New South Wales Supreme Court CITATION : Waste Recycling & Processing Corporation v Global Renewables Eastern Creek Pty Limited [2009] NSWSC 453 HEARING DATE(S) : 18/05/09 - 21/05/09 JUDGMENT DATE : 29 May 2009 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Proceedings to be dismissed. Parties to bring in short minutes of order. CATCHWORDS : Contract - Proper construction of Waste Processing Deed - Difficulties in Court determining what "business commonsense" may mean - Expression "in accordance with" an ordinary English expression meaning "in agreement or in conformity with" - Primacy to be given to actual words used in written contract - Principles which inform branch of estoppel known as 'conventional estoppel' - Assumption to be relied upon must be clear, precise and unambiguous - Estoppel by convention may be terminated - Once a common assumption is revealed to be erroneous the estoppel will not apply to future dealings between the parties - Reliance - Good faith provision - Duty of good faith does not require a party to subordinate its interests or contractual rights - Implied term for parties to cooperate with one another to obtain the benefit of contract and to not prevent the other party from performing its contractual obligations does not rise beyond express terms - Relief - Consideration of circumstances in which Court would not order specific performance or grant mandatory injunctive relief which would have the effect of requiring constant supervision of the Court and continued co-operation of parties - Relief sought would expose party to penalties for contempt for future non-compliance with obligations or breaches of contract - Defendant must know what a court order requires to be done LEGISLATION CITED : Banking Act 1959 (Cth) Waste Recycling and Processing Corporation Act, 2001 (NSW) CATEGORY : Principal judgment Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd (2008) 66 ACSR 594 Bell Group Ltd (in Liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 Biscayne Partners Pty Ltd v Valance Corp Pty Ltd [2003] NSWSC 874 Chint Australasia Pty Limited v Cosmoluce Pty Limited [2008] NSWSC 635 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 Equuscorp Pty Ltd v Glengallen Investments Pty Ltd (2004) 218 CLR 471 GEC Marconi Systems Pty Ltd v BHP Information Technology Limited (2003) 128 FCR 1 GMA Garnet Pty Ltd v Barton International Inc [2009] FCA 439 Grundt v Great Boulder Gold Mines Pty Ltd (1937) 59 CLR 641 Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 JC Williamson Limited v Lukey and Mullholland (1931) 45 CLR 282 Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190 La v Federated Furnishing Trade Society of Australasia (1993) 113 ALR 137 Land & National Development Corporation Pty Ltd v Tatebrook Pty Ltd [1999] NSWSC 669 CASES CITED : LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2008] NSWSC 738 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd [2001] 2 WLR 170 Masterton Homes Pty Limited v Palm Assets Pty Limited [2008] NSWSC 274 MK & JA Roche Pty Limited v Metro Edgeley Pty Limited [2005] NSWCA 39 Moratic Pty Limited v Lawrence James Gordon (2007) 13 BPR 24,713; [2007] NSWSC 5 Norwegian American Cruises A/S v Paul Mundy Ltd (The Vistafjord] [1988] 2 Lloyds Rep 343 Overlook Management BV v Foxtel Management Pty Ltd [2002] NSWSC 17 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Pacific National (ACT) Ltd v Queensland Rail (2006) ATPR (Digest) 46-268; [2006] FCA 91 PRP Diagnostic Imaging Pty Limited (in its capacity as trustee for the Pittwater Radiology Trust) v Pittwater Radiology Pty Limited [2008] NSWSC 701 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 Seaton v The Council of the Municipality of Mosman & Anor [Supreme Court of New South Wales Court of Appeal, Priestley, Meagher and Beazley JJA, 18 October 1996, unreported, BC9604870] Sydney Cove Redevelopment Authority v Chief Commissioner of Land Tax (NSW) (1995) 30 ATR 517 Thompson v Palmer (1933) 49 CLR 507 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Incorporated (1992) 38 FCR 1 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Waterman v Gerling Australia Insurance Company Pty Limited (2005) 65 NSWLR 300 Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 TEXTS CITED : The Concise Oxford Dictionary. The Macquarie Dictionary; PARTIES : Waste Recycling & Processing Corporation (Plaintiff) Global Renewables Eastern Creek Pty Limited (Defendant) FILE NUMBER(S) : SC 50020/09 COUNSEL : Mr M Walton SC, Mr J Potts (Plaintiff) Mr F Gleeson SC, Mr R Foreman (Defendant) SOLICITORS : Clayton Utz (Plaintiff) Watson Mangioni (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Friday 29 May 2009 50020/09 Waste Recycling & Processing Corporation v Global Renewables Eastern Creek Pty Ltd JUDGMENT The proceedings 1 The proceedings broadly concern the respective rights of the parties in terms of a Waste Processing Deed [WPD] entered into on 11 March 2003 and amended on 30 June 2008. Issues of construction are raised. Questions of conventional estoppel are raised. Important questions of entitlement to the claimed relief are raised. The plaintiff 2 The plaintiff [WSN] is a State owned statutory corporation established under the Waste Recycling and Processing Corporation Act, 2001 (NSW). Relevant parameters which required to be understood from the purpose of these proceedings include: i. The objectives and functions of WSN are set out in sections 5 and 6 of the Act. ii. One of its principal functions is the establishment, maintenance and operation of waste facilities: section 6. iii. In exercising its statutory functions section 6 also dictates that WSN must strive to achieve international best practice in waste management and to act in accordance with the principles of ecologically sustainable development. iv. Among the principal objectives in section 5 is for WSN to to be an efficient and responsible provider of waste management services and to minimise any adverse health and environmental impacts of its activities and services relating to waste management. The defendant 3 The defendant [GRL] currently operates a waste management Facility owned by the plaintiff located at Eastern Creek, next to the plaintiff's landfill site. 4 The Facility processes domestic and commercial waste, leading to a large proportion of it being recycled, or put to other productive uses, rather than being sent to landfill. The issues 5 In broad terms, the proceedings involve the following issues: i. Whether GRL's conduct in early February 2009 in not accepting deliveries of waste in excess of the tonnages nominated by GRL constituted a breach of the WPD. With limited exceptions what occurred factually is not in dispute; the dispute between the parties relates to the proper construction of the WPD and an alleged estoppel by convention on which WSN relies. Relevant provisions in this connection include clauses 4.4 and 5.1 of the WPD, Schedules 4 and 11 to the WPD, and associated definitions. ["The Monday to Friday issue"] ii. The extent of GRL's contractual right to reject waste that does not conform with specifications in the WPD. This issue primarily involves the determination of the proper construction of clause 6.2 of the WPD. ["The right of rejection issue"] iii. Whether, in any event, WSN is entitled to the relief sought. This issue involves a consideration of the form of relief sought by WSN (which GRL submits is in the nature of specific performance) and various discretionary factors. ["The issues concerning relief"] Questions concerning the proper approach to contractual construction 6 Whilst it will become necessary from time to time to advert in more detail to the principles which inform the construction of a commercial contract such as the WPD, at least at this early stage it is appropriate to make the following observations: i. A commercial contract should be interpreted having regard to what a reasonable person would have understood the language used by the parties to mean: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at [53]. ii. That normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction: ibid. iii. The process of construction is not a "free-wheeling exercise": GMA Garnet Pty Ltd v Barton International Inc [2009] FCA 439 at [97]. Primacy must be given to the actual words used in a written contract (particularly one that has been carefully drafted by lawyers): see e.g. Masterton Homes Pty Limited v Palm Assets Pty Limited [2008] NSWSC 274 at [26]; Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at [107]-[111]. iv. The subjective beliefs or understandings of the parties about their rights and liabilities are irrelevant: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at [53]; Equuscorp Pty Ltd v Glengallen Investments (2004) 218 CLR 471 at [34]. v. While the objective determination of what a particular contract means may require the adoption of a "business commonsense" or "business-like" approach, this does not necessarily mean those expressions are themselves unproblematic. As Gleeson CJ, Gummow and Hayne JJ observed in Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at [43] what "business commonsense" is may itself be a topic upon which minds may differ and in respect of which an imputed consensus is impossible. See also GMA Garnet Pty Ltd v Barton International Inc [2009] FCA 439 at [98]-[100]. The WPD 7 The WPD defines waste as Input Material. 99 % of the Input Material that is delivered to the Facility for processing is domestic waste collected by local councils, of which 94% is delivered directly by the councils themselves. 5% is transfer station waste which is delivered by WSN. The remaining 1 per cent of Input Material is comprised of commercial and industrial waste. 8 The WPD provides for GRL to procure construction of and then operate and maintain the Facility, and for WSN to deliver waste to GRL for processing at the Facility. 9 The WPD as amended contains provisions as to the minimum amount of waste (termed Input Material) that WSN is to supply to the Facility and the specifications of part of that waste (termed Specification Material). 10 The WPD also provides that GRL is obliged to accept Input Material sufficient to enable the Facility to process 175,000 tonnes of Specification Material in each year: clause 4.3 and the definition of Services. It also provides (as amended) that GRL must accept, subject to certain exceptions, all Specification Material delivered to the Facility by or on behalf of WSN: clause 4.4(a). The Conventional Estoppel issue 11 At this early point in the reasons the conventional estoppel issues litigated may be introduced in the fashion put forward by the plaintiff in its overview submissions [of course certain of the matters so put forward are contentious and this brief summary is not intended to determine any of the crucial issues]. In short, the plaintiff's case is as follows: i. WSN contends that as well as the WPD, a conventional practice has been observed by the parties since the inception of the operation of the Facility established pursuant to the WPD. ii. The contention is that under the WPD GRL may choose to notify WSN each day of the tonnages of Input Material it requires to be delivered by WSN to the Facility in respect of the next day. Throughout the operation of the Facility GRL has chosen to notify a daily figure (though not each day as required by the WPD). Until February this year there was no suggestion that waste was required to be delivered other than on week days (ie. Monday to Friday). To date no notification has been made by GRL pursuant to the WPD which would require WSN to deliver waste on a Saturday or a Sunday. iii. The plaintiff's case is that it is to be inferred from this conduct of the parties in going about the business of performance of their respective obligations under the WPD that WSN has adopted an assumption that the WPD would be performed in this way and that GRL has adopted the same assumption. WSN is further said to have also adopted as an assumption the fact that the Daily Base Capacity (referred to in Schedule 4 to the WPD) would be recalculated and applied on the basis of a 5 day week, that is Monday to Friday. iv. WSN's case is that the result of these assumptions as to the terms of the parties' legal relationship has been that WSN delivers and GRL accepts the vast majority of waste to the Facility on weekdays, with only relatively small quantities, mostly of non-residential waste, being delivered on Saturdays. It asserts that there are no deliveries on Sundays. It asserts that neither party is authorised respectively to make or accept deliveries on a Sunday, although despite this, for a brief time earlier this year, GRL purported to require WSN to do so. v. WSN's case and is that these conventional practices, and the assumptions that it contends may be inferred underlie them, came about because waste collection to the knowledge of both parties was, and still is, normally only made by the local councils on weekdays. WSN's case is that the capacity to store such waste is extremely limited, requiring it to be delivered to the Facility in the most part on the day it is collected. vi. WSN's case is that it has conducted its business affairs on the basis of (in reliance on) these conventional practices. Its contention is that were GRL permitted to depart from these conventions, WSN would suffer irreparable injury. For this reason it contends that it would be unjust or inequitable to permit such a departure. vii. WSN's case contends that the invariable way in which the parties chose to give effect to their obligations to each other under the WPD and the detriment WSN would suffer if GRL were permitted to depart from it gives rise to a common law conventional estoppel: see MK & JA Roche Pty Limited v Metro Edgeley Pty Limited [2005] NSWCA 39; Waterman v Gerling Australia Insurance Company Pty Limited (2005) 65 NSWLR 300; Moratic Pty Limited v Lawrence James Gordon (2007) 13 BPR 24,713. 12 The defendant challenged the WSN case raising the conventional estoppel issues across a wide variety of parameters. One only of those parameters was the fact that the particular detailed arrangements made inter se by WSN and sundry councils were: i. not only arrangements to which the defendant was never privy, but also ii. on examination are shown at least in a number of circumstances, to have required that the facility be open to accept councils' MSW seven days per week, 52 weeks per year, hence being directly inconsistent with the alleged mutual understanding 13 The defendant further relies upon: i. the lack of evidence given by the plaintiff to the effect that it had entered into contracts with councils in reliance on any of the pleaded assumptions; ii. the absence of any evidence called by the plaintiff from any of the councils as to the understandings which the councils had had when entering into the contracts with WSN; iii. the entire agreement clauses in each of the council contracts; iv. the dates on which the council contracts were entered into having regard to the overall chronology of events [which it was contended made clear that WSN did not act and was not entitled to act, on the basis of any alleged contravention as to the operation of the facility]; v. the proposition that WSN had not been able to point to anything which GRL had done that would permit the Court to conclude that GRL had played such a part in the adoption of any assumption as would be unfair or unjust if GRL was free to ignore it: cf Grundt v Great Boulder Gold Mines Pty Ltd (1937) 59 CLR 641 at 675, per Dixon J : "Before anyone can be estopped, he must have 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" The competing contentions as to breach 14 WSN contends that GRL breached the WPD by its letters dated 6 February 2009 and 10 February 2009 respectively and by not accepting deliveries of Input Material on 9 and 10 February 2009 respectively when the deliveries exceeded the tonnages nominated by GRL. WSN seeks injunctive relief based on an alleged fear that GRL will continue to act in the same manner. 15 GRL contends that its conduct in writing the February letters was a valid exercise of its rights under the WPD, rather than a breach of the WPD. In particular, GRL contends that it is entitled to nominate the Daily Throughput Requirement under the WPD. It contends that this is what it did the letters. Examining the WPD in more detail 16 The WPD is in three parts: a. Part I (clauses 2A to 20) relates to the Operational Phase (being the phase that is presently relevant); b. Part II (clauses 21 to 25) relates to the Merchant Phase; and c. Part III (clauses 25A to 44) relates to both the Operational Phase and the Merchant Phase. 17 WSN's primary obligations to deliver waste are imposed by clause 5.1(a) and clause 5.1(d). 18 GRL's primary obligations to accept and process waste are imposed by clauses 4.3 and 4.4(a) of the WPD. Clause 5.1 19 Clause 5.1(a) provides: "Subject to paragraph (d), WSN must, in accordance with this deed: (i) procure the delivery of a quantity of Input Material to the Facility such that Specification Material is delivered to the Facility in accordance with the Throughput Schedule and the Daily Throughput Requirement; and/or (ii) to the extent that WSN does not procure the delivery of Input Material to the Facility in accordance with sub-paragraph (i), pay to GRL the Waste Processing Fee as if WSN had procured the delivery of, and GRL had processed, Input Material in accordance with the Throughput Schedule as calculated in accordance with paragraph 2 of Schedule 6." 20 Clause 5.1(d) provides: "During the Operational Phase, WSN must deliver or procure to be delivered to the Facility any Input Material which WSN has sourced within the Eastern Creek Waste Catchment Area up to a maximum quantity in any Year equal to the quantity of Input Material required to ensure that the Yearly Base Capacity of Specification Material applicable to that Year is delivered to the Facility." 21 The Yearly Base Capacity is the sum of the Monthly Base Capacities applicable to that year. The Monthly Base Capacity is the Sum of the Daily Base Capacities applicable to that month. The Daily Base Capacity has the meaning given in the Throughput Schedule. 22 To understand clause 5.1(a), it is necessary to track through some of the defined terms used (in particular Daily Throughput Requirement and Throughput Schedule). These are usefully represented diagrammatically at the end of these reasons. [The diagrams are not always word perfect with the terms used in the WPD but none the less are often useful as an aid to inter related concepts which regularly recur] 23 Daily Throughput Requirement has the meaning given by Schedule 11. Clause 1 of Schedule 11 provides: "(a) Subject to WSN not being obliged to supply more than one sixth of the Yearly Base Capacity in any one Month, on or before 5.00pm each day , GRL may give notice to WSN specifying the tonnage of Input Material GRL requires in respect of the next day (Daily Throughput Requirement). (b) If, in respect of a day, GRL does not notify WSN of the Daily Throughput Requirement, WSN will deliver the Daily Base Capacity for that day. … (d) WSN will use its reasonable endeavours to deliver Input Material in accordance with the Daily Throughput Requirement and otherwise with the Throughput Schedule." (emphasis added) 24 That is, Daily Throughput Requirement is the amount of Input Material that GRL notifies WSN it requires to be delivered on the next day (in default of which WSN will deliver the Daily Base Capacity). Importantly for present purposes, clause 1 of Schedule 11 – like other provisions of the WPD – uses the word "day", as opposed to the defined term "Business Day" [Attachment A to the WPD provides that "Business Day means a day on which banks (as defined in the Banking Act 1959 (Cth)) are open for general banking business in Sydney, excluding Saturday, Sundays and public holidays." Attachment A is given effect by clause 1 of the WPD]. 25 The Throughput Schedule is Schedule 4. Schedule 4 relevantly provides that, subject to the terms of the WPD, WSN must deliver a quantity of Input Material such that Specification Material is delivered to the Facility in accordance with the table in Schedule 4. That table lists "480" in the relevant row (as the Facility is presently in the Design Steady State Period), with the corresponding column headed: "Daily Base Capacity (t/day)" 480 tonnes per day over 365 days equates to 175,200 tonnes of Specification Material. 26 Putting these together, clause 5.1(a) imposes a 'deliver or pay' obligation. The delivery option requires WSN: i. to deliver to the Facility in accordance with Schedule 11 of the WPD the amount of Input Material that GRL notifies WSN it requires to be delivered on the next day (i.e. the Daily Throughput Requirement); or ii. (if GRL does not so notify) to deliver to the Facility sufficient Input Material to yield the current Daily Base Capacity determined by the Throughput Schedule. 27 In lieu of making delivery as specified above, WSN may pay to GRL the Waste Processing Fee calculated in accordance with paragraph 2 of Schedule 6: see clause 5.1(b). The plaintiff's construction 28 Notably the defendant [in its further amended commercial list statement ] raised a new construction argument in relation to clause 5.1 (a) (i) of the WPD. The defendant now submitted that in clause 5.1 (a) the words " WSN must, in accordance with this deed" should be read as if they had said "WSN must, so as to achieve". 29 The plaintiff's full proposition is as follows: "On the proper construction of the words, "delivered to the Facility in accordance with the Throughput Schedule and the Daily Throughput Requirement" (clause 5.1(a)(i) of the WPD), the delivery obligation of WSN is to deliver sufficient Input Material such that there is sufficient Specification Material to allow GRL to achieve processing of 480 tonnes of Specification Material per day." 30 I do not accept that this gloss on the actual words used in the instrument is appropriate. The ordinary meaning of the words "must in accordance with this deed" would be "in conformance with the deed". 31 In Seaton v The Council of the Municipality of Mosman & Anor (NSW Court of Appeal, 18 October 1996, unreported, BC9604870 at 33) Beazley JA (with whom Priestley and Meagher JJA agreed) observed as follows: "The expression "in accordance with" is an ordinary English expression. It means "in agreement or in conformity with": The Macquarie Dictionary; or "in a manner corresponding to": The Concise Oxford Dictionary. See also La v Federated Furnishing Trade Society of Australasia (1993) 113 ALR 137 at 145, Sydney Cove Redevelopment Authority v Chief Commissioner of Land Tax (NSW) (1995) 30 ATR 517 at 528." 32 WSN's delivery obligation requires it to deliver in accordance with the Throughput Schedule and the Daily Throughput Requirement. Importantly WSN's proposed construction deals only with the Throughput Schedule (i.e. Schedule 4). It does not grapple with the Daily Throughput Requirement as defined by Schedule 11. It offers no explanation as to how Schedule 11 can be re-written (as WSN seeks to re-write Schedule 4). 33 Clause 1 of Schedule 11 defines the Daily Throughput Requirement as follows: "(a) Subject to WSN not being obliged to supply more than one sixth of the Yearly Base Capacity in any one Month, on or before 5.00pm each day , GRL may give notice to WSN specifying the tonnage of Input Material GRL requires in respect of the next day (Daily Throughput Requirement). (b) If, in respect of a day, GRL does not notify WSN of the Daily Throughput Requirement, WSN will deliver the Daily Base Capacity for that day." (emphasis added) 34 As the defendants have contended, the Daily Throughput Requirement is the amount of Input Material that GRL notifies WSN it requires to be delivered on the next day (in default of which WSN will deliver the Daily Base Capacity). It is an obligation on WSN to deliver the amount that GRL notifies. It has 'nothing' to do with processing. 35 The Throughput Schedule is Schedule 4. Schedule 4 relevantly provides: "Subject to the terms of this deed, WSN must deliver a quantity of Input Material to the Facility such that Specification Material is delivered to the Facility in accordance with the following schedule, and GRL must process using the Facility, Specification Material in accordance with the following schedule." 36 Again, this is a plain obligation to deliver in accordance with the schedule. The words "quantity of Input Material to the Facility such that Specification Material is delivered to the Facility" reflect the fact that quantities of Input Material delivered consist of both Specification Material and Out of Specification Material (and so it is necessary to deliver more than 480 tonnes of Input Material to deliver 480 tonnes of Specification Material). 37 WSN's proposed construction attempts to merge obligations to process with obligations to deliver. This is contrary to the plain words used in the WPD; it is also inconsistent with the clear and consistent distinction apparent to the parties between processing and deliveries. 38 In the context of the above provisions of the WPD – in particular clause 5.1 and Schedules 4 and 11, GRL by its February letters is seen to have nominated the Daily Throughput Requirement in accordance with the provisions of the WPD set out above. 39 The 6 February 2009 letter was based on deliveries occurring 7 days per week [ie 175,000 tonnes delivered 7 days per week for 52 weeks, corresponding to 480 tonnes per day]. The 10 February 2009 letter was based on deliveries occurring 6 days per week [ie 175,000 tonnes delivered 6 days per week for 52 weeks, corresponding to 560 tonnes per day] (reflecting the fact that neither WSN nor GRL has approval to deliver or receive substantial deliveries of Input Material on Sundays). GRL's letters dated 6 February 2009 and 10 February 2009 are seen to have represented an 'exercise' of rights under the WPD, rather than a 'breach' of it. 40 It is clear that, as a matter of contract, GRL's right to nominate the Daily Throughput Requirement, and WSN's corresponding obligation to deliver, involved deliveries occurring 6 days per week. Prima facie, deliveries are to occur 7 days per week. Yet neither WSN nor GRL has approval to deliver or receive substantial deliveries of Input Material on Sundays. Having regard to, for example, clauses 4.4(b) and 26.1 of the WPD, GRL is not required to accept deliveries where that would cause it to contravene an Approval or Law. 41 Notably, the Deed of Amendment dated 30 June 2008 inserted a new clause 13.6 into the WPD. Clause 13.6(a) provides that: "Subject to clause 13.3 (which relates to maintenance), GRL must: (i) keep the Facility open during Acceptance Hours to receive Input Material and Green Waste; and (ii) use all reasonable endeavours to ensure that the Facility is only Unavailable outside Acceptance Hours." 42 Further, Attachment A to the WPD provides: " Acceptance Hours means, in respect of each Business Day, 4.00am to 4.00pm and in respect of each Saturday and each Public Holiday (other than Public Holidays which occur on a Sunday), 9.00am to 5.00pm." 43 As the defendant has contended, the express obligation to keep the Facility open to accept deliveries on Monday to Saturday confirms that there is no basis for re-writing the plain words of the other provisions of the WPD in the manner WSN seeks. The applications for development consent 44 A significant objective background fact is found in the applications for development consent (and modifications to that consent) made by WSN to the Minister for Planning, together with the consent (and modification) that the Minister subsequently granted. 45 The five important documents are: i. First, the document styled "Operational Environmental Management Plan" behind tab 23 of the Exhibit to the Singh Affidavit. Mr Kanofski was cross-examined about this document at T64.36 – 66.47. a) This document was submitted by Global Renewables Limited in September 2001 ( " GR") to WSN [Singh at [94]]. b) This document contained the following statements: (i) at paragraph 2.3: "The Eastern Creek WMC is open from 4.00 am to 4.00 pm on weekdays and from 8.00 am to 5.00 pm on weekends….The UR-3R Facility will receive diverted waste during these hours (except for Sunday) and will operate 24 hours seven days a week.." (ii) at paragraph 3.3: "Acceptable waste will be diverted from the weighbridge for the UR-3R Facility and the trucks will transport it over the top of Area 4 of the WMC and into the UR-3R Facility site. Waste will be delivered Monday through to Saturday according to the proposed schedule in Table 3.1.." (iii) at paragraph 4.1.4: "The expected hours for the receival of MSW by the UR-3R Facility would be the same as those for the Eastern Creek WMC, which are as follows: • Monday to Friday, 4.00 am to 4.00 pm; and • Saturday 8:00am to 5:00pm. The UR-3R Facility will continue operation on a seven days per week basis.." ii. Second, the document styled "Environmental Impact Statement" behind tab 24 of the Exhibit to the Singh Affidavit. Mr Kanofski was cross-examined about this document at T 66.50 – 68.2. This document was submitted by GR to WSN in October 2001 [Singh at [95]] iii. Third, the development consent granted 25 February 2002. iv. Fourth, the document styled "Statement of Environmental Effects" behind tab 22 of the Exhibit to the Singh Affidavit. Mr Kanosfski was cross-examined about this document from T 56.14 – 64.35. This was a document prepared for and on behalf of WSN [T 56.31-36] and submitted by GR to WSN in July 2002 [Singh at [92]]. It was submitted as part of an application to modify the development consent [T57.24 ff]. The modification sought was to amend the condition of consent 24 as follows: "Receival of was must only occur between 4.00am and 4.0pm on Monday to Friday and 8.00am to 5.00pm on Saturdays with the exception of a maximum number of five vehicles per day which may deliver to the site outside these hours." The document also provided: "The UR – 3R Facility will accept waste 6 days per week and the waste will be stored in the receival building prior to processing." The document included a table at 035] which showed the anticipated typical waste delivery schedule for the Facility. It included deliveries of 350 tonnes as typical. Mr Kanofski conceded that the delivery schedule in the table showed the typical waste delivery contemplated for the Facility based on 175,000 tonnes of waste per annum [T 64.31-35]. Mr Kanofski also conceded that 350 tonnes was not relevantly a small quantity [T 62.19-35]. v. Fifth, the amended development consent granted 25 November 2002 [Ex D8, tab 7]. The relevant sequence of events 46 The sequence of events is summarised in the following cross-examination of Mr Kanofski [the Chief Executive Officer of the plaintiff) [T 68.4-26]: "Q. So, in summary what we have is towards the end of 2001, the plaintiff put forward an application for development consent to the Minister for Planning which involved a facility that would accept deliveries Monday to Saturday, you agree? A. Yes. Q. And the typical delivery schedule involved deliveries on Saturday of approximately 310 tonnes of waste? A. It does. Q. Then when we move forward to July of 2002 the plaintiff sought a modification to that development and consent that had been granted in February 2002? A. Yes. Q. And the typical waste delivery schedule which was detailed at the time of the modification contemplated deliveries on Saturday of approximately 350 tonnes? A. Correct. Q. And you agree that in both cases those amounts are not insignificant amounts are they? A. I do." 47 Hence the relevant objective fact, known to both parties, is that the Minister had granted development consent for the Facility to receive waste on Saturdays and that that development consent had been granted on the basis that 310 tonnes (and, later, 350 tonnes) of waste would be delivered to the Facility on Saturdays. 48 Returning to Mr Kanofski's cross-examination, he was taken to the above-described 'Statement of Environmental Effects' prepared by the National Environmental Consulting Services for WSN. As the Executive Summary to this report made plain in about November 2001 the plaintiff applied for a development consent for the construction of a recycling facility at Eastern Creek and the Minister for Planning gave consent to that development application on 25 February 2002. 49 Mr Kanofski recalled his understanding that the consent that was obtained at that time, related to a facility which proposed to recycle 156,000 tonnes per annum of waste. He also recalled that after that consent was obtained in February 2002, a modification application was made to the development consent. He was also asked under cross-examination to accept that the purpose of the modification application was to deal with a number of matters, one of which was that the design of the facility had been changed so as to now deal with a capacity of up to 175,000 - 220,000 tonnes of waste per annum and he agreed that that was the main purpose of the development, the modification. 50 It was then put to him that a second purpose of the modification was to provide some extra hours of operation of the facility and this became clear from paragraphs 1.5 of the document which was in the following terms: COC 24 refers to the hours of operation of the facility and the receiver of waste. The proposed modification includes provision for after-hours access for a small proportion of council vehicles. For this purpose it is sought to amend the COC NO 24 as follows: "Receival of waste must only occur between 4 a.m. and 4 p.m. Monday to Friday and 8 a.m. to 5 p.m. on Saturdays with the exception of a maximum number of five vehicles per day which may deliver to the site outside these hours." 51 The cross-examination of Mr Kanofski then continued as follows: Q. You then go to the next page please, page 10 of the document, the number at the bottom is .018. You'll see a paragraph there under 3.1.2 under the heading 'Access' and I refer you to the third paragraph which describes that the facility will utilise existing weigh bridge facilities from Monday to Saturday for waste receival and operate seven days a week 24 hours a day.... Q. …And you understood, you understand reading that paragraph today that that draws a distinction between receival of waste and processing of waste? … A. Yes. Q. And in relation to receival, you understand now reading it today, that the modification was being put on the basis that waste would be received Monday to Saturdays? A. Yes that's what the document says. Q. You don't suggest the document's incorrect do you? A. No. Q. It's a document prepared on behalf of the plaintiff, isn't it? A. It is. Q. For the purpose of obtaining a development consent modification from the minister for planning? A. Correct. Q. And the plaintiff would not have been engaged in any attempt to mislead the minister when seeking this modification, would it? A. I don't know that I can speculate on that but I wouldn't have thought so. Q. It's a serious question Mr Kanofski. The plaintiff does not engage in the process of misleading the minister for planning does it? A. Not that I'm aware. Q. …And you're not aware that the plaintiff was misleading the minister for planning when it submitted this development consent modification in about July of 2002 are you? A. I don't think that's the purpose, no. Q. You're not suggesting that the plaintiff was attempting to mislead the minister are you? A. No. Q. You'll then see in the next paragraph a reference to after hours access and an expectation that some of the council customers who use the facility would seek after hours access and there's an anticipation that that would be an amount of about less than five vehicles per day. Do you see that? Do you now recall that issue? A. I don't recall it at the time, no. Q. Could you turn to the next page please, numbered in the bottom .019. I refer you to paragraph 3.3.1, the concluding sentence. You'll see there Mr Kanofski a reference that "the facility will accept waste six days per week"? A. Yes. Q. And "the waste will be stored in a receival building prior to processing"? A. Yes. [Transcript 56-60] 52 Although Mr Kanofski during his cross-examination had said that he could not recall the document it is clear that in his affidavit sworn on 17 April 2009 he had referred in detail to the document [cf paragraph 33] 53 As an aside, these clear mistaken recollections by Mr Kanofski pose difficulties in accepting fundamental propositions put by the plaintiff as part of its case. That is a parameter which bedevilled the plaintiff's case which ultimately founded on a number of issues, including its not being able to prove the essential matters of fact which formed the underpinning of its case. 54 Later in the same cross-examination, Mr Kanofski was taken to a section of the Operational Environmental Management Plan which in paragraphs 2.3 under the heading Site Facilities and Services, read as follows: The Eastern Creek WMC is open from 4 a.m. to 4 p.m. on weekdays and from 8 a.m. to 5 p.m. on weekends. It is close to the public on Good Friday and Christmas Day, but is open to council vehicles for restricted hours on those two days. The UR-3R Facility will receive diverted waste during these hours (except for Sunday) and will operate 24 hours seven days a week. 55 Mr Kanofski [at transcript 65] accepted that this was the case at that time and that he was familiar with those hours and that the document drew a distinction between the days and hours when waste would be received : ie Monday to Saturday; and the days and hours of operation said to be 24 hours seven days a week. Commissioning of the Facility 56 As the reasons which follow make clear it becomes important to understand some of the parameters concerning the commissioning of the Facility and some of the terminology in respect thereof. This is an area which should be briefly dealt with presently. 57 As Mr Kanofski deposed [paragraphs 45-47 and 39-50 of his first affidavit] two particular periods [amongst others] may be described as follows: "The Ramp-Up Period GRL engaged GRD Minproc Ltd to build the Facility. Construction of the Facility was completed and on 11 September 2004, Nolan-ITU Pty Limited issued a Certificate of Practical Completion in respect of the Facility [WAS.001.093.0295]. It read in part (at page 0296): "In the WPD Practical Completion "means, in respect of the Facility, the date on which the Facility has been successfully designed, constructed and commissioned (without waste) in accordance with this Deed to the satisfaction of GRL and an Independent Engineer...being the start of the Ramp-Up period." The description of Practical Completion in the extract above accords with the definition in the WPD [WAS.001.097.0001] at page 0557. Schedule 4 of the WPD (at page 0166) records that the processing capacity of the Facility moves through a series of stages from its commissioning to when (and if) it is expanded. The first of these stages is the "Ramp-Up Period". This is defined in the WPD (at page 0557) as the period between Practical Completion and Final Completion, during which Input Material is introduced to the Facility in accordance with Schedule 4 of the WPD, which is also called the Throughput Schedule. During the Ramp-Up Period (11 September 2004 to 13 March 2006) the usual practice between WSN and GRL, which I oversaw, was that GRL would nominate the delivery target of Input Material for each day on a Monday to Friday basis. The procedure was that a GRL employee would telephone the WSN operated weighbridge at the WMC and tell a WSN employee what the delivery target was for the given day. This call was made either on the night before or early in the morning on the given day. The WSN employee would record on a working sheet various details from these calls including the name of the GRL employee who made the nomination, the tonnage called in and the time the call was made. On occasion these telephone calls were confirmed by email. An example of such a working sheet and email to WSN are documents WAS.005.001.0210 and WAS.005.001.0214. During this period WSN would endeavour to deliver to the target nominated by GRL. The weighbridge records maintained by WSN during this period [WAS.001.079.0001] show the actual deliveries Monday to Friday and that occasional deliveries of up to 33.1 tonnes of Input Material were also made on Saturdays during this period. Design Steady State Period The description of Final Completion in the extract above accords with the definition in the WPD [WAS.001.097.0001] at page 0543. As set out in Schedule 4 of the WPD (at page 0166), from the date of Final Completion the Facility entered the "Design Steady State Period", under which it was to process waste in accordance with Schedule 4 of the WPD. During the Design Steady State Period, and in particular the period 14 March 2006 to 12 May 2006, the usual practice between WSN and GRL, which I oversaw, was that GRL would nominate a delivery target for each day on a Monday to Friday basis and WSN would endeavour to deliver to that target, in the same way as I have outlined in paragraph 0 above, except that the staff at the weighbridge kept a diary which recorded the information of each call from GRL. I have been informed by WSN's solicitor, Sid Wang, that this diary has not been located at the time of affirming my affidavit. The weighbridge records maintained by WSN during this period [WAS.001.079.0001] show actual deliveries Monday to Friday to the Facility and that no deliveries of Input Material were made on Saturdays during this period." The plaintiffs conventional estoppel case 58 As will have been noted from the earlier statement of the issues, the plaintiff placed heavy reliance upon its conventional estoppel case in these proceedings. The principles which generally inform the branch of estoppel known as estoppel by convention 59 Estoppel by convention is a species of common law estoppel: see e.g. Bell Group Ltd (in Liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 at [3515]. 60 In GEC Marconi Systems Pty Ltd v BHP Information Technology Limited (2003) 128 FCR 1 at [426], Finn J approved of the following statement of principle (subject to one qualification): "The authorities show that for an estoppel by convention to arise the following points must be established by the party claiming the benefit of the estoppel (the proponent): (1) The parties have proceeded on the basis of an underlying assumption of fact, law, or both, of sufficient certainty to be enforceable (the assumption). (2) Each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction. (3) Such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them. (4) The proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding. (5) The proponent would suffer detriment if the other party were allowed to resile or depart from the assumption. (6) In all the circumstances it would be unconscionable to allow the other party to resile or depart from the assumption." [The qualification was that the assumption of law may well be limited to one relating to private legal rights]. 61 In Moratic Pty Ltd v Lawrence James Gordon [2007] NSWSC 5 at [32], Brereton J said: "In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff" 62 As indicated by the above authorities, the proposition that the necessary foundation for an estoppel by convention must be an assumed state of facts presently in existence, as stated by the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244–245, has been qualified by later authority. 63 The assumed state of affairs may extend to an assumption of law: see e.g. Pacific National (ACT) Ltd v Queensland Rail (2006) ATPR (Digest) 46-268; [2006] FCA 91 at [668] (and the cases there cited). However, conventional estoppel does not extend to assumptions concerning future matters: see Pacific National (ACT) Ltd v Queensland Rail (2006) ATPR (Digest) 46-268; [2006] FCA 91 at [668]. 64 In addition, the assumption relied on must be clear, precise and unambiguous: see Bell Group Ltd (in Liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 at [3527]-[3534] (and the cases there cited); Land & National Development Corporation Pty Ltd v Tatebrook Pty Ltd [1999] NSWSC 669 at [56]. 65 An estoppel by convention may be terminated: see Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at [232] and Norwegian American Cruises A/S v Paul Mundy Ltd (the Vistafjord) [1988] 2 Lloyds Rep 343 at 352. Once a common assumption is revealed to be erroneous the estoppel will not apply to future dealings between the parties: ibid. Returning to deal with the issue 66 When closely tested the conventional estoppel case was clearly not made out. There are a number of close highways and by-ways which require to be examined in terms of the facts. A number of the hurdles in the plaintiff's path have already been mentioned. 67 Reliance will be dealt with separately. 68 In relation to some of those matters Mr Richards, the Group General Manager Service Delivery, accepted under cross-examination in relation to particular correspondence drafted by him in collaboration with WSN's lawyers and sent to GRL, statements were made which were false. In particular in a letter dated 10 February 2009 part of paragraph 2.4 had read as follows: "Following extensive discussions, WSN and GR EC agreed a written protocol dated 10 December 2007 (which was further amended and agreed on 1 June 2008) (Protocol Agreement) pursuant to which the parties acknowledged and agreed amongst other things, that : (a) WSN will deliver 175,000 tonnes of Specification Material to the Facility over a five day week, Monday to Friday (ie 672 tonnes of Specification Material per week day) in satisfaction of its obligations under the WPD; and (b) WSN has contracted with various councils and will endeavour to supply this volume on a daily basis as determined by the delivery profile of those contracted councils." 69 Mr Richards' cross examination included the following: Q. I want you to direct your attention firstly to paragraph 2.4, the first statement there "WSN and GREC are agreed a written protocol dated 10 December 2007 which was further amended and agreed on 1 June 2008", do you see that statement?… Q. Now sitting here today that statement is not correct, is it? A. In, in the words that you've said it wouldn't be correct but I believe that by the process of the way that we've been delivering over that period of time it is, it was accepted…. Q. The words that I have read out to you are your own words aren't they Mr Richards? A. That's correct. Q. Let's deal with the first one. There was no written protocol agreed dated 10 December 2007 between WSN and GRL, was there? A. Not that I'm aware. Q. Thank you. So that statement is incorrect, isn't it? A. It's not as agreed, that's right. Q. Sorry? A. It's not as agreed by, by verbal or by correspondence that I'm aware. Q. The next statement says that the 10 December 2007 protocol was further amended and agreed on 1 June 2008, that statement was also incorrect wasn't it?… Q. Paragraph 2.4, just keep reading on the second line please, do you see the words, "WSN and GREC agree a written protocol dated 10 December 2007" with the words in brackets, "(which was further amended and agreed on 1 June 2008)"? A. That's right... Q. What I am putting to you is those words in brackets are also incorrect, aren't they? A. I believe so, yes. Q. There was no agreement between WSN and GRL made on 1 June 2008, was there? A. No. Q. So that statement was false, isn't it? A. It is as, as you've outlined, yes. Q. And you understood it was false at the time you approved this letter and prepared it, didn't you? A. No. Q. What happened on 1 June 2008 in your mind to make you express this statement, "There was a further amendment and an agreement"?… Q. No sorry my asked question is what happened on 1 June 2008? A. Could I - at the time GRL were seeking to increase the amount of volume that was being delivered into the facility and at the time we exchanged a, the protocol under which we would supply that material. The problem we'd had in the past was that GRL kept turning off and on the volume and therefore it was making it difficult for us in order to deliver the amount of material on a five day week in order to meet their, their processing capacity. So consequently we agreed in principle that the protocol would be the document that we'd work to. Now it wasn't agreed to in specifically to the words but in practice we'd delivered the 725 tonnes or the increased amount over that five day period. That's my belief behind the agreement. Q. That's your belief. When you say "we agreed in principle" you have already told this court this morning that there is no written agreement as at May or June 2008, haven't you? A. That's correct. Q. And there was no oral agreement as at May or June 2008? A. That's correct. Q. But in this letter you are very specific to identify that there was an agreement on 1 June 2008, weren't you? A. On my understanding by the parties acting the way that we had, that we had an agreement in principle on that basis. Q. There's no reference to your understanding of the parties acting upon that basis in this letter that you prepared on 10 February, is there? A. That's correct. Q. Because the position you wanted to assert was that the parties had reached agreement on 1 June 2008 to the terms of a protocol, isn't it? A. We were close to agreement on most of the parts of that protocol, that's correct. Q. But you didn't agree all of the parts of the protocol that were sent back to you by Mr O'Lachlan, did you? A. That's correct. Q. And you never agreed to all of the terms of the revised draft that was sent by Mr O'Lachlan, did you? A. That's correct. Q. Did you bother to check when you were preparing this letter what day of the week was 1 June 2008? A. Sorry no. Q. Have you got a diary with you? A. No I don't. Q. Have a look at this, could the witness be shown this document. Does that assist you now Mr Richards? A. Yes. Q. What day of the week was 1 June 2008? A. A Sunday. Q. There was no agreement made on Sunday 1 June 2008 as asserted in this letter, was there? A. That's correct. Q. That statement is false, isn't it? A. That's correct. [Transcript 106-108] The plaintiffs reliance on protocols is abandoned 70 Ultimately Mr Walton, in final address, abandoned the plaintiff's case to the extent that it had relied on protocols agreed between the parties as establishing the conventional estoppel. Instead he contended that the conventional estoppel is made out in face of the admitted practice of the parties. Following the time line 71 Close attention needs to be given to the relevant time line which informs the factual position. The factual findings appropriate in relation to the alleged conventional estoppel issue 72 Each of the following findings contended for by the defendant is made out on the evidence before the court: a. the Facility was in the Ramp-Up Period from 11 September 2004 until 14 March 2006 [T 92-93; Kanofski (No 1) at [45]-[47]; Richards (No 1) at [35]]; b. to the knowledge of WSN, during the Ramp-Up Period the Daily Base Capacity specified in the Throughput Schedule (Schedule 4) was indicative only [T 92.44-47; ECB 2066]; c. WSN was aware that the Facility was not able to process 175,000 tonnes during the Ramp-Up Period (and was not able to do so until the Design Steady State Period) [Richards (No 1) at [36]]; d. during the Ramp Up Period, the amounts delivered by WSN were generally below 725 tonnes per day [see bar charts at ECB 8689 - 8708; e. the amounts delivered to the Facility during the Ramp-Up Period were variable [Richards (No 1) at [49]]; f. the Design Steady State Period commenced on 14 or 15 March 2006 [T 93.1-3; Kanofski (No 1) at [50]; Richards (No 1) at [34], [36]]; g. on or about 12 May 2006, there was a fire at the Facility [Richards (No 1) at [40]; T 93.9-14]; h. the fire had the effect of greatly affecting the ability of the Facility to process waste delivered to it [T 93.16-18]; i. there was a substantial period of time from 12 May 2006 to 31 December 2007 during which there was a rebuilding and repair program going on at the Facility [T 93.20- 23]; j. the Facility was re-certified on 31 December 2007 as being in a position to process waste in accordance with the WPD on 31 December 2007 [Richards (No 1) at [42]-[43]; T 93.25-34]; k. the Facility was not operating in the Design Steady State in the period from 12 May 2006 to 31 December 2007 [Richards (No 1) at [42]-[43]; T 93.36-38] [See also clauses 11.1 – 11.3 of the WPD, in particular clause 11.3(a), which provides for recommencement of the Services within 3 years where GRL is required to repair or rebuild the Facility]; l. the amounts delivered to the Facility during the period from 12 May 2006 to 31 December 2007 were variable [Richards (No 1) at [49]]; m. during the period from 12 May 2006 to 31 December 2007, there were some deliveries on Saturdays not exceeding 144.54 tonnes of Input Material [Richards (No 1) at [41]]; n. WSN was aware (via Mr Richards) that there was nothing in the WPD that restricted GRL requesting delivery of tonnages of waste on a Saturday [T 94.23-26]; o. from 19 July 2007, WSN attempted to secure GRL's agreement to a document styled "operational protocol" [see separate chronology at Annexure A to these submissions]; p. by the draft operational protocols, WSN was seeking certain acknowledgements from GRL [T 75.31 – 76.28]; q. it was important for WSN to obtain the acknowledgment from GRL that waste from contracted councils would be delivered over a five day week Monday to Friday as determined by the delivery profiles of those contracted councils [T 76.5-14]; r. WSN sought an acknowledgment from GRL that if the Facility did not accept Input Material based on the delivery from councils, then WSN was not obliged to make up the shortfall (which acknowledgment was designed to avoid the deliver or pay obligation in clause 5.1 of the WPD) [T 76.15-24]; s. GRL consistently indicated that it did not agree with WSN's proposed operational protocols and that those protocols were inconsistent with the WPD [T 74.50 – 75.5; T 75.20-24; T 75.40-42; T 76.25-28; T 79.25-28 T 80.47 – 81.14; T 95.1 - 97.41; ECB 3778; ECB 3783; ECB 3807; T 98.45-50; T 99.19-21; Ex D3; Ex D4; T 106.20-50; T 113.10-18; ECB 4700] t. WSN's attempt to have the draft operational protocol agreed was a serious endeavour [T 77.44-50]; u. as at May 2008, WSN (via Mr Richards) believed that the WPD contained a number of shortfalls [T 100.1-4; Ex D3; Ex D4]; v. WSN (via Mr Kanofski) was aware that the draft operational protocol he sent to Mr Rogers in May 2008, if agreed to by GRL, would have the practical effect that GRL could not request delivery of Input Material on a Saturday [T 80.14-18]; w. as at May 2008, WSN (via Mr Kanofski) was aware that GRL had not agreed with the operational protocol [T 79.25-28]; x. WSN never accepted the draft operational protocol sent by GRL to WSN on 29 May 2008 [T 81.1-7; T 96.18-24; 100.37 – 101.3; 101.42-45; 106.45-50; T 107.21-27; 107.43-50; 108.15-20 notice to produce and nil answer]; y. the draft operational protocol sent by GRL to WSN contained provisions which were inconsistent with WSN's rights under clause 6.2, which rights Mr Richards: i. regarded as important rights; ii. which he would not give away; iii. which he could not give away without Mr Kanofski's approval; and iv. which he did not, in fact, ever give away [T 102.25 – 103.9; T 104.20 – 105.5]; z. the statement made by Mr Richards in a letter dated 10 February 2009 that "WSN and GREC agreed a written protocol dated 10 December 2007 (which was further amended and agreed on 1 June 2008)" was false [T 106.20-50; 108.1-20; Ex D6 and D7]; aa. there was no agreement between GRL and WSN made on 10 December 2007 or 1 June 2008 [T 106.20-50]; bb. WSN sought to include the draft operational protocol in the 30 June 2008 Amending Deed but GRL did not agree with this proposal [T 101.30-40; see also T 77.44 – 78.4]; cc. the draft operational protocol was not incorporated into the 30 June 2008 Amending Deed [ECB 4757; T 80.43-45]; dd. clause 2.3(b) of the 30 June 2008 Amending Deed inserted a new clause 13.6 into the WPD, which required GRL to keep the Facility open from Monday to Saturday to receive Input Material [ECB 4764]; ee. by clause 3 of the 30 June 2008 Amending Deed, WSN and GRL ratified and confirmed the WPD as amended by the Amending Deed in accordance with clause 44.8 of the WPD [ECB 4767] [Clause 44.8 of the WPD provides that "A variation or amendment of this deed must be in writing and signed by the parties" [ECB 2051]] ff. WSN (via Mr Richards) regarded it as necessary to enter into a protocol agreement to amend the terms of the WPD [T 108.21-34; 109.14-33]; gg. WSN (via Mr Richards) was aware that the draft operational protocol was inconsistent with the terms of the WPD [T 110.18-40]; hh. WSN (via Mr Kanofski) was aware that the WPD could only be varied by writing signed by the parties [T 70.37-46]; 73 Indeed not even one of the points identified by Finn J in GEC Marconi Systems [supra] as required to be established by the party claiming the benefit of the estoppel has been proven by WSN. 74 WSN and GRL have not been shown to have proceeded on the basis of any assumptions as governing legal relationship between them. 75 Neither WSN nor GRL have accepted any assumptions as being true for the purpose of the transaction between them; 76 There is no evidence that WSN ever communicated to GRL that it accepted the assumptions for which WSN contends as being true for the purpose of the transaction. 77 Further: i. the alleged conventions in paragraphs C41, C41A and C41B all involve statements as to intended future conduct. They relate to what the parties will do in the future. However, conventional estoppel does not extend to assumptions concerning future matters: see Pacific National (ACT) Ltd v Queensland Rail (2006) ATPR (Digest) 46-268; [2006] FCA 91 at [668]. ii. no estoppel by convention could arise from pre-contractual conduct because of the "entire agreement" provision in clause 44.6 of the WPD: see e.g. Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190 at 196; Chint Australasia Pty Limited v Cosmoluce Pty Limited [2008] NSWSC 635 at [134]-[141] per Einstein J; iii. no estoppel by convention could arise having regard to: a. clause 44.5 of the WPD (no waiver unless written notice); b. clause 44.8 of the WPD (no variation or amendment without writing signed by both parties); and c. clause 3 of the 30 June 2008 Amendment Deed (by which GRL and WSN ratified and confirmed the WPD as amended, which included clauses 44.5 and 44.8 referred to above and the clauses providing for deliveries on 6 days per week referred to in GRL's Opening Submissions); iv. in relation to clause 44.8, WSN was aware that the WPD could only be varied by writing signed by the parties [T 70.37-46]. WSN regarded it as necessary to enter into a protocol agreement to amend the terms of the WPD [T 108.21-34; 109.14-33]. Reference has already been made to Mr Richards false assertion in a letter dated 10 February 2009 to GRL that "WSN and GREC agreed a written protocol dated 10 December 2007 (which was further amended and agreed on 1 June 2008)" [T 106.20-50; 108.1-20; Ex D6 and D7; ECB 5137-5138]. Mr Richards also wrote in his letter that the (non existent) Protocol Agreement "was required to amend the terms of the WPD to enable the parties to practically perform their obligations under the WPD" . v. one of the necessary elements of conventional estoppel identified by Finn J in GEC Marconi Systems at [426] (see also Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd (2008) 66 ACSR 594 at [27] and [164]) was that the party was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding. WSN was not entitled to act on the alleged assumption in light of the matters referred to in the previous paragraphs. WSN was not entitled to act on the basis of the alleged assumption when it knew that the WPD contained a clause that said that rights could only be waived, and variations could only be effected, by a document signed by both parties. This had not occurred, and WSN knew this. vi. the point in relation to clause 3 of the 30 June 2008 Amending Deed is different. Clause 3 of the 30 June 2008 Amending Deed provided [ECB 4767]: "The parties otherwise ratify and confirm the WPD as amended under this deed in accordance with clause 44.8 of the WPD." vii. that is, by clause 3 of the 30 June 2008 Amending Deed, the parties confirmed that the only variations to the WPD were those set out in the Amending Deed itself. Moreover, and critically, by clause 3 of the 30 June 2008 Amending Deed, the parties ratified and confirmed clause 44.6 of the WPD: that is, the parties ratified and confirmed that the WPD represented the entire agreement between the parties. [WSN accepts that entire agreement clauses operate according to their terms [T 13.21.30]]. viii. the ratification and confirmation effected by clause 3 of the 30 June 2008 Amending Deed precludes the operation of a conventional estoppel after that point (all the more so given that WSN knew at that time, and at all times thereafter, that GRL would not agree to the draft operational protocol). ix. the alleged conventions are also inconsistent with the conduct of the parties entering into the 30 June 2008 Deed of Amendment which inserted a new clause 13.6 into the WPD (which requires GRL to keep the Facility open on Saturdays to receive Input Material). x. the alleged conventions are also inconsistent with WSN seeking to obtain GRL's agreement to a draft operational protocol involving Monday to Friday deliveries and WSN's knowledge of GRL's refusal to accept that draft operational protocol involving Monday to Friday deliveries for council waste. Reliance 78 Reliance and detriment are also essential for conventional estoppel: MK and JA Roche v Metro Edgley [2005] NSWCA 39 at [71]-[74]; Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at [202]. A party will not be bound to adhere to an assumption or convention unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himself or herself in a position of material disadvantage if departure from the assumption be permitted: see Thompson v Palmer (1933) 49 CLR 507 at 547, Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-676. Before a party is estopped, he or she must have played such a part in the adoption of the assumption that it would be unfair or unjust if he or she were left free to ignore it: ibid; see also Bell Group Ltd (in Liq) v Westpac Banking Corporation (No 9) [2008] WASC 239 at [3523]-[3525]. The new paragraph 41C 79 The second further amended commercial list statement included a new paragraph 41C in the following terms: "WSN at all material times relied on the assumption common to both parties which formed the conventional basis of the relationship as set out in paragraphs 41, 41A and 41B. Particulars WSN has ordered its business operations and its affairs both with GRL and third parties such as councils in reliance on the common assumption." 80 GRL requested further and better particulars of the new paragraph 41C [Ex D8, tab 5]. GRL asked: (a) what was meant by the words "ordered it business operations and affairs" in paragraph 41C? (b) in respect of: i. GRL; and ii. each Council (by name), identify: · when; · how; · in what manner; and · by whom on its behalf, did WSN "order it business operations and affairs" and whether it was by way of alleged action or inaction; (c) What evidence, documentary or otherwise, is relied upon in support of the proposed new pleading, if permitted? 81 As to the request for further particulars of the new paragraph WSN responded as follows [Ex D8, tab 5]: "In reliance on the convention between the parties, WSN entered into a series of contracts with councils, being: (a) Blacktown City Council contract dated 29 June 2005; (b) Fairfield City Council contract dated 16 December 2003; (c) Holroyd City Council contract dated 20 March 2009; (d) Hunters Hill Council contract dated 3 July 2006; (e) Lane Cove Council contract dated 29 August 2007; (f) North Sydney Council contract dated 1 January 2008; and (g) Willoughby Council contract dated 6 September 2006. These were entered into on a mutual understanding between WSN and each of the councils that waste could only be collected on Mondays to Fridays." [Emphasis added] 82 As to the particulars seeking evidence to be relied upon in support of the proposed new paragraph 41C, WSN indicated that it only intended to reply on the "Supply Contract" discovered in the proceedings (i.e. respective contracts between WSN and each of the councils). 83 The amendment to the pleading (inserting inter alia the new paragraph 41C) was consented to on the express basis that WSN did not depart from the particulars provided above and the basis on which WSN opened its case [T 47.4-12]. 84 As the defendants have contended, WSN has not even come close to proving reliance. Its alleged estoppel by convention must be rejected for this reason alone. 85 The evidentiary position is summarised in what follows. 86 Neither Mr Kanofski nor Mr Richards gave evidence that they entered into contracts with councils in reliance on any of the pleaded assumptions, namely that: (a) waste would only be delivered to the Facility by WSN on Mondays to Fridays; (b) that GRL would not notify tonnages of Input Material for delivery on Saturdays; or (c) that the Daily Base Capacity referred to in Schedule 4 to the WPD would be, in relation to Specification Material, recalculated and applied on the basis of a 5 day Monday to Friday week (see paragraphs C41, C41A and C41B second further amended commercial list statement). 87 No evidence has been adduced from any of the councils as to the understandings they had when entering into the contracts. 88 Some of the contracts with the councils require that the Facility must be open to accept councils' MSW seven days per week, 52 weeks per year: (a) see Blacktown City Council contract, Schedule 3, clause 2; (b) Fairfield City Council contract, Annexure B, clause A1.5; (c) Hunters Hill City Council contract, Service Specifications, clause 2.3. 89 Further, other of the contracts required WSN to be able accept deliveries 7 days per week, 52 weeks per year: (a) Willoughby Council contract, clause C11; (b) North Sydney Council contract, Specifications, clause 9: (c) Lane Cove Council contract, clause 11.1. 90 That is, the council contracts are directly inconsistent with the alleged mutual understanding. 91 Each of the council contracts contained an entire agreement clause: (a) see Blacktown City Council contract, clause 15.12; (b) Fairfield City Council contract, clause 10, clause C23; (c) Hunters Hill City Council contract, clause 3 of the Formal Instrument of Agreement, clause 28 of the Conditions of Contract; (d) Willoughby Council contract, clause B1.2; (e) North Sydney Council contract, clause 6; (f) Lane Cove Council contract, clause 6. 92 It is necessary to consider the date on which the council contracts were entered into having regard to the overall chronology of events: (a) 11 March 2003 – WPD signed; (b) 16 December 2003 - Fairfield City Council contract entered into; (c) 11 September 2004 - Ramp Up Period begins; (d) 29 June 2005 - Blacktown City Council contract entered into; (e) 14 or 15 March 2006 - the Design Steady State Period begins; (f) 12 May 2006 – fire at the Facility – Facility not in Design Steady State Period; (g) 3 July 2006 - Hunters Hill Council contract entered into; (h) 6 September 2006 - Willoughby Council contract entered into; (i) 1 August 2007 – GRL rejected WSN's draft operational protocol; (j) 29 August 2007 - Lane Cove Council contract entered into; (k) 10 December 2007 – WSN again unsuccessfully sought GRL's agreement to a draft operational protocol; (l) 31 December 2007 – Facility re-certified and Design Steady State Period re-commences; (m) 1 January 2008 - North Sydney Council contract entered into; (n) 29 May 2008 – GRL again refused to accept WSN's draft operational protocol' (o) 11 February 2009 – these proceedings commenced; (p) 20 March 2009 - Holroyd City Council contract entered into; 93 The defendants relied upon a useful chronology which the court now marks for identification 'MFI Chrono' and which is to be regarded as part of this judgment. 94 That table makes it clear that WSN did not act, and was not entitled to act, on the basis of any alleged convention as to the operation of the Facility: (a) the Fairfield City Council contract was entered into before construction of the Facility was completed; (b) the Blacktown City Council contract was entered into during the Ramp Up Period; (c) the Hunters Hill Council contract, the Willoughby Council contract, and the Lane Cove Council contract, were all entered into after the fire but before the Facility was recertified; (d) the North Sydney Council contract was entered into 1 day after the Facility was recertified; and (e) the Holroyd Council contract was entered into after these proceedings had been commenced. 95 As indicated earlier in these reasons, one of the principles alluded to by Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Limited (2003) 128 FCR 1 at [426] is that the party who seeks to rely on the estoppel must be entitled to rely on the assumption. 96 I accept that WSN was not entitled to rely on the assumptions for the reasons set out earlier and because Facility had been in either start-up mode or repair mode for most of the relevant period, and which meant that WSN could not safely rely on GRL's failure to call for tonnes on Saturdays. 97 WSN never communicated to GRL that it was intending to act in reliance upon an alleged convention. There is no evidence that GRL knew or intended WSN to act in reliance on the alleged convention. Indeed, WSN refused to provide GRL with copies of the contracts when GRL requested them in late 2008 [Singh at [41]]. 98 At its highest the plaintiff's case managed to establish that subject to certain exceptions a practice of councils collecting domestic waste on Mondays to Fridays had developed. Even in relation to that practice the evidence established that the councils were and did also collect other waste which satisfied the definition of MSW on Saturdays. That type of waste constituted inter alia materials collected from shopping centres, litter bands and parks. 99 These reasons identify the many problems presented by the plaintiff's case in failing to establish the elements required to be established by a party claiming the benefit of a conventional estoppel. As has already been indicated, not only were the defendants not privy to the terms of the council's contracts with WSN, but generally the terms of those contracts were themselves inconsistent with the proposition that the council contracts were regularly consistent with the alleged mutual understanding forming the underpinning of the plaintiff's case on conventional estoppel 100 If indeed [contrary to the aforesaid findings], any convention was adopted: i. the convention has not been shown to have been intended to affect the parties' legal relations in the sense that it was intended to govern the legal position between them. ii. WSN has failed to establish that WSN played such a part in the adoption of the assumption that it would be unfair or unjust if GRL were left free to ignore it. iii. in all the circumstances it would not be unconscionable to allow GRL to resile or depart from the alleged assumption, particularly following the clause 3 ratification and confirmation effected by the June 2008 Amending Deed. The alleged breaches by GRL 101 There are a number of clauses [4.4(a), 4.7(a)(iv), 40(a) & (b), and the implied term pleaded at paragraph C23 of the Further Amended Commercial List Statement] which WSN contends have been breached. The suggested breaches required to be treated with seriatim, but bearing in mind the need to consider the provisions as a whole. 102 GRL's obligations to accept waste under the WPD require close attention. Clause 4.3 103 Clause 4.3 provides (inter alia) that "GRL must supply the Services". The Services are relevantly defined to mean [See clause 1 of, and Attachment A to, the WPD] the acceptance of Input Material to enable the Facility to process 175,000 tonnes of Specification Material each Year [Input Material is defined to mean "MSW and any other material (other than Green Waste, but including Transfer Station Waste and C&I Waste) that GRL and WSN agree will be supplied by WSN and accepted for processing by GRL using the Facility, including any material supplied by WSN under clause 17(d)"]. 104 As is apparent from this obligation, Input Material is a broader class of material than Specification Material. Relevantly for present purposes: i. Input Material is MSW (municipal solid waste), which is class 3 putrescible waste as defined by EPA Guidelines (i.e. in lay terms, general garbage) and includes Transfer Station Waste and commercial and industrial waste; ii. Specification Material is Input Material that meets the specifications in Schedule 12. Clause 4.4 (a) 105 Clause 4.4(a) provides that (subject to paragraphs (b), (c), (f) and (g) of clause 4.4): "GRL must accept all Specification Material and Specification Green Waste delivered to the Facility by or on behalf of WSN." 106 Hence, (subject to exceptions) GRL is obliged to accept all Specification Material delivered to the Facility by or on behalf of WSN. However, WSN is not free to deliver whatever quantity of material it wants whenever it wants. WSN must procure deliveries in accordance with the Daily Throughput Requirement (being the amount nominated by GRL) and otherwise with the Throughput Schedule. 107 Moreover, clause 4.4(a) does not oblige GRL to accept Input Material; it only obliges GRL to accept Specification Material. WSN admits that the waste it is delivering to the Facility is not Specification Material (Affidavit of Richards dated 8 May 2009 at [12]. That being so, GRL's refusal to accept the deliveries on 9 and 10 February 2009 cannot be a breach of clause 4.4(a). 108 In addition, clause 4.4(e) provides that "The consequences of GRL not complying with paragraph (a) are limited to the consequences set out in clause 6.2 and 18.4". I accept that the parties in clause 4.4 (e) have agreed that the consequences of failing to comply with the obligation to accept all Specification Material are limited to the consequences set out in: i. clause 6.2 (which is the clause that deals with GRL's ability to reject Deliveries containing Out of Specification Material, and which includes a detailed audit, reporting and consultation regime, culminating in consequential reductions in the Waste Processing Fee and additional compensatory payments to WSN where GRL wrongfully rejects Specification Material); and ii. clause 18.4 (which deals with Operational Default and provides a trigger for WSN to terminate the WPD or convert to the Merchant Phase). 109 The rights and obligations created or imposed by clause 4.4 are set out diagrammatically at the end of these reasons. WSN's claim to damages and injunctive relief for breach of clause 4.4(a) 110 WSN is not entitled to damages for breach of clause 4.4(a), nor is it entitled to an injunction in respect of clause 4.4(a). Although relief is dealt with further below, it is convenient to presently note apropos the relief sought, the following: (A) the obligation in clause 4.4(a) to accept Specification Material is subject to clause 4.4(b), which provides: "GRL is not obliged to accept any Input Material or Green Waste delivered in excess of the lesser of the Daily Base Capacity or the Daily Throughput Requirement if acceptance of that Input Material would have an adverse economic affect on the profitability of the Facility, or would cause GRL to breach this deed or any Approval or Law." (B) Hence clause 4.4(b) limits the obligation in clause 4.4(a); it does not impose any additional obligations on GRL. Order 1(b) sought by WSN seeks to convert the exception in clause 4.4(b) into a substantive obligation. (C) order 1(b) would restrain GRL "… from refusing to accept deliveries of Input Material by or on behalf of [WSN]…" . GRL does not have an obligation to accept all Input Material; as is clear from 4.4(a), GRL's obligation is to accept all Specification Material. Yet order 1(b) requires GRL to accept all Input Material, irrespective of whether or not it is Specification Material (and thereby attempts to re-write the WPD). Alleged breaches of clauses 4.7(a)(iv), 40(a) & (b) and the implied term 111 In addition to the alleged breach of clause 4.4(a), WSN asserts that GRL has breached clauses 4.7(a)(iv), 40(a) & (b) and the implied term of co-operation alleged in paragraph C23 of the Further Amended Commercial List Statement [See the particulars to paragraphs C34 and C37 of the Further Amended Commercial List Statement]. 112 I accept that the four other clauses take the matter no further than the clauses discussed above. Logically if WSN's construction of the primary clauses discussed above is rejected, then the four additional clauses on which WSN relies have not been breached. Clause 4.7(a)(iv) 113 WSN alleges that GRL breached clause 4.7(a)(iv), which provides that, subject to clause 4.7(e) [Clause 4.7(e) provides that nothing in clause 4.7 requires GRL to effect any expenditure unless the parties otherwise agree], GRL undertakes, in addition to its specific obligations set out in the WPD, to use its reasonable endeavours to increase the Landfill Diversion Rate. The Landfill Diversion Rate means "the percentage of Input Material that is diverted from landfill as a result of GRL processing Input Material using the Facility on the terms of this deed". 114 I accept that this obligation is clearly directed at improving the operational efficiency of the Facility, not the exercise of rights under the WPD. A 'reasonable endeavours' obligation to improve operational efficiency does not require the abandonment of GRL's contractual rights. Indeed, the definition of Landfill Diversion Rate specifically refers to use of the Facility on the terms of the WPD. 115 An obligation to use reasonable endeavours does not require the party on whom the obligation falls to go beyond the bounds of reason: see e.g. Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 64. As the defendant has contended, it is going beyond the bounds of reason for a party to be forced to abandon its contractual rights. 116 Moreover, the fact that deliveries have been stopped on two days does not establish that GRL has failed to use reasonable endeavours to increase the Landfill Diversion Rate. Clause 40(a) – Good Faith 117 WSN alleges that GRL breached clause 40(a) of the WPD, which provides that each party must act in good faith to each other part in respect of all matters relating to the Facility and each Project Document (including the WPD). However, a duty of good faith does not require a party to subordinate its interests or contractual rights: see PRP Diagnostic Imaging Pty Limited (in its capacity as trustee for the Pittwater Radiology Trust) v Pittwater Radiology Pty Limited [2008] NSWSC 701 at [104]-[105]. Here again if WSN's construction of the other provisions of the WPD is rejected, then there can be no breach of clause 40(a). 118 Moreover, nothing that GRL has said or done demonstrates bad faith, in the absence of which GRL has not breached the good faith duty: see e.g. Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd [2001] 2 WLR 170 at [111]; Overlook Management BV v Foxtel Management Pty Ltd [2002] NSWSC 17 at [68]; Biscayne Partners Pty Ltd v Valance Corp Pty Ltd [2003] NSWSC 874 at [137;] PRP Diagnostic Imaging Pty Limited (in its capacity as trustee for the Pittwater Radiology Trust) v Pittwater Radiology Pty Limited [2008] NSWSC 701 at [103]; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2008] NSWSC 738 at [576]. Clause 40(b) 119 WSN alleges that GRL breached clause 40(b) of the WPD, which provides that each party must not seek to circumvent or permit circumvention of the operation of a Project Document (including the WPD). A GRL has contended, WSN's reliance on this clause elides the central question. If WSN's construction of the other provisions of the WPD is rejected, then it cannot be said that GRL has circumvented the operation of the WPD. Implied term 120 WSN alleges that it was an implied term of the WPD that each party must co-operate with the other to enable the fulfilment of the WPD, to allow each other party to obtain the benefit of it and to not prevent the other party from performing their obligations under the WPD. Accepting the existence of such an implied term exists, by its nature it cannot rise beyond the express terms: see e.g. LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886 at [74]-[75]. This reflects the general proposition that an implied term cannot be inconsistent with the express terms: see e.g. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347; PRP Diagnostic Imaging Pty Limited (in its capacity as trustee for the Pittwater Radiology Trust) v Pittwater Radiology Pty Limited [2008] NSWSC 701 at [105]. That being so, WSN's reliance on the alleged implied term takes the matter no further than the other clauses discussed above. Construction of clause 6.2 – "The right of rejection issue" The dispute 121 The entitlement of GRL to reject Out of Specification Material becomes the subject of this issue. The construction of clause 6.2 of the WPD as amended by clause 2.2 of the amending deed in the context of the WPD falls to be determined. 122 Clause 6.2 provides as follows: (a) If GRL acting reasonably, believes a Delivery of Input Material contains Out of Specification Material, GRL may, either accept that material, in GRL's absolute discretion, for processing using the Facility or notify WSN of its intention to place that material in a Reject Bin. (b) If upon notification under paragraph (a) WSN or its representative inspects the Reject Material and reasonably determines that it contains Specification Material and that such Specification Material can be and is separated from the Out of Specification Material within 24 hours of such notification, GRL must accept that Specification Material which WSN or its representatives separates from the Out of Specification Material for processing at the Facility and place the remaining Out of Specification Material in a Reject Bin. (c) WSN must remove all Reject Material (other than Reject Material deemed to be Specification Material under paragraph (b) or (d)) in accordance with the Collection Procedures. If GRL does not accept the Specification Material that has been separated in accordance with paragraph (b), GRL and WSN must procure the audit of the Reject Material in accordance with clause 6.3." (d) To the extent which Reject Material audited under clause 6.3 is determined to be: (i) Out of Specification Material, WSN must, unless otherwise agreed, promptly pay the costs (if any) of the audit under clause 6.3; or (ii) Specification Material (or if GRL otherwise agrees that the Reject Material is Specification Material): A. That material shall be deemed to be Residual Material for the purposes of Schedule 6 and shall be counted as Specification Material for the purposes of WSN's obligations under the Throughout Schedule; and B. GRL must promptly pay the costs (if any ) of the audit under clause 6.3. (e) If, in respect of any Month, it is determined under paragraph (d) that GRL has rejected a quantity of Specification Material in that Month which is greater than 20% of the Monthly Base Capacity referrable to that Month, GRL must within 14 days after the last day after that Month, give to WSN a written report which sets out , in reasonable detail, GRL's opinion as to the cause of, and potential remedies for, the rejection of that Specification Material. (f) Within 7 days after receipt of the report by WSN under paragraph (e), the parties must meet to discuss any wrongful rejection of Specification Material the subject of the report, and to agree (but with no legal obligation to do so) how WSN may be compensated for such wrongful rejection and how such wrongful rejection may be avoided in the future. (g) If the parties cannot agree under paragraph (f) as to how WSN is to be compensated for such wrongful rejection and how such wrongful rejection may be avoided in the future, to compensate WSN for the increased costs and expense of removing, handling and transporting the wrongfully rejected Specification Material, GRL (in addition to all other amounts payable by GRL under this deed in respect of the rejection of the Specification Material) must pay to WSN, within 7 days of the meeting under paragraph (f), an amount equal to $2.00 per tonne multiplied by the number of tonnes o9f Specification Material wrongfully rejected by GRL in that Month under paragraph (a). 123 The question of construction turns on what the term "that material" in clause 6.2(a) is understood to mean in the context of the WPD. There are two alternative constructions put forward by the respective parties: 1. Plaintiff: "that material" equates to "Out of Specification Material". 2. Defendant: "that material" equates to "Input Material". 124 The plaintiff has contended that GRL is not entitled to reject an entire Delivery of Input Material on the basis that it contains Out of Specification Material. 125 For the reasons set out below, the proper construction is that put forward by the defendant: ie the construction which equates "that material" to "Input Material". Clause 6.2 of the WPD entitles GRL to reject Out of Specification Material, including an entire Delivery, provided the notification procedure in clause 6.2 is followed. The terms "Reject Bin" and "Reject Material" 126 The terms "Reject Bin" and "Reject Material" both appear in clause 6.2. These terms are expressly defined under Attachment A of the WPD: 1. "Reject Material" means Input Material rejected by GRL under clause 6.2(a). 2. "Reject Bin" means a receptacle, which is capable of being lifted and tipped by a standard skip bin truck, for the storage of Input Material rejected by GRL under clause 6.2, which is located at the Collection Point. 127 Both definitions obviously refer to "Input Material rejected by GRL under clause 6.2" rather than Out of Specification Material. In particular "Reject Material" refers to clause 6.2(a), the very clause in contention. 128 Hence the term "that material", when read in the context of "Reject Bin" and "Reject Material", as defined in the WPD, clearly means Input Material. Construing "the material" as referring to "Out of Specification Material" would be contrary to the terms of the WPD itself. Commercial inconvenience 129 The plaintiff vigorously argued, using a hypothetical example, that the defendant's construction of "that material" would mean that under clause 6.2, GRL could reject an entire truckload if it contained just a single item constituting Out of Specification Material, e.g. a battery or a length of rope. 130 The plaintiff's proposition is as follows: i. GRL could reject every single Delivery of Input Material to the Facility and ii. WSN would be obliged to pay for the processing of that entire Delivery under the "put or pay" clause (see clause 5.1(a)(ii) and Schedule 6, paragraph 2). 131 Hence the plaintiff contends that the defendant's construction would lead to "commercial absurdity" (transcript 202.7) or would work commercial inconvenience. 132 An immediate concern that arises from the plaintiff's scenario is that it assumes that GRL can locate the single battery or rope in a 10 tonne load of waste before the pre-sorting stage. However, no evidence was put forward suggesting that GRL is able to do so. 133 If the plaintiff's scenario is played out in accordance with the WPD: i. A Delivery of Input Material enters the Facility that contains one battery or piece of rope but is otherwise Specification Material. ii. GRL gives notice of its intention to reject the entire Delivery. iii. WSN could then exercise its rights under clause 6.2(b) by removing the single rope or battery and GRL would be obliged to accept the remainder of the Delivery (now becoming entirely Specification Material). iv. If GRL refused, an audit would be procured in accordance with clause 6.3. v. Clause 6.2(d) provides that if the audit of Reject Material indicates that it is Specification Material, GRL must pay for the cost of the audit and reduce the Waste Processing Fee for processing the Reject Material (which is now deemed Residual Material). vi. If GRL has incorrectly rejected a specified amount of Specification Material, GRL must provide written justification to WSN under clause 6.2(e) and meet to discuss the wrongful rejection and agree upon compensation to WSN under clause 6.2(f). vii. Lastly, if there is a further impasse regarding compensation, clause 6.2(g) states that, in addition to all other amounts payable by GRL under the WPD, GRL must pay WSN $2.00 per tonne for Specification Material wrongly rejected. 134 Prima facie, GRL would refuse to accept the remainder of the Delivery at its peril given the consequences of a wrongful rejection referred to in clauses 6.2(c)-(g) as outlined above. 135 In fact, the only commercial inconvenience that could occur if GRL repeatedly engaged in the conduct described in WSN's hypothetical example would be that WSN might need to have one of its employees exercise its clause 6.2(b) on its behalf from time to time. 136 This is hardly the kind of 'commercial nonsense' or 'inconvenience' the High Court referred to in Zhu v Treasurer of NSW (2004) 218 CLR 530 at [82]. The High Court there cited Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-314 per Kirby P in support of its statement about commercial nonsense or inconvenience. The President's words are apposite in relation to all aspects of this case: "Between two such substantial businesses, there are sound reasons of principle and policy for determining their respective rights and duties, if at all possible, by reference to the written terms by which they expressed those rights and duties. No other approach is as likely to command general acceptance in the commercial community. No other approach is as efficient in the containment of litigation. None is so effective in conserving the economic and entrepreneurial decisions which lie behind contract law to business people rather than lawyers. But language, including that used in commercial agreements, is often ambiguous. It may be so even in agreements between substantial parties which are well advised by lawyers. The ambiguities may arise from a deliberate decision to keep the terms of the agreement between the parties vague, because they are difficult to define and, it is hoped there will be no occasion for disagreement. It may be so because the parties, and those advising them, do not foresee the infinite variety of circumstances which later arise calling for resolution by reference to their agreement. Or it may be so for no better reason than that the inherent contradictions that lie in the words of the agreement between the parties were not recognised at the time those words were agreed to. It then falls to the parties in the first instance, and a court ultimately, to give meaning to those words. Whoever may be the parties to the agreement, it is the fundamental rule, that a court should give the words of a written agreement the natural meaning that they bear. Subject to that rule, in giving meaning to the words of an agreement between commercial parties, courts will endeavour to avoid a construction which makes commercial nonsense or is shown to be commercially inconvenient. This is because courts will infer that commercial parties would not themselves normally agree in such a way." 137 In addition, there is no evidence to suggest that GRL would likely engage in the conduct described in WSN's hypothetical example. To the contrary, it would be commercially irrational for GRL to do so in view of the increased handling costs that GRL would incur and the floor space of the receival hall that would be engaged whilst the Delivery was made available by GRL to WSN for inspection. The terms "Specification" and "Non-Specification Material" 138 It is also useful to analyse the dichotomy between Specification and Non-Specification Material in resolving the issue at hand. Some important observations can be drawn from the words of Attachment A and Schedule 12 of the WPD: i. Specification Material is Input Material that satisfies each criterion in Schedule 12. ii. Out of Specification Material is Input Material which is not Specification Material (according to Attachment A). iii. Therefore, Specification Material and Out of Specification Material are mutually exclusive categories. Input Material is either Specification Material or Out of Specification Material. 139 In putting forward its hypothetical example of the single battery or rope in a Delivery of Input Material, the plaintiff makes an un-stated assumption that one determines what is Specification Material or otherwise on an object-by-object basis within a given Delivery. However, the criteria in Schedule 12 refer to compositional requirements, proscribes certain objects contained within as well as a prohibition against over-compacted material. These criteria clearly show that such a determination is made through looking at the Delivery in its entirety. 140 Based on the above (incorrect) assumption, the plaintiffs have further assumed that a given Delivery of Input Material contains both Specification Material and Non-Specification Material. However, this assumption is incorrect when one observes the mutual exclusivity between Specification Material and Out of Specification Material provided by the wording of their respective definitions. A given Delivery of Input Material is either Specification Material or Out of Specification Material and cannot contain both. 141 Hence, for example, where a single truckload of material delivered to the Facility does not satisfy the compositional requirements of the specification in Schedule 12 (such as containing one piece of Hazardous Material such as a battery) the entire Delivery contains Out of Specification Material. Even on the plaintiff's construction, GRL is theoretically entitled to reject the entire Delivery because the entire Delivery contains Out of Specification Material. Separation of Specification Material 142 The consequence of WSN's construction would be that GRL would be required to separate Out of Specification Material from the Specification Material before notifying its intention to reject. A construction with that effect is rejected. 143 Clause 6.2(a) requires that GRL must form a "belief" (acting reasonably). In contrast, WSN is required to make a "reasonable determination" (clause 6.2(b)). A determination requires a higher level of satisfaction than a belief. 144 The requisite belief that GRL must hold to be able to notify its intention to reject pursuant to clause 6.2(a) is that a Delivery of Input Material contains Out of Specification Material. Having regard to the definition of Delivery, the WPD expressly requires GRL to form a belief in respect of a "single truckload of material delivered to" the Facility. In contrast, the reasonable determination that WSN has to make for the purposes of clause 6.2(b) is that: 1. The Reject Material – that is, the Input Material that GRL has rejected pursuant to clause 6.2(a) – contains Specification Material and 2. That Specification Material can be and is separated from the Out of Specification Material within 24 hours of the notification. 145 Clause 6.2(b) expressly requires WSN to separate Specification Material from Out of Specification Material. There is no suggestion that GRL is required to sort through the Delivery of Input Material to separate the Out of Specification Material. 146 As noted above, Reject Material is defined as the Input Material that GRL has rejected pursuant to clause 6.2(a), not the Out of Specification Material that GRL has rejected pursuant to clause 6.2(a). If it was intended that GRL would be required to separate Out of Specification Material from Specification Material, then Reject Material would have been defined as the Out of Specification Material rejected by GRL pursuant to clause 6.2(a). 147 Lastly there are significant practical impediments if GRL is required to separate Out of Specification Material from a Delivery before it may exercise its right to notify its intention to reject. 148 In conclusion, in applying the plain language of clause 6.2, in the context of support definitions and criteria in Attachment A and Schedule 12, GRL is entitled to notify its intention to reject an entire Delivery. The relief sought by WSN 149 As is apparent from the number of variations to the Commercial List Summons across a period, the plaintiff appears to have had considerable difficulty in framing with precision the relief to which it claims to be entitled. 150 The reasons make clear that the plaintiff has not established any entitlement to any form of relief of the type ultimately claimed. 151 Nonetheless it is appropriate to make a number of observations in relation to the claims for relief. In this regard it is fair to observe that when answering the defendants attack on the forms of relief, Mr Walton appeared to accept at least some of the problems exposed. In referring [at transcript 283] to the plaintiff's submissions [as having made much of 'the machinations' set out in the plaintiffs claimed relief in paragraph b of the Summons] Mr Walton conceded that he had some sympathy with those comments. 152 Each of the following propositions for which the defendant contended in relation to the shortcomings of the plaintiff's claims for relief would have had substance had the plaintiff achieved the point where the scope of relief required consideration. 153 Although they are drafted as restraints, orders 1(b), 1(c), 1(c1), and 1(e) are, in substance, orders for specific performance of a long term commercial contract. For example, an order that GRL be restrained from refusing to accept deliveries is, in substance, an order compelling GRL to accept deliveries. 154 This is the paradigm case in which the Court would not order specific performance or grant a mandatory injunction which has the effect of requiring the constant supervision of the Court and the continued co-operation of parties. See e.g. JC Williamson Limited v Lukey and Mullholland (1931) 45 CLR 282 at 297-298. The relief sought would compel GRL to engage in repeated acts and/or ongoing conduct: see e.g. Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 at 13. 155 Orders 1(b) and 1(c) concerning deliveries of waste Monday to Friday, are both subject to clause 13.6. That is, WSN seeks to maintain GRL's obligation to keep the Facility open on Saturdays to accept Input Material. Even in the relief sought in these proceedings, WSN's conduct is inconsistent with the alleged convention. 156 The terms of the relief sought are imprecise, vague and uncertain. What is meant by "approximately" 725 tonnes or 672 tonnes? What level of variation is permissible? What is meant by the non-capitalised word "deliveries". 157 Moreover, orders 1(b) and 1(c) attempt to embody detailed contractual terms and conditions in a form that is both incomplete and inappropriate as a matter of substance. For example, the restraint in order 1(b) is subject to eight other clauses in the WPD and a factual matter (namely whether acceptance of Input Material would have an adverse economic effect). Whether or not accepting deliveries "would have an adverse economic effect on the profitability of the Facility" is a question of fact and degree about which minds would legitimately differ. 158 The relief sought would expose GRL to penalties for contempt for future non-compliance with obligations or breaches of contract. As Lord Hoffman said in Co-operative Insurance v Argyll Stores Ltd [1998] AC 1 at 12: "… the only means available to the court to enforce its order is the quasi-criminal procedure of punishment for contempt. This is a powerful weapon; so powerful, in fact, as often to be unsuitable as an instrument for adjudicating upon the disputes which may arise over whether a business is being run in accordance with the terms of the court's order. The heavy-handed nature of the enforcement mechanism is a consideration which may go to the exercise of the court's discretion in other cases as well, but its use to compel the running of a business is perhaps the paradigm case of its disadvantages …" 159 This issue is compounded by the form of the order sought, that would compel GRL to perform obligations that are dependent on a number of detailed and complex contractual terms over a period of time. I accept that GRL should not be required to track through a complex contractual document, and determine – as a matter of fact – whether accepting material would have an adverse economic effect on the profitability of the Facility – to know whether or not it will be guilty of contempt. 160 A defendant must know what must be done or what it is restrained from doing: Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 66. Courts do not grant injunctions and expose parties to the potential to be punished for contempt when compliance depends on the interpretation of a complex contractual document and the determination of uncertain factual matters. Orders of that kind do not quell the controversy between the parties. 161 This is reflected in further comments by Lord Hoffman in Co-operative Insurance v Argyll Stores Ltd [1998] AC 1 at 13: "… the seriousness of a finding of contempt for the defendant means that any application to enforce the order is likely to be a heavy and expensive piece of litigation. The possibility of repeated applications over a period of time means that, in comparison with a once-and-for-all inquiry as to damages, the enforcement of the remedy is likely to be expensive in terms of cost to the parties and the resources of the judicial system." 162 Further, the relief sought is inconsistent with, and/or contrary to, the terms of the WPD, in particular, clauses 4.4(e), 6.1, 6.2 and paragraphs 1 and 2 of Schedule 11. 163 For example: (a;) Order 1(b) seeks to restrain GRL from refusing to accept deliveries of Input Material – GRL has no such obligation under the WPD. Clause 4.4(a) only requires GRL to accept Specification Material . It does not require GRL to accept Input Material . From the exceptions referred to in paragraph 1(b)(A) and (B), it appears that order 1(b) is "based" on clause 4.4(b) of the WPD. Clause 4.4(b) does not impose obligations on GRL. Clause 4.4(b) creates an exception to GRL's obligation under clause 4.4(a) to accept Specification Material. WSN does not allege that GRL has breached clause 4.4(b): see paragraphs C34 and C37 of the Further Amended Commercial List Statement. Presumably this is because clause 4.4(b) does not create a promissory obligation capable of being breached. It is incapable of supporting an injunction. (b) Neither order 1(b) nor order 1(c) refer to clause 6.2. That is, the restraints on refusing to accept deliveries are not subject to clause 6.2 of the WPD (or for that matter GRL's rights under clause 6.1). The effect of orders 1(b) and 1(c) would be to rob GRL of its contractual right to notify an intention to reject in accordance with clause 6.2. Moreover, order 1(e) (and the corresponding declaration in order 1(d)) are inconsistent with clause 6.2). (c) Orders 1(b) and 1(c) give no scope for the exercise of GRL's right to nominate its Daily Throughput Requirement under paragraphs 1 and 2 of Schedule 11 to the WPD. 164 The parties have specified the consequences of GRL not complying with clauses 4.4(a) or 6.2 of the WPD, in clauses 4.4(e) and 6.2(c) to (g) and 6.3 of the WPD. 165 Clause 4.4(e) provides that "The consequences of GRL not complying with paragraph [4.4] (a) are limited to the consequences set out in clause 6.2 and 18.4". Breach of clause 4.4(a) does not entitle WSN to an injunction (especially a mandatory injunction akin to an order for specific performance). 166 Order 1(c) renders absolute and permanent a 7% relationship between Input Material and Specification Material (i.e. that 100 tonnes of Input Material is required to produce 93 tonnes of Specification Material). The 7% relationship is not immutable. It is based on prior levels of rejected hazardous and incompatible waste. Moreover, it does not take into account the proportion of material that is Out of Specification for compositional reasons. 167 There is no time limit in respect of the orders sought. Apparently it is intended that the orders will continue for the remainder of the 25 year term of the WPD. The convention alleged by WSN even had it been established, could not justify such extensive relief. Reserved rulings on evidence 168 During the hearing and after some persuasion to do so from the Court, the parties usefully agreed in the main on the rulings to be given in respect of objections to evidence. Many of the rulings became common ground and many of the objections originally taken by both parties were no longer pressed. 169 In a few instances the parties agreed that questions of admissibility be determined in the final judgment. In the main the type of issue so dealt with concerned the admissibility of evidence, conversations or documents having occurred anterior to the signing of the 11 March 2003 WPD. 170 With respect to Mr Kanofski's affidavit of 17 April 2009 paragraphs 27-32 and 37 are rejected. 171 With respect to Mr Kanofski's affidavit of 8 May 2009 paragraphs 7-9, 11 and 13-31 are rejected. 172 With respect to the affidavit of Mr David Singh sworn on 1 May 2009 the rulings are as follows: · As to paragraph 31 - allow the evidence: ie the second sentence · As to paragraph 37 - reject the paragraph · As to paragraph 38 - reject the evidence · As to paragraph 39 - reject the evidence · As to paragraph 41 - allow the evidence: ie the second and following sentences. The ruling as to the firs sentence is agreed. · As to paragraph 45 - reject all save for the first sentence which is agreed as to the ruling · As to paragraph 58 - allow the evidence · As to paragraph 59 - reject the evidence · As to paragraph 60 - reject the evidence · As to paragraph 61 - reject the evidence · As to paragraph 70 - allow Doc/136 · As to paragraphs 71 - allow the evidence · As to paragraphs 74, 75, 76 – reject the evidence · As to paragraphs 77 and 78 – reject the evidence · As to paragraphs 79 and 80 – reject the evidence Short Minutes of Order 173 The parties are to bring short minutes of order on which occasion costs may be argued. **** ANNEXURE E 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.