions operator in the guise of Mr Schulman and his consultant, Mr Silber. 250As I have also previously said, pursuant to clause 5.8, each Skywalk Quarterly Component was to be the subject of separate and discreet calculation. The Skywalk Adjusted Payment was payable by the defendant and to be calculated, in general terms, as 50% of a particular sum. That sum was to represent, in very broad terms, earnings less tax less such capital expenditure as was not otherwise to be included in clause 13.7 of the Deed. It is also worth observing that there is to be an adjustment by reason of integer D, which is the aggregate of all Skywalk Quarterly Components paid or payable. The proviso in clause 5.8 is to the effect that if the amount calculated as the Skywalk Adjusted Payment is negative, this amount "shall be set off seriatim against future Skywalk Quarterly Component(s) or, in the case of the Final Quarter, shall be deducted from the Skywalk Final Component as calculated in subclause 5.10". This is a clear indication that in the event that a set off is appropriate, it will only be set off against one or more (again where appropriate) of the Skywalk Quarterly Components. In my mind this goes to indicate that the parties were clearly intending very carefully and precisely to monitor and measure the business on a quarterly basis and make the appropriate agreed adjustments in order to provide fairly or effectively a 50/50 split. 251There are two further provisions in the Deed which in my view shed some light on the phrase Skywalk Quarterly Components as used in clause 5.23. In clauses 5.17 and 5.19 there are two situations predicted. In the first instance, a disposal of the Skywalk business, and in the second, a permitted shutdown. In relation to the disposal of the business, the purchaser is not entitled to dispose of the business prior to the second anniversary of the Skywalk Launch Date. But if it does so thereafter, one consequence is that it is released from its obligation to pay the Skywalk Quarterly Components for the balance of the Earn Out Period dating from the quarter of the disposal. In the case of the permitted shutdown, again, provided the shutdown occurs before the end of the Earn Out Period, the purchaser is released from its obligation to pay the Skywalk Quarterly Components for the balance of the Earn Out Period. 252Both of these provisions in my mind indicate that the degree to which the purchaser is relieved from the obligation to pay the Skywalk Quarterly Components is commensurate only with the balance of the Earn Out Period left to run. There is no suggestion that the purchaser should be credited with any Skywalk Quarterly Components paid up to the point of disposal or permitted shut down. This, in my mind, shows a measured approach to the relief granted to the purchaser for the Skywalk Quarterly Components. 253This fortifies my view that when construing clause 5.23, the plural which is used is descriptive of the total potential Skywalk Quarterly Components which may be paid. The relief, as it were, which the purchaser obtains from the delay is an amount of $75,000 "for every complete calendar month that the Skywalk launch date is delayed...". When one looks at this provision in the totality of the relevant provisions in the Deed and the over-arching commercial objective of the arrangements, it seems to me the language rationally points to a reduction of the number of complete calendar months multiplied by the amount of $75,000 per month in respect of the quarter or quarters, but not automatically in respect of each quarter. There is simply no occasion to magnify the agreed reduction to all quarters. It makes no commercial sense in my opinion, but more to the point, I simply think it is contrary to the language when properly understood in its context. 254There is however a further term which I think makes the point equally well. Clause 5.25 deals with the interruption of the Skywalk business. In the event that the business is interrupted completely or partially and as a result the Skywalk business is wholly terminated or otherwise wholly ceases or the purchaser intends to stop the business, then the purchaser is released again from any obligation to pay, importantly in my mind, "any further Skywalk Quarterly Components". This excludes, however, any amounts currently due and payable. Again, this is indicative, in my mind, of only the relevant quarterly components, not all of them, that are to be the subject of the discharge of the purchaser's liabilities. 255The purpose of clause 5.23 is to share the risk of delay of the Skywalk Launch Date between both parties, by partly relieving the plaintiff of its full liability to pay the relevant Skywalk Quarterly Components during the delay, whilst paying the defendant for the success or profitability of the business. That it should be relieved from the totality of the financial obligation in the event of a delay (unassociated with any fault on its part) cannot be questioned as a fair and reasonable outcome. But to translate the agreed discount per complete calendar month and conclude that it should be applied to every relevant quarter, comes with it an assumption that a delay of one complete calendar month would inevitably affect every quarter thereafter (let alone the multiple effect thereof) and would require the clearest words. The mere use of the plural in clause 5.23 is, in my view, insufficient to rationally warrant that result. 256This is especially so given there are other provisions dealing with such things as interruption to the business, cessation of the business (shutdown) where it is only the balance of the quarterly components that the purchaser is relieved from paying. 257This was a business being run by the purchaser but for the benefit of both parties. The idea that the purchaser should be entitled to a discount for anything other than the actual delay itself, would, in my view, potentially provide the plaintiff with a windfall which, given the elaborate and complex nature of this argument, could not have been intended. The result is that only the Skywalk Quarterly Components payable during the period in which the Skywalk Launch Date is delayed beyond 31 March 2005 will be reduced by $75,000 per complete calendar month of delay. 258It follows that the defendant's construction is correct and hence its calculations, not those of the plaintiff, are also correct.

Relevance of surrounding circumstances to construction of clause 5.23 259The defendant relies upon a letter passing between Grant Samuel (the then corporate advisors to the plaintiff) and Mr Silber dated 9 June 2004. The letter deals with a number of outstanding issues and in particular it contains the following statement. With regards to the timing of completion of Sky Walk, we realise that this is an issue on which reasonable minds can differ. You will also appreciate that we have accepted that Paul Sexton will have responsibility for delivery of the project. However we cannot accept 100% of the risk for late completion. Our assessment is that a six month delay beyond 31 December 2004 would impact our value by $800,000 k. Here we would propose that for every month beyond 31 December 2004 for which there is a delay in completion an amount of $150,000 will be deducted from future payments relating to Sky Walk. 260The defendant submits that clause 5.23 is ambiguous or susceptible of more than one meaning, and that the letter is therefore relevant to ascertaining the objective commercial aim of the parties. In particular, the defendant says the letter is evidence that the objective commercial aim of clause 5.23 was to provide some compensation to the plaintiff for the reduced value due to delay in circumstances where if the plaintiff was to accept 100% risk of delay, the plaintiff estimated that a six month delay would reduce the value of Skywalk to the plaintiff by $800,000. The defendant contends that his interpretation of clause 5.23 results in $450,000 compensation to the plaintiff for a six month delay, which he says is consistent with the objective commercial aim of clause 5.23 as ascertained by the letter of 9 June 2004. The plaintiff says that there is no relevant ambiguity in the meaning of clause 5.23 and therefore no permissible resort to the letter of 9 June 2004. The plaintiff also says that even if resort to surrounding circumstances is permissible, the letter constitutes evidence of understanding or intention and is not admissible for that reason. 261I have already set out the principles governing the permissible use of extrinsic material for the purposes of construing a contract (see [34]-[40] above). Although the letter indicates that certain matters relevant to clause 5.23 were known to both parties, the content of the letter, in my view, is really in the vein of negotiations or evidence of the actual intentions of the parties, both of which should not be admitted (see especially Franklins Pty Ltd v Metcash Trading Ltd at [24] per Allsop P and Fuji Xerox Finance Limited v CSG Limited [2012] NSWSC 890 at [58]). However, this conclusion as to the letter of 9 June 2004 does not detract from my conclusion as to the proper construction of the clause.

Relevance of finding of no breach of clause 13.1(a) 262The defendant further argued that although the proper construction of clause 5.23 was to reduce the Skywalk Quarterly Components by $75,000 per month only for the period of delay, the plaintiff in this case should not be entitled to any reduction whatsoever. The defendant says that this should follow because the plaintiff's right to receive any reduction at all to the Skywalk Quarterly Components under clause 5.23 was dependent on the plaintiff having fulfilled its "reasonable endeavours" obligation in clause 13.1(a), which the defendant alleges the plaintiff failed to do. Since I have (for reasons above) rejected the defendant's submission that the plaintiff has breached clause 13.1(a), there is no basis for depriving the plaintiff of the reduction to which it is entitled in accordance with the proper construction of clause 5.23.

Defendant's claims of breaches of the Deed by the plaintiff 263In his cross-claim the defendant alleges that the plaintiff has breached the Deed in various ways. The claims are said to be relevant in two ways. First, the defendant contends that the plaintiff's rights under clauses 5 and 13 were dependent on the plaintiff performing its obligations under those clauses and the plaintiff is not entitled to take advantage of its own wrong. Second, the defendant claims damages for breach by the plaintiff of clauses 5 and 13. 264Various arguments are relied upon by the defendant, including an alleged breach of clause 5.9. This in turn depends upon the construction of clause 5.23 which I have already dealt with, and on which I found in the defendant's favour (i.e. clause 5.23 authorises a reduction of $450,000, not $1.8 million, and the defendant's entitlement to that reduction is not taken away because of any alleged breach of its "reasonable endeavours" obligation under clause 13.1(a), as I have found there was no breach of that clause). 265Numerous other breaches are relied upon, for example a breach of clause 5.4 (in particular the failure within 30 days of the end of each financial year to procure the Company to calculate the Skytour Annual Component and provide an appropriate certificate). In addition, a breach of clause 5.9, in which it is alleged the plaintiff failed within 5 business days of the end of each March, September and December quarters in the Earn Out Period (or at all), to provide the defendant with details in writing of all visitors to Skywalk who obtain entry during the relevant quarter each day during that quarter. In addition, the defendant alleges a further breach of clause 5.9 by the plaintiff failing within 30 days of the end of each quarter in the Earn Out Period ending 30 June and the final quarter to provide the defendant with details in writing of the number of visitors to Skywalk who obtain entry relating to the relevant quarter each day during that quarter. 266The defendant also claims a breach of clause 13.1(a) (however I have already dealt with this issue). 267The defendant also claims that there were breaches of clause 13.1(b)(i) and (ii) by the plaintiff failing to cause the Company to hold management meetings in the relevant period and/or give notice of various meetings. 268In addition, there is alleged to be a breach of clause 13.1(b)(iii) by a failure on the part of the plaintiff to allow the defendant to appoint a nominee to attend quarterly management meetings. 269The defendant also contends the plaintiff breached clauses 13.1(c) and (e) by reason of the plaintiff's failure to cause the Company to prepare and deliver quarterly management accounts to the Skywalk business and/or prepare and deliver to the defendant within three months of the end of each financial year audited annual accounts for the Company in accordance with the clauses. 270Insofar as clauses 5.4, administrative aspects of clause 5.9, clauses 13.1(b)(i), 13.1(b)(ii), 13.1(b)(iii), 13.1(c), 13.1(d) and 13.1(e) were in fact breached, those breaches would go nowhere in my view because they are administrative provisions breach of which can hardly lead to any relevant award of damages (nor has any damage been shown). As I said previously, those breaches would not disentitle the plaintiff from seeking any negative Skywalk Final Component to which it might have been entitled. The plaintiff's claim for the negative Skywalk Final Component failed on another basis, namely that its calculation of the alleged negative Skywalk Final Component was fundamentally flawed because of its misconstruction of clause 5.23.

Breach of "good faith" obligation under clause 13.9? 271Perhaps significantly, the defendant alleges breach of clause 13.9 in that the plaintiff, it is asserted, failed to act in good faith to use its commercial judgment to maximise economic returns from the Skywalk business and Skytour business until all payments required to be made by the plaintiff to the defendant under clause 5 of the Deed have been made. 272Clause 13.9 is in the following terms: Maximisation of economic returns 13.9 Subject to the terms of this Deed, the Purchaser will, acting in good faith use its commercial judgment to maximise economic returns from the Skywalk Business and the Skytour Business until all payments required to be made by the Purchaser to the Releasor pursuant to clause 5 have been made. 273The defendant submits that clause 13.9 required the plaintiff to positively exercise a commercial judgment by considering possible acts or omissions and deciding what acts or omissions would achieve the objective of maximising economic returns from Skytour and Skywalk during the Earn Out Period. The defendant further submits that the notion of maximising economic returns requires alternatives to be considered and compared and the option that would result in the highest return to be selected. The defendant submits that one could not be said to "maximise" returns by considering only one course of action. 274The defendant submits that any commercial judgment implemented which took into account economic returns for other businesses owned by the plaintiff would be in breach of clause 13.9 as the clause obliges the purchaser to maximise the economic returns specifically of the Skywalk business and the Skytour business. Further, it obliges the plaintiff to maximise the economic returns until "all" payments required to be made pursuant to clause 5 have been made. This, in turn, the defendant submits, requires maximising of returns during the Earn Out Period and not over a longer period. 275The plaintiff submits that the obligation is dominated by subjective elements. Essentially it submits the plaintiff was bound to use its commercial judgment in endeavouring to maximise the returns of both businesses. The plaintiff emphasises the focus on "commercial judgment". The plaintiff submits that that inherently leaves no room for any objective test of acting reasonably. Further, the plaintiff contends that it should be acknowledged that the businesses were to operate in a relatively novel area with no history for Skywalk and little history for Skytour. Therefore opinions about how best to conduct such businesses are matters about which reasonable minds effectively would differ. 276The plaintiff also emphasises that it is the purchaser's commercial judgment which is relevant, qualified only by an obligation to act in good faith which means honestly and true to purpose although it may not necessarily be objectively reasonable. 277Although the clause is not entirely clear, it does seem to me that the requirement to act in good faith does include an obligation to comply with standards of conduct that are reasonable having regard to the interests of the parties (Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [12] and [146]). 278The Court of Appeal in Burger King Corp v Hungry Jack's Pty Ltd (2001) 69 NSWLR 558 at [169] - [171] said: [169] We have already touched upon this: see especially from 566 [146]ff supra. However, it is worth noting that the Australian cases make no distinction of substance between the implied term of reasonableness and that of good faith. As Priestley JA said in Renard Constructions (at 263): "The kind of reasonableness I have been discussing seems to me to have much in common with the notions of good faith". [170] Priestley JA commented further (at 265) that: "... in ordinary English usage there has been constant association between the words fair and reasonable. Similarly, there is a close association of ideas between the terms unreasonableness, lack of good faith and unconscionability". [171] Rolfe J observed that in Alcatel Australia, Sheller JA (at 369) appeared to equate the notions of "reasonableness" and "good faith". Whilst Sheller JA did not say that in terms, his review of the case law and academic and extra-judicial writings on the topic, clearly support the proposition. In addition to his references to Renard Constructions, Sheller JA (at 367) referred to the statement of Sir Anthony Mason in his 1993 Cambridge Lecture, that it was probable that the concept of good faith "embraced no less than three related notions": "(1) an obligation on the parties to co-operate in achieving the contractual objects (loyalty to the promise itself); (2) compliance with honest standards of conduct; and (3) compliance with standards of contract which are reasonable having regard to the interests of the parties." 279The defendant's contentions as to what clause 13.9 amounts to in terms of the actual obligation clearly provides a better view of the law and if I may say so a better view of the clause. In my mind it is inconceivable that merely because somebody acts honestly but unreasonably they could be said to act in good faith. It is perfectly understandable why the two notions must work hand in hand. This is consistent with comments recently made by Allsop P (as his Honour then was) writing extra-curially (J Allsop, "Good Faith and Australian Contract Law: A Practical Issue and a Question of Theory and Principle" (2011) 85 Australian Law Journal 341). 280The defendant contends that in two particular areas the plaintiff failed in its obligations pursuant to clause 13.9. First, in relation to sponsorship, and secondly, in relation to advertising and marketing.

Sponsorship efforts 281The defendant points to the fact that in the year 2000 Skytour had entered into a sponsorship agreement with Telstra under which Telstra agreed to pay $500,000 per annum for the right to sponsor Skytour. By November 2005, Mr Silber made a request to Mr Fulford and Mr Bush that the plaintiff engage an external advertising agency to assist to procure sponsorships. That request appears in Mr Bush's notes of the conversation and Mr Bush gave evidence that such a request was made at that time. The defendant contends that that request was ignored by the then CEO and the marketing director between November 2005 and January 2008. 282The defendant contends that in January 2008, Mr Bush, who had been a director of the plaintiff since February 2006 and CEO since May 2007, turned his mind somewhat belatedly to seeking sponsorship for the group's attractions. Mr Bush engaged an advertising agency, Brand Advantage, for that purpose because he thought it was necessary to do so in order to obtain the best possible sponsorship contract. 283Brand Advantage undertook an independent assessment of the value of the sponsorship package and valued the Skytour and Skywalk rights at approximately $385,000 per annum. The plaintiff indicated to Brand Advantage that it wanted to optimise the sponsorship revenue across all attractions and it was decided that the optimal option would be to put the three attractions together. Brand Advantage went to market with a bundled offering with the combined attractions of the plaintiff which had the effect of increasing the price of the offering. 284News Limited apparently was interested in the offering but was conflicted because of the inclusion of Sydney Aquarium and Sydney Wildlife World. 285In June 2008, Optus stated that whilst many of the properties were a solid fit for an Optus branch, the cost of the bundle offering was beyond their budgets. Branch Advantage then approached a significant number of organisations but not one was interested in the combined package. No sponsorship as such was every procured for Skytour and/or Skywalk. Mr Bush did not seek any advice from an expert in the sponsorship market and the defendant contends that there is simply no evidence that the plaintiff ever took steps to seek to procure a sponsorship contract for Skytour and Skywalk separately from the Sydney Aquarium and Sydney Wildlife World. 286The other side of the coin, as often is the case, looks very different. The plaintiff asserts that Mr Fulford did not reject Mr Silber's advice. He simply did not accept it. Approaching Brand Advantage, it is submitted, was an entirely appropriate thing to have done. 287The plaintiff contends that when Brand Advantage was retained it checked the target audience identified by the plaintiff. 288The plaintiff made contact with a Ms Fiona Williams from Optimum Media Direction Pty Limited. At the relevant time in April 2006 she was Business Director. The role included creating media solutions to clients' briefs to achieve brand awareness by researching target markets. 289Her company only became involved in the media strategy planning and buying for the plaintiff from about March 2008 but was not involved in the launch of Skywalk. 290Optimum Media Direction is a global media agency with 97 agencies around the world. It has thousands of employees globally and more than 400 employees in Australia. It specialises in media strategy planning and buying and relies upon research of target audience, marketplace, conditions, competitive landscape and the positioning of the brand and/or product. It uses a series of software tools for its research purposes and obtains statistics from Roy Morgan Asteroid. It analyses all aspects of media such as audio, visual and print. 291Ms Williams sets out in her statement the analysis undertaken by Optimum both in terms of the print media and radio and television. Although she had little memory of what in fact she did, there are a number of spreadsheets attached to her evidence showing the contacts made with various aspects of the media in relation to the plaintiff. It is clear that she and perhaps those assisting her undertook significant research analysing all media plans for a particular campaign, which was scheduled for Easter in 2008. 292She confirmed, for example, in re-examination, that having undertaken the research that she sets out in her statement, she was able to corroborate the appropriateness of the target audience which had previously been identified by the plaintiff prior to her undertaking her work as being correctly targeted. In that regard I accept her evidence as I do generally her evidence otherwise. 293There was some criticism brought by the defendant as to the bundling packing of the Skywalk and Skytour businesses. Quite frankly I can readily envisage that this is a matter about which reasonable minds may well differ but I can certainly appreciate the obvious synergies between bundling that package. Mr Barnacle gave evidence to that effect and I accept his evidence in that regard. It is clear that with both businesses integrated both physically and in terms of the type of attraction, I can understand that it made sense to bundle the two. 294There is a criticism that effectively there was too little too late in terms of seeking to obtain sponsorship. I do not accept that. What I think the evidence does, on balance, portray, and this I think is the better view, is that at the relevant time people were not spending money on sponsorship. Indeed, 2008, as it turned out both in this country and elsewhere, is seen by many as the start of significant financial hardship across all industries. 295However, it is worth observing that many approaches were made to Optus. Approaches appear to have been made in April, June and July of 2008. Presentations were made but were largely unsuccessful. 296The evidence discloses that Telstra was not interested in renewing its association, and Optus was not interested in a bundle package even at a very low rate of $200,000. I do not think that this reflects any disagreement as to the attractiveness of a bundle proposition but rather the marketplace simply not having any appetite for the injection of funds to that effect. 297The evidence also supports approaches to BankWest, ANZ, Credit Suisse, Ernst and Young, Fairfax and others in March, April and May of 2008. A problem that was encountered, for example, with News Limited was its relationship with Taronga Zoo and therefore the perceived conflict in sponsoring the Sydney Attractions Group. 298In all the circumstances therefore and on the evidence I am simply not persuaded that the plaintiff breached clause 13.9 insofar as its activities were directed to sponsorship. I therefore reject the defendant's case in that regard.

Advertising and marketing efforts 299The defendant makes the point that the original Skywalk budget did not allow for a major media campaign but instead relied upon a public relations driven launch, regarded as a soft launch involving only modest expenditure. An unbudgeted media spend of $250,000 was agreed in November 2005 to attempt to stimulate bookings and sales of gift certificates pre-Christmas. 300By February 2006 the defendant contends that the results of customer opinion surveys indicated that television was the most successful media driver of visitation by the domestic market, delivering one in four bookings according to customer opinion surveys. The television campaign was aired in a 21 day period from 4 December to 24 December 2005 at a cost of $110,000. The defendant further contends that by February 2006 the plaintiff had made an assessment that the Skywalk product needed a highly visual explanation with television being the most effective means for this purpose. On the evidence, or so the defendant contends, as at February 2006 there were insufficient funds within the current budget for the campaign on paid television. The defendant points to a number of board papers indicating that at various meetings comments were made such as budgets being tight, and in particular at a board meeting of 28 August 2007 in relation to Skywalk the observation that marketing expenses were 53.8% on budget due to phasing. 301The defendant further contends that throughout the whole period Skywalk was performing poorly. In the period from the Skywalk Launch Date to 31 December 2005, actual visitors were 6,000 against budgeted visitors of 19,000 and EBITDA was negative $920,000 against a budgeted EBITDA of positive $536,000. By financial year 2006, actual visitors were 16,000 against budged 48,000 and EBITDA continued to be negative at $1,035,000 against budgeted EBITDA of positive $1,824,000. The defendant also submits that the number of visitors did not improve in a financial year 2007. 302The defendant points to Mr Bush becoming CEO in May 2007 and his expressing the view that Skywalk was not working and further that he thought Skywalk had been under performing continuously since January 2006. In 2008 the defendant contends that Mr Bush introduced a new business model for Skywalk involving a substantially reduced admissions price and shorter visitor experience but points out however that this was more than two years after the launch of Skywalk. It was also pointed out by the defendant that the former CEO had not taken such steps in the 19-month period from the Skywalk Launch Date to May 2007. 303The defendant does concede that monies were expended with Optimum which was engaged by the plaintiff in March 2008. He also accepts that during the period March 2008 to 30 June 2009 the plaintiff spent $2,542,950 on advertising of which he alleges however $123,063 was advertising dedicated to Skytour and/or Skywalk. He also makes the point that none of the advertising dedicated to Skytour and/or Skywalk involved television advertising. He also points to a lack of an explanation on the part of the plaintiff as to why only 5% of the advertising spend was dedicated to Skytour and/or Skywalk. The defendant also points to the fact that the Sydney Aquarium and Sydney Wildlife World attractions were part of the plaintiff's advertising account with Clemenger but Skytour and Skywalk were not. Nor was there any explanation as to why Clemenger had not been retained to market or advertise Skywalk or Skytour. 304All the while, the defendant says the plaintiff knew from January 2006 that Skywalk was performing significantly below expectations and further he contends that the plaintiff must have known that television was the most effective form of advertising to attract customers. However, no significant television advertising for Skywalk was undertaken after December 2005. 305The plaintiff says in response that, perfectly understandably for the opening and following months, the concept of a "soft" launch in terms of media campaign followed by a significant and successful television campaign with related media added for a limited period prior to Christmas or school and related holidays, was the perfectly explicable and acceptable approach. 306The parties called expert evidence. The plaintiff relied upon a report of Mr Barnacle, and the defendant upon a report of Mr Boundy. A Ms Bensley was called by the defendant, but I was unimpressed with her evidence and found it of no assistance at all. In submissions, the defendant placed no reliance on Ms Bensley's evidence, and the plaintiff said her evidence "was of no effect". For example, during cross-examination (at T442-T446) it emerged that a number of Ms Bensley's suggestions, such as having sky jumping facilities, hosting celebrities, or lighting up Centrepoint Tower, were either not permitted by Council, not properly investigated, not costed and likely to be unfeasible. Both Mr Barnacle and Mr Boundy had appropriate expertise and experience. In Mr Barnacle's case he had worked since about 1979 for various advertising agencies in Australia and elsewhere, starting his own in 1993. In about 2000, the business which he co-founded was sold to Clemenger Communications. Thereafter he had a career with that organisation in various forms until he partly retired in 2010. On the other hand, Mr Boundy worked in the advertising, marketing and media industry for about 25 years and had a good deal of experience in developing sponsorship contracts, analysis of target audience and strategic media campaigns, and giving advice on various services to major corporations in Australia, such as the Commonwealth Bank of Australia and Qantas Holidays. 307Mr Barnacle was supportive of the soft launch and spending money on a campaign later to catch the holiday period. He supported, it seemed to me, a focussed approach at a time when a campaign might be thought to be more effective, or as he put it, "there is no point fishing where there is no fish" (T487.30). 308It was put to Mr Barnacle that by reason of the fact that the Skywalk marketing budget did not allow for a major media campaign in the period from the Skywalk Launch Date (in October 2005) to Christmas of that year was not reasonable if the owner wanted to maximise economic returns. He said he could not agree with that proposition because a soft launch implied that you save your money until the peak period. He also said that merely because $123,000 had been allocated to an advertising budget for Skytour and Skywalk it did not follow that the owner was failing to maximise economic return. He observed that his impression was that the Sydney Attractions Group had a very effective public relations approach and his view was that one only bought media when one had to. He also thought that the attractions had obtained a great deal of free publicity which would assist in keeping costs low in that regard. He also explained that in his opinion advertising in public relations was about awareness not sales. His view was that if you have a high awareness you might get the sales, but the two do not always follow hand in glove as he put it. He thought, to have arrived at the assessment to keep the budget low at that relevant point in time, may well have been a reasonable approach to adopt in the circumstances. 309Notwithstanding the above, Mr Barnacle did accept that the Skywalk advertising expenditure was modest and that a soft launch was likely to generate modest sales. He accepted that a major advertising launch would be likely to generate significantly greater sales than a soft launch but that all turned upon the effectiveness of a major advertising launch. 310Mr Boundy was critical of the absence of a budget for major media campaigns in either 2005 and 2006. He thought this was a serious omission in contemplating the launch of a high profile asset. He also expressed the view that the actual marketing expenditure in the lead up to the launch of Skywalk in October 2005 was modest and below budget. Further, he expressed the view that the results of the December 2005 media campaign indicated that television advertising was the most effective media. 311In addition, he intimated that the absence of any budget for any significant new television campaign after February 2006 was, as he described it, a "recipe for failure", because television advertising delivered one in four bookings. He thought a reasonable and proper marketing or advertising campaign would have required at least four campaigns each of two to three weeks in duration, and television activity in the nine months from September 2005 to June 2006. He thought television was an ideal medium because of the very nature of the attraction. 312Mr Boundy had to accept, as was obvious, that much of the criticism he levelled at the marketing and advertising strategy/budget was with the benefit of hindsight. Mr Barnacle thought that radio was a cost effective way to extend the reach of television. 313I think it may be said quite fairly that Mr Boundy's evidence is simply representative of a person who no doubt felt strongly about the views he expressed but really ought to be seen as one of a number of views reasonably open and expressed very much with the benefit of hindsight and without regard to the specific circumstances of the Skywalk and Skytour businesses. In that regard none of the experts could do any more than express their own personal views, as I see it, as to how they may or may not have spent the available budget. 314On balance, I think the proposition advanced effectively by Mr Bush and Mr Barnacle, that the pursuit of the bundled approach that gained the benefit of the existence of the Sydney Aquarium and other attractions to lead customers to Skywalk and Skytour, was one reasonably open. I see nothing wrong with that approach. I should add that in Mr Barnacle's case, whose evidence on balance I prefer over that of Mr Boundy, he had a lot of experience in the years 2000 to 2009 supervising the Village Roadshow account which included involvement with and awareness of Movie World, Sea World, Sydney Aquarium and Sydney Wildlife World. As such, he was directly responsible for the communication strategy of all those entities and supervised the creative and budget management thereof and the delivery of media plans and so on. It is true that he did not have direct experience with Skytour and Skywalk but I think the analogous businesses which he was associated with gives him, in my view, along with his evidence, an edge over that of Mr Boundy. 315As I have already observed, Mr Boundy held his views strongly but there is certainly no evidence from which one could accept that to have adopted a different approach would necessarily have led to a different outcome. An element of Mr Boundy's evidence did, it seemed to me at least, proceed somewhat artificially on the basis that there were no constraints on the budget, which as a matter of practical reality may be the ideal for professionals such as him, but is, I would expect, rarely the case and certainly not during difficult times.

Summary of findings as to defendant's allegations of breach by the Plaintiff 316In the circumstances, I am unpersuaded that the plaintiff did not use its commercial judgment to maximise economic returns from the Skywalk and Skytour businesses. The failure to budget for a major media campaign around the Skywalk Launch Date, I do not believe, could be regarded as incompetent or lacking in good faith. On one view it was a shrewd and perhaps astute approach given the nature of the attraction. Nor do I think it could be said that in allocating its budget the way it did it effectively sacrificed the Skywalk or Skytour businesses contrary to its obligation pursuant to clause 13.9. In the result, I am by no means persuaded there has been a breach of that provision on the part of the plaintiff, and I therefore reject the defendant's case on that aspect. 317It follows from my rejection of the defendant's claim that the plaintiff was in breach of clause 13.9 that there is no need to quantify damages. 318I have, for reasons already stated (at [176]-[186] above), rejected the defendant's claim that the plaintiff breached its "reasonable endeavours" obligation under clause 13.1(a). 319In relation to various other breaches the defendant alleges against the plaintiff (namely clauses 5.4, administrative aspects of clause 5.9, clauses 13.1(b)(i), 13.1(b)(ii), 13.1(b)(iii), 13.1(c), 13.1(d) and 13.1(e)), I have held that no damage has been shown (mainly because these provisions are merely administrative and can hardly lead to an award of damages). 320The defendant is however entitled to be paid Skywalk Quarterly Components, to be assessed in accordance with my findings as to the proper construction of clause 5.23 (with the consequence that a total reduction of $450,000 is authorised). The defendant is entitled to interest on those amounts, to be calculated in accordance with clause 6 of the Deed.

Conclusion 321I would invite the parties to prepare short minutes reflecting my reasons and to arrange with my Associate an appropriate time to be heard on costs.

Amendments 01 July 2013 - Coversheet amended Amended paragraphs: Coversheet 21 August 2013 - word change "effort" to "evidence" in 168 and "on" to "in" and deletion of following part sentence in 78 Amended paragraphs: paragraphs 78 and 168 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 August 2013