United Petroleum Pty Ltd v Pentaco Oil

Date of hearing: 16, 17 and 22 December 2015

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

Counsel for the Applicant: JP Moore QC with C van Proctor

Solicitor for the Applicant: Corrs Chambers Westgarth

Counsel for the Respondents: MD Wyles QC with MI Borsky and CJ Tran

BETWEEN: UNITED PETROLEUM PTY LTD (ACN 085 779 255) Applicant

AND: PENTACO OIL (AUST) PTY LTD (ACN 006 506 056) First Respondent

YARRASIDE SERVICE STATION PTY LTD (ACN 005 947 688) Second Respondent

GEORGE ANDRIANOPOULOS (and others named in the Schedule) Third Respondent

JUDGE: MOSHINSKY J DATE OF ORDER: 19 FEBRUARY 2016

1. Within 7 days the parties file minutes of orders to give effect to these reasons for judgment. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A. INTRODUCTION 1 The applicant (United) is a supplier of petroleum products. The first respondent (Pentaco) is an operator of petrol stations. It is owned and controlled by four brothers and their brother-in-law, who are the third to seventh respondents to this proceeding (the Directors). 2 In October 2011, United and Pentaco entered into a supply agreement for the sale of petroleum products by United to Pentaco (the Supply Agreement). The Supply Agreement relates to the supply of petroleum products for seven petrol station sites (the seven sites) and runs for a term of five years. The petrol stations are branded 'United' and operated by Pentaco. The Supply Agreement is currently in place. 3 The Supply Agreement contains a 'right of first refusal', the general effect of which is that if Pentaco proposes to dispose of a freehold, leasehold or beneficial interest in any of the seven sites, it must first offer to dispose of the interest to United, stating the price and the terms and conditions of the offer. 4 The problem which has given rise to this litigation is that Pentaco does not actually own any of the seven sites. Six of them are owned by the second respondent (Yarraside), which is another company owned and controlled by the Directors; the seventh site is owned directly by the five Directors. 5 United contends that at the time it negotiated and entered into the Supply Agreement, the respondents represented (including by failure to inform) that Pentaco was the registered proprietor of the seven sites and that, upon entry into the Supply Agreement, United would be entitled to and would receive the benefit of a right of first refusal in respect of any sale or lease of the seven sites. United contends that, on the faith of the representations and induced by them, it assumed those matters to be the case. United contends that, if it had known that the seven sites were not owned by Pentaco, it would have insisted that Yarraside and the Directors be included as parties to the Supply Agreement, so that they would be bound by the right of first refusal. In all likelihood, United contends, Yarraside and the Directors would have agreed to this. 6 In January 2015, Yarraside and Pentaco entered into a non-binding agreement, referred to as a proposal, to lease the seven sites and sell equipment to another company operating in the industry, Puma Energy Australia Pty Ltd (Puma). (Although one of the seven sites is owned by the Directors, the proposal proceeded on the basis that Yarraside was the owner of all seven sites.) The proposal provided for a lease term of 10 years, an annual rental of $2,080,000 per annum plus GST, 3 x 5 year lease options in respect of each site, rent reviews, and other matters (the Puma proposal). 7 On 31 March 2015, Pentaco wrote to United. After indicating that Pentaco was a monthly tenant from Yarraside of the seven sites (which was inaccurate as to the one site owned by the Directors), the letter stated that Pentaco had been advised by Yarraside that Yarraside intended to determine its monthly tenancy and to lease the sites on terms which were then set out in the letter, which related to rent, permitted use, the lease term, options and rent reviews. The terms reflected the terms of the Puma proposal, albeit in less detail. The letter then stated that Pentaco was not in a position to offer to lease on such terms, but under the terms of the Supply Agreement, United was "entitled to a right of first refusal to a lease on similar terms" and Pentaco "in a spirit of goodwill" had requested Yarraside to extend such an offer to United. The letter stated that Yarraside "may be prepared" to lease the sites to United on the same terms mentioned earlier in the letter and stated that United was "hereby notified" that Yarraside would not proceed with such an arrangement for 14 days. The letter concluded: "If you wish to accept an offer to lease on similar terms please notify us on behalf of Pentaco and Yarraside of your acceptance or rejection." 8 On 8 April 2015, following a conversation between the parties, one of the Directors sent an email to United with the subject line "Offer to Lease - Further Information". The email referred to the 31 March 2015 letter and then set out "clarifications and further information". The email concluded: "The offer stands as per the original letter dated Tuesday 31st March 2015. Awaiting your acceptance or rejection as per the original letter." 9 On 9 April 2015, United wrote to Pentaco. The letter referred to the 31 March 2015 letter and the 8 April 2015 email and stated: "I confirm that [United] accepts the offer set out in the above correspondence." 10 The issues in this proceeding may be shortly stated: (a) First, United contends that the correspondence dated 31 March, 8 April and 9 April 2015 constituted an agreement to lease the seven sites and seeks specific performance. The respondents deny that any agreement to lease came into existence principally because: there was no intention to create legal relations; the letter dated 31 March 2015 was an invitation to treat, not an offer; and there was a lack of essential terms. (b) Secondly, and in the alternative, United contends that if there is no agreement to lease, then in the circumstances described above it would be unconscionable for Yarraside and the Directors to resile from the representations set out in paragraph [5] above and they are estopped from so resiling. United seeks an injunction restraining Yarraside and the Directors from disposing, leasing or otherwise dealing with the sites until they have granted a lease of the sites to United on the terms of the alleged agreement to lease. Further, United contends that the right of first refusal having been engaged by the Puma proposal, the appropriate relief is an order requiring Yarraside and the Directors to offer the interest the subject of the proposed disposition to United on no less favourable terms. Alternatively, United seeks compensation for loss and damage. In response, the respondents contend, in summary, that the alleged representations were not made; that there was no detrimental reliance by United; and that, in any event, United is not entitled to the relief sought. (c) Thirdly, also in the alternative to paragraph (a) above, United contends that the respondents engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law. This allegation relies on essentially the same facts and matters as the estoppel case. The respondents raise essentially the same contentions in response. 11 In summary, I have concluded as follows: (a) In my view, the correspondence dated 31 March, 8 April and 9 April 2015 did not constitute an agreement to lease. Although I have concluded that, on the proper construction of these documents, there was an intention to create legal relations, the parties failed to agree on the commencement date for the lease or on a mechanism for its ascertainment. As this is an essential term of a lease or an agreement to lease, no concluded agreement was formed. (b) In relation to the estoppel case, in my view, Yarraside and the Directors did represent (including by failing to inform) that Pentaco was the registered proprietor and beneficial owner of the seven sites and that, upon entry into the Supply Agreement, United would receive the benefit of a right of first refusal in respect of any proposal to sell or lease any of the sites. Induced by the representations, United assumed that Pentaco was the owner of the sites and that United would receive the benefit of a right of first refusal in respect of any proposal to sell or lease the sites. In my view, it is very likely that, had United been told that the sites were not owned by Pentaco, it would have insisted that Yarraside and the Directors be included as parties to the Supply Agreement. The right of first refusal was important to United and without the registered proprietors being parties to the Supply Agreement, the right of first refusal would be effectively worthless. Further, in my view, it is very likely that the respondents would have agreed to this course: they had agreed to give the right of first refusal; there is no good reason why they would not have agreed to make it effective. In the circumstances, in my view, it would be unconscionable for Yarraside and the Directors now to resile from the representations and they are estopped from doing so. The appropriate relief is an injunction restraining them from disposing of a freehold, leasehold or beneficial interest in the seven sites during the term of the Supply Agreement unless they have offered the interest to United in accordance with the right of first refusal provisions in the Supply Agreement. However, I do not consider that there should be an order requiring Yarraside and the Directors to make an offer to United reflecting the terms of the Puma proposal. This is because the right of first refusal provisions, properly construed, operate as a limited restraint on disposition rather than conferring an independent requirement to make an offer to United in the event that it is proposed to sell or lease a site. As the respondents are not currently proposing to proceed with the Puma proposal, the right of first refusal provisions do not require an offer to be made to United. (c) For essentially the same reasons, I conclude that the respondents engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law. The appropriate relief would be an injunction in the same terms as that granted in relation to the estoppel case. The issue of loss or damage did not form part of the trial.

B. PLEADINGs AND PROGRESS OF THE TRIAL 12 The pleadings of both sides were amended during the course of the trial. United's final pleading was its Further Amended Statement of Claim (statement of claim), while the respondents' was their Amended Defence (defence). 13 The statement of claim identifies the seven petrol station sites relevant to the proceeding as follows: (a) 1365 Princes Highway, Pakenham; (b) 625 Lower Dandenong Road, Dingley; (c) 48 Princes Highway, Doveton; (d) 82 Barkers Road, Hawthorn; (e) 50 South Gippsland Highway, Dandenong; (f) 265 Darebin Road, Thornbury; (g) 645 Bridge Road, Richmond. 14 There was no issue regarding ownership of the sites. The registered proprietor of the first six sites (referred to in the statement of claim as the "Yarraside Premises") was Yarraside. The joint registered proprietors of the seventh site (referred to in the statement of claim as the "Richmond Premises") were the third to seventh respondents, namely George Andrianopoulos, Konstantinos (Con) Andrianopoulos, Vasilious Andrianopoulos, Stan Andrianopoulos and Tony Hadjistamatis, referred to herein as the Directors. 15 It was pleaded, and admitted, that both Pentaco and Yarraside were trading corporations within the meaning of ss 4 and 131(1) of the Competition and Consumer Act 2010 (Cth) and s 18 of the Australian Consumer Law, being Sch 2 to that Act (Australian Consumer Law). It was also pleaded, and admitted, that each of the Directors was a director of Pentaco and a director and shareholder of Yarraside. 16 The first substantive section of the statement of claim sets out United's agreement to lease case. Two agreements are alleged, one relating to the six sites owned by Yarraside, the other relating to the site owned by the Directors. The pleading in relation to each follows the same format and relies on the same documents as constituting the agreement. For example, paragraphs 9 and 10 of the statement of claim are in the following terms: 9. By an agreement entered into on or about 9 April 2015, Yarraside agreed to lease the Yarraside Premises to United (the Yarraside Agreement). PARTICULARS The Yarraside Agreement was partly in writing and partly to be implied. Insofar as it was in writing, the Yarraside Agreement was constituted by: A. a letter dated 31 March 2015, signed by George Andrianopoulos, containing an offer to lease the Yarraside Premises to United on specified terms and seeking United's acceptance or rejection of the offer; B. an email sent on 8 April 2015 from Con Andrianopoulos to David Szymczak of United, providing further information to United in relation to the offer in paragraph A above, and confirming that United's acceptance or rejection of the offer was awaited; C. a letter dated 9 April 2015 from United to George Andrianopoulos accepting the offer in paragraph A above. A copy of each of the documents may be inspected at the office of United's solicitors. Insofar as the Yarraside Agreement was implied, it was implied by law, alternatively in fact by reason of the need to give business efficacy to the Yarraside Agreement. 10. Pursuant to the Yarraside Agreement, Yarraside agreed to: (a) lease the Yarraside Premises to United for a period of 10 years with three additional five-year options, upon the determination of a monthly tenancy; (b) finalise the lease and related documentation; and (c) do all things necessary to give effect to the Lease Agreement. PARTICULARS The term in subparagraph (a) was express and contained in the offer referred to in paragraph A of the particulars subjoined to paragraph 9 above. The terms in subparagraph (b) and (c) were implied by law, alternatively in fact by reason of the need to give business efficacy to the Yarraside Agreement. 17 Paragraph 11 pleads that, in breach of the agreement, from about 16 April 2015, Yarraside has failed, refused or neglected to comply with its obligations in paragraph 10. Paragraph 12 alleges that United is and at all material times has been ready, willing and able to lease the premises. Paragraph 13 pleads that, by reason of Yarraside's breach of the agreement, United has suffered, and will continue to suffer, loss and damage. The pleadings in relation to the Richmond Premises are essentially the same, save that they refer to the Directors rather than Yarraside. 18 These allegations are denied in the defence. Further, the respondents plead a number of specific responses to United's agreement to lease case. In paragraph 9D, the respondents plead that it was a term of the Supply Agreement that Pentaco not dispose of its leasehold in the sites until it had offered to sell the leasehold to United. In paragraph 9F, the respondents plead that at no time did Pentaco dispose, seek to dispose, or propose to dispose of its leasehold. The respondents plead that, in the circumstances set out in the pleading (not all of which I have referred to here), Pentaco was not under any obligation to offer to sell the leasehold to United. 19 Further, the defence sets out aspects of the 31 March 2015 letter and the 8 April 2015 email and alleges that the only effect of these communications was "a conditional indication by Pentaco that Pentaco was prepared to seek to procure from Yarraside an offer to United to lease, on terms including those set out in the 31 March letter and the 8 April email, the petrol station sites to United, if United first confirmed to Pentaco that were such an offer to be made by Yarraside, United would accept that offer". 20 The respondents also plead that the 9 April 2015 letter from United constituted an offer to acquire from Pentaco the assets utilised by Pentaco's full retailing business on terms to be specified in "contracts of sale" and further offered to enter into a lease of the sites on the terms of "relevant lease documentation". The pleading then refers to subsequent correspondence passing between the solicitors for the parties. 21 In paragraphs 9R to 9U of the defence the respondents plead: (a) at no time has any consideration moved from United to Yarraside in respect of the alleged Yarraside Agreement; (b) there was no note or memorandum of the alleged Yarraside Agreement as required by s 126 of the Instruments Act 1958 (Vic); (c) Yarraside has not at any time authorised Pentaco in writing to enter any agreement to lease the sites as required by s 126 of the Instruments Act; (d) not all of the requisite terms, essential to an agreement for lease, were contained in the 31 March letter, the 8 April email and the 9 April letter. 22 Also, the respondents plead that at all material times until its expiry on 17 October 2016, United remains the exclusive supplier of petroleum products to Pentaco for sale in its fuel retailing business at the petrol station sites; and that in these circumstances, United can suffer and has suffered no loss in consequence of its not having entered into a lease of the sites, a sale of assets agreement for the assets utilised by Pentaco to conduct Pentaco's fuel retailing business, and a guarantee as security for the terms of each lease of each petrol station site. 23 In response to the alleged agreement to lease in relation to the Richmond Premises, the respondents rely on essentially the same allegations. 24 The next substantive section of the statement of claim sets out United's estoppel case. This is expressed to be in the alternative to the agreement to lease case. The allegations in respect of the Yarraside Premises and the Richmond Premises are dealt with separately but follow the same format. United alleges that between 19 July 2011 and the date of execution of the supply agreement, Yarraside represented (alternatively caused and/or authorised the making of representations) to United that: (a) Pentaco was the registered proprietor or beneficial owner of the Yarraside Premises; and (b) upon entry into a supply agreement with Pentaco, United would be entitled to, and would receive, the benefit of a right of first refusal in respect of any sale or lease of the Yarraside Premises. 25 The particulars under this allegation refer to three emails from Con Andrianopoulos (dated 19 July 2011, 29 July 2011 and 13 October 2011) and also "the failure to inform United at any time prior to 14 October 2011 that Pentaco was not the registered proprietor or beneficial owner of the Yarraside Premises". 26 The statement of claim then alleges that, on the faith of the representations and induced by them, United assumed that: (a) Pentaco was the registered proprietor or beneficial owner of the Yarraside Premises; and/or (b) upon entry into a supply agreement with Pentaco, United would be entitled to, and would receive, the benefit of a right of first refusal in respect of any sale or lease of the Yarraside Premises. 27 United then alleges that, in reliance on those assumptions, it entered into the Supply Agreement; that in early 2015 Yarraside proposed to lease the Yarraside Premises; that if the assumptions were correct, United would be entitled to exercise a right of first refusal to lease the Yarraside Premises; and that by reason of the matters alleged it would be unconscionable for Yarraside now to resile from the representations, and Yarraside is estopped from so resiling. 28 In their defence, the respondents deny the alleged representations and assumptions. They allege that United was a sophisticated commercial operation and had the means and ability to access the records of the Titles Office; that in these circumstances the respondents were entitled to infer that United knew or ought reasonably to have known the relevant matters alleged in the statement of claim; and that no person acting reasonably and rationally in the circumstances of United could have assumed that Pentaco was the registered proprietor or beneficial owner of the Yarraside Premises. The respondents deny that United relied on the alleged assumptions in entering into the Supply Agreement and rely on clause 26.2 of the Supply Agreement (an 'entire understanding' clause). In response to the allegation that Yarraside proposed to lease the Yarraside Premises, the respondents plead: Save to admit that on 30 January 2015 it accepted the commercial terms and conditions outlined in a letter from Puma Energy Australia Ltd (ABN 78 147 981 020) ("Puma") to it and Pentaco dated 20 January 2015, subject to mutual agreement on the lease documentation (the "Puma proposal"), Yarraside denies paragraph 22. 29 The respondents then plead that Yarraside has retained and continues to retain the freehold or beneficial interest in the Yarraside Premises and that it did not reach mutual agreement with Puma on the lease documentation. The respondents also plead that, in the circumstances alleged in the defence, it is to be inferred that, in drafting the terms of clauses 12 and 13 of the Supply Agreement, United elected not to seek to make Yarraside a party to the agreement and further elected not to draft those clauses to confer on United a right of first refusal in respect of any sale or lease by Yarraside of the sites. The response to United's estoppel case in relation to the Richmond Premises is essentially the same. 30 The last section of the statement of claim contains United's misleading and deceptive conduct case. Again, the allegations in relation to the Yarraside Premises and the Richmond Premises follow the same format. For example, in relation to the first six sites, the pleading relies on the same alleged representations as the estoppel case, alleging that they were made by Pentaco and Mr Con Andrianopoulos in trade or commerce. (Although paragraph 31 of the statement of claim refers only to Pentaco and Mr Con Andrianopoulos, paragraph 35 refers also to Yarraside having engaged in misleading and deceptive conduct. It appears that United relies here on the earlier pleading that Yarraside made the alleged representations and hence the misleading and deceptive conduct case in relation to the first six sites relates to Yarraside, Pentaco and Mr Con Andrianopoulos.) It is alleged that the representations were misleading and deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law in that: (a) Pentaco was not the registered proprietor or beneficial owner of the Yarraside Premises; and (b) upon entry into the Supply Agreement, United was not entitled to, and did not receive, the benefit of a right of first refusal in respect of any sale or lease of the Yarraside Premises. 31 It is also alleged, further or in the alternative, that there were no reasonable grounds for making the representations. United alleges that by reason of the matters pleaded, it has suffered, and will continue to suffer, loss and damage. 32 In their defence, the respondents deny the misleading and deceptive conduct allegations. They plead an email dated 28 October 2011 by which United confirmed to Pentaco United's knowledge that Pentaco was not the registered proprietor of the petrol station site at Hawthorn. They also plead that, in the circumstances alleged in the defence, it can reasonably be inferred that at all material times the matters alleged in paragraph 33 of the statement of claim (set out at the end of paragraph [30] above) were or ought reasonably to have been known to United. 33 In the statement of claim, United claims by way of relief: specific performance of the Yarraside Agreement and the Richmond Agreement; an injunction restraining Yarraside from disposing, leasing or otherwise dealing with the Yarraside Premises until Yarraside has granted a lease of the premises to United on the terms set out in the Yarraside Agreement; a comparable injunction in relation to the Directors and the Richmond Premises; further or alternatively, damages; costs; and such further or other order as to the Court seems appropriate. In United's outline of submissions filed before trial, United also identified the following relief as appropriate in relation to its estoppel case: "an appropriate remedy is an order requiring the Respondents to fulfil their promise to offer the interest the subject of the proposed disposition [to Puma] to [United] on no less favourable terms". Relief in similar terms was referred to in relation to United's misleading and deceptive conduct case. No objection was taken to those paragraphs of United's outline of submissions and I consider that the case was conducted on the basis that an order to this effect was part of the relief sought by United. 34 The trial was on all issues other than loss and damage. 35 United called one witness, Mr David Szymczak. He is currently the Chief Operating Officer of United. In 2011, he held the position of General Manager of Logistics, Terminals and Supply at United. He was the person principally responsible for negotiating the Supply Agreement on behalf of United. He signed the Supply Agreement on United's behalf. He prepared two affidavits in the proceeding, one dated 13 July 2015, the other dated 15 December 2015 (the day before trial). He was cross-examined. 36 The respondents called five witnesses. The first three were: (a) Mr Con Andrianopoulos, the fourth respondent. He prepared an affidavit dated 31 July 2015 and was cross-examined. (b) Mr George Andrianopoulos, the third respondent. He prepared an affidavit dated 8 December 2015 and was cross-examined. (c) Ms Yen Seah, a solicitor. She prepared an affidavit dated 15 December 2015 annexing a transcription of some voicemail messages, and was not cross-examined. 37 In addition, at the commencement of the trial, the respondents sought and were granted leave to subpoena the two Joint Managing Directors of United, Mr Avi Silver and Mr Eddie Hirsch. The basis for the late application for leave to subpoena these witnesses was the late production of an email dated 8 April 2015 (11.01am) from Mr Szymczak to Mr Silver and Mr Hirsch. Accordingly, the Joint Managing Directors of United were called to give evidence by the respondents. They were cross-examined by United's senior counsel. 38 It is convenient to note at this point that both sides made submissions that adverse inferences should be drawn from the failure of the other side to call certain witnesses: see Jones v Dunkel (1959) 101 CLR 298. United submitted that an adverse inference should be drawn from the failure of the respondents to call the fifth, sixth and seventh respondents. The respondents submitted that an adverse inference should be drawn from the failure of United to call Mr McCrindle (who assisted Mr Szymczak in the preparation of the draft Supply Agreement in 2011), Mr McLean (United's General Counsel) and Ms Tan (a corporate solicitor employed by United). 39 In my view, for the following reasons, no adverse inference should be drawn with respect to the failure to call any of these witnesses. In relation to the fifth, sixth and seventh respondents, the tenor of the evidence of Mr Con Andrianopoulos and Mr George Andrianopoulos was that the brothers and their brother-in-law had worked together for many years; there was a high level of trust between them; and each of Mr Con Andrianopoulos and Mr George Andrianopoulos could and did act on behalf of the others and their companies in relation to the business dealings which are the subject of this proceeding. In these circumstances, it is not necessary to resort to adverse inferences for the findings sought by United in relation to the authority of Mr Con Andrianopoulos and Mr George Andrianopoulos, and the responsibility of the fifth to seventh respondents, to be accepted. 40 In relation to Mr McCrindle, he now works for Caltex, a competitor of United. In these circumstances, there is a reasonable explanation for the failure to call him. In any event, his role was subsidiary to that of Mr Szymczak. In relation to Mr McLean and Ms Tan, it does not appear that they were involved in the negotiation of the draft Supply Agreement or that their presence as witnesses was required in order to explain or contradict something.

C. FACTS 41 In this section I set out my main factual findings. Many of the facts are drawn from documents and were not contentious. The main factual disputes at trial concerned the conversations that took place on 8 and 9 April 2015.

Negotiation of the Supply Agreement 42 In March 2011, Mr Szymczak on behalf of United submitted to Mr Con Andrianopoulos on behalf of Pentaco a proposal for the supply of petroleum products. The initial proposal related to the supply of petroleum products for ten sites, including some which did not ultimately form part of the Supply Agreement. Although the negotiations concerned the supply of petroleum products by United, it is convenient to note at this point that United also operated at least 260 retail petrol stations across Australia. 43 The evidence did not go into detail about the practical arrangements at this stage pertaining to the seven sites which ultimately formed part of the Supply Agreement. It appears that they were branded '7-Eleven' and had previously been branded 'Mobil'. 44 In the period May 2011 to October 2011, a number of meetings took place between the parties. Mr Szymczak attended these meetings and was the principal negotiator on behalf of United. Mr Silver gave evidence, which I accept, that Mr Szymczak had full authority on behalf of United to negotiate and agree the terms of the deal. Mr Con Andrianopoulos gave evidence that there were about six to ten meetings; that he and Mr George Andrianopoulos attended all of the meetings; and that all the brothers and their brother-in-law attended three or four of the meetings. 45 On 19 July 2011, Mr Con Andrianopoulos sent an email to Mr Szymczak in the following terms: Hi David We are getting closer to doing business with United however we need to know a couple of things, 1/ We need a clause in your contract where either party can give 30 to 60 days notice, in case we have a dispute and cannot resolve it. 2/ We need to know how long it will take your company to do a change over, let's say from Caltex to United, we will need to give Caltex 30 days notice and we will need to purchase Pos systems for all sites. The leased sites end on the 17/10/11, we will only get the sites back if the Environmental certificate is issued to us. The sites that can come to United are, Pakenham, Dingley, Hawthorn, Burwood, Doveton. Waiting for your reply. Regards Con (emphasis added) 46 This is one of the communications relied on by United as founding an implied representation that Pentaco was the owner of the seven sites. It will be noted that in this email, and in other correspondence, Mr Con Andrianopoulos used the word "we". In evidence in chief, after using the word "we" in relation to the Puma proposal, he explained that he was referring to himself and the four other Directors. During cross-examination in relation to the above email, he said that he used the words "we" in writing because that is the way he speaks and most of the public probably speak in that manner. He also gave evidence that this is the way he spoke with Mr Szymczak. He was then asked, "So the 'we' is the owners of the property, isn't it?", to which he answered, "Look, they're our properties, so that's the term I used". 47 On 29 July 2011, Mr Con Andrianopoulos sent an email to Mr Szymczak in the following terms: Hi David The Lease ends on the 17/10/11 for Richmond, Camberwell, Dandenong and Thornbury, as per our lease agreement the sites must be handed back to us with an environmental audit and must be cleaned to a certain level. 7-Eleven has not begun to clean the properties. I cannot see how these sites will be handed back on the 17/10 cleaned. In the event that 7-Eleven do not clean them by the 17/10, we will not take the sites back until they have cleaned them. Once we get an answer from 7-Eleven we can talk. With the sites we operate; Pakenham, Dingley, Doveton, Hawthorn and Burwood, Burwood I am in partnership with the Costa Brothers and that will be part of the Pentaco deal. We have agreed with your supply proposal to do with delivered price, security, and terms, once we resolve our other concerns we can then move forward and finalise the deal. I have some answers to your questions below, waiting for your reply. Regards Con (emphasis added) 48 As can be seen, this email states that "we" will not take the sites "back" until the current lessee has cleaned them. This is the second email relied on by United to found an implied representation that Pentaco owned the seven sites. 49 On 12 August 2011, Mr Szymczak sent Mr Con Andrianopoulos a marked-up and clean copy of a draft of the Supply Agreement. I infer from the fact that one of these versions is marked up that at least one previous draft had been produced. The evidence was that the first draft was prepared by United from a standard form document. The parties to the draft agreement were United and Pentaco, referred to as the "Customer". The draft of 12 August 2011 included a clause 12 (headed "Disposal of the Site") and a clause 13 (headed "Right of First Refusal"). The wording of clause 12 in this draft is the same as in the executed version of the Supply Agreement (set out below). However, the wording of clause 13 of this draft is different to the final form of that clause. At this stage, draft clause 13 was in the following terms: 13. RIGHT OF FIRST REFUSAL 13.1 Whenever any disposition or assignment is proposed, the interest must first be offered to United or its nominee on no less favourable terms or if it is proposed that the interest be given away, for market value. Wherever any disposition or assignment is proposed, the Customer must use its best endeavour to ensure the interest is first offered to United or its nominee on no less favourable terms or if it is proposed that the interest be given away, for market value. 13.2 If there is any dispute as to the market value for the purposes of clause 13.1, it will be determined by a member of the Division of the Australian Property Institute Inc in which the Site is located or its successors appointed by United and the Customer, or failing agreement, by the President for the time being of that Institute at the request of either United or the Customer and the costs of the determination will be shared equally by United and the Customer. 13.3 The Customer must make any offer in writing and address it to United or its nominee. The letter must state all the terms and conditions of the disposition or assignment including the name of the proposed assignee and where the proposed disposition is a gift, the Customer's opinion of the market value and suggestion for a valuer in case United disputes this value. Any offer to assign or sell to United or its nominee must also include: (a) an offer by the Customer to restrain from competing with the assignee or purchaser in the trading area of the Site for at least 2 years; and (b) a reasonable period for settlement or in any event not less than 30 days from the date of United's or its nominee's acceptance of the offer in accordance with clause 34.4 becomes unconditional. 13.4 If United or its nominee wishes to accept the offer, United or its nominee must notify the Customer in writing within 14 days of the date of delivery of the offer to United. Any acceptance by United or its nominee will be conditional upon environmental tests being conducted by United or its nominee and the outcome of the tests being satisfactory. 13.5 Until the expiration of that period of 14 days, the Customer must not proceed with the disposition or assignment unless the offer is unconditionally rejected by United in writing before then. 50 On 22 September 2011, Mr McCrindle sent an email to Mr Con Andrianopoulos, copied to Mr Szymczak, with a revised draft of the Supply Agreement. At this stage, there were nine sites included in the draft agreement, namely Pakenham, Dingley, Doveton, Hawthorn, Burwood, Richmond, Camberwell, Dandenong and Thornbury. In other words, the seven sites that ultimately formed part of the Supply Agreement and Burwood and Camberwell. In his covering email, Mr McCrindle wrote: "I have passed the details of the Camberwell site onto Elias Anastasiou our National Acquisitions Manager." It is unclear to what this statement was directed. No substantive changes were made to the draft of clause 13 at this stage. 51 On 13 October 2011, Mr Con Andrianopoulos sent an email to Mr John McCrindle, which contained comments from Mr Andrianopoulos's solicitor on the draft of the Supply Agreement. The email from Mr Andrianopoulos to Mr McCrindle (which he forwarded to Mr Szymczak later that day) is set out below. This is the third email relied on by United to found an implied representation that Pentaco owned the seven sites. Hi John, Please read below and change the contract as per what my solicitor has suggested re sale of our properties. Call me at my office and we can discuss. … Cheers Con Subject: Supply Agreement Dear Con As discussed yesterday the Supply Agreement has been amended to allow either party to terminate the agreement on 30 days notice. HOWEVER, I mentioned yesterday clause 13 of the Agreement gives United a right of first refusal to purchase any one of the sites. Whilst you have advised that such a clause is common in Supply Agreements, this particular clause is unacceptable for the following reasons:- At present the way it is worded, it means:- • If you decide to sell any one of the sites, you must first offer to sell to United at a price not less than what has been offered. United have 14 days to decide whether to purchase and you must show them the contract and if United decide to purchase they can make the contract conditional upon them receiving satisfactory environmental reports. This therefore means that you could not auction the property. It also means that United are in effect given an option to purchase because they can buy subject to satisfactory environmental reports. • If you decide to restructure for example by transferring the properties to one of your other companies or to one of your brothers you can't do so without first offering to sell to United for market value which if such market values cannot be agreed it can be determined independantly (sic). The clause is unsatisfactory and should be deleted. If United insist of having a right of first refusal then the following clause would be acceptable:- 13.1 Whenever any disposition is proposed other than a disposition by public auction, the Customer must first offer to sell its interest to United by written notice to United by providing a Contract of Sale and Vendor's Statement or Assignment stating the price the Customer is willing to accept and the acceptable terms and conditions of the offer ("offer to sell"). 13.2 United may accept the offer to sell within fourteen (14) days of the date of delivery of the offer to sell from the Customer by signing the Contract and Vendors Statement and delivering it to the vendor with the deposit required by the Contract. 13.3 If United fails to accept the offer to sell, the Customer may dispose or assign its interest to a third party provided that any offer to sell to a third party by the Customer be on terms no less favourable than those upon which the offer to sell was made to United. (emphasis added) 52 In my view, the comments of the solicitor on the then draft of clause 13 proceeded on the assumption that Pentaco was the registered proprietor of the sites which were the subject of the then current draft (which includes the seven sites). There is no other way to understand the comments that the clause, as then drafted, "gives United a right of first refusal to purchase any one of the sites" and that the clause means that "[i]f you decide to sell any one of the sites, you must first offer to sell to United at a price not less than what has been offered". Further, the comments that "[t]his therefore means that you could not auction the property" and "[i]f you decide to restructure for example by transferring the properties to one of your other companies or to one of your brothers you can't do so without first offering to sell to United for market value" only make sense if Pentaco was the registered proprietor of the property; otherwise the right of first refusal in the draft agreement (between United and Pentaco) would not preclude the sale of the property at auction or a transfer of the property as part of an internal restructure. In my view, in the context of the draft Supply Agreement, the comments of the solicitor contain a clear implied representation that Pentaco was the registered proprietor of the sites which were the subject of the then current draft of the Supply Agreement. As has been noted, the email refers to the possibility of transfer "to one of your other companies". The respondents sought to rely on this as disclosing the existence of other companies associated with the Directors. While that may be accepted, I do not think it detracts from the proposition that the solicitors' comments implicitly conveyed that Pentaco owned the sites. 53 Following Mr Con Andrianopoulos's email of 13 October 2011, the draft of the Supply Agreement was revised so that clauses 13.1 to 13.3 reflected the wording proposed by the solicitor in the email set out above. The clauses appear in that form in the Supply Agreement as executed. It is significant that the respondents did not seek to remove the right of first refusal from the Supply Agreement altogether (as recommended by the solicitor) but rather requested or required the solicitor's wording to be adopted. I infer that they were aware that the right of first refusal was important to United and it would not agree to the clause being removed. 54 Although the Supply Agreement is dated 14 October 2011, it is clear from the documents in evidence that it was not executed on that date (drafts of the agreement were prepared up to 17 October 2011). Mr Szymczak's evidence was that it was executed on or shortly after 17 October 2011. Mr Con Andrianopoulos's evidence is that he believes the agreement was executed in the period 21 to 25 October 2011. Nothing turns on the difference in the evidence. I will proceed on the basis that the agreement was signed between 17 and 25 October 2011. 55 Mr Con Andrianopoulos gave evidence that he never mentioned who the owner of the sites was before entering into the Supply Agreement. 56 Mr Szymczak's evidence was that, at the time United entered into the Supply Agreement, he believed that Pentaco owned the seven petrol station sites, and this belief was based on the emails dated 19 July, 29 July and 13 October 2011. I accept this evidence. There is no reason to doubt its correctness and it is understandable that he would hold that belief given the terms of the 13 October email, as well as the references to getting the leased sites back in the 19 July and 29 July emails and the failure to inform him that Pentaco was not the owner of the sites. While it is true that he assumed that Pentaco was the owner before receiving those emails, I think it is clear that the emails and failure to inform materially contributed to his holding that belief at the time that he entered into the Supply Agreement. I note that Mr Szymczak understood that it is possible for a company to operate a retail petrol station from a property without that company owning the property and that United itself does not own all the sites from which it operates. Nevertheless, I am satisfied that Mr Szymczak did believe, at the time United entered into the Supply Agreement, that Pentaco owned the seven sites. 57 Mr Silver also gave evidence he believed that Pentaco owned the sites. He said that he had known Mr Con Andrianopoulos "for many, many years"; that he had visited some of the Pentaco sites while they were under development; and that at no point in time did he contemplate that there was an entity other than Pentaco involved in the business. 58 Mr Szymczak gave evidence that he would not have signed the Supply Agreement if he had been aware that Pentaco was not the owner of the seven sites. His evidence is that, had he then known that six of the seven sites were owned by Yarraside and that the Richmond site was owned by the Directors, he would have insisted that they be included as parties to the Supply Agreement and clause 13 amended to reflect their agreement to give United a right of first refusal in respect of any proposed disposition of any of the seven sites. I accept this evidence. The right of first refusal was important to United. Without the inclusion of Yarraside and the Directors as parties, the right of first refusal was effectively worthless. In these circumstances, I think it very likely that if United had been told that Pentaco was not the registered proprietor of the seven sites, it would have insisted that Yarraside and the Directors be included as parties to the Supply Agreement, so that they would be bound by the right of first refusal. 59 These conclusions are supported by Mr Silver's evidence. Mr Silver gave the following evidence, which I accept: … And it's usual in the industry from your experience that supply agreements contain a right of first refusal for any disposition of the site by the owner? - - - Every oil company would insist on first right if it's a branded supply agreement without exceptions. Right? - - - The reason for is every oil company has a card business. It's the bunch of the most loyal customers that you have, and, therefore, you can't afford branded ….. changing hands pursuant to a better offer on the table. So that's when the first right comes to protect the company and its card business to make sure that we have the right to ..... offer to protect their business. That's applicable to every oil company without a fail. No oil company would sign a branded deal without first right. 60 Mr Silver also gave evidence that the seven sites that are the subject of the Supply Agreement are all branded United sites. 61 Had United insisted that Yarraside and the Directors be included as parties to the Supply Agreement and appropriate adjustments be made to the right of first refusal clause, I consider it very likely that this would have been acceded to. Given that Mr Con Andrianopoulos and the other Directors were prepared to include the right of first refusal in the Supply Agreement, there is no good reason why they would not have agreed to include Yarraside and the Directors as parties (together with appropriate adjustments to clause 13) so as to make the right of first refusal effective. I note Mr Con Andrianopoulos's evidence that he would not necessarily have agreed to this course. However, for the reason I have indicated, I think it very likely that he and the other respondents would have agreed. This conclusion is supported by other evidence given by Mr Con Andrianopoulos, to the effect that in his view, if there were a proposal to sell any of the sites (other than at public auction), the right of first refusal would apply. His evidence was as follows: … During the supply agreement, if you were proposing to sell the properties to a third party …..? - - - To sell a property. One of them? - - - Yes. One of them? - - - Yes. Right. Not at a public auction? - - - Yes. … your position is you couldn't do that without offering it to United first? - - - Yes. So if you came to me and said, "I'll give you $3 million for your Bridge Road property," and it was an offer in writing, then I had to go to United and say, "Look, this is the offer in writing. Do you want to pay $3 million for this property?" Okay. So that was the deal, that if you …? - - - That if I was to auction the property … Yes? - - - they would have to come to the auction to bid for it. Okay? - - - Yes. That was the deal you did with United - that if you wanted to sell not at an auction to a third party, you had to offer it to United first? - - - If we got a written offer from somebody. Yes? - - - Correct. 62 It is convenient to note at this point a difference between the legal submissions put on behalf of the respondents and Mr Con Andrianopoulos's view as to the scope of the right of first refusal. The respondents in their submissions accepted that clause 13 applies to a proposed disposition of a freehold or leasehold interest, while Mr Con Andrianopoulos's view, expressed in his evidence at trial, was that the right of first refusal applies only to a proposed disposition of a freehold interest. Nevertheless, what is significant for present purposes is Mr Con Andrianopoulos's view that the right of first refusal in the Supply Agreement would apply if the respondents proposed to sell any of the sites other than by public auction (notwithstanding that they are not owned by Pentaco, the party to the Supply Agreement). This provides support for the view that, if United had insisted that Yarraside and the Directors be included as parties to the Supply Agreement, so as to bind them to the right of first refusal, the respondents would have agreed.

The Supply Agreement 63 As indicated above, the Supply Agreement was executed some time between 17 and 25 October 2011. The parties to the Supply Agreement are United and Pentaco. Pentaco is described as the "Customer". The agreement commenced on 17 October 2011, with an initial term of 5 years, expiring on 17 October 2016. Clause 3.1 of the agreement provides that the Customer warrants that each of the seven sites will purchase their Petroleum Products (as defined in the agreement) exclusively from United from the dates listed in Schedule 7. Clause 4.1 of the agreement provides that, subject to certain other clauses, "the Customer must purchase from United and United must sell to the Customer all of the Customer's requirements of Petroleum Products at the Price [a defined term] which is applicable to those Petroleum Products to the Sites". 64 Clauses 12 and 13 of the Supply Agreement are in the following terms: 12. DISPOSAL OF THE SITE 12.1 If the Customer is the registered proprietor, lessee or otherwise the beneficial owner of the Site (whether solely or with another person), the Customer must not: (a) dispose or allow any disposal of the freehold, leasehold or its beneficial interest in the Site: or (b) where the registered proprietor, lessee or beneficial owner is a company, allow any disposal of the shares (or interest in the shares) in that company if the disposal would result in a change in the effective control of that company from that existing on the Commencement Date; until the Customer has complied with clause 13. 13. RIGHT OF FIRST REFUSAL 13.1 Whenever any disposition is proposed other than a disposition by public auction, the Customer must first offer to sell its interest to United by written notice to United by providing a Contract of Sale and Vendor's Statement or Assignment stating the price the Customer is willing to accept and the acceptable terms and conditions of the offer ("offer to sell"). 13.2 United may accept the offer to sell within fourteen (14) days of the date of delivery of the offer to sell from the Customer by signing the Contract and Vendors Statement and delivering it to the vendor with the deposit required by the Contract. 13.3 If United fails to accept the offer to sell, the Customer may dispose or assign its interest to a third party, provided that any offer to sell to a third party by the Customer be on terms no less favourable than those upon which the offer to sell was made to United. 13.4 Until the expiration of that period of 14 days, the Customer must not proceed with the disposition or assignment unless the offer is unconditionally rejected by United in writing before then. 13.5 If the offer is unconditionally rejected by United in writing or expires by lapse of time, the Customer may proceed with or allow the proposed disposition or assignment but only to the named assignee and on terms and conditions which are not more favourable than those offered to United (or in the case of a gift, those terms proposed to United under 13.1 or determined under 13.2) and only within six months of such rejection or expiration. 65 As noted above, in their submissions at trial, the respondents accepted that clause 13 applies to a disposition of a freehold or leasehold interest, not just a freehold interest. This was the logical corollary of their submission (discussed below) that clauses 12 and 13 need to read together. It was, therefore, common ground that the references to "Contract of Sale" and "Vendor's Statement or Assignment" in clause 13 are to be read as including comparable documents (if any) applicable to the disposition of a leasehold interest. I note that clause 12 commences with the words "If the Customer is the registered proprietor, lessee or otherwise the beneficial owner of the Site" (emphasis added). Given that the agreement was prepared from a standard form document, I do not think the use of the word "If" affects the conclusions in paragraphs [56]-[57] above that Mr Szymczak and Mr Silver believed that Pentaco owned the seven sites. 66 It is not necessary to refer in any detail the remaining clauses of the Supply Agreement, save for clause 26.2, which reads as follows: 26.2 Entire Understanding (a) This Agreement contains the entire understanding between the parties concerning the subject matter of the Agreement and supersedes all prior communications between the parties. (b) Each party acknowledges that, except as expressly stated in this Agreement, that party has not relied on any representation, warranty or undertaking of any kind made by or on behalf of the other party in relation to the subject matter of this Agreement. 67 I note also that clause 26.9 of the Supply Agreement provides that the agreement is not to be construed to the disadvantage of a party because that party was responsible for its preparation. 68 The Supply Agreement was signed on behalf of United by Mr Szymczak and on behalf of Pentaco by Mr Con Andrianopoulos and Mr George Andrianopoulos. A handwritten change or 'annotation', as it was referred to in evidence, was made to Schedule 4 at the time of signing. The handwriting is that of Mr Szymczak, and the change was initialled by Mr Con Andrianopoulos. That Schedule relates to securities. The Schedule with the handwritten change reads as follows (the words in italics are those inserted by hand; the struck-through words were crossed out by hand): SCHEDULE 4 - SECURITIES First registered mortgage over property to be advised, to cover the full value of the credit exposure. OVER PROPERTY AT HAWTHORN CERTIFICATE OF TITLE VOL 9007 FOL 958 TO MAXIMUM AMOUNT OF $1.8 MILLION DOLLARS. 69 The sequence of evidence in relation to this handwritten change was as follows. First, in his affidavit, Mr Con Andrianopoulos said that he witnessed Mr Szymczak annotate this page and he (Mr Andrianopoulos) initialled the annotation at about the same time as the annotation was made. Next, in his second affidavit, Mr Szymczak said that at the time he made the annotation he was shown a slip of paper by Mr Con Andrianopoulos that had the "Vol. 9007 Fol. 958" details that he (Mr Szymczak) wrote on the page. During the trial, the respondents produced a copy of the certificate of title for the Hawthorn property (Exhibit R2). Mr Con Andrianopoulos gave oral evidence in chief that he kept photocopies of certificates of title in the filing cabinet in his office and that he handed this to Mr Szymczak to take the folio and volume number. Mr Con Andrianopoulos said that Mr Szymczak did not take the document away; he just wrote down the details on the Supply Agreement. Mr Szymczak was asked questions about this during cross-examination. He said that to the best of his recollection the piece of paper he was shown by Mr Con Andrianopoulos did not have the name of Yarraside on it. When it was put to Mr Szymczak that the piece of paper that Mr Con Andrianopoulos showed him was the copy of the certificate of title, Mr Szymczak said, "Absolutely not". He also said, "I've never seen this document. This was not the document", and maintained this position during further questioning. 70 It is doubtful that anything turns on whether the slip or piece of paper shown to Mr Szymczak at signing, at the timing he made the handwritten change to Schedule 4, was the copy of the certificate of title or something else, because I find that in any event Mr Szymczak was not aware at the time he made the handwritten change and signed the agreement that the registered proprietor of the Hawthorn property was Yarraside. Even if the copy of the certificate of title was the paper shown to Mr Szymczak, this was for the purpose of writing down the volume and folio numbers; the name of Yarraside (on the reverse side of the page) was easily missed in the circumstances. However, if anything does turn on this, I am not satisfied given the state of the evidence that the slip or piece of paper shown to Mr Szymczak was the copy of the certificate of title. First, Mr Con Andrianopoulos made no mention of this in his affidavit, despite referring specifically to the making of the annotation, suggesting that he did not have a clear recollection of the event. Secondly, Mr Szymczak was clear and unequivocal during cross-examination that piece of paper he was shown was not the copy of the certificate of title. Thirdly, there is no objective evidence to indicate that it was the copy of the certificate of title.

Events shortly after entry into the Supply Agreement 71 On 27 October 2011, Mr Con Andrianopoulos sent an email to Mr Szymczak with the subject line "Mortgage with United petroleum". In this email, Mr Con Andrianopoulos requested the addition of certain words in the mortgage over the Hawthorn property that was being offered as security for Pentaco's obligations under the Supply Agreement. 72 On 28 October 2011 (11.54 am), Ms Tan, a corporate solicitor at United, sent an email to Mr Szymczak relating to the mortgage of the Hawthorn property as security for Pentaco's obligations under the Supply Agreement. The email makes clear that the mortgagor of the property was Yarraside and not Pentaco. The respondents placed emphasis on this email to show that, at least by this date, United was aware that the registered proprietor of the Hawthorn property was Yarraside and not Pentaco. While the email establishes that United was aware of this fact on 28 October, it does not establish or support an inference that United knew this at an earlier point in time. 73 When Mr Szymczak was cross-examined about this email, he accepted that it stated that Pentaco was not the registered proprietor of the Hawthorn property. In response to a question whether he understood the meaning of registered proprietor in a property context as owner, he answered, "No". He said that he read the email sometime between 28 October and 3 November 2011. When asked if he understood it, he answered, "Obviously not, because at the time I was focussed on getting the mortgage in place so we could commence supply". During further questioning during cross-examination, Mr Szymczak accepted that he understood that only the owner of property can give a mortgage over the property. He said that at the time he was focussed on getting the mortgage in place as security for the supply which he was hoping to commence providing, pursuant to the Supply Agreement. His concern was not on the right of first refusal at this point in time. 74 In view of this email and evidence, I find that Mr Szymczak became aware, between 28 October and 3 November 2011, that the owner of the Hawthorn property was Yarraside rather than Pentaco. However, it seems likely that, at that point in time, because he was focussed on matters of completion, he did not, to put the matter colloquially, 'connect the dots'; he did not appreciate the significance of this fact for the efficacy of the right of first refusal in the Supply Agreement. This is why, in my view, he did not at this stage raise the matter with Mr Con Andrianopoulos and seek to have Yarraside added as a party to the (now executed) Supply Agreement. In these circumstances, I do not accept that an inference is to be drawn (from the receipt of this email and the failure to seek to have Yarraside added as a party) that the right of first refusal was not important to Mr Szymczak or that he would not have sought to include Yarraside and the Directors as parties had he known before entry into the Supply Agreement that they were the owners.

The Puma proposal 75 The chronology of events relevant to the issues in the case now jumps to late 2014. In October 2014, discussions took place between Puma and Pentaco regarding an arrangement whereby some of the petrol station sites operated by Pentaco would be re-branded 'Puma'. By 10 December 2014, the discussions had progressed to a point where proposed conditions of rental of the seven sites were put forward on behalf of Pentaco to Puma. 76 On 17 December 2014, Puma provided an offer to Pentaco and Yarraside. This document was signed by Mr Stephen Fogarty on behalf of Puma and provided for a proposed purchase of assets from Pentaco and a proposed lease from Yarraside of the seven sites referred to in paragraph [13] above. 77 The terms of the document were the subject of negotiation during December 2014. On 31 December 2014, Mr Fogarty provided a revised letter of offer to Mr George Andrianopoulos and others. In the covering email, Mr Fogarty stated that he would appreciate if Mr George Andrianopoulos could forward the offer to his solicitor, along with his United Petroleum brand and supply agreement for their review and comment. 78 On 19 January 2015, Mr Fogarty sent an email to Mr Ben Galanos of Newtons (who was acting on behalf of the respondents). Mr Fogarty wrote that Pentaco would need to notify United (as their current supplier) that they intended to lease the properties to Puma. 79 On or about 20 January 2015, Puma provided a revised form of the offer to Pentaco and Yarraside dated 20 January 2015, again signed by Mr Fogarty. (It seems most likely that the final form of this document was provided on 21 January 2015.) This offer was accepted on behalf of Pentaco and Yarraside on 30 January 2015. Mr George Andrianopoulos signed the document on behalf of both Pentaco and Yarraside. 80 The first two paragraphs of the letter of offer were as follows: Further to our on-going discussions, Puma Energy is pleased to provide the following offer to Pentaco Oil (Aust) Pty Ltd (as Vendor) and Yarraside Service Station Pty Ltd (as Landlord) to purchase the assets and lease the premises, based upon the terms and conditions set out below. Please sign the appropriate pages of this document and return a copy to myself. Following receipt of this, draft purchase and lease documentation (incorporating the terms of this proposal) will be prepared and forwarded for review. 81 Next, there was a section headed "Proposed Terms & Conditions of Purchase Agreement". This set out terms for a purchase of plant, equipment and goodwill by Puma from Pentaco for $1,950,000 plus GST. 82 The next section was headed "Proposed Terms & Conditions of Lease/s". This set out terms for a lease of the seven sites referred to in paragraph [13] above. The landlord was named as Yarraside for all seven sites, notwithstanding that the Directors, rather than Yarraside, own the Richmond site. The rental was specified to be $2,080,000 per annum plus GST, to be allocated by Puma between the sites in its discretion. The lease term was 10 years, with 3 x 5 year lease options in respect of each of the sites, exercisable by Puma without reference to any other sites. Provision was made for rent reviews, outgoings, consumables, hours of operation, insurance, landlord works, assignment/subletting, first right of refusal, contamination, maintenance, surrender and equipment. 83 The last section of the letter was headed, "General Terms & Conditions of this Offer" and set out a number of further terms. These included a term alongside the title, "Binding Nature": This Heads of Agreement is non-binding on the parties, and is conditional upon Puma Energy receiving board approval. All negotiations and communications between the parties, their respective representatives and advisers, prior to and following the date of this Heads of Agreement, are strictly on a subject to contract basis unless expressly stated otherwise. 84 The letter concluded with a statement that the offer remained open until 5.00 pm on 2 February 2015 or withdrawn by Puma. As indicated above, the offer was accepted on behalf of Pentaco and Yarraside on 30 January 2015. 85 During the weeks after 20 January 2015, there was correspondence between Puma and the respondents regarding the right of first refusal in the Supply Agreement. Puma was aware of the existence of the clause (although it did not initially have a copy of the Supply Agreement) and provided suggestions to the respondents as to how to deal with this matter. Also, over this period, Puma commenced its due diligence on the sites. The impression gained from the terms of the Puma proposal, the correspondence passing between Puma and the respondents (both before and after the signing of the proposal), and the subsequent due diligence, is that this was a concrete proposal from the perspective of both parties rather than something that was merely exploratory. 86 On 21 January 2015, Mr Fogarty sent an email to Mr Con Andrianopoulos with the subject line, "First Right of Refusal - United Petroleum - Brand and Supply Agreement". In the email Mr Fogarty wrote that Puma's Singapore lawyer had suggested that Pentaco's solicitor consider certain matters relating to the right of first refusal: • What entity has enter (sic) the brand and supply agreement with United [?] Is it Pentaco or Yarraside or another entity [?] • Is the first right of refusal over the properties (i.e., lease), equipment or fuel supply [?] • What are (sic) the wording of the clause(s) and the process [?]. Is it first right over the supply only? 87 On 4 February 2015, Mr Fogarty sent an email addressed to Messrs Bill, George and Con Andrianopoulos at Pentaco thanking them for signing the proposal. The email stated that Puma would need to commence its review and verify key information relating to the individual site performance. It then set out a list of information required. 88 On 12 February 2015, an email was sent by an in-house lawyer at Trafigura (the parent company of Puma) in Singapore to Pentaco's Melbourne solicitors. The email referred to Puma's letter of offer dated 20 January 2015, which had been countersigned on 30 January 2015. The email asked the addressee to confirm that he had instructions to discuss the matter as there were some preliminary issues it would be useful to resolve at the outset. 89 On 12 March 2015, Mr Fogarty sent an email to Mr George Andrianopoulos with the subject line, "OPTIONS (INDEPENDENT LEGAL ADVICE IS RECOMMENDED)". The email stated that, based on the information Mr George Andrianopoulos had supplied to Mr Fogarty as part of the due diligence process, it appeared that there was no formal agreement in place between Pentaco (as operator of the sites) and Yarraside (as owner of the properties). The email also pointed out that Yarraside was not a party to the Supply Agreement. The email then set out three potential options relating to these matters. Options 2 and 3 involved making an offer to United which it would have 14 days to accept. Option 3 was: • Pentaco, under the United Petroleum supply agreement, offers United the lease and sale of the business under the same time (sic) as Puma's offer • United has 14 days under the supply agreements 90 It is likely that the word "time" in the first bullet point was meant to be "terms". It would appear that this option involved, in effect, giving United a right of first refusal in relation to both the lease and sale of assets proposed with Puma. The email then stated that, "[a]s this matter is extremely complex and complicated I strongly recommend that you seek independent legal advice on the matter". 91 On 16 March 2015, Mr Fogarty sent an email to Mr George Andrianopoulos, Mr Con Andrianopoulos and others with the subject, "Due Diligence - Pentaco". The email stated that, as the addressees would be aware, Puma was progressing with due diligence of the seven sites. It stated that Puma had received the tank and line testing results as well as the dilapidation reports for each site, and was currently working through the results. The email sought further details as to five matters as part of the due diligence process. 92 On 17 March 2015, Mr Fogarty sent an email to Mr George Andrianopoulos with the subject, "Yarraside - notice to United". The email stated that Puma's Singapore lawyers had drafted a letter based on their understanding of the situation, and then set out a draft letter to United.

Alleged agreement to lease in March/April 2015 93 On 31 March 2015, Pentaco sent (by email) a letter to United which is the first of three documents said by United to constitute an agreement to lease. The letter was sent under cover of a letter from Wisewould Mahony Lawyers, Pentaco's solicitors, to Mr Szymczak. The cover letter stated: We act on behalf of Pentaco Oil (Aust) Pty Ltd. We enclose herewith letter in relation to the proposed Lease of various premises. 94 The enclosed letter was signed by Mr George Andrianopoulos on behalf of Pentaco and addressed to Mr Szymczak at United. It read: Petroleum Products Supply Agreement - Pentaco Oil (Aust) Pty Ltd & United Petroleum Pty Ltd Pentaco Oil (Aust) Pty Ltd is a monthly tenant from Yarraside Service Station Pty Ltd of the following premises:- 1. 1365 Princes Highway Pakenham 2. 625 Lower Dandenong Road Dingley 3. 48 Princes Highway Doveton 4. 82 Barkers Road Hawthorn 5. 645 Bridge Road Richmond 6. 50 South Gippsland Highway Dandenong 7. 265 Darebin Road Thornbury Pentaco has been advised by Yarraside that Yarraside intend to determine its monthly tenancy and to lease the sites on the following terms:- Rent $2,080,000.00 per annum plus GST plus outgoings. Permitted Use: Service Station, retail convenience, restaurant, other retail services. Lease Term: 10 years from the lease commencement. Option: 3 X 5 year lease options. Rent Reviews: Rent to be increased annually by 3%. Market reviews will be conducted at the expiration of the lease term and each further term. The annual rent following such a review will not increase by more than 105% of the previous rent and will not be decreased by more than 95% of the previous annual rent. Pentaco are not in a position to offer to lease on such terms however under the terms of its existing Supply Agreement with you dated 14 October 2011 you are entitled to a right of first refusal to a lease on similar terms and Pentaco in a spirit of goodwill has requested Yarraside to extend such offer to you. Pentaco has been advised that Yarraside may be prepared to lease the sites to you on the same terms as mentioned above and you are hereby notified that it will not proceed with such arrangement for a period of 14 days from the date hereof. If you wish to accept an offer to lease on similar terms please notify us on behalf of Pentaco and Yarraside of your acceptance or rejection. (emphasis added) 95 At this stage it is convenient to make some observations about the letter. First, the letter sets out with some specificity the key terms of a proposed lease with a third party. It identifies the properties and sets out: the rent; the lease term; the number and term of the options; and the terms applicable to rent reviews. Second, the letter specifically refers to the right of first refusal in the Supply Agreement. After saying that Pentaco (the party to the Supply Agreement) is not in a position to offer to lease the properties to United on similar terms as the proposed lease with a third party (in other words, Pentaco is not in a position to give effect to the right of first refusal), it says that, in a spirit of goodwill, Pentaco has requested Yarraside to extend such an offer to United. I would infer from the terms of the letter and circumstances more generally that the respondents felt some sense of obligation (legal or moral) to give effect to the right of first refusal in the Supply Agreement notwithstanding that the properties were not owned by Pentaco. Third, as with the Puma proposal, the letter proceeds on the basis that Yarraside owns all seven sites whereas in fact the Richmond site was owned by the Directors. Fourth, there is a degree of tension in the language used in the letter. On the one hand, the words "may be prepared" appear to be tentative, suggesting that Yarraside has not made a decision to offer to lease the properties to United on similar terms. On the other hand, the words "[i]f you wish to accept an offer" tend to suggest that an offer is being made, which it is open to United to accept. Fifth, the words "on behalf of … Yarraside" in the last sentence suggest that the letter is sent on behalf of Yarraside, not just Pentaco in its own right. 96 Mr Szymczak received and read the letter on or about 31 March 2015. Mr Szymczak telephoned Mr George Andrianopoulos about the letter soon after he read it (either on 31 March or 1 April). They had a brief conversation. Each gives a slightly different account of the conversation but the differences are not material. According to Mr Szymczak, during the conversation, Mr George Andrianopoulos said words to the effect: "the letter contains all the information you need to know, just respond to the letter". According to Mr George Andrianopoulos: Mr Szymczak said that he had received the letter but had not previously heard of Yarraside; Mr George Andrianopoulos told Mr Szymczak to call "our" solicitor if he wanted any information about the letter; Mr Szymczak sought a meeting but Mr George Andrianopoulos said, no, speak to his solicitor. 97 On 2 April 2015, Mr McLean of United sent a letter to Wisewould Mahony Lawyers stated: I refer to the supply agreement between Pentaco Oil (Aust) Pty Ltd (Pentaco) and United Petroleum Pty Ltd (United) (Supply Agreement) and your letter dated 31 March 2015. As I understand your client's letter it was prepared in accordance with clause 13.1 of the Supply Agreement which stipulates that: Whenever any disposition is proposed other than a disposition by public auction, the Customer must first offer to sell its interest to United by written notice to United by providing a Contract of Sale and Vendor's Statement of Assignment stating the price the Customer is willing to accept and acceptable terms and condition of the offer". United is interested in the offer as set out in your client's letter but requires further details in order that it can make an informed decision. Accordingly United requests that your client provide the Contract of Sale and Vendor's Statement in accordance with clause 13.1 of the Supply Agreement. Once United receives that above documentation it will provide its written response in the time frame required in accordance with clause 13.2 of the Supply Agreement, namely 14 days upon receipt of such. 98 On 8 April 2015, a conversation took place at Pentaco's offices between Mr Szymczak and Mr Con Andrianopoulos. Mr George Andrianopoulos was present for part of the conversation. During cross-examination, both Mr Con Andrianopoulos and Mr George Andrianopoulos were firmly of the view that this was not a 'meeting' or a 'discussion' but merely a 'coffee'. Nothing turns on the label attached to it, and I will adopt the neutral word, 'conversation'. 99 Some aspects of the conversation are not controversial. It is common ground that Mr Szymczak telephoned Mr Con Andrianopoulos at about 7.30 am on 8 April and asked if he could drop in to his office for a coffee. Mr Con Andrianopoulos agreed. Mr Szymczak then visited Mr Con Andrianopoulos's office in Bridge Road, Richmond at about 8.00 am. They had a conversation in the bar area. During the conversation, Mr Szymczak asked Mr Con Andrianopoulos questions about the sites and Mr Con Andrianopoulos provided some information. Mr George Andrianopoulos walked in during the conversation. When he heard them discussing the sites he told Mr Con Andrianopoulos not to provide too much information. 100 There is, however, a dispute about other aspects of the conversation. Mr Con Andrianopoulos gave evidence in paragraph 15 of his affidavit that, "I told Mr Szymczak that we were not leasing the petrol station sites and the directors had not agreed to lease the petrol sites". He also gave evidence in his affidavit that Mr George Andrianopoulos said to Mr Szymczak that "Pentaco only wanted to know if he was interested in leasing the sites; that no decision had been made to lease the sites". Mr Con Andrianopoulos gave generally similar evidence during cross-examination. Evidence to generally similar effect was also given by Mr George Andrianopoulos during cross-examination. For example, Mr George Andrianopoulos gave evidence that he said that Pentaco was only testing whether United was interested in leasing the sites. He also gave evidence that he believes he said to Mr Szymczak that "Pentaco have decide[d] not to lease the sites at that time". 101 On the other hand, Mr Szymczak's evidence was that statements to this effect were not made. Although Mr Szymczak did not refer in his second affidavit to paragraph 15 of Mr Con Andrianopoulos's affidavit, Mr Szymczak was very clear in his evidence during cross-examination that Mr Con Andrianopoulos did not say that the Directors had decided not to lease the sites (or that the Directors had not agreed to lease the sites). Mr Szymczak also gave evidence (in his second affidavit) that Mr George Andrianopoulos did not say that Pentaco only wanted to know if he was interested in leasing the sites. 102 In considering which account of the conversation is likely to be correct, it is important to consider two documents which form part of the evidence. One of these is an email sent by Mr Con Andrianopoulos to Mr Szymczak at 10.31 am on 8 April 2015, a short time after the conversation. The subject line on the email was "Offer to Lease - Further Information". The email (which is the second document relied on by United as constituting an agreement to lease) reads as follows: As discussed this morning, further to the letter dated Tuesday 31st March 2015, signed on behalf of Pentaco Oil (Aust) by George Andrianopoulos, please see the below clarifications and further information. • Equipment - $1,950,000.00 + GST • Tank and line testing - completed by Lessee at the Lessee's expense. • Environmental testing - completed by Lessee at the Lessee's expense. Starting base line. • Tanks, lines and equipment to be maintained throughout the lease by the Leasee. • All plant and equipment becomes Pentaco's/Yarraside property at the expiry of the Lease. • Dandenong - Common road to the rear of the property. • Richmond offices at Ground and Level 1, 645 Bridge Rd, Richmond 3121 do not form part of the lease. • Preparation of Individual and Master Lease documentation to be borne by the Leasee. • Development Clauses - 645 Bridge Rd, Richmond and 74-82 Barkers Rd, Hawthorn can be removed from the Lease under a development clause not before 5 years. • Minimum operating hours for all sites is 18 hours per day 7 days a week. • No site can be decommissioned during the term of the lease. • Guarantee required as security for the term of the lease. • Outgoings to be borne by the Leasee. • Breakdown of initial yearly rent per site. • Dandenong - $255,000.00 + GST • Dingley - $360,000.00 + GST • Doveton - $224,000.00 + GST • Pakenham - $490,000.00 + GST • Thornbury - $230,000.00 + GST • Hawthorn - $161,000.00 + GST • Richmond - $360,000.00 + GST The offer stands as per the original letter dated 31st March 2015. Awaiting your acceptance or rejection as per the original letter. (emphasis added) 103 The other document is an A4 page containing (save for two lines) Mr Szymczak's handwriting (Exhibit A3). This document was written by Mr Szymczak during the conversation on 8 April 2015 and records matters they discussed. At the end of the conversation, Mr Con Andrianopoulos asked Mr Szymczak to leave the note with him. I infer (notwithstanding the suggestion in Mr Con Andrianopoulos's evidence to the contrary) that this was to assist him (Mr Con Andrianopoulos) in preparing the email which he subsequently sent a short time later: there is an evident overlap between the matters in the note and the matters in the email. The matters recorded in the note are consistent with a conversation in which Mr Szymczak sought, and Mr Con Andrianopoulos provided, further information about the offer or proposal outlined in the 31 March 2015 letter. There is no reference in the note to the Directors having decided not to lease the sites or to the Directors merely seeking to ascertain if United was interested in leasing. 104 One of the matters included in the note, but not in the email, is "date to be determined". In relation to these words, Mr Szymczak gave oral evidence in chief that these words reflected discussion about "the practical implementation of the changeover". He described this aspect of the conversation and said, "the date would be determined on the basis of the - as soon as the leases could be drawn up. So, really, it was, you know, when could you have the leases drawn up, have those signed off, and then it was a matter of a week or two to actually implement the - the changeover". 105 Returning to the factual dispute about the 8 April 2015 conversation, in my view the evidence of Mr Szymczak is to be preferred to that of Mr Con Andrianopoulos and Mr George Andrianopoulos to the extent that there is a dispute between their accounts. I have reached this conclusion for a number of reasons. First, the evidence of Mr Con Andrianopoulos and Mr George Andrianopoulos is inconsistent with the 8 April 2015 email. This email is expressed in terms of an "offer" which is open for "acceptance or rejection". If Mr Con Andrianopoulos or Mr George Andrianopoulos had said that the Directors had decided not to lease the sites (or had not agreed to lease the sites) or that they were merely seeing if United was interested in leasing the sites, it is most unlikely that the email, sent only a short time after the conversation, would have been expressed in these terms. Moreover, had these things been said during the conversation, it is likely that they would have been referred to in the email. Secondly, Mr Szymczak's account is supported by the handwritten note that he made during the conversation. If Mr Con Andrianopoulos or Mr George Andrianopoulos had said that the directors had decided not to lease the sites or that they were merely seeing if United was interested, it is likely that this would have been reflected in the note, but it is not. To the contrary, the note reflects a discussion about the detail of the offer or proposal in the 31 March letter. Thirdly, to some extent, Mr Con Andrianopoulos's and Mr George Andrianopoulos's account is inconsistent with Mr George Andrianopoulos's own evidence (referred to below) that on or about 15 April 2015, the Directors decided not to proceed at this stage with a lease of the seven sites. If that decision was made on or about 15 April 2015, it is unlikely that they would have said that the Directors had decided not to lease the sites during the conversation on 8 April 2015. For these reasons, I find that Mr Con Andrianopoulos and Mr George Andrianopoulos did not say, during the 8 April 2015 conversation, that the Directors had decided not to lease the sites, or that they were merely seeking to find out if United was interested in leasing the sites. Rather, the conversation (which was mainly between Mr Con Andrianopoulos and Mr Szymczak) involved fleshing out in more detail the offer or proposal contained in the 31 March 2015 letter. The topics discussed are reflected in the email sent by Mr Con Andrianopoulos a short time after the conversation. 106 I should make clear that, although I have rejected some of the evidence of Mr Con Andrianopoulos and Mr George Andrianopoulos about the conversation, I do not consider their evidence to have been dishonestly given; rather, I consider their recollection to be honest but faulty, for the reasons explained above. 107 As noted above, at 10.31 am on 8 April 2015, Mr Con Andrianopoulos sent an email to Mr Szymczak. The text of the email has already been set out. It is convenient to make some observations about the email at this point. First, it is expressed in stronger terms than the 31 March letter. The subject line refers to an "[o]ffer to lease". The penultimate sentence treats the 31 March letter as an "offer" and the last sentence seeks United's "acceptance or rejection" of that offer. Second, the email expands the scope of the 31 March letter to include an offer to sell equipment for $1,950,000 plus GST. This was not part of the 31 March letter. Third, the letter provides considerably more detail than was included in the 31 March letter. 108 At 11.01 am on 8 April, Mr Szymczak sent an email to Mr Silver and Mr Hirsch, forwarding the email from Mr Con Andrianopoulos of 10.31 am. The email says that he (Mr Szymczak) visited Pentaco's offices that morning and met with Mr Con Andrianopoulos. The email states that Mr Con Andrianopoulos had promised to send an email setting out the deal and that the email below (that is, the email from Mr Con Andrianopoulos of 10.31 am) was consistent with the discussion that morning. The email then states that a few more things were discussed, and sets these out. 109 After that email was sent, Mr Hirsch and Mr Szymczak had a discussion about the 31 March letter and 8 April email. Mr Hirsch told Mr Szymczak that he (Mr Hirsch) needed to have the shop sales figures for the seven sites before making a decision on whether to lease the properties. At this stage, Mr Hirsch knew the proposed rent (from the 31 March letter and the 8 April email) and the fuel sales (as United was the supplier), but didn't have the shop sales figures. He told Mr Szymczak to go back to see Mr Con Andrianopoulos to get the shop figures. 110 On the morning of 9 April 2015, a conversation took place between Mr Szymczak and Mr Con Andrianopoulos. It was common ground that a conversation took place, but there was a dispute about whether it was by telephone or face-to-face, and about what was said. Mr Szymczak gave evidence in his second affidavit (but not his first) that a second face-to-face conversation took place with Mr Con Andrianopoulos on that day. The purpose of the conversation was to obtain information about shop sales, at the request of Mr Hirsch. Mr Con Andrianopoulos disputed that a further face-to-face conversation took place on 9 April. Although perhaps not much turns on this, I am not satisfied on the evidence that a second face-to-face conversation took place on 9 April. First, Mr Szymczak did not refer to any such face-to-face conversation in his first affidavit, suggesting that he does not have a clear recollection of the conversation. Second, Mr Szymczak's account of the two conversations was quite similar (including, for example, Mr George Andrianopoulos walking in during the conversation and saying words to the effect that Mr Con Andrianopoulos should not provide too much information) suggesting that he may be confusing them. 111 As for the content of the 9 April conversation, Mr Con Andrianopoulos gave evidence in his affidavit that he phoned Mr Szymczak and told him that no offer had been made to United to lease the sites and that Pentaco was only finding out if United was interested in a lease from Yarraside; and that the Directors hadn't decided whether to lease and he would let United know down the track. On the other hand, Mr Szymczak's evidence is that he sought, and Mr Con Andrianopoulos provided, information about shop sales figures. I think this account of the conversation is more likely to be correct. Mr Hirsch was very clear in his evidence, which I accept, that at the time he discussed Mr Con Andrianopoulos's 8 April 2015 email with Mr Szymczak, he (Mr Hirsch) did not have the shop sales figures and he sent Mr Szymczak back to get these; and that by the time he (Mr Hirsch) signed the 9 April 2015 letter (referred to below) he did have these figures. Mr Szymczak's account of the conversation with Mr Con Andrianopoulos is also supported by Mr Szymczak's handwritten notes (Annexure "DBS-12"); the second page appears to set out the shop sales figures he was told. 112 At 1.08 pm on 9 April 2015, Mr Szymczak sent Mr Con Andrianopoulos a text message which read: "Con, give me a call when you have a moment. I have a letter I want to present to you. Regards, David." He also left a voicemail message to similar effect a few minutes earlier. 113 Later on 9 April 2015, Mr Szymczak emailed and hand delivered a letter to Mr Con Andrianopoulos and Mr George Andrianopoulos. The email, which was sent at 6.10 pm, read: "Following on from our conversation please find attached the letter I foreshadowed this morning. Please acknowledge receipt." 114 The letter was dated 9 April 2015. It was addressed to Mr George Andrianopoulos at Pentaco and signed by Mr Hirsch on behalf of United. It stated: I refer to your letter dated 31 March 2015 and your email to David Szymczak dated 8 April 2015, copies of which are attached. I confirm that United Petroleum Pty Ltd accepts the offer set out in the above correspondence. I will forward the relevant lease documentation and contracts of sale to you, which reflect the agreed terms. 115 Over the following weeks, there was correspondence between the solicitors for the parties. 116 On 13 April 2015, the solicitors for United sent a letter to the solicitors for Pentaco referring to the correspondence of 31 March, 8 April and 9 April 2015. The letter concluded by stating that (as set out in the 9 April letter) they would prepare the relevant lease documentation and asset sale agreement and requested the following information to assist with this: the leasehold details (including landlord and site details) of each site; and a list of assets to be sold to United. 117 Mr George Andrianopoulos gave evidence in his affidavit that, on or about 15 April 2015, the Directors decided not to proceed at this stage with a lease of the seven sites. I accept that evidence. It is consistent with the letter sent by Pentaco's solicitors to United on 16 April 2015, referred to below, and with Mr Con Andrianopoulos's evidence about a telephone conversation he had with Mr Szymczak on 15 April. 118 On 15 April 2015, Mr Szymczak called Mr Con Andrianopoulos and left a voice message on his phone. The message said in part: "I just want to talk about the current state of play. We haven't had any contact from your lawyer and I was really just after an update." Mr Con Andrianopoulos telephoned Mr Szymczak and asked what he wanted. Mr Con Andrianopoulos's evidence is that during this conversation he told Mr Szymczak: that Yarraside and Pentaco had not agreed to lease the sites to United or Puma; and that the Directors had met and decided not to lease the sites. I accept this evidence. It is consistent with the letter from the respondents' solicitors of the next day, referred to below. 119 On 16 April 2015, the solicitors for Pentaco sent an email to the solicitor for United, the general effect of which was that at this point in time the "Landlord" had not determined the monthly tenancy to Pentaco and had not made a decision as to when or whether to do so; it was therefore premature to prepare any agreement. 120 On the basis of the evidence referred to in paragraphs [117] to [119] above, I accept that on or about 15 April 2015 the respondents decided not to proceed with the Puma proposal for the time being. During cross-examination, it was put to Mr Con Andrianopoulos that the respondents had not written to Puma saying that they were not going ahead with the proposal, and he accepted this. Nevertheless, there is no evidence to contradict the proposition that they decided not to proceed with the Puma proposal for the time being and it is understandable, given the legal issues which are the subject of this litigation, that they would make this decision. 121 In late April 2015, there was further correspondence passing between the lawyers for the parties. This correspondence essentially put forward the positions of the parties which they have maintained in this litigation, and it is not necessary to refer to it in any detail.

Applicable principles 122 In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, Gaudron, McHugh, Hayne and Callinan JJ said (at [24]) in relation to the intention required to create contractual relations: "It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty." To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet "[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts". (footnotes omitted) 123 Their Honours continued (at [25]): Because the inquiry about this last aspect may take account of the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances, not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the "intention to create contractual relations" requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties. (footnotes omitted) 124 There may be an overlap between the question whether the parties intended to enter into legal relations and the question whether they have agreed on all essential terms. In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, Gleeson CJ (Hope and Mahoney JJA agreeing) said at 548: It is to be noted that the question in a case such as the present is expressed in terms of the intention of the parties to make a concluded bargain: see, eg, Masters v Cameron (at 360). That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention. 125 In some cases it is alleged that a concluded agreement has come into existence notwithstanding that the parties intended that a more detailed or formal agreement would also be prepared and entered into: see Masters v Cameron (1954) 91 CLR 353 at 360. Where the communications which the parties have exchanged are in writing, the issue is to be resolved objectively, and as a matter of construction of the relevant documents: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548-549. 126 In determining whether there was an intention to create legal relations, it may be permissible to have regard to subsequent communications between the parties. In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, Gleeson CJ said (at 550): Furthermore, as was noted earlier, it is proper to have regard to communications between the parties subsequent to the date of the alleged contract to the extent to which those communications throw light upon the meaning of the language which is being considered for the purpose of determining whether it expresses an intention one way or the other upon the critical matter. At the least, such subsequent communications will often form part of the context in which the particular exchanges in question are to be evaluated. 127 In some cases, the issue is whether a particular person is a party to an alleged agreement. In Pico Holdings Inc v Wave Vistas Pty Ltd (2005) 214 ALR 392, the appellant (the lender) lent $1.2 million to the borrower. A promissory note was executed by the borrower and given to the lender. Several days before the extended repayment date, the director of the first respondent acting on behalf of the borrower, sought a second extension. The director offered land as security, representing to the lender that the land was unencumbered. The lender accepted the land as security and the repayment date was extended. The director subsequently sent a letter to the lender confirming that, as consideration for the grant of the second extension, the director would provide the lender with the certificate of title for the land offered as security. The borrower failed to repay the loan. The lender sought a declaration that it had an equitable charge over the land. One of the issues was whether the first respondent was a party to the agreement regarding the second extension of time and the provision of the land as security. The Court held that there was a tripartite agreement to which the lender, the borrower and the first respondent were parties. The Court (at [51]) considered how a reasonable person in the position of the addressee would have understood the relevant correspondence. The Court said that the offer to provide the additional security could only have been referring to the director, to the borrower, or to the owner of the substitute collateral. No party contended that the director was referring to himself. The borrower was a corporation in financial difficulty; no reasonable person would think that it was the borrower which was offering to provide the additional security. That left as the promisor the owner of the relevant property. On the facts of that case, the Court concluded (at [52]) that it was contrary to reason to conclude that the director's promise to supply a certificate of title over the relevant property was a promise by the borrower, which did not own the land, rather than a promise by the first respondent, which did; and that a reasonable person in the addressee's position would have inferred that the director was purporting to act on behalf of the first respondent. I note that it was common ground that the director in fact had the authority to commit the first respondent to that promise (at [52]). While a decision on the facts of a particular case, it is nevertheless instructive as to the correct process of reasoning to adopt in relation to such issues. 128 A number of cases, discussed below, have held that the commencement date is an essential term of a lease or agreement to lease. 129 In Whitlock v Brew (1968) 118 CLR 445, a majority of the High Court held that a clause in a contract of sale providing for the grant of a lease in relation to a portion of the relevant land used as a petrol station was uncertain, because it did not prescribe either the term of the lease or the rent. It was explicit in the judgment of McTiernan J (dissenting) (at 454) and implicit in the judgments of Kitto J (at 456) and Taylor, Menzies and Owen JJ (at 460-461) that it was necessary to have an ascertainable commencement date (although, in this case, this was ascertainable, being the date the purchaser obtained possession). McTiernan J said at 454: In order to have a lease there must be, in addition to the parties and property, an ascertainable period for its duration, an ascertainable rent, and an ascertainable point of commencement. 130 In Darling Point Securities Pty Ltd v Industrial Equity Pty Ltd (1991) NSW ConvR 55-589, Clarke JA (Handley JA agreeing) said at 59,324: There is no doubt that the identification of the commencement date and duration of the term of the lease are essential terms (Halsbury (4th Ed) Vol 27, para 57.) So much was conceded by the appellant. It would seem to follow that an agreement to procure the grant of a lease which did not nominate or sufficiently indicate the commencement date of the term of the lease would not satisfy contractual requirements of certainty. 131 His Honour then referred to an argument which had been argued at first instance that in the absence of an express statement of the commencement date of the term there is a rule to the effect that it should be implied that the date of the agreement to grant or procure the granting of the lease was intended by the parties to be the commencement date of the term. Clarke JA said that that view was mistaken and had not been pressed on appeal. In this regard, he cited Marshall v Berridge LR XIX ChD 233, in which the headnote reads: An executory agreement for a lease does not satisfy the Statute of Frauds, unless it can be collected from it on what day the term is to begin, and there is no inference that the term is to commence from the date of the agreement in the absence of language pointing to that conclusion. 132 Justice Clarke also cited (at 59,325) the statement of Lord Denning MR in Harvey v Pratt (1965) 1 WLR 1025 at 1026, that: It has been settled law for all my time that, in order to have a valid agreement for a lease, it is essential that it should appear, either in express terms, or by reference to some writing which would make it certain, or by reasonable inference from the language used, on what day the term is to commence. 133 In Foote v Acceler8 Technologies Pty Ltd [2012] NSWSC 635, one of the issues was whether a contract was void for uncertainty because of the absence of agreement as to the commencement date for the proposed lease. The relevant clause stated: "Lease commencement: Four weeks after handover date". Another clause stated: "Handover Date: TBA". It was common ground that "TBA" should be construed to mean "to be announced" or "to be advised". Pembroke J at [20]-[21] set out the following general principles relating to essential terms, including in the context of agreements to lease: [20] The omission of an essential term, without any means of curing the omission except by the further agreement of the parties, will be fatal to the validity and enforceability of an agreement: Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597 at 607 (Menzies J); Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 at [85]-[95] (Young CJ in Eq); May & Butcher Ltd v R [1934] 2 KB 17n at 20 (Lord Buckmaster). [21] In any given case, the essential terms that require the parties' agreement will of course vary, depending on the nature of the particular agreement: Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 68 (Ormiston J); Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601 at 619. In the case of a lease or agreement to lease, the essential terms will usually be the parties, the premises, the term and the rent: NZI Insurance Ltd v Baryzcka [2003] SASC 190 ; (2003) 85 SASR 497 at 506. Agreement about the term of a lease necessarily connotes agreement on both its commencement and duration. (emphasis added) 134 In the next paragraph of the judgment, Pembroke J referred to the well-recognised exception to the requirement for agreement on all essential terms, namely where the agreement provides a mechanism for the determination of the omitted matter and the operation of that mechanism does not require the further agreement of the parties. His Honour held that that exception applied in the case before him. He held that handover was a shorthand expression for the grant of occupation. Occupation was dealt with in another clause, which provided that occupation of the premises would not be granted by the owner until the lease documentation had been executed to the satisfaction of the owner's solicitors. His Honour held that, properly construed and in the context of the occupation clause, the determination of the handover date was a matter for the owner. 135 Other cases have affirmed that, in order to establish a complete and enforceable lease agreement, there must be certainty as to its essential terms, including the parties to it, the identity of the leased premises, the commencement and duration, and the rent to be paid: see Re Oliver Brown Pty Ltd (No 2) (2012) 17 BPR 32,253 at [26] per Black J; Picwoods Pty Ltd v Panagopoulos (2005) NSW ConvR 56-120 at [60]-[63] per White J.

Application of principles to facts of this case 136 The issue is whether the 31 March 2015 letter, the 8 April 2015 email and the 9 April 2015 letter constitute an agreement to lease. It is convenient to start with the question whether there was an intention to create legal relations. As the communications relied on as constituting the agreement are in writing, the issue is to be resolved objectively, and as a matter of construction of the relevant documents. In the present case, the language of "offer" and "acceptance" may be taken to be a significant indicator of an intention to create legal relations. 137 The terms of the letter dated 31 March 2015 appear, at least at first blush, to be somewhat tentative. In particular, the final paragraph contains the statement that Pentaco has been advised that Yarraside "may be prepared" to lease the sites to United on the same terms as mentioned above. These words may suggest that Yarraside has not decided whether to make an offer to United. On the other hand, the last sentence is expressed in terms of acceptance of an offer. It states in part: "If you wish to accept an offer to lease on similar terms please notify us". These words suggest that an offer is being conveyed by the letter; if the letter was only an 'invitation to treat' one would expect the letter to ask whether United wishes to make an offer, rather than whether it wishes to accept one. The last sentence also refers to United notifying Pentaco on behalf of itself and Yarraside of United's "acceptance or rejection". These words also tend to suggest that an offer is being made. 138 The proper construction of the 31 March 2015 letter requires consideration, not just of the text of the letter, but also (at least in the circumstances of this case, given the textual ambiguity) of the commercial context. Relevantly, the commercial context included the existence of the Supply Agreement between United and Pentaco; the existence of the right of first refusal in that agreement; and the fact that, although the negotiation of the right of first refusal in the Supply Agreement had been premised on Pentaco owning the seven sites, they were not actually owned by Pentaco. (The letter proceeds on the basis that they are owned by Yarraside but in fact the Richmond site was owned by the Directors.) In this context, in my view, a reasonable person in the position of United would probably have understood the letter as conveying an offer to lease the seven sites by way of notional fulfilment of the right of first refusal. In other words, even though Yarraside was not a party to the Supply Agreement and therefore was not, on the face of things, bound by the right of first refusal, Yarraside was making an offer to lease to sites as if it were a party to the Supply Agreement and bound by that clause. On this view of things, Yarraside was also protecting itself against any claim that, notwithstanding that it was not a party to the Supply Agreement, it was nevertheless bound (for example, by reason of estoppel) to offer United a right of first refusal before leasing the sites. 139 This reading of the letter (as constituting an offer to lease) is supported by the email sent by Mr Con Andrianopoulos of 8 April 2015. His email clearly treated the 31 March 2015 letter as an offer to lease. This is indicated by the subject line of the email and the last two sentences. 140 Turning to the letter dated 9 April 2015, this is clearly expressed in terms of acceptance of an offer, thus indicating an intention to create legal relations. If, therefore, the letter dated 31 March 2015 and the email dated 8 April 2015 constituted an offer to lease, evincing an intention to create legal relations, then both sides evinced such an intention. For these reasons, I conclude that, on the proper construction of the three documents, there was an intention to create legal relations. 141 Assuming (as I have concluded above) the letter dated 31 March 2015 constituted an offer to lease, I think there is little difficulty in concluding that a reasonable person in the position of United would have understood the letter as being sent on behalf of Yarraside. This is strongly indicated by the closing words, which asks United to notify us "on behalf of … Yarraside". But it is also indicated by the logic of the letter viewed in its commercial context. Yarraside was (the letter stated) the landlord of the seven sites; any offer to lease the sites was necessarily being made by Yarraside. This same logic justifies an inference that Pentaco had actual authority from Yarraside to send the letter. 142 It is more difficult, however, to conclude that the letter dated 31 March 2015 constituted an offer on behalf of the Directors in relation to the Richmond site. That is because the letter proceeds on the (incorrect) basis that that site is owned by Yarraside and makes no express mention of the Directors. In these circumstances, the reasonable person in the position of United would not have understood the letter as conveying an offer to lease the Richmond site on behalf of the Directors. United, the addressee, had no knowledge at this stage that the Richmond site was owned by the Directors. 143 I next consider whether, notwithstanding an intention to create legal relations, there was a lack of essential terms, with the result that the communications are insufficient to constitute a concluded agreement to lease. Although the letter dated 31 March 2015 set out the rent, the lease term, the number and term of the options, and provisions relating to rent reviews, it did not set out a commencement date for the lease. Nor did the email of 8 April 2015. I do not consider that the failure to agree upon this matter can be resolved as a matter of construction of the documents, as submitted by United. Unlike the situation in Foote v Acceler8 Technologies Pty Ltd [2012] NSWSC 635, discussed above, there are no words which, properly construed, provide a mechanism for the ascertainment of the commencement date. In particular, there is no textual foundation for a construction which would allocate determination of the commencement date to the landlord. I note that United sought to rely on the reference to "date to be determined" in Mr Szymczak's handwritten note of the 8 April 2015 conversation and Mr Szymczak's evidence in relation that aspect of the conversation. However the agreement alleged in the statement of claim relies on the three written communications, not on what was said during the 8 April 2015 conversation. Further and in any event, even accepting, as I do, Mr Szymczak's account of this aspect of the conversation (set out in paragraph [104] above), it does not constitute agreement on the commencement date or on a mechanism for its ascertainment. For these reasons, I conclude that no agreement to lease came into existence. 144 In these circumstances, it is unnecessary to consider the respondents' submission that there was a lack of completeness regarding other matters, in particular, the equipment to be sold for $1,950,000. An offer to sell equipment was not included in the 31 March 2015 letter, but was added in the 8 April 2015 email. It seems that the 31 March letter was directed at satisfying the requirements of the right of first refusal (as if it applied to Yarraside), whereas Mr Con Andrianopoulos's email of 8 April 2015 was designed to reflect the full scope of the Puma proposal. No detail was provided as to the equipment covered by this aspect of the 8 April 2015 email. In these circumstances, I think there was insufficient certainty as to this aspect of the offer constituted by the 31 March letter taken together with the 8 April email. However, I consider this aspect to be severable. In the context of the total value of the offer (rent totalling $20,800,000 over the initial term, not taking into account rent reviews), the equipment represented a comparatively small component. Further, the offer was primarily concerned with an agreement to lease. Yarraside was in effect complying with the right of first refusal as if it was a party to the Supply Agreement. In these circumstances, in my view, the equipment aspect of the offer was severable. 145 The respondents contended that other aspects of the 31 March 2015 letter and the 8 April 2015 lacked completeness. These concerned: the identity of the landlord, and a make-good provision. I consider these matters to be capable of resolution through a process of construction. 146 For these reasons, I conclude that the agreement to lease case is not made out.

Applicable principles 147 United's alternative case relied on equitable estoppel, primarily promissory estoppel. The principles applicable to equitable or promissory estoppel were described by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429 as follows: In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. 148 In Thompson v Palmer (1933) 49 CLR 507 and Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641, Dixon J explained the object of estoppel in pais (or estoppel by conduct), in comments which are applicable both to common law and equitable estoppel. In Thompson v Palmer, his Honour said at 547: The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct, … or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption. 149 In Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641, Dixon J said at 674-675: … it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice. 150 More recently, in Sidhu v Van Dyke (2014) 251 CLR 505, which concerned the category of equitable estoppel usually traced back to Dillwyn v Llewelyn (1862) 4 De GF & J 517 [45 ER 1285] and Ramsden v Dyson (1866) LR 1 HL 129, French CJ, Kiefel, Bell and Keane JJ emphasised (at [58]) that "it is the conduct of the representee induced by the representor which is the very foundation for equitable intervention". Their Honours continued (at [58]): Reliance is a fact to be found; it is not to be imputed on the basis of evidence which falls short of proof of the fact. It is actual reliance by the promisee, and the state of affairs so created, which answers the concern that equitable estoppel not be allowed to outflank Jorden v Money by dispensing with the need for consideration if a promise is to be enforceable as a contract. It is not the breach of promise, but the promisor's responsibility for the detrimental reliance by the promisee, which makes it unconscionable for the promisor to resile from his or her promise. In Giumelli v Giumelli, Gleeson CJ, McHugh, Gummow and Callinan JJ approved the statement of McPherson J in Riches v Hogben that: "It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise." (footnotes omitted) 151 In the same case, Gageler J said at [91]-[92]: [91] To establish that the belief to which she was induced by the appellant's representations was a contributing cause to the course of action or inaction which she took, the respondent needed to establish more than that she had the belief and took the belief into account when she acted or refrained from acting. She needed to establish that having the belief and taking the belief into account made a difference to her taking the course of action or inaction: that she would not have so acted or refrained from acting if she did not have the belief. [92] The need for the respondent to establish such a difference stems from what Dixon J described in Grundt v Great Boulder Pty Gold Mines Ltd as the "indispensable" condition that a party asserting an estoppel "must have so acted or abstained from acting upon the footing of the state of affairs assumed" that the party asserting the estoppel "would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption". That is to say, "the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted". There can be no real detriment if the party asserting the estoppel would have been in the same position in any event. (footnotes omitted) 152 Although the formulation of equitable estoppel from Brennan J's judgment in Waltons Stores, set out above, speaks of assumptions or expectations rather than representations, a party should not be estopped on the basis of an ambiguity, and representations should be clear and unequivocal: Legione v Hately (1983) 152 CLR 406 at 435-437; Foran v Wight (1989) 168 CLR 385 at 410-411; Knott Investments Pty Ltd v Winnebago Industries Inc (2013) 211 FCR 449 at [91]. 153 Further, as in the case of other estoppels by conduct, it suffices that the representation has materially contributed to the representee's course of conduct; the fact that other causes may also have contributed does not prevent an estoppel arising: Sidhu v Van Dyke (2014) 251 CLR 505 at [67]-[78]; Heydon, Leeming and Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (5th ed, 2015), at [17-265]. 154 A particular issue concerns the effect, if any, of an 'entire agreement' clause in the context of an alleged estoppel. In Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603, Campbell JA (with whom Allsop P and Giles JA agreed at [32]-[33] and [42] respectively) dealt with the alleged effect of an 'entire agreement' clause in a contract on the alleged equitable estoppel. His Honour said at [554]: I would accept that an entire agreement clause, even one that, like cl 14.2, specifically denies efficacy to all previous negotiations and representations, could not overcome an equitable estoppel, once established. An "entire agreement clause" might create a factual difficulty in the way of proof of the elements of equitable estoppel, most obviously, proof of inducement or reliance, and I would not want to rule out the possibility that it might be relevant to any precise remedy granted (though I cannot at present think of an example of when that might occur). However, it does not create an insuperable obstacle of principle. Consistently with the equitable principle that it will not allow a contract to be an instrument of fraud, equity would not permit an entire agreement clause to stultify the operation of its doctrines. 155 This passage was cited with approval by Jagot J in Yarrabee Chicken Company Pty Ltd v Steggles Limited [2010] FCA 394 at [131].

Application of principles to facts of this case 156 The issue in the present case is whether the elements of equitable estoppel, outlined above, are made out. For the following reasons, I think they are. 157 The first question is whether the alleged representations were made. These were, first, that Pentaco was the registered proprietor or beneficial owner of the seven sites and, secondly, that, upon entry into a supply agreement with Pentaco, United would be entitled to, and would receive, the benefit of a right of first refusal in respect of any sale or lease of the sites. In my view, these representations were implicitly conveyed by the 13 October 2011 email for the reasons discussed in paragraph [52] above. They were also implicitly conveyed, to some extent, by the references to getting the leased sites back in the 19 July and 29 July 2011 emails. Further, in my view, the representations were implicitly conveyed by the failure to inform United at any time prior to the execution of the Supply Agreement that Pentaco was not the registered proprietor or beneficial owner of the sites. As is evident from the narrative of the facts set out above, the parties were specifically negotiating the right of first refusal. If Pentaco was not the registered proprietor of the sites, the right of first refusal was effectively worthless. In these circumstances, combined with the sending of the emails, the failure to inform United that Pentaco was not the registered proprietor of the seven sites implicitly conveyed the alleged representations. In my view, the representations were clear. 158 In my view, the representations were made by all of the respondents, not just Pentaco. Each of Mr Con Andrianopoulos and Mr George Andrianopoulos were, in my view, acting on behalf of all of the Directors and their companies when they negotiated the Supply Agreement with United. The tenor of Mr Con Andrianopoulos's and Mr George Andrianopoulos's evidence is described in paragraph [39] above. Further, Yarraside can be said to have had knowledge of the emails through the knowledge of Mr Con Andrianopoulos, one of its directors. In these circumstances, the representations (including by failure to inform) were made by Yarraside and the Directors. 159 I also accept that, at the time that it negotiated and entered into the Supply Agreement, United assumed that Pentaco was the registered proprietor or beneficial owner of the seven sites, and that, upon entry into a supply agreement with Pentaco, it would be entitled to, and would receive, the benefit of a right of first refusal in respect of any sale or lease of the sites; and that the representations materially contributed to these assumptions. I refer to the factual findings on these matters set out in paragraphs [56]-[57] above. Although the Supply Agreement contains an 'entire understanding' clause, which is comparable to an 'entire agreement' clause, this does not provide a basis, in the circumstances of this case, to conclude that United did not in fact rely on the representations. 160 As discussed in paragraphs [58]-[62] above, in my view, if United had been informed that Pentaco was not the registered proprietor, it is very likely that United would have insisted that Yarraside and the Directors be included as parties to the Supply Agreement, so that they would be bound by the right of first refusal; further, it is very likely that Yarraside and the Directors would have acceded to this. In these circumstances, United has acted or abstained from acting to its detriment on the basis of the assumptions which the respondents induced it to adopt. In particular, United abstained from insisting that Yarraside and the Directors be included as parties to the Supply Agreement. 161 In my view, the circumstances outlined above satisfy each of the elements of equitable estoppel identified by Brennan J in Waltons Stores. The third element referred to by Brennan J was that the plaintiff acts "or abstains from acting" in reliance on the assumption or expectation. The reference to abstaining from acting reflects the statements of principle of Dixon J in Thompson v Palmer and Grundt v Great Boulder Pty Gold Mines Ltd extracted above. As indicated above, in this case, United abstained from acting, in reliance on the assumption induced by the representations. The fourth element is that the defendant knew or intended the plaintiff to do so. The respondents, having made the representations, can be taken to have known that United was acting or abstaining from acting in reliance of those representations in entering into the Supply Agreement as drafted and not insisting that the owners of the properties be included as parties. In my view, giving effect to the asserted estoppel in the circumstances of this case is consistent with the purpose of the doctrine as explained in the cases discussed above. It is not the departure from the representations, but rather the respondents' responsibility for the detrimental reliance by United, which makes it unconscionable for the respondents not to adhere to the representations. 162 It is appropriate in these circumstances for the respondents to be estopped from denying the representations or assumptions. In practical terms, this would be achieved by an injunction restraining Yarraside and the Directors from disposing of a freehold, leasehold or beneficial interest in any of the seven sites during the term of the Supply Agreement unless they have complied with the right of first refusal in clause 13 of the Supply Agreement (as if it applied to them). This puts the parties in effectively the same position as if Yarraside and the Directors had been included as parties to the Supply Agreement for the purposes of binding them to clauses 12 and 13. 163 I note that there is nothing surprising or commercially unreasonable about this result. As set out in paragraph [61] above, Mr Con Andrianopoulos said in his evidence during the trial that, if the respondents were proposing to sell any of the seven sites to a third party other than by public auction, they couldn't do this without offering it to United first. 164 I now turn to consider whether, in addition to an injunction as outlined above, there should be an order that Yarraside and the Directors make an offer to lease the seven sites to United, on the same terms as the Puma proposal. United's argument for this additional relief depends upon the contention that the right of first refusal in clause 13 was 'triggered' or 'engaged' by the Puma proposal, with the consequence that, treating the right of first refusal as notionally applying to Yarraside and the Directors, they are obliged to offer to lease the sites to United on the same terms. On this argument, the requirement to make an offer continues notwithstanding that (as I have found) the respondents are not currently proposing to proceed with the Puma proposal. 165 I do not have any difficulty in accepting that, in entering into the Puma proposal, Yarraside "proposed" a disposition of a leasehold interest within the meaning of that word in clause 13. As described above, the Puma proposal was constituted by a written document, signed by all parties, containing detailed terms and conditions. Although expressed to be non-binding, the documents and events indicate a level of intention on the part of the respondents where it is fair to say that they "proposed" a disposition of a leasehold interest to Puma. 166 The more difficult issue is whether, as contended by United, clause 13 (assuming it applied to Yarraside and the Directors) operates to require an offer to lease to be made in circumstances where they are not currently proposing to proceed with the Puma proposal. The respondents contend that clauses 12 and 13 need to be read together and that clause 12 is the primary clause. They note that clause 12 specifically refers to clause 13, thus linking the two clauses. They contend that clause 13 is merely a procedure which must be adhered to before the Customer can dispose of a freehold, leasehold or beneficial interest in one of the seven sites. So long as the Customer does not dispose of such an interest, it is not obliged to make an offer under clause 13. It follows that, if the Customer proposes to dispose of an interest in one of the seven sites and then changes its mind, there is no obligation to make an offer under clause 13. On the other hand, United contends that clause 13 has an independent operation such that, whenever any disposition of a freehold, leasehold or beneficial interest is proposed, the Customer is required to make an offer to United. 167 The expression 'right of first refusal' has no fixed legal meaning: see Woodroffe v Box (1954) 92 CLR 245 at 257-258 per Fullagar and Kitto JJ; Farrands, The Law of Options and other Pre-emptive Rights (Lawbook Co, 2010), pp 156-158. In each case, the meaning of the clause is to be determined as a matter of construction, in accordance with the generally applicable principles for the construction of commercial contracts, discussed in, for example, McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at [22]; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at [8]; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]. See also Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 325 ALR 188 at [46]-[52], [108]-[113], [119]. 168 In my view, the construction of clauses 12 and 13 contended for by the respondents is to be preferred. First, the two clauses are expressly linked by virtue of the reference to clause 13 in the last line of clause 12. This suggests that the two clauses are to be read together. Second, the proposition that clause 13 applies, not only to a proposed sale, but also to a proposed lease, flows from reading the two clauses together. Clause 13 is expressed in terms which are apt for a sale but possibly inapt for a lease. The proposition that the clause extends to a proposed disposition of a leasehold interest (which is a necessary part of United's case, and is accepted by the respondents) is supported by, perhaps even depends upon, reading the two clauses together. Third, clause 13.1 states that the Customer must "first" offer to sell (or lease) its interest. Although not expressly stated, the implication is that the Customer must first offer to sell (or lease) its interest before disposing of that interest. This indicates that the clause sets out a procedure which must be followed before the Customer is permitted to proceed with a proposed disposition. Fourth, clause 13.1 does not stipulate that an offer must be made within any fixed period of time following a proposal. This is to be contrasted with clause 13.2, which provides that United has 14 days within which to accept the offer, and tends to indicate that the requirement in clause 13.1 is not a free-standing requirement, but rather a step that must be gone through before the Customer is permitted to dispose of an interest. Fifth, the commercial purpose of the clause is met by reading clauses 12 and 13 together in the way contended for by the respondents. That purpose, as I see it, is to ensure that a site is not sold or leased without United first having the opportunity to purchase (or lease) it on the same terms. This is consistent with Mr Silver's explanation of the importance of such a clause, set out in paragraph [59] above. For these reasons, I conclude that clauses 12 and 13 are to be read together and that clause 13 provides a procedure which must be gone through before the Customer is permitted to dispose of a freehold, leasehold or beneficial interest in one of the seven sites; clause 13 does not impose an independent requirement to make an offer once a disposition is proposed. It follows from this construction that I do not accept the submission, put on behalf of United, that, once there is a proposed disposition, clause 13 confers an equitable interest in land in the nature of an option. 169 On the basis of this construction of clauses 12 and 13, in circumstances where Yarraside and the Directors are not currently proposing to proceed with the Puma proposal, there is no occasion to make an order that they be required to make an offer on the same terms to United. 170 For these reasons, I conclude that United's estoppel case is made out, and I would grant relief as outlined in paragraph [162] above.

Applicable principles 171 Section 18(1) of the Australian Consumer Law provides that "[a] person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". The expressions "conduct" and "engaging in conduct" are defined in s 2(2) of the Australian Consumer Law. The Australian Consumer Law, which commenced on 1 January 2011, applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapter 2 (which includes s 18), 3 or 4 of Schedule 2 by corporations: Competition and Consumer Act 2010 (Cth), s 131(1). The Australian Consumer Law text applied as a law of Victoria at the relevant time pursuant to the Fair Trading Amendment (Australian Consumer Law) Act 2010 (Vic). In this application, s 18 of the Australian Consumer Law was not confined to the conduct of, or contraventions by, corporations. 172 The principles relating to s 18 of the Australian Consumer Law are well established and need not be set out in any detail. In Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, French CJ said at [25], "[c]haracterisation is a task that generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error". In the same case, Gummow, Hayne, Heydon and Kiefel JJ at [102] quoted with approval the following passage from the judgment of McHugh J in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592. In that case, in reference to s 52 of the Trade Practices Act 1974 (Cth), McHugh J said at [109]: The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document. (footnotes omitted) 173 Where the conduct complained of is constituted by or includes a failure to disclose something, the question is whether in light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 41 per Gummow J, Black CJ and Cooper J agreeing; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [14] per French CJ and Kiefel J. In Demagogue at 41, Gummow J agreed with the remarks of French J (as his Honour then was) in Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193 at 53,195 that, "unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist". See also Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [19]-[23] per French CJ and Kiefel J. 174 In relation to an 'entire agreement' clause, in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, Gummow, Hayne, Heydon and Kiefel JJ said at [130]: It is as well to add, however, that, of itself, neither the inclusion of an entire agreement clause in an agreement nor the inclusion of a provision expressly denying reliance upon pre-contractual representations will necessarily prevent the provision of misleading information before a contract was made constituting a contravention of the prohibition against misleading or deceptive conduct by which loss or damage was sustained. As pointed out earlier, by reference to the reasons of McHugh J in Butcher, whether conduct is misleading or deceptive is a question of fact to be decided by reference to all of the relevant circumstances, of which the terms of the contract are but one. (footnotes omitted)

Application of principles to facts of this case 175 Many of the issues here overlap with those considered in relation to United's estoppel case. 176 In my view, for the reasons set out in paragraphs [157]-[158] above, the respondents made the alleged representations, namely that Pentaco was the registered proprietor or beneficial owner of the seven sites; and that, upon entry into a supply agreement with Pentaco, United would be entitled to, and would receive, the benefit of a right of first refusal in respect of any sale or lease of the sites. In my view, the circumstances were such as to create a reasonable expectation that if Pentaco was not the registered proprietor of the seven sites, this fact would be disclosed. While it is true that United was a large commercial enterprise and it would have been prudent to have conducted a title search, in circumstances where the comments of the solicitor contained in the 13 October 2011 email clearly proceeded on the basis and conveyed the impression that Pentaco owned the sites, and the right of first refusal was the subject of specific negotiation, there was, in my view, such a reasonable expectation. 177 The representations were made in trade or commerce. They formed part of the business dealings of the respondents. 178 The representations were, in my view, misleading and deceptive, because Pentaco was not the registered proprietor of the seven sites, and because, upon entry into the Supply Agreement, United did not receive the benefit of a right of first refusal in respect of any sale or lease of the seven sites. 179 In these circumstances, I accept that the respondents engaged in misleading and deceptive conduct, or conduct likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law. 180 In my view, United relied on the representations. As discussed in paragraphs [58]-[62], it is very likely that, if United had been informed that Pentaco was not the registered proprietor of the seven sites, it would have insisted that Yarraside and the Directors be included as parties to the Supply Agreement so as to be bound by the right of first refusal; and that the respondents would have acceded to this. The respondents submitted that United carelessly disregarded its own interests, relying on Mr Silver's observation during his evidence that, in hindsight, United should have carried out a title search. However I do not consider that the failure to take this or other steps which could have been taken is sufficient to displace the conclusion that United acted, or refrained from acting, in reliance on the conduct given, in particular, the terms of the 13 October 2011 email and the fact that the right of first refusal was the subject of specific negotiation. In the circumstances, an appropriate remedy pursuant to s 232(1) of the Australian Consumer Law would be an injunction to the same effect as that to be given in relation to the estoppel case (see paragraph [162] above). The issue of loss and damage did not form part of the trial. Therefore it is unnecessary to consider this at this stage.

G. CONCLUSION 181 For these reasons, I have concluded that United's contract case is not made out, but that its estoppel case and its misleading and deceptive conduct case are made out. In relation to the estoppel case, I will grant an injunction as outlined in paragraph [162] above. In relation to the misleading and deceptive conduct case, I would grant a like injunction. The issue of loss and damage did not form part of the trial. I will hear from the parties as to whether, in light of the injunction, and my other conclusions, there is a need to consider loss and damage. I certify that the preceding one hundred and eighty-one (181) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.

SCHEDULE OF PARTIES VID 255 of 2015

Fourth Respondent: KONSTANTINOS ANDRIANOPOULOS Fifth Respondent: VASILIOUS ANDRIANOPOULOS Sixth Respondent: STAN ANDRIANOPOULOS Seventh Respondent: TONY HADJISTAMATIS