weinberg j:
110 This is an appeal from a judgment of Finkelstein J allowing an application by a creditor challenging the rejection of a proof of debt by a company's administrators: Thiess Infraco (Swanston) Pty Ltd v Smith (2004) 209 ALR 694.
111 The facts are in relatively short compass. In 1999, the Victorian Government privatised the public transport system in Victoria. Franchises were awarded to various private organisations to operate the transport system. Three franchises were granted to Australian-based subsidiaries of National Express Group Plc ('NX'), a British publicly listed company. One such franchise was awarded to National Express Group Australia (Swanston Trams) Pty Ltd ('NX Swanston') for a term of ten years.
112 It soon became apparent that the NX subsidiaries could not operate profitably. In December 2002, the British parent withdrew its financial support. Shortly thereafter, all of the NX subsidiaries went into administration. Ultimately, they entered into Deeds of Company Arrangement. The Deeds made provision for the extinguishment of creditors' claims upon payment to them, out of a $30 million fund established by the Victorian Government and the British parent, of a sum less than the full amount of their claims. One group of creditors whose claims would be compromised were those who had a 'debt payable by, or claim against, [a franchisee] (based in contract, tort, statute or otherwise, present or future, certain or contingent, ascertained or sounding only in damages), being a debt or claim arising on or before' 23 December 2002. That was the day on which NX Swanston went into administration.
113 The respondent, Thiess Infraco (Swanston) Pty Ltd ('Thiess') claims to be a creditor of NX Swanston. It lodged a proof of debt with the appellants, who are the administrators of the particular Deed that is central to this appeal. The proof was for unpaid services for work done before 23 December 2002, and for loss of profits. The administrators rejected the proof insofar as it claimed loss of profits, and Thiess challenged that decision pursuant to s 1321 of the Corporations Act 2001 (Cth).
114 The contractual arrangements giving effect to the privatisation process were complex. On 14 May 1999, National Express Group (Australia) Pty Ltd ('NX Australia') entered into an Infrastructure Maintenance Agreement ('the IMA') with Thiess Contractors Pty Ltd. On 23 July 1999, that agreement was novated to, inter alia, NX Swanston and Thiess. It was agreed that Thiess would provide infrastructure maintenance services to NX Swanston for a period of three years, extendable at the option of NX Swanston.
115 On 25 June 1999, the Director of Public Transport ('the DPT') and NX Swanston entered into a Franchise Agreement. On 26 July 1999, the DPT and Thiess entered into a Direct Agreement. The terms of these agreements are set out in some detail in the judgments of French J and Allsop J, and I shall not repeat them here. It is sufficient to note that pursuant to the Direct Agreement between the DPT and Thiess, Thiess gave various undertakings designed to protect the public interest in the operation of the transport system. Clause 5.2 of that agreement prevented Thiess from terminating or suspending the IMA in terms different from cl 24.4 of the IMA. That clause will be discussed below. Clause 5.2(a) provided that Thiess could terminate or suspend the performance of its obligations under the IMA for default on the part of NX Swanston but only if it had given notice of that default to the DPT, and either the default was not remedied within thirty days or, if it could not be remedied, if the obligations of NX Swanston under the IMA did not commence and continue to be performed within that period. Clause 5.2(b) provided that Thiess could not terminate or suspend the IMA if the DPT notified Thiess that he would assume responsibility for NX Swanston's obligations under the IMA.
116 There are several provisions of the IMA that are of critical importance in this case. Clause 34 sets out the circumstances under which the IMA could be terminated in the case of certain defined 'Events of Default'. The primary judge considered it curious that cl 34 appeared to give NX Swanston alone, and not Thiess, the right to terminate the IMA. The wording of that clause had led to a submission that it was a 'code', governing the entire IMA and enabling only NX Swanston to terminate the agreement in case of default. His Honour rejected that submission. He noted that cl 24, which did not deal with any question of default, expressly contemplated termination of the IMA by Thiess.
117 The primary judge regarded cl 24 as important for other reasons. It was concerned with contracts called 'Key Contracts'. By a complicated trail, "Key Contracts" were defined to include the IMA. Clause 24.4 limited the circumstances in which Thiess could terminate a Key Contract. It required, as a condition of Thiess doing so, the DPT to be reasonably satisfied that it was no longer necessary for Thiess to have the benefit of the Key Contract, or to be reasonably satisfied that Thiess had made adequate alternative arrangements for the continued operation of the franchise business. Moreover, the clause went on to say that if Thiess terminated a Key Contract in breach of the IMA, it would be obliged, at the request of the DPT, to enter into an agreement immediately following that request with each counterparty to the Key Contract on the terms set out in the relevant Direct Agreement between the DPT and itself.
118 Thiess provided maintenance services to NX Swanston in accordance with its obligations under the IMA, and received payment for those services throughout the period 1999 to 2002. On 16 December 2002, NX announced that it had given notice to the Victorian Government that it would no longer continue to provide funds to enable its train and tram subsidiaries to meet their liabilities. Later that day, the relevant Minister announced that the NX subsidiaries would hand back their franchises with effect from 23 December 2002.
119 On 17 December 2002, Thiess, which was owed approximately $4 million under the IMA, sought clarification of NX Swanston's position, and its intentions under the IMA. NX Swanston immediately replied that it was negotiating with the Victorian Government for an orderly handover of the franchise businesses once its parent company ceased to provide funding.
120 On 19 December 2002, a director of Thiess sought an assurance from the Chief Operating Officer of NX Australia that NX Swanston would continue to pay the amounts due to Thiess. The Chief Operating Officer said that no such guarantee could be given.
121 On 20 December 2002, Thiess served a default notice on the DPT pursuant to cl 5.2 of the Direct Agreement. The default identified in the notice was the failure by NX Swanston, in breach of the IMA, to pay the sum of $3.989 million currently due and payable to Thiess. Two days later, on 22 December 2002, the DPT, acting pursuant to certain securities granted by NX Swanston to the Victorian Government, appointed Receivers and Managers over the company's assets. Thiess then served a further default notice of the DPT, relying upon the appointment of the Receivers as a further event of default under the IMA. To secure the continued operation of the Swanston tram system, the DPT notified Thiess that it could not terminate or suspend the IMA, and that it was required to honour its obligations under that agreement. Thiess performed those obligations until 18 April 2004 when the IMA was terminated, and was paid for those services by the Receivers.
122 The IMA ultimately came to be terminated in the following circumstances. On 9 September 2003, Thiess, NX Swanston, the DPT, the Receivers and various other parties, executed a Settlement Deed. The Settlement Deed was intended to enable the contracts concerning the franchise to be renegotiated while at the same time keeping the original contracts on foot. As the primary judge noted, as no new contracts were made, most of the Settlement Deed never came into operation. Some of its provisions are, nonetheless, important.
123 Clause 2.2 provided that the IMA would be extended until a new maintenance agreement was struck. In the meantime, Thiess would not seek to terminate the IMA by reason of an 'insolvency event', which included the suspension of the payments of debts, insolvency and the appointment of an administrator. Eventually a new operator was found. The franchise operation was transferred to that new operator under what was described as the 'M>Tram Transfer Agreement (Infrastructure Maintenance)' dated 17 April 2004 ('the Transfer Agreement') to which Thiess, NX Swanston, the DPT and various others were parties. By cl 2 of that agreement, both NX Swanston and Thiess acknowledged and agreed that the IMA 'will terminate on commencement of the Franchise Agreement for breaches by [NX Swanston] of the [IMA] which occurred before 22 December 2002'. The parties further acknowledged and agreed that until the 'Completion Date' (that being the 'Franchise Commencement Date', as defined under the Franchise Agreement), each was bound by and obliged to continue to perform its obligations under the IMA. As the primary judge noted, the existing IMA thereby came to an end.
124 It can readily be seen that the original contractual arrangements between NX Swanston and Thiess were unusual in at least one key respect. They restricted Thiess' rights to terminate the IMA, and effectively prevented it from doing so without the DPT's consent. The reason for this was plain. It was intended to ensure that there would be continuity in the provision of vital public transport services even if one or other of the private parties to that agreement failed to meet its contractual obligations.
125 There cannot be any serious doubt that NX Swanston repudiated the IMA when it told Thiess on 17 December 2002 that, by reason of its parent company's decision to withdraw financial support, it would no longer be able to meet its liabilities as and when they fell due. The critical issue in this appeal is whether Thiess thereby acquired a contingent right to sue NX Swanston for damages for loss of profits, and whether that right existed prior to 23 December 2002, being the date specified in the Deeds of Company Arrangement. If, prior to that date, Thiess had a 'claim' (within the meaning of that expression in cl 1.1 of the relevant Deed), it was entitled to have its proof of debt accepted by the administrators. If Thiess did not have such a 'claim', the administrators acted correctly in rejecting the proof of debt.
126 The administrators refused to admit Thiess' claim for loss of profits as a 'claim' under the relevant Deed because they maintained that Thiess had no right, under the IMA, to terminate notwithstanding NX Swanston's repudiation of that agreement. In accordance with well-established authority, if Thiess could not terminate the contract, it could not recover for loss of profits. They contended that Thiess had bargained away any ordinary common law right that it might otherwise have had to terminate for breach of an essential condition by agreeing to maintain services unless and until the DPT was satisfied that adequate alternative arrangements could be made.
127 It is necessary therefore to consider the legal principles that govern termination of contracts, as they apply to this appeal. It is trite law that a contract may come to an end in various ways. For example, events may occur after a contract has been made which make its performance pointless, more difficult, or even impossible. Such events may result in the termination of the contract by operation of law on the basis that it has been frustrated.
128 Another way in which a contract can come to an end is by termination after breach of an essential condition. It is clear that all contracts involving an exchange of promises are conditional in the sense that each party's obligation to perform is conditional on the performance of all essential promises by the other. Breach of an essential condition by one party confers on the other party the right to terminate the contract. Non-fulfilment of such a condition does not normally result in the automatic termination of the contract, but creates a right to terminate by election. A right to terminate for breach may be lost by conduct indicating that the right will not be exercised. Such conduct may amount to an affirmation of the contract, or waiver of the right to terminate, or may give rise to an estoppel. In any event, the effect of termination is that, in the absence of agreement to the contrary, the contract comes to an end. However, it does so prospectively, leaving accrued obligations unaffected.
129 As a general proposition, the parties are free to agree between themselves whether, and in what circumstances, there shall be a right to terminate for breach. A right to terminate for breach also arises by law, provided that the breach is serious enough.
130 It is common for commercial contracts to provide for rights of termination in response to breach (or 'default'). The parties are free to specify what breaches shall justify termination, how the right to terminate shall be exercised, and what effect the exercise of that right shall have. A contract may validly stipulate that even a minor breach will entitle the other party to terminate. Such terms are frequently included in contracts for the sale of land.
131 Importantly, for present purposes, the law exercises a degree of control over contractual provisions conferring a right to terminate. In general, such provisions are construed strictly, limiting the right to terminate in circumstances where the breach or breaches are relatively innocuous. The present appeal raises a different issue. The question is whether Thiess, an innocent party, should be deprived of its right to sue for loss of profits, because its right to terminate in response to NX Swanston's act of repudiation was to some degree constrained.
132 The appellants in this case accept that, unless otherwise agreed, a right to terminate for breach, pursuant to the terms of a contract, operates concurrently with any right conferred by law to do so. That principle is well established.
133 In Holland v Wiltshire (1954) 90 CLR 409, a contract in writing for the sale of land provided that a deposit of a particular amount should be paid, and the balance of the purchase price paid by a specific date. It further provided that, if the purchaser defaulted, the vendor might, without notice, sell the land and rescind the contract, and any monies paid on account of the purchase should then be forfeited to the vendor as liquidated damages. The purchasers duly paid the deposit, but prior to the due date requested an extension of time for payment of the balance. The vendor agreed to that extension of time. Subsequently, the purchasers' solicitor informed the vendor that they would not proceed with the purchase. The vendor thereupon gave the purchasers a notice which, after reciting the agreement, the date fixed for settlement, and their failure to settle, gave them a new date by which to make settlement, and informed them that if that did not occur, the vendor would sue them for breach of contract. The purchasers failed to complete the purchase and subsequently the vendor sold the land at a lower price. He claimed to recover as damages the difference between the original contract price and the price at which he sold the land. The purchasers claimed the vendor was entitled only to forfeit their deposit.
134 The High Court held that the sale by the vendor was not effected under the recision clause of the contract, but independently thereof. Accordingly, the vendor was entitled to recover the damages claimed. Dixon CJ noted that the purchasers had done more than merely default upon their obligations. They had renounced and refused to perform the entire contract. His Honour said at 415-6:
'True it is that it was not accepted at once either as a breach or as an anticipatory breach. What was done was to place the purchasers on notice that they would be sued for breach if they did not complete before the date named by the notice. This was not an unconditional affirmance of the contract notwithstanding the renunciation. It was a demand for performance coupled with an intimation that refusal or failure to perform would result in proceedings for damages. That is to say it kept the contract open for a limited time and conditionally upon compliance. If time is an essential condition, to extend it does not waive the effect of the stipulation as a condition [cases omitted] … In the same way to give a party refusing to perform a fixed time to resile from his refusal and to notify him that failing his doing so he will be sued for his breach does not amount to an unconditional waiver of the refusal as a renunciation. Here the inference of fact is plain that the purchasers were maintaining their attitude of refusal to go on with the sale.
In these circumstances, the vendor was entitled to treat the contract as discharged by breach. He himself was ready and willing up to the expiration of the notice. His election to treat the contract as discharged by the purchasers' breach was sufficiently manifested by his proceeding to advertise the property for sale, and by his selling it. By that time, the purchasers were in actual breach and that breach was accompanied by an intention clearly evinced of setting the contract at nought. It is hard to see why this should not enable the vendor to treat the whole contract as discharged by the purchasers' breach or in other words to treat the contract as no longer binding upon him. This means that both parties would be discharged from further performance of the contract. The whole contract was involved, including the clause relating to rescission.'
See also generally N C Seddon and M P Ellinghaus, Cheshire and Fifoot's Law of Contract, 8th Australian ed, LexisNexis Butterworths, Sydney, 2002 ('Cheshire and Fifoot') at [21.3] and the cases cited at footnote 9 thereto.
135 However, the appellants submit that it is equally well established that the parties can agree, expressly or by implication, that the right to terminate for breach will be governed exclusively by the contract. They say that in such circumstances, courts will give effect to their agreement. For example, in Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 ('Progressive Mailing House'),Mason J said at 30:
'It is, of course, open to the parties by their contract to regulate the exercise of the common law right to determine for repudiation or fundamental breach. But in this case the parties have not attempted to do so.'
136 In accordance with this principle, the learned authors of Cheshire and Fifoot note that in Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, a clause entitling the Commonwealth to terminate its contract with Amann by giving a notice requiring Amann to show cause was held to constitute an exclusive code governing termination for breach thereby depriving the Commonwealth of any concurrent right to terminate by law.
137 In my view, the present case does not fall within the Progressive Mailing House principle. This is because the facts, as presented, do not take the case outside what the authors of Cheshire and Fifoot describe as a 'presumption of concurrence'. In Concut Pty Ltd v Worrell (2000) 176 ALR 693, the High Court held that a clause in an employment contract giving the employer a right to dismiss for wrongful conduct augmented, rather than removed, the right given by law to terminate for such conduct. In a joint judgment, Gleeson CJ, Gaudron and Gummow JJ at [23] reiterated the long established principle that clear words are needed to rebut the presumption that a contracting party 'does not intend to abandon any remedies for breach of the contract arising by operation of law'. There is a helpful discussion of this principle in Cheshire and Fifoot at [21.3] and in the cases cited at footnote 13 thereto, particularly Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 585 per Lord Goff; Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 at 717 per Lord Diplock; Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117 at 135 per Powell J; and Dover Fisheries Pty Ltd v Bottrill Research Pty Ltd (1994) 63 SASR 557 at 573 per Prior J.
138 Unless otherwise agreed, the effect of terminating a contract for breach is the same whether the right to terminate is conferred by the contract itself, or by law. However, that principle is subject to an important qualification. If the right to terminate is provided by law, the terminating party can sue for damages representing the full value of the lost performance. This is generally known as 'loss of bargain' damages. However, where the right to terminate is justified only under the contract, and not by law, it appears that such damages cannot be recovered. In substance, discharge of a contract, by termination for repudiation or breach, is necessary before such damages can be recovered.
139 This doctrine is supported by the decision of the High Court in Shevill v Builders Licensing Board (1982) 149 CLR 620. In that case, a lease provided that if rent was unpaid for 14 days or if the lessee was in breach of any covenants or if certain other events occurred such as bankruptcy or liquidation, the lessor could re-enter the land 'without prejudice to any action or other remedy the lessee has or might or otherwise could have for arrears of rent or breach of covenants or for damages as a result of any such event'. The lessee was constantly late in paying rent. The lessor re-entered and claimed as damages for breach of contract an amount equal to the rent payable over the balance of the term. The High Court held that the lessor was not entitled to recover damages for non-payment of rent.
140 It was accepted, in principle, that when one party commits a breach of contract entitling the other to rescind, and that innocent party does rescind, they are entitled to damages for loss of bargain. The damages were the loss of benefits that the performance of the contract would have conferred upon the innocent party. However, it did not follow from the fact that a contract conferred upon the party the right to terminate the contract that it also conferred the right to recover damages as compensation for the loss sustained as a result of the failure of the lessee to pay rent. Accordingly, the lessor was entitled to recover arrears of rent, but not entitled to the actual damages awarded by the trial judge.
141 The distinction that Shevill drew between damages for loss of bargain being available only when there has been a breach entitling the innocent party to rescind, and the unavailability of such damages when there has been a lesser breach, has been much criticised. However, Shevill has never been overruled. Indeed, it was expressly cited with approval by the High Court several years later in Progressive Mailing House. See also Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245. It goes without saying that Shevill has been repeatedly followed by lower courts.
142 In my opinion, the primary judge's finding that Thiess had a right to terminate for breach of an essential condition, or repudiation (albeit one that was 'held in suspense'), was justified. Thiess' right to terminate for breach was conferred by law. Nothing in the IMA took away that right. The IMA merely imposed a restriction upon its exercise in the form of a condition that had first to be met. The right was, in that sense, 'contingent', but nonetheless a right that existed before 23 December 2002. The presumption of concurrence was in no way rebutted. His Honour's metaphor of 'suspense' was, with respect, entirely apt. The primary challenge to his Honour's judgment is therefore rejected.
143 It follows that I agree with both French J and Allsop J that the primary judge correctly rejected the appellants' contention that the IMA denied Thiess the right to terminate for breach or repudiation. I also agree with virtually all that their Honours have said regarding the issue of election or affirmation, subject only to what appears below. I would therefore reject each of the appellants' grounds of appeal, leaving only ground eight for further consideration.
144 This takes me to the point upon which French J and Allsop J part company. French J would reject all of the grounds of appeal, including ground eight. Allsop J would uphold ground eight, and allow the appeal on that limited basis.
145 Ground eight asserts that the primary judge erred in not finding that the basis upon which the IMA was in fact terminated was inconsistent with Thiess having accepted any repudiation by NX Swanston of the IMA. In substance, the ground contends that the termination of the IMA was brought about by mutual assent, and had nothing to do with any acceptance on the part of Thiess of NX Swanston's repudiation of that agreement.
146 French J rejects this contention. He concludes that any termination of the IMA brought about by the Transfer Agreement cannot properly be described as 'consensual'. He notes that all of the parties to the Transfer Agreement accepted that the termination had been brought about by NX Swanston's breach of the IMA. That breach had occurred prior to 23 December 2002.
147 French J further notes that the termination that was effected by the Transfer Agreement specifically preserved any rights that Thiess would have enjoyed upon a termination for breach. The fact that Thiess did not insist upon incorporating into the Transfer Agreement any statement to the effect that the termination of the IMA resulted from its acceptance of NX Swanston's repudiation was not fatal to its claim.
148 Allsop J, on the other hand, notes that the Transfer Agreement, which he describes as 'the M>Tram Agreement', provided for the termination of the IMA, the commencement of a new Franchise Agreement between the DPT and a separate entity (MetroLink) and the commencement of employment by MetroLink of employees of Thiess should they take up the offer. His Honour observes that cl 2(a) of the Transfer Agreement provides that NX Swanston and Thiess mutually agree to end the IMA upon the commencement of the new franchise arrangement. The receivers ceased to have possession of the assets, and ceased to operate the business of NX Swanston at precisely the moment of completion under the Transfer Agreement, namely 3.00 am on 18 April 2004. Until that moment, all of NX Swanston's obligations under the IMA continued to be performed by the receivers, at least for the purposes of the Direct Agreement. In his Honour's view, at no point prior to the termination of the IMA by the operation of the Transfer Agreement did Thiess have an entitlement to terminate the IMA by any general law right of termination.
149 Allsop J concludes that the IMA came to an end, not because Thiess exercised an antecedently existing general law right to terminate, but only because of the operation of the Transfer Agreement. It may also be noted that the Transfer Agreement did not, in terms, attribute the termination of the IMA to an acceptance by Thiess of NX Swanston's repudiation.
150 However, this is by no means the end of the matter. The relevant parties to the Transfer Agreement, NX Swanston and Thiess, not only acknowledged but also agreed that the IMA would terminate at the appointed time 'for breaches of the [IMA] which occurred before 22 December 2002': see cl 2(a) (emphasis added). That statement seems to me to be more than just a recitation of historical fact. It lies at the core of the Transfer Agreement, and explains why the IMA is finally being brought to an end. Allsop J's characterisation of this aspect of the agreement as something other than the exercise by Thiess of a general law right of termination or recission, namely as an agreement to treat the ending of the IMA as an ending for breach of the IMA, has its attractions. It represents a view of the clause that is plainly open. However, with great respect, it is not a view that commends itself to me.
151 In my opinion, cl 2(a) must be read as a whole, and in the context of the entire Transfer Agreement. The clause also operates against the background of the parties' dealings throughout the entire period from the time that NX Swanston repudiated the IMA until the Transfer Agreement came into effect. The link between the termination of the IMA, and the past breaches as described, is drawn for a purpose and is intended to have a practical and operational effect. It is important to note that, at no stage during the period leading up to the Transfer Agreement did Thiess do anything to suggest that it had abandoned any rights that it may have had, under general law principles, to bring the IMA to an end. There is also nothing to suggest that the "presumption of concurrence" (to which I have previously referred) was rebutted. There is nothing in the evidence to suggest that Thiess, by entering into the Transfer Agreement, bargained away its right to terminate for repudiation. In the absence of any indication that Thiess stood to benefit from abandoning that right, it would have been foolish in the extreme for it to do so. Thiess would have given up, for no apparent reason, its right to recover damages for loss of profits.
152 The construction of cl 2(a) that I prefer, namely that it implicitly constituted termination by acceptance of repudiation, seems to me to find textual support in the agreement when read as a whole. It is also supported by the principles formulated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347-8, particular his Honour's observation that the courts had come to a recognition that evidence of surrounding circumstances is admissible in aid of the construction of a contract. To suggest that Thiess had to spell out, in terms, that its right to terminate under general law principles was not being abandoned simply in order to preserve that right would, in my view, be unfair, and hardly consonant with basic principles of justice.
153 The primary judge certainly seems to have viewed the matter in this way. He noted that as at 23 December 2002 NX Swanston was in breach of the IMA. It had failed to pay the fee due on 17 December 2002. This was a breach of an essential term, time being of the essence. In addition, NX Swanston had repudiated the IMA by informing both the Victorian Government and Thiess that it was no longer able to perform its obligations. Ordinarily, both the breach of an essential term, and the repudiation, would entitle Thiess to terminate the IMA, and sue for loss of profits.
154 The primary judge then noted that Thiess had not terminated the IMA at any time shortly after NX Swanston's breach, and repudiation. That led the administrators to contend that the IMA should be treated as if the breach had never occurred, and as if the IMA had never been repudiated. His Honour regarded that submission as having as its foundation the doctrine of election. However, he concluded that the fact that the IMA remained in force until 2004 should not be treated as an affirmation or an election not to discharge that agreement. Thiess was not entitled to terminate the contract for breach or repudiation without the consent of the DPT, and Thiess did not obtain that consent until it entered the Transfer Agreement. To that point Thiess had no choice but to go on with the IMA. It had no power to elect to terminate the IMA. Its right to do so was 'held in suspense' and could only be exercised with the DPT's consent unless, in the meantime, Thiess chose to go on with the IMA 'come what may'. As his Honour noted, this Thiess most definitely did not do.
155 I agree with the primary judge's observation regarding the issue of election. I also agree with his Honour's conclusion that Thiess did not bargain away its right to sue for 'loss of profit damages' by any form of accord and satisfaction. Thiess did nothing to suggest that it was prepared to give up, or had given up, any accrued right that it had to sue for such damages. Clause 2(a) of the Transfer Agreement makes it clear that the termination of the IMA on 18 April 2004, though in form a termination by agreement, was implicitly at least an exercise of the power to terminate in response to the antecedent breach and repudiation. The possibility of exercising that power had stood in limbo for approximately sixteen months, but it had never in any true sense been abandoned.
156 It follows that, in my opinion, the appeal must be dismissed.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.