New South Wales Supreme Court CITATION : E K Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 28; 29 & 30 November 2005; 1; 2; 5; 6 & 7 December 2005. JUDGMENT DATE : 16 November 2006 JURISDICTION : Equity Division Commercial List JUDGMENT OF : White J DECISION : Order the parties to bring in short minutes in accordance with the reasons. CATCHWORDS : TRADE & COMMERCE – Trade practices and related matters – Misleading and deceptive conduct – Plaintiff, a developer, and defendant, an owner of chain of supermarkets, commenced negotiations for agreement for lease with respect to land owned by plaintiff – Proposed agreement for lease provided for construction of supermarket on plaintiff's land – Plaintiff expended significant moneys in order to obtain development approval and otherwise prepare land for development – Expenditure made in anticipation of formal agreement for lease with defendant – Defendant encouraged plaintiff's expenditure – Defendant claimed right to recover costs and loss of profits if plaintiff failed to proceed – Defendant reserved right to withdraw from proposed agreement if it were not signed within twelve months of board approval - Third party developer approached defendant with superior development opportunity – Defendant withdrew from negotiations with plaintiff prior to expiry of twelve months period in order to pursue development opportunity with third party – Whether defendant engaged in misleading and deceptive conduct by representing intention to enter into agreement for lease – Whether defendant engaged in misleading and deceptive conduct by representing that there had been no material change to likelihood of its entering into agreement for lease – ss 4(2), 52 and 84 Trade Practices Act 1975 (Cth) considered – Held that defendant engaged in misleading and deceptive conduct – Whether defendant's misleading and deceptive conduct causative of plaintiff's decision to expend moneys on development – Whether plaintiff entitled to damages pursuant to s 82 Trade Practices Act – Whether plaintiff derived benefit of residual value by its expenditure on development – Damages awarded – Calculation of damages - ESTOPPEL – Equitable estoppel – Principles of equitable estoppel – Whether plaintiff entitled to equitable compensation for its expenditure on basis of principles of equitable estoppel – Whether defendant's representation that it would enter into an agreement for lease with the plaintiff was sufficiently clear to found an estoppel – Whether necessary for plaintiff to assume that defendant was not free to withdraw from anticipated legal relationship – Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 considered – Whether proposed agreement for lease was sufficiently defined for an estoppel to operate – Held that defendant estopped from departing from plaintiff's assumption that defendant would enter into agreement for lease – Held that plaintiff entitled to equitable compensation – Calculation of equitable compensation. Environmental Planning and Assessment Act 1979 (NSW) Trade Practices Act 1974 (Cth) LEGISLATION CITED : Fair Trading Act 1987 (NSW) Civil Procedure Act 2005 (NSW) Evidence Act 1995 (NSW) Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53 193 Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 Warner v Elders Rural Finance (1993) 41 FCR 399 Lam v Ausintel Investments Australia Pty Ltd & Ors (1989) 97 FLR 458 [1990] ATPR 40-990 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 Elajou v Dollarland Holdings plc [1994] 2 All ER 695 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd (1977) 16 ALR 23 British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 Monroe Schneider Associates (Inc) v No. 1 Raberem Pty Ltd (1991) 33 FCR 1 Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443 Makita Pty Ltd v Sprowles (2001) 52 NSWLR 705 Australian Securities and Investments Commission v Rich (2005) 216 ALR 320 Hadid v Australis Media (28 October 1996 Sperling J unreported) Connex Group Australia Pty Ltd v Butt [2004] NSWSC 379 Giumelli v Giumelli (1999) 196 CLR 101 Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504 Dickson Elliott Lonergan Ltd v Plumbing World Ltd [1988] 2 NZLR 608 Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 CASES CITED : POS Media Online Ltd v Queensland Investment Corp [2001] FCA 809 Sinclair v Rankin (1908) 9 WALR 233 ABB Engineering Construction Pty Ltd v Abigroup Contractors Pty Ltd [2003] NSWSC 665 Australian Securities and Investments Commission v Edwards (2005) 220 ALR 148 Mason and Carter Restitution Law in Australia S Christensen "Recovery for Work Performed in Anticipation of Contract: Is Reliance an Element or Benefit?" (1993-1994) 11 Aust Bar Rev Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 A Wyvill "Enrichment Restitution and the Collapsed Negotiations Cases" (1993-1994) 11 Aust Bar Rev 93 Attorney-General (Hong Kong) v Humpreys Estate Ltd [1987] 1 AC 114 Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475 Legione v Hately (1983) 152 CLR 406 Ramsden v Dyson (1866) LR 1HL 129 Holiday Inns Inc v Broadhead (1974) 232 EG 951 Plimmer v The Mayor of Wellington (1884) 9 App Cas 699 Commonwealth v Verwayen (1990) 170 CLR 394 Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 Austotel Pty Ltd v Franklins Self Serve Pty Ltd (1989) 16 NSWLR 582 S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637 Baird Textile Holdings Ltd v Marks & Spencer plc [2001] All ER 352 Evans v James [2001] CP Rep 36 [2000] 42 EG 173 Akiens v Salomon (1993) 65 P&CR 364 Secretary of State for Transport v Christos [2004] 1 P&CR 17 Gillett v Holt [2001] Ch 210 Gonthier v Orange Contract Scaffolding Ltd [2003] EWCA 873 Inwoods v Baker [1965] 2 QB 29 Pacific National (ACT) Ltd v Queensland Rail [2006] FCA 91 E K Nominees Pty Ltd PARTIES : v Woolworths Ltd FILE NUMBER(S) : SC 50093/03 COUNSEL : Plaintiff: R Angyal SC & D Jay Defendant: R McHugh & P W Flynn SOLICITORS : Plaintiff: Landerer & Co Defendant: Clayton Utz IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION WHITE J Thursday, 16 November 2006 50093/03 E K Nominees Pty Ltd v Woolworths Ltd JUDGMENT CONTENTS Heading Paragraph No. Introduction [1] The Auburn Road Site [5] Woolworths' Interest in Auburn [8] Consensus on Terms [14] Board Approval [27] Obtaining Council Approval [30] Work Continued Whilst Agreement for Lease Discussed [43] Markham Corporation's Approach on the Queen Street Site [56] Progress of the Auburn Road Development [63] Further Discussions on Queen Street [72] Further Progress on Auburn Road and Discussions with Markham Corporation [75] The Woolworths Property Committee Meeting of 7 May 2002 [96] The Woolworths Property Committee's Decision [102] Mr Hunt's Advice to Mr Marcocci [104] Decision Not to Proceed with Auburn Road [107] Mr Hunt's Credit [115] No Alternative Development [118] E K Nominees' Claim for Damages or Equitable Compensation [119] Misleading and Deceptive Conduct Claim [120] Representation that Woolworths Intended to Enter into an Agreement for Lease and Lease of the Auburn Road Site [127] Representation that Likelihood of Woolworths Entering Into Agreement for Lease had Not Materially Changed [131] Misleading and Deceptive Conduct by Non-Disclosure [140] No Change of Intention Prior to 7 May 2002 [143] Change to Likelihood of Woolworths' Proceeding with Auburn Road [150] Causation [157] Damages for Expenses Incurred from 29 January 2002 [170] A Question of Evidence [206] Equitable Compensation for Expenses Incurred from 18 July 2001 [211] Equitable Estoppel [219] Clarity of Representation [228] No Assumption that Woolworths was Obliged to Proceed [231] Was the Proposed Agreement Sufficiently Defined? [269] Date From Which Equitable Compensation is Payable [279] Conclusion in Relation to Estoppel Claim [281] Quantum of Claim for Equitable Compensation [282] Conclusion [291] APPENDIX Page 116 Introduction 1 HIS HONOUR: In these proceedings E K Nominees Pty Ltd claims damages or equitable compensation from Woolworths Ltd. E K Nominees seeks to recoup expenditure it made in obtaining development approval, satisfying conditions of development approval, and preparing a development site, in anticipation of entering into a formal agreement for lease with Woolworths. The agreement for lease would have provided for the construction of a Woolworths supermarket on the site. Woolworths encouraged this expenditure and held out to E K Nominees that an agreement for lease would be entered into. It decided not to enter into the agreement for lease when a better opportunity presented itself. 2 E K Nominees alleges that from 10 January 2002 to 7 May 2002, Woolworths engaged in misleading and deceptive conduct by not disclosing that it no longer intended to enter into a lease of the site, or that the likelihood of its doing so was materially diminished by negotiations for the grant of a lease of a supermarket at a nearby site. It claims damages of $924,653 for expenditure incurred from 10 January 2002 until it ceased work on the site shortly after 7 May 2002, when it learned that Woolworths had entered into such negotiations. 3 E K Nominees also claims that Woolworths is estopped from departing from an assumption which E K Nominees made from 18 July 2001 that Woolworths would enter into the agreement for lease. It claims that Woolworths actively induced it to make that assumption, knew that it was acting to its detriment in reliance on that assumption, and encouraged it to do so. E K Nominees claims equitable compensation in the amount of $1,264,463 for the expenses it incurred from 18 July 2001 in reliance on that assumption. 4 Both claims are for the recovery of expenditure. The second claim covers a longer period. If E K Nominees succeeds on the latter claim, both claims will be satisfied by an award of equitable compensation plus interest. The Auburn Road Site 5 The site in question is land at 93-105 Auburn Road, Auburn and 5 Beatrice Street, Auburn. The land is owned by E K Nominees. E K Nominees purchased the land at 97-105 Auburn Road in 1985. Until 1990, a retail store known as "Venture" conducted business on the site. That retail store closed in 1990. The building formerly housing the Venture store was used by a casual tenant (or flea market as counsel described it) which paid outgoings. That building was demolished in June or July 2001. 6 The Auburn Road site is irregular in shape. E K Nominees has been attempting to develop it for many years. The zoning permits residential development over retail shops. In 1995, E K Nominees applied for development approval for the construction of a retail, commercial and residential development with two residential towers. However, that application was not proceeded with following a recommendation from Council staff that it be rejected. In 1997, E K Nominees lodged a new application for development consent for the construction of two residential buildings over retail or commercial space. This application was refused in March 1998. 7 The shareholders of E K Nominees are Mr Ervin Katz and Mrs Katz. Since about 1990, Mr Antonio Marcocci has been engaged as a full-time consultant to E K Nominees. Although not a director or employee, all major business decisions for E K Nominees are made by Mr Marcocci and Mr Katz. Mr Katz said that Mr Marcocci was in charge of the day-to-day operations of E K Nominees and had full authority to make decisions on its behalf. Mr Marcocci attempted over several years to interest a major retailer in a lease of the Auburn Road site. He had discussions with Woolworths, Franklins and Coles. Woolworths' Interest in Auburn 8 From at least 1995, Woolworths was interested in establishing a supermarket and a Big W discount department store in Auburn. Negotiations took place between Woolworths and the owners of a large site in Queen Street, Auburn, then known as the "RAAD site" (after the name of the then owners). However, there were difficulties from Woolworths' perspective in establishing both a Big W store and a Woolworths supermarket on the Queen Street site. E K Nominees' site is not large enough to accommodate a Woolworths Supermarket and a Big W store. The Queen Street site had advantages over the Auburn Road site from Woolworths' perspective if both a Woolworths supermarket and a Big W store could be built on it. The Queen Street site was closer to the retail centre of Auburn and to Auburn railway station. 9 The major difficulty in the negotiations in relation to the Queen Street site was that neither Woolworths' architects, nor RAAD's architects, could create a design for a Big W store that satisfied the Big W division at Woolworths. Big W had standard designs for its stores and was extremely reluctant to enter a site on which a standard design could not be used. The negotiations for Woolworths were conducted by Mr Anthony Isaac. He later became a consultant to E K Nominees. From Mr Isaacs' perspective, there were also difficulties in the negotiations in that he believed that Auburn Council would be unlikely to consent to a development containing a residential tower, which he believed RAAD proposed to construct above the retail component. 10 In 1998, Woolworths opened negotiations with E K Nominees in relation to the Auburn Road site in case negotiations for the Queen Street site fell through. Mr Katz knew of Woolworths' interest in the Queen Street site. He sought an assurance from Woolworths that Woolworths' interest in the Auburn Road site was genuine. On 8 April 1998, Mr Isaac wrote to the relevant executives in Woolworths advising them of his discussions with Mr Katz. Amongst the persons to whom Mr Isaacs' memorandum was sent was Mr Peter Hunt, who then held the position of National Property Manager at Woolworths. Mr Isaac wrote as follows: " At a meeting held with Ervin last Thursday, he was most anxious to ascertain from us that we are genuine in our efforts in pursuing this opportunity as he felt that in the past the position has changed during negotiation periods for one reason or another. I advised him that the opportunity on the RAAD site was still probably there, however, with planning difficulties being experienced on the site and the fact that the RAAD Group intended to construct a multi-storey residential tower on top of any retail component, I believe that if his offering could be firmed up it may well be the preferred option at the end of the day. Ervin has not been able to overcome the difficulty in acquiring one of the properties fronting Auburn Road, however, I am now progressing with him on the basis that we endeavour to pick up the properties on the corner of Harrow Road and Beatrice Street which would enable us to achieve a supermarket of approximately 3,325 m² compared with a store of only 2,500 m² which is dependent upon on him obtaining the other property in Auburn Road. I would like you (sic) comments in relation to the above as I believe that it is important that we give Ervin some further comfort that we are genuinely pursuing this opportunity albeit that I believe that it would not be unreasonable to put some set date of say six months in this regard. " 11 On 15 April 1998, Mr Clayton Rowston, Woolworths' Property Manager for New South Wales, wrote to Mr Katz. He said: " We understand you still have some concern about our bona fide interest in your site as a location for a Woolworths supermarket. To reconfirm our discussions with you in your office last month we decided as a matter of courtesy to reassess your site as the result of ongoing long-term delays and planning difficulties associated with the RAAD site together with an additional approach from the owner of an alternative site in the Auburn CBD. In view of our existing relationship at St. Ives and our discussions held some twelve months ago regarding your site we wish to give you first chance to provide a site for the establishment of a Woolworths supermarket. We trust that this letter provides some comfort that we are genuinely pursuing your site subject to acceptable development scheme and council approval being achieved by say October 1998. " The reference to the parties' " existing relationship at St. Ives " was to the fact that E K Nominees owns the St. Ives shopping village at which Woolworths is the anchor tenant. 12 It took much longer than anticipated for E K Nominees and Woolworths to reach an agreement in principle in relation to the provision of a site for the establishment of a Woolworths supermarket. However, Woolworths' letter of 15 April 1998 is significant for the disclosure of its intentions in its planning for the establishment of a site in Auburn. Woolworths openly discussed its alternatives for the establishment of a Woolworths supermarket in Auburn. This is relevant to what disclosure E K Nominees was entitled to expect when, much later, after years of work and the expenditure of hundreds of thousands of dollars in consultants' fees and other expenses, Woolworths was again approached by a developer of the Queen Street site. 13 Both E K Nominees and Woolworths were anxious that the property at 107 Auburn Road be acquired so that it could be added to the development. This would help "square up" the site. Mr Marcocci believed that E K Nominees' chances of interesting Woolworths in the Auburn Road site were largely dependent on whether it could acquire the south-east corner of the site at 107-111 Auburn Road. E K Nominees had previously attempted to buy 107 Auburn Road without success. It bought the properties at 109 and 111 Auburn Road but was unsuccessful in persuading the owner of 107 Auburn Road to sell. Consensus on Terms 14 In March 1999, Mr Isaac was awaiting a response from the Big W division of Woolworths as to whether it was interested in proceeding with the Queen Street site. Mr Isaac asked Mr Rowston whether, if the Big W division declined the location, Mr Rowston would wish to proceed with the Queen Street site, or if he would prefer E K Nominees' Auburn Road site. On 11 May 1999, he was advised by Mr Rowston that Woolworths was in a position to move forward with the Auburn Road site should Big W withdraw from the Queen Street site. In mid 1999, Mr Isaac was told by Mr Ralph Kemmler, the National Property Manager of the Big W division of Woolworths, that he would not be proceeding with the Queen Street site because the configuration of the Big W store proposed by the RAAD Group did not satisfy the Big W division's design criteria. 15 In about mid 1999, Mr Isaac told Mr Marcocci that Big W was not proceeding with the Queen Street site. Either Mr Isaac or Mr Rowston told Mr Marcocci that Woolworths had given up trying to lease the Queen Street site from the RAAD Group because Big W would not agree to the modifications to its standard-design store that would be needed to fit into the site. From about December 1999, for the following twelve months, there was consultation between E K Nominees, Woolworths and their respective architects, with a view to their preparing plans and drawings for a Woolworths supermarket on the Auburn Road site. 16 During this period, attempts were again made to acquire the property at 107 Auburn Road. An offer was made to the owners of 107 Auburn Road to swap the land with one of the properties owned by E K Nominees further south on Auburn Road. Mr Isaac, on behalf of Woolworths, also made an offer to the owners of 107 Auburn Road for Woolworths to purchase the property. None of these approaches was successful. In August 2000, Mr Marcocci told Mr Rowston that he had been unable to acquire the property at 107 Auburn Road. He said "this is the site we can offer you. Take it or leave it." Mr Rowston said "we'll see if we can make it work." 17 In August 2000, Mr Marcocci and the architect retained by E K Nominees, Mr Stephen Gergely, learned that a new Development Control Plan had come into force for business premises in Auburn. The new Development Control Plan provided E K Nominees with the opportunity to combine a Woolworths supermarket as the anchor tenant for a retail precinct at ground level with a further five levels of residential units. 18 During the remainder of 2000, Mr Gergely and his staff worked on a new development application for the site involving two residential towers and a retail development that included a Woolworths supermarket. Detailed discussions took place in relation to the location of the plant room. Extensive work was done on the design to incorporate the Woolworths supermarket into the development. There were discussions between Mr Marcocci and Mr Rowston on terms for a lease of the supermarket. 19 Jebb Holland Dimasi, a firm of economists and property advisers retained by Woolworths, had earlier provided Woolworths with an assessment of the market potential for a Woolworths supermarket on the Queen Street site. On 22 November 2000, they advised Woolworths that the Queen Street site enjoyed better exposure and accessibility than the Auburn Road site and generally would be the slightly preferred option for a supermarket development. However, they advised that either site would be suitable for a new Woolworths supermarket. 20 On 5 December 2000, Woolworths made an offer to take a lease of a supermarket to be constructed on the Auburn Road site. The offer was expressed to be subject to Woolworths board of directors' approval. Woolworths stated that the offer was based on the plans and latest information provided to it. It stated that in the event of further amendments, re-designs and changes to configuration, it reserved the right to amend the offer. The letter set out the area to be leased, the lease term, the number of options, the gross rental, the commencement date of the lease, outgoings, and other matters. The letter included the following paragraphs: " Design Brief. The Design Brief will be issued with Woolworths Standard Specification Kit (Kit). The lessor is to provide the tenancy in accordance with the obligations contained in the Kit. The transmittal documents accompanying the Kit will be attached to the agreement. The kit is current for a period of six months and will be re-issued if necessary to ensure and up to date Kit is annexed to the agreement. Programming. The landlord must provide a construction program acceptable to Woolworths for inclusion into the Agreement for Lease. Scope of Works and Finishes. As part of the agreement, a schedule of finishes and Scope of Works will be required for attachment to the agreed documentation. … Consents and Authorities. We recognise that the basis of the offer to grant a lease is subject to a number of conditions. Could you please identify any legal, infrastructural or commercial matters that require resolution or could impact the delivery of the project. Woolworths will require an indication of timing for each condition to be satisfied. This will assist in presenting the submission and also the cashflow of capital expenditure. Documentation and Approvals. This offer is subject to satisfactory development plans, programming, Scope of Works and finishes. Further, the terms and conditions outlined are subject to the approval of the Woolworths Board and Execution of Agreements and Lease Documentation satisfactory to our group. Specific Performance following Board Approval: The landlord acknowledges that Woolworths agreement to proceed is based on the landlord's commitment to the project and their development programs. It is acknowledged by the landlord that Woolworths are incurring costs in the negotiation and documentation process and have allocated capital from the State's budget for the completion of the Supermarket within the nominated period. If the landlord fails to perform in accordance with the agreements and approvals, or markets/sells the property, in whole or in part, then Woolworths approval will be rescinded and a claim for costs and loss of profits will be actioned. Notwithstanding the above, the landlord may seek and must obtain Woolworths consent to a proposed sale or other dealing with the ownership of the Centre which shall not be unreasonably withheld if the lessor/developer can satisfy Woolworths that the purchaser has the capacity to undertake the development and furthermore, that the landlord guarantees the completion of the Centre and all aspects of the agreement to our satisfaction. … Currency of Approvals. Any approvals granted by the Woolworths Board will be operative for a period of twelve months. If the legal documentation is not executed the tenant can elect to terminate the agreement free of any claim, etc if the landlord cannot satisfy the tenant on the progress of the development. We trust the above offer is acceptable and upon your confirmation we will proceed with recommending acceptance to the Woolworths Board of Directors. " 21 On 25 January 2001, E K Nominees responded to this letter and proposed amendments. On 6 February 2001, Woolworths replied to E K Nominees' letter of 25 January 2001. Again, its letter was headed "Subject to Woolworths Board of Directors Approval". Woolworths wrote: " Subject to your approval of final development plans, all terms and conditions contained in your letter are agreed. Upon receiving copy of final development plans, we will proceed with recommending acceptance to the Woolworths Property Committee which is a delegated authority of the Woolworths Board. " 22 It is not suggested that this exchange of correspondence gave rise to a binding agreement for lease. The correspondence was expressly subject to Woolworths board's approval and to the execution of agreements and lease documentation. Nonetheless, E K Nominees was required to give its "commitment to proceed". Woolworths' letter of 5 December 2000 contemplated that some rights and obligations would arise following board approval and prior to the entry into any such agreements and lease documentation. Any approval granted by the Woolworths board was said to be "operative" for a period of twelve months only. That conveyed that the giving of Woolworths board's approval would have some "operation" but that E K Nominees could not rely upon the continued "operation" of the board approval for longer than twelve months. During that period, E K Nominees could rely on the board approval in committing itself to the project. Woolworths also obtained E K Nominees' acknowledgment that following board approval, if E K Nominees failed to perform in accordance with the "agreements and approvals", or sold the property without Woolworths' consent, then Woolworths' approval would be rescinded and it could claim its costs and loss of profits. This term appears to have been intended to apply independently of any formal agreement for lease which the parties might enter into. 23 E K Nominees did not suggest that upon board approval being obtained, the correspondence of 5 December 2000, 25 January 2001 and 6 February 2001 gave rise to a binding agreement for lease. Nonetheless, it is clear from this correspondence that Woolworths expected that E K Nominees would "commit" itself to the project even before a binding agreement for lease was entered into. Woolworths also committed itself to the project to some extent once board approval was obtained, but before an agreement for lease was entered into. It reserved the right to "elect to terminate the agreement free of any claim" if E K Nominees could not satisfy it on the progress of the development. The "agreement" it would then be entitled to terminate was apparently an agreement binding in honour. 24 On 14 June 2001, Woolworths sought an amendment of the commercial terms which had been agreed to that point in relation to the calculation of percentage rent. The amendment sought by it was agreed to by E K Nominees. 25 At about this time, Mr Daniel Hargraves, the Regional Manager – Property NSW for Woolworths, who was then handling the project for Woolworths, told Mr Marcocci that "Once we have got board approval, it's a done deal". Mr Hargraves did not recall this conversation. I think it is likely that such words were said. From Woolworths' perspective, the project was a "done deal" if board approval were obtained. Woolworths' board had delegated the approval for such projects to the Woolworths Property Committee. Neither of the two witnesses who gave evidence for Woolworths, nor Mr Isaac, who had been engaged as a consultant for Woolworths for a number of years, was aware of any case where Woolworths did not proceed with a project after the project was approved by the Property Committee. 26 On 7 February 2001, Woolworths sent Mr Gergely its standard specification kit. This consisted of numerous plans, sections, elevations and specifications. These were to be incorporated in the architect's design. Mr Gergely met with Auburn Council staff to discuss amended sketches for the development and to discuss traffic and garbage disposal issues. In March 2001, Mr Gergely sent Mr Rowston a preliminary set of drawings for the development. On 4 May 2001, he lodged development application 216/01 with Auburn Council. Board Approval 27 On 4 July 2001, a submission was made to the Woolworths Property Committee for approval for Woolworths to enter into an agreement to lease and to lease a new supermarket and Woolworths liquor store at the Auburn Road site. The submission records that the Queen Street site had recently been onsold to a specialist residential developer without ever having received development approval. The submission addressed numerous matters in relation to the Auburn Road site, including Woolworths' investment criteria. It estimated the costs and returns to be derived from the development against Woolworths' benchmarks. These comprised the anticipated internal rate of return, the return on funds invested, an occupancy cost ratio, sales per square metre of trading area, parking spaces, the average capital cost, and the ratio of trading area to gross lettable area. The proposal passed four of these criteria. It did not pass the benchmarks for occupancy cost ratio, estimated sales per square metre of trading area, or average capital cost. Explanations were provided in respect of each of these matters. The estimated net present value of the Auburn Road store was $781,407. The submission was approved by the Property Committee. 28 By letter dated 18 July 2001, Woolworths advised Mr Marcocci that the submission for a new Woolworths supermarket at Auburn had been approved by the Woolworths Property Committee. Woolworths' letter stated: " The approval is subject to the following terms and conditions: Type: agreement to lease and lease. " There then followed a description of the lessor, lease commencement date, the term of the lease, the number and period of options, the base rent and percentage rent, the provision for rent review, the provision for outgoings, a special condition dealing with the changes which were to be made to the rent if Woolworths was unsuccessful in relocating a liquor licence, and " other terms as agreed in previous correspondence ". E K Nominees was asked to advise Woolworths' legal manager who its legal representative was in order that legal documentation could be prepared. 29 Again, E K Nominees does not suggest that a binding agreement for lease came into existence at this time. It is clear that the parties intended to enter into a separate agreement for lease, even though all of the commercial terms raised to this stage had been resolved, including all essential terms for an agreement for lease. Obtaining Council Approval 30 On 28 June 2001, Mr Gergely had asked Auburn Council to expedite consideration of the application for development consent. In August 2001, Mr Gergely attended meetings with Council staff to discuss difficulties which the Council staff had identified with E K Nominees' application for development consent. Consultants had been retained in connection with the development application. These included town planners, heritage consultants, acoustic consultants, hydraulic and fire protection consultants and consulting engineers. Various reports were received from these consultants. On 29 August 2001, Mr Hargraves forwarded details to Mr Gergely of the rubbish bins that the supermarket would use so that that information could be incorporated into a waste management plan for submission to Council. On 30 August 2001, in order to satisfy Auburn Council's requirements, Mr Gergely forwarded various documents including amended drawings, an amended landscaping plan, an environmental assessment, a report by structural engineers on the excavation, an economic impact report, recommendations for noise treatment, a traffic report, and an assessment of the impact of the development on heritage structures. 31 On 27 September 2001, Mr Hargraves wrote to Mr Marcocci. He said: " As discussed, Woolworths Management is extremely disquieted by the time being taken to finalise the Development Application process and has expressed grave doubts about the future of the development itself. We therefore seek your assistance in alleviating these concerns as a matter of urgency, else we are instructed to begin inquiries into alternative opportunities outside the Auburn area. We hope this situation can be resolved expeditiously to eliminate this prospect. " 32 At this stage, no draft agreement for lease had been prepared. It is clear from the document later produced that the agreement for lease was to include the agreement for construction of the premises according to plans and specifications for the Woolworths supermarket. These plans were still in the process of being finalised in conjunction with the discussions with Council, as Council approval was needed for them. 33 On 2 October 2001, Landerer & Co, who acted for E K Nominees, forwarded to Woolworths' solicitors, Corrs Chambers Westgarth, certain of the plans. They asked that Corrs Chambers Westgarth submit draft documents. 34 Although the staff of Auburn Council recommended approval of the development application, there was resistance to it within Council. At a meeting on 7 November 2001, the Council resolved to defer the application to a workshop on 12 November 2001. The workshop was attended by consultants retained by E K Nominees. Mr Gergely was asked whether E K Nominees could assure the Council that Woolworths was committed to the site. After being told of this, Mr Marcocci telephoned Mr Hargraves and asked Mr Hargraves if he could send a letter saying that Woolworths was committed. 35 Mr Hargraves forwarded a letter dated 13 November 2001 to Mr Marcocci. He confirmed that: " We are, subject to the terms of our Agreement, committed to establishing a store in Auburn and are most willing to co-operate in whatever capacity is reasonably required to secure a favourable outcome to the DA ." 36 Mr Hargraves went on to stress that it was necessary for Woolworths to be allowed to use the loading dock between 10.00 pm and midnight. He concluded by saying: " Tony, whilst we do not wish to create any additional burden for E K Nominees, we are concerned with the length of time the approval process is taking in relation to this development. After our recent experiences in relation to alternate sites, we are extremely concerned about the outcome of this proposal. We require an urgent resolution to this matter else we are instructed to commence investigations into opportunities outside the Auburn area ." 37 This letter confirmed that Woolworths intended to establish a store at E K Nominees' site on Auburn Road, but also made it clear that Woolworths did not regard itself as bound to do so if its operational requirements were not met, or if there was too long a delay in obtaining development approval. 38 This letter was sent to Auburn Council on 16 November 2001. On 28 November 2001, the development application was considered by the Council. Both Mr Marcocci and Mr Hargraves spoke at the meeting. There was conflicting evidence as to what Mr Hargraves said. One or more of the councillors was concerned that if development consent were given, Woolworths might close down its store in Berala, which is a nearby suburb. Mr Hargraves' recollection was that the only thing he said was to assure the Council that Woolworths had no intention of breaching its lease of another store at Berala. 39 Mr Marcocci told the Council in Mr Hargraves' presence that: " we have worked long and hard to structure a deal with Woolworths supermarket and have been successful in securing them as anchor tenants for the site. … The Woolworths supermarket will be modern and will offer great facilities for the shoppers of the Auburn CBD. This supermarket will be one of the largest in NSW, much larger than the current offering by the other two supermarkets in Auburn. The process of this current application has been extensively discussed with council officers over many months. All changes requested by council officers have been addressed and have been incorporated in the present proposal, including the re-design of both residential buildings and the supermarket. Woolworths have been most co-operative and have agreed to these changes." 40 Mr Marcocci deposed that Mr Hargraves told the meeting that: " Woolworths is committed to E K Nominees' site. We are keen to get the development going as soon as possible. If we can't get development consent for E K Nominees' site, Woolworths will have to look outside Auburn for a site for a supermarket." 41 Mr Hargraves had no recollection of making the statements attributed to him by Mr Marcocci. However, I accept Mr Marcocci's evidence that he did so. Mr Hargraves agreed in cross-examination that if he had been asked whether Woolworths was committed to establishing a store at the Auburn Road site, he would have said that Woolworths was so committed and that it was keen to get the development going as soon as possible. The Council wanted that assurance and it is probable that he gave it. 42 On 6 December 2001, Auburn Council approved E K Nominees' development application. The approval was subject to conditions, some of which (known as the deferred commencement conditions) had to be satisfied before the approval became operative. Work Continued Whilst Agreement for Lease Discussed 43 On 14 November 2001, Corrs Chambers Westgarth forwarded a draft agreement for lease and lease to Landerer & Co. Corrs Chambers Westgarth sent the draft documents under cover of a letter which stated: " I look forward to discussing the attached drafts with you and confirm that no binding Agreement for Lease or Lease shall come into existence until duly executed counterpart documents are exchanged between the parties. " The draft agreement for lease provided that on the "Commencing Date", E K Nominees would grant to Woolworths, and Woolworths would accept, a lease in the form contained in the schedule to the agreement. The "Commencing Date" was not the date specified in Woolworths' letter of 18 July 2001. In that letter, Woolworths specified 2 October 2002 as the commencement date of the lease. The draft agreement for lease provided for the commencing day to be the last to occur of three specified dates: namely, the date Woolworths commenced trading in the premises; the date of registration of the plan of subdivision; and eight weeks after E K Nominees handed over the premises to Woolworths for equipment installation and stocking. 44 The draft agreement also provided for E K Nominees to carry out the works required to complete the construction of the shopping centre in accordance with the "plans and specifications". These plans and specifications were to be set out in the schedule to the agreement. Accordingly, all of the requirements for the construction of the shopping centre and all of the terms of the lease had to be settled before the draft agreement for lease could be finalised. However, Woolworths was pressing for the earliest possible opening of the supermarket. Rather than pausing to settle the legal documentation, the parties pressed on with the proposed development. 45 The deferred commencement conditions to the development consent included the submission of a waste management and recycling plan for Auburn Council's approval, the submission of details of all finished surfaces and building materials, the provision of storm water plans to the Council, the carrying out of an analysis to confirm the contamination status of the site, an analysis of the pedestrian and traffic movement on the corner of Beatrice Street and Harrow Road, the provision of a design for modifications to four roundabouts in the vicinity of the site, and the submission to the Council of planting details and specifications for tree planting along Harrow Road. There were another 117 conditions to be satisfied during the currency of the development approval. 46 Extensive reports were required before the commencement of demolition, excavation or building works. 47 Following the grant of the Council's approval, instructions were given to various consultants in order to satisfy the Council's conditions and to carry out the development. A meeting of the consultants had been held on 14 November 2001. Various tasks were identified and responsibility for those tasks allocated. The tasks were divided into the areas of structural work, (including piling and shoring design and excavation), hydraulic work, (including relocating sewers, stormwater design and new sewer and trade waste drainage design), electrical work, mechanical ventilation, architectural work (including the preparation of plans incorporating input from the various consultants and implementing Woolworths' plans), the work of "developer/builder" (including the acceptance of documentation from various consultants), and the preparation of the preliminary works program, a building method study, a construction program and a bill of quantities. 48 On 11 December 2001, Mr Gergely forwarded to Mr Colston, the acoustic consultant, a set of amended ground and basement plans for his evaluation in accordance with conditions contained in a report forwarded to Council. He was asked to proceed with structural details. On 12 December 2001, Mr Isaac advised all of the consultants that he was convening a meeting of consultants to be held on 19 December 2001. 49 On 13 December 2001, Mr Isaac wrote to Mr Rod Rose of Woolworths, noting that he had been appointed as client representative and development manager for the project with the role of managing the appointed consultants. He asked that Mr Rose forward a revised "Gamma kit" to Gergely & Pinter Pty Ltd, the firm of architects retained by E K Nominees, and gave advice in relation to a person to be appointed by Woolworths as project manager for the project. 50 Mr Isaac's facsimile was also sent to Mr Hargraves of Woolworths. At about this time, prime responsibility for the project within Woolworths passed from Mr Hargraves to Mr Peter Hunt. In his affidavit, Mr Hargraves said that Mr Hunt assumed responsibility for the region which included Auburn in about late 2001 or early 2002. I accept that evidence. A note dated 14 December 2001 from Mr Hargraves to Mr Hunt stated that "Peter, DA was approved for Auburn. Draft lease has been issued to L'er. Mark Lamb handling. Is probably as good a time as any to hand over". Mr Hunt stated in his affidavit (paragraph 16) that he assumed responsibility for the Woolworths file in relation to the Auburn Road site in early 2002. In his oral evidence, Mr Hunt said that he did not effectively take over the file until late February or early March 2002. I do not accept that evidence. It is not only inconsistent with Mr Hargraves' affidavit, and with Mr Hunt's own affidavit, but it is not corroborated by any contemporaneous document. I find that Mr Hunt assumed responsibility for the E K Nominees development in late December 2001, or early January 2002. 51 On 18 December 2001, Woolworths sent a revised "Gamma kit" to Mr Gergely. This kit contained numerous plans for the Woolworths supermarket, together with a supermarket design brief, construction summary, schedule of finishes, fire protection brief and specifications for air conditioning and mechanical ventilation and electrical work. Mr Gergely was required to incorporate these documents into the design. The supermarket brief included stipulations that E K Nominees pay all statutory fees and obtain all necessary approvals for the work. It stated that Woolworths was required to approve the subcontractors to be used. It stated that the requirements set out in the enclosed documents were minimum acceptable requirements of Woolworths and would form the basis of a full set of co-ordinating working documents to be prepared by E K Nominees at its cost. Detailed requirements were stipulated. 52 On 19 December 2001, a meeting of consultants was held at the offices of Mr Isaac. The consultants present included Gergely & Pinter, a structural engineer, a hydraulic consultant, an electrical consultant, a mechanical ventilation consultant, a geotechnical engineer, a traffic engineer, two representatives of the builder, a consultant on the Building Code of Australia, and a quantity surveyor. Other consultants engaged by E K Nominees who did not attend the meeting included a construction programmer, an acoustical engineer, and a town planner. The meeting was also attended by Mr Phillip Murphy and Mr Jim Kapetangiannis of Woolworths. Mr Kapetangiannis was the technical service manager for the Woolworths property services group. Mr Murphy was Woolworths' project manager for the project. The minutes of the meeting include the comment that piling and excavation was to start as soon as possible, given commitments made to the Council and end-users. The expression "end-users" was a reference to Woolworths. There were reports and resolutions on numerous aspects of the development. 53 The next meeting of consultants was held on 16 January 2002. It was also attended by Mr Murphy and Mr Kapetangiannis. Again, there was discussion of the various steps that were being undertaken to satisfy the Council's conditions and to progress the development. Matters which it was noted had been completed from the previous meeting were the provision of Gamma drawings from Woolworths to the architect, the issuing of letters and drawings for Beatrice Street residents in relation to sewer, stormwater and overland flow, the carrying out of contamination and testing work on the site and the obtaining of a contamination report. Matters described as having an "ongoing" status included satisfying the Council's condition on a waste disposal method, the resolution of heights for the podium, mezzanine slab and car park slabs to allow the accommodation of all services, the preparation by the surveyor of a consolidation plan, the retaining of vibration experts, the obtaining of a road opening permit from the Council, checking with the Council as to whether excavation and shoring drawings had been approved, the preparation by the quantity surveyor of packages, budget estimates for all trades, the re-submission of a traffic report, and commencing design on Woolworths' air conditioning and ventilation requirements. This is not an exhaustive list. 54 At the meeting of consultants held on 16 January 2002, Mr Kapetangiannis and Mr Murphy agreed to provide all of E K Nominees' consultants with Woolworths' new drawings and specifications on compact disc and in hard copy and then to "convene separate services meeting once consultants are up to speed with Woolworths' latest specification". 55 On 16 January 2002, Woolworths forwarded to Mr Gergely a new set of plans and specifications. Markham Corporation's Approach on the Queen Street Site 56 In the meantime, on 10 January 2002, Mr Hunt received a telephone call from Mr Markham of Markham Corporation Pty Ltd. Markham Corporation describes itself as a property developer and investor. Mr Markham told Mr Hunt that he was the project manager for Holdmark Developers Pty Ltd. He told Mr Hunt that Holdmark Developers had taken an option to purchase the Queen Street site which used to be owned by the Raad Group. He asked if Woolworths and Big W would have an interest in leasing the premises if Holdmark were to purchase and develop the site. Mr Hunt told him: " Yes, we would be interested. However, I have a high degree of scepticism based on the six years or so of negotiations which have already taken place since I joined Woolworths property department, with no result. I also have to say that we are a fair way down the track in negotiations with the owners of the site in Auburn Road. Big W is the critical element. If you can fit them in, we may have something to talk about ." 57 On 11 January 2002, Mr Markham wrote to Mr Hunt and to Mr Luke Turner, the National Property Manager of the Big W Division of Woolworths. His letter was expressed to be "in confidence". He advised that Holdmark had taken an option to purchase and was considering a retail/residential development which would include space for a supermarket of 3,462 m², and a department store of 6,249 m², together with residential components and other retail stores. He advised that he was seeking "general written expressions of interest" by 25 January 2002 in relation to pursuing a leasing or sale opportunity for the three major retail tenancies. He said that following expressions of interest, and the purchase of the property by Holdmark, formal negotiations with interested parties would be entered into with a view to finalising an agreement to lease or purchase for each anchor tenancy. 58 Mr Hunt did not disclose this approach to Mr Marcocci or anyone else on behalf of E K Nominees. 59 Mr Hunt gave evidence that he expected that any discussions which might eventuate with Mr Markham would eventually prove to be fruitless having regard to the history of Woolworths' previous attempts to negotiate the establishment of a Big W store and Woolworths supermarket on the Queen Street site. He said that he nevertheless considered it to be his role to present all opportunities for new Woolworths supermarkets which he considered to be commercially viable to the Woolworths Property Committee for its consideration. He therefore considered that it was his duty to investigate the opportunity raised by Mr Markham, with a view to presenting it to the Woolworths Property Committee for its consideration if it should be feasible. He assumed that Mr Markham would be making similar approaches to other retailers and that, therefore, even if the Queen Street site could accommodate a design which accommodated both a Woolworths supermarket and a Big W store, the prospects of Woolworths being successful in any attempt to become a tenant were uncertain. That would be a decision for the Woolworths Property Committee, not for him. I accept this evidence. 60 Mr Hunt also said that: " At that time, I held no belief that the conversation which I had with Mr Markham had any adverse impact whatsoever on the prospects of Woolworths proceeding with the establishment of a supermarket at the E K site ". 61 I do not accept this evidence. The Queen Street site was a superior site for a Woolworths supermarket than the Auburn Road site. Unless Mr Hunt believed that Woolworths would regard itself as committed to the development with E K Nominees, it must have been obvious to him that if the proposal that Woolworths take a lease of the Queen Street site proved to be feasible, there was a very real prospect that Woolworths would not proceed with the establishment of a supermarket at the Auburn Road site. When a submission for the Queen Street site was ultimately made to the Woolworths Property Committee in April 2002, it was based on Woolworths not proceeding with the Auburn Road site. Mr Hunt then recommended that the Property Committee approve a proposal that Woolworths enter into an agreement for lease and lease for a new supermarket on the Queen Street site and "seek to exit an Agreement for Lease for premises in Auburn which was approved in July 2001". 62 Mr Hunt gave evidence that he thought that there was a distinct possibility that the Property Committee would agree to the establishment of two Woolworths supermarkets in Auburn. When asked why he wrote a submission to the Property Committee in April 2002 that there be only one supermarket in Auburn and that it be at the Queen Street site, his answer was "because the Queen Street site is the preferred site in Auburn for all reasons we have been through previously". In cross-examination (T468), Mr Hunt acknowledged that Queen Street was the preferred site in January 2002. He said that although he believed there was the opportunity for two supermarkets in Auburn, the Queen Street site was the preferred site, potentially at the expense of the Auburn Road site. That was the position in January as much as it was in April. Progress of the Auburn Road Development 63 On 24 January 2002, Mr Isaac wrote to Mr Kapetangiannis and Mr Murphy. He enclosed a report from Colston Budd, E K Nominees' traffic engineers. That report set out alternative routes that could be used by semi-trailers accessing the proposed Woolworths loading dock in Harrow Road, Auburn. Mr Colston recommended that Woolworths test the routes with the size of vehicle intended to service the site. Mr Isaac asked Woolworths to provide a vehicle so that the test could be carried out. 64 On 24 January 2002, Mr Gergely forwarded three sheets of section drawings to Mr Kapetangiannis following the latter's request. 65 On or about 24 January 2002, E K Nominees acquired a property at 5 Beatrice Street, Auburn in order to provide an entrance to the residential component of the development that did not impinge on the space available to the Woolworths supermarket. 66 By 24 January 2002, Gergely & Pinter had prepared a complete package of plans but were awaiting a final "sign off" from Woolworths. There were other aspects of the building which could not be finalised until Woolworths gave its final approval to the ground floor design. 67 On 25 January 2002, Mr Kapetangiannis wrote to Mr Isaac. He advised that: " … the responsible Retail Executive (Operations) has confirmed that due to the lapse of time between now and the last scheme that was submitted to him, a completely new layout is required which captures the changes in our store layout/finish philosophy. " Mr Kapetangiannis then described the proposed programme for Woolworths to amend its supermarket design. He also advised: " In the meantime, I am having our ' waste management plan ' prepared and should be able to give this to you during the coming week. Please contact me if you wish to discuss this any further or if there is anything else I can do to help your program stay on track. " 68 On the same day, Mr Kapetangiannis wrote to Mr Hunt. He said that one of the issues which Woolworths needed to address for the Auburn development was a waste management plan, especially for the supermarket. He said: " I have been informed that you have some experience and expertise in the preparation of these types of plans. Please discuss with me if you require any further information. " 69 He did not receive a response to this memorandum from Mr Hunt. He wrote to Mr Hunt again on 11 February 2002 asking to be advised of the current status of the waste management plan, noting that "the developer awaits". 70 In his oral evidence, Mr Hunt said that he had not had experience in preparing waste management plans. He said that by 25 January 2002, he had not taken over the Woolworths file as Mr Hargraves was still tidying up pieces of the file and bringing it to him. I do not accept that evidence. He said that he referred Mr Kapetangiannis' memorandum to Mr Hargraves. I do not accept that evidence. It was not corroborated by Mr Hargraves. It was not corroborated by any document. In my view, Mr Hunt was seeking to distance himself from his involvement with the E K Nominees file because of the work he was doing in relation to the Queen Street site at this stage. 71 Mr Hunt said that "probably" he told Mr Kapetangiannis that it was the developer's responsibility, not Woolworths' responsibility, to prepare the waste management plan. However, the deferred commencement conditions of the development consent, which were forwarded by Mr Kapetangiannis to Mr Hunt with his memorandum of 25 January 2002, required details to be provided of the supermarket's storage and disposal arrangements of perishables, including the frequency of collection. Plainly, Woolworths' input was required. That is why Mr Kapetangiannis was seeking it. I infer that Mr Hunt did nothing to move this issue forward because he was waiting to see how discussions on the Queen Street site developed. Further Discussions on Queen Street 72 On 25 January 2002, Mr Markham sent to Mr Hunt and Mr Hain, of Woolworths' Big W division, a new concept plan prepared by Markham Corporation's architect. On 29 January 2002, Mr Hunt and Mr Hain met with Mr Markham, a representative of Holdmark Developers Pty Ltd, and the architect who had prepared the concept plan for the Queen Street site. By letter dated 29 January 2002, Messrs Hunt and Hain advised Mr Markham as follows: " The site has been of interest to both Woolworths supermarkets and Big W for many years and one that we believe offers an excellent opportunity for locating our businesses within Auburn. We take this opportunity in formally expressing interest in working with yourself and the team to secure a suitable retail opportunity for both Big W and supermarkets and look forward to further discussing this matter. If we can be of any assistance whilst you are in the process of determining the retail offer, we would be more than happy to assist in this process ." 73 This letter was forwarded to Mr Markham on 4 February 2002. 74 In the course of his cross-examination, Mr Hunt accepted that he understood at the time that the formal expression of interest in Woolworths' letter dated 29 January 2002 was a step which had an adverse impact on the prospects of Woolworths proceeding with the supermarket at the Auburn Road site. He later resiled from that admission, but the admission was properly made. Further Progress on Auburn Road and Discussions with Markham Corporation 75 On 31 January 2002, Mr Kapetangiannis asked Mr Hunt if he had any problems with Mr Isaac's request to run a truck through the proposed delivery route, and to let him know who could be contacted to set up the trial. Mr Hunt's response was to say that the trial had already been conducted and a video tape produced to the Council, and therefore he doubted that the exercise needed repeating. Mr Kapetangiannis observed that this had been a trial of a different route which had been found to be inappropriate. He asked Mr Hunt to reconsider and to forward him contact details to organise the test. Mr Hunt's response was consistent with the inference I draw that he was not expediting progress on the Auburn Road site because of the negotiations pending on the Queen Street site. The test was conducted on 12 February 2002. 76 On 5 February 2002, Landerer & Co proposed amendments to the agreement for lease and lease. They asked Corrs Chambers Westgarth to identify any matters which were in issue so that a meeting could be convened between the representatives of the respective parties with a view to resolving any outstanding issues. 77 On 4 and 5 February 2002, Mr Gergely received layout plans from Woolworths for the liquor store and ramps from the car park to the supermarket and the liquor store. On 6 February 2002, he received from Woolworths its feasibility plan for the supermarket and liquor store showing the layout in greater detail. 78 On 12 February 2002, Mr Gergely asked Auburn Council for permission to start excavation before the deferred commencement conditions were satisfied. He said that this request was made because of time limitations set by Woolworths for its occupancy. 79 E K Nominees' intention to start excavation and piling work as soon as possible was known to Woolworths. It was one of the matters discussed in the regular meetings of consultants. At the meeting held on 13 February 2002, attended by Mr Kapetangiannis for Woolworths, it was noted that it was proposed that piling and excavation start on 21 February 2002, and that the reason for this was due to commitments given to the Council and to "end users", that is, Woolworths. Mr Kapetangiannis tabled feasibility drawings at the meeting of 13 February 2002. The drawing was for "information purposes at this stage". 80 On 26 February 2002, the Council advised Mr Gergely that before excavation could start, E K Nominees would have to have satisfied all of the deferred consent conditions, or have obtained Council approval to omit the conditions, or applied under s 96 of the Environmental Planning and Assessment Act 1979 (NSW) to vary the conditions. E K Nominees concentrated its efforts on satisfying the conditions. 81 On 27 February 2002, Woolworths provided another copy of its feasibility plan. There was a further meeting of consultants on 27 February 2002 and an excavation start date of 14 March 2002 was agreed upon. There was continuous work on the project during February and March 2002. This included Woolworths providing further feasibility plans, the issue of further plans by the architects, the obtaining of certification that the project design met the fire services requirements of the Building Code of Australia and other applicable standards, and the obtaining of approval from Sydney Water for the deviation of the sewer main. 82 On 27 February 2002, Mr Kapetangiannis advised Mr Hunt that at the consultants' meeting held on that day, Mr Marcocci "flagged that the project at Auburn will not be complete for a Woolworths opening for Christmas". He asked Mr Hunt to advise him if this had any negative impact from Mr Hunt's perspective. There is no evidence of Mr Hunt's suggesting that that advice would have any negative impact from his perspective. 83 On 6 March 2002, Mr Markham advised Mr Hunt that Holdmark had exchanged unconditional contracts to purchase the Queen Street site. He advised that settlement was expected in May 2002 and that Holdmark was targeting the second half of 2003 as the time by which a supermarket could be delivered for fit-out purposes. He invited Woolworths as one of four parties who had expressed interest to submit their best offer to lease the supermarket area within the development. He wrote a letter in similar terms to Mr Hain. Mr Hain noted "Smkts keen to submit joint offer on site". Mr Hain noted that Mr Hunt anticipated that the supermarket would gross more than $30,000,000, which, in context, meant more than $30,000,000 annually. The projected sales for the Auburn Road site for the 2004 year were $25,200,000. The projected sales on the Auburn Road site only reached more than $30,000,000 after seven years of operation. This confirms that Mr Hunt believed the Queen Street site was a superior site. 84 On 8 March 2002, Corrs Chambers Westgarth requested a meeting with Landerer & Co to discuss the Auburn supermarket. That meeting was arranged to be held on 15 March 2002. On 14 March 2002, Corrs Chambers Westgarth identified what were described as commercial and drafting issues which needed resolution. 85 On 15 March 2002, another amended feasibility plan was received by Mr Gergely from Mr Kapetangiannis. 86 A meeting was held that day between the solicitors for E K Nominees and Woolworths. The meeting was also attended by Mr Marcocci and Mr Hunt. Not all of the issues were resolved, although many were. It was agreed that the meeting would be resumed on 21 March 2002. Nothing was said about Woolworths' intentions to make an offer to lease the Queen Street site. 87 On 25 March 2002, Mr Gergely received certification that the fire services were in accordance with normal engineering practices and met the requirements of the Building Code of Australia. On that day, he sent Mr Isaac and various of the consultants a set of progress prints showing the new Woolworths layout and some changes from the previous version. On 26 March 2002, agreement was received from Sydney Water in relation to the deviation of the sewer main. On the same day, the quantity surveyors requested refinements to be made to drawings to enable them to prepare a more accurate quantity survey. As a result of this request, Mr Gergely had a long conference with various consultants who agreed to produce the drawings by 4 April 2002 to satisfy the quantity surveyors' requests. 88 On 21 March 2002, the meeting between the solicitors, Mr Marcocci and Mr Hunt resumed. A number of issues in relation to the lease and agreement for lease were agreed upon. It appears from the solicitors' notes of the meeting that the matters outstanding were the number of supermarket trolleys for which E K Nominees would provide storage, and the definition of "outgoings" to whose increase Woolworths would contribute. Again, nothing was said about Woolworths' intentions with respect to the Queen Street site. Mr Marcocci continued to think that Woolworths would enter into the agreement for lease with E K Nominees. 89 On 22 March 2002, Mr Hunt, on behalf of Woolworths, sent to Markham Corporation a ten-page proposal to take a lease of part of the Queen Street site for a Woolworths supermarket. The offer was subject to Woolworths' board's approval. At the same time, Big W made a proposal to lease part of the site for a Big W store. Again, this was expressed to be subject to board approval. Mr Hunt noted in his letter that: " The outline letter of offer provides you with terms and conditions that we would expect in this type of development. The comments are quite extensive and will cover much of the detail that is required for us to reach an agreement and present a paper to Woolworths' board for approval. It will then form the basis of an agreement for lease and lease should your party accept our offer. " 90 There then followed detailed proposals in relation to the premises to be leased, the lease term, the base rental, Woolworths' contributions to outgoings, extended trading hours, turnover rent, a design brief and numerous other matters. The offer was based on Woolworths' supermarket trading in conjunction with a Big W discount department store in the centre. 91 Woolworths did not advise E K Nominees that it had sent the proposal in its letter of 22 March 2002. Mr Hunt deposed that he understood that Holdmark would be undertaking an assessment of all offers that it had received. He went on to say that: " I held no belief at that time that the proposal had any adverse impact whatsoever on the prospects of Woolworths proceeding with the establishment of a supermarket at the EK site. " 92 I do not accept Mr Hunt's evidence in the passage quoted. I cannot conceive that Mr Hunt would go to the trouble of preparing the detailed offer, and evidently liaising with Mr Hain in relation to Big W's offer to take a lease of the Queen Street site, if he did not consider that there were reasonable prospects that Woolworths' offer would be accepted. So far as the evidence before me reveals, negotiations had gone further in relation to the Queen Street site than they had on any previous occasion. Mr Hunt had no information that any other retailer was preferred to Woolworths. Mr Hunt eventually accepted in cross-examination that Woolworths' likely competitor for the Queen Street site would have been Coles' supermarkets or K-Mart. They were both part of the Coles Myer Ltd group. He knew that Coles had recently moved into a refurbished and extended Franklins store in the Auburn Village Shopping Centre. 93 If Woolworths' proposal was acceptable to Holdmark, there had to be a reasonable prospect that the Woolworths Property Committee would approve it, given that the Queen Street site was superior to the Auburn Road site, particularly if both a Big W discount department store and a supermarket could be accommodated. As I noted previously, if a Woolworths supermarket were to be located at the Queen Street site, there was at least a prospect that Woolworths would not wish to proceed with the Auburn Road site. That must have been Mr Hunt's view, because in his submission to the Woolworths Property Committee he proposed withdrawing from what he described as the "agreement for lease" in relation to the Auburn Road site. In rejecting Mr Hunt's evidence referred to in para [91], I also take into account the contents of his submission to the Woolworths Property Committee to which I refer below. 94 On 2 April 2002, Mr Markham advised Mr Hunt and Mr Hain that Woolworths and Big W were the preferred party for the Queen Street development. He proposed a meeting to be held on 5 April 2002 to go over their proposals in detail. That meeting occurred on 5 April 2002. Mr Markham pushed for Mr Hunt and Mr Hain to be in a position to make a submission to a meeting of the Woolworths Property Committee to be held on 7 May 2002. Mr Hunt prepared a submission for the Property Committee. He said that he commenced its preparation in about mid April 2002. 95 Meanwhile, on 10 April 2002, Landerer & Co provided further comments to Corrs Chambers Westgarth on the terms of the proposed agreement for lease and lease. Woolworths asked Mr Gergely to clarify the dimensions of a number of columns. A further meeting of consultants was held on 9 April 2002, although this meeting was not attended by a representative of Woolworths. It was noted that piling and excavation would start as soon as possible after the issue of a construction certificate. It was noted that Woolworths' internal design drawings were required in order for the architect to proceed. On 11 April 2002, the fire engineers retained by E K Nominees clarified whether additional fire exits were required to be incorporated in the design. On 18 April 2002, Mr Kapetangiannis advised Mr Gergely that Woolworths briefing documents would be ready by the end of the week and that a design co-ordination meeting should be held on 29 April 2002 at Woolworths' offices to finalise internal design and décor issues to enable Gergely & Pinter to complete their drawings. Further plans were received from Woolworths on 29 April 2002. Mr Gergely received a report from acoustical consultants on 30 April 2002. There was a further consultants' meeting on 30 April 2002. At the meeting of 30 April 2002, the consultants were advised that excavation would commence on Monday, 6 May 2002. However, Mr Marcocci arranged for invitations to be issued for a ground turning ceremony at the Auburn Road site on Friday, 10 May 2002. The Woolworths Property Committee Meeting of 7 May 2002 96 On 7 May 2002, the Woolworths Property Committee considered a submission that Woolworths enter into an agreement for lease of a supermarket and a Big W discount department store at the Queen Street site. The submission was signed by Mr Hunt, by Woolworths' finance manager and by Woolworths' general manager. It was also "recommended for approval" by Mr Hunt and by three other senior Woolworths executives, including the Chief General Manager of Supermarkets, Mr Flood. 97 The submission was that Woolworths "seek to exit an agreement for lease for premises in Auburn which was approved in July 2001". The submission noted the following: " Woolworths have been actively pursuing representation in Auburn for the last decade. The preferred site is the subject site, which was previously referred to as the RAAD site. In 2001, it appeared that any opportunity to develop the RAAD site was not going to be realised as the site had been onsold to a residential developer who had shelved the retail development plans. Woolworths property then pursued the next best alternative site. This was the ex Venture store site in the Auburn Road shopping strip. In July 2001, Woolworths Property Committee approved a submission to enter into an agreement for lease and lease for a 3,100 m² supermarket in the main shopping strip in Auburn Road, Auburn. The lease negotiation on the Auburn Road site is virtually complete with the agreement for lease in the final drafting stages AL. Both parties have actively been finalising these documents ready for execution. They should be in an executable format during the month of May. …" 98 There then followed an analysis of anticipated sales and profits if Woolworths operated supermarkets at both the Auburn Road site and the Queen Street site, and a comparison with the estimated sales and profits if Woolworths operated from the Queen Street site only. The estimated net present value of the proposals of either operating both stores or operating only a store at Queen Street were estimated as follows: "1. Operate both stores … NPV Auburn Road ($375,031) RAAD $1,846,603 Total $1,471,572 2. Operate RAAD only $2,445,061 " 99 This can be compared with the estimated net present value of the Auburn Road store standing alone of $781,407. The submission continued: This analysis is based on the assumption that if Woolworths pull out of the Auburn Road site another full line competitor will commence operation in this location. It is likely that this may not eventuate due to the fact that both Coles and Woolworths will be well represented in Auburn. If additional competition does not occur, the sales and potential profit for the RAAD site will be further enhanced. " 100 The submission also noted that if two supermarkets operated in Auburn, the loss of sales from Woolworths' supermarkets at Berala and Granville would be substantially greater than if only one store operated in Auburn. 101 The submission noted that the Queen Street site offered "dramatically improved amenity to the alternative offers in and around Auburn". These were elaborated upon. The submission showed that the Queen Street site satisfied all of Woolworths' standard investment criteria. It noted that: " The RAAD development is also estimated to affect the original forecasts of the Auburn Road store by approximately $5,000,000 p.a. If this occurs, the original Auburn store will be projected to incur a negative net present value. The submission is based on Woolworths not proceeding with the Auburn Road site. " The Woolworths Property Committee's Decision 102 On 7 May 2002, the Woolworths Property Committee resolved to approve the proposal to establish a new supermarket on the Queen Street site, and that Mr Flood should review whether it opened two stores. 103 As no evidence was called by Woolworths from any person who attended the Property Committee meeting, or from Mr Flood, I infer that the Property Committee was concerned whether commitments had been made to E K Nominees which might preclude it from walking away from the Auburn Road site. Mr Hunt's Advice to Mr Marcocci 104 On about 6 May 2002, Mr Marcocci was asked by one of his electrical sub-contractors whether Woolworths was going elsewhere. Mr Marcocci telephoned Mr Hunt. According to Mr Marcocci, he said to Mr Hunt that he had heard that Woolworths was not proceeding with the Auburn Road site and that they were going to the Queen Street site. He asked if that was true. Mr Hunt told him that "there is no decision made whether we go on your site, the Queen Street site, or both". Mr Hunt told him that the matter was before the board for a decision on Tuesday, 7 May 2002. That was the first time Mr Marcocci had any idea that Woolworths was considering the Queen Street site as an alternative to, or as an addition to, the Auburn Road site. 105 According to Mr Hunt, on or about 7 or 8 May 2002, Mr Marcocci said to him, "I have heard a rumour that Woolworths is considering leasing premises at another site in Auburn. Is this true?" According to Mr Hunt, he told Mr Marcocci, "There is an element of truth in that. I suggest that we get together and discuss where we go from here." They then agreed to postpone the ground-breaking ceremony. Mr Hunt says that on 15 May 2002, he told Mr Marcocci that: "Woolworths is negotiating in relation to the Queen Street site in Auburn to support a Big W store as well as a supermarket. The Chief General Manager of Supermarkets has to decide whether we will go with one or two supermarkets in Auburn and that decision could go either way. I do not know what decision he will make, but if it is decided that Woolworths will have only one supermarket in Auburn, I expect it will be the Queen Street site because that site is clearly superior in terms of our needs. We are not doing any more work on the legal side in terms of our proposed documentation with you, until we know what that decision is. As soon as I know the outcome, I will let you know." 106 On his own evidence, Mr Hunt did not tell Mr Marcocci that he had recommended to the Woolworths Property Committee that Woolworths proceed only with the Queen Street site. On either version of the conversation between Mr Marcocci and Mr Hunt, the matter was left in the balance as to whether or not Woolworths would proceed with the Auburn Road site. According to Mr Marcocci, he was told that no decision had been made. According to Mr Hunt, Mr Marcocci was told that there was an "element of truth" to the rumour that Woolworths was considering leasing premises at another site. In fact, there was much more than an element of truth in that rumour. Be that as it may, this information was sufficient to cause Mr Marcocci not only to cancel the ground-breaking ceremony scheduled for 10 May 2002, but shortly thereafter to issue instructions to the subcontractors and consultants retained by him to stop work. This is significant when considering the parties' submissions as to what E K Nominees would have done had it been advised earlier of Woolworths' dealings with Markham Corporation. Decision Not to Proceed with Auburn Road 107 On 15 May 2002, Mr Hunt asked JEB Holland Dimasi to express their opinion on the likely turnover at the Queen Street site if the supermarket were extended in size and also to advise what level of turnover could be anticipated from the Queen Street site if it were the only supermarket operated by Woolworths in Auburn, or alternatively, if it was competing against a second Woolworths supermarket at the Auburn Road site. On 17 May 2002, JEB Holland Dimasi advised that the proposed Woolworths supermarket of the larger size at the Queen Street site was likely to achieve additional sales of around $7-9,000,000 if a Woolworths supermarket did not proceed at the Auburn Road site. They advised that a larger Woolworths supermarket at the Queen Street site was also likely to reduce the potential sales for the Woolworths supermarket at the Auburn Road site. 108 On 4 June 2002, the Woolworths Property Committee resolved not to proceed with the agreement for lease of the Auburn Road site. 109 According to Mr Hunt, it was not until shortly before 20 June 2002 that he was told the results of the Property Committee meeting of 4 June 2002. According to Mr Hunt, he told Mr Marcocci on 20 June 2002 that Woolworths had decided there should be only one supermarket in Auburn and that it would not be at the Auburn Road site. According to Mr Marcocci, no decision was communicated to him by 20 June 2002 as to whether Woolworths would proceed with the Auburn Road site. In this, as in other matters where there is a conflict between Mr Marcocci and Mr Hunt, I prefer Mr Marcocci's evidence. 110 On 20 June 2002, Mr Marcocci instructed Mr Gergely to tell the consultants retained by Mr Gergely for E K Nominees for the Auburn development to stop work. Mr Gergely wrote to the various consultants whom he had engaged telling them to suspend work on 24 June 2002. 111 On 20 June 2002, Landerer & Co wrote to Corrs Chambers Westgarth noting that they had received no reply to their correspondence of 10 April 2002. Landerer & Co continued as follows: " It has come to our client's notice that Woolworths may be considering taking premises in Auburn, other than those which are proposed to lease from our client. Notwithstanding various assurances by Woolworths, it has failed to confirm that it is proceeding. The matter has now become urgent. Although there has been no formal execution of documents, from at least 5 December 2000 and continuously thereafter (including especially by its letter dated 18 July 2001 informing our client of approval having been obtained by the Woolworths Property Committee) your client held out and represented that it would proceed and was proceeding. The commercial terms have been agreed. To your client's knowledge our client has obtained various approvals, has carried out demolition works, has expended substantial sums of money and has taken upon itself commitments to facilitate the Woolworths Supermarket on its premises at Auburn. Your client has stood by while our client has done so knowing that our client was doing so on the basis of the agreement reached, the representations made and the assumption that your client was proceeding. Our client does not know if and when Woolworths has changed its mind. Not proceeding now would breach the agreement and understandings reached and would be unconscionable. In the event that Woolworths does not proceed our client will be looking to it to fully recompense our client. Given the urgency which has been brought about by Woolworths' delay, our client requires Woolworths forthwith to affirm, formally, its intention to proceed. If our client does not receive that affirmation in writing by 5pm on Monday, 24 June 2002, our client will assume that Woolworths does not intend to proceed and our client will take its own course. " 112 Corrs Chambers Westgarth replied on 26 June 2002. They said: " We refer to your letter of 20 June 2002. Our client has been in regular and constant contact with your client regarding its intentions in relation to the proposed lease. Our client is under no obligation to your client in relation to the discussions and negotiations which have taken place regarding your client's development. Any monies expended by your client were expended at your client's risk with full knowledge that negotiations in relation to the proposed transaction had not been completed. Clearly, the parties had not reached agreement as at 10 April 2002 (or at any other time) and it is the manifest intention of the parties that they not be contractually bound at any stage prior to execution of agreements for lease with all necessary annexures and specifications agreed and attached to the documents ." 113 Corrs Chambers Westgarth did not deny Landerer & Co's statement that E K Nominees did not know whether Woolworths had changed its mind. Its failure to do so is inconsistent with Mr Hunt's version of his conversation of 20 June 2002 with Mr Marcocci. 114 On 3 September 2002, the Woolworths Property Committee considered a further submission from Mr Hunt and other executives dated 23 August 2002. The submission included the following note: "Woolworths' intention to not proceed with the original deal at Auburn Road, has been conveyed to the developer of that site, E K Nominees. E K Nominees had indicated the failure of Woolworths to complete the transaction has potentially resulted in unspecified damages of up to $1,500,000. A complete review of the Agreement for Lease process has been undertaken and a response has been sent to E K Nominees, stating that they were informed of our intention not to proceed." A claim for privilege was made on the balance of the submission on this topic. Mr Hunt's Credit 115 Mr Hunt accepted that he was the author of this note. E K Nominees attacked Mr Hunt's credit on the basis that the last sentence of the note was false to his knowledge, and was intended to mislead the Property Committee. This attack would be well founded if the sentence was intended to convey that E K Nominees had been informed of Woolworths' intention not to proceed before the Property Committee's meeting on 7 May 2002. Mr Hunt denied that that was what the sentence was intended to convey. The last sentence accurately stated the substance of the second paragraph of Corrs Chambers Westgarth's letter to Landerer & Co of 26 June 2002. However, that paragraph was not true. 116 It has not been established that Mr Hunt deliberately intended to mislead the Property Committee. It would be surprising if the Property Committee was not fully apprised of Woolworths' dealings with E K Nominees before making the decision not to proceed with the Auburn Road site. I do not think it likely that they would have been misled by the ambiguous sentence in question. I do not accept this aspect of the attack on Mr Hunt's credit. 117 That is not to say that I accept Mr Hunt as a reliable witness. I have already explained why I have rejected his evidence on a number of particular matters. They affect his general reliability. His answers in cross-examination were frequently not responsive to the questions asked. In part, this may have been attributable to the form of the questions asked of him. But in part, I think it was due to his reluctance to deal with the questions asked and his consciousness of not having dealt openly with E K Nominees. However, my principal ground for not accepting Mr Hunt as a reliable witness concerns his evidence that he had no belief that his dealings with Mr Markham up to and including 22 March 2002 had any adverse impact whatsoever on the prospects of Woolworths proceeding with establishing a supermarket at the Auburn Road site. That evidence is not credible when considered against the objective facts. No Alternative Development 118 Following Woolworths' withdrawal from the Auburn Road site, the site has remained undeveloped. Mr Marcocci had negotiations with Aldi Stores in relation to their leasing a smaller area of about 1,300 m². E K Nominees obtained a development consent in relation to such a modified development. However, it decided not to proceed with it. Woolworths pleaded that E K Nominees failed to act reasonably to mitigate its damages by not pursuing alternative developments. Ultimately, it did not press this defence. E K Nominees' Claim for Damages or Equitable Compensation 119 The damages claimed by E K Nominees are not the loss of profits it may have derived from an agreement for lease with Woolworths. Nor does it claim diminution in the capital value of the land by reason of Woolworths not proceeding with the proposed agreement for lease. Instead, it seeks to recover the expenses incurred by it either from 18 July 2001 (when it was advised that the Woolworths Property Committee had approved the proposal), or from 10 January 2002 (when Woolworths received the approach from Markham Corporation without disclosing it to E K Nominees). Misleading and Deceptive Conduct Claim 120 E K Nominees alleges that from 10 January 2002, Woolworths, in trade or commerce, engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW). 121 E K Nominees alleged that the expenses it incurred from 10 January 2002 amounted to damage which it suffered by the conduct of Woolworths which contravened s 52. Subsection 82(1) of the Trade Practices Act provides: " 82 Actions for damages (1) Subject to subsection (1AAA), a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. " 122 Subsection 4(2) of the Trade Practices Act provides that: " Interpretation. (2) In this Act: (a) a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant; … (c) a reference to refusing to do an act includes a reference to: (i) refraining (otherwise than inadvertently) from doing that act; or (ii) making it known that that act will not be done; … " 123 E K Nominees pleaded that Woolworths made two representations which were misleading and deceptive. The first representation was that Woolworths intended to enter into an agreement for lease and lease of the area on the terms and conditions contained in its approval letter of 18 July 2001. It alleged that that was a continuing representation, and that by no later than 10 January 2002, Woolworths did not have that intention. It pleaded that by failing to disclose to E K Nominees until 6 May 2002 that it no longer had, or otherwise did not have, that intention, Woolworths engaged in conduct which was misleading or deceptive. 124 The second alleged misrepresentation was that there had been no material change to the likelihood of Woolworths' entering into a lease of the Auburn Road site for the operation of a supermarket. E K Nominees says that this representation was conveyed by Woolworths' conduct. E K Nominees says there had been such a change. It says that by making that representation through its conduct, Woolworths, in trade or commerce, engaged in misleading or deceptive conduct. This representation was not made expressly. E K Nominees contends it was implied from Woolworths' conduct, including its silence. 125 In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 at 555, Lockhart J, with whom Burchett and Foster JJ agreed, said: "Misleading or deceptive conduct generally consists of representations, whether express or by silence; but it is erroneous to approach s 52 on the assumption that its application is confined exclusively to circumstances which constitute some form of representation. The section is expressed briefly, indeed tersely, in plain and simple words which, if I may be forgiven for repeating them, say simply: ' a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.' There is no need or warrant to search for other words to replace those used in the section itself. Dictionaries, one's own knowledge of the developing English language and ordinary experience are useful touchstones, but ultimately in each case it is necessary to examine the conduct, whether representational in character or not, and ask the question whether the impugned conduct of its nature constitutes misleading or deceptive conduct. … " In Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, the High Court confirmed that the expression "conduct" in s 52 extends beyond "representations" (at [32], [102]-[110], [179]). 126 The present case was pleaded and argued by reference to what representations were expressly or impliedly conveyed by Woolworths' conduct. Indeed, it is difficult to see how it could be determined whether Woolworths' conduct was misleading or deceptive without identifying what message that conduct conveyed. However, within the confines of the pleadings and the case fought at trial, regard must be had to the whole of Woolworths' conduct, including its actions, inactions and silence, and not to isolated parts of that conduct which are expressly representational in character. Particularly in relation to the second representation, E K Nominees contended that the representation arose partly by Woolworths' conduct in its day-to-day dealings with E K Nominees, and partly from its silence in not disclosing its discussions and negotiations with Markham Corporation in relation to the Queen Street site. As the Full Court of the Federal Court emphasised in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 34 and 41, silence is to be assessed as one of the factors in a party's conduct, having regard to what the party did, what it said, and what it did not say or do, in order to determine whether its conduct as a whole was misleading or deceptive. If the circumstances are such as to give rise to a reasonable expectation that if some relevant fact exists it will be disclosed, silence may support the inference that that fact does not exist (Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193 at 53,195; Demagogue Pty Ltd v Ramensky at 32, 41; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 114; Warner v Elders Rural Finance (1993) 41 FCR 399 at 405). Representation that Woolworths Intended to Enter into an Agreement for Lease and Lease of the Auburn Road Site 127 E K Nominees alleged that by issuing its approval letter of 18 July 2001, Woolworths represented to E K Nominees that it intended to enter into an agreement for lease and a lease of the Auburn Road site on the terms contained in its letter of 5 December 2000, its letter of 18 July 2001, and the other correspondence between the parties. It alleged that this was a continuing representation. It alleged that by no later than January 2002, Woolworths did not have an intention to enter into a lease from E K Nominees, and by not disclosing the fact that it no longer had, or did not have, such an intention, until 6 May 2002 it engaged in conduct which was misleading or deceptive. 128 Woolworths submitted that the correspondence from Woolworths was subject to so many conditions, including the negotiation of the terms of an agreement for lease and lease, the obtaining of planning and building approval, and Woolworths being satisfied in relation to the design and configuration of the works, that no representation was made that Woolworths intended to enter into a lease or an agreement for lease. 129 I accept that the approval letter of 18 July 2001 conveyed the representation that Woolworths intended to enter into an agreement to lease with E K Nominees on the terms set out in the letter of 18 July 2001, and otherwise on the terms set out in the previous correspondence. There is no doubt that there were conditions attached to that statement of intention. Planning and building approvals were required. Woolworths' offer might be amended in the event that there were amendments, or re-designs, or changes to the configuration of the premises. Development plans and specifications and finishes had to be satisfactory to Woolworths. However, subject to these conditions, Woolworths' correspondence conveyed the representation that Woolworths intended to enter into the agreement for lease once the terms of that document were settled. 130 Woolworths' subsequent conduct confirmed that representation, and it remained a continuing one until 7 May 2002. It was not qualified by the delay in settling the terms of the agreement for lease. Those issues were being worked through. There is no reason to doubt that the terms of the agreement for lease would have been settled in due course. Mr Hunt told the Woolworths Property Committee in his submission of 30 April 2002 that the documents should be ready for execution during May 2002. Whilst there were issues outstanding which could be described as "commercial" issues, there is no reason to doubt that they would have been resolved. Woolworths did not tell E K Nominees that the delay in finalising the agreement was causing it to have second thoughts. Its second thoughts were not prompted by the delays in settling the agreement for lease. Representation that Likelihood of Woolworths Entering Into Agreement for Lease had Not Materially Changed 131 E K Nominees alleged that by not disclosing to E K Nominees until about 7 May 2002 to E K Nominees that it had entered into negotiations for the grant of a lease at the Queen Street site, Woolworths represented to E K Nominees from early January 2002 until about 7 May 2002 that there had been no material change to the likelihood of entry by Woolworths into a lease of part of the Auburn Road site for the operation of a supermarket. This was a representation conveyed by conduct and silence. It was alleged to be misleading. 132 Woolworths denied that such a representation was conveyed. It submitted that it is not reasonable to expect in a negotiation between commercial parties that one party would inform the other party to the negotiations if an alternative opportunity presented itself which might have some ultimate impact upon the likelihood of a deal being consummated. It submitted that it was not misleading to fail to disclose the discussions in relation to the Queen Street site as E K Nominees was not entitled to believe that if an opportunity for Woolworths to take a lease of that property arose, that would be a matter which would be communicated to it. 133 In Lam v Ausintel Investments Australia Pty Ltd & Ors (1989) 97 FLR 458 at 475; [1990] ATPR 40-990 at 50,880, Gleeson CJ said: " Where parties are dealing at arm's length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not in itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice. It would normally only be if there were an obligation of full disclosure that a different result would follow. That could occur, for example, by reason of some feature of the relationship between the parties, or because previous communications between them gave rise to a duty to add to or correct earlier information. " 134 The present case involves more than the parties negotiating upon the terms of an agreement for lease. If that were all that were involved, I would readily accept the submission for Woolworths that there were no circumstances which gave rise to a reasonable expectation by E K Nominees that, if an alternative opportunity presented itself to Woolworths which affected the likelihood of the negotiations with E K Nominees being consummated, that fact would be disclosed. 135 This is not merely a case in which the parties were negotiating with a view to entering into an agreement for lease. E K Nominees had spent, and was continuing to spend, substantial sums of money in order to satisfy the deferred commencement conditions of the development consent and otherwise to move the development forward as quickly as possible, with a view to expediting the date on which Woolworths could open its supermarket. It was doing so with Woolworths' knowledge and encouragement. 136 That was not merely a matter of choice for E K Nominees. The effect of Woolworths' letter of 5 December 2000 was that if E K Nominees did not demonstrate its commitment to the project and to Woolworths' development program, then Woolworths could make a claim on it for its costs and loss of profit. By the same letter, Woolworths had held out that Woolworths' approval would be "operative" for a period of twelve months from the time it was granted, thereby implying that provided the conditions of Woolworths' board's approval were met, and provided the parties could agree upon the matters to be included in the agreement for lease, Woolworths would not resile from its intention to enter into an agreement for lease. That was reinforced by the further provision in Woolworths' letter of 5 December 2000 that Woolworths could elect to terminate what it described as "the agreement" without being liable for any claim if legal documentation were not executed, apparently within the period of twelve months following notification of Woolworths' board's approval, if E K Nominees could not satisfy it on the progress of the development. That letter is to be read in the context of the earlier correspondence in which E K Nominees had sought and obtained an assurance that Woolworths was genuinely pursuing the Auburn Road site as a location for the Woolworths supermarket. The parties knew that there was a superior site in which Woolworths was interested. 137 In that context, E K Nominees could reasonably have expected that if a new proposal arose in relation to the Queen Street site, it would be told about it, or at least, it would be told that Woolworths may have to reconsider whether to proceed with the Auburn Road site. 138 The negotiations for the agreement for lease were not carried on with any haste. In contrast, the architects and consultants retained by E K Nominees worked hard to satisfy the deferred commencement conditions of the development consent and to expedite the development. They had Woolworths' encouragement and co-operation in doing so. Against the background summarised above, Woolworths' conduct in encouraging that work, whilst at the same time evincing no need for haste in the negotiations for the agreement for lease, impliedly represented that there was no material change in the likelihood of Woolworths entering into the agreement for lease. Nothing was said to indicate that anything had changed which would affect the likelihood of its doing so. 139 Accordingly, I consider that both of the representations alleged by E K Nominees were impliedly made by Woolworths. Misleading and Deceptive Conduct by Non-Disclosure 140 It is Woolworths' failure to disclose its response to the approach from Mr Markham in relation to the Queen Street site, or to disclose the alleged change in its intention to take up a lease of the Auburn Road site, or in the likelihood of its proceeding to enter into an agreement for lease of part of the Auburn Road site, which is claimed to make its conduct misleading. 141 The refraining from taking action only amounts to the engaging in conduct within the meaning of s 52 of the Trade Practices Act or s 42 of the Fair Trading Act if the refraining from action is not inadvertent. Woolworths did not submit that such non-disclosures were inadvertent. Mr Hunt must have considered what he would disclose to E K Nominees about the approaches from Mr Markham and Woolworths' proposals in relation to the Queen Street site, and decided not to say anything about them to E K Nominees. 142 I will deal first with the allegation that Woolworths changed its intentions with respect to the Auburn Road site and engaged in misleading and deceptive conduct by not disclosing that to E K Nominees. No Change of Intention Prior to 7 May 2002 143 Woolworths submitted that at all times until 7 May 2002 it did intend to enter into an agreement for lease or lease if the terms were finally settled between the parties. It submitted that the relevant organ of Woolworths whose intention was to be considered was the Woolworths Property Committee. The committee did not make a decision to proceed with the Queen Street site until 7 May 2002, and did not decide not to proceed with the Auburn Road site until 4 June 2002. Accordingly, Woolworths did not cease to hold the intention of entering into an agreement for lease with E K Nominees prior to 4 June 2002. If Mr Hunt was the relevant person whose intentions were to be attributed to Woolworths, Woolworths submitted that Mr Hunt continued to hold the intention that Woolworths would enter into an agreement for lease with E K Nominees during the relevant period. 144 The question whether Woolworths ceased to hold the intention of entering into an agreement for lease with E K Nominees prior to 6 May 2002 requires identification of the individuals within Woolworths whose state of mind should be imputed to Woolworths. Woolworths submitted that it was only the members of its Property Committee whose intentions could be attributed to it. The Property Committee was exercising delegated authority from the board of directors. It was only the state of mind of the individuals comprising that committee which represented the state of mind of the company (Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 170-171; El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 at 695-696, 705). 145 If the position were unaffected by statute, I would accept this submission. I also accept that there is no evidence that members of the Woolworths Property Committee changed their intentions in relation to Woolworths entering into a lease of the Auburn Road site at any time before the Property Committee meeting on 7 May 2002. However, s 84(1) and (5) of the Trade Practices Act must be considered. 146 Subsections 84(1) and (5) of the Act provide: " 84 Conduct by directors, servants or agents (1) Where, in a proceeding under this Part in respect of conduct engaged in by a body corporate, being conduct in relation to which section 46 or 46A or Part IVA, IVB, V, VB or VC applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, servant or agent of the body corporate, being a director, servant or agent by whom the conduct was engaged in within the scope of the person's actual or apparent authority, had that state of mind. … (5) A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person's reasons for the person's intention, opinion, belief or purpose." 147 Subsection 84(1) directs attention to the person by whom relevant conduct is engaged in on behalf of a corporation. It is not alleged that Woolworths engaged in misleading and deceptive conduct merely by changing its intention. The allegedly misleading conduct in which it engaged was the non-disclosure of that alleged change of intention. Such non-disclosure would only amount to the engaging in conduct if it were advertent (s 4(2)). The relevant conduct is the advertent failure to disclose Woolworths' alleged change in intentions. It was Mr Hunt who deliberately made no disclosure of the approach of Markham Corporation or the implications that might have for the Auburn Road site. 148 It was submitted for Woolworths that subs 84(1) was inapplicable unless the state of mind of the body corporate was an element of the contravention of the Act. Ordinarily, it is no part of establishing a contravention of s 52 of the Act to establish the state of mind of the contravenor. However, in the first of the ways in which it is alleged that Woolworths contravened s 52, proof of the state of mind of the corporation and proof as to whether there had been a change to that state of mind, is an element of the contravention alleged. In my view, if Mr Hunt had an intention in relation to Woolworths' entering into the agreement for lease, his intention should be imputed to Woolworths pursuant to s 84(1), because it was his decision to make no disclosure. 149 However, I do not think that Mr Hunt had any intention in relation to Woolworths' entering into a lease with E K Nominees, as distinct from his having an expectation as to whether such a lease would be entered into. His job was to arrange for Woolworths to enter into the agreement for lease with E K Nominees in accordance with the approval given by the Woolworths Property Committee. Once the terms for the agreement for lease had been settled, it would have been a matter for Woolworths' in-house solicitor, Mr Jeffs, to have recommended to its Chief Executive Officer, Mr Corbett, that the documents were in accordance with the previous Property Committee's approvals. If circumstances changed after the Property Committee's approval was given, so that a decision had to be made as to whether Woolworths should go ahead, that decision would be made by representatives of the Property Committee, which did not include Mr Hunt. Mr Hunt was not the person authorised to decide whether or not Woolworths should enter into an agreement for lease. I do not consider that he had any relevant intention about that matter. That is not to say that he did not have an expectation as to whether or not Woolworths would enter into the agreement for lease. Change to Likelihood of Woolworths' Proceeding with Auburn Road 150 I therefore turn to the second way in which E K Nominees put its case, namely, by reference to the implied representation that there had been no material change in the likelihood of Woolworths entering into a lease of the Auburn Road site. 151 Counsel for Woolworths submitted that an implied representation to that effect could only be misleading or deceptive if either Woolworths did not believe the matter impliedly conveyed, or if there were no reasonable grounds for it to have a belief in the truth of that representation. Counsel submitted that there was no basis to find that the Woolworths Property Committee did not genuinely believe during the relevant period that the likelihood of Woolworths entering a lease at Auburn Road was unchanged because it did not meet to consider the issue until 7 May 2002. So much may be accepted. It was then submitted that Mr Hunt's evidence in his affidavit, that he did not have any belief that there had been any adverse impact on the prospects of Woolworths' proceeding with the establishment of a supermarket at the Auburn Road site, should be accepted. 152 It was submitted that there were reasonable grounds for the belief to which Mr Hunt deposed because: (a) of Woolworths' long and unsuccessful history in dealing with the Queen Street site, the chief problem being that the shape and size of the site was such that neither Woolworths' architects, nor RAAD's architects, could create a design for a Big W store that satisfied the requirements of the Big W division; (b) Holdmark held no more than an option to purchase; (c) Holdmark was contacting other potential major tenants; (d) the Woolworths Property Committee had given an operative approval for a supermarket at the Auburn Road site and had not given consideration to the establishment of a new Woolworths supermarket at the Queen Street site. To this can be added Mr Hunt's evidence that he was aware of no case in which a development did not proceed once it had been approved by the Woolworths Property Committee; (e) the process of putting a submission to the Property Committee involved obtaining external demographic data and performing internal financial modelling which would take at least three weeks after receipt of the information from the demographers; (f) even after the Property Committee gave approval to proceed with the supermarket at the Queen Street site on 7 May 2002, there was still a real chance that Woolworths would operate two supermarkets in the Auburn area; and (g) well after January 2002, Woolworths proceeded with its work on a design for a supermarket at Auburn Road and negotiated the terms of the draft agreement for lease and lease. 153 In my view, notwithstanding these considerations, once Woolworths indicated its willingness to treat with Holdmark, there was a materially reduced likelihood of Woolworths proceeding to take a lease of the Auburn Road site. I also conclude that Mr Hunt was of the same view, notwithstanding his evidence to the contrary. It is true that in previous years, neither Woolworths' architects, nor RAAD's architects, had been able to create a design for the site which satisfied the requirements of the Big W division. However, matters had moved on. RAAD was no longer the owner of the site. New architects were engaged by Holdmark who were well known to Woolworths in this area and were well reputed. The 2001 decision to proceed with the Auburn Road site was made in the context of RAAD having sold the site to a purely residential developer. The prospects of a retail development involving Woolworths then appeared to be remote. In 2002, a new developer, Holdmark, had taken an option over the site. 154 The fact that as at January 2002, Holdmark only had an option, and had not purchased the site, was neither here nor there. The purpose of a developer's taking an option to buy the site was to investigate the possibility of acquiring the site if arrangements could be made for an appropriate development. Mr Isaac said that, in his experience "ninety-nine out of one hundred sites I have ever known have been by way of option. I have only exercised the option if the supermarket or whatever it was, committed to the site." The Queen Street site was plainly superior to the Auburn Road site. Notwithstanding his evidence to the contrary, I consider that Mr Hunt believed that if the requirements of the Big W division could be satisfied, the Queen Street site would be the preferred option for Woolworths, and in that event, it would be in Woolworths' best interest not to proceed with the Auburn Road site. His submission to the Woolworths Property Committee of 30 April 2002 proceeded on that basis. Enough demographic assessment had already been made of the two sites for Mr Hunt to know that the Queen Street site was the preferred site. The fact that there was still a chance that Woolworths would operate two supermarkets in Auburn did not detract from the fact that by Woolworths' taking up the invitation of Markham Corporation to treat in relation to the Queen Street site, there was a material diminution in the likelihood of Woolworths' proceeding with the Auburn Road site. 155 It was submitted for Woolworths that E K Nominees could not reasonably have expected that Woolworths would disclose confidential discussions with another property developer. The correspondence from Markham Corporation was addressed as being "in confidence". However, I do not accept that Woolworths was required to yield to Markham Corporation's request that its communications be kept confidential. In any event, Woolworths was not entitled to keep its dealings with Markham Corporation confidential at the expense of misleading E K Nominees, which continued to carry out work on the project ignorant of the changed circumstances. If Woolworths felt compelled to respect Markham Corporation's confidence, it could still have advised E K Nominees that it might have to reconsider its decision to enter into an agreement for lease with E K Nominees. 156 There was a material change to the likelihood of Woolworths entering into an agreement for lease with E K Nominees from the time that Woolworths decided that the approach from Markham Corporation was one which was worth pursuing. That date was no later than 29 January 2002. On that day, Mr Hunt prepared a letter formally expressing interest in working with Mr Markham to secure a suitable retail opportunity for Big W and the supermarkets division. Woolworths' failure to disclose its changed position, whilst continuing to encourage E K Nominees to carry out work on the project, and continuing to negotiate terms of the agreement for lease, was conduct, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive. Causation 157 Woolworths submitted that even if had engaged, in trade or commerce, in conduct that was misleading or deceptive, or likely to mislead or deceive, any such conduct was not causative of E K Nominees' decision to spend money on the development after 10 January 2002. It submitted that E K Nominees must have known that, in spending that money before an agreement for lease had been signed, it was running a risk that an agreement for lease would not eventuate. 158 Further, in relation to the second representation relied on by E K Nominees, Woolworths submitted that E K Nominees did not suffer loss "by" Woolworths' alleged misleading and deceptive conduct. It submitted that if Woolworths had disclosed the negotiations in relation to the Queen Street site to E K Nominees, or had disclosed that there was a reduced likelihood of its entering into an agreement for lease of the Auburn Road site, E K Nominees would have sought assurances from Woolworths that it was committed to the Auburn Road site, or that Woolworths intended to proceed with the Auburn Road lease. Woolworths submitted that such an assurance would have been given as a statement of Woolworths' present intention. It submitted that if E K Nominees had demanded that Woolworths enter into an agreement for lease of the Auburn Road site before doing further work, Woolworths would probably have executed such an agreement. It submitted that on this hypothesis, the plaintiff had failed to prove any loss unless it adduced evidence that it would not have been worse off if the contract had been entered into. 159 It also submitted that had E K Nominees sought assurances that Woolworths was committed to leasing the Auburn Road site, and such assurances had not been given, E K Nominees would not have stopped work. Rather, it would have considered what items of work should be carried out to endeavour to persuade Woolworths to go ahead with the Auburn Road site whilst possibly deferring major items of expenditure. It would have done all it could to persuade Woolworths not to abandon the Auburn Road site, and that would necessarily have entailed the continuation of some work. Woolworths submitted that E K Nominees had failed to adduce evidence as to what items of work would have been carried out, and what items would not have been carried out, in that eventuality. 160 Woolworths did not dispute that if E K Nominees had known about either of the letters dated 11 and 29 January 2002, E K Nominees would have sought assurances from Woolworths. Mr Katz gave evidence that E K Nominees would have sought an assurance that Woolworths "still intended to enter into an agreement for lease and the lease". Mr Marcocci gave evidence that he would have sought assurances from Woolworths that it was committed to the Auburn Road site. I accept that Mr Marcocci would have sought such an assurance. 161 Woolworths submitted that E K Nominees would have sought an assurance from Woolworths that it presently intended to enter into a lease of E K Nominees' Auburn Road site, and that if such an assurance had been given, that assurance would have satisfied its concerns. It submitted that that was Woolworths' then intention. However, any representation by Woolworths of its intention to enter into a lease would have had to have been qualified, if it were not to be misleading. Such an assurance would have to have been qualified by a disclosure that there was a reduced likelihood of Woolworths' proceeding. E K Nominees would have expected details. It would not have been satisfied with a mere statement that Woolworths still intended to proceed, but might not do so depending upon what arrangements were made on another site. 162 Woolworths submitted that if E K Nominees had required an assurance in the form of an executed agreement for lease of the Auburn Road site, Woolworths would probably have entered into the agreement. But, it was said, E K Nominees had not proved it would have been better off had such an agreement been made. 163 It does not follow that E K Nominees has failed to prove any loss because it has not proved that a contract would have been profitable, or it would not have made at least the same loss as it has suffered. The hypothesis put forward by Woolworths is that, had it not engaged in misleading conduct, E K Nominees would still have incurred the expenses which it seeks to recover, but it may have been no worse off because E K Nominees may not have recouped those expenses from the development. The analogy here is with a claim to recover wasted expenditure in an action for breach of contract. If it is impossible to show what profit would be derived had the contract been performed, the law presumes against the contract-breaker that the contract would not have caused a loss to the innocent party, so that the innocent party is entitled to recoup his expenditure. The onus lies on the contract-breaker to prove that the expenditure would not have been recouped had the contract been performed (The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 85-89, 106-108, 126-127, 155-156, 166). In the same way, the onus lies on Woolworths to show that if it had not engaged in misleading and deceptive conduct, but had entered into the agreement for lease with E K Nominees, E K Nominees would have been no worse off. It did not attempt to discharge such an onus. 164 Mr Marcocci gave evidence of the basis upon which he considered the returns from the development would have met the building and other costs. The reasonableness of his assessment on the figures provided to him was not challenged in final submissions. Although the figures were not supported by expert evidence, the onus did not lie on E K Nominees to prove that the development would have been profitable. 165 The question remains what E K Nominees would have done had Woolworths not allowed it to continue to act on the assumption that Woolworths would enter into the agreement for lease, without explaining that it was investigating another opportunity which materially reduced the likelihood of its proceeding with the Auburn Road site. 166 Mr Isaac, who was retained as a consultant to E K Nominees, gave evidence to the effect that if he had seen Markham Corporation's letter of 11 January 2002, in the absence of receiving any definite information from Woolworths that Woolworths was not proceeding with the Auburn Road site, he would have had no reason to advise E K Nominees to stop work. If he had read the 11 January and 29 January 2002 letters, he would have attempted to obtain an assurance from Woolworths that they were looking at the possibility of having two supermarkets, and would have been satisfied if Woolworths had said they were looking at both. He said he did not understand why E K Nominees would stop work unless they were definitely informed by Woolworths that Woolworths was not proceeding. However, he also said that if he could not get a "definite understanding" from Woolworths that they were still committed to the site, he would have advised E K Nominees that they should "back off" until they got what they needed. 167 Mr Isaac appears to have placed a high degree of confidence in Woolworths' not wishing to undermine its reputation or the confidence of its business partners, which approval of a project by the Woolworths Property Committee would be expected to engender. 168 It does not follow that because such advice would have been given by Mr Isaac, it would have been followed by E K Nominees. It was common ground that Mr Marcocci would have determined what E K Nominees would do had such disclosure been made to it. He gave evidence that had he seen Woolworths' letter of 29 January 2002, he would have stopped all work until Woolworths signed the lease agreement. He agreed that as at 29 January 2002, he would have been eager to get Woolworths to sign a lease (meaning the agreement for lease) as soon as possible. 169 Woolworths submitted that I should not accept this evidence, which was given with the benefit of hindsight. Woolworths submitted that where Mr Marcocci's evidence conflicted with the evidence of other witnesses, or with the inferences available from other evidence, the Court should reject it. It was said that Mr Marcocci was reluctant to make reasonable concessions. However, I was favourably impressed with Mr Marcocci. Contrary to Woolworths' submissions, he was prepared to make concessions against the interests of E K Nominees on important matters (see para [231] below). I accept his evidence as to what he would have done had he been aware of the terms of Woolworths' letter of 29 January 2002. His evidence was consistent with how he in fact acted in May 2002. He gave instructions for work to stop on the site, even though he had no definite indication from Woolworths that Woolworths would not be proceeding with that site, and had not been told that the recommendation made to the Woolworths Property Committee was that Woolworths not proceed with the Auburn Road site. Accordingly, I accept that had Woolworths not engaged in misleading and deceptive conduct from 29 January 2002, E K Nominees would not have incurred the further expenses in relation to the property after that date. Damages for Expenses Incurred from 29 January 2002 170 E K Nominees claimed it spent $1,264,463.43 following receipt of Woolworths' approval letter of 18 July 2001 in designing the building to be constructed on the Auburn Road site, and associated activities. E K Nominees is entitled to damages for its wasted expenditure from 29 January 2002. 171 The consultants and contractors who worked on the project were retained either by Simhilt Pty Ltd, or by the architects, Gergely & Pinter. The consultants and contractors invoiced Simhilt for their fees. Those fees were paid by Simhilt, which in turn was paid by E K Nominees. Simhilt either paid the invoices, having been put in funds to do so by E K Nominees, or was reimbursed for its expenditure by E K Nominees. 172 Simhilt regularly invoiced E K Nominees for the amounts which it paid consultants and contractors. Between 10 August 2001 and 6 February 2003, Simhilt invoiced E K Nominees for a total of $1,060,063.10. Of this amount, $12,693.36 did not relate to work undertaken in connection with the project after 18 July 2001. The invoices were usually paid by E K Nominees within a couple of weeks of being rendered. 173 There was no issue that the work for which invoices were rendered was not done, or that the fees charged were not proper fees. Nor was there any dispute that the work done was necessary in order to progress the development. 174 Woolworths pleaded that E K Nominees failed to act reasonably to mitigate its loss by failing to proceed with a development on the land with a suitably reconfigured retail mix (without Woolworths) which would have enabled E K Nominees to derive all benefits from all of the costs incurred in connection with the proposed development. 175 The development for which E K Nominees obtained approval in DA 216/01 involved the excavation and construction of an underground three-level parking garage and a commercial floor at ground level above the garage. The commercial floor would have comprised a Woolworths supermarket, a Woolworths liquor shop and six specialty shops. Above the commercial floor, there would have been constructed a transfer slab capable of supporting two towers of home units. 176 Following Woolworths' withdrawal from the project, E K Nominees looked to other ways of developing the site. Mr Marcocci approached Auburn Council to modify its development consent to permit an all residential development. This would have been inconsistent with the zoning, and his approach was unsuccessful. Mr Marcocci attempted to find another major retailer. Coles had already taken up another store in Auburn. It will be recalled that in the 2002 submission to the Woolworths Property Committee, Woolworths' executives said they thought it likely that no "full line competitor" would occupy the Auburn Road site as both Coles and Woolworths would be well-represented in the Auburn area. 177 In June 2002, Mr Marcocci had negotiations with Aldi, which was interested in leasing an area of about 1,300 m². In 2002, E K Nominees applied for development consent for a modified development which would have included an Aldi store. That consent was granted, again with deferred commencement conditions, in September 2003. However, the development did not proceed. Mr Marcocci formed the view that the development was not economic. No agreement was reached with Aldi. 178 In its final submissions, Woolworths did not press its defence that E K Nominees had failed to take reasonable steps to mitigate its damage. 179 Notwithstanding that, at the time of the hearing, no development project had been implemented for the site, no such development was in prospect, and no major retailer has occupied the site since 1990, Woolworths claimed that E K Nominees' expenditure was not wasted, but provided benefits to E K Nominees for any development of the land involving two seven-storey residential towers, a ground floor retail or commercial area, and three levels of car parking. Woolworths claimed that the onus lay on E K Nominees to show that its expenditure was wasted, and that meant that E K Nominees had to adduce evidence which negated any such enduring benefit. It contended that E K Nominees had failed to do this. Woolworths submitted that to prove that the costs were wasted, E K Nominees had to prove that it had been unable to develop the Auburn Road site in the manner contemplated by either DA 216/01 or DA 227/03. Woolworths submitted that it was not sufficient for E K Nominees to show that it acted reasonably in not pursuing the Aldi development. It was submitted that it could be inferred that much of the expenditure would have an enduring benefit and that because E K Nominees had not demonstrated the absence of such a benefit, it had failed to prove its loss. 180 E K Nominees contended that it was not open to Woolworths to rely upon a defence that E K Nominees derived benefits from its expenditure which it was required to bring to account, or to contend that E K Nominees had not discharged an onus of showing that the expenditure had been wholly wasted by failing to negate such benefits. Woolworths had pleaded in its original defence the matter referred to in paragraph [174]. E K Nominees sought particulars of the defence. On 19 April 2005, the solicitors for Woolworths declined to provide such particulars and stated that Woolworths' case on E K Nominees' opportunity to derive benefit from costs incurred was a matter for Woolworths' expert evidence. However, it did not serve any such expert evidence until a week before the hearing, notwithstanding that it had been required to file and serve all of the affidavits on which it proposed to rely more than three months before the hearing. I refused Woolworths leave to rely upon that report. 181 This does not mean that it is not open to Woolworths to rely upon the point. Woolworths' defence raised the issue, as it was bound to do, so as to give notice to the plaintiff that the matter was in issue. However, if, as a matter of law, the onus lies upon E K Nominees to prove an absence of a calculable benefit, Woolworths is not precluded from relying upon the absence of evidence on the matter merely because it had foreshadowed serving its own expert's report, but then failed to do so until it was too late. 182 The issue of whether E K Nominees derived a benefit from its expenditure which is of residual value to it is best illustrated by taking a number of benefits which Woolworths sought to identify. Woolworths submitted that the architects' services were used to obtain DA 216/01. The development approval increased the density of residential units and the overall built area from that which had been allowed in the previous development approval of 1998. In 1998, approval had been given for sixty residential units. In 2001, approval was given to 103 units and a larger area of retail space and associated car parking. It was submitted that this work had an enduring value to E K Nominees, or to another owner of the site, as it had "identified the bulk and mass of the development that was now achievable for any subsequent development". 183 Woolworths submitted that the project management services provided by Mr Isaac in undertaking negotiations with the Council, authorities, and potential tenants and sales agents, were beneficial for the formulation of any feasibility studies for any future development. 184 The services of mechanical ventilation, electrical consultants and fire consultants were used in obtaining the development approval. Woolworths submitted that this led to an increase in value to the Auburn Road site because the development approval made the site more valuable. It submitted that the work of geotechnical engineers in establishing the nature of the subsoil and ground conditions would be of enduring value for any future development requiring a basement and foundations. The hydraulic design consultant designed the diversion of a sewer, provided stormwater management plans for the DA approval, and the construction certificate. Woolworths submitted that the sewer design and stormwater loadings would be relevant to any future development of similar magnitude. Woolworths submitted that the work of the quantity surveyors in providing construction cost estimates would be relevant for "benchmarking and monitoring against any future design". The work of surveyors in carrying out a survey of adjoining properties and site boundaries was said to be of benefit to any future development. The work of the expert on hazardous materials was said to be of enduring value to E K Nominees or another owner if any future development is carried out, unless further contaminants are added to the site. The work of the structural engineers who designed the basement, the shoring and the structural frame of the building was said to be of enduring value to E K Nominees, or any other owner, as the work could be used in another development of a similar nature. Loading calculations and design for apartments could also still be relevant. Legal costs incurred in advising on rights of way, it was said, would be required no matter what development was to occur, and accordingly the work carried out by the solicitors in providing such advice was of enduring value. The report of the heritage consultant on the heritage impact of the development on adjoining listed properties was said to be of enduring value, both because it led to the grant of the development approval which itself, it was submitted, increased the value of the Auburn Road site, and because the report could be used for any subsequent development application with only minor changes. Fees paid to Energy Australia relating to the design of an electrical substation was said to be of enduring value, as the work done would be relevant to any future design. Electrical work undertaken on the site to make the site safe for building works would have to be carried out for any future development and, accordingly, it was said to have enduring value. The demolition of the old Venture store and the removal of such works would be necessary for any future development. It was submitted that such demolition works had an enduring value to E K Nominees or another owner. The costs of various trades in setting up site accommodation for the building work which was then imminent, was said to be of enduring value if work were carried out on the site. 185 In my view, the question of whether any allowance should be made for the works having such an enduring value can be decided without recourse to the onus of proof, but the onus of proof lies on Woolworths to establish that such benefits were obtained from the expenditure. The assumptions underlying Woolworths' submissions are that: (a) the obtaining of development approval no. 216/01, the satisfaction of the deferred commencement conditions in that approval, and the carrying out of the other work described above, increases the value of the land, even if the development is not carried out; and/or (b) a development of the site in accordance with the zoning, that is, a mixed commercial and residential development, will occur at some time in the future. 186 I do not accept either of these contentions. As to the first, development approval no. 216/01 was an approval for a specific proposed development which included a Woolworths supermarket. The fact that the development would include a Woolworths supermarket was material to the Council's decision to give its consent to the development. The Council's report on the then proposed development included consideration of the positive economic effects to the Auburn Town Shopping Centre if the development were to proceed. Council officers recommended that: " It is therefore considered that it is reasonable for Council to support this development on economic impact grounds because this development will provide the needed catalyst for growth and revitalisation which the Auburn Shopping Centre has needed for some time. " 187 It was in this context that the Council considered the application for approval to construct the two seven-storey residential towers. These towers exceeded the minimum height limit set for the subject site by the Council's Business Areas Development Control Plan. The Council officers noted that: " There were certain design restrictions placed on this form of development by the requirements of Woolworths as buildings significantly over the supermarket would require numerous supporting columns within the supermarket retailing area thereby diminishing its functionality as a supermarket. In order to accommodate Woolworths and purportedly to ensure reasonable financial viability of the project, the two additional floors on blocks A and B beyond the six-storey maximum height were necessary ." 188 It cannot be assumed that because the Council approved this specific development that E K Nominees, or any purchaser of the site, could expect to obtain a future development consent for the same scale and density of the development for which approval had been obtained. 189 Given the zoning, any such development will require a retail tenant, or tenants. It is reasonable to expect that it would require a major retail tenant to act as an anchor. E K Nominees had not obtained any such tenant at any time from 1990. After Woolworths withdrew from the project, it was unsuccessful in attracting a new major retailer. This was in accordance with Woolworths' executives' own expectations. I therefore do not accept that the existence of the development consent itself provided value to E K Nominees. It was contended that the existence of such a development consent added value to the land. If that were the fact, there was at least an evidential onus on Woolworths to establish that fact through expert evidence. It is not something which I would assume. 190 There is no evidence that E K Nominees proposes to sell the site. Mr Katz made it clear that he was willing to consider offers for the land. However, there is no reason to think that even if the grant of the development approval might increase the capital value of the land, that that increase in value would be realised. The development consent would, in any event, expire on or about 6 December 2006. 191 Because it is not known what future development might occur on the site, or when such development might occur, it is not possible to say that any of the work which Woolworths claims is of enduring value to E K Nominees will in fact be of any value. Some of the work was said to be of enduring value to E K Nominees solely on the ground that it was done in order to obtain the development consent and, it was said, the development consent increased the value of the site. However, some of the work was said to be likely to be beneficial to any future development in that it would save the developer from having to repeat the work, or would otherwise be beneficial in assessing and preparing such a development. Work which fell into this category was said to be the work of Mr Isaac (project management), Simhilt Holdings Pty Ltd (building consultants and project/construction managers), Jeffery & Katauskas Pty Ltd (geotechnical engineers), the LHO Group (hydraulic design consultants), Ralph Beattie Bosworth (NSW) Pty Ltd (quantity surveyor), Wilkinson Murray Pty Ltd (acoustical consultants), Lean Lackenby & Haywood L'Poole Pty Ltd (surveyors), HLA Envirosciences Pty Ltd (hazardous materials experts), MPN Group Pty Ltd (structural engineers), Landerer & Co (solicitors advising on rights of way), Graham Brooks & Associates (heritage consultant), Energy Australia (design and location of substation), FIP Electrical (site safety), Bassett Demolitions (demolitions), and various trades providing site accommodation for building works. 192 As it is not known that any such development will take place, or if it does take place, when it will occur, I do not accept that such expenditure will be of enduring benefit to E K Nominees. When any new development occurs, it will be necessary for E K Nominees to obtain appropriate experts at that time to satisfy the then requirements of the Council and other authorities, to assess the feasibility of the development according to the circumstances which then obtain, and design whatever development is then intended. 193 I do not accept that E K Nominees had to prove it was unable to proceed with the proposed 2003 development with Aldi in order to show that its expenditure was wasted. It is the fact that the development with Aldi was not carried out which is relevant, not whether E K Nominees had the ability to carry out that development. Once the defence of failure to take reasonable steps in mitigation was abandoned, E K Nominee's ability to proceed with that development ceased to be relevant. Onus of Proof 194 Woolworths submitted that in order to substantiate its claim that its expenditure had been wasted, E K Nominees was required to prove the difference between the expenditure it incurred and the residual value or benefit accruing to it from that expenditure. Woolworths submitted that if E K Nominees failed to prove the residual value or benefit accruing to it by reason of its expenditure, it had not discharged its onus to prove its damages and no damages could be awarded. In support of this submission, Woolworths relied upon the decision of the High Court in Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd (1977) 16 ALR 23. There, the plaintiff was induced by a fraudulent misrepresentation to purchase a business. It did not rescind the contract of sale. To establish that it had suffered any damage, it bore the onus of proving that the price it paid for the property purchased was more than the "fair or real value" which the property it had acquired had at the date of purchase (at 36-37). The majority of the High Court held that there was no evidence that the property purchased had no value, and as there was no evidence of what the value was, the plaintiff failed to discharge the burden of proving that it had suffered any loss. 195 The present case is not of that kind. It is one thing to say that where the measure of damages is the difference between the purchase price and the value of the property purchased, the plaintiff bears the onus of showing both the purchase price and the value of the property purchased. However, that is not the relevant principle in this case. E K Nominees was induced to incur expenditure by reason of Woolworths' misleading and deceptive conduct. Prima facie, its damages are the money it spent which it would not otherwise have spent. To the extent to which that expenditure resulted in a benefit to E K Nominees, the benefit must be allowed for in the calculation of damages because it is a direct consequence of the breach of s 52 of the Trade Practices Act (British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 at 690, 691). That is what is meant by E K Nominees being entitled to damages for wasted expenditure. However, the defendant bears the burden of proving the extent to which the loss arising from the expenditure of money has been avoided by the benefit obtained from such expenditure (Monroe Schneider Associates (Inc) v No. 1 Raberem Pty Ltd (1991) 33 FCR 1 at 17; Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [255], [264]; Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443 at [44], [53]). 196 There are three other heads of damage which need to be addressed specifically. The first concerns the fees of Gergely & Pinter. Gergely & Pinter have rendered invoices to Simhilt totalling $545,906.36. $300,906.36 of their invoices have been paid. Their invoice dated 4 February 2003 was for the amount of $245,000. It remains unpaid, as an agreement was made between E K Nominees and Gergely & Pinter that the latter would forgive the final amount of the invoice if it were not recovered from Woolworths. That agreement does not mean that the fees payable to Gergely & Pinter are not recoverable damages. Woolworths cannot take advantage of the Gergely & Pinter's gratuitous, but conditional, willingness to forgive the debt if it is not recovered as damages. The case is analogous to the receipt of a gratuitous payment. I did not understand Woolworths to submit otherwise. 197 The second issue relates to fabricated steel footings which were delivered to the site. Those steel footings were not able to be used. They were fabricated to the specific requirements of the project. They remained on site, rusting away. 198 The third item involves the purchase of a shovel. The shovel was plated with chrome and was to be used for a ground-breaking ceremony at the Auburn site to mark the beginning of major excavations. It cost $36.01 plus GST. E K Nominees still owns the shovel. It was tendered as an exhibit and will be returned to E K Nominees. It could readily be sold or used by E K Nominees. Woolworths has demonstrated that the shovel is of enduring value to E K Nominees and I have no reason to think it is worth less than the $36 paid for it. To this extent, E K Nominees' damages claim should be reduced. 199 I have found that the earliest date from which E K Nominees has established that Woolworths engaged in misleading and deceptive conduct was 29 January 2002. Woolworths took issue with E K Nominees' allocation of expenses as having been incurred after 10 January 2002. The same question of allocation of expenses arises in relation to E K Nominees' damages claim in identifying expenses incurred from 29 January 2002. 200 E K Nominees' claim for damages of $924,653 was made up as follows: AMENDED SCHEDULE B AUBURN SUMMARY OF CLAIM AMOUNTS ARE EXCLUSIVE OF GST CONSULTANTS AMOUNT CLAIMED PROJECT MANAGEMENT ISSAC PROPERTY CONSULT $37,500.00 SILRO HOLDINGS PTY LTD $8,387.10 CONBUILT PTY LTD $18,810.00 TOTAL $64,697.10 CONSULTANTS GERGELY & PINTER PTY LTD (ARCHITECTS) $238,000.00 RICHARD DUGGAN (MECHANICAL VENTILATION CONSULTANT) $7,000.00 D. CATTERSON & ASSOCIATES (ELECTRICAL CONSULTANT) $14,400.00 ARUP SYDNEY (FIRE ENGINEERED SOLUTION) $14,500.00 JEFFERY & KATAUSKAS PTY LTD $1,538.70 MCKENZIE GROUP CONSULTING (BCA CONSULTING & CONSTRUCTION CERTIFICATE) $16,600.00 THE LHO GROUP (HYDRAULIC DESIGN CONSULTANT) $65,163.89 LEN KEEBLE PROJECT PLANNING SERVICES (CONSTRUCTION & PROCUREMENT PROGRAMMING) $4,650.00 RALPH BEATTIE BOSWORTH (NSW) PTY LTD (QUANTITY SURVEYOR) $12,017.50 COLSTON BUDD HUNT & KAFES PTY LTD (TRANSPORT PLANNING) $7,230.00 INGHAM PLANNING (TOWN PLANNERS) $493.75 WILKINSON MURRAY PTY LTD (ACOUSTICAL CONSULTANTS) $6,451.96 LEAN LACKENBY & HAYWARD L'POOL PTY LTD (SURVEYORS) $7,395.45 HLA ENVIROSCIENCES PTY LIMITED $8,245.00 PICTORAL REPORTING (DILAPIDATION REPORT ON ADJOINING PROPERTY) $3,653.50 DM TAYLOR, LANDSCAPE ARCHITECTS PTY LTD (LANDSCAPE ARCHITECT) $1,525.00 MPN GROUP PTY LTD (STRUCTURAL ENGINEER) $118,877.00 LANDERER & COMPANY (LEGALS) $5,490.75 RATNER CHIU & CO SOLICITORS $550.00 GRAHAM BROOKS & ASSOCIATES $0.00 JEBB HOLLAND DIMASI $0.00 ELEVATOR MANAGEMENT SERVICES (LIFT DESIGN) $2,182.00 TOTAL $535,964.50 AUTHORITIES COUNCIL FEES $0.00 WATER $10,714.00 ENERGY AUSTRALIA $0.00 TOTAL $10,714.00 TRADES FIP ELECTRICAL $550.00 J A BRADSHAWS (EXCAV) $214,899.19 BASSETT DEMOLITIONS $12,800.00 BARCA PLUMBING $7,640.00 AIRMAKERS AIRCONDITIONING $12,021.18 WILSON & SONS $5,900.00 T & C PLASTERING $17,350.00 MASTER VINYLS PTY LIMITED $6,000.00 VARIOUS TRADES $8,505.53 TOTAL $285,665.90 MISCELLANEOUS SHOVEL $36.01 RENT $27,575.75 TOTAL $27,611.76 TOTAL $924,653.26 201 The figures were supported by invoices and a description of the work done. In apportioning expenses for work done after 29 January 2002, I have had regard to the dates of the invoices and the description of when the work covered by those invoices was carried out. Where it is not possible to say to what extent an invoice applied to work done before or after 29 January 2002, I have apportioned the invoice according to the period of work covered by the invoice, provided it is clear that the work covered by the invoice spanned both sides of 29 January 2002. Where invoices were rendered for work done in the month of January 2002, I have not made such an apportionment, because of the doubt as to whether any of the work charged for that month was done on or after 29 January 2002. 202 In making this apportionment, I have not relied upon the opinions of Mr O'Connor, a project manager for E K Nominees, who swore an affidavit providing the quantification of the claim. Mr O'Connor was not appointed project manager until 18 February 2002. He did not have personal knowledge of what work was done by the individual consultants before or after 29 January 2002. Indeed, E K Nominees contended that its claim for damages should cover expenditure incurred from 10 January 2002, not 29 January 2002. Accordingly, I have made the apportionment from the invoices, the related documents, and, in some cases, the evidence of Mr Gergely of the work being done. 203 Woolworths submitted that in respect of invoices rendered after 8 May 2002, E K Nominees had not shown that the work did not simply relate to placing the site in a position to comply with statutory safety and environmental requirements. However, the invoices described the work done. Nothing in the invoices which are the subject of the present claim for damages suggests that they are for work which would have had to be carried out even if Woolworths had not engaged in misleading conduct. 204 I have made adjustments to some of the amounts claimed by E K Nominees to reflect an appropriate apportionment. My conclusions are set out in the table below. I attach as an appendix to these reasons my comments on particular items where comments are called for. AMENDED SCHEDULE B AUBURN SUMMARY OF CLAIM AMOUNTS ARE EXCLUSIVE OF GST CONSULTANTS AMOUNT CLAIMED AMOUNT ALLOWED PROJECT MANAGEMENT ISSAC PROPERTY CONSULT $37,500.00 $27,500.00 SILRO HOLDINGS PTY LTD $8,387.10 $5,000.00 CONBUILT PTY LTD $18,810.00 $18,810.00 TOTAL $64,697.10 $51,310.00 CONSULTANTS GERGELY & PINTER PTY LTD (ARCHITECTS) $238,000.00 $153,447.35 RICHARD DUGGAN (MECHANICAL VENTILATION CONSULTANT) $7,000.00 $4,200.00 D. CATTERSON & ASSOCIATES (ELECTRICAL CONSULTANT) $14,400.00 $11,567.00 ARUP SYDNEY (FIRE ENGINEERED SOLUTION) $14,500.00 $14,500.00 JEFFERY & KATAUSKAS PTY LTD $1,538.70 $514.50 MCKENZIE GROUP CONSULTING (BCA CONSULTING & CONSTRUCTION CERTIFICATE) $16,600.00 $16,600.00 THE LHO GROUP (HYDRAULIC DESIGN CONSULTANT) $65,163.89 $62,115.50 LEN KEEBLE PROJECT PLANNING SERVICES (CONSTRUCTION & PROCUREMENT PROGRAMMING) $4,650.00 $4,650.00 RALPH BEATTIE BOSWORTH (NSW) PTY LTD (QUANTITY SURVEYOR) $12,017.50 $10,071.00 COLSTON BUDD HUNT & KAFES PTY LTD (TRANSPORT PLANNING) $7,230.00 $5,670.00 INGHAM PLANNING (TOWN PLANNERS) $493.75 $497.75 WILKINSON MURRAY PTY LTD (ACOUSTICAL CONSULTANTS) $6,451.96 $5,571.68 LEAN LACKENBY & HAYWARD L'POOL PTY LTD (SURVEYORS) $7,395.45 $2,659.09 HLA ENVIROSCIENCES PTY LIMITED $8,245.00 $0.00 PICTORAL REPORTING (DILAPIDATION REPORT ON ADJOINING PROPERTY) $3,653.50 $2,663.50 DM TAYLOR, LANDSCAPE ARCHITECTS PTY LTD (LANDSCAPE ARCHITECT) $1,525.00 $0.00 MPN GROUP PTY LTD (STRUCTURAL ENGINEER) $118,877.00 $105,483.71 LANDERER & COMPANY (LEGALS) $5,490.75 $2,200.00 RATNER CHIU & CO SOLICITORS $550.00 $550.00 GRAHAM BROOKS & ASSOCIATES $0.00 JEBB HOLLAND DIMASI $0.00 ELEVATOR MANAGEMENT SERVICES (LIFT DESIGN) $2,182.00 $2,182.00 TOTAL $535,964.50 $405,143.08 AUTHORITIES COUNCIL FEES $0.00 WATER $10,714.00 $10,714.00 ENERGY AUSTRALIA $0.00 TOTAL $10,714.00 $10,714.00 TRADES FIP ELECTRICAL $550.00 $550.00 J A BRADSHAWS (EXCAV) $214,899.19 $214,899.19 BASSETT DEMOLITIONS $12,800.00 $0.00 BARCA PLUMBING $7,640.00 $7,640.00 AIRMAKERS AIRCONDITIONING $12,021.18 $12,021.18 WILSON & SONS $5,900.00 $5,900.00 T & C PLASTERING $17,350.00 $17,350.00 MASTER VINYLS PTY LIMITED $6,000.00 $6,000.00 VARIOUS TRADES $8,505.53 $7,255.53 TOTAL $285,665.90 $271,615.90 MISCELLANEOUS SHOVEL $36.01 $0.00 RENT $27,575.75 $0.00 TOTAL $27,611.76 $0.00 TOTAL $924,653.26 $738,782.98 205 Unless subsumed by its claim for equitable compensation, E K Nominees is entitled pursuant to s 82 of the Trade Practices Act to damages of $738,782.98, before interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW). The calculation of damages excludes GST. I assume that E K Nominees does not seek to recover damages inclusive of GST. If there is any dispute about that question, it can be raised when short minutes are brought in. A Question of Evidence 206 During the hearing, a question arose as to the admissibility of estimates given by quantity surveyors of the estimated cost of construction of the development, and of the construction of the development contemplated by the 2003 development application. The fact that the estimates of construction had been provided to Mr Marcocci was itself a relevant matter, particularly in the second case. It was relevant to Woolworths' defence that E K Nominees had failed to mitigate its damages by failing to pursue the Aldi development. A question of what estimates Mr Marcocci received as the cost of construction was material, irrespective of the accuracy of the estimate. However, E K Nominees also relied on the estimates given by the quantity surveyors to Mr Marcocci as evidence of what the costs of construction would have been. Neither quantity surveyor was called to verify or explain his opinion. 207 I made an order pursuant to s 136 of the Evidence Act 1995 (NSW) that the use to which the evidence could be put was limited to the issue of whether E K Nominees failed to act reasonably to mitigate its damages, and that the documents not be used as evidence of the likely cost of the developments. 208 The quantity surveyors' estimates were no doubt given by qualified persons skilled in such tasks. If the opinion rule applied to their estimates, the estimates would be inadmissible. The estimates did not meet the requirements for admissibility under s 79 of the Evidence Act having regard to the principles in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705. 209 The opinion rule did not apply to the estimate of the construction cost for the 2003 proposed development. That was because the document was, in any event, admissible for a different purpose (Evidence Act, s 77). There has been recent consideration of the question as to whether the opinion rule applies to documents which are admissible as business records (Australian Securities and Investments Commission v Rich (2005) 216 ALR 320 at 366-369; and see also Hadid v Australis Media (28 October 1996, Sperling J, unreported); Connex Group Australia Pty Ltd v Butt [2004] NSWSC 379). It is not necessary to pursue this question. Whether or not the opinion rule applied, it would have been unfairly prejudicial to Woolworths to have allowed the documents to be used to prove the likely cost of construction (assuming that to be a relevant question). The authors of the documents were not available for cross-examination and the basis of their opinions was not exposed. For these reasons, I limited the use to which the documents could be put pursuant to s 136 of the Evidence Act. 210 In the result, nothing turns on this ruling. The cost of the construction of the Aldi development became irrelevant once the defence of failure to mitigate was dropped. For the reasons I have given, I do not accept that E K Nominees' ability to carry out the Aldi development was relevant otherwise than to the defence of failure to mitigate. The cost of construction of the Woolworths development is only relevant to Woolworths' claim that E K Nominees did not show that it would not have made the same loss had the development proceeded. E K Nominees did not bear the onus on that question. The cost of construction could also be relevant in assessing the maximum fees which Gergely & Pinter were entitled to charge. However, Woolworths did not submit that E K Nominees had failed to show that Gergely & Pinter was owed the amount for which invoices were rendered. Equitable Compensation for Expenses Incurred from 18 July 2001 211 The steps in E K Nominees' claim for equitable compensation were that: (a) Woolworths induced E K Nominees to adopt the assumption that Woolworths would enter into an agreement for lease of the Auburn Road site; (b) in reliance on that assumption, E K Nominees engaged consultants and carried out work and incurred expenditure in so doing; (c) Woolworths knew that E K Nominees was carrying out work and incurring expenditure on the basis of its assumption that Woolworths would enter into an agreement for lease of the Auburn Road site; (d) Woolworths failed to inform E K Nominees that its assumption was incorrect; (e) by refusing to enter into the agreement for lease, Woolworths failed to fulfil E K Nominees' assumption; (f) as a result, E K Nominees has suffered detriment in the form of the expenditure incurred from 18 July 2001; and (g) it is thereby entitled to equitable compensation to remedy that detriment. 212 Although not expressly pleaded, the third step in E K Nominees' claim can be expanded. Woolworths not only knew that E K Nominees was doing work and incurring expense on the assumption that an agreement for lease would be entered into, but Woolworths encouraged E K Nominees to do that work and to incur that expense. 213 E K Nominees' claim was put on the basis of an equitable estoppel, where the appropriate remedy was not to compel Woolworths to make good the assumption, but to compensate the plaintiff for the detriment it suffered by a monetary award. E K Nominees' argument assumed that if the requirements for an equitable estoppel were made out, precluding Woolworths from resiling from the assumption made by E K Nominees that Woolworths would enter into an agreement for lease, E K Nominees was entitled to compensation for the expenses which it incurred in reliance on that assumption. Woolworths took issue with the contention that Woolworths was so estopped. It denied that its conduct was unconscientious. But it did not dispute that, as a matter of principle, monetary compensation was an available remedy if the elements of the estoppel claim were otherwise established. It did not take issue with the proposition that a remedy by way of compensation would satisfy the equity necessary to avoid unconscientious conduct by the defendant (Giumelli v Giumelli (1999) 196 CLR 101 at 125). 214 E K Nominees did not plead or argue a quantum meruit claim for reimbursement of expenses or reasonable remuneration. No reliance was placed on cases such as Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 at 901-903; British Steel Corp v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504 at 511; Dickson Elliott Lonergan Ltd v Plumbing World Ltd [1988] 2 NZLR 608 at 513; or Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 at 258-259, where plaintiffs obtained recovery for work done at the request of the other party, in anticipation of a contract that did not eventuate because of a change of heart of the other party. Although I raised the question whether the facts pleaded supported a claim on the principles in Sabemo Pty Ltd v North Sydney Municipal Council, and the plaintiff's counsel said that they did, no argument was advanced in support of such a claim. It is therefore unnecessary to consider this line of authority, including POS Media Online Ltd v Queensland Investment Corporation [2001] FCA 809, where Wilcox J applied Sinclair v Rankin (1907) 9 WALR 233 in preference to Sabemo, but was apparently not referred to Brenner v First Artists' Management Pty Ltd. 215 Sabemo was more recently considered in the context of work done in anticipation of contracts that did not materialise in this Court in ABB Engineering Construction Pty Ltd v Abigroup Contractors Pty Ltd [2003] NSWSC 665 at [159]-[168] and Australian Securities and Investments Commission v Edwards (2005) 220 ALR 148 at 168-171). 216 In none of these cases is the right to compensation or restitution discussed by reference to the principles of estoppel. However, in K Mason and J W Carter, Restitution Law in Australia, Butterworths, Sydney, 1995 (at [1035]), the learned authors said: " From a technical perspective, it might be asked why there was a right to 'compensation' in Sabemo . If there was a breach of duty, it arose either under estoppel or a principle of good faith. Compensation on the basis of promissory estoppel was not available at the time, but might now be applicable on the basis of Sabemo's (detrimental) reliance on representations made by the council and the council's arguably unconscionable conduct in breaking off relations. From a compensation perspective, the complaint of Sabemo was that it had relied on the council's conduct, and incurred expenditure. Sheppard J's (alternative) solution in terms of restitution is also difficult, because he did not adopt an unjust enrichment basis. He may have taken the view that a claim in restitution is a claim for compensation, or held that restitution may be available even though the principle of unjust enrichment does not apply, perhaps on the basis that unjust enrichment applies only in cases of tangible benefit. We do not see either approach as viable today: each has been overtaken by subsequent developments. " 217 S Christensen, in an article entitled "Recovery for Work Performed in Anticipation of Contract: Is Reliance an Element of Benefit?" (1993) 11 Aust Bar Rev 144, drew a comparison between the facts in Sabemo and the facts in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, and argued that the principles in each case operated in the same circumstances, or may be aspects of the same principle. Similarly, A Wyvill, "Enrichment, Restitution and the Collapsed Negotiations Cases" (1993) 11 Aust Bar Rev 93 argued (at 125), in reference to Waltons Stores (Interstate) Ltd v Maher, that: " By abandoning the requirements that, first, equitable estoppel could only apply between parties who were in an existing contractual relationship and, secondly, it could only be used as a shield not a sword, the High Court of Australia cleared the way for equitable principles based upon unconscionable conduct to allow the recovery of reliance losses from collapsed negotiations. Waltons was a pre-contractual negotiations case and the specific recognition it gave this cause of action based upon unconscionable conduct allows us now to analyse the Sabemo category of case in similar terms. " 218 Having regard to the academic and textwriters' support for such a restitutionary claim being considered according to the principles of estoppel, I am content to proceed along the lines the matter was argued. This is also consistent with the reasoning of Heenan J in Striker Resources NL v Australian Goldfields NL (in liq) [2006] WASC 153 at [126]-[130]. Understandably, Woolworths did not submit that there was no remedy in equity because E K Nominees had an adequate remedy at law. Equitable Estoppel 219 The starting and finishing point is Waltons Stores (Interstate) Ltd v Maher. There the plaintiff obtained a judgment for damages in lieu of specific performance of a contract which had not been made, but which the defendant was estopped from denying. The parties had settled all the terms of a lease of land, but the contracts had not been exchanged. The lease required the owner to demolish the existing building and construct a new one to the lessee's specification. The owner's solicitor forwarded its counterpart of the executed lease to the lessee's solicitor by way of exchange, but the lessee did not provide its executed counterpart. To the lessee's knowledge, the owner commenced demolition and building work. When the building was partially erected, the lessee advised it did not intend to proceed. There are similarities with the facts of the present case. The most significant difference is that the terms of the lease had been settled. The process of exchanging counterparts had proceeded to such an extent that Deane and Gaudron JJ found that the owner had assumed that a binding agreement had been made and that the lessee was estopped from denying the existence of a binding agreement for lease, by standing by silently and watching the owner act to its detriment, and by failing to inform the owner that exchange might not occur (at 439-440, 443, 445 per Deane J; at 460-461, 463-464 per Gaudron J). 220 In the present case, E K Nominees did not assume that an exchange had occurred, or that a contract had otherwise come into existence. It expected that a contract would come into existence. To the knowledge of Woolworths, and with Woolworths' encouragement, it did work and incurred expense in that expectation, which occasioned it detriment when its assumption was not fulfilled. 221 This directs attention to the basis upon which the lessee in Waltons Stores succeeded in the view of Mason CJ, Wilson J and Brennan J. Mason CJ and Wilson J referred with approval to authorities that treated promissory estoppel and proprietary estoppel, or estoppel by acquiescence, as facets of the same general principle. Their Honours said (at 404): " One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J. in Grundt (68); see also Thompson (69). Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption. " 222 After considering Attorney-General (Hong Kong) v Humpreys Estate Ltd [1987] AC 114 (which Mason CJ and Wilson J treated as a case of promissory estoppel and not proprietary estoppel), their Honours said (at 406): "As failure to fulfil a promise does not of itself amount to unconscionable conduct, mere reliance on an executory promise to do something, resulting in the promisee changing his position or suffering detriment, does not bring promissory estoppel into play. Something more would be required. Humphreys Estate suggests that this may be found, if at all, in the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party. Humphreys Estate referred in terms to an assumption that the plaintiff would not exercise an existing legal right or liberty, the right or liberty to withdraw from the negotiations, but as a matter of substance such an assumption is indistinguishable from an assumption that a binding contract would eventuate. On the other hand the United States experience, distilled in the Restatement (2d, §90), suggests that the principle is to be expressed in terms of a reasonable expectation on the part of the promisor that his promise will induce action or forbearance by the promisee, the promise inducing such action or forbearance in circumstances where injustice arising from unconscionable conduct can only be avoided by holding the promisor to his promise." 223 Likewise, Brennan J enunciated principles of equitable estoppel in general terms. After distinguishing (at 415-416) an estoppel in pais, which compels adherence to an assumption of fact which the opposite party has been induced to adopt but which does not itself create rights, from an equitable estoppel, which is itself the source of rights and obligations, his Honour said (at 428-429): " In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs. " 224 Woolworths raised a number of arguments in answer to the claim that it was estopped from departing from the assumption it had induced E K Nominees to adopt that it would enter into the agreement for lease. First, it submitted that nothing it did could reasonably have induced that assumption, as the letter of 18 July 2001 was not "sufficiently specific and unqualified to attract the application of equitable estoppel" (Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475 at 515; Legione v Hately (1983) 152 CLR 406 at 435-436). 225 Secondly, Woolworths relied on evidence of Mr Marcocci that he understood that Woolworths was free to walk away if it wished to do so. It submitted that there could be no estoppel as the first of the requirements identified by Brennan J in Waltons Stores quoted in para [223] above was not satisfied. E K Nominees did not assume that Woolworths was not free to withdraw from the expected legal relationship. Woolworths submitted that it was not unconscionable for it to withdraw from negotiations when E K Nominees knew that Woolworths considered itself free not to enter into any such lease. 226 Thirdly, it submitted that as not all of the terms of the agreement for lease had been settled, there was no agreement for the estoppel to operate upon. 227 Fourthly, Woolworths submitted that the earliest time at which it could be argued that it had engaged in unconscientious conduct was when it failed to disclose the approach by Markham Corporation. Clarity of Representation 228 In Legione v Hately, Mason and Deane JJ said (at 436) that the requirement that a representation be clear in order to found an estoppel applies as much to the doctrine of promissory estoppel as it does to an estoppel in pais. The passage in Mobil Oil Australia Ltd v Wellcome International Pty Ltd at 515 relied on by Woolworths concerns a different point, namely, whether there is a sufficient particularity in the legal relationship which E K Nominees assumed would come into existence to found an estoppel, when not all the terms of the anticipated contract had been settled. Mobil Oil is best dealt with in the context of Woolworths' third submission. 229 In my view, E K Nominees' assumption that Woolworths would enter into an agreement for lease was reasonably based on Woolworths' conduct. Woolworths clearly represented its intention to enter into the agreement for lease, even though its intention was conditional. 230 The parties had settled all the terms that were necessary for an agreement for lease, although further and more complete terms were the subject of later negotiation. Woolworths' Property Committee had approved of Woolworths entering into an agreement. For the reasons given in paras [129]-[131], Woolworths' letter of 18 July 2001 contained a clear representation of its intention to enter into the agreement for lease, even though its intention was subject to conditions. As matters proceeded, further issues arose for discussion and agreement. There is no reason to doubt that those issues would have been resolved, as the submission to the Property Committee of 30 April 2002 made clear. (Mr Hunt said that the documents would be ready for execution in the following month.) The assumption engendered by the communication of the Property Committee's approval was reinforced by the work which followed, in which Woolworths encouraged E K Nominees to obtain development consent as soon as possible, supported it in its endeavours to do so, and actively co-operated with E K Nominees and its consultants in seeking to finalise reports, drawings, and specifications for the development. I do not accept the first of Woolworths' submissions. No Assumption that Woolworths was Obliged to Proceed 231 E K Nominees reasonably expected that Woolworths would enter into an agreement for lease with it on the terms referred to in Woolworths' letter of 18 July 2001, which in turn referred to the terms agreed in previous correspondence, with such additional terms or modifications as might be agreed upon in settling the final form of the agreement for lease. However, E K Nominees, through Mr Marcocci, believed that Woolworths was not legally bound to do so, but was free to walk away if it chose to do so. Woolworths' letter of 18 July 2001 provided that its approval was subject to certain terms and conditions including "agreement to lease and lease". Mr Marcocci gave evidence in cross-examination that he understood that Woolworths was saying that it would not be bound to any agreement with E K Nominees until there was an execution of the agreement for lease and lease. Until then, he understood that Woolworths was free to walk away if it wanted to (T193, 273). 232 The question is whether it is sufficient for E K Nominees to prove that it was induced by Woolworths reasonably to assume that Woolworths would enter into an agreement for lease with it, and acted to its detriment in reliance on that assumption, or whether it is necessary for E K Nominees to have assumed, or expected, that Woolworths was bound to proceed. If it is necessary for E K Nominees to demonstrate an assumption that Woolworths was bound to proceed, that is, to have assumed that Woolworths was not free to withdraw from the expected legal relationship, then its claim based on estoppel must fail. 233 In Attorney-General (Hong Kong) v Humphreys Estate Ltd, an agreement in principle was reached for the Hong Kong government to acquire property of the plaintiff HKL in exchange for the grant of Crown land to HKL with the right for HKL to develop it and adjoining land. The agreement was expressed to be "subject to contract". The government took possession of HKL's buildings, spent money on them and moved a number of government employees from their existing residences into those properties. It allowed HKL into possession of its property and gave it a licence to demolish the existing buildings. A number of the terms of the "in principle" agreement were performed on both sides. The question was whether HKL was estopped from withdrawing from the agreement in principle with the government so that it was entitled to re-take possession of its land. The Privy Council reviewed a number of the authorities on proprietary and promissory estoppel, including the statement of principle in the dissenting judgment of Lord Kingsdown in Ramsden v Dyson (1866) LR 1 HL 129 at 170, and the decision of Robert Goff J in Holiday Inns Inc v Broadhead (1974) 232 EG 951 at 1087. These were reviewed with evident approval. Lord Templeman, who delivered the judgment of the Privy Council, said (at 124): "Their Lordships accept that the government acted to their detriment and to the knowledge of HKL in the hope that HKL would not withdraw from the agreement in principle. But in order to found an estoppel the government must go further. First the government must show that HKL created or encouraged a belief or expectation on the part of the government that HKL would not withdraw from the agreement in principle. Second, the government must show that the government relied on that belief or expectation." 234 The Privy Council found that the government failed on both counts. As to the first, their Lordships said (at 124-125): "Counsel for the appellants submitted that every action of the government and every action of HKL after the date of the agreement in principle served to create or encourage a belief and expectation in the government that the agreement in principle would be carried into effect and that HKL would not withdraw. HKL allowed the government to take possession of Tregunter, to fit out the flats, to rehouse senior civil servants and to dispose of their former residences. HKL prevailed on the government to allow HKL to enter on and to destroy the buildings comprised in Queen's Gardens and adjacent sites and HKL paid in full the price for taking over Queen's Gardens. It was impossible for the government to go back and unthinkable that HKL would not go forward. It was unconscionable for HKL to seek to exercise their legal right to withdraw from the agreement in principle." After referring to a number of documents, their Lordships continued (at 126): " This memorandum makes it clear that the government did not believe that HKL were bound to proceed ." They concluded (at 127-128): "In the present case the government acted in the hope that a voluntary agreement in principle expressly made 'subject to contract' and therefore not binding would eventually be followed by the achievement of legal relationships in the form of grants and transfers of property. It is possible but unlikely that in circumstances at present unforeseeable a party to negotiations set out in a document expressed to be 'subject to contract' would be able to satisfy the court that the parties had subsequently agreed to convert the document into a contract or that some form of estoppel had arisen to prevent both parties from refusing to proceed with the transactions envisaged by the document. But in the present case the government chose to begin and elected to continue on terms that either party might suffer a change of mind and withdraw." 235 Their Lordships concluded from the fact that HKL, to the knowledge of the government, retained the right to withdraw from the agreement in principle, that HKL did not induce the government to expect that it would not withdraw. This may merely be a finding of fact. On the other hand, their Lordships appear to have proceeded on the basis that it was necessary for the government to show that it acted to its detriment, not on the basis of an assumption induced by HKL that HKL would not withdraw from the agreement in principle, but on the basis of an assumption induced by HKL that HKL could not do so. However, the Privy Council did not in terms say that that was the principle to be applied. Rather, their Lordships appear to have proceeded on the basis that because the government knew HKL could withdraw from the agreement in principle, HKL did not induce the government to believe it would not do so, notwithstanding its other conduct. This appears to be a factual finding. 236 The Privy Council stated the principle in terms that the government needed to show that HKL encouraged the government to believe that the plaintiff would not withdraw. 237 The question whether the plaintiff must assume that a contract will come into existence, or a promise will be performed, or an interest granted, as distinct from the question whether the plaintiff must assume that he has a right to compel the defendant not to withdraw from an expected legal relationship, was at the heart of the differences of opinion in the House of Lords in Ramsden v Dyson. It is Lord Kingsdown's dissenting speech in Ramsden v Dyson which has commanded acceptance. His Lordship stated the principle as follows (at 170-171): " The rule of law is applicable to the case appears to me to be this: If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation. … If, at the hearing of the cause, there appears to be such uncertainty as to the particular terms of the contract as might prevent a Court of equity from giving relief if the contract had been in writing, but there had been no expenditure, a Court of equity will nevertheless, in the case which is above stated, interfere in order to prevent fraud, though there has been a difference of opinion amongst great Judges as to the nature of the relief to be granted. … but I do not understand any doubt to have been entertained … that, either in the form of a specific interest in the land, or in the shape of compensation for the expenditure, a Court of equity would give relief, and protect in the meantime the possession of the tenant. If, on the other hand, a tenant being in possession of land, and knowing the nature and extent of his interest, lays out money upon it in the hope or expectation of an extended term or an allowance for expenditure, then, if such hope or expectation has not been created or encouraged by the landlord, the tenant has no claim which any Court of law or equity can enforce. " 238 What is absent from this statement of principle is any requirement that the tenant believe that the landlord is legally obliged to confer an interest in the land on him. This absence is conspicuous because it was an important part of the reasoning of the majority of the House of Lords that the tenant failed because he did not believe he had acquired an absolute right (that is, a right as distinct from an expectation) that an interest would be granted beyond that of a tenant at will, or a tenant from year to year, but was depending rather on the family's honour (per Lord Cranworth at 142, 146; per Lord Wensleydale at 166, 167). 239 In Plimmer v The Mayor of Wellington (1884) 9 App Cas 699, the Privy Council said (at 711-712) that there was no disagreement among the judges in Ramsden v Dyson on the principles of law applicable to that case, only on the inferences to be drawn from the facts. However, the conclusions of fact which the Privy Council summarised Lord Cransworth as having drawn included that the tenant never believed that he had any higher right than as a tenant at will, that the landlord had refused to come under any legal obligation, and that the tenant had expressly submitted to trust to the honour of the landlord's family. On the other hand, Lord Kingsdown accepted the respondents' evidence that "those who built and entered on their land without leases, at lower rents, did so on the assurance that they might have leases whenever they required them, and that in the meantime they should not be disturbed in their possessions, or at all events, not without full compensation." (at 172). His Lordship did not go on to inquire whether the respondents considered that assurance gave them legally enforceable rights, although it was an important part of the reasoning of the majority that the respondents did not have that belief. 240 In Attorney-General (Hong Kong) v Humphreys Estate, the Privy Council cited with apparent approval the following statement by Robert Goff J in Holiday Inns Inc v Broadhead that: " The authorities clearly establish that there is a head of equity under which relief will be given where the owner of property seeks to take an unconscionable advantage of another by allowing or encouraging him to spend money, whether or not on the owner's property, in the belief known to the owner that the person expending the money will enjoy some right or benefit over the owner's property which the owner then denies him. The authorities also establish that this relief can be granted although the agreement or understanding between the parties was not sufficiently certain to be enforceable as a contract, and that the Court has a wide, albeit of course judicial, discretion to what extent relief should be given and what form it should take. " 241 In Holiday Inns Inc v Broadhead, the plaintiff negotiated to take a long-term lease of a hotel which it would construct. It reached an agreement in principle with the defendant for the grant of a lease, but no contract was entered into. It spent money and acted to its detriment in reliance on the belief that an agreement for lease would be entered into. The owner, Mr Broadhead, then withdrew. Robert Goff J made no finding that the plaintiff believed that Mr Broadhead was legally bound to proceed. The evidence, so far as it is recounted in the judgment at 1087 and 1089, does not suggest that the plaintiff had such a belief. For example, the plaintiff said "I had no contract. I had a gentleman's agreement with a gentleman … I had an agreement; I did not have a contract." 242 In Waltons Stores (Interstate) Ltd v Maher, Brennan J took the Privy Council in Attorney-General (Hong Kong) v Humphreys Estate to have decided that it was not sufficient to show that the government expected that, as a matter of probability, HKL would not withdraw from the agreement, but that it was necessary to show an expectation that HKL was bound to proceed (at 422). Brennan J said (at 422-423) that: " … an assumption or expectation by one party which does not relate to what the other party is bound to do or not to do gives no foundation for an equitable estoppel, though the assumption or expectation relates to the prospect of the other party conducting himself in a particular way. The risk that the other party who, being free to conduct himself in whatever way he chooses, may choose to conduct himself in a way different from that assumed or expected rests with the party who adopts the assumption or expectation. Parties who are negotiating a contract may proceed in the expectation that the terms will be agreed and a contract made but, so long as both parties recognise that either party is at liberty to withdraw from the negotiations at any time before the contract is made, it cannot be unconscionable for one party to do so. Of course, the freedom to withdraw may be fettered or extinguished by agreement but, in the absence of agreement, either party ordinarily retains his freedom to withdraw. It is only if a party induces the other party to believe that he, the former party, is already bound and his freedom to withdraw has gone that it could be unconscionable for him subsequently to assert that he is legally free to withdraw." 243 Hence, the first of the six well-known criteria which Brennan J formulated as being necessary to establish an equitable estoppel (at 428-429) was that: " The plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship ." 244 However, Mason CJ and Wilson J said (at 406): " … The doctrine of promissory estoppel … extends to the enforcement of voluntary promises on the footing that a departure from the basic assumptions underlying the transaction between the party must be unconscionable. As failure to fulfil a promise does not of itself amount to unconscionable conduct, mere reliance on an executory promise to do something, resulting in the promisee changing his position or suffering detriment, does not bring promissory estoppel into play. Something more would be required. Humphreys Estate suggests that this may be found, if at all, in the creation or the encouragement by the party estopped in the other party of an assumption that a contract will come into existence … and that the other party relied on that assumption to his detriment to the knowledge of the first party. Humphreys Estate referred in terms to an assumption that the plaintiff would not exercise an existing legal right or liberty, the right or liberty to withdraw from the negotiations, but as a matter of substance such an assumption is indistinguishable from an assumption that a binding contract would eventuate. " 245 Their Honours held that once the lessee learned that the owners were proceeding to carry out demolition work on the property, it was required to choose whether to enter into the contract or warn them that it had not yet decided upon the course it would take (at 407). Their Honours said: "The appellant's inaction, in all the circumstances, constituted clear encouragement or inducement to the respondents to continue to act on the basis of the assumption which they had made. It was unconscionable for it, knowing that the respondents were exposing themselves to detriment by acting on the basis of a false assumption, to adopt a course of inaction which encouraged them in the course they had adopted. … the appellant is estopped in all the circumstances from retreating from its implied promise to complete the contract." 246 The implied promise to complete (that is, enter into) the contract was a voluntary promise. But for the estoppel, Waltons was free not to proceed. 247 Mason CJ and Wilson J did not say that the party relying upon the estoppel must assume not only that a contract will come into existence, but that the other party is legally bound to bring it into existence. Their Honours described Attorney-General (Hong Kong) v Humphreys Estate as turning on a finding that the Hong Kong Government had failed to show that HKL had created or encouraged a belief or expectation on the part of the government that it would not withdraw from an agreement in principle reached with the government. 248 The general statements of the principles of equitable estoppel in The Commonwealth v Verwayen (1990) 170 CLR 394 do not include a requirement that if the assumption which is the foundation of the estoppel is an assumption that a legal relationship will come into existence with the other party, the party must believe that the opposite party is legally bound to enter into the expected relationship (per Mason J at 412-413; per Deane J at 444-445; per Dawson J at 453-454; and per McHugh J at 500-501). However, the present issue did not arise for consideration in The Commonwealth v Verwayen. 249 In Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, Priestley JA, with whom Hope and McHugh JJA agreed, extracted from Waltons Stores a number of propositions concerning common law and equitable estoppel. Relevantly, his Honour said in proposition (5) (at 472): " For equitable estoppel to operate in circumstances such as those of the present case there must be the creation or the encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed, and reliance on that by the plaintiff in circumstances where departure from the assumption by the defendant would be unconscionable. " 250 It is to be noted that his Honour did not expressly adopt the requirement stipulated by Brennan J in Waltons Stores that where the assumption is that a contract will come into existence, the party asserting an equity arising by estoppel must believe that the estopped party is bound to proceed to enter into the contract. However, it was submitted by counsel for Woolworths that, following what Brennan J said in Waltons Stores, it would only be unconscionable for the defendant to depart from the assumption which the plaintiff was encouraged to adopt if the assumption were that the defendant was bound to proceed. 251 The question was further considered by Priestley JA in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582. His Honour pointed out that proposition (5) in Silovi Pty Ltd v Barbaro was expressed to apply to the circumstances of that case. The circumstances of that case were akin to those in Waltons Stores in that the terms of the proposed agreement had all been agreed to. In Austotel v Franklins, Franklins had spent money and acted to its detriment in terminating its current lease of other premises in the expectation that it would take up a lease in a new suburban property development. The terms of that lease had not been agreed. Indeed, the parties had negotiated for an increase in the space to be taken by Franklins, but had not reached an agreement on an enlarged rent. Kirby P and Rogers AJA held that both parties had deliberately chosen to keep that matter open in the hope of obtaining an advantage in the negotiation. 252 Priestley JA, who dissented in the result, reviewed the authorities and restated proposition (5) from Silovi Pty Ltd v Barbaro with two extensions (at 610). In the first place, his Honour removed the qualification that proposition (5) applied to circumstances such as those obtaining in Silovi Pty Ltd v Barbaro. Secondly, his Honour restated the proposition to apply also to an assumption that an interest would be granted to the plaintiff by the defendant. That extension is not directly relevant to the present case. 253 In S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637, the Full Court of the Federal Court described as "cogent" the fifth proposition restated by Priestley JA in Austotel. 254 In Austotel v Franklins, Kirby P agreed with Priestley JA's restatement and expansion of proposition (5) from Silovi Pty Ltd v Barbaro. His Honour said (at 585): "I am prepared to accept that, for equitable estoppel to operate, there must relevantly be the creation of encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence, or a promise be performed, or a transaction carried out between the plaintiff and the defendant, and reliance on that by the plaintiff in circumstances where departure from the assumption by the defendant would be unconscionable." 255 Rogers AJA did not attempt a delineation of the requisite elements of an estoppel in the circumstances of the case before him. His Honour was of the view that it was not unconscionable for Austotel to decline to enter into the proposed lease where Franklins deliberately refrained from seeking to reach agreement on an essential term in the hope of obtaining an advantage in the negotiations. 256 In Austotel v Franklins, Priestley JA considered Attorney-General (Hong Kong) v Humphreys Estate and said (at 614): " … the reason why it is in general unlikely that there will be an estoppel in circumstances where parties are negotiating by reference to a document expressed to be 'subject to contract' or 'subject to exchange', is that the circumstances are likely to show that neither party is relying on the contractual intention of the other, and thus the reliance element of any estoppel will usually be absent." 257 This is consistent with the way in which Mason CJ and Wilson J in Waltons Stores considered Attorney-General (Hong Kong) v Humphreys Estate. That is to say, the fact that the parties are negotiating "subject to contract" will usually indicate that one party is not relying, or at least is not reasonably relying, upon the contractual intention of the other party. But whether there is such reliance is a question of fact. 258 Nor, with respect to Brennan J in Waltons Stores, need it always be the case that "so long as both parties recognise that either party is at liberty to withdraw from the negotiations at any time before the contract is made, it cannot be unconscionable for one party to do so." Whether it is unconscionable for one party to withdraw will depend on what was the nature of the risk of his or her withdrawal which the other party was induced to assume, and the extent to which the other party acted to his or her detriment on the basis of that assumption, to the knowledge, or with the encouragement, of the first party. 259 In Baird Textile Holdings Ltd v Marks & Spencer plc [2001] All ER (D) 352, where the parties were in a close and long-term business relationship and refrained from entering into legally binding contracts, Mance LJ said (at [96]): " They must be taken to have been well aware of the legal significance of contracting or not contracting. [Counsel] accepted that the question was ultimately one of risk. In my view, these considerations indicate that the risk fell on [the appellant] in the present situation. " However, it is not the law that parties cannot find relief on the principles of equitable estoppel merely because they have not entered into contractual relationships. The fact that a party might rely upon a non-contractual representation or promise to his detriment is the very reason for the doctrine of equitable estoppel. The doctrine affords relief against people acting to their detriment on unenforceable promises, if all of the circumstances make it unconscionable for the estopped party to resile from the assumption which he or she has induced the other to make. The fact that the parties have not entered a contractual relationship provides the occasion for considering the doctrine of estoppel. It is not the end of the inquiry. In Baird Textiles , the Court of Appeal found that the High Court's decision in Waltons Stores went beyond the limits of equitable estoppel provided for in English law. Their Lordships accepted that their decision in that case may have been different if it were open to them to apply the principles in Waltons Stores . 260 In the present case, E K Nominees must be taken to have accepted the risk that notwithstanding all of the work which it had done at Woolworths' request, Woolworths might not proceed to enter into an agreement for lease because of delays in satisfying the Council's requirements, or if Woolworths insisted on including a term in the agreement for lease with which E K Nominees could not agree. However, to adopt the language of Sheppard J in Sabemo (at 902-903), E K Nominees did not accept the risk of Woolworths abandoning the project "not for any reason associated with bona fide disagreement concerning the terms of the contract to be entered into, but for reasons which, however valid, pertain[ed] only to [its] own position." Particularly is that so for the period of twelve months following Woolworths board's approval, during which E K Nominees was both obliged to commit itself to the project, or face a claim from Woolworths for its costs and loss of profit, and entitled to rely on the board approval remaining operative. 261 In other words, the recognition by one party that the other party is not legally bound by a contract, or is not legally bound to enter into a contract, (if there is a difference), cannot in all circumstances mean that it is not unconscionable for the opposite party to withdraw if it has induced the first party to act to its detriment in the belief that a contract will eventuate. Whether the first party is relying on the other's contractual intentions, whether it is doing so reasonably, and whether it has accepted the risk of the allegedly estopped party not proceeding in any circumstance, are questions of fact depending upon particular circumstances. 262 This is only to apply to this context what was said by Deane J in The Commonwealth v Verwayen (at 445) that: " Ultimately, however, the question whether departure from the assumption would be unconscionable must be resolved not by reference to some preconceived formula framed to serve as a universal yardstick but by reference to all the circumstances of the case, including the reasonableness of the conduct of the other party in acting upon the assumption and the nature and extent of the detriment which he would sustain by acting upon the assumption if departure from the assumed state of affairs were permitted. " 263 This statement was referred to with approval by Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli v Giumelli at 123. 264 This conclusion is also consistent with later English authority. Attorney-General (Hong Kong) v Humphreys Estate has been applied in England in a number of cases to deny a claim in estoppel where a party alleged that it altered its position to its detriment in reliance on negotiations which were conducted subject to contract (Evans v James [2001] CP Rep 36, [2000] 42 EG 173; Akiens v Salomon (1993) 65 P&CR 364; Secretary of State for Transport v Christos [2003] EWCA Civ 1073; [2004] 1 P&CR 17). However, in Gillett v Holt [2001] Ch 210, the Court of Appeal said that Attorney-General (Hong Kong) v Humphreys Estate did not require a party raising an estoppel, who was acting to his or her detriment on the faith of a promise or representation made by another, to show that the promise or representation was expressed to be irrevocable. Robert Walker LJ referred with approval (at 227) to the argument that: " The whole point of estoppel claims is that they concern promises which, since they are unsupported by consideration, are initially revocable. What later makes them binding, and therefore irrevocable, is the promisee's detrimental reliance on them. Once that occurs, there is simply no question of the promisor changing his or her mind. " 265 In Gonthier v Orange Contract Scaffolding Ltd [2003] EWCA Civ 873, Lindsay J, with whom Kay and Waller LJJ agreed, said (at [60] and [61]) that Gillett v Holt had opened up a possibility which Attorney-General (Hong Kong) v Humphreys Estate had seemed to deny, namely, that: "where a very strong case can be made on the facts as to the obviousness and duration of reliance upon a 'subject to contract' dealing nonetheless being implemented, notwithstanding [Humphreys Estate] , the right to withdraw from the dealing may be lost …". 266 In Whittle v Parnell Mogas Pty Ltd (2006) 94 SASR 421 the Full Court of the South Australian Supreme Court, by majority, rejected a claim by an intending lessor of a service station that the proposed lessee, with whom it had negotiated, was estopped from denying that an agreement for lease had been made. The decision turned on findings of fact that the intending lessor had not assumed that an agreement for lease had been made, that the proposed lessee had not induced it to do so, and the proposed lessee was not acting unconscionably in denying that it was bound to proceed (at 4466,448; [100]-[101], [117]-[118]). 267 In the course of her reasons, Layton J referred (at 448, [116]) with approval to Brennan J's statement in Waltons Stores at 423 that it is only unconscionable for a person to assert a right to withdraw from a proposed contract if he or she has induced the opposite party to assume that he or she is not free to withdraw. Her Honour did not consider whether this was consistent with the reasons of Mason CJ and Wilson J at 406, cited in para [244] above, or with other authorities. The question did not squarely arise, as the estoppel the plaintiff contended for was based on its having assumed that a contract had been entered into; not that a contract would be entered into. I do not consider that Whittle v Parnell Mogas Pty Ltd requires a different conclusion on this question from the one to which I have come. 268 I conclude that notwithstanding that E K Nominees, through Mr Marcocci, did not believe that Woolworths was bound to enter into an agreement for lease, but was free to withdraw, it is nonetheless unconscionable for Woolworths to deny E K Nominees' assumption that Woolworths would proceed to enter into the agreement for lease. The unconscionability arises from a combination of circumstances that: (a) Woolworths knew of E K Nominees' expenditure in reliance on that assumption and encouraged that expenditure; (b) the expenditure would have been for the benefit of both parties had the contract proceeded; (c) Woolworths insisted that if E K Nominees failed to perform in accordance with the agreement in principle which had been reached, that is, if it failed to take all the preliminary steps which were necessary before entering into the agreement for lease, Woolworths would be entitled to make a claim for its own costs and loss of profits; (d) Woolworths represented that the approval which its board had given would be operative for a period of twelve months and that if the agreement for lease were not entered into by that time, Woolworths would regard itself as free to terminate the agreement in principle, free of any claim. That period had not expired when it withdrew from negotiations for the agreement for lease; (e) E K Nominees had previously sought assurances that notwithstanding the possibility of a better site being available to Woolworths, Woolworths had a bona fide interest in locating a Woolworths supermarket on the Auburn Road site, and that assurance was given; (f) Woolworths' words and conduct conveyed that it would not pull out of negotiations with E K Nominees, after E K Nominees had expended substantial moneys on the Auburn Road site, in order to relocate its supermarket to an alternative site. Was the Proposed Agreement Sufficiently Defined? 269 A lack of definition of the interest which the plaintiff was induced to assume it would acquire in the defendant's property may not be a bar to the grant of equitable relief on the principles of proprietary estoppel (Ramsden v Dyson per Lord Kingsdown at 170-171; Plimmer v The Mayor of Wellington; Inwoods v Baker [1965] 2 QB 29 at 37; Holiday Inns Inc v Broadhead; Austotel v Franklins). As Jacobson J said in Pacific National (ACT) Ltd v Queensland Rail [2006] FCA 91 (at [668]): " (22) Subject to a qualification stated below, it is not necessary that the interest to the secured under the Ramsden v Dyson or Plimmer principle be expressly stated or that the terms of the arrangement or understanding to secure that interest be sufficiently certain to be enforceable as a contract. The Court must look at the circumstances of each case to determine the form of relief: Plimmer at 713–714, Inwards v Baker [1965] 2 QB 29 at 37, and Austotel at 607–610 per Priestley JA. (23) The qualification is that where the parties have not reached agreement as to the contractual terms necessary to establish the interest in the land, the Court will exercise caution in coming to a conclusion that it would be unconscionable to prevent a party from insisting upon its strict legal rights: Austotel at 585–586 per Kirby JA and at 620–621 per Rogers AJA. " 270 Even if what had been agreed as the terms to be included in the agreement for lease were insufficient for a complete agreement, it would not follow that E K Nominees was not entitled to relief by way of compensation for the expenditure incurred. If that were the fact, it would mean that, in contrast to Waltons Stores, E K Nominees would not be entitled on the principles of equitable estoppel to enforce a contract which Woolworths would be estopped from denying it was obliged to enter into. It would not follow that E K Nominees was wholly without remedy. 271 The present case is not like Mobil Oil Australia Ltd v Wellcome International Pty Ltd, on which Woolworths relied. There, an officer of an oil company made representations to the company's franchisees of its petrol stations that they would receive an extended tenure if certain performance levels were met. Two promises or representations were alleged. The first was that if a dealer achieved a certain level of performance in any one year, it would be give one additional year's tenure of its current franchise (the "one for one proposal"). The second was that if the dealier attained a certain level of performance over six years, it would receive a nine-year extension of its franchise (the "nine for six proposal"). The Full Court of the Federal Court held that no commitment was mentioned in reference to the nine for six proposal (at 515). The Court said (at 515): " … A generalised commitment to find a way to implement an appropriate tenure for achievements scheme cannot, in the present context, give rise to an expectation of either a 'particular legal relationship' coming into existence or the grant of an identifiable 'interest' to use the language of Waltons and of Plimmer . The essential elements and details of the legal relationship are lacking as are any specific details relating to the duration or terms of any extension or renewal or of the period over which the franchisees would qualify. … The 'less precise' approach identified in Plimmer by Priestley JA does not in our view, support a submission that there is 'sufficient' certainty in the 'promise' or 'encouragement' with respect to the 'finding a way' commitment, to attract the operation of the doctrine of equitable estoppel. The lack of information as to the contents of the proposal is too pronounced. In particular, there is a lack of information as to the period and qualifying performance and the duration, and extent of the interest to be granted. " 272 The Court went on to compare a case where the plaintiff had made expenditure where it was possible with reasonable certainty to identify the amount or the value of the expenditure or the value of work done on property, so that some reasonably precise determination could be made of the relief called for to redress or remove the detriment. 273 The matter is one of degree. The insufficient definition of the proposal in Mobil Oil Australia v Wellcome International Pty Ltd is also relevant to the reasonableness of the plaintiff's reliance upon a proposal and whether it is unconscionable for a defendant to deny an assumption which an indefinite proposal may have induced. 274 In the present case, the term, commencement, duration, and rent of the lease had all been settled. So had almost all the other terms. The parties had also settled the details of the construction to be undertaken. 275 The details of the agreement for lease which were unresolved were minor. The parties had agreed to all the essential terms of a lease which could have given rise to a binding agreement for lease had they then agreed to be bound by those terms. The only "commercial terms" which were outstanding were the number of trolleys for which a bay was to be provided and proposed amendments to the definition of outgoings to whose increase Woolworths would be required to make a contribution. The correspondence leading to the grant of the Board's approval had set out sufficient terms. Woolworths' letter of 5 December 2000 had proposed that "lessee to pay increases in rates and taxes over a year one base only". E K Nominees agreed to this on 25 January 2001. This was restated in Woolworths' letter of 18 July 2001 advising of the Board's approval. The draft lease provided a definition of outgoings. The dispute concerned the proposal by E K Nominees to include in the definition of outgoings an amount for management fees and associated wages. The fact that that inclusion was unresolved does not mean that there was not an agreement on all essential terms. Had E K Nominees sought specific performance of an agreement for lease, such an order could have been made with the question of what expenses fell within the expression "outgoings" being left for later decision, if a question of interpretation of the agreement for lease ever arose. Alternatively, the matter could have been referred to an Associate Judge or referee to settle the terms of the lease. 276 The same comments are true of the provision of space for shopping trolleys. The draft lease provided that the landlord provide a secure undercover area for the storage of not less than a certain number of trolleys. There was no suggestion that there was disagreement about the number. The solicitor's note of the meeting of 21 March 2002 was that Mr Marcocci would come back on the issue of the number of shopping trolleys for which space was to be provided. This was a detail which, if left unresolved, would be resolved by an implication of reasonableness, or by the term being settled by the Court. 277 It was suggested that there was an outstanding commercial term in relation to a "sunset date". This was a reference to the date for completion of the building and the date by which Woolworths would be able to occupy it. Corrs Chambers Westgarth had set out Woolworths' position in relation to the extension of the "sunset date" in its letter of 14 March 2002. It appears that this was a matter which was resolved at the meeting of 15 March 2002. 278 Accordingly, the fact that not all of the terms of the proposed agreement for lease had been finally resolved does not preclude E K Nominees from pursuing its claim for equitable compensation for expenditure incurred as the appropriate remedy to give effect to its cause of action on the basis of an equitable estoppel. Date From Which Equitable Compensation is Payable 279 Woolworths submitted that the earliest time in which it could be said to have engaged in anything remotely resembling unconscientious conduct was following the approach from Markham Corporation on 10 January 2002. It submitted that equitable compensation could only be payable in respect of expenditure incurred after that date. 280 I do not agree with this submission. It is true that Woolworths' conduct from 29 January 2002 is capable of giving rise to an estoppel by encouragement through silence in failing to disclose the change in the likelihood of its entering into the agreement for lease following the approach from Markham Corporation. However, that is not the only ground upon which the estoppel arises. What is unconscientious is the denial by Woolworths of E K Nominees' assumption that it would enter into the agreement for lease. What makes its position unconscientious is not only its silence following the approach from Markham Corporation in January 2002, but its later denial of that assumption, notwithstanding the encouragement which it gave to E K Nominees' expenditure after the conveying of Board approval on 18 July 2001. Conclusion in Relation to Estoppel Claim 281 For these reasons, I consider that E K Nominees has made good its claim that it is entitled to equitable compensation from the time it incurred expenditure with Woolworths' knowledge and encouragement after 18 July 2001. Quantum of Claim for Equitable Compensation 282 E K Nominees' claim for equitable compensation was made up as follows: AMENDED SCHEDULE A AUBURN SUMMARY OF CLAIM AMOUNTS ARE EXCLUSIVE OF GST CONSULTANTS AMOUNT CLAIMED PROJECT MANAGEMENT ISSAC PROPERTY CONSULT $43,500.00 SILRO HOLDINGS PTY LTD $15,600.00 CONBUILT PTY LTD $18,810.00 TOTAL $77,910.00 CONSULTANTS GERGELY & PINTER PTY LTD (ARCHITECTS) $516,500.00 RICHARD DUGGAN (MECHANICAL VENTILATION CONSULTANT) $7,000.00 D. CATTERSON & ASSOCIATES (ELECTRICAL CONSULTANT) $14,400.00 ARUP SYDNEY (FIRE ENGINEERED SOLUTION) $14,500.00 JEFFERY & KATAUSKAS PTY LTD $5,188.70 MCKENZIE GROUP CONSULTING (BCA CONSULTING & CONSTRUCTION CERTIFICATE) $16,600.00 THE LHO GROUP (HYDRAULIC DESIGN CONSULTANT) $67,750.50 LEN KEEBLE PROJECT PLANNING SERVICES (CONSTRUCTION & PROCUREMENT PROGRAMMING) $4,650.00 RALPH BEATTIE BOSWORTH (NSW) PTY LTD (QUANTITY SURVEYOR) $12,017.50 COLSTON BUDD HUNT & KAFES PTY LTD (TRANSPORT PLANNING) $13,030.00 INGHAM PLANNING (TOWN PLANNERS) $5,093.00 WILKINSON MURRAY PTY LTD (ACOUSTICAL CONSULTANTS) $7,167.46 LEAN LACKENBY & HAYWARD L'POOL PTY LTD (SURVEYORS) $7,395.45 HLA ENVIROSCIENCES PTY LIMITED $8,245.00 PICTORAL REPORTING (DILAPIDATION REPORT ON ADJOINING PROPERTY) $3,653.50 DM TAYLOR, LANDSCAPE ARCHITECTS PTY LTD (LANDSCAPE ARCHITECT) $1,938.00 MPN GROUP PTY LTD (STRUCTURAL ENGINEER) $119,857.00 LANDERER & COMPANY (LEGALS) $5,490.75 RATNER CHIU & CO SOLICITORS $550.00 GRAHAM BROOKS & ASSOCIATES $1,675.00 JEBB HOLLAND DIMASI $560.00 ELEVATOR MANAGEMENT SERVICES (LIFT DESIGN) $2,182.00 TOTAL $835,443.86 AUTHORITIES COUNCIL FEES $13,823.00 WATER $10,714.00 ENERGY AUSTRALIA $2,472.00 TOTAL $27,009.00 TRADES FIP ELECTRICAL $550.00 J A BRADSHAWS (EXCAV) $214,899.19 BASSETT DEMOLITIONS $13,245.00 BARCA PLUMBING $7,640.00 AIRMAKERS AIRCONDITIONING $12,021.18 WILSON & SONS $5,900.00 T & C PLASTERING $17,350.00 MASTER VINYLS PTY LIMITED $6,000.00 VARIOUS TRADES $8,542.53 TOTAL $286,147.90 MISCELLANEOUS SHOVEL $36.01 RENT $37,916.66 TOTAL $37,952.67 TOTAL $1,264,463.43 283 No different issues of principle were raised in relation to the assessment of equitable compensation from those raised in relation to the assessment of damages. 284 The expenses excluded from the assessment of damages due to the apportionment of that claim as at 29 January 2002 are recoverable under the claim for equitable compensation. 285 An issue as to the apportionment of expenses before and after 18 July 2001 arises in comparatively few cases. 286 I will deal only with the claims where particular comment is warranted. 287 The first invoice for Silro Holdings Pty Ltd was dated 27 July 2001. It was for $2,400, not for $840 as set out in E K Nominees' claim as set out in Mr O'Connor's affidavit. The invoice covered the period from 30 June 2001 to 27 July 2001. Eight hundred and forty dollars is a fair pro rata apportionment of the invoice. No adjustment is required to the fees paid to Silro Holdings. 288 The claim for fees paid and payable to Gergely & Pinter needs to be apportioned. The fee for stage 1 was $357,000. Substantial work for stage 1 was done before 18 July 2001. An invoice of $50,000 was rendered in March 2001. Another invoice for $50,000 was rendered in October 2001. Mr Gergely deposes that that invoice relates partly to work done between 18 March 2001 and 18 July 2001, and partly to work done after 18 July 2001. He says that it is impossible to allocate the charge between the two periods from Gergely & Pinter's records. Hence, E K Nominees seeks to apportion only the October invoice for $50,000. However, Gergely & Pinter did not render invoices on the basis of hours spent, such that the invoices correlated with their entitlement to fees. The third invoice for $50,000 was not sent until April 2002. But the fee of $357,000 for the first stage of the development was earned by 6 December 2001 when development consent was granted. The question is how the stage 1 fees of $357,000 should be apportioned. If the October invoice is apportioned pro rata, of the fees earned up to 6 December 2001, only $71,500 would be attributable to the period before 18 July 2001. That does not appear to me to be an appropriate allocation. I accept that there was a flurry of work after 18 July 2001 associated with the negotiations with the Council and the hearings leading up to the final granting of consent. However, the evidence of the work done before 18 July 2001 was not given in the same detail as the evidence of the work done after that date, because E K Nominees was focusing on establishing what it had done in reliance on Woolworths' approval letter of 18 July 2001. I do not accept that 20% of the stage 1 fees is a fair allocation to the period before 18 July 2001. Precision is impossible. In my view, the stage 1 fee should be allocated in proportion of 50/50 for work done before, and work done after 18 July 2001. That allocation may be generous to Woolworths, but it is the best I can do. Accordingly, I will allow half of the fees payable to Gergely & Pinter for stage 1 ($178,500) and the fees payable for stage 2 ($238,000). This is a total of $416,500 which, coincidentally, is exactly $100,000 less than the amount claimed. 289 The only other adjustment to be made is to the fees paid to Wilkinson Murray, acoustical consultants. The first invoice of $195 rendered by that company was for the period from 1 May 2001 to 31 August 2001. The invoice was for one hour's work. It is not possible to say that that work was done after 18 July 2001. That invoice is disallowed and the claim is reduced by $195. 290 For the reasons given previously, the claim for the costs of the shovel are rejected. The claim for rent is not pressed. Hence, the claim is reduced by $138,147.67. Conclusion 291 E K Nominees is entitled to equitable compensation in a sum of $1,126,316, plus interest pursuant to s 100 of the Civil Procedure Act. Again, I presume no claim is made for GST paid on the expenditures. If there is an issue about that matter, I will hear argument when short minutes are brought in. There will need to be a calculation of interest based on the times at which E K Nominees paid Simhilt. I direct the plaintiff's counsel to bring in a calculation of interest and a minute of judgment to be entered. 292 The short minutes should provide for the defendant to pay the plaintiff's costs. APPENDIX Adjustments to E K Nominees' claim for damages for under s 52 of the Trade Practices Act 1974 (Cth) as sought in Amended Schedule B to the Summons to reflect an apportionment of expenses incurred before and after 29 January 2002. Isaac Property Consultants The amount claimed was $37,500. There was an arithmetical error in this claim as the invoices rendered total $35,500. The first invoice rendered on 31 January 2002 was for $8,000. Fees for the month of January would have been incurred by 29 January 2002. I do not accept the amount of this invoice as a component of damages. In relation to the fees paid to Isaac Property Consultants, E K Nominees is entitled to damages of $27,500 (excluding GST) in respect of expenses incurred and paid from February to April 2002. Silro Holdings The invoice of 31 January 2002 (misdated 31 January 2001) is an invoice for work done in the month of January. For the reasons given in the judgment, this amount is not accepted. E K Nominees is entitled to damages for the fees paid to Silro Holdings in the amount of $5,000. Conbuilt Pty Ltd There are no issues in relation to this claim for $18,810. Gergely & Pinter Gergely & Pinter were entitled to charge fees in total being 4¼% of final building costs. This was divided into three stages. The first stage for which Gergely & Pinter were entitled to 30% of the total fees was described as "work (development application)". Mr Gergely accepted that this stage was completed when the development consent was given on 6 December 2001. The second stage for which 40% of the fees were payable was for "working drawings, building application". The third stage (30%) was for site inspections, detailed drawings and contract administration. The third stage was not reached. It was not suggested that Gergely & Pinter were not entitled to the amount of the fees for which invoices were rendered. Mr Gergely estimated the final building cost to be about $28,000,000. The quantity surveyors advised a building cost of $32,600,000. Whilst I did not accept this as evidence of the likely cost of the development, it provided a reasonable basis for Gergely & Pinter and E K Nominees to assess an appropriate level of fees. In any event, the total amount charged of $595,000 reflected the fact that not all of the work which was the subject of the agreement with Gergely & Pinter was able to be carried out. There is no challenge to the reasonableness of the total fees charged for the work done. Mr Gergely explained how the invoices were calculated as follows: " 143. Gergely & Pinter rendered the following invoices to E K Nominees for work on its Auburn site for the project that involved a Woolworths supermarket, copies of which are annexure "C" to this affidavit, and E K Nominees paid all these invoices except the last: 143.1 No. 5 10 March 2001 $50,000 143.2 No. 6 10 October 2001 $50,000 143.3 No. 7 1 April 2002 $50,000 143.4 No. 8 24 June 2002 $50,000 143.5 No. 9 1 October 2002 $50,000 143.6 No. 10 14 January 2003 $100,000 143.7 Final 4 February 2003 $245,000 Total: $595,000 144. I calculated the fee owed to Gergely & Pinter by E K Nominees this way. Under my fee agreement (Annexure A), the fee was 4¼% of the final building cost, which I estimated to be $28 million, namely $1,190,000. Stage One of the work to be done under the agreement earned 30% of this fee, or 1.275% of the final building cost, or $357,000. Stage Two of the work earned 40% of this fee, or 1.7% of the final building cost, or $476,000. 145. Invoices 5 – 10 represented Gergely & Pinter's fee for Stage One of the project and half of Stage Two, i.e .: 145.1 Stage One: $357,000 145.2 Stage Two (50%): $238,000 145.3 Total: $595,000 Although (as I deposed in paragraph 141 of this affidavit) Gergely & Pinter had by early May 2002 completed substantially more than half of the stage two work, in light of the fact that the project did not proceed when Woolworths declined to enter into a lease, I only invoiced E K Nominees for half of Stage Two. 146. Invoice No. 5, dated 10 March 2001, does not relate to work done on E K Nominees' Auburn Road project after 18 July 2001. 147. Invoice No. 6, dated 10 October 2001, relates partly to work done between 10 March 2001 and 18 July 2001 and partly to work done after the latter date, but it is not possible from Gergely & Pinter's records to allocate the amount charged between these two time periods. Pro-rating the invoice in proportion to the months that it spans before 18 July 2001 (approximately 4) and after 18 July 2001 (approximately 3), results in $21,500 being attributable to the period after 18 July 2001. 148. Taking the allocation of Invoice No. 6 in the previous paragraph into account, the total amount that Gergely & Pinter charged to E K Nominees for the Auburn Road project after 18 July 2001 was $516,500 ( i.e ., Invoices 7 – 9 plus the final invoice, plus $21,500 of Invoice No. 6). 149. Because development consent was granted on 6 December 2001, the amount invoiced by Gergely & Pinter to E K Nominees in respect of work performed in the time period 10 January 2002 to 7 May 2002 was approximately $238,000. " No fees for the stage one work are payable as damages. The stage two work for which fees of $238,000 were rendered spanned the period from 6 December 2001 to 7 May 2002. Mr Gergely allocates this expense wholly to the period after 10 January 2002. However, extensive work was done between 6 December 2001 and 10 January 2002, and up to 29 January 2002. In my opinion, the stage two fees of $238,000 (which have not been paid) should be apportioned pro rata between the periods 6 December 2001 to 29 January 2002, and from that date until 7 May 2002. This may favour Woolworths owing to the holiday period being taken into account, but the difference should not be substantial. E K Nominees is entitled to recover as damages 98/152 or 64.47% of the stage two fees. I therefore allow $153,447.35 as damages in respect of the architects' fees. As this sum has not been paid, there will be no interest to be added in respect of this component of the claim. Richard Duggan The first invoice for $4,000 was dated 20 February 2002. I infer that this work was done following the grant of development approval. I have allocated 30% of the first invoice to the period after 29 January 2002. I allow $1,200 in respect of the first invoice, and the $3,000 which is the amount of the second invoice. The claim is allowed at $4,200. D Catterson & Associates D Catterson & Associates were engaged before 29 January 2002. They were sent drawings on 14 December 2001 for the purpose of attending a meeting of consultants on 19 December 2001. I have allocated their invoice pro rata over the periods from 6 December 2001 to 29 January 2002, and from 29 January 2002 to 7 May 2002. The claim is therefore allowed at $11,567. Arup Fire There is no dispute that all of the work was done after 29 January 2002. $14,500 is recoverable. McKenzie Consulting Group There is no issue in relation to the invoice for $16,600. Jeffery & Katauskas There is no issue in relation to the invoice for $514.50. The LHO Group The invoice of 31 January 2002 covers work up to 28 January 2002 and is therefore not allowable. The subsequent invoices cover the work done from 29 January 2002. The subsequent invoices total $62,115.50. Len Keeble Project Planning Services There is no apportionment issue in relation to the expense of $4,650. Ralph Beattie Bosworth Ralph Beattie Bosworth's first invoice was dated 28 February 2002. It did not specifically identify the period over which the work charged for was done. This company was involved in the project prior to 29 January 2002, as appears from its being sent the conditions of development consent on 14 December 2001 and its attendance at the meeting of consultants on 19 December 2001. I have apportioned the first invoice pro rata for the periods from 14 December 2001 to 29 January 2002, and from 30 January 2002 to 28 February 2002. I allow $1,271 for the first invoice. There is no issue as to the latter invoices. Accordingly, E K Nominees is entitled to claim damages of $10,071 in respect of the fees paid to this company. Colston Budd Hunt & Kafes The invoice of 15 February 2002 was for services rendered in January 2002. I have not attempted to apportion that invoice for the last two days of the month for the reasons previously given. The remaining invoices are for the work done from February 2002. They total $5,670 and are recoverable. Ingham Planning The invoice was for work from 7 February 2002. It is allowed at $497.75. The amount claimed seems to have been a misreading of the invoice. Wilkinson Murray The first invoice of 28 February 2002 covered the period from 10 December 2001 to 28 February 2002. I have apportioned the invoice. E K Nominees is entitled as damages to recover three-eighths of the invoice, totalling $528.30. There is no issue as to the later invoices. The total amount recoverable is $5,571.68. Lean Lackenby & Hayward The first invoice for survey work was rendered on 18 March 2002. The invoice shows that surveys were carried out in October 2001. It does not appear when the balance of the work was done. I am not satisfied that any of that work post-dated 29 January 2002. Accordingly, the first invoice is not allowed. E K Nominees is entitled to damages for the remaining invoices, totalling $2,659.09. HLA-Envirosciences The invoice pre-dates 29 January 2002 and is not allowed. Pictorial Reporting Pictorial Reporting rendered an invoice dated 4 February 2002 for shooting videos and preparing a dilapidation report. It does not appear whether the work was done before or after 29 January 2002, or whether the work spanned that date. I do not allow the first invoice. The other invoices are for additional work and they are allowed at $2,663.50. D M Taylor The last invoice is dated 31 January 2002. It does not appear whether any of the work was done after 29 January 2002. I do not allow this claim. MPN Group MPN Group rendered fees up to 23 January 2002. Their next invoice is dated 20 March 2002 and covers the continuation of work from 23 January. I have allowed 89% of the invoice dated 20 March 2002. I apportion that invoice by date. The remaining invoices are for later work. They are allowed in total at $105,483.71. Landerer & Co Landerer & Co's first invoice was dated 18 February 2002. It is for work done in connection with preparing the agreement for lease, including attending meetings with Mr Marcocci and with Woolworths' solicitors. That would cover some work done after 29 January 2002, such as the letter requesting amendments of 5 February 2002. This account cannot be readily apportioned by time. I will allow an arbitrary $1,000 to cover work for the period from 29 January to 18 February 2002. Landerer & Co's invoice of 22 March 2002 for advising on rights of way appears to be for work done after the relevant date. I infer that had the work been done before 29 January 2002, an account would have been rendered before 22 March 2002, particularly as another account was rendered on 18 February. I allow the payments made to Landerer & Co in total in an amount of $2,200. Ratner Chiu & Co Ratner Chiu's invoice was dated 11 April 2002. I infer from the date of the invoice that the work was done after 29 January 2002. The claim is allowed at $550. Elevator Management Services This invoice was for work done following a purchase order dated 11 March 2002 and relates to the period in question. It is allowed at $2,182. Sydney Water Sydney Water rendered an invoice on 27 February 2002 for its charges to the developer for the preparation of a "development servicing plan" for periods after 27 February 2002. Charges were also incurred in March and April 2002 for applications to Sydney Water. In total, the claim is allowed at $10,714. Simhilt rented premises from E K Nominees to use for a site office and as offices for consultants along with first aid facilities and day accommodation for workers. The claim for rent paid by Simhilt to E K Nominees is not pressed. Costs were incurred in fitting out the amenities building. There was a charge of $550 for FIP Electrical. I conclude that this was incurred after the relevant date and is allowed. J A Bradshaws J A Bradshaw was engaged in April 2002 to carry out excavation, shoring and other associated works on the project. Its charges were $214,899.19 and are allowed. Bassett Demolitions Bassett carried out demolition work. It rendered an invoice on 12 February 2002 for $12,800. This was for the demolition and removal of an old shop and a fibro extension. The invoice shows that this was done pursuant to a quotation dated 24 January 2002. It does not appear when the work was done. I do not accept this item. Barca Plumbing Barca Plumbing carried out plumbing work on a "do and charge" basis. Its invoices relate to work done in March 2002 and later. They are allowed at $7,640. Airmakers Airconditioning, Wilson & Sons, T&C Plastering, Master Vinyls These companies all carried out work in February or later. Their invoices are allowed as recoverable damages. Various Trades Various subcontractors and tradesman did work on a do and charge basis. Their invoices are summarised in paragraph 206 of Mr Connor's affidavit. The amount claimed is $8,505.53. I am not satisfied that the invoice of $1,250 from Kalone Constructions dated 31 January 2002 relates to work done on or after 29 January 2002. Otherwise, the costs claimed are recoverable. I allow this item at $7,255.53. These are the reasons for the apportionment leading to the amounts set out in the table at paragraph [204] of the judgment. These amounts take into account other invoices about which there is no issue. 29/11/2006 - 1. Change of date from 7 May 2006 to 7 May 2002 in first sentence of para 130;2. 'That period "has"' changed to 'That period "had"' - last sentence 268(d);3. 'Woolworths' in para 282 changed to 'E K Nominees'. - Paragraph(s) 130, 268(d), 282 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.