District Court New South Wales Medium Neutral Citation: Premium Building Management Pty Ltd v The Owners - Strata Plan No 69204 [2019] NSWDC 312 Hearing dates: 18 – 20, 24 June 2019 Date of orders: 10 July 2019 Decision date: 10 July 2019 Jurisdiction: Civil Before: Abadee DCJ Decision: See paragraph 232 Catchwords: CONTRACT – building management agreement – whether and when agreement existed – terms of the agreement – incomplete or uncertain terms – statutory illegality – validity of contract under s67 of Strata Schemes Management Act 2015 (NSW) ESTOPPEL – conventional estoppel – reply to defence of statutory illegality – whether defendant estopped from denying it entered into a binding agreement. DAMAGES – claim for loss of profit – whether overhead expenses required to be taken into account proportionately to the business. EVIDENCE – whether Jones v Dunkel inference available against defendant for failure to call evidence from attendees at meeting of content of discussions – reliability of Minute as business record of the defendant. PRACTICE AND PROCEDURE – pleading requirements – whether assertion of incompleteness or uncertainty in contract needs to be pleaded – whether a party, in reply to unpleaded contention of incompleteness, may raise alterative case on date when agreement entered into. Legislation Cited: Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Evidence Act 1995 (NSW) Strata Schemes Management Act 2015 (NSW) Uniform Civil Procedure Rules Cases Cited: ASIC v Hellicar & Ors (2012) 247 CLR 345 ASIC v Rich (2005) 191 FLR 385 Bondlake Pty Ltd v The Owners – Strata Plan No. 60285 (2005) 62 NSWLR 158 Commercial Union Assurance Co of Australia v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 Gynch v Polish Club (2015) 255 CLR 414 Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 Meriton Apartments Pty Ltd v Owners Strata Plan No. 72381 (2015) 105 ACSR 1 Moratic Pty Ltd v Gordon [2007] NSWSC 5 Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1 Nelson v Nelson (1995) 184 CLR 538 North Sydney Leagues' Club v Sydney Protection Agency Pty Ltd (2012) 83 NSWLR 710 Pua Hor Ong v Wu You Yang Pty Ltd (2008) SASC 365 Purkess v Crittenden (1965) 114 CLR 164 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 Stolfa v Owners Strata Plan 4366 [2009] NSWSC 589 Upper Hunter County District Council Australian Chilling & Freezing Co (1968) 118 CLR 429 Waldorf Apartment Hotel, the Entrance Pty Ltd v Owners Corp Sp 71623 [2010] NSWCA 226 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Water Board v Moustakas (1988) 180 CLR 491 Whitlock v Brew (1968) 118 CLR 445 York Air Conditioning and Refrigeration (A/Sia) Pty Ltd v Commonwealth (1949) 80 CLR 11 Texts Cited: Cheshire & Fifoot Law of Contract, 11th Australian ed Heydon on Contract: The General Part (Lawbook Co 2019) Category: Principal judgment Parties: Premium Building Management Pty Ltd (First Plaintiff) Premium Strata Pty Ltd (Second Plaintiff) The Owners – Strata Plan No 69204 (Defendant) Representation: Counsel: Mr J Lazarus with Mr T Liu (Plaintiff) Mr I Davidson SC with Ms J Treherne (Defendant) Solicitors: Project Lawyers (Plaintiff) Strata Specialist Lawyers (Defendant) File Number(s): 2018/171635 Publication restriction: Nil Judgment INTRODUCTION – THE NATURE OF THE CASE 1. The defendant (the "Owners Corporation") is the Owners Corporation of a Strata scheme located in Paddington. The strata scheme is known as "Paddington Central". This case concerns an alleged arrangement that the Owners Corporation had with its Building Manager, being the first plaintiff ('PBM'). On the second day of the trial, the claim of the second plaintiff ('PS'), strata manager of the scheme, was settled and subject to a consent judgment. 2. PBM and PS are closely associated companies. ASIC company searches put into evidence reveal that, at all material times, they shared common directors (and directly or indirectly) similar members, and business addresses. To outsiders, they shared very similar logos and promotional slogans. They shared a Chief Executive Officer, Ms Habib. PBM was very much her brainchild: with PS having provided strata management services since 2007, she, and her co-director of PBM, Ms Inger Brettle, saw a business opportunity to offer a building management service leveraging the 'Premium' brand established by PS. This accounted for the substantially similar use of the slogan ("exceeding expectations") and logo. 3. On 19 October 2016, PS had been appointed as the strata managing agent for the Owners Corporation. It was re-appointed to that position on 26 April 2017. 4. Between February and May 2017, it is common ground that negotiations were entered between the Owners Corporation and PBM for the latter's appointment as Building Manager. PBM contends, and the Owners Corporation denies, that it entered into a Building Management Agreement on or about 23 May 2017. PBM says, in the alternative, that if there was no binding agreement reached by 23 May 2017, for some incompleteness in certain terms, those terms were complete by 3 August 2017 so as to constitute a binding agreement by that date. It is common ground that any binding agreement, on whichever date it was entered into, was not executed in writing by the Owners Corporation. 5. The Owners Corporation primarily disputes that an enforceable agreement came into existence at all. It says that there were a range of essential matters (including price and rights of termination) that remained to be negotiated (on 23 May 2019. It says that PBM is not entitled to run an alternative action that an agreement came into being on 3 August 2019. The Owners Corporation also contends that the requirements of section 67 of the Strata Schemes Management Act 2015 (NSW) (the 'SSM Act') meant that any such agreement as was concluded (on either date) was invalid. In answer to this, PBM relies upon conventional estoppel so as to preclude the Owners Corporation invoking a defence of statutory illegality. 6. On 18 September 2017, the Owners Corporation sent a sparsely-worded notice of termination to PBM. Its reasons were elaborated on 21 September 2017. A significant part of those reasons was said to be the non-disclosure, by PBM, of its association with PS. 7. PBM contends that the purported termination was invalid and accordingly, the Owners Corporation had repudiated the building management agreement and that it accepted such repudiation (either on that date or on 18 December 2017). By this proceeding, PBM seeks damages for the loss of profits that it would have made during the life of the agreement, including an option period, which it says was caused by reason of the repudiation of the agreement. 8. I should add that about a month before the trial began (23 May 2019), an application by the Owners Corporation to substantially amend its defence, so as to permit it to run a case that it would have been entitled to terminate PBM's contract on account of poor performance of its services as a Business Manager failed. The application was not renewed at trial. Much of the Owners Corporation's affidavit evidence deposed, generally to that topic, and, in circumstances where such material was not otherwise relevant to the issues in dispute, significant parts of the defendant's affidavit evidence were either not read or were ruled inadmissible by me. At the same time, PBM's application to the Court to set aside a notice to produce served by the Owners Corporation, which would have required production of many categories of documents relevant to the expert accounting opinion of Mr Bridger (who quantified PBM's loss of profits claim), and thereby enabled its own expert (Mr Loneragan) to fully respond to Mr Bridger's opinions, succeeded. I mention these procedural events as they had practical consequences for the Owners' Corporation's defence of the proceeding at trial. FACTUAL BACKGROUND 1. I will elaborate upon the factual background; primarily with reference to facts that are either uncontentious, or for which there is objective support; whilst indicating also where there are differences between the parties. Establishing PBM's connection with the Owners Corporation 1. PS' appointment as strata managing agent from about October 2016 arose through its connection to Ms Stella McWiggan. Ms McWiggan was a former employee of PS (having commenced around July or August 2016) and had acted as the senior licensed Strata manager for the predecessor to PS, as the strata manager for the Owners Corporation – an entity called Strata Partners. Ms McWiggan did not give evidence in the proceeding. She had left her employment with PBM in November 2017. (There was debate about the significance of her not giving evidence and whether it was appropriate for any adverse inferences should be drawn by that omission and if so, against which party). 2. On 15 September 2016, Ms McWiggan emailed to Mischa Warren (at that point, the Chairperson of the strata committee for the Owners Corporation) a building management proposal for Paddington Central. Ms McWiggan had received that proposal by email from Ms Habib a short time earlier and had on-sent that email to Ms Warren. Close discernment of the two emails would have revealed the close resemblance between the logos, and contact details of both PBM and PS. 3. Ms Habib was cross-examined on some of the content of that brochure that related to the disclosed links between PS and PBM and the applicability of what was called the 'Diamond Service Guarantee' – whereby it was said that "if you are not satisfied with our service within six months, we will happily release you from our agreement and refund your setup fees, no questions asked." Ms Habib said that this 'guarantee' was only provided by PS; and not PBM. Ms Habib later presented the same brochure to Ms Anita Kneebone, a lot owner and member of the strata committee, when she met her on 24 April 2017 in the circumstances referred to further below. 4. In the first of her affidavits sworn in this proceeding, dated 21 September 2018, Ms Habib said that on 27 February 2017, PBM submitted (via Ms McWiggan) to the Strata committee of the Owners Corporation a formal proposal to provide building management services for the Paddington Central scheme. 5. From 6 March 2017 to 20 April 2017, there were communications between Ms Brettle (a co-director, with Ms Habib, of PBM) and Ms Kaye Carr (who had recently become the new Chairperson of the Owners Corporation) with a view to arranging a discussion of the proposal. 6. Under cross-examination, Ms Carr accepted that when she responded to Ms Brettle's message about obtaining a quote from 'Diamond Class Management', this was a reference to PBM, who she understood to be the prospective service provider. At about March 2017 or April 2017, it was put to her that the strata committee were dissatisfied with the performance of the incumbent Building Manager (Mr Camil Nassar, of 'Captain Friendly'), Ms Carr demurred: when she was shown an email sent by Ms McWiggan, which purported to express the view of the committee at one of its meetings, Ms Carr said she thought that was only Ms McWiggan's opinion. Nevertheless, she accepted that at this point, the committee thought it desirable to retain a new Building Manager, who might apply a more professional approach than the incumbent. 7. Ms Habib says that she and Mr Sarkis met with Ms Kneebone, on 24 April 2017, on-site, where they had a tour of the building and discussed the scheme's strata management and the building management needs. She says that after the tour they went across to a cafe where she and Mr Sarkis gave a presentation to Ms Kneebone about the services that PBM could offer. As indicated earlier, Ms Habib recalled supplying Ms Kneebone with a brochure which, she said, had been previously given to members of the Strata committee when PS had first pitched its services to the Owners Corporation. The same brochure was provided because PBM did not have its own separately branded brochure: it was referred to as the PS 'dual-branded' brochure. 8. Ms Habib also recalled saying words to the following effect: "I am the CEO of both Premium Building Management and Premium Strata. I was a founder of the Premium Strata in 2007 and after working in strata for many years I saw a need for quality building Management services. That's why we now have Premium Building Management [without] diamond class service. Given that we already manage your strata, coming on board for building management will be an easy transition. With the addition of our building management services we can provide real synergies and our trademark Diamond Class Service at an exceptional price. By having both companies on board and working together we can provide a one-stop shop with all the processes working hand-in-hand. The left hand will know what the right hand is doing and you won't have a problem of the building manager pointing the finger at the Strata manager or vice versa." 1. Under cross-examination, Ms Habib accepted that she had informed Ms Kneebone of PBM's database program that was capable of being accessed by its clients to ascertain the status of work orders. Mr Sarkis provided an overview that if PBM's clients sought to ascertain the status of spending, they would need to make contact with the strata agent. This was a practical illustration, or demonstration, of Ms Habib's 'pitch' to PBM about the relative ease with which inquiries about building or strata works could be made through a 'one stop shop'. 2. Ms Kneebone said, in her account of this meeting in her affidavit, that Mr Sarkis provided her with a business proposal. She said that Ms Habib had represented that PBM had a database computer program accessible to the Owners Corporation to track the status of spending and tasks. 3. When she gave evidence, Ms Kneebone indicated that she came to receive this 'pitch' by happenstance: she understood her role was simply to escort Ms Habib and Mr Sarkis around the building site and she would happily have returned to her unit after that had occurred. However, out of politeness, she agreed to join Ms Habib and Mr Sarkis for coffee across the road; thinking it was more of a social event. Nevertheless, Ms Habib used the opportunity to hand over, and discuss the content of a hard copy of a brochure and Mr Sarkis brandished his laptop. Notes annotated on the copy of the brochure indicated that Ms Habib had calculated the cleaning costs and, specifically, that if PBM's services were engaged, they would amount to $38,000 more than the incumbent building manager's fees. Ms Kneebone said she could not recall, or indeed, comprehended anything that was said to her; but she did recall saying that any decision about an appointment of a building manager was something that had to go to a committee. 4. On 26 April 2017, at its Annual General Meeting, the Owners Corporation resolved to reappoint PS as its Strata managing agent. It also resolved to further consider building management proposals, including (but not limited to) a proposal by PBM, at a future EGM. 5. The minutes of this meeting recorded that a Building Management Agreement had been "annexed and tabled". In subsequent affidavits, Ms Habib acknowledged that it was erroneous for the Minute to record that the written agreement had been 'annexed' to the minutes, but maintained that the document had been 'tabled' at the meeting. Under cross-examination, it was put that there may have been some other omissions as well (such as Ms Konstantinidis' omission from the list of persons elected to the strata committee), however, Ms Habib – who did not attend the meeting – said she did not know. 6. On 27 and 28 April 2017 there were email communications between Ms Brettle, Ms McWiggan, Ms Carr and Ms Konstantinidis about the proposal for building agreement services. On the latter day, Ms Brettle sent a proposal about building management quotations. Conveying the proposal and a draft Building Management agreement 1. On 1 May 2017, Ms Habib sent an email (at 4:22pm) to Ms Stella McWiggan (and cc'd Inger Brettle and Mark Sarkis) attaching the (proposed) contract for PBM and a revised business proposal. The email explained that Schedule C to the proposed agreement (relating to the scope of the cleaning services) would be finalised in a week or two before starting, or within the first two weeks of starting. Ms McWiggan was asked to circulate the agreement and proposal. 2. On 2 May 2017, Ms Habib sent another email (at 12.25pm) to Ms McWiggan (also cc'd to Ms Brettle and Mr Sarkis) indicating that there was a typo in the earlier version of the contract, and attaching a revised version. 3. There was no substantial difference in the versions of the agreement Ms Habib emailed to Ms McWiggan on 1 and 2 May 2017. 4. On 2 May 2017, the incumbent Building Manager, Mr Nassar gave notice of his resignation, effectively, from 1 June. PBM had indicated that it was in a position to have a staff member on site by that date, capable of undertaking the full duties that it, PBM, had previously proposed to the Owners Corporation, and in accordance with a contract which was expected to shortly be proposed. Ms Carr accepted that with Mr Nassar's resignation, the imperative to replace him (by the end of the month) with a new Building Manager became more urgent. That meant the need for a new contract; although Ms Carr said that she was not aware of this particular requirement at this particular point in time. 5. In her email to the Strata committee informing it of Mr Nassar's resignation, Ms McWiggan noted that PBM were "confident" in being able to commit to having a staff member on site by 1 June, should it be successful at the EGM, to at least attend to essential duties, but were endeavouring to have the nominated Building Manager on site by 1 June to undertake the full duties set out in the scope and contract. 6. On 3 May 2017, Ms McWiggan circulated (by mail) correspondence to the owners of the strata scheme, notifying them of an EGM to be held on 23 May 2017. The EGM notice and agenda enclosed a proposed Building Management Agreement and revised business management proposal from PBM. 7. The version of the agreement emailed out was, in fact, different to the versions Ms Habib emailed to Ms McWiggan on 1 and 2 May. Counsel for PBM identified (in his opening at T9.19) that the version of the agreement sued upon was that which was exhibited to Ms Habib's first affidavit (Tab B12 of Ex PX1). There was one important difference: in the version sued upon, the rate of increase for the 'Base Fee' was 3.5% (not 5% in the versions Ms Habib emailed to Ms McWiggan on 1 and 2 May). However, the versions of the agreement reviewed by Ms Crundell on 17 May 2019 indicates that it is more likely that the version circulated to members accorded with what Ms Habib sent to Ms McWiggan on 1 or 2 May (being substantially identical). 8. Ms Carr accepted, contrary to what she had said in her affidavit, that she had received, with the notice of the EGM, a draft contract; although, when she gave evidence, she said that the fact of receipt of the draft contract had not registered in her mind back around 3 May 2017: she thought the document amounted merely to a proposal. Under cross-examination, she was asked to confirm that she read it. She accepted, rather grudgingly, that she would have had to have read at least some of the proposed contract, but said her focus was upon the financial aspects. This was despite an email that she sent to Ms McWiggan that she had read the EGM papers "in detail". 9. Nevertheless, Ms Carr said that, as the Chairperson, the lot owners of the strata scheme were being asked to consider the appointment of a new Building Manager on particular terms being those set out in the agreement enclosed with the notice. She acknowledged that, at this time, she was aware of the need for a contract to be put in place so a new building manager could commence from the point of Mr Nassar's departure. She also acknowledged that the proposal and contract had come from PBM; it had indicated the services it could provide; and the price for the provision of such services. 10. It was also put to Ms Carr that she understood that what she was being asked to approve was not only the appointment of a building manager, but the appointment upon the terms and conditions contained in the proposed contract. This included the term of the arrangement in cll 3.1 and 32 (providing for a 3-year term with a 3 year option). Ms Carr equivocated in her answer: she said that she did not recall this being made 'explicit', and that the terms of the arrangement were not her focus at the time, but eventually she acknowledged that the terms were accessible. She also accepted that the proposed agreement (save for the last page) was circulated to the lot owners. 11. Under the heading 'motions to be considered', the following motions (or resolutions) were proposed (in paraphrase) in the EGM notice: * Motion 1: minutes of the last general meeting (26 April 2017) as a true and accurate account; * Motion 2: that the Owners Corporation resolved to decide whether a building manager should be appointed under section 66 and, if a building manager is to be appointed, what functions the building manager should exercise; * Motion 3: that the Owners Corporation resolve to appoint PBM as building manager, to assist the Owners Corporation in the management, control, maintenance and repair of the common property in accordance with the terms and conditions set out in the Building Management Agreement dated April 2017 annexed and tabled with this agenda; * Motion 4: that the Owners Corporation resolved to nominate to representatives to affix the seal and signing of the building management contract on behalf of the Owners Corporation. * Motion 5: (subject to motions 3 & 4 not being approved) the Owners Corporation resolve to appoint Lefand Group as Building Manger to assist the Owners Corporation in the management, control, maintenance and repair of the common property. 1. By cl 3 of the proposed Building Management Contract annexed to the notice for the meeting, the term of the contract was 36 months', commencing 1 June 2017, with an option (capable of being exercised unilaterally by the building manager) of a further term of 36 months under the same conditions. 2. Other pertinent features of what PBM says was the Building Management Agreement were: * Clause 5: which regulated the basis for termination (by either party). Most materially, this included (in cl 5.1(e)) the right to immediately terminate by giving notice to the defaulting party where the defaulting party had breached any term of the agreement and failed to rectify the breach within 14 days of receiving a notice from the non-defaulting party requesting it to remedy the breach (provided such breach was capable of being remedied) * Schedule A: this schedule specified the Building Management Services. This included the provision for a building manager, identified functions of the building manager, maintenance of contractors and insurance. * Schedule B: this set out the Building manager's fees. Most pertinently, for the purpose of the issues in this proceeding, was what the agreement (as enclosed with the notice of the meeting) said about reviews of the building managers "Base fee". This was that it should increase by 3.5% over the fee payable for the immediately preceding year. 1. Although there was a reference in the proposed agreement (within Schedule A (cl 2.4)) to Schedule C, the version of the proposed agreement which Ms Habib emailed to Ms McWiggan on 2 May did not attach Schedule C. The evidence indicates that Schedule C was not, in fact, supplied to the Owners Corporation until early July 2017. 2. Under cross-examination, it was suggested to Ms Habib that beyond the missing Schedule C, there were other differences between the version of the proposed agreement sent out (on 3 May) and the version she had sent to Ms McWiggan on 2 May 2017 (as indicated in her affidavit of 17 June 2019). This included, for example, differences between cross-references in clause 3 (in clause 3.1) as well as the method for calculating the rate of increase in Base Fees (in Schedule B). It was put to Ms Habib that, as at 23 May 2017, PBM was still negotiating these matters. Ms Habib denied this – saying that, as at the date of the meeting, there were no further negotiations; although she accepted that she did not attend the meeting. 3. It was further put to Ms Habib that notwithstanding evidence that minutes of the meeting of 23 May 2017 had been electronically generated on 6 June 2017, there was no record to establish that they had been mailed to members of the strata committee. Ms Habib said she was not aware that the Minutes had been mailed to members of the Owners Corporation. It was also brought to Ms Habib's attention that the Minutes that PBM relied upon did not indicate a time when the meeting closed: to the contrary, it was stated that the meeting "closed at ???". Ms Habib accepted that it was not usual practice for such a reference to be contained within a minute, but speculated that there might have been a reason for it. Ms Habib was challenged that it was not until her first affidavit had the Minute been distributed. Ms Habib said that she was unable to comment as she was not involved in the process of distributing it. It was put that it would have been important to PBM (and PS, whose task it was to prepare the Minutes) for Minutes accurately to record its appointment as a building manager. It was also suggested that it was important to PBM to be clear that an appointment had actually been made. Ms Habib said that although it was necessary, for the purposes of the legislative requirements, it was not otherwise important. The Owners Corporation's consideration of the proposal 1. On 17 May 2017, there was discussion between two strata committee members of the Owners Corporation discussing the proposed PBM contract. Ms Bechely-Crundall, a member of the strata committee, typed some notes, after having prepared some handwritten notes. She could not locate the handwritten notes, but she annexed the typed notes to her affidavit. The typed notes indicated that, after discussion of the proposed candidates (including Lefand), the members agreed to recommend PBM at the forthcoming EGM. The typed notes also refer to an agreement that an initial appointment be only for 6 months and 1 year, thereafter with an automatic 5% annual increase. 2. Email correspondence indicated, at the time, that Ms Carr had looked at the proposed agreement closely; and closely enough to compare what PBM was proposing with other proposals from other prospective building managers. Ms Carr acknowledged that she had reviewed the quote from the Lefand Group and the motion for PBM's appointment as the Building Manager. 3. Ms Carr also acknowledged that, between 3 May and 23 May, the Owners Corporation had had sufficient opportunity to request such information as she thought relevant to determine whether to appoint PBM, over 3 weeks, and the terms for such engagement, however, from her point of view, she said that her focus was on getting sufficient information for others; and she thought that Ms McWiggan would be available to answer questions. The EGM on 23 May 2017 1. Minutes of the EGM on 23 May 2017 indicate that Motion 3 in the notice was carried such that the Owners Corporation resolved to appoint PBM as building manager, and (by the passing of Motion 4) for Ms Carr and Ms Konstantinidis to attest to fixing the seal and the signing of the contract on behalf of the Owners Corporation. As a corollary to the passing of motions 3 & 4, motion 5 – proposing the appointment of Lefand Group as the Building Manager – was defeated. 2. There was no contemporaneous signed minute of this meeting, however, at the Owners Corporation's next AGM (in April 2018), the minute of the EGM was adopted as correct. Evidence relied upon in Ms Brettle's affidavit of 13 June 2019 indicates that the Minutes were created on PBM/PS' Microsoft software system on 6 June 2017. 3. The content of the Minute closely corresponded with the resolutions in the agenda. 4. Ms Carr was the only witness called by the Owners Corporation who gave evidence of what had occurred at the meeting on 23 May 2017. There was no evidence from Ms Konstantinidis. Although affidavits were prepared by Ms Kneebone and Ms Crundall, they did not give evidence as to what occurred at that meeting. This led PBM's Counsel to submit that inferences should be drawn that they did not give evidence on this matter because the defendant feared what they may say (Commercial Union Assurance Co of Australia v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-9). No affidavits were served at all from the other attendees. To lay the platform for the submission that the rule in Jones v Dunkel arose, Counsel for the plaintiff inquired of Ms Carr as to whether other attendees referred to in the Minutes - Vanessa Bennett, Dianne McQueen, Julie Foster and Nicola Barsby – who had all remained lot owners, were alive and well. Ms Carr indicated that they had and were. This evidence led PBM's Counsel to later submit that Jones v Dunkel inferences should be drawn from the Owners Corporation's failure to call these attendees as witnesses. 5. The parties each submitted that a Jones v Dunkel inference should be drawn against their adversary on the basis that Ms McWiggan was in their adversary's camp; and not called to give evidence. 6. Ms Carr deposed in her affidavit that she did not recall seeing the Minute of the meeting of 23 May 2017 until she read affidavit evidence prepared on behalf of PBM. Under cross-examination, she said that when she did take the opportunity to review the Minute, she could not recall how much attention she paid to it. Nevertheless, she accepted that, although she had the opportunity to do so, she did not dispute the accuracy of what was indicated about the resolutions that had been passed when she prepared her affidavit. That indicated, she accepted, that the meeting had resolved not only to appoint PBM as the building manager, but also on the terms of the contract that had been circulated earlier in May. She acknowledged that the resolution was not confined merely to negotiating a contract with PBM. She also acknowledged that, by 23 May, if she had previously been unaware of the need for a written contract in order for a building manager to be appointed, she became aware of that necessity by that date. 7. In re-examination, Ms Carr did indicate that her recollection of what was discussed at the meeting also featured questions from some members about certain particulars to the agreement, relating to CPI and the extent of PBM's experience. She also recalled one of the attendees wanting some specific service to be supplied. 8. Immediately following the EGM, on 23 May 2017, Ms Carr and Ms Konstantinidis signed the Strata Management Agreement (commencing for a minimum 39 month term) and Ms Habib signed it for PS. The defendant emphasised the contrast between their execution of the strata management agreement and the absence of any executed building management agreement. 9. After the EGM, Ms Habib says that she asked Mr Sarkis to oversee the setup of building manager operations for the strata scheme. She said in her first affidavit that in early June 2017, Mr Sarkis recommended that PBM appoint Mr Caine Kelly to be the full-time on-site building manager for the scheme. In his affidavit, Mr Sarkis said that he had been informed that PBM had won the contract from the Owners Corporation. I was asked to infer, and the inference was not disputed, that the source of this information was Ms Habib. Given that she did not attend the meeting on 23 May 2017 and in the absence of any other representative of PBM being in attendance, I was also asked to infer that Ms Habib would have received that information from Ms McWiggan (of PS). Again, there was no serious challenge to that inference and, at any rate, given her role as the licensed strata agent to the Owners Corporation, it was consistent with the functions of her position that Ms McWiggan would notify Ms Habib of the outcome of the meeting on 23 May 2017 (putting aside the consideration of the closeness of association between PS and PBM). 10. From early June 2017 PBM started providing building management services. This included, amongst other things, hiring a building manager to be on-site, sending Mr Sarkis to manage the set up and liaise with Strata committee members; starting with an initial spring clean, attending Strata committee meetings and attending to general cleaning and maintenance. 11. On 6 June 2017, Ms McWiggan modified the Minutes of the meeting of 23 May 2017. PBM's Counsel later submitted that the circumstance that Ms McWiggan, in her capacity as the Owners' Corporation's licensed strata agent, essentially was the last person to have input into the content of the Minutes, was one matter (among others) that indicated that it was unnecessary for PBM to call her to give evidence. 12. On 6 June 2017 Mr Sarkis, on behalf of PBM, attended a Strata committee meeting. At that meeting the Strata committee resolved that it confirmed the commencement of Premium Building Services, and that its senior site manager (Caine Kelly) had started the transition of protocols to the building. A minute of the meeting indicated that there were several "current" works in progress, of a building nature. Under cross-examination, Ms Carr agreed that what was recorded in the minute of this meeting was consistent with her understanding of a contract (with PBM) being on foot as a result of the passing of the resolutions on 23 May. 13. Mr Mark Sarkis, Operations Manager for PBM deposed in his affidavit, to being informed after the meeting on 23 May 2017 that PBM had won the contract for Paddington Central, and set about laying the groundwork with strata committee members and setting up on-site operations. To meet the strata committee members' requirements – to have an on-site full-time business manager and a one-off 'spring clean', he recruited an interim business manager, Mr Caine Kelly, who he considered capable of starting straight away; before being transferred to a different site after about 3-6 months. 14. Mr Sarkis said he personally attended the site very regularly for about 3 months. He explained that this was important in order to build a good relationship and establish the trust of residents in the first year of a three, or six year contract. He said he made himself the point of contact to the strata committee. He said he was involved in procurement and set up for the new site and managed and helped set up the administrative and operational apparatus. He said that, from about 6 June, he bought all the cleaning equipment (including vacuum cleaners) for the new site and personally ensured it was taken to the site as quickly as possible. 15. On 14 June 2017, PBM sent a letter to owners and residents at the strata scheme announcing PBM's appointment as permanent on site building manager having commenced on 1 June 2017. 16. On 21 June 2017, Mr Sarkis appointed Mr Tony Alesci to be the permanent full-time building manager on-site at the strata scheme, to take over from Mr Kelly. Mr Sarkis said that despite the appointment, he continued to heavily involve himself in building management, since members of the strata committee wanted his input on a lot of details. Mr Sarkis exhibited to his affidavit many communications with committee members from 30 June to 14 September 2017. 17. Mr Sarkis was not required to attend for cross-examination on his affidavit. I accept his evidence. 18. On 25 July 2017 a 'Paddington Central Newsletter', provided to all residents and owners, stated that the Strata committee was pleased to announce that the Premium Building Management had been appointed as Paddington Central's Building Management Company and that Mr Tony Alesci had been appointed full-time building manager. 19. On 1 August 2017, Ms Habib and Mr Sarkis attended a strata committee meeting at which the latter tabled discussion on the items set out in the minutes of meeting under the heading 'building manager's report'. On 14 September 2017 he provided the building manager's report for August 2017, to the Strata committee. He sent this to members of the Strata committee by email. Further negotiations 1. From June 2017 to September 2017 PBM performed, and was paid for its building management services. Payment was made in advance by the Owners' Corporation in a manner which accorded with the content of the building management agreement. 2. It is common ground that from 29 May to about 3 August 2017, Ms Habib, Ms Brettle and Ms Konstantinidis had certain negotiations. Much of the evidence was chronicled, in detail, in the exhibit to Ms Konstantinidis' affidavit. The Owners Corporation emphasised that some of these negotiations had occurred before PBM set about performing services as building manager in early June, and that, prior to starting that work, PBM had not suggested that such changes could not be made because of any binding agreement entered into on 23 May. Further, it did not suggest that it could not, or would not, commence to provide services until the form of the agreement had been agreed. 3. On 29 May 2017, Ms McWiggan sent an email to Ms Konstantinids, attaching a work version of the Building Management agreement for her mark up. 4. On 30 May 2017, Ms Konstantinidis emailed (12:13pm) Ms McWiggan a marked up version of the building management agreement. The markings up related to a clause providing for termination of the agreement 'for convenience' (cl 5.1(a)), insubstantial changes to cl 5.2, changes to the way that the Base Fees would be reviewed, to accord with the CPI (Sch B, cl 1) and the inclusion of added content for the circumstances in which project management fees would be charged (Sch B, cl 2). At this stage, Schedule C had not been provided by PBM (notwithstanding that this document was referred to at Sch A, cl 2.4). In the covering email, Ms Konstantinidis referred to these matters. 5. Later that same day, (at 3:09pm) Ms Konstantinidis sent Ms McWiggan a further email. In this message, she requested that the provision about commissions for major building works be deleted altogether and expressed concern about legislative requirements for the disclosure of commissions. A short time after this email was sent, Ms McWiggan responded (by email at 4:23pm) to Ms Konstantinidis agreeing with the latter's recommendation and observing the importance of the disclosure of commissions. 6. On 5 June 2017, Ms Brettle emailed Ms McWiggan, attaching marked up changes, in response to Ms Konstantinidis' comments in relation to the agreement. The mark ups which appeared in the annexure were those of Ms Brettle. Amongst other things, the marking up indicated her rejection of a proposed 'termination for convenience clause' and a willingness to give further content to Schedule B insofar as it concerned project management fees. In the covering email, Ms Brettle noted that PBM was willing to reduce the CPI down from 5% to 3.5%; as well as PBM's willingness to amend the project management clause. After receiving this email, Ms McWiggan on-sent it to Ms Konstantinidis and Ms Kneebone. 7. On 14 June 2017 Ms McWiggan sent a follow up email to Ms Konstantinidis and Ms Kneebone seeking an indication as to whether "you are now ready to execute the Building management contract as sent recently" and inquiring whether they needed anything more from her to help with the execution. 8. On 20 June 2017 Ms Konstantinidis emailed Ms McWiggan, stating that she had not heard from her since 30 May about the "building management agreement amendments" (emphasis supplied) and wanted to know whether the Owners Corporation's proposed changes had been accepted. Later that day, Ms McWiggan responded by explaining that she had sent through two emails earlier in June. The problem seems to have been that she had sent them through to an email address which Ms Konstatinidis was not using at that time (the problem being indicated by another email message Ms Konstantinidis sent to Ms McWiggan that day). Relevantly, though, Ms McWiggan forwarded Ms Brettle's email of 5 June 2017 to Ms Konstantinidis on this date. 9. On 3 July 2017, Mr Sarkis sent an email message to all strata committee members announcing Mr Tony Alesci's commencement of the position of Building Manager. 10. On 4 July 2017, there was a strata committee meeting. Minutes indicated (for Motion 10) that Ms Konstantinidis "would finalise" the contract with PBM and make any changes required. Counsel for PBM later submitted that the purpose of this was technical: to relieve Ms Carr of the responsibility (entrusted to her on 23 May) of executing the document. It is notable that these Minutes were distributed by PS (Ms Gayle Marshall, an Executive Assistant to the directors of that entity) to committee members for their record. This was a contrast to the absence of distribution of minutes of the important EGM on 23 May 2017. 11. On 4, or 6 July 2017, the document called 'Schedule C' was provided. Ms Konstantinidis' email of 5 July 2017 (below) indicates her belief that it had been provided at the strata committee meeting the previous night. Otherwise it was sent on 6 July. 12. On 5 July 2017, Ms Konstantinidis sent an email to Ms McWiggan. By this email, she re-sent the Owners Corporation's mark ups of the Building Management Agreement. She also made the following points: * "We" agreed at the EGM on 23 May 2017 that any increase to the Base Fee was to be CPI, as currently indexed (as) 2.1%; * She understood that in late May 2017, PBM had agreed that no commissions would be charged for project managing major building works; * Ms Kneebone had suggested cl 10 be varied to include the value of insurances; * There was no Schedule C attached to the copy of the agreement Ms McWiggan has sent her. This was important in setting out the duties and responsibilities of the Building Manager. Schedule C should also cover the duties and responsibilities of the Building Manager, in addition to cleaning duties. Ms Konstantinidis also indicated that the Owners Corporation had been disappointed with the interim building management services which had been provided to date. 1. Ms Habib was cross-examined on the content of this email, and the marked up version of the agreement attached to it. She could not recall whether she received the email. She said she disagreed with the proposal to include a right to terminate for convenience. She said that insofar as there was discussion about the rate of increase of the Base Fee in Schedule B, this was something about which staff had accepted, but she agreed she did not countermand that position. It was put to her that until 18 September 2017, she had never communicated to the Owners Corporation that the increase to the Base Fee would be otherwise than increased in accordance with the CPI. She agreed with that. 2. On 5 July 2016, Ms McWiggan on-sent Ms Konstantinidis' email of that date to Ms Brettle. 3. Ms Brettle's response on 6 July was to directly email Ms Konstantinidis. She indicated that some changes proposed were agreed, whilst others were not. Ms Brettle alluded to her earlier response to the Owners Corporation's marked up changes, in her email of 5 June 2017, which email she re-sent. She also attached the contract that contained Schedule C and foreshadowed that she would arrange for Ms Habib to contact Ms Konstantinidis after the former had returned from annual leave early next week. 4. On 14 July 2016, Ms Konstantinidis sent a further email, directly, to Ms Brettle. She said that the Owners Corporation would only agree to the Building Management Agreement if 4 changes were made: * The base fee increased in accordance with CPI; * The right to terminate for convenience; * No commission on any project management; * Schedule C only included a cleaning schedule and did not identify any other duties or responsibilities. 1. Ms Habib explained when she gave evidence that these negotiations were initially conducted with the Owners Corporation through Ms McWiggan, as intermediary, until 14 July when Ms Habib took over negotiations with Ms Konstantinidis, for the Owners Corporation, directly. 2. On 19 July 2017, Ms Habib sent an email to Ms Konstantinidis; in which she proposed amended wording on the issue of project management fees should those services be required. Ms Habib accepted that annual increases in the contract would be adjusted to CPI. This was on the basis of what the Owners Corporation had agreed with PS. She concluded her message to 'finalise' contract terms on behalf of the Owners Corporation. 3. Under cross-examination, Ms Habib said she took over the negotiations because it was she who had the authority to make changes to the agreement. The subject matter of the negotiations concerned such matters as CPI increases, whether commissions were payable for project management services and whether there should be a clause permitting either party to the building management agreement to terminate for convenience. 4. Ms Konstantinidis read Ms Habib's email of 19 July on the same date and indicated (by return email that day) that she would discuss it with the strata committee and revert as soon as possible. 5. On 25 July 2017, a week after her last email to Ms Konstantinidis, Ms Habib sent a follow up email, indicating PBM's desire to finalize contract terms so that it could complete the final step in relation to our appointment. I take 'final step' to be a reference to execution. 6. On 1 August 2017, Ms Konstantinidis eventually responded to Ms Habib's email of 19 July. The contents of the email: acknowledged that agreement was reached that the base fee increase would be adjusted to CPI; accepted that PBM rejected the suggestion of a termination for convenience clause; sought further clarification with the wording of cl 5.2; accepted commission being charged on project manager services, but suggesting changes to clarify the scope of project manager works; and continued to press for amendment to cl 6 to more clearly indicate that the builder manager's duties are covered in both Schedules A & C. 7. On 3 August 2017, Ms Habib sent an email to Ms Konstantinidis. To all intents and purposes, the changes proposed by Ms Konstantinidis in her email of 1 August 2017 were accepted. 8. PBM says that these were negotiations to amend the Building Management Agreement that had been reached on 23 May 2017. The Owners Corporation says that they were negotiations about essential matters which, at that point, had precluded the entry into an enforceable agreement. PBM's riposte was that the only matter not agreed was the working out of the project manager's fees clause (in Schedule B to the agreement) which, it contends, was immaterial. 9. PBM later submitted that following Ms Habib's email of 3 August 2017, every issue had been agreed by 3 August 2017; embracing essential and non-essential matters. PBM submitted that if agreement had not been reached by 23 May 2017, it had been reached by 3 August. 10. On 10 August 2017 Ms Habib sent an email to Ms Konstantinidis indicating PBM's desire to "complete" the appointment process and "validate" its appointment by the Owners Corporation. 11. On 21 August 2017, Ms Habib sent an email to strata committee members acknowledging concerns expressed about the quality of building management services that have been provided and stating her understanding that this was why the contract that was pending execution would not be signed. Ms Habib proposed a meeting to discuss those concerns with the intention of finding a resolution. 12. On 30 August 2017, Ms Habib had some email communications with Ms Carr. Ms Konstantinidis was on holidays. Ms Habib was pressing for execution of the agreement. The communications indicated attempts to meet. 13. On 1 September 2017, Ms Habib sent a further email to Ms Carr. Ms Habib inquired implicitly whether there was someone else who might execute the contract as PBM was keen to finalise it and it should have been signed prior to PBM starting its services to properly authorise those services. Counsel for PBM later relied on this communication to indicate that Ms Carr was acting on the basis that a contract had been entered and the remaining issue was to "finalize" – which was taken to be a reference to 'formalize' – what had gone on. The Owners Corporation's termination of the building management agreement 1. It was put to Ms Habib that, by July 2017, she had become aware of the Owners Corporation's dissatisfaction with the building manager who had been assigned. 2. At 11:08 AM on 18 September 2017 the Owners Corporation (through Ms Konstantinidis) sent a letter purporting to terminate PBM's services, effective at 5pm the same day (ie a little less than 6 hours after notice of termination had been communicated). 3. On 21 September 2017, Ms Konstantinidis set out the explanation for the termination of the building management agreement: it was because of Ms Habib's failure to disclose the association between PS and PBM. The next day, Ms Habib wrote back, asserting that at all times PS and PBM were disclosed as 'sister' companies. 4. Internal correspondence as between members of the Strata committee indicates, however, that at least as early as 11 September 2017, Ms Kaye Carr and three other committee members had met to discuss ('review') the building management agreement. An email on 12 September 2017 from Ms Carr indicates that Ms Konstantinidis' expertise (she was a qualified lawyer) was sought because of the view of at least these members that the PBM business management model was unsuitable for the Owners Corporation's requirements. These committee members, at least, considered that the Owners Corporation should engage the services of a smaller company than PBM and that it was not getting value for money for the building. 5. On 22 September 2017, PBM (through Ms Habib) wrote back a letter in response refuting or denying the validity of the reasons expressed by the Owners Corporation for termination of the building management agreement. ISSUES 1. The parties agree that the following issues arise for the Court's determination: 1. whether the Owners Corporation entered into an agreement with PBM on or about 23 May 2017 and, if so, on what terms ('Issue 1') (noting also as an additional related issue, whether PBM can reply upon an alternative case, being that it was entered into on a later date); 2. whether such agreement was invalid, for non-compliance with the SSM Act ('Issue 2'); 3. (if the answer to both Issues 1 & 2 is yes) whether the Owners Corporation is estopped (through the doctrine of conventional estoppel) from denying it entered into a binding agreement ('Issue 3'); 4. (if so) whether PBM suffered loss or damage (for lost profits and, if so, for what amount) by reason of the owner corporation's repudiation of the Building Management Agreement ('Issue 4'). ANALYSIS Issue 1 – was a binding agreement reached on 23 May 2017? PBM's submissions 1. PBM's primary contention was that a binding agreement was entered into as at 23 May 2017 by which (a) it was appointed as a building manager and (b) it was appointed on the terms set out with the version of a building management agreement authorised at the EGM on 23 May 2017, which version of the agreement, PBM says, had been mailed (along with a notice and agenda) on 3 May 2017. It says that the evidence of Ms Carr, who confirmed that the resolution to appoint PBM as building manager was passed, by majority, on that date and that the minutes for 23 May 2017 accurately reflected the passage of the four motions referred to in the minutes, which, themselves were substantially identical to the content of the motions in the notice for the EGM. It also contends that the Minutes were sufficient to establish this primary contention; but if not, the unexplained failure by the Owners Corporation to adduce evidence in chief by a range of attendees at the EGM fortifies its case (or reflects adversely upon the Owners Corporation's case). Subsequent correspondence in June and July 2017, PBM says, contained repeated assertions by the Owners Corporation, referring to PBM's appointment as Building Manager. 2. If the minutes themselves were insufficient, PBM refers to a range of background circumstances. Principally, this included the dissatisfaction of Strata committee members with the performance of the incumbent building manager and a desire amongst the Strata committee for a more "professional" approach. This desire, PBM submits, was heightened when, on 2 May 2017, the incumbent building manager gave notice of his resignation effective on 1 June. The Owners Corporation not only needed to appoint a building manager from that date, but by virtue of statutory requirements, it also needed to enter into a binding building management contract from that date. It says that the EGM notice, with the proposed form of building contract had been circulated, by post, on 3 May, giving the lot owners sufficient time to consider not only PBM's proposal, but to compare that proposal against the terms offered by other building managers interested in the position. Ms Carr, as the chairperson for the committee acknowledged that this was sufficient time to consider the adequacy of the information in order for the members to make their decision. 3. PBM rejects the proposition that the version of the agreement which it says was endorsed on 3 May 2017 was incomplete for omitting essential terms, as the Owners Corporation had contended for. In this respect, Counsel for PBM submitted that the only essential terms to constitute a binding agreement were: identification of the parties; the term of the agreement (cl 3); the services to be supplied (Sch A) and the fees to be rendered for those services (Sch B). In its written submissions, PBM elaborated that for the purposes of the statutory scheme, the essential terms required for the appointment of a building manager; (a) and identification of the functions required to be exercised by a building manager (corresponding to s 66(1) of the SSMA Act); (b) the remuneration of the building manager (per s 66(2) of the SSMA Act) and (c) evidence to establish the Owners Corporation' intention to appoint a building manager in accordance with the legislative regime. These requirements, PBM contends, were all established by the Minute recording passage of Motion 2 at the meeting of 23 May 2017. 4. But, if this was incorrect, it says that by reason of negotiations from early June to 3 August 2017, the matters that had concerned the Owners Corporation had been settled. The correspondence thereafter made it clear that the only issue that troubled either party was PBM's concern to have the building management agreement 'finalized' which, PBM submitted, meant formally executed by the Owners Corporation and PBM. OC's submissions 1. OC submitted that unless PBM could establish a binding agreement as at 23 May 2017, its case must fail: the 'strict' approach which, it contends, has characterised the Court's approach to the parties' pleadings in the trial, would preclude consideration of PBM's fall-back case of an agreement being entered into on 3 August 2017. Senior Counsel urged that if PBM had sought to amend then a potential prejudice may have arisen by reason of the Court's ruling on the limited use to which the affidavit of Ms Konstantinidis could be made. 2. The Owners Corporation submitted that there was doubt as to the content and form of the proposed building management agreement there had been mailed to Strata committee members on or about 3 May 2017. For example, the rate of increase for the base fee was 5% in the versions that Ms Habib sent to Ms McWiggan on 1 and 2 May, rather than the 3.5% figure asserted to be the rate in the version of the agreement that PBM's Counsel referred to in his opening. It further submits that there was no Schedule C to the agreement: this was only provided in July. There was no building management agreement tabled at the meeting on 23 May. The Owners Corporation drew attention to the contrast between the Strata management agreement which was executed on 23 May with the absence of any signed builders management agreement on that date. There was, in short, no binding contract in the form approved by members of the Strata committee held on 23 May 2017. It was said that the Court could not find that there was any intention to be bound by the building agreement as alleged by PBM. 3. The Owners Corporation then submits that essential terms of the builders management agreement were incomplete or uncertain. This was indicated by the subsequent negotiations conducted from late May to early September 2017. When asked during closing address to identify what he regarded as the essential terms of the building management agreement, Senior Counsel for the Owners Corporation identified that essential terms to a building manager agreement were: (a) price; (b) term; (c) the cleaning services; and (d) the fees which the builder manager would receive if it acted as a project manager. These were, the Owners Corporation say, the very same terms that were uncertain or incomplete. Senior Counsel elaborated this submission when he contended that the provision for the review of the price, over a 6 year term (when including the option period) was essential, and that it was unclear whether the annual rate of increase was fixed at 5% or by reference to the CPI. He said that negotiations soon after 23 May indicated uncertainty as to whether an additional basis for termination was the convenience of the parties. He said that the schedule of cleaning services ('Schedule C') was essential and was not provided to the Owners Corporation until 4 or 6 July 2017 - a period well after Ms Habib's verbal assurance that the schedule would be provided within 2 weeks after entry into the builders' management agreement. It was said that this important document was not enclosed with the agenda for the EGM. 4. Senior counsel for the Owners Corporation, with reference to correspondence post-dating 23 May 2017 asked, rhetorically, why Ms McWiggan (who the Owners Corporation identified as acting as the agent for PBM) would send to Ms Konstantinidis a soft form electronic version of the agreement in mark up to her if agreement had been reached? 5. The Owners Corporation derided the reliability of minutes of the meeting on 23 May 2017 as proof of what had been agreed during the meeting. Senior Counsel emphasised that a copy of the minutes had not (contrary to Schedule 1, cl 22.2(a) & (b) been provided to members within 2 weeks. Indeed, members had not seen the Minutes at all until they were annexed to affidavit evidence of PBM served (generally, in September or October 2018) in this proceeding. By then, the argument went, it was unrealistic to expect members of the Owners Corporation to give reliable evidence as to what was discussed back in May 2017. Notwithstanding Ms Carr's evidence as to what had been resolved at the meeting, she had indicated, in her re-examination, that if she had had proper opportunity to review the Minutes, she would have sought to insert a caveat that the Owners Corporation were still in negotiations with PBM on certain matters at the date of the meeting. It was said that the minutes purely constituted an internal Owners Corporation document which, because of certain irregularities or omissions, the Court should not place any credence upon. In this regard, the form of the Minute was contrasted with minutes of a meeting not long after, on 6 June which, it was said, bore the seal of the Owners Corporation. 6. On the point about whether PBM's provision of building management services after 23 May 2016 may be an objective indicia of agreement, Senior Counsel for the Owners Corporation distinguished this case from the case relied upon by PBM, being Waldorf Apartment Hotel, the Entrance Pty Ltd v The Owners Corp SP 71623 [2010] NSWCA 226, on the facts. The latter decision, it was said, dealt with an executed agreement which was ineffective and an unsuccessful attempt by a party to procure acknowledgment of the earlier agreement when services had been performed for 6 years. The Owners Corporation also sought to distinguish PBM's reliance upon the Supreme Court's decision in Meriton Apartments Pty Ltd v The Owners Strata Plan No. 72381 (2015) 105 ACSR 1. PBM relied upon this decision as authority for the proposition that where an Owners Corporation resolves to approve a building manager agreement and accepts services in accordance with the approved agreement, that conduct may be consistent with the conclusion that it was bound by the whole agreement approved by the resolution and not only parts of it. This decision was said to be factually distinguishable because of the provision of services over a long period. 7. As to the significance of discussions, or negotiations, about certain terms (which the Owners Corporation asserted, but PBM disputed, were essential terms), this was not a case of the Owners Corporation having second thoughts about an agreement it has authorised on 23 May, or wanting to have a 'second bite of the cherry', but rather proved that the Owners Corporation had not agreed as to the constituent elements of an agreement. In this regard, the Owners Corporation cited the entire agreement clause in the agreement and argued that changing key terms, such as the change from 5% to CPI for the rate of increase of the base fee was contrary to that; and there was no pleaded variation of the agreement. 8. The Owners Corporation further submitted that the circumstance that PBM may have commenced to provide services referable to an agreement will not suffice to establish a binding agreement in the absence of essential terms. In this case, there was no signed minutes of the 23 May 2017 meeting, nor, indeed, any version of the minute distributed to committee members: the first opportunity for committee members to view the version of the minuted relied upon by the plaintiff was when it was put into evidence served by PBM in this proceeding. Further, it was said by those who were present at the meeting that the terms of the agreement had not been agreed and remained to be negotiated. In the last respect, the Owners Corporation contend that a Jones v Dunkel inference arises from PBM's failure to call Ms McWiggan to give evidence about what occurred at the meeting. PBM's submissions in reply 1. Counsel for PBM said that there would be no prejudice to the Owners Corporation by it being allowed to run its fall-back case, that an agreement was at least entered into by 3 August 2017. This fall-back case, he said, only arose in response to the Owners' Corporation's arguments on the incompleteness on various terms in the version of the building management agreement reflected in PBM's primary case. He said that if the Owners Corporation sought to run a case of incompleteness, its own Defence should have clearly identified the point; and the Owners Corporation was not now in a position to complain about PBM's alternative case. He said that there was no prejudice to this alternative case being advanced now; with the case being advanced, as it now is, only upon objective matters raised in the evidence. 2. Counsel for PBM rebutted the Owners' Corporation's arguments on incompleteness: 1. On the matter of price, or more accurately, the facility for the annual review of the price, there was certainty: it was either 5% or in accordance with the CPI. But if there was any uncertainty at all as to the basis for the annual review of increase in the base view, in circumstances where there was no uncertainty as to the base level of fee ($92,000 per year) the solution was not to void the entire agreement for incompleteness, but only to sever the uncertain part of it (relying upon the principle stated in Cheshire & Fifoot Law of Contract, 11th Australian ed [6.17]). 2. On the matter of the term of the agreement, there was no uncertainty at all as at 23 May 2017: there was the 3 year term; the 3 year option period; and the rights to terminate set out in cl 5. Further, there was no indication that, prior to 23 May 2017, anyone had considered a possible further right to terminate for convenience. 3. On the matter of Schedule C, the schedule of cleaning services, such schedule was not essential. Schedule A of the version that had been mailed to lot owners indicated (at cl 2.4) that the content of Schedule C was variable and either agreed to by the parties "or amended as deemed necessary by the (Building) manager". (As a small point, contrary to the Owners Corporation's submissions, the Schedule had been supplied to Ms Kneebone in early June 2017; consistently with Ms Habib's assurance that it would be distributed within a couple of weeks of entry into the building management agreement). 4. On the matter of project management fees, this was, in effect, an add on – not the essence – of an agreement to provide builders' management services. It was also not a matter raised by anyone prior to 23 May 2017. 1. Counsel for PBM submitted that it could not be argued that Ms McWiggan was in PBM's camp; for being a former employee of PS. She was, to be sure, an intermediary for receiving and conveying communications sent to the Owners Corporation by PBM; but she was also passing on to PBM communications she had received from the Owners Corporation. She was, in other words, a neutral intermediary. Specifically, very little could be drawn from her communications with Ms Konstantinidis (such as the circumstances in which she sent to the latter a marked up version of the building management agreement shortly after 23 May). This was a lacuna in the evidence that did not need to be addressed. Consideration Relevant principles Contractual formation 1. There was no dispute as the relevant principles for determining contractual formation. They were recently and concisely stated by the Court of Appeal in Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1 per Sackville AJA (with whom Macfarlan and Gleeson JJA agreed) at [59] (citations omitted): "…in Australia the 'objective' theory of contract has been accepted... Consequently, in determining whether a binding contract has been concluded, the law is concerned not with the parties' subjective intentions, but with 'the outward manifestations of these intentions'… Thus what matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe … In a case where the ordinary process of offer and acceptance has taken place, the court enquires as to what a reasonable person would infer or deduce from observing the exchanges between the parties." Acceptance by conduct 1. It is well established that the objective theory of contract recognises that acceptance of an offer may be manifested by conduct: Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 per McHugh J at 534-5. Practically speaking, the Court of Appeal in Waldorf Apartment Hotel, the Entrance Pty Ltd v Owners Corp Sp 71623 [2010] NSWCA 226 per Macfarlan JA at [65] (with whom Beazley JA agreed) determined the test was whether "the conduct (of the party disputing the formation of the contract) showed that it had accepted that the parties were bound by an agreement in the terms set out in the document." 2. As to contracts of the kind under analysis in this proceeding, in Waldorf Apartment Hotel, the Court observed (at [35]) that a motion of an Owners Corporation passed at the general meeting could disclose the intention of the Owners Corporation that it would bind itself to the building management agreement. Further, as demonstrated in Meriton Apartments Pty Ltd v The Owners Strata Plan No. 72381 (2015) 105 ACSR 1 at [86], acceptance by conduct may be found where an Owners Corporation passes a resolution approving a building manager agreement and accepts services in accordance with the approved agreement. Essential terms, incompleteness and uncertainty 1. For a contract to be legally effective it must be sufficiently certain, and complete, in its essential terms (Upper Hunter County District Council Australian Chilling & Freezing Co (1968) 118 CLR 429 at 436-7). 2. Whether a term is essential or inessential depends upon the intention of the parties. At least it is to be expected that the parties to the contract, the principal undertakings, the subject matter and the price must be certain. On the question of completeness, in Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1, Sackville AJA (with whom Macfarlan and Gleeson JA agreed) said at [62]-[64]: "[62] An alleged contract will fail for incompleteness if, even though the parties have used clear language, a term which is regarded as essential as matter of law has not been agreed. The principle was stated by Viscount Dunedin …: "To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties." [63] If the parties are not agreed on all essential terms, for example because they have left one such term to be settled by future agreement, the contract is incomplete no matter what the parties themselves may think. Moreover, if the parties have not reached consensus on the essential terms of the contract, there will be no binding contract notwithstanding that one of the parties has commenced work referable to the agreement ... Depending on the circumstances, non-contractual remedies, for example on restitutionary principles, may be available but the contract itself is incomplete and therefore unenforceable. [64] ... for an agreement for the supply and sale of goods to constitute an enforceable contract, the parties must agree as to price, although they may leave the price to be determined by a third person or by an agreed mechanism. Thus, if a contract for the supply or sale of goods expressly provides the price to be agreed between the parties, there is no concluded contract." 1. The Court of Appeal in Mushroom Composters also observed (at [65]-[69]) the limits upon the admissibility or relevance of statements by parties as to what they apprehend has occurred. Ordinarily, where a party makes an assertion against his, her or its own interests, the assertion may be admissible as it relates to facts in dispute. Sackville AJA cited (at [69]), with approval, the following passage from the judgment of Basten JA in Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 (at [121], [124]: "[121] … where (the admission) provides evidence of facts, the assertion of which is against the interests of one party, it may be admissible as an admission by that party. However, to the extent that the evidence reveals an opinion as to a question of law rather than fact, the admission may be irrelevant or valueless. … [124] with respect to an alleged agreement not wholly reduced to writing, the post-agreement conduct of one party known to the other, and communications between the parties, which reveal a common assumption as to the existence and terms of an agreement may provide evidence of such an agreement. However, the subjective views or reservations of one party, undisclosed to the other, cannot provide a basis for inferring the terms of a pre-existing agreement." 1. It is well established that, so far as possible, courts will strive to uphold contracts notwithstanding a lack of clarity. This is particularly so where the parties act in compliance with the contract: principally, where a party pays the other (in accordance with the price set out) who supplies the services referable to the contract. In York Air Conditioning and Refrigeration (A/Sia) Pty Ltd v Commonwealth (1949) 80 CLR 11, Latham CJ said (at 53): "When the parties have shown by their conduct that they understand and can apply the terms of a contract without difficulty, a court should be very reluctant indeed to pay no attention to such conduct by holding that the terms of the contract are unintelligible by reason of uncertainty." Severance 1. It is because courts seek to uphold, wherever possible, an agreement which the parties believe is binding that they will attempt to sever the part of a contract that is either uncertain or incomplete. Whether or not an uncertain provision can be severed has been said to depend upon the intention of the parties as to whether the operation of the contract, apart from the impugned part, was to be conditional on the efficacy of that impugned part; or whether it was to take effect notwithstanding the failure of that part (Pua Hor Ong v Wu You Yang Pty Ltd (2008) SASC 365 at [59]-[60]). The issue is whether the parties intended that the impugned clause was central to the contractual scheme; or another way of describing the same point, whether the parties intended that if the clause in question could not for any reason take effect the whole of the agreement must fail (Whitlock v Brew (1968) 118 CLR 445). Analysis Did the Owners Corporation approve the (pleaded) agreement put before the EGM on 23 May 2017? 1. PBM's pleaded case (in paragraph 4 of its statement of claim) was that the Owners Corporation approved a written agreement "in the form approved by members (of the defendant)" at the EGM held on 23 May 2017. 2. I find that the version of the building management agreement that was put to the Owners Corporation at the EGM was that which Ms Habib emailed to Ms McWiggan at 12:25pm on 2 May 2017 (although it would not matter whether it was the version emailed on 1 May which was substantially identical). This version is consistent with the version Ms Crundell took notes about prior to the EGM. 3. With its reference to motions 2-4 inclusive, plainly, the EGM was directed to the question of who should be appointed as the next building manager and on what terms. Ms Carr accepted as much. 4. An important background circumstance, which occurred prior to the meeting on 23 May 2017, was the recent resignation of the incumbent building manager. Another important circumstance was Mr McWiggan's indication to members, that, in comparison with its competitors for the appointment, PBM was able to commence to supply services as a building manager from 1 June (the willingness or ability of its competitors to similarly be able to start from 1 June was not apparent in the evidence). Further, there was a statutory requirement that in order for an appointment to be made, a written contract had to be entered into. All of these circumstances suggest that the Owners Corporation was under some pressure to promptly have arrangements in place to replace the incumbent building manager within less than a month and PBM (whatever be the terms it was proposing) was apparently on hand to supply these services from the date of the incumbent's departure. Nevertheless, the members still had 3 weeks to review PBM's proposal, its quotation, and its proposed contract and compare it with others. No one for the Owners Corporation complained about a lack of time, or an insufficiency of information before the time came to consider the resolutions on 23 May 2017. 5. There was vigorous debate about the reliability of the Minute (including the omission of any signing of it and the lack of opportunity for contemporaneous review by members) and the evidentiary consequences of the Owners Corporation not calling some of the attendees and neither party calling Ms McWiggan. 6. In view of some doubts about the opportunity of members to review it, and its compliance with legislative requirements, I do not regard the minute as attaining the status of having the force of presumptive correctness, in a fashion similar to the operation of s 251A(6) of the Corporations Act 2001 (Cth) [1] . But this Minute was tendered in PBM's case (without objection) and would still serve as a business record of the Owners Corporation, and thereby be evidence of the truth of what was represented in the document (per s 69 of the Evidence Act 1995 (NSW)). [2] 7. Ultimately, the critical matter is Ms Carr's evidence which affirmed that what was recorded in the Minute under the heading 'Motion 3' – a resolution (by majority) in favour of the appointment of PBM as Building Manager in accordance with the terms and conditions set out in the agreement mailed out to members – actually happened (T 173.20). Ms Carr herself was part of the majority that passed that particular resolution. Ms Carr went on to admit that that outcome of discussions at the meeting was the passing of all motions 1-4 and the defeat of motion 5 (T 173.1). 8. Further, the minute itself was prepared, if not modified, by Ms McWiggan, acting within the scope of her authority and responsibilities as the Owners Corporation's licensed strata agent, by 6 June 2017, about two weeks after the meeting. 9. No witness was called by the Owners Corporation to contradict Ms Carr's evidence; Ms Carr being the Chairperson of the strata committee at the time. Further, as occurred in ASIC v Hellicar (at [72]-[75]), it was the Owners Corporation's case to prove that other matters, such as the lack of opportunity for members to review the minute, lack of signing or any errors in the document, were such that the Court should infer that the minute, constituting one of its business records, was so inaccurate as to be unreliable. 10. Having regard to the primary importance of the accuracy of this disputed issue, I accept PBM's submission that. Ms Crundall's and Ms Kneebone's failure to attend to the topic in their respective affidavits leads to a Ferrcom inference. I recognise that they did not have the benefit of receiving the minute at the time that they should have. Nevertheless, the significance of the issues is such that I would have expected them to have had some recollection as to the substance of what occurred in a meeting virtually 2 years before. Similarly, I draw a Jones v Dunkel inference against the Owners Corporation for its unexpected failure to call other members who attended the EGM to testify as to the substance of what was discussed. In terms of the effect of these findings, I treat the omissions to call this evidence as re-enforcing the findings of what occurred at the EGM which I have previously made. 11. Given these circumstances, I do not see why any Jones v Dunkel inference should be drawn against PBM for failing to call Ms McWiggan; at least in relation to questions arising as to what occurred at the meeting of 23 May 2017. Having proven (by objective means) that she was the last person who had any involvement in the content of the minute, at a point that was relatively contemporaneous with the meeting, there was no necessity for PBM to call her to corroborate that she prepared the content of the minute and that it reflected what occurred at the meeting. This is all the more so where, as I note shortly below, Ms McWiggan conveyed to Ms Habib, the outcome of the EGM in terms consistent with the resolutions that appear in the minute. 12. Subject to the matter of execution (which I will consider below in relation to the issue of statutory illegality), I find that the members approved PBM's appointment on the terms of the building management agreement which was enclosed with the notice of the EGM and received on or about 3 May. 13. I further find that Ms McWiggan conveyed the outcome of this meeting to Ms Habib who, in turn, conveyed it to Mr Sarkis. Steps were then put in train by PBM to commence its works, which it did on or from about 1 June. 14. These findings mean that I have determined that by its passage of the resolutions, the Owners Corporation evinced its intention that it would bind itself to the Building Management Agreement (Waldorf at [35]); and from 1 June took the benefit of the work in the knowledge that the work was being performed consistently in accordance with the agreement (it was not being performed gratuitously or pursuant to any other agreement other than that which had been approved by the members), the Owners Corporation accepted PBM's offer of services in accordance with the terms of that agreement (Empirnall at 536; and Meriton at [86]). Was that agreement complete? 1. Later in these reasons (when addressing PBM's 'fall-back' position on the date when an agreement was entered into), I note the significance that the Owners Corporation did not plead in its Defence that the version of the building management agreement (as I have determined it to be), even if it had been approved, was void for being incomplete. For present purposes, however, I will proceed on the premise that this argument is available for the Owners Corporation to run. 2. In closing addresses, I asked Counsel for both parties to identify the essential terms of an agreement of this kind. Senior counsel for the Owners Corporation submitted –not altogether co-incidentally - that they were the very terms which he said were missing from the version of the agreement approved in the meeting: the price for the 6 years (taking into account review rates), the term (whether there was provision to terminate by convenience), Schedule C and project management fees, if PBM was asked to provide project management services. Counsel for PBM identified the essential terms partly by reference to the statutory framework (providing for statutory functions, the remuneration of the building manager); as well as the more usual essential features of contracts for the provision of services (parties, the principal undertakings, subject matter and price). 3. I prefer PBM's contention in this respect. This is simply recognition that what is essential depends upon the particular context and where contractual relations are significantly affected by the imposition of statutory provisions conferring rights and obligations, those contractual relations must necessarily accommodate the requirements. 4. The question then is whether the agreement that was, as I have found, approved on 23 May 2017 provided for the necessary essential terms; or, put in another, more practical, way, were there essential terms in the agreement that were incomplete or uncertain? 5. Ms Carr said, in re-examination, that, if she had the time again, she would have sought to insert a caveat to make it clear in the minute recording the resolutions that there was a caveat to passage of the resolutions, or other things that some members were unclear about. That evidence is not, however, of any value in accordance with the objective theory of contractual formation. It is avowedly subjective. To reiterate, the members manifested, by their conduct in approving the relevant resolution at the meeting, acceptance of PBM's appointment as building manager in accordance with the terms and conditions of the agreement supplied to them for their consideration. 6. I do not accept that for that agreement, there were essential terms that were incomplete. In relation to what was included, and what was, to my mind, sufficiently complete and certain: 1. The price, or remuneration of PBM's services was set: there was a monthly fee. In the version that was approved, that monthly fee was set. The basis for annual increases (in Schedule B) was also set at 5%. 2. The term of the agreement was set; as per clause 3, as 3 years with a 3 year option period. The termination clause (cl 5) set out a regime for termination in accordance with prescribed circumstances; 3. The services supplied by the Building Manager were set out in Schedule A. (It is not suggested that these services were inconsistent with the statutory functions of a Building Manager). 1. In terms of what was omitted from the agreement that was approved: 1. It is true that Schedule C – the cleaning schedule – was omitted in the version of the agreement that had been approved. But the diligent, if not meticulous reader of the version that had been approved by members would have picked up the reference to Schedule C in Schedule A (cl 2.4) and observed that the content of that schedule was, (if not agreed with the Owners Corporation) ultimately, in accordance with the building manager's discretion. Further, if it is necessary to consider the correspondence between the parties pre-dating 23 May 2017, there is scarcely any reference to the content of a cleaning schedule. 2. It is true that the provision was also made for fees for, or the content of, project management services differed significantly from the version of the agreement I have found was approved and that which ultimately came to be accepted in August or September 2017. But I consider that project management services were collateral or incidental to the essence of the building management services; and note the evidence of Ms Habib – conveyed to the Owners Corporation - that project management services were not customary to what PBM provided. 1. I acknowledge that negotiations occurred in relation to the subject matter of these matters very soon after the meeting on 23 May 2017, which continued, at least up to August 2017. These do not derogate from my view that the essential terms of the agreement were sufficiently complete and certain on the operative date. For an agreement of this nature, it would be surprising if the Owners Corporation and building manager would have foreseen every contingency. Schedule C was a good example. I accept Ms Habib's evidence that Schedule C could only be realistically finalised after an agreement has been realised, when the building manager had received the opportunity to get on site and tailor its general template for cleaning services to meet the exigencies (as well as taking into account the individual requirements of members). 2. I further acknowledge that there were significant discussions about the rate to increase the base fee for a (potentially) 6 year term after 23 May. Certainly, I accept that it is essential that the price be set; not only for monthly fees, but also for the basis by which that fee might be increased (Mushroom Composters). But I consider that there was no lack of certainty as to how that base fee would be increased in Clause 1 of Sch B to the version of the agreement approved by the members on 23 May. At least there was nothing, conveyed objectively to PBM, to indicate any uncertainty on the part of committee members as to price. 3. So too, with the method of termination (although in this regard, the parties could rely upon general contract law principles rather than express termination rights). What happened after 23 May was that the Owners Corporation sought to include an additional right to that which had been agreed. 4. I am not persuaded by the Owners Corporation's defence that the agreement of 23 May 2017 fails for want to completeness or certainty in the essential terms. If the pleaded agreement was incomplete, is severance of the incomplete part permissible? 1. In view of my findings, it is unnecessary for me to address this question further. I would however, add that if, contrary to my view, the price was properly regarded as being incomplete or uncertain over the period of 6 years, since the basis for increasing fees was not agreed, then contrary to the suggestion proffered by Counsel for PBM, I do not consider that it would be appropriate to sever the latter aspect of the provision for price. That being so, I would have been inclined to think that the incompleteness or uncertainty as to the provision for price would be fatal to the existence of a binding agreement being reached on 23 May. Should PBM be able to rely upon a fall-back position that an agreement was binding by 3 August 2017? 1. I need only address this question on the contingency that I am wrong in finding that a binding agreement was entered into on 23 May 2017. 2. In its statement of claim, PBM pleaded its case on the agreement it sues upon as follows: "4. On or about 23 May 2017, PBM and the OC entered into a Building Management Agreement, pursuant to which the OC appointed PBM as the building manager for the Strata Scheme on the terms and conditions set out in the Agreement (Building Management Agreement). Particulars The agreement was in writing, and was in the form approved by members of the defendant at an Extraordinary General Meeting held on 23 May 2017." 1. In its Defence (as amended), the Owners Corporation denied (in paragraph 4) that an agreement was concluded with PBM on the terms of the agreement that PBM had pleaded and particularised. It specifically alleged statutory illegality after having recently been granted leave to amend its Defence. It did not, however, expressly, or specifically, say that such approval (if any) as had been given by the Owners Corporation to a proposed agreement on 23 May 2017 had no effect as the agreement was void for incompleteness or uncertainty. 2. Rule 14.14(2) of the Uniform Civil Procedure Rules indicates the pleading requirement for a defendant to specifically plead matters which might take the plaintiff by surprise, or make the plaintiff's claim not maintainable or raises matters of fact not arising out of the statement of claim. 3. In my view, on the point of pleading, the Owners Corporation's contention that an agreement is void for incompleteness or uncertainty is a matter that should have been, but was not, pleaded by the Owners Corporation in its Defence. If made good, the contention would make PBM's claim that a binding agreement came into force on 23 May (subject to the separate statutory invalidity defence) not maintainable (for being void); and if it was not notified, it would take PBM "by surprise". In this sense, it is not dissimilar to, and has the same effect, of the defence of illegality, which the Owners Corporation did expressly plead in its Defence. In its Defence (at paragraph 4), the Owners Corporation avered that no agreement was "concluded" on "the terms pleaded" by PBM. That is a different thing to a plea that on the basis of the agreement that actually occurred (ie. was concluded), it was void for incompleteness or uncertainty. 4. In its written opening outline of submissions prepared on 17 June 2019 and submitted to the Court on the first day of the trial, Owners Corporation did submit (at paragraphs 57 and 61) that the Court should find that there was no certainty of terms as at 23 May 2017, since it was clear that the parties had not reached final agreement and that a contract was therefore not formed. It submitted that the email chain following that date showed that there remained negotiations about very important terms to be included in any signed building agreement. In this sense, at least from the first day of the trial, it could be said that PBM was informally put on notice of the contention advanced by Owners Corporation that in its defence to the claim for damages based upon a pleaded agreement it relied upon notions of incompleteness or uncertainty. 5. On the last day of the trial (24 June) each party relied upon closing written submissions, supplied to the Court in advance of the hearing that day. At paragraph 48 of PBM's closing written submissions, for the first time, it expressly raised its fall-back, alternative case. In its written submissions in closing, the Owners Corporation also reiterated (at paragraphs 84-93) its point of incompleteness. In neither case did the Owners Corporation apply for leave to further amend its Defence to plead incompleteness/uncertainty as a defence or PBM applied for leave to amend its statement of claim in order to run an alternative case as to when agreement was formed. 6. These positions in the parties' written submissions were maintained through their Counsel's respective closing addresses. In his closing address Senior Counsel for the Owners Corporation objected to PBM being allowed to run an alternative, fall-back case. He said that the Court had hitherto been strict in confining parties to their pleadings. He also said that had any application to amend been brought by PBM to run this alternative case, the Owners' Corporation's own application to use an affidavit of Ms Konstantinidis, or tender a statutory declaration (the admissibility of which I ruled upon on 19 June 2019) may have taken on a different complexion (T 227, 251). 7. Counsel for PBM submitted, in his address in reply, that the Court would be entitled to find an alternative case, that if an agreement was not complete as at 23 May 2017, it was complete by 3 August 2017. He submitted (T246-7) that there was no prejudice to the Owners Corporation if it was allowed to assert this alternative date for when a binding agreement was entered. This was, in circumstances where the alternative case: (a) was only raised in response to the Owners' Corporation's 'incompleteness' defence which itself was not pleaded; (b) was based on the evidence as it emerged at trial (without any requirement for any additional evidence); and (c) where the question of whether, on the alternative case, an agreement was entered into on 3 August would be determined objectively; or (put another way) would not depend upon testimonial evidence of witnesses as what they subjectively intended. 8. I consider that the parties have had sufficient opportunity to argue whether PBM should be permitted to run an alternative case for me to determine the question of whether the parties, or only one of them can rely upon a matter which they did not plead. Certainly, in addition to his closing written submissions, at different points in his closing address, Senior Counsel for the Owners Corporation, took the opportunity to speak to the point and did not seek any further period of time to argue it. 9. I am inclined to allow PBM to run this alternative case. 10. First, I accept that it is a case that is run in response to a defence (incompleteness or uncertainty) of Owners Corporation that was not pleaded; and was only informally flagged, literally, on the eve of the trial (17 June). If the argument is that PBM should have sought leave to amend at the commencement of the trial, being the earliest practicable opportunity after such informal notice had been supplied, then the argument suffers on account of the circumstance that PBM might reasonably have thought that the Owners Corporation would seek leave to amend, first, to rely upon the defence of incompleteness. In the circumstances that have occurred, the Owners Corporation has never itself sought leave to further amend to rely upon this defence, but still asserts its entitlement to argue that the case of the agreement on 23 May fails for want of completeness or uncertainty; whilst denying PBM the entitlement to argue an alternative case if its argument on incompleteness is accepted. 11. Secondly, it sometimes happens that the evidence at trial is allowed to run in a way that may exceed the way that the parties have pleaded the issues. In such a situation, where fresh issues may be said to emerge, although technically pleadings, or particulars to the pleadings should be amended, the failure to amend will not necessarily preclude the Court from determining issues on the basis of the facts as have emerged: Water Board v Moustakas (1988) 180 CLR 491 at 497. 12. In this case, both parties have asked the Court to address, in particular, negotiations and discussions that occurred after 23 May 2017, up to 3 August 2017. It is incongruous, if not absurd, if I was not able to determine the legal consequences that flow from that evidence when the parties had not themselves, by their respective pleadings, asserted what would flow from that evidence. I also think that it would not be fair, or just, if the Owners Corporation was allowed to run a non-pleaded incompleteness defence whilst PBM was not permitted to run a fall-back alternative version of an agreement in reply to that defence. 13. Thirdly, the Owners Corporation's grievance that to allow PBM to rely upon this fall-back case would be inconsistent with its 'strict' approach taken to date does not recognise the forensic context in which that approach has hitherto been applied. Specifically, the Owners Corporation is referring to the decision, shortly (ie less than a month) before trial, by the Judicial Registrar which effectively prevented it from running a case that it was entitled to terminate the building management agreement because of its alleged poor performance. It is not necessary, or productive, to consider the reasons for the Judicial Registrar's decision in that regard; but I regard it as plainly obvious that a consequence of the Judicial Registrar allowing the Owners Corporation the opportunity to run such a case would have meant (at least) that PBM would consider whether it wished to put on evidence, contesting that case. If it did, it might lead to the vacation of the trial. I consider that the position is quite different here: in this case, PBM is, in effect, picking up the evidence of negotiations from 24 May to 3 August which the Owners Corporation has put into evidence and then use it (in the aggregate) as a 'sword' to be deployed against the Owners Corporation if its primary case failed. It makes little or no sense to say that the Owners Corporation could, or would, have wished to supplement the evidence of those negotiations. In that regard, I do not accept the submission of Senior Counsel for the Owners Corporation that its application to rely upon Ms Konstantinidis's affidavit (or statutory declaration) may have been affected by any earlier application to amend had been brought by PBM. Unless it could be suggested (which I think would be fanciful) that there were other communications which Ms Konstantinidis would have wished to include, beyond that which was contained, in an already voluminous exhibit (Ex DX3), it is difficult to conceive of what more she could add, other than subjective statements of her understanding which would be inadmissible on the point (incompleteness). In other words, in response to the Owners Corporation's complaint about inconsistency with any earlier approach to pleading issues, I do not conceive that the Owners Corporation can say that it would have altered its position if PBM was allowed to run a fall-back case and would now be prejudiced if PBM is allowed to run its alternative case. 14. I therefore allow PBM to rely upon its alternative case of when a binding agreement was entered. This is to enable it to reply to the Owners' Corporation's case that an agreement of 23 May 2017 was void for being incomplete and uncertain in its essential terms, a defence which, although also not pleaded, I also allow the Owners' Corporation to maintain. 15. That being so, subject to its (expressly pleaded) defence of statutory illegality, I consider that at least by 3 August 2017 (if not by 23 May 2017), all of the essential terms of the building management agreement were sufficiently complete as to constitute a binding agreement. 16. As I have cited in the factual chronology, on that date, Ms Habib agreed to Ms Konstantindis's requested changes made on 1 August 2017. 17. I reject the Owners Corporation's submission that such negotiations as remained meant that the agreement was still incomplete. A fair reading of the correspondence between late May and early August 2017 indicates that any differences as to what were the essential terms had, in substance, if not completely in form, had been resolved by 3 August. Thus Ms Konstantinidis' wish to re-state the obligations of Sch A and C in clause 6 was a matter of form. The wording of project management fees clause, in relation to incidental (project management) services did not mean that the identification of the essential obligation to provide building services was incomplete. If it was necessary, if the project management clause was a matter which would hold up the binding effect of the agreement, I would sever it; as I do not regard the issue as being of such weight as to preclude a binding agreement. The only negotiations about cl 5 were of form. Issue 2 – statutory illegality 1. Section 67 of the SSM Act provides: A building manager may be appointed for a Strata scheme The appointment is to be made by instrument in writing (a building manager agreement) executed before or after the strata scheme commenced by the building manager and: by the original owner, if executed before the strata scheme commenced, or under the authority of a resolution passed at a general meeting of the Owners Corporation of the strata scheme, if executed after the strata scheme commenced. PBM's submissions 1. PBM commences its argument on this point with reference to the statement in Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 513 [23] that one of the three typical categories of case where an agreement may be unenforceable for statutory illegality is where the making of the agreement, or (more relevantly) the doing of an act essential to its formation is expressly prohibited, absolutely or conditionally, by the statute. Another is where the making of an agreement is impliedly prohibited by the statue. 2. PBM contends that section 67, properly construed, neither expressly nor impliedly provides that a building management agreement is void or unenforceable because the appointment is made otherwise than by an executed instrument in writing. It relies upon observations made by Gageler J in Gynch v Polish Club (2015) 255 CLR 414 (at [73]) that: "if a statute itself does not operate to deny legal operation to an agreement made in breach of one of its prohibitions, or to render that agreement unenforceable by reason of that breach, the coherence of the law is best served by a court respecting and enforcing that legislative choice." His Honour had earlier said (at [75] "The court will weigh the consequences of withholding a remedy to enforce the agreement in light of the objects or policies which the statute 6 to advance and the mean which the statute has adopted to achieve that end. Ordinarily, it would be open to the court to conclude that withholding a common law remedy from a person whose intention was, and remained, to flout the statute was justified by reference to the narrower consideration of public policy only if the consequence of withholding the remedy could be determined by the court to be both proportionate to the seriousness of the illegality and not incongruous with the statutory scheme." (emphasis supplied) 1. PBM characterises the requirement for a written instrument as being 'directory' only. It says its purpose is simply to ensure that contracts of this kind are formalised in some way and would only be valid if approved by an authorisation. Its purpose is not to deny contractual effect where the parties have agreed, but have simply not executed in writing, that agreement. PBM cites the decision of the Court of Appeal in Bondlake Pty Ltd v The Owners – Strata Plan No. 60285 (2005) 62 NSWLR 158 (at [34]) to support its contention that it would be improbable if Parliament intended the "extreme consequence of (relevantly) the unenforceability of a contract" where an appointment is made otherwise than pursuant to an executed written instrument where the agreement providing for the appointment was binding in general law. 2. It further cites a decision of the Supreme Court of New South Wales (Slattery J) in Meriton Apartments Pty Ltd v Owners Strata Plan No. 72381 (2015) 105 ACSR 1 (at [83]) as authority, or at least an illustration, for the proposition that an agreement not executed by a building manager is capable of being binding. The issue in that case, being the same as the anterior point in this case, is whether a binding agreement was entered into at all. 3. PBM contrasted the current text (in s 67) with the text of the predecessor provision (the former s 40B of the 1996 Act), contending that the latter provision used stronger language ("is required to be appointed") and thereby supported its contention that the provision was directory only. OC's submissions 1. The Owners Corporation did not dispute the proposition that the question of statutory validity turns upon statutory construction. It says that the absence of any express penalty for contravention of section 67 is a factor in favour; this being the converse of the proposition that where the statute itself provides sanctions for non-compliance, the court will lean against construing the statute as imposing the further sanction of invalidation: Nelson v Nelson (1995) 184 CLR 538 at 613; Heydon on Contract: The General Part (Lawbook Co 2019) [20.230], p 785. 2. The Owners Corporation submitted further that the circumstance that s 67, by its terms, affixes the obligation upon the building manager to execute the agreement, and not the Owners Corporation. That circumstance, it says, undermines PBM's reliance upon the maxim that a party cannot benefit from its own wrong to avoid obligations under a contract. 3. It relies upon certain other contextual matters, such as the express requirement for the agreement to be in writing and the objects clause in the legislation (s 3) which stipulates that an object is to assist in the management of strata schemes and assist in the resolution of any disputes: a prohibition upon agreements that were not executed would be consistent with furthering that object. Other provisions of the Act (ss 270 and 273) reinforced the importance of solemnity in having an executed agreement. 4. Senior Counsel for the Owners Corporation submitted that PBM's reliance upon Bondlake was distinguishable. In that case, the developer had breached the agreement as a result of an insolvency event and it was said that it could not take advantage of its own wrong when it was responsible for breaching an important statutory obligation. 5. He said that the decision of Brereton J (as his Honour then was) in Stolfa v Owners Strata Plan 4366 [2009] NSWSC 589 (at [97]) established that a provision like section 67 is for the benefit of the Owners Corporation in the protection of their proprietary rights. There is no suggestion here of any absence of good faith in the Owners Corporation relying upon it. Consideration 1. Motion 4, passed at the meeting of 23 May 2017, nominated Ms Carr and Ms Konstantinidis as the individuals authorised by the members to affix the seal of the Owners Corporation, to execute the building management agreement that had been approved. So far as the members were concerned, at least as at 23 May 2017, there was nothing more to be done to 'finalise' the building management agreement other than for those individuals to arrange to affix the seal, as they had been expressly authorised to do. 2. It was common ground that the circumstances in which statutory provisions may invalidate contracts are determined by the principles of statutory construction. 3. Textual analysis does not support the Owners Corporation's submission that s 67 is prohibitory. Certainly the language of that provision contrasts with the unequivocal prohibitory language of the provision considered in Stolfa. I am, on the other hand, not persuaded by PBM's submission that there has been a loosening in the standard of compliance between the predecessor provision to s 67 considered in Meriton (at [44]): I consider that the language of the expression 'is required to be' is substantially the same as 'is to be' (an expression which I consider, on an ordinary reading, naturally imports a requirement). 4. But I am not persuaded that the converse position stemming from the Owners Corporation's reliance upon Yango Pastoral truly does apply: that the absence of sanction for non-compliance means that a Court might lean to withholding contractual benefits bargained for by the building manager. 5. As to the contextual matters referred to by the Owners Corporation, I consider that the objects provision in the statute is no less served by a binding agreement whose terms are recorded in writing and would otherwise be enforceable in general law than a binding agreement that happens to be executed by seal. Having regard to what the Court of Appeal said in Bondlake, a construction that posits that irrespective of the circumstance that the building manager, who awaits the Owner's Corporation affixing of a seal, has done all that it can to reach an agreement should have that agreement rendered unenforceable at the whim of an Owners Corporation would carry the "extreme" consequences of the kind referred to in Bondlake; or, to adopt what Gageler J said in Polish Club Ltd, avoiding the contract in those circumstances would be disproportionate to the seriousness of the contravention and incongruous with the statutory scheme. 6. In the circumstances of this case, there was a sense of urgency in which a new building owner had to be appointed and statute required the terms of the agreement to be written. If the Owners Corporation was content to let a building manager proceed to do the works referable to an unexecuted agreement, whose essential terms had in fact been agreed, but delayed execution pending an uncommunicated intention to conduct a trial period in order to ascertain the quality of the building manager's services, I would regard that as a misuse of a provision like s 67 and, would in fact frustrate, rather than 'assist' the resolution of disputes; being one of the statutory objectives of the SSM Act. An Owners Corporation should not be entitled to use s 67 as a shield if, having had second thoughts about some of the provisions of a written agreement its members have approved, the nominated representatives do not wish to execute the agreement. But that scenario would be possible if the Owners Corporation's construction of s 67 was accepted. 7. The scenario I have outlined immediately above would probably lead a building manager to bring a case in restitution, on a quantum meruit, if binding arrangements could be hijacked by recalcitrant representative(s) of an Owners Corporation unwilling to execute an agreement whose written terms were approved in a meeting. It would surely not avail the Owners Corporation if a building manager had to resort to such remedy to recoup money for work done in the belief that the parties had made a binding contract (Heydon on Contract at [3.80]). 8. As to the contextual matters that the Owners Corporation relies upon, in relation to s 270 of the Act, PBM's construction does not amount to an attempt to oust the prohibitions in the statute. There is no prohibition in s 67 and what PBM seeks, in substance, is a construction of the provision that posits that where a building manager has done what it practicably can but the Owners Corporation, for whatever reason, delays the final step of execution, this would not invalidate a binding agreement. The requirement in s 273 for an Owners Corporation to apply its seal does not add to the Owners Corporation's argument: it simply sets out the mode of execution. 9. I accept that an obvious purpose of a provision like s 67 is to instil certainty, primarily for the Owners Corporation, but, in a subsidiary sense, also for the building manager. But that purpose is also consistent with the operation of the general law of contract. That is not to say that s 67 adds nothing to general law. It plainly demands contracts of this type in written form attended with the solemnity of the affixing of the Owners Corporation's seal. But in the absence of prohibitory language, I do not construe a building management agreement, whose terms are agreed, and in the particular context, endorsed by the Owners Corporation in meeting, to be invalidated because of the refusal of those entrusted with the responsibility to see that it is executed, to take the final step of executing it. Issue 3 – conventional estoppel 1. This issue is not necessary to decide in view of my determination on the proper construction of s 67, but lest I am wrong, I now consider it. PBM's submissions 1. Counsel for PBM submitted that there is no reason in principle why estoppel cannot outflank a provision such as 67. He noted that it had been accepted in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 per Deane J at 446, that an estoppel could outflank a Statute of Frauds provision (requiring contracts for the sale of land to be in writing) and argued that the position should be no different in the present context. He distinguished the Supreme Court of New South Wales's decision in Stolfa v Owners Strata Plan 4366 [2009] NSWSC 589 as being a case which, contrary to the present statutory provision under consideration, expressly prohibited a state of affairs. OC's submissions 1. As a first point, OC contends that estoppel cannot outflank a provision like s 67. It relies upon the authority of Stolfa. 2. Senior counsel for the Owners Corporation referred to Ms Carr's email to Ms Konstantinidis (and other strata committee members), which generally provided an explanation as to why the owners wanted to dispense with PBM's services. Ms Carr stated the view of the committee (or at least the view of those who had attended a committee meeting the previous evening) that "we" had yet to sign the building management agreement. This was, the Owners Corporation argued, at odds with the notion that the Owners Corporation shared PBM's assumption that PBM had been appointed as building manager on the terms of the agreement put to the meeting for its consideration on 23 May 2017. Senior counsel asked, rhetorically, if the Owners Corporation thought it was bound by what it had resolved at that meeting, then why did it not readily sign the building management agreement as it had contemporaneously with its execution of the strata management agreement? PBM's submissions in reply 1. Counsel for PBM pointed to Ms Carr's belief that a contract was on foot. He also referred to the objective circumstances of reports and admissions, post-dating 23 May, indicating the Owners' Corporation's (subjective) belief as to PBM's appointment. This included serial reference to PBM's appointment as building manager, which can only have been referable to, and was understood by all, as being in accordance with the terms and conditions of the agreement approved on that date. Consideration 1. In answer to the Owners' Corporation's first point, I consider that Stolfa is distinguishable. Section 67 is not expressed, as was the provision addressed in Stolfa, in prohibitory terms, such that it thereby precludes estoppel. If it is prohibitory, that would only be the result of implication or by the general process of construction. I agree with the submission of Counsel for PBM that if an equitable estoppel can outflank a Statute of Frauds provision, there should be no reason in principle why an estoppel could not, subject to the proper construction of the statutory provision, also outflank s 67. 2. It was common ground between the parties that the requirements to establish conventional estoppel were: 1. the party asserting the estoppel has adopted an assumption as to the terms of its legal relationship with the other party; 2. the other party has adopted the same assumption; 3. both parties have conducted their relationship on the basis of that mutual assumption; 4. each party knew, or intended that the other act on that basis; and 5. departure from the assumption will occasion detriment to the first party [3] 1. As to the first element, PBM says that the assumption is that the terms of the legal relationship were governed by agreement being approved on 23 May 2017. But this is where its argument runs into difficulty. It cannot be that it adopted an assumption that its relationship was governed by the terms of an agreement approved on 23 May 2017 or 3 August 2017. Although those cases are alternative, they are also inconsistent for present purposes: the works that were done by PBM prior to 3 August could only be attributable to arrangements it said was approved on 23 May 2017. 2. I do not regard the absence of execution of the building management agreement as precluding satisfaction of element 2 (above). But although I would be prepared to accept that there was common assumption that PBM would act as a building manager, I find it difficult to ascribe a common assumption (which is a subjective matter) that PBM would act in that capacity in accordance with the written terms of the building management agreement considered at the meeting on 23 May. 3. This is where the general injunction against the Court's receipt, or admission, of subjective understandings for the purposes of defending a contractual claim does not similarly limit the Owners Corporation on the estoppel claim. It is theoretically possible for the estoppel claim to founder if the Owners Corporation can establish that it did not truly appreciate the import of what it was doing on 23 May. I consider that the contemporary correspondence is such as to indicate that it did not (subjectively) share the assumption that the business management agreement proposed to it and considered on 23 May set out all the essential terms of the arrangement. In particular, less than one week after 23 May 2019, it appears that Ms Konstantinidis was already moving to alter the (unexecuted) version of the building management agreement. That conduct is inconsistent with a belief the Owners Corporation was bound by the terms of the agreement passed on 23 May 2017. To some degree (going back to element 1, above) PBM acted in an equivocal way as well. On 10 August, Ms Habib was seeking continuation upon the acceptance of some (objectively inessential) terms. It did not assume that, from 1 July in each succeeding year for the next 5 years (plus), it would be subject to a 5% increase in PBM's fees. It did not assume that the cleaning schedule contemplated by Schedule A would be in accordance with a document which it would not see until early July. 4. In this regard, I do not consider that Ms Carr's stated understanding as to the effect of what was agreed on 23 May derogates from the above conclusion. She said that as far as she was concerned, there were to be negotiations about certain matters to come. 5. No submission was made that a conventional estoppel would lie from any common assumption as to the relationship between the parties in August 2017. Issue 4 – PBM's loss of profit claim 1. Ultimately, Senior Counsel for the Owners Corporation conceded that if a valid and binding agreement had been entered into on or about 23 May 2017, it was repudiated by the Owners Corporation in September 2017. 2. That then leaves the issue of PBM's claim for loss and damage, more specifically, its claim for loss of profits. Mr Bridger's evidence 1. PBM relies upon the expert evidence of Mr Joseph Bridger. Mr Bridger is an accountant with the firm Bridger & Associates and has practiced for 35 years. He lists his expertise as including, amongst other things, the quantification of economic loss. He is a member of the Institute of Chartered Accountants 2. Mr Bridger was asked to determine the value of the lost profit to PBM over the unexpired term of the Building Management Agreement. His methodology involved deployment of a discounted cash flow methodology (DCF) to assess the loss associated with the future period. 3. He calculated, in particular, the past loss of fees to PBM, the future loss of fees to PBM for the first contract term and future loss of fees to PBM for the second contract term. 4. Mr Bridger opined that past losses were for the sum of $52,774.19. This was the period from 1 November 2017 to June 2019.This sum was derived by Mr Bridger taking the base fee equivalent, from the date the contract was; followed by a deduction for (a) variable costs (principally wage costs) but also (b) other expenses (assumed to be slightly less than $321 per month); and factoring in the assumption that PBM would exercise its option to renew for an additional three years. Mr Bridger also included a payment authorised by Ms Habib for $10,835.05 being a refund of fees paid in advance after termination of its contract. 5. In his next component of calculations – representing future loss of fees for the 'first' contract term, Mr Bridger opined that this sum was $23,837.96, covering the period 1 July 2019 to 1 May 2020. In relation to this component (and the last component) he was briefed to opine on, he selected a discount with reference to a range of matters, principally the nature of income streams and the current economic climate and the circumstance that, in this context, future income streams could be predicted with a relative degree of certainty. 6. In the final component calculations – representing future loss of fees for the 'second' contract term, on the assumption (as stated by Ms Habib) that its option would be exercised, Mr Bridger opined that this sum was $72,785.82. This covered the period June 2020 to May 2023. 7. Total loss to PBM (as at 1 June 2019) was therefore $149,417.77. 8. Features of the cross-examination of Mr Bridger were: 1. his confirmation that he focussed on the cash flow of PBM, attributable to the strata scheme in question, rather than net profits; 2. his acceptance (having heard Ms Habib's evidence, that PBM's model was only geared to contracts of 6 years' duration) that net profits were not likely to be sustainable for the first year of a contract; 3. in relation to expenses, he had only allocated costs attributable to the strata scheme. 4. He had asked for (his request being made to Ms Yang, PBM's financial controller), but was not provided with PBM's P&L accounts. This was not a matter that had been disclosed in his reports; 5. He was not provided with the general software accounting package for PBM, which covered general fixed costs (such as office rental, fitout, professional expenses, staff training and stationery), but was only provided the 'Strata Master' software accounting package, which relevantly recorded receipts and expenditure for individual strata schemes; 6. Although, in his report in reply to Mr Loneragan's report, he had used, as an analogy, a 'cash generating unit' (CGU), unlike the AASB's Standard 136 (par 39), he did not regard it as necessary to take into account fixed costs. This was because he could not find a reasonable and consistent basis to allocate costs. 7. Even if provided with the P&L (and any other) information he had asked for but not received on behalf of PBM, that would not change his opinion as to the inability to allocate costs. Mr Loneragan's evidence 1. The Owners Corporation relied upon the report of Mr Hugh Loneragan, a chartered accountant (with over 20 years' experience) and accredited business valuation specialist, who is the managing principal of the forensic accounting firm Quantum Forensic Solutions, dated 10 April 2019. Amongst his fields of expertise, he is an expert in quantifying economic loss and damage in commercial disputes. 2. Mr Loneragan was not required for cross-examination on his report. 3. Mr Loneragan said he was unable to calculate loss of profits of PBM in consequence of the termination of the management agreement in the absence of the accounting data contained in PBM's records. He disagreed with Mr Bridger's calculations for loss of profits in the absence of that information. In his report, he listed 9 categories of financial information which he said he required from PBM to assess any loss of profit. This included, amongst other things, P&L statements, tax returns and balance sheets for the last 3 financial years; as well as a detailed breakdown from management accounts of the costs to each contract, payroll expenses and the calculation of employee entitlements. 4. Mr Loneragan disagreed with certain aspects of Mr Bridger's methodology (although he did not cavil with the selection of the discounted cash flow methodology generally); especially assumptions made concerning savings expected to be realised by PBM in consequence of the termination of the management agreement, including payroll "on-costs" in respect of the assigned property manager. He did not comment upon the discount rate selected by Mr Bridger. 5. He agreed with Mr Bridger that it was appropriate to include, within the calculation of past loss, the refund that PBM paid ($10,835.05) in advance. He also agreed with Mr Bridger's distinction between variable costs (to be deducted as savings) and fixed costs (not to be deducted). 6. Whilst he noted some other matters raised by Mr Bridger (the remuneration package for the assigned property manager being treated as a saving in payroll) and the variable costs captured by Mr Bridger, Mr Loneragan expressed very little comment other than to say that he required further information before opining on the reasonableness of Mr Bridger's treatment of those matters. 7. It has to be said that Mr Loneragan's views, such as they are, were provisional and awaited the provision of further information. As a result of the Court's recent rejection of the Owners Corporation's notice to produce, that information did not materialize. Consequently, Mr Loneragan's views were, essentially, incomplete. PBM's submissions 1. Junior Counsel for PBM, Mr Liu, submitted in his closing address that the main substantive point dividing the parties was the Owners Corporation's contention that when assessing net profits there should have been some allocation made by Mr Bridger for PBM's fixed costs. He cited the Court of Appeal's decision in North Sydney Leagues' Club v Sydney Protection Agency Pty Ltd (2012) 83 NSWLR 710 (per Beazley JA, with whom Macfarlan JA and Whealy JA agreed) at 718 [46] to contend that there is no absolute principle to this effect and that it was inappropriate to take into account, when assessing PBM's claim, costs which would have incurred even if the contract had been performed. 2. In anticipation of the Owners Corporation's complaint that it was not in a position to provide meaningful expert opinion evidence from Mr Loneragan to compete for acceptance with Mr Bridger, Counsel submitted that PBM could not be blamed. He cited that Mr Loneragan had been briefed to provide his opinion in November 2018 – fully 5 months before his report was eventually served (on the last day before a guillotine order was due to take effect). He said that in response to a recent notice to produce served on the Owners Corporation's behalf, PBM had produced documents in 3 of the requested categories and indicated that there was nothing to produce in relation to the balance of the categories requested. It appears that no contention was advanced on the Owners' Corporation's behalf about the adequacy of this response. At any rate, in respect to the categories for which there were said to be no documents to produce, these were not categories which Mr Loneragan had requested, as indicated in his expert report. 3. It was also put that, depending on what finding I made as to when agreement was reached as to the basis for fee review (on 23 May or 3 August 2017), there may need to be some arithmetical adjustment to the quantum calculations, which should be susceptible to the parties' reaching, or attempting to reach agreement on quantum. OC's submissions 1. Senior counsel for the Owners Corporation accepted that, should I find that the building management agreement was repudiated, that in the assessment of damages, the onus fell upon it to establish any basis for a diminution in damages after PBM had prima facie proven evidence of loss (noting that PBM at all times retained the legal onus of proof). 2. Senior counsel for the Owners Corporation submitted that Mr Bridger's evidence could not be relied upon. Three points were emphasised. The first and second were procedural. The third was a substantive objection. First, the Owners Corporation had unsuccessfully pressed PBM to produce what it, or their expert, Mr Loneragan, regarded as essential documentation to prove the claim for loss of profits. More than that, the Owners Corporation had resorted, in at least one instance, to service of a notice to produce (the first notice to produce), however PBM had been successful in applying to the Court to set that notice aside. Then, less than a fortnight before the commencement of the trial, it served another notice to produce (the second notice to produce); this time, seeking different categories of documentation. It received a response from PBM's lawyers indicating a 'nil' response to at least four categories of the documents requested. This, it was said, was inconsistent with the evidence of Ms Sue Fung, PBM's financial controller. The effect of this, as I understood Senior Counsel to submit, was that the Owners Corporations was effectively deprived of the opportunity to meaningfully challenge Mr Bridger's opinion evidence. 3. The Owners Corporation's second point was that Mr Bridger's opinion could not be accepted because he had not disclosed in his reports that he had requested P&L statements – the very category that the Owner Corporation had requested in its first notice to produce - from PBM but had been 'talked out' of the need to receive that information. 4. The Owners Corporation's third point was that, Mr Bridger should have, but did not, take into account overhead expenses, or alternatively, take the expenses into account proportionately – that is, proportionately to the value of the contract to the overall business unless the evidence indicated that some different deduction should be made. PBM's submissions in reply 1. Counsel for PBM submitted that the Owners Corporation's submission about North Sydney Leagues amounted to a misreading of what was said in that case. It was said that, properly construed, Beazley JA rejected the proposition that it was necessary for overhead expenses to be taken into account proportionately, that is, proportionately the value of the contract to the overall business, unless some different deduction should be made. He submitted that her Honour (as Her Excellency then was) reaffirmed the general principle that in calculating the damages, the plaintiff was to be entitled to be put in the same position it would have been had the contract been performed. This meant that there should be no deduction from the assessment of net profit if the costs would have been incurred in any event, whether or not the contract had been performed. 2. Counsel for PBM submitted that were it to be found that PBM had impermissibly hindered or frustrated the Owners' Corporation's attempts to extract information relevant to Mr Bridger's opinion, then this would be a matter that would weigh against its argument that it had failed to discharge an evidentiary onus that damages should be reduced once PBM had established, prima facie, the loss. But, he submitted, there was no warrant for finding any such conduct by PBM here. For one thing, it had successfully contended that the Owners' Corporation's first notice to produce should be set aside. As to the second notice to produce, the explanation furnished by PBM's lawyers for the response to that notice (in a letter of 7 June 2019) provided a plausible explanation for the non-production of certain documents; as well as an explanation for what the Owners Corporation argued was an inconsistency with paragraphs 8-9 of Ms Yang's affidavit. Analysis 1. In the absence of any meaningful, or more accurately, competing analysis of the damages claim for the Owners Corporation, its hands were effectively tied and its submissions, individually or collectively, amount to the argument that I should find that Mr Bridger's evidence does not suffice to establish PBM's claim. This essentially defensive argument, centred on the three points I have noted above, is hindered somewhat by the Owners' Corporation's acceptance of Mr Bridger's choice of a methodology for calculating loss of profit. Indeed, on matters of principle, to the extent that there were differences between Mr Bridger and Mr Loneragan, they were not glaring. 2. I am not persuaded that, individually or collectively, the points that the Owners Corporation urges me to accept would lead me to reject Mr Bridger's evidence. 3. First, it is not appropriate now for the Court to revisit the entrails of the procedural history in this proceeding as to why the Owners' Corporation was unable to adduce a substantively complete response to Mr Bridger's report. The Court's Practice Note for civil proceedings in the Court's General List, generally sets out a series of milestones as to when procedural events are to occur. This supplements general rules of Court and, of course, is subject to directions made by the Court for the case management of this proceeding. Parties are expected to use all of the above as a guide for the preparation of their cases. That expectation is substantially sourced from their statutory obligation in s 56(3) of the Civil Procedure Act 2005 (NSW) and has been for a long period of time. The simple fact is that the Owners Corporation left it perilously late to serve evidence, just before a guillotine order was to take effect. This included its expert evidence. What it did serve, by way of expert evidence, was manifestly incomplete. In retrospect, it is somewhat surprising that, in circumstances where its expert, Mr Loneragan was apparently briefed in November 2018, it took him until April 2019 to prepare what was an incomplete report. Further, I do not accept that this delay can be excused on the basis that PBM was hindering the Owners' Corporation's efforts to obtain information which would enable it to test Mr Bridger's reasoning. It was vindicated in its application to set aside the first notice to produce and its response to the second notice to produce passed without complaint. 4. In reaching this conclusion, I do not regard it as necessary to express a view as to whether the Owners Corporation held any evidentiary onus to prove anything on the premise that Mr Bridger's views are prima facie plausible. This is not a case like Purkess v Crittenden (1965) 114 CLR 164 at 169 where there were competing explanations by the parties for how loss or damage was sustained. I regard the issue as simply one which is resolved on the basis of whether PBM, who carries the legal burden of proof, is able to discharge its onus having regard to all of the evidence before the Court. 5. The Owners' Corporation's second point was more serious. It is true that one matter set out in the Expert Witness Code of Conduct – a Code which Mr Bridger agreed to be bound by – was the disclosure of matters which the expert believed that, without the information at hand, s/he would not be able to produce a report. It is also curious that Mr Bridger asked for, but did not receive from PBM, a category of documents (P&L statements) which the Owners Corporation had sought. But when referred to Ms Yang's affidavit evidence, Mr Bridger explained that it was the 'Strata Master' accounting package, and not PBM's other accounting software facility, which was specifically utilised to record receipts and expenditure for each strata plans. Once that explanation was provided to him, he considered that he did not need to pursue the information he had previously requested (T 134-135). This explanation is, at least plausible and was not seriously challenged. In any event, in my view, it was not clearly put to Mr Bridger that he held any honest belief that he was unable to opine on the issue he was asked to address without the information, but still went on to express the opinion anyway. In the circumstances, I am not persuaded that Mr Bridger fell foul of what was required of him in the Expert Witness Code of Conduct: he did not consider that his report was incomplete or required qualification. 6. It is plain that Mr Bridger did regard himself as capable of providing that opinion. Having heard him give evidence, I did not perceive him as being someone who would act contrary to his paramount duty to assist the Court by trying to advance PBM's case. 7. The Owner Corporation's third point, about the need to allocate overhead expenses, is not established as an immutable principle, as indicated by the Court of Appeal's decision in North Sydney Leagues Club. Further, Mr Bridger's explanation for why he did not do so in the circumstances – that he could not find a reasonable or consistent basis upon which to allocate fixed costs (T 137-138) - was not only plausible, but was not contradicted by expert opinion to the contrary. Further, even if the principle was applicable, the Owners Corporation did not seek to further to indicate how, if at all, the quantification of the loss of profit was affected. It merely invites conjecture that it might. 8. It follows that I agree with PBM that, in the evidence before the Court, the only expert opinion on loss of profits is that of PBM's expert Mr Bridger. The Owners Corporation has not established any basis for arguing that Mr Bridger's conclusions as to quantum are either unreliable, or should be diminished. 9. I accept the calculations of Mr Bridger's supplementary report, which quantified PBM's lost profits as being in the sum of $149,917.77. SUMMARY & ORDERS 1. For the above reasons, I find that: 1. a binding builders management agreement was entered into on 23 May 2017; 2. the last finding implies that the building management agreement was sufficiently complete, or certain, in its essential terms as at that date; 3. in the alternative to points (a) and (b), a binding builders management agreement was entered into on 3 August 2017; 4. the absence of execution by the building manager, as a consequence of the refusal of the Owners Corporation to execute the agreement, did not result in the statutory invalidity of the agreement; 5. if it was necessary to decide, the first plaintiff's contention that a conventional estoppel arose is not made out; 6. The first plaintiff has established its claim for loss of profit in the sum of $149,417.77. 1. I order that within 7 days, the plaintiff is to serve on the defendant short minutes of order to reflect the reasons for judgment. This should accommodate its interest claim and the rate of increase of the Base Fee on the basis of the findings I have made; as well as costs. Calculations on the damages claim that I have made should also be reviewed. 2. Within a further 3 days, the defendant is to inform the first plaintiff whether its proposed short minutes are consented to in order to dispose of the proceeding or, if not, indicate the basis for objections. 3. Within a further 2 days, the plaintiff is to send to my Associate short minutes, as agreed (if appropriate) or its version of the proposed short minutes in conjunction with an indication of the point(s) of difference with the defendant. Absent any contrary indication from the Court, it is intended that orders to finally dispose of the proceeding will be made on the papers. ********** Endnotes 1. See ASIC v Hellicar & Ors (2012) 247 CLR 345 at [66]-[71] 2. Even if the document was a draft, it is still admissible as a business record: ASIC v Rich (2005) 191 FLR 385 at [188]. 3. Moratic Pty Ltd v Gordon [2007] NSWSC 5 at [32]; Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 Amendments 10 July 2019 - Amendments to page 3. 'Representation' DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 July 2019