Lakatoi Universal Pty Ltd v L.A. Walker; Ensile Pty Ltd v Walker Consolidated Investments [2000] NSWSC 113

New South Wales Supreme Court

CITATION : Lakatoi Universal Pty Ltd v L.A. Walker; Ensile Pty Ltd v Walker Consolidated Investments [2000] NSWSC 113 FILE NUMBER(S) : SC 50035/98; 50109/98; 50110/98; 1798/98 HEARING DATE(S) : 21, 22, 23, 27, 28, 29, 30.9.99; 11, 12, 13, 14, 15, 18, 19, 20, 21, 22, 25, 26, 27, 28, 29.10.99; 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 15, 16, 17, 18, 19, 22, 29, 30.11.99; 1, 2, 3, 6, 7, 8, 9.12.99 JUDGMENT DATE : 10 March 2000

50035/98 Lakatoi Universal Pty Ltd v Langley Alexander Walker & Ors PARTIES : 50109/98 Ensile Pty Ltd v Walker Consolidated Investments Pty Ltd 50110/98 Ensile Pty Ltd v Walker Consolidated Investments Pty Ltd and Ors 1798/98 Ensile Pty Ltd v Walker Consolidated Investments Pty Ltd (D. Court) JUDGMENT OF : Einstein J

R.J. Ellicott QC, V.R.W. Gray, A.E. Galasso, COUNSEL : S.D. O'Campo (Plaintiffs) A.B. Shand QC, D.P.F. Officer QC, R.J. Powell, C.J. Leggat (Defendants) SOLICITORS : Gye & Associates (Plaintiffs) Perkes & Stone (Defendants) CATCHWORDS : Environmental Law - Environmental Planning and Assessment Act 1979 - Process necessary to obtain a rezoning of land - Commission of Inquiry - Failure to properly prepare for or present submissions to Commission of Inquiry - Contract - Joint venture contract related to lands proposed to be initially rezoned to permit redevelopment as residential subdivision - Oral representations inducing entry into Heads of Agreement subsequently followed by formal agreement - Construction of Contract - Commercial and business transaction - Whether defendants warranted that rezoning would be achieved - Whether defendants strictly liable for failure to obtain rezoning - Defendants' covenant to provide their expertise at cost to promptly secure rezoning of land - Obligation construed as obligation to use best endeavours [this is the promise] to secure the rezoning of the land promptly [this is the intended result of the promise] by the use of their expertise [this is the tool by the medium of which the best endeavours are to be applied] - Alternatively term to be implied into subject agreements to the same effect - Parole Evidence Rule - General rule that contract be interpreted objectively - Relevant intention is intention manifested in the words of contract or conduct of the parties as reasonably understood by the other party - Evidence of negotiations prior to execution of Heads of Agreement and formal agreement not admissible to establish subjective intention and expectations of parties, but admissible to establish objective background facts known to both parties and the subject matter of the contract - Rectification - Implied Terms - Oral evidence of parties' actual intention not admissible to establish implied term - Oral evidence admissible to negative implication of a term - Causation - Breach of contract need only be a cause of damage - Need not be sole or predominant cause - Causal relationship between individual breaches and ultimate loss - Breaches of Heads of Agreement and formal agreement both causes of the loss - Presumption against wrongdoers - Applicable where action of parties have made an accurate determination problematic - Loss of Chance - Principles applicable - Implied obligation to use best endeavours to promptly secure rezoning of land - Breach enables innocent party to bring action for loss of commercial opportunity - Opportunity need not be equal to or greater than a 50 per cent likelihood - Damages for breach of contract - Damages for loss of a chance - Plaintiff must show commercial opportunity was of some value, though not negligible value - Damages awarded by reference to the possibilities and probabilities of what would have happened - Difficulties and uncertainty of assessment of damages for loss of chance does not relieve from the court the responsibility of assessment as best it can - Equity - Fiduciary relationship - Joint venture - Contractual relationship may give rise to fiduciary obligations - Fiduciary obligations may exist between parties who embark upon conduct of the venture before the precise terms of the joint venture arrangements have been settled - Joint venturers may occupy relationship demanding trust, confidence and the exercise of good faith - Joint venturers undertaking to act for and on behalf of the joint interest in the venture and not as to prejudice joint interest - One joint venturer's interest vulnerable to another - Incidents of joint venture relationship gleaned from negotiations prior to execution of joint venture documents - Trade Practices - Misleading and deceptive conduct - Necessity for applicants seeking relief to establish what applicant would have done had applicant not relied on the representation - Necessity for comparison between hypothetical and actual state of affairs - Evidence - Failure of one party to call evidence - Application of principle in Jones v Dunkell - Administrative Law - Statutory decisionmaker may not fetter statutory discretion - Estoppel does not lie to fetter future exercise of statutory discretion Clean Waters Act 1970 Corporations Law LEGISLATION CITED : Environmental Planning and Assessment Act 1979 (NSW) Fair Trading Act 1987 (NSW) Protection of Environmental Administration Act 1991 (NSW) Trade Practices Act 1974 (Cth) Abbott v Hessen (1913) 15 WALR 80 Alexander v Cambridge Credit Corporation (1987) 9 NSWLR 310 Ashington Piggeries v Christopher Hill [1972] AC 441 Australasian Performing Rights Association Ltd Austrama Television Pty Ltd [1972] 2 NSWLR 467 Australia Hotel Co Ltd v Moore (1899) 20 LR(NSW) Eq 155 Australian Broadcasting Corporation v XIVth Commonwealth Games (1988) 18 NSWLR 540 Bennett v Minister for Community Welfare (1992) 176 CLR 408 Bishops Gate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd (1981) 1 NSWLR 429 Boska v Sterling Drug Co (1969) 416 F (2d) 417 Breen v Williams (1995) 186 CLR 71 British Homes Assurance Corporation Ltd v Paterson [1902] 2 Ch 405 Chamberlain v Thornton (1892) 18 VLR 192 Chaplin v Hicks [1911] 2 KB 786 Chatsworth Investments Ltd v Cussins (Contractors) Ltd [1969] 1 WLR 1 Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 Collette v Morrison (1851) 9 Hare 162; 69 ER 458 Commercial Union Assurance Co of Australia v Ferrcom (1991) 32 NSWLR 389 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 Ex parte Wright (1812) 19 Ves Jun 255; 34 ER 513 Export Corporation v Asia Australian Express Ltd (1990) 19 NSWLR 285 Eyre v Measday (unreported, 16 October 1985. Court of Appeal, England) Fink v Fink (1946) 74 CLR 127 Gissing v Gissing [1971] AC 886 Greaves & Co (Contractors Ltd) v Baynham Meikle & Partners [1975] 1 WLR 1095 Hodgkinson v Simms (1994) 117 DLR (4d) 161 Houghton v Immer (No 155) (1997) 44 NSWLR 46 In re European Assurance Society Arbitration Acts and Wellington Reversionary Annuity and Life Insurance Society (1875) 1 Ch D 335 In re Head; Head v Head [1894] 2 Ch 236 Kenny v Scholl (1905) 7 ALR 197 Kitchen v Royal Air Force Association [1958] 1 WLR 563 Kurtovic v Minister for Immigration, Local Government and Ethnic Affairs (1990) 92 ALR 93 CASES CITED : LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 Malec v JC Hutton Proprietary Ltd (1990) 169 CLR 638 Mallett v McMonagle [1970] AC 166 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 Milliman v Rochester Ry Co 3 App Div 109; 39 NYS 274 (1896) Minister for Urban Affairs and Planning v Rosemount Estates PtyLtd (1996) 91 LGERA 31 Mortimer v Cradock (1843) 12 LJCP 166 Multi-Malls Inc v Tex Mall Properties (1980) 108 DLR (3d) 399 Navigazine Libera v Newtown Creek (1938) 98 F (2d) 694 Nesterczuck v Mortimore (1965) 115 CLR 140 NSW Medical Defence Union Ltd v Transport Industries Insurance Co Ltd (1986) 6 NSWLR 740 Olsson v Dyson (1969) 120 CLR 365 Pacific Coal Pty Ltd v Indemitsu (Qld) Pty Ltd (unreported, Supreme Court of Queensland, 21 February 1992, Ryan J.) Pedler v Richardson (Unreported, New South Wales Supreme Court, October 16, 1997, per Young J) Penvidic Contracting Ltd v International Nickel Co of Canada Ltd [1976] 1 SCR 267 Performance Cars v Abraham [1962] 1 QB 33 Prior v McNab (1976) 78 DLR (3d) 319 (Ontario High Court) Pukallus v Cameron (1982) 180 CLR 447 Reardon Smith Line Ltd v Yngvar Hansen- Tangen (trading as HE Hansen Tangen) [1976] 1 WLR 989 Sapwell v Bass [1910] 2 KB 486 Scarf v Jardine (1882) 7 App Cas 345 Schipp v Cameron (unreported, 9 July 1998, Supreme Court of NSW, Equity Division, Einstein J.) Scruples Imports Pty Ltd v Crabtree & Evelyn Pty Ltd (1983) 1 IPR 315 Secured Income Real Estate (Australia) Limited v St Martins Investment Pty Ltd (1979) 144 CLR 596 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Shirlaw v Southern Foundaries [1939] 2 KB 206 Thake v Maurice [1986] QB 644 The City Bank of Sydney v McLaughlin (1904) 9 CLR 615 Thomas v Nottingham Incorporated Football Club Ltd [1972] 1 Ch 596 Toikan International v Plasteel Windows (1989) 15 NSWLR 641 United Dominion Corporation v Brian (1985) 157 CLR 1 Utica City National Bank v Gunn (1918) 118 NE 607 Wood v Grand Valley Railway Co (1915) 51 SCR 283 DECISION : Short Minutes of Order to be brought in.