Wayne Danckert v Ralph Erwin Tonkin

Background facts

1. On 23 November 2007 Carlisle, as trustee of the Danckert Family Trust (No 4) (Trust), became the lessee of certain land which comprised, amongst other things, the Bidwill Shopping Centre (Bidwill). The shopping centre, at this stage, had been closed for about ten years and was in a rundown condition.
2. Also on 23 November 2007, Carlisle obtained a loan facility of $3 million from SRD by mortgaging its leasehold interest in the shopping centre (2007 facility). This was to fund the assignment of the leasehold interest and the building renovation work. The facility was guaranteed by Mr Danckert and Carlisle.
3. The owner of the land is the New South Wales Land and Housing Corporation (Housing).
4. HCS Properties Pty Ltd was the transferor of the lease to Carlisle on 23 November 2007. The consideration paid by Carlisle for the transfer of the lease from HCS Properties Pty Ltd was $550,000. On the transfer of the lease Carlisle paid to Housing the first year's rent in advance.
5. The intention of Carlisle (and those associated with it) was to renovate the shopping centre and then secure tenants to produce a viable and attractive local community shopping centre which would in turn, it was hoped, generate profitable revenue.
6. Mr Danckert is a licensed real estate agent and a beneficiary under the Trust. However, Mr Danckert was made a bankrupt on 19 February 2008, although his bankruptcy was discharged on 15 March 2011.
7. In early 2008 the plaintiffs commenced renovation work on the shopping centre.
8. Between 2008 and October 2011 SRD made total advances of $2.75 million under the 2007 facility.
9. However, as at October 2011, each of the parties alleged breaches of the original loan agreement by the other.
10. On 25 October 2011 the parties entered into a Deed of Release and Variation to resolve their differences. Pursuant to this instrument, the parties released each other from the alleged breaches and SRD provided a further loan of $250,000, which Mr Weldon guaranteed. SRD eventually made advances of $165,657.89 under this facility.
11. The loan agreement, guarantee and indemnity documents of 2007 had been prepared by representatives of SRD. On the other hand, the Deed of Release and Variation of October 2011 was prepared by Mr Weldon. In each case the respective parties executed the relevant agreements.
12. In August and September 2013 SRD made further allegations of breach of the original loan, the mortgage, and the subsequent loan arrangements.
13. On 6 February 2014 SRD served Carlisle with a notice pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW) alleging default on the part of Carlisle and seeking possession of the leasehold.
14. In addition, on 11 February 2014 SRD commenced proceedings in the Supreme Court of South Australia against Messrs Danckert and Weldon.
15. On 28 February 2014 the parties met in Adelaide to discuss the possibility of settling their disputes. Mr Weldon produced notes of the meeting but prepared them at the airport after the meeting had concluded, prior to him returning home (Ex P1).
16. On 3 March 2014 Mr Weldon sent a letter to Schirripa Commercial Lawyers (the then solicitors for SRD) referring to the meeting and to the various matters discussed therein. This letter attached a proposal "to establish a joint venture" on certain terms and conditions.
17. However, in the covering letter Mr Weldon commented as follows: We believe that the meeting was very productive, with considerable goodwill being expressed on both sides. It not only allowed for a frank interchange but began to identify principles of a joint venture going forward, with the aim of getting the Carlisle Plaza Shopping Centre fully operational as soon as possible. … As agreed, Wayne and I were to formally put a proposal on behalf of Carlisle Plaza Pty Limited. A. Proposal The proposal is attached, which hopefully captures the matters discussed on Friday.
18. Mr Weldon concluded by saying: Would you kindly obtain your client's response to the Proposal as soon as possible?
19. The detailed proposal attached to the letter dealt with numerous matters, including the proposed 75:25 split between SRD and the plaintiffs' interests. Under the letter "L" and heading "Legal documentation", Mr Weldon remarked: Once agreement has been reached, I can provide (within 3 business days) an initial draft of: Shareholders Agreement Deed of Assignment The Deed of Assignment would need to be approved by Housing; Once agreement has been reached, you can provide an initial draft of documentation to settle the current litigation.
20. However, on 5 March 2014 a Mr Nicholas Evans from Schirripa Commercial Lawyers, acting for the Tonkin interests, rejected the proposal.
21. On 7 March 2014 SRD appointed Mr Divitkos, an accountant, as controller of Carlisle pursuant to s 429(2) of the Corporations Act 2001 (Cth).
22. Further, SRD obtained a default judgment against Messrs Weldon and Danckert in the Supreme Court of South Australia on 27 March 2014 in the sum of $255,813.27, plus fixed costs at $3,046.00.
23. In June 2014 SRD issued bankruptcy notices against Messrs Danckert and Weldon.
24. In July 2014 Mr Danckert alleges he had a telephone conversation with Mr Ralph Tonkin in order to inform him that Housing was happy with the progress of the shopping centre.
25. On 15 August 2014 a meeting took place between Mr Danckert, Mr Ralph Tonkin, Mr John Hyslop (from Foodworks), Mr Aman Jain and Manami Sall (for the prospective supermarket tenant).
26. On 17 August 2014 Mr Ralph Tonkin sent an email to Mr Danckert. Amongst other things he said (as written): I will discuss new JV Company prep with Dad Tomw morning in time for our Tues 1030am phone conference with Housing. Please send a draft heads of agreement as you think win/win for our new JV company, plus what we realistically need to offer housing for start of rental payments.
27. On 18 August 2014 Mr Ralph Tonkin sent an email to the putative tenant of the proposed supermarket at the shopping centre, which stated amongst other things: I had our lawyer Phil Weldon working on the lease over the weekend and I need all your company information to put on the lease.
28. On 18 August 2014 there was a conference call held between Messrs Danckert, Ralph Tonkin, Ron Tonkin and Weldon to discuss matters concerning the joint venture. As is outlined below, there are differences in the accounts given concerning what was said in this conversation. The versions are, however, consistent in establishing at least that the Tonkins were concerned to open the shopping centre as soon as possible, the parties intended in principle to proceed with the joint venture proposal, the interests in the joint venture were to be split 75:25, a new company was to be formed, and the approval of Housing was necessary.
29. On 20 August 2014 Mr Weldon sent an email to Mr Ralph Tonkin with a copy to Mr Danckert. He referred to a discussion which had taken place on that day and made some comments along the following lines. In order to facilitate the proposed 75:25 joint venture arrangements, we would like the outstanding issues to be dealt with as follows: 1. SRD Tonkin Pty Limited forgives WD and PW all indebtedness under the 25 October 2011 loan agreement and releases them from all liability under the loan agreement. 2. It follows from (1) that there should be consent orders filed in the SA Supreme Court a. setting aside the default judgment on 27 March 2014 and any cost orders made in the proceedings; and b. dismissing the statement of claim; and c. No order as to costs. 3. SRD Tonkin should confirm that it extended time for compliance with the bankruptcy notice (to the date of sign off) and confirms that it withdraws bankruptcy notices issued against each of WD and PW. 4. SRD Tonkin forgives Carlisle Plaza the indebtedness under the mortgage and loan agreement and release WD from all liability under his guarantee of the mortgage and loan. 5. Tonkin terminates the appointment on behalf of the Controller of Carlisle Plaza's leasehold interest (George Divitkos, BDO) and acknowledges that there is no utility in receiving the Report an to Affairs. SRD Tonkin indemnifies Carlisle Plaza, PW and WD from any claim by the Controller.
30. On 21 August 2014 Mr Weldon sent an email to Mr Ralph Tonkin and, again, Mr Danckert. He attached what he described as an "initial draft of the proposal" to go to Mr Ken Bartho (Mr Bartho). It is plain from the attachment (wrongly dated 22 July 2015), that Mr Bartho was at the Department of Finance and Services with the New South Wales Government.
31. On 21 August 2014 Mr Ralph Tonkin sent an email to a Mr Ben Ziesing (an accountant/adviser at a firm called Gibson & Partners in South Australia). Copies of Mr Ralph Tonkin's email were also sent to Messrs Weldon and Danckert.
32. Amongst other things Mr Ralph Tonkin informed Mr Ziesing that a lease had been sent to the anchor tenant (the supermarket) and that a plan of action for Housing had been prepared. He also said: 3. JV company formation is now required, please contact Phil Weldon on the above email for details, basically 75/25 Tonkin/Wayne & Phil
33. On 22 August 2014 Mr Weldon circulated to Mr Danckert and Mr Ralph Tonkin an amended draft to go to Mr Bartho.
34. On 22 August 2014 Ralph Tonkin sent an email to Mr Weldon purporting to indicate his agreement with the draft that Mr Weldon had prepared. On the same day Mr Ziesing circulated to various members of the Tonkin family a detailed summary of a meeting which had taken place between himself and various Tonkin interests on 20 August 2014 (Ex P3). As appears from the email, a great many matters were discussed including the lease of the supermarket and the proposed joint venture arrangement. Mr Ziesing commented that Mr Ralph Tonkin had advised that a "JV Company" needed to be established to conduct the project. Mr Ziesing, however, raised questions about the proposed corporate structure.
35. On 22 August 2014 Mr Weldon sent the final version of his proposal to Mr Bartho. The attached proposal informed Mr Bartho that the parties, relevantly SRD and Messrs Danckert and Weldon, had agreed to "enter into a joint venture to operate [the shopping centre]". It asserted that terms had been agreed with a supermarket operator (National Security Service Pty Limited (National Security Service)) which would operate under the FoodWorks banner as the anchor tenant. The attachment to the letter was headed "Bidwill Shopping Centre - Proposal to Department of Finance and Services". The proposal went on to announce that "the joint venture proposes the following" and then outlined various steps that would be taken into the future.
36. Mr Weldon also made contact with Mr Ralph Tonkin by email on 22 August 2014 indicating that he wanted Mr Ralph Tonkin on behalf of SRD to agree with the contents of the attached letter (described at [40] above).
37. Having received the communication from Mr Weldon, Mr Bartho on 25 August 2014 indicated to Mr Weldon that he would appreciate SRD providing him with a confirmation of the "re-united approach" proposed to be undertaken. Later that day (25 August) Mr Ralph Tonkin sent an email to Mr Bartho in the following terms (as written): SRD Tonkin Pty Ltd hereby confirms it's commitment to the re-united approach to be undertaken with regard to the Carlisle Plaza shopping centre at Bidwill. We have add good input, along with Wayne Danckert & John Hyslop of Foodworks, to the draft business plan and proposal presented by Weldon Legal to LAHC last Friday, who is authorised to submit such plan. I will discuss with Steven whether Schrippa Lawyers will still be acting on behalf of SRD Tonkin Pty Ltd given that Michael is no longer involved. Weldon Legal will be of great assistance in the preparation of leases for the Carlisle Plaza tenancies, as has been the case recently with the Foodworks lease preparation to Aman at National Security Pty Ltd last week… Thank you for your patience and belief in us.
38. During late August 2014, or perhaps very early September 2014, Mr Weldon was busily preparing a Deed of Release and Settlement (Deed of Release) and Shareholders' Agreement for the purposes of formalising the joint venture.
39. On 2 September 2014 Mr Danckert and Mr Ralph Tonkin were at lunch together at a hotel near the shopping centre. Mr Weldon arrived at the meeting bearing the draft documents and alleges he took Mr Ralph Tonkin through a number of the clauses in some little detail. There is a dispute as to precisely what occurred and what was said at this meeting.
40. However, on 2 September 2014 Mr Weldon sent the draft documents which he described as "initial draft copies" of the Deed of Release and Shareholders' Agreement to Mr Ziesing in Adelaide. Mr Weldon also commented in the course of his letter as follows: The documents are largely informed by the proposal Wayne Danckert and I put to the Tonkin family on 28 February 2014 (as confirmed in my letter to Schirippa Commercial Lawyers dated 3 March 2014), together with the recent discussions Wayne and I have had with Ralph Tonkin.
41. The draft Deed of Release, as appears from the recitals, purported to set out the history of the dealings between the parties including the various historic allegations and counter-allegations concerning breach. Recital S had twelve sub-clauses. It provided as follows: The Parties wish to: resolve their differences; … 12. generally release each other from any liability of any kind arising under the Loan Agreements or on any other basis on the terms set out in this Deed.
42. Amongst other clauses, it was anticipated that there would be a cl 16, "Entire Agreement", which was to provide, as is conventional, that the Deed was the entire agreement between the parties on the subject matter.
43. The proposed Shareholders' Agreement was in turn a lengthy agreement, which contained provisions such as, for example, an "offer to purchase" clause and, indeed, a clause providing for a compulsory acquisition in the event of default. It also contained in its proposed cl 28, an entire understanding clause.
44. On 4 September 2014 Mr Ziesing informed Mr Weldon by letter that he had attended to the registration of a new corporate entity, namely Bidwill Shopping Centre Pty Limited. He told Mr Weldon that: The Company is the entity jointly established by Mr Ralph Tonkin & Mr Wayne Danckert in relation to the conduct of the Carlisle Plaza Shopping Centre. The shareholdings within the Company are to be updated in the near future to reflect the agreed ownership interests of the Tonkin family and the Danckert family within the project. Upon receipt of approval from the Housing Corporation, the necessary ownership changes will be attended to forthwith.
45. On 3 September 2014 Mr Weldon had sent an email to Mr Ziesing referring to the company name, Bidwill Shopping Centre, its place of business, and the identity of the directors. Mr Weldon told Mr Ziesing (amongst other things): As noted, any company incorporated today or tomorrow will not be able to reflect the shareholding position once the J-V has been finalised and the shareholdings will need to altered as soon as the J-V is finalised.
46. On 4 September 2014 Mr Ziesing sent an email to Mr Weldon which, amongst other things, stated: One issue that I should have remembered to discuss yesterday, re the JV structure - previously I have recommended to the Tonkins that the structure should be that of a new company acting as the trustee of a new unit trust, with 75% Tonkin & 25% to be Weldon/Danckert.
47. Mr Weldon replied to Mr Ziesing on 4 September 2014 indicating: Please note that my family will also participate in any JV arrangement (Wayne and I sharing the 25%). When do you think you will be a position to respond to the documents I sent on 2 September? If we go down the unit trust route, we will still need to deal with the elements set out in the Shareholder Agreement.
48. On 8 September 2014 Mr Weldon sent an email to Mr Ziesing. He said: When do you think you will be able to respond to the documents I sent last week? All things being equal, Housing will let the JV vehicle take over the Lease by the end of this week - and the supermarket tenant is raring to go. We can't sign anything until these internal arrangements between us have been sorted. Do you think its possible to negotiate and finalise the releases and the JV arrangement by the end of this week?
49. On 9 September 2014 Mr Ziesing sent an email to Mr Ralph Tonkin with some detailed comments about the proposed documents. On the second page of the email Mr Ziesing made the following comments: One of the issues is the estimated cash payment required to acquire a freehold interest in the Centre. Ralph has estimated this cost to be in the region of $1.5 m. the requirement and financing of this payment needs to be discussed. We note that clause 10.2 of the Shareholders Agreement states that the Leasehold interest shall not be sold for less than $8m - presumably this clause is included because the Leasehold Interest is able to be sold without conversion to a freehold interest, but not sure about that latter point - if it will need to be converted, then that is an issue for SRD Tonkin. There is also the issue that SRD Tonkin is effectively being asked to convert the debt that it is owed into a 75% equity stake in the JV entity. It would appear that if surplus funds are subsequently generated, either via ongoing operation or sale of the Centre, that these funds are to be disbursed on an equity basis, ie 75% SRD, 25% Danckert/Weldon (after payment of Additional Shareholder Contributions). We would suggest that the principal funds lent by SRD to Carlisle under the previous documents be calculated, ie the $6m excluding accrued interest, and that this amount be paid out in priority to any funds subsequently being paid out on any equity basis. The priority of payment clauses to be amended in the Shareholders Agreement would be 6.2, 11.1 & 20.1. Again, Ralph will discuss this with you further. Notwithstanding the above paragraph, SRD Tonkin's interest in the JV entity is to remain valued at $6m at commencement. It is merely the priority of the repayment of this amount that is subject to discussion.
50. Mr Ralph Tonkin simply forwarded Mr Ziesing's email to Mr Weldon without comment.
51. On 11 September 2014 Mr Weldon forwarded to Mr Bartho (copies to Mr Danckert and Mr Ralph Tonkin) a letter concerning historic rent liability. At or about this date rent owed to Housing amounted to approximately $565,000. Mr Weldon was proposing a plan of payment by instalments. He explained in the letter to Mr Bartho that $550,000 had to be borrowed to provide a cash incentive to the proposed supermarket tenant of $300,000 and an amount of $250,000 to be expended on external works and fitout on a number of the smaller tenancies. He explained borrowing needed to occur because the company was forced to accept a nine month free period for the supermarket and because the smaller tenancies would typically have a two month free rent period.
52. On 12 September 2014 Mr Weldon sent an email to Mr Ralph Tonkin indicating that he and Mr Ziesing had agreed that Mr Weldon would send a revised deed of release and a proposed Unitholders' Agreement. He then stated: Ralph, Ben says its important that you and he meet with your dad. He doesn't think your Dad is aware of what's being negotiated. Given the urgency of finalising the JV, perhaps you'll need to be in Adelaide on Tuesday (or Wednesday).
53. On 15 September 2014 Mr Weldon sent an amended Deed of Release along with a Unitholders' Agreement to Mr Ziesing. The documents he attached were in "clean" and "marked-up" versions.
54. A number of matters were dealt with in the course of the letter and Mr Weldon concluded by stating: Housing wants to assign the Lease to Bidwill Shopping Centre towards the end of this week. In order for this to happen the agreements need to be finalised by then. Housing has been told that we are a united force. Housing has made it clear that it will only deal with us if we are united and that otherwise it will take possession of the Centre.
55. The proposed Deed of Release still contained Recital S, however it had a new paragraph added to it; a proposed sub-cl 13 in the following terms: [The parties] release all conceivable grounds of dispute or claim (existing or future, whether presently in the contemplation of the parties or not) against each (other than a breach of this Deed) in respect of and in relation to Original Breaches, the Carlisle Breaches, the Subsequent Loan Breaches, the Loan Agreements, any rights they may have under any agreements or deeds between any or all of Tonkin on the one hand and any or all of Carlisle, Danckert and/or Weldon on the other, and otherwise. on the terms set out in this Deed.
56. This was an enlarged provision dealing with very precisely defined breaches and previous agreements. Under the proposed arrangements the previous loan agreements were to cease to have effect. In addition, the default judgment was to be set aside and the bankruptcy notices withdrawn.
57. There were a number of other proposed changes to the Deed of Release, including a new cl 6.3 and a proposed cl 11 which stated: The Loan Agreements will cease to have effect from the date of this Deed.
58. The "Loan Agreements" was a reference to the original loan agreement, the mortgage and the original deed and of course the subsequent loan agreement as well.
59. On 17 September 2014 Mr Ziesing sent an email to Mr Weldon. He provided Mr Weldon with some details concerning some Tonkin corporate entities and then stated: With regard to the documentation, discussions have been held and Ralph is your contact point to finalise same.
60. On 17 September 2014 a Mr Balomatis, the principal solicitor for Housing, sent an email to Mr Weldon in which he stated: In order to further assist with evaluating the proposal, can you please provide the following documents/information which I assume you have…
61. He then listed seven items which included, amongst other things, the JV agreement and "any" shareholders agreement.
62. On the same day Mr Weldon forwarded to Mr Ralph Tonkin and Mr Danckert Mr Balomatis' email. Mr Weldon, in his email, expressed his disappointment that Housing wanted to see so much information.
63. On 18 September 2014 there was an email exchange between Mr Weldon and Housing as to an outstanding water rate notice.
64. On 18 September 2014 Mr Weldon sent an email to Mr Balomatis attaching a letter of the same date. The email purported to set out in some little detail the various arrangements. Aside from giving a brief explanation as to the proposed arrangements between the parties, Mr Weldon attached various documents, which included the proposed JV agreement, a copy of the constitution for the new joint venture company, the Unitholders' Agreement, the sub-lease with National Security Service, and correspondence with other prospective tenants.
65. In relation to the proposed Joint Venture Agreement, Mr Weldon asserts he indicated that the units in the unit trust would not be issued until he had received advice from Housing that the assignment of the lease would proceed. Further, he says he indicated that upon Bidwill Square Shopping Trust assuming liability for the Carlisle debts and the joint venture vehicle "receiving Housing's approval for the assignment", SRD Tonkin would provide a discharge of mortgage in registrable from.
66. Under the heading "Observations" Mr Weldon indicated that the joint venture documents "are not yet signed" and then stated: While the joint venture parties are both united and excited about the way the project has progressed in the last month, you will understand that the parties won't sign the joint venture documents until Housing permits the assignment of the lease to the joint venture vehicle.
67. Under the heading "Summary", Mr Weldon concluded by making the following comment: I trust that it is evident from the above that we are now at an advanced stage in being able to get the Centre open, and as early as 15 November 2014. However, until Housing formally advises that it approves the assignment of the lease and advises any conditions in relation to that approval, the joint venture parties are not able to formally commit to each other in a legally binding way and the joint venture is not in a position to bind itself to any sub-lessees.
68. In a further email of 18 September 2014, in which Mr Weldon forwarded to Mr Ralph Tonkin and Mr Danckert his communication to Mr Balomatis, he indicated that he had not shown Housing the Deed of Release as it was "none of their business".
69. On 19 September 2014 Mr Ralph Tonkin sent an email to Mr Weldon indicating that he was proposing to finalise the lease over the coming weekend and to sign it "next Wed at your conference room, if not before".
70. On 24 September 2014 Housing wrote to the directors of Carlisle, with a copy to Mr Weldon, under the signature of Mr Balomatis, indicating that in principle Housing had agreed to the assignment of the lease subject to a number of conditions. Two of them were as follows (emphasis added): the Corporation receiving, and finding satisfactory, all documentation in relation to the assignment of the lease by Carlisle Plaza Pty Limited to the Assignee; the Corporation receiving, and finding satisfactory, all documentation in relation to the discharge of all mortgages, charges and other securities granted by Carlisle Plaza Pty Limited to its current mortgagees:
71. The letter concluded with the following statement (emphasis added): If these matters are not satisfactory to the Corporation, the Corporation will not for any purpose be taken to have consented to any assignment of the lease for Bidwill Plaza. Nothing in this letter releases Carlisle Plaza Pty Limited from any obligations under the Lease, the Variation of Lease and the Car Parking Licence unless and until all the above documentation is duly signed by all relevant parties and is satisfactory to the Corporation.
72. On 24 September 2014 Mr Weldon forwarded the letter from Mr Balomatis to Messrs Danckert and Ralph Tonkin. The letter from Mr Balomatis had attached to it a letter inviting Mr Ralph Tonkin and Mr Danckert to sign indicating their agreement to the terms and conditions set out in Housing's letter. In due course, on or about 1 October 2014 both Mr Ralph Tonkin and Mr Danckert signed, indicating they had agreed to the various conditions and/or requirements of Housing.
73. On 25 September 2014, Bidwill Shopping Centre Pty Limited signed a sub-lease to National Security for a period of 10 years commencing on 15 November 2014.
74. On 13 October 2014 Mr Weldon forwarded some further documentation to Mr Ralph Tonkin and Mr Danckert concerning the car parking licence, which needed execution, and indicating that Housing wanted certain monies paid in relation to outstanding rent.
75. On 13 October 2014 Mr Weldon also sent a detailed letter to Mr Balomatis concerning amendments to be made to the Deed of Car Parking Licence proposed by Housing.
76. On 22 October 2014 Mr Ziesing sent an email to Mr Weldon and Mr Ralph Tonkin. He enquired as to when he might expect to receive what he described as "establishment documents" signed by everyone concerned.
77. It was clear, however, by 27 October 2014, that certain matters concerning the lease were still not agreed with Housing. Mr Weldon kept Mr Ralph Tonkin informed concerning these developments, as is clear from an email from him to Mr Ralph Tonkin of 27 October 2014.
78. By 10 November 2014 matters were still not finalised and an issue had arisen in relation to land tax debt. Mr Weldon, in an email of 10 November 2014, asked for Mr Ralph Tonkin's views about the matter.
79. During this period SRD was making contributions to fitting out the supermarket and other works at the shopping centre.
80. On 13 November 2014 Mr Weldon sent an email to Mr Ralph Tonkin and Mr Danckert. He said (as written): After chasing up Chris Balomatis a few times, yesterday he got back to and informed me that Housing has agreed to backing down on us being responsible for the wider car park. Also he had requested Clayton Utz to send out the amended docs. We should have them today or tomorrow. This will now enable us to send out the other leases, as well as to finalise the documents for our internal arrangements.
81. Mr Ralph Tonkin responded shortly after Mr Weldon's email on the same day in the following terms: Thanks Phil. We need to meet next week & sign docs from Ben Ziesing regarding Bidwill Shopping Centre P/L. I am paying the final $50k to National Security today, don't want them to have any reasons regarding Housing Dept approval not to start rent free period.
82. On 14 November 2014 Mr Weldon sent an email to Mr Ralph Tonkin and Mr Danckert. It attached a proposed lessor's disclosure statement which Mr Weldon indicated Mr Danckert was happy with. He asked Mr Ralph Tonkin for his comments.
83. On 19 November 2014 a meeting was held at Mr Weldon's office between himself, Mr Danckert and Mr Ralph Tonkin to discuss the various deeds proposed by Housing.
84. On 20 November 2014 Mr Danckert and Mr Ralph Tonkin, according at least to Mr Ralph Tonkin, had a heated argument at the shopping centre. Mr Danckert's evidence (Danckert affidavit 31/7/15, [26], [27] and [28]) attributes the argument to costs associated with the payment for refrigeration for the shopping centre.
85. In his reply affidavit Mr Ralph Tonkin agrees he was not in a good mood but does not address Mr Danckert's assertion about the heated remarks allegedly made by him at the shopping centre.
86. During 20 and 21 November 2014 Mr Weldon asserts he had a conversation with Mr Ralph Tonkin about the disagreement with Mr Danckert and about the possibility of Mr Ralph Tonkin buying out Mr Danckert's share.
87. On 21 November 2014 the Office of State Revenue rejected Mr Weldon's proposal concerning outstanding land tax.
88. On 25 November 2014 Mr Danckert circulated a proposal for fees for a building certifier.
89. On the same day Mr Ralph Tonkin requested a comparison quote.
90. Again on 25 November 2014 Mr Danckert responded to Mr Ralph Tonkin's question indicating there was not very much time to obtain a competing quote.
91. On 26 November 2014 Mr Weldon sent an email to Mr Ralph Tonkin in the following terms: Can you and I get together ASAP (preferably tomorrow morning) to discuss the situation with Wayne? We need to resolve this urgently. We need to sign the docs with Housing. We can meet at Bidwill or here at my office. What do you want to do?
92. On 27 November 2014 Mr Weldon followed Mr Ralph Tonkin up by sending him another email. Amongst other things he made the following comments: I have tried to contact you since Monday. I know that you are very busy attending to all the jobs at Bidwill, however it is critical that you and I (not Wayne) have some quality time as soon as possible to discuss a resolution of the disagreement between you and Wayne. This disagreement has the real potential to de-rail the whole venture. Already, Bartho is chasing Wayne as to why Housing's documents have not been signed. I am not acting for Wayne, but want to meet with you about what he proposes. I have told Wayne that I will convey what he has said, but thereafter, any further discussion should be with you directly. He said that he would use a lawyer. However, in the first instance, it might help if I'm the "go-between". It is better if we speak face-to-face and discuss the various issues. We really need to get together as soon as possible, because until that happens, the documents can't be signed …
93. On 28 November 2014 Mr Weldon and Mr Ralph Tonkin had a meeting in an attempt to resolve the dispute with Mr Danckert.
94. On 1 December 2014 Mr Weldon sent a further follow up email to Mr Ralph Tonkin. It read in part: I thought I'd let the dust settle for a few days before writing. I know that you were in no mood to talk on Friday - but it's vital at this critical point in the project that we work through the issues in a calm and constructive manner. I recognise that presently you don't want to talk to Wayne - but you and I must talk because I have serious concerns about the future of the project. We urgently need to resolve the issues between you and Wayne. I must admit I was really taken aback by your attitude to me on Friday. I came to see you in good faith to try to resolve your differences with Wayne. I had been trying to contact you for most of the week. I was concerned that if your dispute with Wayne wasn't resolved quickly, we could no longer present the united front we had previously shown to Housing and which, given the history of the lease, Housing required to see if it was going to deal with us. About the blow up about Floyd Davies' debt and the other things between you and Wayne, Wayne was going to pursue his rights under the joint venture agreement. I was concerned that this had the potential to blow everything apart. I wanted to meet to convey a solution that Wayne wished to put as the way forward. It was easier if I did so in person because we could talk through the issues. As I indicated in my email on Thursday, I agreed to do so in the capacity of 'go between' and not as Wayne's lawyer. I have an obvious concern about my own interest under the agreement but my immediate concern on Friday was to get over the difficulties that had arisen in the previous week. I was prepared to stay in the deal even if Wayne had to be negotiated out of it. To then be accused of lying, to be told that I was no longer welcome at Bidwill and to be told that any dispute about the j-v agreement we had in place would now need to be dealt with by lawyers came as a total shock. When we had last spoken on the previous Friday, you said that you and Wayne could no longer work with each other. You said that over the weekend you would explore buying out Wayne's interests under the j-v agreement. You said that you would approach Aman about buying out Wayne. Because Aman had previously agreed to pay out Wayne's $1 million when you and he had the earlier blowout, I believed that this had prospects. We spoke about my continued involvement in the j-v arrangement, but you did canvass me about the possibility of my interest in the agreement also being bought out by Aman.
95. In this email, which was quite lengthy, Mr Weldon made some additional comments under the heading "The bigger picture" in the following terms: We desperately need to move beyond all "the stuff" of the last week or so. Our j-v agreement has worked well until the hiccups of last week. We had agreed terms and we have all been playing our different roles under the agreement. On the basis of the j-v agreement, the works are being finalised, leases have been issued, a binding commitment has been made to Aman and Manami, and we are now in a position to finalise the commitments we have made to Housing. As previously agreed, with the finalisation of Housing's agreements, all documents were to be signed, including the ones from Ben Ziesing. In fact, we were going to discuss this when the 3 of us last met in my office - before the Floyd issue arose. The issue with Wayne needs to be resolved for a variety of reasons, including the fact that Wayne remains a director of Bidwill Shopping Centre Pty Limited and Housing requires him to sign the documents and give personal guarantees etc. If Wayne is not to be involved in a directorial capacity, we need to work out how to communicate to Housing that Wayne still has an involvement - which will be the truth. Housing expects us to sign the documents. We can't delay them much longer.
96. On 2 December 2014 Mr Weldon sent a further email to Mr Ralph Tonkin. Mr Weldon posed the question of what he should say if Mr Bartho asked him when documents might be signed. He told Mr Ralph Tonkin that he was ready to meet whenever Mr Ralph Tonkin was next in town.
97. On the same day Mr Ralph Tonkin finally replied. In his email to Mr Weldon he reminded Mr Weldon that some four and half days had gone by since he asked for proof of the amount of cash that he and by implication Mr Danckert had put into the shopping centre.
98. On 2 December 2014 Mr Weldon replied that his wife (who had kept a record of the payments) worked and that they had had commitments over the last weekend, but that he expected to get the figures to Mr Ralph Tonkin by "late tomorrow night". He concluded the email to Mr Ralph Tonkin by saying "[t]hen we must get on with resolving the conflict within the j-v. That's the most pressing issue."
99. On 3 December 2014 Mr Ralph Tonkin indicated to Mr Weldon that he needed bank statements (by implication) in order to prove the precise amount of cash spent.
100. On the same day Mr Weldon responded saying that his wife had indicated that they may not have bank statements but he hoped to give Mr Ralph Tonkin some information the next day. Later on 3 December 2014 Mr Weldon wrote again to Mr Ralph Tonkin indicating that such materials he had and that he was happy to sit down with Mr Ralph Tonkin and go through the material in detail.
101. Later again on 3 December 2014 Mr Weldon sent an update on the number of payments and again asked how Mr Ralph Tonkin wanted to proceed. On 5 December 2014 Mr Ralph Tonkin responded indicating that he wanted the material emailed to him.
102. On 5 December 2014 Mr Weldon again sent an email to Mr Ralph Tonkin. He indicated that he had tried unsuccessfully to contact Mr Ralph Tonkin several times on that day, and that he attached certain documents showing expenditure of at least $244,000.
103. On 10 December 2014 Mr Ralph Tonkin rather tersely replied: Nothing attached. No proof of bank transactions rec'd.
104. On the same day Mr Weldon indicated that bank statements had in fact been sent.
105. Later on 10 December 2014 Mr Ralph Tonkin acknowledged that he had received the statements and would go through them in detail.
106. On 10 December 2014 Mr Weldon sent an email to Mr Ralph Tonkin seeking an explanation of certain items.
107. On 11 December 2014 Mr Ralph Tonkin sent an email to Mr Weldon. He said, among other things (as written): I want to discuss with you, Ben Ziesing & Schrippa how to best separate with Wayne as I can not be in a company with him as director.
108. On 19 December 2014 Mr Weldon sent an email to Mr Ralph Tonkin asking him how he was "going with sending Housing docs x 3?"
109. On 20 December 2014, in two separate emails, Mr Weldon sent to Mr Ralph Tonkin the car parking licence, and two deeds. One was a deed of consent to assignment of the lease and the other a deed of consent to a sub-lease.
110. On 9 January 2014 Mr Weldon sent an email to Mr Ralph Tonkin. Mr Weldon informed Mr Ralph Tonkin that Mr Danckert had instructed a solicitor to write a letter of demand to Mr Ralph Tonkin. Mr Weldon assured Mr Ralph Tonkin that he had tried to remain neutral and he hoped that he and Mr Danckert could sort matters out as a matter of urgency.
111. On 11 February 2014 Mr Weldon sent an email to Mr Ralph Tonkin indicating his disappointment at not having heard from Mr Ralph Tonkin. Mr Weldon commented (as written): Putting to one side the legal ramifications of all this, I am disappointed, at a personal level, that you departing from the clear assurances you gave me. On behalf of the Tonkin entities you repeatedly made it clear that despite your dispute with Wayne, our arrangements under the j-v remained in place.
112. On 13 February 2015, Schirripa Commercial Lawyers sent an email to Mr Weldon indicating that all future correspondence to Mr Ralph Tonkin or other members of the Tonkin family should be sent to that firm, which from that point forward would be acting for Mr Ralph Tonkin. It informed Mr Weldon of outstanding indebtedness and of the judgment sum against him and Mr Danckert in South Australia. The letter in part concluded with the following: Our client instructs us that you have sent a number of emails to him in an attempt to create a "paper trail" of assertions about the position between the parties. Our client rejects those assertions regarding the existence of a concluded joint venture. To the extent that any discussions have occurred with Mr Ralph Tonkin in an attempt to resolve the differences between the parties, these have not resulted in a concluded agreement.
113. On 2 March 2015 Mr Weldon provided a somewhat lengthy response. Amongst other things, he asserted that there had been an agreement between the parties.
114. On 2 March 2015 Housing wrote to the directors of Bidwill and Carlisle, Mr and Mrs Danckert, and Mr Ralph Tonkin. The letter was stated expressly to be a reminder that documents were to be signed and returned. It asked when the documents would be signed by all parties and when all other outstanding instalments would be met.
115. On 4 March 2015 Mr Weldon sent a letter to Schirripa Commercial Lawyers attaching a demand made by Blacktown City Council for unpaid rates totalling $29,280.60.
116. On 24 March 2015 proceedings were commenced by the plaintiffs seeking, amongst other things, specific performance.

Legal principles

1. The key legal controversy between the parties concerns whether the parties fell into the "second class" of agreements described in Masters v Cameron (1954) 91 CLR 353 at 360-362 (Masters v Cameron), or the so-called "fourth class" recognised in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 (Baulkham Hills).
2. It is apposite to begin with the remarks of Higgins J in Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 650: If there was no complete contract, the plaintiffs must fail. The law knows no gradations in the contractual relations. It knows nothing of virtual agreements, or honourable understandings. Even if the defendants were shown to have disappointed the legitimate expectations of the plaintiffs for some unworthy reason - to have meanly backed out of almost completed negotiations - the action must fail. There is no contract unless the two parties mutually consented to be bound one to the other by one agreement. Moreover - though it ought to be superfluous to say it - it is one thing for two parties to settle what are to be the terms of an agreement, if it should be made; and quite another thing to make the agreement. I have found, in my experience, that the two processes are frequently confounded; and, if I may judge from some of the cases to which I have been referred by Mr. Starke, the confusion has not always been avoided even in the Courts.
3. In Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, Mahoney JA considered: The only question considered by Yeldham J was whether there was a binding contract between the parties. In considering this question, in a context such as the present, it is of assistance to distinguish between three questions: did the parties arrive at a consensus?; (if they did) was it such a consensus as was capable of forming a binding contract?; and (if it was) did the parties intend that the consensus at which they arrived should constitute a binding contract?: cf Barrier Wharfs Ltd v. W Scott Fell & Co Ltd (1908) 5 CLR 647 at 650.
4. In Baulkham Hills at 628 a so-called "fourth class" of agreements was recognised, whereby the parties intend immediately to be bound but are "expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms." Some doubt has been cast on whether this is truly a fourth category: see, eg, Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at [118] (Sagacious Procurement).
5. In Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 (Toyota Motor Corporation) Brooking J made the following observations at 132-3: Those observations concerned a Masters v. Cameron dispute, but they are also apposite to a case like the present, in which the document said to be or evidence a contract makes no reference to a more formal document. Each case is different. A relatively short letter may be held to record a binding agreement in a matter of great consequence and considerable complexity, in which numerous formal documents will have to be prepared and executed to give effect to the transaction, as in Custom Credit Corporation Ltd v. Cenepro Pty Ltd (unreported, Court of Appeal of New South Wales, 7 August 1991). Just as possible uncertainty and incompleteness bear on intention to make a binding contract, so too does doubt as to the identity of the parties to the contract and doubt as to the identity of the person by whom some act under the contract is to be performed. As with uncertainty and incompleteness, even though it is possible to resolve the doubt as to identity of parties, the very doubt may in a given case be viewed as bearing on the presence or absence of intention to contract. This case raises both questions of uncertainty, incompleteness and identity of parties and in addition the related and more fundamental question whether the parties to the suggested contract (whoever they may be) intended to contract. In a case like the present the question is whether the parties intended to make an immediately binding contract in the sense that some document or documents already brought into existence was or were to constitute or evidence a binding contract made between them: there is no doubt about the existence of an intention to contract in the sense of an intention or expectation or hope that at some stage a binding contract would be made between the parties. As Lindley LJ said in May v. Thomson (1882) 20 Ch D 705, at 722: " ... the parties corresponded intending to come to an agreement, fully expecting that they would come to an agreement, knowing perfectly well that the subject-matter of the sale was such that a formal agreement was absolutely essential, and that certain things of very great importance in matters of this kind, which were not alluded to in the letters at all, would have to be discussed and finally settled when they signed the final contract. In other words, it comes to this, without going through the letters critically and step by step, that the parties thought they had agreed to all the more material terms; that some less material terms and matters of detail would have to be discussed and settled by their agents, and that the agents were to prepare the final agreements; and I think they never did intend to be bound until the final agreement was signed."
6. His Honour went on to say at 136: The evidence is consistent with the conclusion concerning intention to which Exhibit G itself points, namely, that the parties were negotiating in the hope and expectation that at some stage a binding contract, or collection of binding contracts, would be made; that they had already agreed on some of the principal terms of the contemplated contract or contracts; but that the matter remained in the realm of negotiation, it not being the intention that Exhibit G should constitute or evidence a rudimentary but binding contract. An intelligent layman would find in documents coming into existence on or after 21 December 1990 clear indications that the Toyota companies did not regard Exhibit G as evidencing a binding contract.
7. Later in his reasons, his Honour remarked (at 138): In both cases just cited the document or documents contained express reference to a formal contract of sale. That is not so in the present case. Nevertheless the two cases cited, and the other decisions cited earlier, show that the magnitude, subject matter or complexity of the transaction may suggest that the informal agreement was not intended to constitute a binding contract.
8. Tadgell J, at 170, considered that: The approach which the learned trial judge was induced to adopt to his consideration of Exhibit G tended, in my respectful view, to leave out of account a question that I take to be fundamental to this case. Simply stated, the question is whether the appellants are, or either of them is, to be regarded as having promised by Exhibit G to assume legally enforceable obligations to purchase land, to lease it back and to lend $1.9 million. By treating the parties as not being in contention upon the question whether agreement had been reached in December 1990-and by proceeding upon the footing that they had reached an agreement of which Exhibit G was evidence - the necessity to investigate and determine the character of Exhibit G was passed by or overlooked. That is to say, in concluding or assuming that the parties had reached an agreement on or about 19 December in terms of Exhibit G, there was no separate consideration of what it was that Exhibit G was designed to do.
9. His Honour went on, at 176, to remark: With regard to probability, the respondents' onus of proof in establishing what they allege was not much adverted to as such in the judge's reasons or in argument before us. Even so, it is not to be overlooked. Some simple but essential guidance was offered by Bingham LJ in Food Corporation of India v. Antclizo Shipping Corporation (The Antclizo) [1987] 2 Lloyd's Rep 130, at 143: "Agreements are not to be imputed to parties who have made none .. If, therefore, the court is to find an agreement . . . it must on the balance of probabilities be satisfied that there really was such an agreement." That was said in a case where it was sought to infer agreement from silence and inactivity but the principle is no different when reliance for proof of agreement is placed on what has been said and done. What, if anything, was promised by the appellants is to be determined by ascertaining by inference and as a matter of fact what their words and conduct would have led KMG reasonably to believe that they were promising: Ashington Piggeries Ltd v. Christopher Hill Ltd [1972] AC 441, at 502, per Lord Diplock. The present case, like Australian Broadcasting Corporation v. XIVth Commonwealth Games Ltd involves: " . . . the objective determination of the intention of the parties from a consideration of a series of communications exchanged by them in the context of their dealings over a period of time": per Gleeson CJ, at 550. The nature, magnitude and complexity of the "rescue package" that was under discussion up to 21 December 1990 are appropriately to be considered upon an assessment of the character of Exhibit G: cf Sinclair, Scott and Co Ltd v. Naughton (1929) 43 CLR 310, at 316 and 332.
10. JD Phillips J said at 198-9: The very existence of all this complex documentation points very strongly, I think, against an intention to make a binding and enforceable contract on about 19 December in the manner urged by the plaintiffs. It is stretching credulity to suppose, in the light of such careful, existing arrangements, that the parties were - or that either could reasonably have supposed that the other was-intending to agree finally on the injection of a further $7 million by means only of the letter of 19 December: see and compare Clifton v. Palumbo [1944] 2 All ER 497, at 499. This is a case in which further documentation was plainly anticipated. (I simply observe that in the loan agreements there is express provision made that any variation or modification will be documented.) Obviously, it was in the anticipated documentation that the identity of the parties would be plainly spelled out and, wanting such documentation, I think that the conclusion is impelled that there was in the meantime nothing binding or enforceable.
11. His Honour went on to say at 201: That is the point upon which most of the cases cited to the court can be distinguished. For instance, it was submitted that the court strains to give effect to commercial agreements. But as an examination of the cases shows, that may be so where once the court has concluded that the parties did enter into what was intended to be a binding and enforceable contract. That intention may be discovered by the very nature and content of the document containing the bargain: eg, the charterparty in Didymi Corp v. Atlantic Lines and Navigation Co Inc [1988] 2 Lloyd's Rep 108 and the insurance contract in American Airlines Inc v. Hope [1973] 1 Lloyd's Rep 233. Or it may be discovered in informal correspondence in the light of the surrounding circumstances: eg, Corpers (No 664) Pty Ltd v. NZI Securities Australia Ltd (1989) ASC 55-714 (where the decision, although dependent upon the parties' conduct in relation to an informal document, may have turned on estoppel); contrast Allen v Carbone (1975) 132 CLR 528 (where the intention to contract was not to be so found). Or it may be Found in the fact that the parties have conducted themselves on the basis that they earlier entered into a binding contract; eg, British Bank for Foreign Trade Ltd v. Novinex Ltd [1949] 1 KB 623, F and G Sykes (Wessex) Ltd v. Finefare Ltd [1967] Lloyd's Rep 53; contrast Australian Broadcasting Corporation v. XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 where the parties' subsequent conduct pointed against their having been earlier bound. But however the contractual intention be determined to exist in the particular fact situation, the cases relied upon to support a generous approach to the construction of commercial agreements all depended for their result upon the court's first concluding that the parties did intend to be bound by an enforceable contract.
12. In Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 81, the following remarks were made: I have already said something as to this method of analysis in Gjergja v Cooper [1987] VR 167, especially at 195-211. No authority binding upon me, either before or since that time, has yet laid it down that an analysis by way of offer and acceptance is not to be treated as the primary mode of ascertaining agreement, but I am prepared to accept, without examining in detail all the cases in which it has been discussed and referred to in the works cited above, that agreement and thus a contract can be extracted from circumstances where no acceptance of an offer can be established or inferred and where the most that can be said is that a manifestation of mutual assent must be implied from the circumstances. In the language of para22(2) of the Second Re-statement on Contracts: "A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined".
13. In Hill End Gold Ltd v First Tiffany Resource Corporation [2011] NSWCA 276 at [61] Allsop P and Meagher JA considered that: 61 HEG, using this material, submitted that, although it could not identify any particular occasion for offer and acceptance, from the body of evidence one could recognise the existence of contractual arrangements entered into by the parties. Particular reliance was placed upon cases such as Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd (1988) 5 BPR 11,110, at 11,117 per McHugh JA, Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153 at 179 [81] and Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424 at 525 [369]. It is undoubted that contractual arrangements do not only arise out of formal offer and acceptance. In some circumstances, it will be open to a court apprised of the commercial context and the acts, including words, of the parties to interpret the engagements of the parties to ascertain the existence and extent of a legal relationship. A relationship and a body of conduct may evince a clear mutual intention to be legally bound in a particular respect or a relationship or a document may be "instinct with an obligation", imperfectly expressed: Moran v Standard Oil Co 211 NY 187 at 198 per Cardozo J (Court of Appeals, 1914).
14. In Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1 the relevant principles concerning formation were summarised by Sackville AJA (with whom Macfarlan and Gleeson JJA agreed) at [59] - [63]: [59] First, in Australia the "objective" theory of contract has been accepted: see, most recently, Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at [35]. Consequently, in determining whether a binding contract has been concluded, the law is concerned not with the parties' subjective intentions, but with "the outward manifestations of these intentions": Taylor v Johnson [1983] HCA 5; 151 CLR 422 at 428 (Mason ACJ, Murphy and Deane JJ). Thus what matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22] (per curiam); Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; 219 CLR 165 at [40]-[41] (per curiam). In a case where the ordinary process of offer and acceptance has taken place, the court inquires as to what a reasonable person would infer or deduce from observing the exchanges between the parties: NC Seddon, RA Bigwood and MP Ellinghaus, Cheshire & Fifoot Law of Contract (10th Aust ed 2012, LexisNexis Butterworths) at [3.4]. [60] Secondly, it is not necessary, in determining whether a contract has been formed, to identify a precise offer or acceptance; nor is it necessary to identify a precise time at which an offer or acceptance can be identified: Ormwave Pty Limited v Smith [2007] NSWCA 210 at [68] and authorities cited at [68]-[75] (Beazley JA, Santow and Ipp JJA agreeing). The questions to be asked are: "in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of the [plaintiff] and a reasonable person in the position of the defendant think as to whether there was a concluded bargain?" Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153 at [81] (Heydon JA). [61] Thirdly, an agreement that is incomplete will not give rise to an enforceable contract. As was said in Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; 149 CLR 600 at 604 (Gibbs CJ, Murphy and Wilson JJ): "It is established by authority, both ancient and modern, that the courts will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future." [62] An alleged contract will fail for incompleteness if, even though the parties have used clear language, a term which is regarded as essential as a matter of law has not been agreed: J W Carter, Carter on Contract (2014, LexisNexis) at [04-120]. The principle was stated by Viscount Dunedin in May and Butcher Ltd v The King [1934] 2 KB 17 n at 21: "To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties." [63] If the parties have not agreed on all essential terms, for example because they have left one such term to be settled by future agreement, the contract is incomplete no matter what the parties themselves may think: G. Scammell and Nephew Ltd v H.C. and J.G. Ouston [1941] AC 251 at 260 (Lord Russell of Killowen); O'Brien v Dawson [1942] HCA 8; 66 CLR 18 at 37 (Willams J, Rich J agreeing); Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 170 (Tadgell J); Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19; 190 FCR 364 at [123]-[124] (Keane CJ); at [212] (Emmett J); at [223]-[227] (Finkelstein J) (an appeal to the High Court was allowed, but not on this point: Forrest v Australian Securities and Investments Commission [2012] HCA 39; 247 CLR 486).
15. In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105, the plurality (Gaudron, McHugh, Hayne and Callinan JJ) made the following observations (footnotes omitted): 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.
16. In Pavlovic v Universal Music Australia Pty Limited [2015] NSWCA 313 (Pavlovic v Universal Music), Bathurst CJ made the following remarks: 15 It is well established that the question of whether the parties intended to bind themselves to a contract is to be determined objectively, having regard to the intention disclosed by the language the parties have employed: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 362. In cases such as the present, which do not depend on the construction of a single document, what is involved is the objective determination of the question from the communications between the parties in their context and the parties' dealings over the time leading up to the making of the alleged contract. This involves consideration of the subject matter of the communications: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, that includes consideration of what the parties said or wrote (at 334, 337). 16 It should be noted that Universal based its contention that a contract existed on classic offer and acceptance analysis. As the President pointed out at par [56] above, it contended that the email of 23 December 2014, attaching the proposed Deed, constituted an offer to enter into an agreement on the terms of the Deed, which was accepted by the 2.36pm email of 24 December from Mr Gorry to the solicitors for Universal. Universal did not contend that an offer was accepted by conduct, nor that, irrespective of whether or not there was a formal acceptance of the offer, it could be implied from circumstances objectively viewed from the point of view of reasonable persons on both sides that the parties had concluded a bargain: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153 at [71]-[75]; Vroon BV v Foster's Brewing Group Ltd (1994) 2 VR 32 at 81. 17 Whichever way the matter is looked at, I do not think that a binding agreement was reached. First, as a matter of construction, the words "he will sign" written by Mr Gorry are in the nature of a statement that his client would enter into a contract with Universal, rather than an acceptance of Universal's offer. 18 Further, the communications to which I have referred above show that the parties, from the start of negotiations, intended that any agreement reached between them would be embodied in the Deed executed by each of them: see Eccles v Bryant & Pollock (1948) Ch 93 at 99. The nature and ambit of the dispute between the parties provide powerful reasons for why the parties would wish any accord which they reached to be embodied in a formal agreement. This could not be described as a mere matter of administration.
17. In relation to the issue of subsequent conduct, it is appropriate to have regard to the subsequent conduct of the parties in ascertaining their intentions at the relevant time. In Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd [2009] NSWCA 386 at [112] Sackville AJA (with whom Hodgson and Campbell JJA agreed) considered that: 112. In determining whether the parties intended to conclude a contract, their post-agreement conduct may be taken into account. The conduct may be relevant, among other purposes, in order to show that: "it was not in the contemplation of either party that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up embodying all the matters incidental to a transaction of such a nature". Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; 5 CLR 647, at 669, per Griffiths CJ. See also Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, at 547-548, per Gleeson CJ (with whom Hope and Mahoney JJA agreed); Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153, at 163-164, [25], per Heydon JA.
18. In Sagacious Procurement the relevant principles were described as follows: 99 Regard to the parties' subsequent communications is of some importance in this case. That regard may be had to their subsequent communications is undoubted. In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd Gleeson CJ said at 547-8 "There is ample authority for the proposition that reference may be made to the correspondence between the parties subsequent to 13 June 1986 for the purpose of showing that 'it was not in the contemplation of either party that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up embodying all the matters incidental to a transaction of such a nature': Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 669 per Griffiths CJ; see also Howard Smith and Co Ltd v Varawa (1907) 5 CLR 68; Hussey v Horne-Payne (1879) 4 App Cas 311; B Seppelt and Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 and Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251." 100 So also in Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25] Heydon JA said succinctly, referring to the same cases, that "post-contractual conduct is admissible on the question of whether a contract is formed". 101 In Barrier Wharfs Ltd v W Scott Fell & Co Ltd at 669 Griffiths CJ had considered that subsequent correspondence between the parties showing that they continued in negotiation "negatives the idea of an existing concluded contract". In Howard Smith and Co Ltd v Varawa (1907) 5 CLR 68 his Honour had said at 78 that "the question being whether the parties had in fact concluded an agreement on 1st December, any statements or conduct on their part after that date inconsistent with the existence of a concluded contract are relevant for this purpose". In B Seppelt and Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 regard was had to subsequent communications showing that the parties contemplated the execution of a formal contract, and Mahoney JA said at 9155, with reference to Barrier Wharfs Ltd v W Scott Fell & Co Ltd and Howard Smith and Co Ltd v Varawa, that although it was not conclusive on whether a binding contract had previously been made, the regard - " … does provide support in the present case for the view that, as the parties understood it, whether the contract was to proceed was affected by matters to be agreed concerning settlement, and that in relation to that agreement, it was proposed to exchange contracts and proceed in the normal course of conveyancing". 102 The juridical basis on which the subsequent communications bear upon contractual intention may not be settled. 103 In Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251 McLelland J suggested at 9255-6 that the probative value of subsequent communications lay in the light they shed on "the proper interpretation of the earlier communications alleged to constitute the contract", such as by showing continued negotiations whereby the alleged contractual dealings could not properly be interpreted as mutual assents to be bound; his Honour said they could also be admissions by conduct of the existence or non-existence of a subsisting contract, with the probative force "vary[ing] inversely with the strength of the available direct evidence of the matters in question". 104 Interpretation of the earlier communications may not be an ideal description of the use of the subsequent communications on the first basis to which his Honour referred. It has been put a little differently in other cases. In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd at 548 Gleeson CJ spoke of "interpretation and understanding of the earlier communications in that it constitutes an important source of information as to what are matters incidental, or for that matter essential, to a transaction of the nature in question". In Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd one of Kirby P's "principles" was - "4. In order to determine in what areas the parties were, and were not, in agreement, and what matters they considered necessary in order for an agreement to exist, it is legitimate to examine their subsequent conduct. Where correspondence between the parties after an informal agreement refers to important terms and conditions not mentioned during that informal discussion, it may more readily be inferred that the earlier discussion was simply a preliminary negotiation and not a binding agreement;" 105 I respectfully suggest that subsequent communications are not simply aids to interpretation, or a source of information as to matters with which a concluded contract should deal. Their probative value may be more direct. To repeat, the objective intention of the parties is fact-based, and found in all the circumstances. That in their subsequent communications the parties have continued in negotiations, or have expressed the common understanding that they are not legally bound unless and until a formal contract is executed, is of itself probative as to their contractual intention: see Howard Smith and Co Ltd v Varawa, stating simply that any statements or conduct inconsistent with the existence of a concluded contract are relevant. 106 The basis of subsequent communications as admissions is very different. It does not depend on communication between the parties, and that basis gives scope for evidence of, for example, a party's internal memoranda saying or less directly conveying that there is or is not a concluded contract. Admissions bearing upon contractual intention present difficulties. As Gleeson CJ said in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd at 550, "it will often be necessary to identify with some care the fact which is said to have been admitted". What is said to be admitted may be a relatively straightforward fact, for example that A discussed with B the price for goods. But if a matter of mixed law and fact is involved, or the application of a legal standard, admissibility may be more contentious. It is considered in Grey v Australian Motorists & General Insurance Co Pty Ltd (1976) 1 NSWLR 669 at 675 per Glass JA and 684-5 per Mahoney JA; Jones v Sutherland Shire Council (1979) 2 NSWLR 206 at 231 per Mahoney JA; and Pitcher v Langford (1991) 23 NSWLR 142 at 147 per Kirby P and 160 per Handley JA, but see the reservations, with reference to other cases, in Cross on Evidence, Aust ed, at [33465]. An admission by conduct in a case such as the present may bring its own difficulties. And a statement that there is or is not a concluded contract, for example, may if admissible, carry significant weight or little weight depending on the circumstances, and the weight of any admission will depend on the source of knowledge of the person making the admission: cf Lustre Hosiery Ltd v York (1936) 54 CLR 134 at138-9 per Rich, Dixon, Evatt and McTiernan JJ.
19. Again in Pavlovic v Universal Music, Beazley P said the following regarding the subsequent conduct of the parties: 118 It is well settled that regard may be had to subsequent conduct of parties to determine whether, at an earlier juncture, the parties intended to enter into a binding agreement: see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd at 547-548 per Gleeson CJ (with whom Hope and Mahoney JJA agreed); Brambles Holdings Ltd v Bathurst City Council at [25] per Heydon JA; Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at [101] per Giles JA (with whom Hodgson and Campbell JJA agreed); Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 at [121] per Basten JA (Gleeson JA agreeing).
20. The defendants seek to draw an analogy with Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 (ABC v Commonwealth Games), where price was agreed and a substantial payment made, yet the Court reached the conclusion that there was no binding agreement. In that case, Handley AJA remarked: The communications relied upon by the appellant as constituting a contract, construed with regard to the subject matter of the negotiations and the surrounding circumstances, and in the light of subsequent communications between the parties, do not appear to me to evidence an intention to make a concluded bargain. Rather, they show that, in a context where it was contemplated that there would be express agreement on a number of important matters which the parties had not yet got around to discussing, or in respect of which their discussions were still at a very incomplete stage, the parties had made an agreement on the most important subject of their transaction, that is, the price, in the confident expectation that they would in due course come to terms on the other issues that needed to be addressed. The important matters to which I refer include, in particular, the definition of the rights which the appellant was to have (that is to say the subject in respect of which the appellant stated its "expectations" following 13 June 1986) and the matter sometimes loosely referred to as the possibility of boycott.
21. In that case, Gleeson CJ considered at 548 that: 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.
22. In Toyota Motor Corporation it was said at 138.3-5 that: I think it extremely unlikely that parties in the position of those said to be contracting in the present case, whose relationships had always been regulated by a series of formal and complicated agreements, would have intended to become bound immediately in respect of the sale of land for $5.1 million on the basis that they would, if necessary, be content to have such rights and obligations as the law confers or imposes upon those who do no more than agree to buy and sell land for a certain price.

Estoppel

1. The plaintiffs rely upon both promissory estoppel and estoppel by convention. In relation to promissory estoppel, they cite the well-known articulation of those principles in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 428.
2. The plaintiffs, with respect to both the estoppel points, rely upon the decision of Brereton J in Moratic Pty Lt v Gordon [2007] NSWSC 5 at [29]-[34] (Moratic): 29 In promissory estoppel, as with equitable estoppel generally, equity comes to the relief of a plaintiff who has acted to its detriment on the basis of a fundamental assumption in the adoption of which the defendant has played such a part that it would be unfair or unjust if it were left free to ignore it, on the footing that it would be unconscionable for the defendant to deny the assumption [Grundt v Great Boulder Gold Mines Limited (1937) 59 CLR 641, 675; Thompson v Palmer (1933) 49 CLR 507, 547; Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, 404 (Mason CJ and Wilson J)]. The unconscionability which attracts the intervention of equity is the defendant's failure, having induced or acquiesced in the adoption of the assumption or expectation, with knowledge that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion [Waltons v Maher, 423 (Brennan J)]. 30 Although Moratic relied primarily on equitable promissory estoppel, the analogous but distinct doctrine of common law conventional estoppel [MK & JA Roche Pty Limited v Metro Edgley Pty Limited [2005] NSWCA 39, [71]], which precludes either party from denying an assumption which has formed the conventional basis of a relationship between them [Legione v Hateley (1983) 152 CLR 406, 430 (Mason and Deane JJ)], also operates alongside contractual variation and proprietary estoppel in the field of consensual departures from contractual rights, sharing some characteristics with each. The analogies and distinctions between contractual variation and conventional estoppel appear from the observations of Lord Denning MR in Amalgamated Investment and Property Co Limited v Texas Commerce International Bank Limited (in liq) [1982] QB 84, 121, to the effect that if parties to a contract by their course of dealing put a particular interpretation on its terms, on the faith of which each to the knowledge of the other acted and conducted their mutual affairs, they are bound by that interpretation just as much as if they had recorded it as a variation of the contract. With reference to Grundt v Great Boulder Proprietary Gold Mines, his Lordship explained that such parties had by their course of dealing adopted a conventional basis for the governance of their relations and were bound by it - because, having regard to the dealings between the parties, it would be unjust to allow either to insist on the strict interpretation of the original terms. Nor is it necessary that the parties, in adopting their assumption, have adverted to the express terms of the contract. As Lord Denning MR said in Amalgamated Property Co v Texas Bank [at 121]:- There is no need to inquire whether their particular interpretation is correct or not - or whether they were mistaken or not - or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contract, and cannot be allowed to go back on it. 31 Thus whereas an intention to vary the original terms is necessary to support a contractual variation, no advertence to the original terms is necessary to found a conventional estoppel having the same effect. An estoppel by convention depends upon the adoption by the parties of an assumption as the conventional basis of their relationship [Dabbs v Seaman (1925) 36 CLR 538, 549; Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited (1986) 160 CLR 226, 244-5]. Any requirement that the assumption be of a state of facts (as distinct from law) has been discarded [Eslea Holdings Limited v Butts (1986) 6 NSWLR 175, 185-9; Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, 415-6, 432, 452, 458; Foran v Wight (1989) 168 CLR 385, 435, 457; Commonwealth v Verwayen (1990) 170 CLR 394, 413, 445, 501; Amalgamated Investment and Property Co Limited v Texas Commerce International Bank Limited (in liq) [1982] QB 84, 122; Meagher, Heydon and Leeming, Equity Doctrines & Remedies, 4th ed, [17-020]; MK & JA Roche v Metro Edgley, [71]]. 32 In Waterman v Gerling Australia Insurance Company Pty Ltd [2005] NSWSC 1066, 65 NSWLR 300, I compared the elements of these two related estoppels - both are included in the rubric of estoppel in pais [Legione v Hateley, 430 (Mason and Deane JJ)] - so as to reveal their analogies and distinctions in the following terms. In equitable promissory estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of a legal relationship with the defendant; (2) that the defendant has induced or acquiesced in the plaintiff's adoption of that assumption; (3) that the plaintiff has acted in reliance on its assumption; (4) that the defendant knew or intended that the plaintiff so act; and (5) that it will occasion detriment to the plaintiff if the assumption is not fulfilled [Waltons v Maher, 428-429 (Brennan J)]. In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff [Waterman v Gerling, [83], [96]]. 33 The similarities between the two doctrines should not be allowed to mask their differences, which reflect the disparate origins of promissory estoppel and conventional estoppel. Promissory estoppel, a creature of equity, is, typically, focussed on the conscience of the defendant: it operates when the defendant has induced or acquiesced in the adoption by the plaintiff of an assumption that the defendant will not assert its strict legal rights, so to prevent unconscionable (or unconscientious) insistence by the defendant on its strict legal rights. On the other hand, conventional estoppel, a creature of the common law, is focussed on the consensual basis of the parties' relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved, so as to hold both parties to their common understanding. 34 The differences in the second and third elements outlined above, impact on the requisite state of knowledge of the defendant, particularly in a case of acquiescence (or inducement by silence). In the case of promissory estoppel where the defendant has not positively encouraged the plaintiff to adopt the relevant assumption, a plaintiff must show that the defendant at least failed to deny the assumption with knowledge that the plaintiff was relying on it to the plaintiff's potential detriment, and that the assumption could be fulfilled only by a diminution or suspension of the defendant's contractual rights [see generally Waltons v Maher, 428-429 (Brennan J); Meagher, Gummow & Leeming, [17-050]]. It is essential to an equitable estoppel that the defendant knows or intends that the party who adopts the assumption will act or abstain from acting in reliance on it [see Crabb v Arun District Council [1976] Ch 179, 188; Waltons v Maher, 423 (Brennan J)]. Such knowledge or intention may easily be inferred where the adoption of the assumption is induced by the making of a promise, but it may also be found where the defendant encourages a plaintiff to adhere to an assumption already formed, or acquiesces in an assumption when in conscience objection ought to be stated [Waltons v Maher, 423 (Brennan J)]. The cases emphasise that a party who seeks to set up an equitable estoppel of this type must show that the other has made, whether by words or conduct, an unequivocal representation that it did not intend to enforce its strict legal rights [Allied Marine Transport Ltd v Vale Do Rio Doce Navegacao SA (The Leonidas) [1985] 1 WLR 925, 941 (Robert Goff LJ); Legione v Hateley, 435-7; Foran v Wright, 410-11, 435-6]. Although there are cases in which silence, when there is an obligation to speak, may convey such a representation, silence is usually not unequivocal, as there can be multiple reasons for a party remaining silent [The Leonidas, 941; Handley, Estoppel by Conduct and Election, Sweet & Maxwell, 2006, p54, [3-013]]. Brennan J, in the passage cited above, limited the circumstances in which silence would found an equitable estoppel to those in which the relevant assumption of the plaintiff could be fulfilled only by a diminution of the defendant's rights (or an increase in its obligations) and the defendant, with knowledge that the plaintiff's reliance on the assumption may cause detriment to the plaintiff if not fulfilled, failed to deny to the plaintiff the correctness of the assumption. His Honour had earlier explained (at 427):- Silence will support an equitable estoppel only if it would be inequitable thereafter to assert a legal relationship different from the one which, to the knowledge of the silent party, the other party assumed or expected: see Ramsden v. Dyson, at pp 140-141; Svenson v. Payne (1945) 71 CLR 531, at pp 542-543; Willmott v. Barber (1880) 15 ChD 96, at pp 105-106. What would make it inequitable to depart from such an assumption or expectation? Knowledge that the assumption or expectation could be fulfilled only by a transfer of the property of the person who stays silent, or by a diminution of his rights or an increase in his obligations. A person who knows or intends that the other should conduct his affairs on such an assumption or expectation has two options: to warn the other that he denies the correctness of the assumption or expectation when he knows that the other may suffer detriment by so conducting his affairs should the assumption or expectation go unfulfilled, or to act so as to avoid any detriment which the other may suffer in reliance on the assumption or expectation. It is unconscionable to refrain from making the denial and then to leave the other to bear whatever detriment is occasioned by non-fulfilment of the assumption or expectation. 35 Thus, in promissory estoppel, it is the defendant's knowledge of the potential for the plaintiff to incur detriment if it remains silent that may impose on the defendant's conscience an obligation to speak. 36 In a case of conventional estoppel, however, all that is required is the mutual adoption of the relevant assumption, as Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ emphasised in Con-Stan Industries [at 244]:- Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted upon by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. 37 Although I accept that detriment is an element of conventional estoppel [see Waterman v Gerling, [96]], and that each party must know or intend that the other act on the relevant assumption, there is no requirement that either have induced, or acquiesced in, the adoption of the assumption by the other, and in particular there is no requirement that either know that the other may incur detriment by reliance on the assumption. To the contrary - since the assumption is one common to both parties, and may involve a mistaken interpretation of the contract - the possibility that either party might incur detriment by reliance on it will usually not occur to the other.
3. In Labracon Pty Limited v Cuturich [2013] NSWSC 97 at [106] Lindsay J considered: 106 Estoppel by convention. The essential idea of estoppel by convention is that parties who have conducted their relations with each other on an agreed or assumed state of affairs (adopted as the conventional basis of their relationship) will, in proceedings against one another, be estopped from denying that agreed or assumed state of affairs: Handley, Estoppel by Conduct and Election, ch 8; Spencer Bower, Estoppel by Representation (4th ed) ch 8, pp 179-201; Young, Croft & Smith, On Equity, para [12.100].
4. In Sze Tu v Lowe [2014] NSWCA 462 at [431], Gleeson JA (with whom Meagher and Barrett JJA agreed) followed the approach of Brereton J in Moratic, summarising the applicable principles as follows: 431 In Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603 at [200], this Court approved the restatement of principles by Brereton J in Moratic Pty Ltd v Gordon [2007] NSWSC 5 at [32] that the elements of conventional estoppel are: (a) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant; (b) the defendant has adopted the same assumption; (c) both parties have conducted their relationship on the basis of that mutual assumption; (d) each party knows or intends that the other will act on that basis; and (e) departure from the assumption will cause detriment to one of them.
5. In relation to the loss said to have been suffered, the plaintiffs cite Delaforce v Simpson-Cook (2010) 78 NSWLR 483 at [42] and [56], per Handley AJA (with whom Allsop P and Giles JA agreed): 42. The detriment that makes an estoppel enforceable is that which the party asserting the estoppel would suffer, as a result of his or her original change of position, if the assumption which induced it was repudiated by the party estopped. This was explained by Dixon J (the Dixon principle) in Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641 at 674-675: "That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, 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." … 56. Although there are statements in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 and The Commonwealth v Verwayen that relief in these cases must be limited to removing or reversing the detriment suffered by the party entitled to the estoppel, the joint judgment in Giumelli (at 120 and 125) established that there is no such restriction. The detrimental reliance that supports the estoppel need not constitute, in any sense, a consideration moving to the party bound. It is a unilateral element of the estoppel and not the price paid for it

Misleading or deceptive conduct

1. The Competition and Consumer Act 2010 (Cth) sch 2 (Australian Consumer Law) provides as follows: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in Part 3 1 (which is about unfair practices) limits by implication subsection (1).
2. I note that the parties devoted very little, if any, attention to this part of the case, but the principles are well understood: see, eg, Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.

Credit

1. A trial judge is in no way restricted in his or her assessment of a witness. He or she is not bound to accept any of that which the witness attests to or, indeed, may only accept part thereof: Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 at [118]-[123]. Nor is a judge bound to accept the testimony of a witness where there has been no cross examination.
2. I am mindful of the remarks of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 at [30]-[31] where they said: 30. It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Société d'Avances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana"): "... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour." 31. Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility.
3. In Watson v Foxman (1995) 49 NSWLR 315 (Watson v Foxman) at 319, McLelland CJ in Eq made the following remarks: …human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
4. In any fact finding exercise, however, a judge must always be astute in particular when drawing inferences to carefully distinguish in his or her mind between what is a reasonable inference as opposed to what may amount to no more than mere speculation: Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 222.

The witnesses

1. On balance I have to say I was somewhat unimpressed by each of the witnesses. I did not form the view any witness was not generally trying to recall events. However, each of the witnesses was, to my observation, quite defensive at times.
2. No one had any contemporaneous diary notes of conversations, apart from a document recording one event (the meeting of 28 February 2014), which Mr Weldon wrote after the meeting and produced belatedly in the trial.
3. Whilst I have not ignored the oral and affidavit evidence, I have found the contemporaneous communications and documents, especially those of Mr Weldon, the most significant in terms of coming to conclusions as to what the parties were in fact doing or attempting to do, bearing in mind the objective nature of the exercise.

Positions of the parties in summary - a binding agreement

1. The plaintiffs submit a binding agreement existed on two alternative bases. The first is that such an agreement came into existence on or about 20 August 2014. The second is that an agreement came into existence prior to 26 November 2014. I will deal with each of these in turn.
2. The defendants, on the other hand, submit that the parties had previously regulated their relationship with each other with a series of detailed written agreements, which they had executed. They say that the complexity of the Deed of Release and the Unitholders' Agreement militate against a conclusion that the parties intended to be bound prior to execution. They say that the presence of a warranty that the parties had obtained independent legal advice (cl 13) is indicative of the fact the parties had an ongoing ability to review the documentation and withdraw from it up to the point of signature.
3. The defendants say that while it is true Mr Ralph Tonkin was party to correspondence being sent to Housing that identified that the parties had agreed to enter into a joint venture, this did no more than state the fact that there was, in a general sense, an agreement to enter into a joint venture. They submit that it did not amount to a representation that such a binding agreement had already been entered into and say that, further, the language of futurity is used in the correspondence in question.
4. The defendants say that the correspondence throughout September indicated that while the parties hoped (and expected) that their plans for a joint venture would come to fruition, they intended that the process would occur formally and that the relevant final step would be execution of the relevant documentation. The defendants also submit that it is one thing to say that the parties had reached a negotiated consensus on the matters between them, but quite another to say that they objectively intended to be irrevocably bound prior to signature.

An agreement of 20 August 2014

1. The plaintiffs submit that an agreement was made on or about 20 August 2014 that fell into either the second class of Masters v Cameron agreements or the fourth class identified in Baulkham Hills, it being either a case where the parties reached an immediately binding agreement but proposed to have the terms restated in a form fuller or more precise but to the same effect, or one where the parties were immediately bound but expected to make a further contract in substitution for the first contract containing, by consent, additional terms.
2. The plaintiffs contend that the agreement is evidenced by the conversations between the parties and incorporates by reference the terms of the letter dated 3 March 2014. The plaintiffs say the parties were immediately bound but expected to execute formal documents expressing the agreement or, in the alternative, make a further contract in substitution containing additional terms.
3. It is the contention of the plaintiffs that the Deed of Release and Unitholders' Agreement satisfy either analysis. The plaintiffs also say the subsequent conduct of the parties is compelling evidence that there was a binding agreement.

An agreement at a date prior to 26 November 2014

1. In the alternative to the parties having entered into a binding agreement on or around 20 August 2014, the plaintiffs say the parties had such a binding agreement prior to 26 November 2014. They say that it is not necessary to identify with specificity the time at which such an agreement was entered into. They say that in an ongoing relationship it is not easy to pinpoint the precise moment at which a contract was formed. They submit that agreements concerning terms and conditions which might be too uncertain or illusory to enforce at a particular time in the relationship may, by reason of subsequent conduct, become sufficiently specific to give rise to legal rights and duties. They say that within the parameters of a dynamic commercial relationship new terms will be added or will supersede older terms.
2. The plaintiffs submit that it is necessary to look at the whole of the relationship and not only what was said and done when the relationship was first formed. A contract may be inferred, it is said by the plaintiffs, from the acts and conduct of the parties, as well as or in the absence of their words. The plaintiffs say the question in this type of case is whether the conduct of the parties, viewed in light of the surrounding circumstances, shows a tacit understanding or agreement.
3. The plaintiffs submit that mutual assent to be bound may be clear even in circumstances where offer and acceptance cannot be identified, and despite the fact the moment of formation cannot be determined. They say such a manifestation of mutual assent will occur where, viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain.
4. The plaintiffs contend that if the Court is not persuaded that the evidence demonstrates that a contract was made on or about 20 August 2014, it should be satisfied that the events subsequent to that date comprise a clear body of evidence manifesting mutual assent and an intention to be bound.
5. On either view, the plaintiffs say that the Deed of Release and Unitholders' Agreement embody the agreed terms of the relationship between the parties and that the defendants, having purported to resile from the agreement, ought to be ordered to take all necessary steps to execute the relevant documents.
6. They also submit that the level of tension that arose between Mr Ralph Tonkin and Mr Danckert is not a sufficient discretionary reason to refuse specific performance. In addition, the plaintiffs submit that if the parties wish to sever totally their relationship, the buyout provisions in the Unitholders' Agreement would allow them to do so.

Submissions concerning the evidence

1. The plaintiffs say that the differences in recollection between the witnesses, concerning what was said in crucial conversations, are not significant. They emphasise the large body of documentary evidence and say that their witnesses' account of events is consistent with the contemporaneous documentation.
2. Furthermore, the plaintiffs say that it would have been open to the defendants to have called Mr Steve Tonkin, Mr Ziesing, or one of the relevant people from Schirripa Commercial Lawyers, and that they did not. In these circumstances, the defendants say that the Court may draw an inference that this evidence would not have supported the defendants' case.
3. The plaintiffs urge the Court to find that at all material times from August 2014 onwards Ralph Tonkin was put forward by the Tonkin interests as the person to deal with the plaintiffs, and he had authority to deal with the plaintiffs and bind the defendants. The plaintiffs also say that the Court should find that Mr Ziesing played a key role as advisor to the Tonkin interests.

The submissions of the parties in detail - a binding agreement

Events prior to the start of 2014

1. The defendants draw attention to the events preceding 2014 (which are not controversial). An important part of that background, the defendants say, is that during this period the parties stood in the position of borrower and lender and were careful to document their relationship accordingly. The defendants point out that the 2007 dealings between the parties involved a substantial loan and a guarantee. Mr Weldon, the defendants say, regarded himself as an experienced contract lawyer. In his cross examination Mr Weldon recalled that the parties took care to document their dealings and ensured that they were provided with documents in advance of settling. That process customarily occurred by simultaneous execution of the various documents, which became operative on execution.
2. The defendants highlight the fact that by October 2011 no rent-paying tenants had been secured for the shopping centre. Mr Danckert had entered and been discharged from bankruptcy, and neither he nor Mr Weldon were in a position to inject further funding into the project. The defendants note that, as in 2007, the documents to secure further funding were drawn up and executed together, becoming binding upon execution.
3. The defendants note that the parties' 2007 agreements contained clauses requiring amendment or variation to be in writing. Although the defendants accept that the plaintiffs' case involves the replacement, not the variation, of the 2007 agreements, the defendants submit that these clauses are further indication of the formal manner in which the parties related.
4. The defendants submit that by the start of 2014 the parties had a history of carefully recording their dealings in writing and relating to one another on the basis of agreements that became binding on execution and not, for example, of concluding oral agreements to be more fully documented at a later date. The defendants say that the Court should note that the 2011 Deed of Release and Variation bears strong similarities to the 2014 documentation drafted by Mr Weldon.
5. In their reply submissions, the plaintiffs accept that the parties had used formal documentation in the past. They reiterate, however, the submission that the apparent significance of this fact must yield to the concatenation of circumstances arising in 2014 and the "situation of crisis" which did not, the plaintiffs submit, allow the parties to take the kind of approach taken in the past, nor make such an approach desirable. The plaintiffs submit, emphatically, that the parties did not intend to await formal documentation. They wanted to, and did, the plaintiffs say, move their agreement forward as quickly as possible with the expectation of executing formal documentation at a later time.
6. The plaintiffs submit that the importance of the subject matter favours the case of the plaintiffs. The plaintiffs say that the agreement was evidently important because it had its genesis in a "situation of crisis". This was, the plaintiffs say, why formal documentation was deferred to a later point in time. It was "subsidiary", the plaintiffs say, and it was the fact of agreement that was most important, even if that agreement was not embodied in formal documents.
7. The size and complexity of the agreement, the plaintiffs submit, are not self-evidently of great significance in this case. The plaintiffs submit that in truth the agreement required release from existing liabilities and steps to achieve what the parties had always sought as the final outcome - a tenant for the supermarket and the opening of the shopping centre. The terms of the Deed of Release and the Unitholders' Agreement, the plaintiffs submit, are not particularly complex, and were easily analysed and commented upon by the Tonkins and their advisors (with minor changes made).
8. As discussed above, the plaintiffs' first contention is that the Court should find an enforceable contract was concluded on or about 20 August 2014. They submit that the events on 18-20 August 2014 need to be assessed against the background of the meeting in Adelaide on 28 February 2014 and the letter of 3 March 2014.
9. The defendants submit that at the start of 2014 "things were grim". The shopping centre was not open, there was no supermarket tenant in place, and no rent was flowing to Carlisle. It was in this context that SRD served the s 57(2)(b) notice and commenced proceedings against Messrs Weldon and Danckert as borrowers under the 2011 Loan Agreement. This formed the background to the 28 February 2014 meeting.
10. The plaintiffs submit that to the extent that there are differences concerning the versions of what was said at the meeting in Adelaide, the Court should accept the evidence of Mr Weldon and Mr Danckert. They say that the letter of 3 March 2014 is, in part, a contemporaneous record of what was said and supports Mr Weldon and Mr Danckert's version of events.
11. The plaintiffs submit that the evidence of Mr Ralph Tonkin is consistent with the plaintiffs in so far as it concedes that Mr Danckert had indicated that there was a tenant for the supermarket and that the equity split should be 75:25. The plaintiffs say that it is clear from Mr Ralph Tonkin's evidence that Mr Ron Tonkin was concerned about opening the shopping centre as soon as possible.
12. The defendants make several submissions regarding the 28 February 2014 meeting. It is a common recollection, they accept, that Mr Ron Tonkin said words to the effect of "[g]et the bloody thing open". The defendants submit that there remains no controversy over whether or not Mr Ralph Tonkin expressed "agreement" to a 75:25 joint venture. The defendants submit that Mr Danckert, in cross examination, conceded that while he had made reference in his affidavit evidence to Mr Ralph Tonkin expressing that agreement, in fact he had no such recollection.
13. The plaintiffs submit that the letter of 3 March 2014 contained a detailed proposal which included all the essential elements of the agreement ultimately reached in August 2014. The defendants submit that the language of this letter is in terms of a "proposal", and that everything points to the meeting of 28 February 2014 being one at which general proposals were made but no consensus reached.
14. The plaintiffs say that the proposal in the 3 March 2014 letter was made on the basis of immediate agreement to be followed by more formal documentation. The plaintiffs accept that the proposal was not accepted in March 2014, but say that it was expressed in terms of offer and acceptance, demonstrating that if it was accepted it was intended to be immediately binding.
15. The defendants submit that the proposition that the letter was being put on an offer-acceptance basis is not self-evidently correct. The defendants say that it should be recalled that the letter was being drafted by an experienced solicitor with an acute personal interest in obtaining releases from the obligations pressing upon him, but nonetheless the letter does not use the term "binding", or even the term "offer". Rather, the letter repeatedly uses the word "proposal".
16. The defendants say that the letter of 3 March 2014 is "replete with explanation, contingency and expression of belief". They say that none of these are features of an offer capable of acceptance. In particular, they point out that contingency is a particular feature of the letter, and that some vital elements of the proposal are still to be decided. They point to remarks such as "we are open to proceeding in either of the 2 following ways", "[w]e believe that Housing will approve it, subject to…", and "a float of funds may be required to meet fitout costs". Additionally, the defendants say that the letter contains a further narrative about possible funding options, a very generalised statement in relation to priority of funds, and references to the potential sale of the centre in terms that do not make it clear whether a contractual term is being proposed.
17. As the proposal was expressly rejected two days after being made, the defendants submit that the Court need not make a final determination as to whether, had it been accepted, a binding contract would have arisen. The defendants do submit, however, that against the background of the parties' dealings in 2007 and 2011 this would be a surprising conclusion to reach. The defendants characterise the document as being a "step along the way to building a consensus between the parties", which consensus would then have been the subject of further, binding documentation. Overall, it is submitted by the defendants that the letter supports the notion that the parties were not inclined to resolve their differences in a binding way other than by the execution of formal documentation.
18. The defendants observe, in the context of the 3 March 2014 letter, that it is worth noting that in rejecting the "Proposal", SRD's lawyers concluded by requesting that Mr Weldon ensure that any communications regarding the matter be directed to those lawyers, not to the directors and shareholders of SRD. The defendants say that there is no evidence of departure from that position by August 2014, and that this is a further indication that the parties' existing written arrangements could not be expected to be overthrown by an informal oral agreement.
19. The plaintiffs say, to the contrary, that by mid-August 2014 it is clear that Mr Ralph Tonkin was dealing directly with Mr Danckert and Mr Weldon, including the telephone meeting on 18 August 2014, the telephone meeting with Housing on 19 August 2014, and the email correspondence from August 2014 onwards. Any requirement that the parties deal through solicitors had by this stage, the plaintiffs contend, clearly been abandoned.
20. The defendants note that on 7 March 2014 SRD entered into possession of the lease. On 27 March 2014 the default judgment was entered against Mr Weldon and Mr Danckert, and on 2 June 2014 bankruptcy notices were issued in respect of the judgment debt.
21. The plaintiffs observe that it was clear to all the parties by mid-August 2014 that the central asset, the leasehold, was in peril, and that there was a risk that SRD would be removed from the site by Housing and that the lease would be terminated.
22. The plaintiffs say this is important in contextualising the discussions between the parties. The plaintiffs say that, in this context, despite the history of using formal documentation, the parties "treated formal documentation as subsidiary" because the exigencies of the situation made such documentation unnecessary and undesirable. The plaintiffs say it is clear that the parties were willing to "do whatever it [took]" to get the shopping centre open.
23. The plaintiffs refer to a conversation just prior to 15 August 2014 between Mr Danckert and Mr Ralph Tonkin, not denied or remarked upon by Mr Ralph Tonkin, where Mr Ralph Tonkin said that "[w]e will proceed with the joint venture we spoke about in Adelaide back in February." They say that there was then a meeting with the prospective supermarket tenants on 15 August 2014. They submit that is clear from Mr Ralph Tonkin's email of 17 August 2014 that by 15 August 2014 Mr Ralph Tonkin had embraced the elements of the proposal made in February 2014, which included a 75:25 equity split, the formation of a joint venture company, and the preparation of more formal documentation.
24. The plaintiffs submit that although there are differences between versions of what was said during the telephone conference on 18 August 2014, the versions are consistent in indicating that:

• The Tonkins wanted Mr Weldon and Mr Danckert to "do whatever it takes" to get the shopping centre open;
• The parties would proceed with the joint venture proposal;
• The interests in the joint venture were to be split 75:25;
• A new company had to be formed; and
• Approval from Housing was necessary.

1. The defendants make several submissions regarding this phone conversation. The first is that the time estimates range from about 5 to 15 minutes. This tends against, the defendants say, the notion that there was a detailed discussion of a possible agreement. Furthermore, the defendants say, the idea than an experienced solicitor, himself facing bankruptcy, would have entered into a binding agreement in the course of a telephone call, without expressly drawing to the attention of the parties the fact an agreement was being created, is improbable. They say the dictates of both prudence and professional responsibility would have militated against Mr Weldon taking such a course.
2. Mr Weldon, the defendants say, was concerned at least to deal with his existing liability. He was also involved in negotiations for the joint venture, the details of which had not been documented. They say that one would have expected to find express language directed to the binding nature of the agreement and immediate written confirmation. That did not occur.
3. It is common ground that a feature of the conversation was overwhelming concern, particularly of Mr Ron Tonkin, that the supermarket be opened. That accords, the defendants say, with commercial reality. Until a supermarket tenant was secured for the project it is apparent where was no prospect of any substantial rent, and therefore no prospect of repaying the Tonkin interests.
4. The plaintiffs observe that in the subsequent conversation with Housing the parties confirmed a "reunited" approach, a joint venture, a tenant for the supermarket, and the assignment of the lease from Carlisle. The defendants characterise the conversation with Housing on 19 August 2014 as being part and parcel of this shared concern and a recognition by the parties that, regardless of the legal structure adopted, they would need to keep Housing happy.
5. The plaintiffs say that the uncontested evidence of Mr Weldon is that immediately on and from 19 August 2014 Mr Ralph Tonkin, Mr Weldon and Mr Danckert collaborated on matters relating to the joint venture, including securing a tenant for the supermarket (a draft of the sub-lease being sent out on 21 August 2014).
6. The plaintiffs observe that the letter sent by Mr Weldon on 20 August 2014 to Mr Ralph Tonkin refers to the "proposed 75:25 joint venture arrangements" and deals with the issues of indebtedness, the judgment in South Australia, and bankruptcy notices.
7. The defendants say that this letter is, on its face, quite inconsistent with a binding agreement being reached. They refer again to the language of a "proposed" joint venture, and to the list of "outstanding issues". They note the absence, in an email from an experienced solicitor, of any language referring to a concluded agreement. They submit that the language concerning the "outstanding issues" is particularly telling because there is an observation that the plaintiffs would "like" to have some matters dealt with in a particular way. The defendants say that this is the language of ongoing negotiation.

Estoppel

1. The plaintiffs submit in the alternative that the defendants, through Mr Ralph Tonkin and Mr Ron Tonkin, made representations that induced or encouraged the plaintiffs to believe a binding agreement had been made. The plaintiffs say the Court should infer that the defendants intended the plaintiffs would act in reliance on the representations. Objectively, in the circumstances, the plaintiffs say, there could be no other reason for making the representations. The plaintiffs say this conduct engages the operation of promissory estoppel.
2. Alternatively, the plaintiffs say the representations constituted an agreed or assumed state of affairs adopted as the conventional basis of the relationship between the parties after 20 August 2014. They note that estoppel by convention does not rely on inducement on the part of one party, and in particular there is no requirement that either party know the other may incur detriment in reliance on the relevant assumption.
3. The plaintiffs say that the reliance on the representations made by the defendants caused detriment to the plaintiffs, namely that they expended considerable time and effort on the basis that they believed they had a binding contract with the defendants. Furthermore, they point to Mr Danckert's execution of the sub-lease.
4. The plaintiffs say the appropriate relief would be an order that the defendants specifically perform the agreement they represented was in existence. They submit that this is not extravagant or uncertain, but the prima facie entitlement of the plaintiffs to have their reasonable expectation of a contract fulfilled and to prevent departure of the defendants from the assumed state of affairs.
5. The defendants say that, having regard to the way in which the matter has unfolded, there is no practical room for the claims in estoppel or misleading and deceptive conduct to operate. They submit that it could not have been reasonable for Mr Weldon to assume that there was a binding agreement in place between the parties, having regard to the circumstances discussed above. The defendants say that if Mr Weldon drew that conclusion, notwithstanding the form of the documents he himself drafted, and despite his failure to draw this conclusion to Mr Ralph Tonkin's attention in a timely way, it was not a reasonable conclusion to draw. Put another way, the defendants submit that any such conclusion could not reasonably be said to result from Mr Ralph Tonkin's conduct.
6. The defendants submit that it is apparent that Mr Danckert, to the extent he was relying on anyone in relation to the status of the dealings between the parties, was looking to Mr Weldon, and not to Mr Ralph Tonkin.
7. Finally, the defendants submit that there is no loss or detrimental reliance established for either the estoppel claim or the misleading or deceptive conduct claim. The defendants submit that Mr Weldon and Mr Danckert had previously been doing work in respect of the Bidwill project on behalf of Carlisle and they continued to do so from August 2014. This work had to be done, the defendants say, regardless of the legal structure. The defendants submit there is no evidence or reason to conclude that they would have taken any different course by reason of any conduct of Mr Ralph Tonkin's.
8. In response, the plaintiffs say that it is clear that the plaintiffs, taken collectively, relied on assertions of an agreement made by the defendants. This reliance, the plaintiffs say, was entirely reasonable, and indeed it would have been unreasonable not to act in reliance on the existence of an agreement in the circumstances.

Misleading and deceptive conduct

1. The plaintiffs say, further, that if the Court finds that representations were made by the defendants to the effect that an agreement existed, then on the defendants' case these must have been misleading because it is the contention of the defendants that there is no agreement. They repeat the observations made in the context of estoppel concerning reliance.
2. The plaintiffs submit that the appropriate relief would be compensation pursuant to the Australian Consumer Law for expenses incurred in reliance on the misleading conduct.

Cross claim

1. The defendants pursue the cross claim only against Carlisle. If there is no binding release established, the defendants say, then that claim must succeed. It is sufficient, the defendants say, for them to refer to the recitals of the draft Deed of Release, which reflected Mr Weldon's understanding of the relevant transactions, and the interest provisions of the original loan.

Consideration

1. Each example of this species of contractual dispute unsurprisingly turns upon its own facts.
2. In other words, whether parties intend to be bound must be determined objectively, but inferences can and should be reasonably drawn from what the parties said or did, tempered by what it may be inferred a reasonable businessperson would have understood the parties intended.
3. In summary, the first half of 2014 was a financially precarious time for all concerned. The shopping centre was not generating any income and debts were mounting. On 6 February 2014 SRD had served a s 57(2)(b) notice seeking repayment of $6 million from Carlisle. That same day SRD commenced proceedings against Messrs Weldon and Danckert alleging breaches of the 2011 agreement.
4. The meeting in Adelaide on 28 February 2014 was obviously an attempt to discuss and if possible resolve issues. It is accepted by the defendants that Mr Ralph Tonkin expressed "agreement" with a 75:25 joint venture. Mr Weldon's notes of the meeting refer to a proposal and a 75:25 split. They do not, however, refer to any binding agreement and none, of course, is suggested.
5. The 3 March 2014 letter sent by Mr Weldon after the meeting is no more than a detailed proposal. There is nothing, in my view, in the tone and text of the letter of 3 March 2014, suggestive of anything beyond a proposal. It was, in any event, in fact rejected two days after it was put.
6. I can find nothing in what occurred between 3 March 2014 and August of that year to suggest (objectively) that the parties were inclined to bind themselves in any other way than upon execution and exchange of formal documentation. Whilst there are conversations from time to time which undoubtedly took place in which I am satisfied persons expressed agreement in principle, I am equally satisfied the parties never objectively consummate that agreement, as at 20 August 2014 or thereafter.
7. The parties had prior to 2014 organised their affairs quite formally. They had executed and exchanged formal documentation. That, in my view, is a most important part of the historical contractual context. There is nothing to suggest, in my view, that they had resolved this current dispute be dealt with in any other way.
8. In other words, where disputation had arisen they resolved their differences by formally executing further documentation before moving on. Mr Weldon was in 2014 preparing documentation to achieve, if he could, the same outcome.
9. There are numerous references in the various emails, especially those of Mr Weldon, for the need to execute documents prior to the parties being legally bound.
10. Most importantly, I am firmly of the view, both parties appreciated and expected that Housing required signed agreement(s) between the parties. Housing was very concerned about the precise terms of the agreements prepared between the parties, to the point of requesting copies of them, no doubt to ensure they were appropriate (see [76] above).
11. However, in addition and equally importantly, Messrs Weldon and Danckert needed the slate very precisely and formally wiped clean. They wanted not only a forgiveness of the previous debt, but a setting aside of a judgment and the withdrawal of bankruptcy notices. Unless the slate was comprehensively wiped clean, the judgment in South Australia, as an example, would stand. In my view business persons in this position would require nothing less than formal clarity and certainty.
12. It is true that in this case the defendants were only intermittently represented by their own lawyers. Mr Weldon, who was in a position, in my view, of hopeless conflict, assumed the role from time to time of advising both the plaintiffs and defendants. I am satisfied he did so, however, not out of any philanthropic ideal but out of a desire to create and perpetuate harmony arising out of a real concern for his own commercial and financial wellbeing. After all, he had a judgment against him, which he had no desire or capacity to meet (T131.25).
13. Mr Weldon nonetheless made frequent references in his communications with Mr Ralph Tonkin for the need to execute the formal agreements which he had prepared for all parties including himself. This was the position before and after August 2014.
14. Mr Weldon did his best as principal, agent and/or intermediary to cajole each of Mr Danckert and Mr Ralph Tonkin to sign the respective documents, but to no avail. I am satisfied that he clearly intended that he would (subjectively) conclude all arrangements with signed agreements. He knew (as any person, however, objectively in his position would) that Housing would require and expect nothing less.
15. These were parties with a past, and a chequered one at that. The defendants had poured substantial funds into the centre as an investment opportunity and there was suspicion and doubt as to how much the plaintiffs (Mr Danckert and Mr Weldon) had in fact contributed. There was a high level of distrust, despite Mr Weldon's concerted charm offensive.
16. In all the circumstances, I am satisfied no binding agreement came into existence on or about 20 August 2014. The events which the plaintiff's rely upon, on analysis do not in my view point objectively in favour of a binding agreement. Certainly Mr Weldon had every reason to finalise a formal agreement, and I consider he was anxious to do so.
17. Leaving conversations to one side - his email of 20 August 2014, after the 18 August 2014 phone call, speaks not of a binding arrangement, but a "proposed 75:25 joint venture" and a list of "outstanding issues". This is quite contrary to any notion of a binding agreement. In my view, again objectively, such an email would not have been written by any person, let alone a commercial lawyer who believed there was a concluded bargain.
18. In summary, the most significant factors which point, in my view, against any binding agreement in or about August 2014 are: 1. The practice or history of dealings between the parties, in 2007 and 2011, in regulating their affairs by negotiations followed by signed agreements. 2. It was in the nature of Mr Weldon's experience and professional practice that he sought to draft precisely and formalise the terms and conditions of any agreement the parties (including himself) would enter. Mr Weldon financially was in a somewhat perilous state and I do not consider he (or for that matter, any legal practitioner in his position) would be content with anything less than a formal, carefully drafted set of documents which would be executed. 3. In my view Housing required and the parties (indeed any persons reasonably in the parties' position) would have anticipated and expected to enter formal, executed agreements. This, in my view, was a pervasive theme continuing throughout the balance of 2014. 4. An equally potent factor is the very form and structure of the documents providing as they did for releases and covenants upon execution of the documents. This objectively suggests that the parties fully intended to be legally bound only on and after execution of the documents.
19. The communications between 20 August and September 2014 in my view do not further advance matters for the plaintiffs. I am in no doubt the parties were working towards a written agreement. They appreciated Housing needed to see a show of unity. There is no doubt that a joint venture (75:25) was contemplated in principle, but I see nowhere anything objectively resembling a concluded arrangement.
20. At the risk of repetition, Mr Weldon was engaged in a precarious juggling act. His anxiety and frustration to one side, he appreciated the benefit of a detailed, concluded and executed agreement.
21. Importantly, on 2 September 2014 Mr Weldon sent the first draft of the various documents to Mr Ziesing, and on the same day physically handed copies to Mr Ralph Tonkin whilst he was having lunch with Mr Danckert. Mr Weldon, of course, asserts he gave Mr Ralph Tonkin an explanation of the documents. However, I am not satisfied with Mr Weldon's evidence on this topic. Indeed, I do not accept the detail of his evidence at all. It was clearly not the context where any solicitor would reasonably or seriously expect to have someone like Mr Ralph Tonkin's full attention. Mr Weldon accepted he left the documents with Mr Ralph Tonkin for him to further consider.
22. Mr Weldon said nothing to Mr Ralph Tonkin nor to Mr Ziesing in his email of 2 September 2014 about there being a concluded agreement. Indeed the documents he circulated are merely, in my view, evidence of advanced drafts.
23. I am not satisfied that this evidence rises any higher than an experienced solicitor giving a person a brief opportunity to satisfy himself that the drafts had captured the understanding in principle which had been discussed between the relevant parties. The reason Mr Weldon left the documents with Mr Ralph Tonkin is that he fully appreciated Mr Ralph Tonkin needed to consider the detail.
24. More importantly perhaps, it seems to me, is that the form the drafts took in providing for releases to occur in the future, and upon execution, as opposed to recording or acknowledging releases and covenants which had already been given. Again, this in my mind points to execution of the documents as the moment the parties intended to be bound.
25. By 15 September 2014 the structure for the joint venture had materially changed, in my view, from a shareholders' agreement to a unitholders' agreement. The tone, in my view, of Mr Weldon's email of 15 September 2014 which enclosed the second drafts of the proposed documents, is that of proposal or negotiation. It is not suggestive of a finalised agreement. It is, in my view, a further attempt to get the structure and the precise terms and conditions of the structure in an agreed form.
26. The point is well made by the defendants that the releases presented at this time were conspicuous in their breadth. That is unsurprising as Mr Weldon (apart from looking after Mr Danckert and his interests) had a vital interest (professional and commercial) in seeing the most favourable outcome for himself and his interests. It is also important to observe, in my view, that by September, Mr Weldon had added a new recital S13, and new cll 11 and 14. For example, the bankruptcy notices were to remain on foot until execution of the documents. None of these additions could be said to be trivial, and the fact they were being proffered for the first time in mid-September is another factor in persuading me that no binding agreement was reached at any earlier point in time.
27. When Mr Weldon updated Housing on 18 September 2014, again there was simply no hint the parties were legally bound. Indeed Mr Weldon stated unequivocally that the parties had at that stage not bound themselves (see [72] above).
28. It is true that later in September Mr Ralph Tonkin and Mr Danckert as directors of Bidwill executed a lease document in favour of National Security Service, but it was stated to be conditional upon written consent (importantly in my mind) of the Head Lessor. What I consider to be more important is that at that time Bidwill had no assets, liabilities or bank account. It was simply a shell. Therefore the execution of the lease has no significance as such, in my view, except as another example of commercial pragmatism.
29. This conduct, in my view, is not determinative of an already existing agreement, but rather conduct which is merely a necessary prelude to one coming into existence.
30. There is no doubt further substantial funds had been contributed to the project by the Tonkin interests, in particular a company called Tonkin Properties. These monies were paid directly to the relevant builder or supermarket tenant. SRD obviously, quite independently of any agreement with the plaintiffs, had a real commercial interest in making the centre operational and hence revenue producing.
31. It was the Tonkin interests which had the capital to inject into the shopping centre. The plaintiffs had no tangible means of doing so. The Tonkin interests would only recoup their investment if the shopping centre was up and running with the possibility of a sale of the lease in the future.
32. During this whole period (after 20 August 2014 to November 2014) the various relevant communications in my view portray Mr Weldon, again unsurprisingly, as being concerned to have the agreements executed. SRD, of course, had at least the comfort of a mortgage over the head lease. On the other hand, I consider, Mr Weldon and Mr Danckert were looking for a way out of their predicament.
33. Mr Ralph Tonkin was devoting all his time and energy to the detail of the supermarket lease, the fitout of the supermarket, and the possible sub-lease to other tenants.
34. In so far as subsequent conduct in the relevant sense is relied upon as corroborating the existence of a binding contract, I am unable to identify any which would in reality qualify objectively as such. The conduct of the parties, it seems to me, at all relevant times, whilst confirming an agreement in principle on certain matters (eg. a joint venture on a 75:25 basis) and an expectation or ambition to enter binding legal relations, continued throughout the whole of 2014, to do no more than evince an intention not to consummate any agreement and hence not to become legally bound until formal agreements embodying all terms and conditions had been agreed upon and executed accordingly. Mr Weldon voiced this very expectation as late as 1 December 2014, in his email to Mr Ralph Tonkin and set out above at [100].
35. By late November the Tonkin interests had in any event decided not to proceed with the joint venture. It was clear by then that Mr Ralph Tonkin did not want to do business with Mr Danckert. Mr Weldon's later assertions about the existence of a legally binding arrangement are self-serving, but in any event in my view of no weight whatsoever.

Estoppel and False and Misleading Conduct

1. I do not consider on the facts of this case it was reasonable for Mr Weldon to assume there was a binding agreement in place. He was drawing up documents for himself and others to sign and at all times he knew they had not been signed. He was instrumental in shaping the precise terms and conditions he wanted everyone to commit to, and he was the one who placed emphasis and important on execution as a significant event.
2. With Mr Weldon setting the terms and conditions (for the most part), especially providing for execution to be the triggering event for a number of the releases, I am not satisfied anything said by Mr Ralph Tonkin was relied upon by Mr Weldon to conclude that there was a binding agreement in place. He was solely responsible for setting the relevant ground rules, namely a binding agreement only upon execution of the relevant documents.
3. Mr Danckert, if he relied upon anyone at all, relied on Mr Weldon or separate lawyers he seemingly retained at the end of 2014.
4. This analysis in my view disposes of both the estoppel and misleading and deceptive conduct claims.

Cross Claim

1. The cross claim is particularised against Carlisle only. In the absence of a binding agreement which would include a release then the debt is outstanding. In my view the cross claim should succeed and I would propose to enter judgment on the cross claim accordingly.

Conclusion

1. The plaintiffs have been unsuccessful and I would therefore dismiss the proceedings.
2. The defendants succeeded on their cross claim.
3. Accordingly, I would direct the parties to prepare short minutes reflecting my reasons, and I will make orders accordingly.
4. If the parties are unable to agree on costs they should make arrangements with my associate to have the matter relisted so argument can be heard accordingly.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 October 2015