Woolworths Group Ltd v Gazcorp Pty Ltd

1. [1]

   BATHURST CJ: I have had the advantage of reading the judgment of the President in draft. I agree with the order proposed by his Honour and with his Honour’s reasons.

2. [2]

   BELL P: Green Square is a densely populated inner-urban precinct in the vicinity of Alexandria, Rosebery, Waterloo and Zetland. It has undergone significant development and transformation in the last two decades. At the heart of this case is the status of an Agreement for Lease (AFL) entered into between Woolworths Group Ltd (Woolworths) and Gazcorp Pty Ltd (Gazcorp) on 20 February 2008. In a detailed judgment delivered on 30 March 2021 after a six-day hearing, Darke J (the primary judge) held that the AFL was no longer on foot because it had either been abandoned or had been frustrated: Gazcorp Pty Ltd v Woolworths Group Ltd [2021] NSWSC 309 (primary judgment or PJ). Woolworths appeals from his Honour’s decision.

3. [3]

   The AFL contemplated that building works on a site in Green Square would be undertaken by Gazcorp; that the Date for Practical Completion would be 30 April 2010; and that Woolworths would enter into a lease in the form provided by Schedule 5 to the AFL as part of a mixed commercial and retail development to be constructed by Gazcorp.

4. [4]

   The development, including the shopping centre which the AFL contemplated would be erected, has not been built. A Development Application in relation to its construction was submitted on 20 August 2007, with a Development Consent being issued on 4 February 2008 (the 2008 Development Consent). The 2008 Development Consent expired on 17 February 2014 without any substantial (or non-substantial) commencement of the works to which it related.

5. [5]

   Prior to the expiry of the 2008 Development Consent, Gazcorp submitted a further Development Application for the same land. Development Consent for this application was secured on 30 November 2012 (the 2012 Development Consent). Mr Stoljar SC, for Woolworths, accepted that, had a building been constructed by Gazcorp in accordance with this Development Consent, the location of the supermarket would have been different from that contemplated by the AFL and the 2008 Development Consent. It would, amongst other differences, have been on a different floor of the building that it was contemplated Gazcorp would construct and the overall mall configuration would have been very different, as would have been the number and location of loading docks for the supermarket.

6. [6]

   Although Woolworths asserted that the AFL remained on foot at all material times, according to the evidence that was led at first instance, it was not mentioned by the parties in any correspondence between April 2012 and 3 February 2016. The primary judge’s conclusion that the AFL had been abandoned by mutual agreement at some time between October 2012 (shortly prior to the securing of the 2012 Development Consent) and the beginning of 2014 turned on a close and careful analysis of the interactions between the parties over the period from September 2008 until February 2017.

7. [7]

   Gazcorp also contended that even if the AFL had not been abandoned, its performance had been frustrated by the expiry of the 2008 Development Consent on 17 February 2014. In the absence of such consent, Gazcorp was not lawfully able to construct the building in which approximately 3,800m2 of space was to be let to Woolworths pursuant to the AFL. The primary judge upheld this argument.

8. [8]

   His Honour also held that the AFL was varied by a letter of 12 September 2008 sent by a representative of Woolworths to Mr Nicholas Gazal of Gazcorp (Mr Gazal). Woolworths accepted that, if the AFL had relevantly been varied by this letter, then the AFL had been frustrated. It did not, however, accept that there had been any such variation.

9. [9]

   The primary judge’s alternative conclusions on abandonment and frustration are both challenged in this appeal as is his finding on variation. On the question of frustration, Woolworths contended that it was Gazcorp that was effectively responsible for the act of frustration relied upon and that this precluded reliance on that act for the purposes of its case based on frustration (on the assumption that the AFL had not been varied on 12 September 2008). There was a dispute between the parties as to whether such an argument was open to be run.

10. [10]

    In my opinion, for the reasons given below, which substantially accord on the variation and abandonment issues with those of the primary judge, the appeal should be dismissed with costs.

11. [11]

    Before turning to consider his Honour’s reasoning process and the grounds on which his decision is challenged, it is first necessary to consider the factual background relating to the parties’ entry into the AFL, and the terms of the AFL itself.

Background to entry into the AFL

1. [12]

   Between about late 2004 and early 2008, Gazcorp engaged in negotiations with Woolworths about a lease of space in the proposed development at Green Square from which Woolworths could operate a supermarket.

2. [13]

   On 20 August 2007, Gazcorp lodged a Development Application with the City of Sydney (the Council) in respect of the proposed development, [1] and as explained above, on 4 February 2008, the Council issued the 2008 Development Consent. [2]

3. [14]

   Approval was given for “construction of a part 3/part 4 storey mixed use building containing 14,949sqm of retail floor area and 10,733sqm of commercial floor area, with 3 levels of basement parking for 614 spaces”. [3] The approval plans envisaged a Woolworths supermarket on the lower ground level. This was also described as the “Wyndham Street level”.

4. [15]

   In February 2008, just over three weeks after securing the 2008 Development Consent, Gazcorp and Woolworths entered into the AFL. [4]

The AFL

1. [16]

   The AFL was entered into by Gazcorp as Landlord, and Woolworths as Tenant. [5] It was executed as a deed, and contained recitals as follows:

2. [17]

   Clause 1.1 contained numerous definitions. “Centre” was defined to mean “the shopping centre to be constructed on the Land as described in the Plans and Specifications”. The “Premises” was defined to mean “the Woolworths supermarket identified in the Plans and Specifications and on the Site Plan”.

3. [18]

   Clause 2 concerned the “Landlord’s Works”. Sub-clauses 1–6 were as follows:

4. [19]

   “Landlord’s Works” was defined in cl 1.1 to mean “the works required to complete the construction of the Centre”. As noted above, by cl 2.1 the Landlord’s Works were required to be carried out in accordance with the “Plans and Specifications”. “Plans and Specifications” was defined to mean:

5. [20]

   As to (a), the plans and specifications contained in Schedule 2 consisted of three sheets, prepared by Humphreys & Edwards Architects, in respect of a mixed use development of the two blocks of land owned by Gazcorp.

6. [21]

   The first plan (LE 205) is described as the “Lower Ground Floor Leasing Plan”. It depicted, amongst other things, a Woolworths supermarket outlet and nine other retail spaces. There were a number of notes on the plan, including the following:

7. [22]

   The second plan (LE 203) was described as the “Basement Level 1 Leasing Plan”. It depicted, amongst other things, a retail car park. This plan contained notes in the same form as those found on LE 205. In addition, it noted that “Basement Level 1” was to have 204 car spaces, Basement Level 2 was to contain 228 car spaces, and Basement Level 3 was to contain 182 car spaces, forming a total of 614 car spaces.

8. [23]

   The third plan (LE 202) was described as “Basement Level 2 Leasing Plan”. It depicted a car park for “Retail and Commercial Parking”. The plan contained notes in the same form as those found on LE 205, and it contained the same note as LE 203 about the three levels of parking.

9. [24]

   As the primary judge noted at [17], it was evident from the references to “Basement Level 3”, and also from the depiction on LE 205 of an “Escalator to/from Ground Level”, that the proposed development contemplated a building that included additional levels both above and below the three levels (or “floor plates”) that were said to constitute the “Woolworths Stage”, which was defined in the AFL as “the area shown as such in the Plans and Specifications”. The Woolworths Stage was referred to in cl 2.5(c) of the AFL, which made it plain that there were to be parts of the Centre “outside of the Woolworths Stage”.

10. [25]

    As to (b) of the definition of Plans and Specifications (see [19] above), the Site Plan in Schedule 6 to the AFL depicted the location of the development site. The Site Plan also showed that the top of the proposed new building would include some landscaped open space and an atrium. The Site Plan contained notes in the same form as those found on LE 205, which made it clear that the building depicted on the plan was to be subject to an approval from the relevant government authority.

11. [26]

    As to (c) of the definition of Plans and Specifications, the Supermarket Plans, as defined in the AFL, included the Woolworths Supermarket Design and Specification Briefing Kit document and the Feasibility Plan, both of which were found in Schedule 4 to the AFL.

12. [27]

    The Construction Program, in Schedule 3, provided for a 95-week construction period from September 2008–June 2010. It referred to various levels, including the “Wyndham Street Level”, Level 1 and the “Podium Level”.

13. [28]

    The “Approximate Lettable Area”, referred to in cl 2.3, was 3,800m2, excluding certain defined areas referred to in item 4 of Schedule 1 to the AFL.

14. [29]

    Under cl 2.4, Gazcorp was required to use its best endeavours to complete the Landlord’s Works so that: so far as they related to the premises (i.e. the Woolworths supermarket), they reached practical completion by at least the eight-week Environmental Impact Statement (EIS) period before the Date for Practical Completion; and the Centre would reach practical completion no later than the Date for Practical Completion (defined as 30 April 2010, subject to any extension of the date under cl 2.12).

15. [30]

    Clause 2.12 concerned delay, and provided as follows:

16. [31]

    Clause 6.1 provided (subject to cll 6.2–6.5) that Woolworths was to commence trading in the supermarket premises no later than the day after the EIS period had expired.

17. [32]

    Clause 7 provided for the grant (by Gazcorp) and acceptance (by Woolworths) of the Lease contemplated by the AFL in the form contained in Schedule 5 for the Term commencing on the Commencement Date. The Term, as provided for in Schedule 2 to the AFL, was 12 months, with options to renew for further terms of 19 years and then 10 years. The Commencing Date was defined as the date Woolworths commenced trading in the Premises. The Lease provided for a base rent of $1.7 million per annum plus a sum for turnover rent.

18. [33]

    Clause 9 granted to Woolworths a right of termination in certain circumstances, and provided that:

19. [34]

    Clause 14 provided as follows, under the heading “Planning Approvals and Access Arrangements”:

20. [35]

    The Approval Date was defined to be 31 July 2008. “Approvals” was defined to mean “all necessary approvals, consents, permissions and licences of all relevant Government Authorities which must be obtained to carry out the Landlord’s Works”.

21. [36]

    “Access Arrangements” was defined to mean “the re-design of the intersections and driveways adjacent to the Centre so as to provide pedestrian access and vehicle access to the Centre in accordance with the Plans and Specifications and any subsequent plans agreed by the parties”.

22. [37]

    Clause 15.1 of the AFL provided for the resolution of certain disputes by expert determination. The relevant disputes included those under cll 2.2 and 2.12 of the AFL.

Big W discussions

1. [38]

   Towards the end of 2007, Mr Gazal raised with Ms Tickelpenny (of Woolworths’ Supermarkets division) the prospect of including a Big W store in the development (Big W being a chain of discount department stores forming part of the Woolworths Group). Ms Tickelpenny referred Mr Gazal to Mr Robert MacMahon (Regional Property Manager, Big W) and thereafter Messrs Gazal and MacMahon discussed the possibility of a Big W store being located on Level 1 of the proposed development. [6]

2. [39]

   As the primary judge noted at PJ [33], the plans that had been submitted in 2007 in support of the Development Application showed three basement levels for parking, a lower ground floor (to include a Woolworths supermarket), a ground floor (for retail use), Level 1 (for office use), Level 2 (for facilities including a swimming pool, gymnasium and landscaped open space) and a Level 3 (roof level). The primary judge noted that if a Big W store was to form part of Level 1, an amendment to the 2008 Development Consent would be required.

3. [40]

   Following entry into the AFL in February 2008, discussions continued in relation to the inclusion of a Big W store and, at around the same time, there were discussions about the possibility of Woolworths taking some extra space (near the supermarket) for a liquor store. Mr Hocking of Woolworths suggested to Mr Gazal that the supermarket Lease therefore might need to be varied. There were also discussions about various design aspects of the proposed supermarket. [7]

4. [41]

   On 14 April 2008, a letter was sent by Mr MacMahon to Mr Gazal with respect to the “Proposed Big W Discount Department Store Green Square”. [8] The letter summarised the general parameters of the proposal and the “basis that BIG W would be prepared to enter into a lease subject to the approval of Woolworths Limited Board of Directors”. [9]

5. [42]

   On 23 April 2008, Mr MacMahon sent a Letter of Offer to Mr Gazal in relation to a lease for the proposed Big W store. [10] The offer was expressed as being subject to, inter alia, receipt of the necessary development approvals “including Section 96 approval” (this being a reference to an “application to modify a development consent” pursuant to s 96 of the Environmental Planning and Assessment Act 1979 (NSW)). It was evidently envisaged at that time that the necessary approval would be obtained via an amendment to the 2008 Development Consent. An application to modify the consent (the Modification Application) was lodged on about 7 May 2008. [11] However, it appears that, following an objection by a third party, the parties decided to proceed by way of a fresh development application.

6. [43]

   On 21 May 2008, Mr Justin Madden (Woolworths’ solicitor) emailed Mr Gazal as follows: [12]

7. [44]

   On about 2 July 2008, an application was lodged for a development that would include a Big W store (the 2008 Development Application). [13] In summary, it was proposed to change the use of Level 1 and part of Level 2 from commercial to retail, and to add an additional basement level for car parking. The Modification Application referred to in [42] above (at least in relation to the Big W changes) was withdrawn on about 8 July 2008.

8. [45]

   In the meantime, the solicitors for the respective parties commenced correspondence and negotiations about a draft agreement for lease and a draft lease for the proposed Big W store. The existing AFL for the supermarket was used as a template, as had been contemplated in Mr Madden’s letter of 21 May 2008.

9. [46]

   The primary judge noted at PJ [38] that it was apparent from letters sent by Mr Stephen Parry (Gazcorp’s solicitor) to Mr Madden on 2 June 2008, and by Mr Gazal to Mr Hocking of Woolworths on 3 June 2008, that it was expected that proceeding with the Big W proposal would have had the effect of requiring certain changes to the existing AFL for the proposed supermarket, including in relation to the Date for Practical Completion (of 30 April 2010).

10. [47]

    On 3 June 2008, Mr Gazal sent a letter to Mr Hocking, “for the revision of the Date of Practical Completion and Termination Date”. [14] The letter provided as follows:

11. [48]

    In a letter from Mr Madden to Mr Parry on 7 July 2008, relating to the “unresolved issues of the draft [AFL] and Lease for the Big W tenancy”, the following was outlined: [15]

12. [49]

    On 21 July 2008, Mr Parry emailed Mr Madden and Mr Gazal, as follows: [16]

13. [50]

    On 23 July 2008, Mr Gazal sent a letter to Mr Hocking (incorrectly dated 23 August 2008) in the following terms: [17]

14. [51]

    On 11 August 2008, the 2008 Development Application (which had been lodged on 2 July 2008; see [44] above) was “deemed to have been refused” and, shortly thereafter, Gazcorp commenced an appeal in the Land and Environment Court of New South Wales which was dismissed on 20 March 2009: see further at [101] below. As the primary judge noted at PJ [44], “this effectively put paid to the Big W proposal, but of course the 2008 [Development] Consent remained in place”.

15. [52]

    On 15 August 2008, Mr Gazal sent Mr MacMahon the “[l]atest plans for Big W”. In his email, Mr Gazal outlined that “[s]imilar to when we did the agreement with [Woolworths], the current layout is very close to the final outcome, but engineering advice may require some things to be slightly readjusted”. [18]

16. [53]

    Mr Gazal sent further plans to Mr MacMahon with respect to the proposed Big W store on 18 August 2008. [19]

17. [54]

    On 27 August 2008, Mr Gazal sent an email to Mr Hocking (and also to Mr Ross Finlay of Woolworths) attaching five plans which were referred to as “Latest plans for leasing issue” (the 27 August 2008 email). These plans were dated 1 August 2008 (C105, C107, C108 and C109) and covered the Lower Ground Floor, Ground Floor, Level 1 and Level 2. Almost immediately thereafter, Mr Gazal sent another email to Mr Hocking and Mr Finlay, attaching four plans which were referred to as “Latest plans for leasing issue 2”. These plans were for each of the four levels of basement parking and were dated 4 August 2008 (C101–C104). [20] As explained below, these were the plans referred to in the letter of 12 September 2008 (extracted at [61]). Their significance will become clear.

18. [55]

    On 9 September 2008, Mr Gazal sent an email to Mr MacMahon attaching three plans dated September 2008, which were referred to as “Plans for Big W”. [21] Various further plans under the same title were sent by Mr Gazal to Mr MacMahon on the following day. [22]

19. [56]

    As had been noted in earlier correspondence, although the Big W plans still contemplated that the Woolworths supermarket would be on the lower ground or Wyndham Street level, the configuration of the supermarket was significantly altered from the plans attached to the AFL and approved in the 2008 Development Consent. First, the entrance to the supermarket was moved eastwards so that it was no longer visible from the Bourke Street entry to the building. Secondly, the configuration of the loading docks was changed and they no longer included a separate entry and exit.

20. [57]

    On 11 September 2008, Mr MacMahon emailed Mr Gazal, requesting further plans with respect to the basement parking levels. [23]

21. [58]

    Also on 11 September 2008, Mr Hocking emailed Mr Gazal with Woolworths’ “response to your letter dated 23 August 2008 [which had been sent on 23 July 2008; see [50] above] requesting an extension to the Date of Practical Completion”. [24] The attached letter, dated 10 September 2008, read as follows: [25]

22. [59]

    On 11 September 2008 at 6.37pm, Mr Gazal emailed Mr Hocking, copying Mr MacMahon, as follows: [26]

23. [60]

    Shortly thereafter, on 12 September 2008 at 8.19am, Mr MacMahon replied to Mr Gazal by email, as follows:

24. [61]

    Later on 12 September 2008, at 8.34am, Mr Hocking emailed Mr Gazal, attaching Woolworths’ “amended response to your letter dated 23 August 2008 requesting an extension to the Date of Practical Completion”. [28] The attached letter provided as follows (the 12 September 2008 letter): [29]

Was the AFL varied in September 2008 and, if so, in what respect?

1. [62]

   By reference to the items of correspondence set out at [50], [58], [60] and [61] above, Gazcorp pleaded, at [22] of its Amended Statement of Claim, that the terms of the AFL were varied such that, inter alia:

2. [63]

   Woolworths admitted [22(a)], [22(b)] and [22(c)] in its Defence but did not admit the matters alleged in [22(d)].

3. [64]

   By reference to the same items of correspondence and consistent with the admissions contained in its Defence, Woolworths pleaded at [29] of its Statement of Cross-Claim that the terms of the AFL were varied, such that:

4. [65]

   As can be seen, both parties in their pleadings accepted that the AFL had been varied by and as a result of the specific items of correspondence as particularised. The difference between the positions of the two parties was that Gazcorp pleaded that there was an extra aspect of the variation to the AFL, namely that pleaded at [22(d)] of its Amended Statement of Claim in relation to New Landlord’s Works. This is significant because if the contract was varied to amend the reference to Landlord’s Works as alleged by Gazcorp, then Woolworths accepted that the AFL had been discharged by frustration on 20 March 2009, when the Land and Environment Court refused the 2008 Development Application that provided for the inclusion of a Big W store: see [8] above.

5. [66]

   The primary judge held that the 12 September 2008 letter comprised or effected a variation to the AFL as pleaded by Gazcorp.

6. [67]

   The primary judge considered that it was not open to Woolworths on the pleadings to assert that the 12 September 2018 letter was not intended to be immediately binding as this would be inconsistent with Woolworths’ acceptance that, by reason of the communications culminating in the 12 September 2008 letter, the AFL had been varied in a number of other respects. The primary judge held that it was not open to argue that the reference in the letter to the “preparation of a draft Deed of Variation” showed that the parties did not intend immediately to be bound by the terms contained in the letter: PJ [59].

7. [68]

   His Honour considered, however, that the non-admission of a variation to the definition of “Landlord’s Works” left it open to Woolworths to contend that the terms of the letter were not effective to vary the AFL in this respect. His Honour rejected this contention, stating (at PJ [61]–[62]):

8. [69]

   The primary judge held that the reference in the 12 September 2008 letter to “the updated plans and specifications” should be understood as a reference to the plans that had been sent by Mr Gazal to Mr Hocking on 27 August 2008 (see [54] above), accepting Gazcorp’s emphasis, in argument, on the use of the definite article in the phrase “the updated Plans and Specifications”. Accordingly, the primary judge was of the view that the meaning of [(c)(iii)] of the 12 September 2008 letter was sufficiently clear to effect a variation of the AFL, by deleting the existing plans in Schedule 2 and replacing them with the plans sent to Mr Hocking on 27 August 2008. His Honour held that the Landlord’s Works were thus “revised” and the AFL was varied as alleged by Gazcorp: PJ [66].

9. [70]

   Although it will be necessary to return to the parties’ interactions and correspondence over the following nine years, for the purposes of considering the primary judge’s conclusions on the questions of abandonment and frustration, at this point of the judgment it is convenient to address Woolworths’ challenge to the primary judge’s conclusion that the AFL was varied in the way explained above, as this was fatal to Woolworths’ case given its acceptance of the fact that if the AFL had been so varied, it would be incapable of performance such that it was frustrated: see [8] above.

10. [71]

    By ground 1 of its Amended Notice of Appeal, Woolworths sought to challenge the primary judge’s finding that the AFL had been varied on 12 September 2008 on the basis that:

11. [72]

    Woolworths submitted that the letter could not, of itself, comprise or give rise to a binding agreement to vary the AFL and that it was in fact a counter-offer, as Woolworths did not accept Gazcorp’s proposal to extend the Date for Practical Completion and, instead, proposed an alternative extension of that date as part of a suite of proposed further terms. Woolworths asserted that there was no pleading before or finding by the primary judge to the effect that the counter-offer made in the letter was then accepted by Gazcorp.

12. [73]

    Woolworths further submitted that any proposal communicated by the letter was plainly intended to be subject to formal documentation — “We will instruct our solicitors to prepare a draft Deed of Variation of Agreement for Lease for review and signature in the near future” — and that it was “entirely implausible” that the parties intended that the letter would immediately effect a variation of the AFL so as to replace the plans and specifications identified therein. Woolworths highlighted that those plans and specifications had been negotiated over three years, whilst the revised plans sent under cover of the emails of 27 August 2008 were of a “preliminary nature” (as recognised by the primary judge at PJ [64]). Woolworths submitted that it was clear from the parties’ correspondence between 27 August and 12 September 2008 that these plans were not in final form, but were subject to further negotiation, expert advice and revision, and that it was highly unlikely that the parties intended on 12 September 2008 to enter into a binding contract on the basis of preliminary and provisional plans.

13. [74]

    Woolworths submitted that the alleged variation to the Landlord’s Works was insufficiently certain to give rise to a legally binding agreement to vary that part of the AFL.

14. [75]

    In response, Gazcorp pointed to [22(a)] of Woolworths’ Defence and [29] of its Statement of Cross-Claim, by which it was admitted that, by reason of the communications between Gazcorp and Woolworths culminating in the 12 September 2008 letter, the terms of the AFL were varied such that the Approval Date became 30 March 2009, the Date for Practical Completion became 1 October 2010 and the Termination Date became 1 October 2011. Gazcorp submitted that:

15. [76]

    In reply, Woolworths submitted that whilst it admitted, for the purposes of the proceedings, that a variation had been made in relation to the dates at [22(a)–(c)] of Gazcorp’s Amended Statement of Claim, it made no broader admission and, in particular, it made no admission as to the asserted legally binding effect of the totality of the 12 September 2008 letter.

16. [77]

    Gazcorp submitted that the primary judge correctly observed at PJ [67] that the fact that the reference in the 12 September 2008 letter to the preparation of a draft Deed of Variation was not necessarily inconsistent with an intention to be immediately bound by its terms, with those terms to be restated later in a form which was not different in effect. In this regard, the concluding sentence of the 12 September 2008 letter used the words “for review and signature”, not for “further negotiation” or “further discussion”.

17. [78]

    In response to Woolworths’ submission that the plans sent under cover of the 27 August 2008 email were “of a preliminary nature” and that it was therefore unlikely that the parties intended them to form the basis of a binding contract, Gazcorp submitted that the same could be said of the plans already in Schedule 2 of the AFL, which were also submitted for approval, rather than final plans for the Centre.

18. [79]

    The purported significance and legal effect of the 12 September 2008 letter must, of course, be viewed in context. Questions of contractual variation, as with contractual formation, are not necessarily, or always, to be considered and assessed by reference to a stringent application of the concept of offer and acceptance: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [71]–[75].

19. [80]

    Woolworths contended that the 12 September 2008 letter was a “counter-offer”. That submission overlooked the fact that, but for an alteration to one date in [(c)(ii)], it was in precisely the same terms as the letter of 10 September 2008, sent under cover of an email on the following day: see [58] above. That earlier letter may fairly have been characterised as a “counter-offer”, but Mr Gazal’s email of 11 September 2008 in response signalled that he only had one issue with it, namely the approval date of November 2008, asserting that it needed to be pushed out to 2009 with his suggestion being March/April of that year. This suggestion was accepted in the 12 September 2008 letter.

20. [81]

    The character of this interchange is captured in Mr MacMahon’s email to Mr Gazal at 8.19am on 12 September 2008 (see [60] above), in which he communicated that Woolworths would “accept 30/03/09”. The same email indicated that this would be done “via a letter for supermarkets”. That was the 12 September 2008 letter, which was sent shortly thereafter. This second aspect of the email cuts against Woolworths’ reliance on the reference at the conclusion of the 12 September 2008 letter to the preparation of a draft Deed of Variation. That reliance was also undermined by Woolworths’ triple admission that the 12 September 2008 letter effected variations to the Approved Date, the Date for Practical Completion and the Termination Date in the AFL: see [62]–[63] above. The admission of those three matters was entirely inconsistent with the notion that formal execution of a Deed of Variation was a condition precedent to such a variation being legally effective, in the Masters v Cameron sense: see (1954) 91 CLR 353 at 360; [1954] HCA 72.

21. [82]

    Woolworths’ argument would require the attribution of conflicting practical effects to the proposed draft Deed of Variation, namely that its execution was not necessary to effect variations to the Approval Date, the Date for Practical Completion and the Termination Date, but was necessary to vary the meaning of the Landlord’s Works. That would not be a sensible or satisfactory way to interpret the 12 September 2008 letter, at least in light of the admissions in the pleadings as to its effect in respect of the variation of dates.

22. [83]

    Woolworths submitted that the “parties consistently through their dealings over some 12 years made clear that the formation or amendment of contractual arrangements needed to be documented in writing.” That is precisely what was achieved by the 12 September 2008 letter, the status of which was identified in Mr MacMahon’s email of 12 September 2008 (set out at [60] above), in particular in the reference to the fact that the acceptance would be formalised “via a letter for supermarkets”, referring to the supermarkets division of Woolworths as opposed to Big W.

23. [84]

    I also reject Woolworths’ ground of appeal and submission that, in the event that the parties had reached a binding agreement to vary the AFL by replacing the plans and specifications for the Landlord’s Works, such agreement was void for uncertainty. It is trite that a court will strive to avoid finding that an agreement between commercial parties is void for uncertainty: see Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 at 437; [1968] HCA 8; Meehan v Jones (1982) 149 CLR 571 at 589; [1982] HCA 52.

24. [85]

    In the present case, it is plain that the plans being referred to were those for the overall development, which provided for the inclusion of the Big W store in addition to the Woolworths supermarket. This necessarily involved an alteration to the plans which had formed part of the AFL, which made no provision for a Big W store. As the parties recognised and accepted, the inclusion of a Big W store in the development was also going to necessitate attention to the configuration of the Woolworths store, including in relation to loading and delivery bays. There was no relevant lack of clarity as to which plans were being referred to; it was Woolworths in its letter of 12 September 2008 (and its almost identical letter of 10 September 2008) that had used the definite article in the expression “the updated plans and specifications”. Mr Gazal did not question what those were a reference to in his email of 11 September 2008 (see [59] above). This was scarcely surprising given that it was he who had sent the plans to Woolworths.

25. [86]

    That the revised plans may have been provisional or preliminary was not to the point. The AFL expressly provided for their negotiated alteration, in cl 2.6: see [18] above.

26. [87]

    As varied by the 12 September 2008 letter, the AFL was not void for uncertainty and, as Woolworths accepted, the ability of the parties, Gazcorp in particular, to perform that varied agreement was frustrated by the Land and Environment Court’s rejection of the appeal from the deemed refusal of the 2008 Development Application, which incorporated a Big W store into the shopping centre in addition to a Woolworths supermarket. Although this conclusion alone is sufficient to dispose of the appeal, out of deference to the arguments of the parties, these reasons now turn to deal with the questions of abandonment and frustration on the assumption, contrary to the conclusion of the primary judge which I have also reached, that the AFL was not varied to alter the definition of Landlord’s Works in the way I have found.

Abandonment

1. [88]

   The primary judge held that the AFL was abandoned at some point during the period from 1 October 2012 to the beginning of 2014. The significance of the first of these dates was that Woolworths had, in its letter of 10 September 2008 (see [58] above), expressly reserved its rights to invoke cl 9 to terminate the AFL and to make a claim for costs and expenses. Any exercise of such rights could occur up to 1 October 2012, which was one year from the Termination Date of 1 October 2011. As the primary judge held at PJ [205], Woolworths “at least evinced an intention to keep the [AFL] alive for that purpose” in the 12 September 2008 letter. The latter date, namely the beginning of 2014 was significant as the primary judge found that by about that time, the parties must have been taken to have realised that the 2008 Development Consent would lapse on 17 February 2014: PJ [220(i)].

2. [89]

   To consider the grounds of appeal in relation to abandonment and the correctness of the primary judge’s findings on that issue, it is necessary to return to a chronological review of the parties’ correspondence and conduct leading up to October 2012, continuing to February 2014 and indeed thereafter so as fully to understand the complete context of that correspondence and conduct.

3. [90]

   In undertaking that further chronological review, it should be noted that there was no real dispute between the parties as to the applicable principles concerning the abandonment of contracts.

4. [91]

   As outlined in Ryder v Frohlich [2004] NSWCA 472 at [135] (Ryder), where it is plain from the conduct of parties to a contract that neither intends that the contract should be further performed, the parties will be regarded as having so conducted themselves as to abandon or abrogate the contract. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 434; [1978] HCA 12 (DTR Nominees), Stephen, Mason and Jacobs JJ observed that:

5. [92]

   In Paal Wilson & Co AS v Blumenthal [1983] 1 AC 854 at 914, Lord Brandon described abandonment as follows:

6. [93]

   As Leeming JA (with whom Bathurst CJ and White JA agreed) pointed out in Técnicas Reunidas SA v Andrew [2018] NSWCA 192 at [51], although it is common to refer to “abandonment” as a distinct doctrine, the preferable view is that the contract has been discharged by inferred agreement. His Honour relied on the following statement by Dixon CJ and Fullagar J in Fitzgerald v Masters at 432:

7. [94]

   As McColl JA stated in Ryder at [137]:

8. [95]

   Whether there is abandonment or abrogation of a contract is a matter of fact to be inferred from an objective assessment of the conduct of the parties: Ryder at [136]; see also Wallera Pty Limited v CGM Investments Pty Limited [2003] FCAFC 279 at [2], [30]–[32] and [57]; and Marminta Pty Limited v French [2003] QCA 541 at [22]. In Jafari v 23 Developments Pty Ltd [2019] VSCA 201 at [192], the Victorian Court of Appeal held that:

9. [96]

   In Fazio v Fazio [2012] WASCA 72 at [74], Murphy JA noted that the abandonment of a contract, in the sense of the mutual release of future obligations, does not depend upon the subjective intention of the parties. Rather, it depends upon whether their conduct (both acts and omissions), viewed objectively, manifests an intention to discharge the contract. This observation was cited with approval by this Court in Protector Glass Industries Pty Ltd v Southern Cross Autoglass Pty Ltd [2015] NSWCA 16; (2015) 230 BPR 35,511 at [98].

10. [97]

    Against the background of the parties’ interactions between February and September 2008 as set out earlier in these reasons, from September 2008 and into 2009 discussions continued between the parties in relation to the proposed development, including in relation to the Big W store, the potential inclusion of a Dick Smith electronics store, a Thomas Dux grocery store, and the addition of an area for a liquor store in the overall development.

11. [98]

    On 27 January 2009, Mr Hocking forwarded to Mr Gazal a Letter of Offer in respect of an additional area to be leased by Woolworths for a liquor store. [30]

12. [99]

    On 2 February 2009, Mr Hocking forwarded to Mr Gazal an amended Letter of Offer, which was subsequently signed by Mr Gazal on behalf of Gazcorp on 11 February 2009 and returned to Woolworths. [31]

13. [100]

    On 27 February 2009, Mr Finlay sent an email to Mr Gazal informing him that the property committee of Woolworths had “approved the additional area for liquor” and that solicitors would be instructed shortly to “vary the documents”. [32]

14. [101]

    By 10 March 2009, the parties expected that the Land and Environment Court would soon give its judgment concerning the 2008 Development Application, which incorporated the proposed Big W store. As has been noted above at [65], the judgment was given on 20 March 2009 and was adverse to the 2008 Development Application, and thus the proposed development that included a Big W store. In essence, it was held that the large amount of retail floor space proposed would have an adverse economic impact upon the nearby Green Square Town Centre and was therefore not in the public interest: see Humphrey & Edwards v City of Sydney [2009] NSWLEC 1075. Gazcorp promptly informed Woolworths of the decision, which Mr Gazal described as a “huge shock”. [33]

15. [102]

    However, as the primary judge noted at PJ [73], the demise of the 2008 Development Application did not affect the continued existence of the 2008 Development Consent. On 29 January 2009, that consent was modified, such that it was stated to operate from 17 February 2009 and to lapse on 17 February 2011.

16. [103]

    Subsequently, the parties confirmed their commitment to the development of a Woolworths supermarket on the site, during discussions between their respective solicitors on 23 March 2009 [34] and in a meeting on 31 March 2009 (see [104] below). [35] From about this time, the parties also discussed the possibility of Woolworths leasing additional space to include a Dick Smith store and a Thomas Dux store, as well as a liquor store (see [97] above).

17. [104]

    On 31 March 2009, Mr Gazal met with Mr Finlay and Ms Grace Srbinovski of Woolworths, with Mr Gazal deposing that, in the course of that meeting, he said words to the following effect: [36]

18. [105]

    Discussions proceeded thereafter about various options, including Dick Smith and Thomas Dux stores on the ground floor level. By mid-April 2009, Gazcorp’s architects were preparing a s 96 application “for our proposed staging of occupation”: see PJ [78].

19. [106]

    On 23 April 2009, Mr Gazal sent various “indicative leasing plans” to Mr Hocking, who noticed that these plans did not include the liquor store area. He requested that the plans be reviewed and amended.

20. [107]

    On 28 April 2009, Mr Hocking sent a Letter of Offer to Mr Gazal for his review. The Offer concerned a lease of about 1200m2 of space for a Thomas Dux store on the ground level. Later on that same day, Mr Gazal sent to Mr Hocking a revised plan of the lower ground floor. Later again on 28 April 2009, Ms Srbinovski sent a separate Letter of Offer to Mr Gazal concerning a lease of space for a Dick Smith store on the ground level.

21. [108]

    Mr Gazal deposed that he attended a meeting with Mr Hocking, Ms Srbinovski and others on 28 April 2009 at approx. 4.30pm, at which the Thomas Dux and Dick Smith proposals were discussed. On 30 April 2009, Mr Gazal sent an email to Mr Hocking in relation to the Thomas Dux proposal. The email, which outlined the terms and conditions offered by Gazcorp, included the following: [38]

22. [109]

    On 23 June 2009, Ms Srbinovski sent an email to Mr Gazal informing him that Thomas Dux had pulled out of negotiations but that Dick Smith was “still keen to secure space in [the] development”. [39]

23. [110]

    In August 2009, Mr Gazal sought to arrange a meeting with Mr Hocking and Mr Finlay to discuss various matters including “Alexandria and the completion date” and “Alexandria Potential new plans”. On 5 August 2009, Mr Hocking sent an email to Mr Gazal in the following terms: [40]

24. [111]

    Mr Gazal thereafter had numerous dealings with Mr Carroll of Woolworths right through until about June 2015.

25. [112]

    On 31 August 2009, Mr Gazal sent to Mr Carroll various plans for the proposed ground floor and lower ground floor levels. The plans for the ground floor showed a number of options as to layout. Mr Gazal’s covering email included the following: [41]

26. [113]

    Almost four months later, on 14 December 2009, Mr Carroll sent an email to Mr Gazal in the following terms: [42]

27. [114]

    On 15 December 2009, Mr Gazal replied to Mr Carroll saying that “the court case to try and get Big W in the centre” had caused delays, as had “the GFC the bank then [getting] tougher in their conditions to grant finance” due to the then extant Global Financial Crisis. Mr Gazal added that “[w]e are committed to the project and would like to have seen it started already and we are using our best endeavours to get the project underway”. [43]

28. [115]

    During the first half of 2010, the parties engaged in further communications and meetings. On 4 March 2010, Woolworths sent an email to Gazcorp asking for any plans to be used in the shopping centre’s marketing campaign and noting that: [44]

29. [116]

    On 8 March 2010, Woolworths sent Gazcorp a letter setting out an offer to amend the AFL to extend the Date for Practical Completion by 3 years, to 30 April 2013, and to extend the Approval Date, noting that the revised plans for the Landlord’s Works “will need to be approved” by Woolworths and that “in this regard, we need to determine if your overall plans of the Centre have changed since the AFL was executed”. Woolworths then asked Gazcorp to “provide the necessary plans for our review so we may then brief our solicitors to prepare a draft Variation of [the] AFL” and to “confirm acceptance of the above by return correspondence by Friday 12 March 2010”. [45] Gazcorp did not accept that offer, by 12 March 2010 or otherwise. [46]

30. [117]

    A file note prepared by Mr Gazal in respect of a meeting on 14 April 2010 recorded that: [47]

31. [118]

    A file note of a meeting on 15 June 2010, prepared by Mr Gazal, recorded that:

32. [119]

    In or by June 2010, the 2008 Development Consent was further modified, such that it was to operate until 14 February 2014. [49] Gazcorp informed Woolworths of that extension. [50]

33. [120]

    On 14 July 2010, Mr Gazal emailed Mr Carroll with the subject “Meeting 15 June”, as follows: [51]

34. [121]

    Mr Carroll replied to Mr Gazal on 16 July 2010, as follows:

35. [122]

    Mr Gazal replied to this email two minutes later, stating: [53]

36. [123]

    On 5 October 2010, the solicitor for Woolworths wrote to the solicitor for Gazcorp noting that the Date for Practical Completion under the AFL (1 October 2010) had passed and reserving Woolworths’ rights, including those under cl 9 of the AFL in respect of termination (see [33] above). [54] The letter was in the following terms:

37. [124]

    Mr Gazal sent an email to Mr Anthony Mellowes of Woolworths on 15 October 2010, asking Mr Mellowes to “give [him] a call when he got a chance to discuss Green Square”. [55] Mr Gazal deposed that the resulting conversation included words to the following effect: [56]

38. [125]

    On 8 December 2010, Mr Gazal emailed Mr Mellowes in relation to the site, inquiring as to whether he “had any further thoughts since our last conversation regarding Green Square”. [57] Mr Mellowes replied on 13 December 2010, outlining that he was “following up on that legal issue and will have something to you soon”. [58]

39. [126]

    By early 2011, Woolworths was expressing some frustration with the lack of progress. On 8 March 2011, Mr Gazal emailed Mr Carroll, with the subject “Dan Murphy’s Lease and Green Square”, asking about “[a]ny news on the two points above?” [59] Mr Carroll replied by email on 9 March 2011 and, in relation to the Green Square site, outlined the following: [60]

40. [127]

    On 27 April 2011, Woolworths lodged a caveat against the titles over the site, [61] relying on its interests under the AFL. The nature of the interest was described as “[l]essee of the premises known as ‘Woolworths Supermarket’ in the centre on the land”, by virtue of the AFL dated 20 February 2008. [62] However, following a meeting between Messrs Gazal, Carroll and Mellowes on 5 May 2011, Woolworths agreed to remove its caveat, at Gazcorp’s request, because the registration of a caveat on the titles could cause Gazcorp “problems with [its] bank”. [63] Woolworths confirmed its withdrawal of the caveat on 20 May 2011. [64] Gazcorp replied to Woolworths on the same day, thanking it for removing the caveat, and saying that it was “full steam ahead now with the planning, so hopefully we can get a good outcome with Council”. [65]

41. [128]

    The parties continued to engage in further discussions into and throughout the second half of 2011: PJ [110]–[114]. A file note prepared by Mr Gazal and dated 5 May 2011, headed “WOW – Anthony Mellows, David Carroll”, records a number of bullet points, with the final stating “[t]hey re-iterated that WOW have never sued for damages”. [66]

42. [129]

    On 28 June 2011, Gazcorp provided Woolworths with the “first cut” of the plans which would ultimately be submitted to the Council with the 2012 Development Application (being a further application that came to be submitted by Gazcorp in relation to the site and which contained plans differing in fundamental respects from those approved by the 2008 Development Consent). [67] The attachments to the email were titled “GS – Wyndham St level (option B)” and “GS – Botany Rd level (option B)”. [68]

43. [130]

    On 20 July 2011, Woolworths emailed Gazcorp stating that “[i]n relation to Green Square we were to get back to you to see [if] we could either give up some space or recut the deal and we think the latter is our preferred way forward. Happy to discuss when it suits. Can you let me know”. [69] (emphasis added)

44. [131]

    On 26 July 2011, Mr Carroll emailed Mr Gazal as follows: [70]

45. [132]

    On 22 September 2011, Mr Carroll sent another email to Mr Gazal in the following terms: [71]

46. [133]

    On 18 October 2011, Mr Madden sent a letter to Mr Parry in the following terms: [73]

47. [134]

    On the same day, Mr Carroll emailed Mr Gazal noting that the letter extracted above was “only a mechanical letter and it should not cause any distress”. [74]

48. [135]

    On 31 October 2011, Mr Parry responded to Mr Madden’s letter of 18 October 2011, including that “[w]ithout commenting on the legal position of the parties my client is confident of being able to arrive at a negotiated position directly with your client … with the objective that legal representatives are subsequently engaged to document and give legal effect to a mutually acceptable arrangement”. [75]

49. [136]

    On 3 November 2011, Mr Gazal sent an email to Mr Carroll which included the following: [76]

50. [137]

    On 6 December 2011, Mr Gazal again wrote to Mr Carroll stating, amongst other things, that Gazcorp was: [77]

51. [138]

    From late 2011 to July 2012, the parties engaged in extensive correspondence regarding plans for a further development application for the construction of a shopping centre, potentially containing a Woolworths supermarket, on the site. On 11 April 2012, Mr Gazal emailed Mr Carroll a “Crude mockup of Green Square”, with the covering email reading as follows: [78]

52. [139]

    Mr Carroll replied to this email on 13 April 2012, as follows: [79]

53. [140]

    Later in the afternoon of 13 April 2012, Mr Gazal sent to Mr Carroll his “hand drawn remodelling of what we spoke about”. [81] In oral submissions, senior counsel for Woolworths submitted that Mr Gazal “never contest[ed] the proposition that we had a signed AFL at Green Square”. [82] So much may be accepted, but the primary judge did not hold that the abandonment of the AFL had occurred as at that time.

54. [141]

    On 19 April 2012, an internal email sent from Mr Carroll to Ms Grace Kurek and Mr Vincent Duong of Woolworths provided as follows: [83]

55. [142]

    On 7 May 2012, Mr Carroll emailed Mr Gazal in relation to the Green Square site as follows: [84]

56. [143]

    As noted above at [129], on 6 July 2012 Gazcorp caused a further development application to be lodged in relation to the site (the 2012 Development Application). [85] This was lodged in circumstances of some urgency due to the anticipated introduction of the Sydney Local Environmental Plan 2012 (the 2012 LEP), cl 7.23(3) of which would limit retail tenancy sizes in the Green Square area to a maximum of 1,000m2 (cf the 3,800m2 “Approximate Lettable Area” of the supermarket under the AFL).

57. [144]

    On 16 July 2012, Gazcorp sent Woolworths a link to the 2012 Development Application on the Council’s website. [86] Mr Julian Ackad, a Woolworths Property Manager, replied to Mr Gazal on the same day, asking whether the Council gave Gazcorp a guide as to how long it would likely take to assess the 2012 Development Application. [87] Mr Gazal replied four minutes later, as follows: [88]

58. [145]

    On 19 November 2012, Mr Carroll emailed Mr Gazal in relation to a liquor licence application. Towards the end of the email, Mr Carroll requested that Mr Gazal “[i]n the interim, let [him] know when we can discuss and do the deal at Green Square”. [89] (emphasis added)

59. [146]

    On 30 November 2012, the Council granted the 2012 Development Consent. [90] The development as approved included two basement levels accommodating 327 car parking spaces and construction of a three-storey retail and commercial building accommodating 11,452m2 of floor space. [91] The accompanying plans provided for a supermarket on the ground level, not the lower ground level as was the case with the 2008 Development Consent: PJ [130]. In addition, the loading dock was very different to that originally approved in the earlier Consent; it provided for only four as opposed to eight trucks and was on a different level to the supermarket.

60. [147]

    On 5 December 2012, Mr Carroll emailed Mr Gazal outlining that: [92]

61. [148]

    On 14 December 2012, the 2012 LEP came into effect.

62. [149]

    Numerous documents described as “updated plans” were sent by Mr Gazal to Mr Carroll in December 2012. Woolworths, for its part, subsequently provided a great deal of information to Gazcorp on various aspects relating to supermarket design, including trolley management and security. It is evident from the communications between the parties that it was envisaged that a s 96 application to modify the 2012 Development Consent would be lodged in due course.

63. [150]

    One such application was lodged by Gazcorp on about 27 February 2013, seeking, inter alia, to “[a]mend Condition 11 to delete the reference to ‘supermarket’ so as to approve use and fit-out of a supermarket”. [94] Further applications to modify the 2012 Development Consent were subsequently made.

64. [151]

    On 5 March 2013, Mr Gazal advised Mr Carroll that the “WOW DA is lodged and awaiting response from planners”. [95] This was presumably intended as a reference to the s 96 application described above.

65. [152]

    On 5 April 2013, Mr Gazal sent an email to Mr Carroll attaching some preliminary sketches for the loading dock for Woolworths. These sketches depicted the supermarket on the ground (or Botany Road) level. [96]

66. [153]

    On 17 April 2013, Mr Carroll sent an email to Mr Gazal which included the following: [97]

67. [154]

    On 18 April 2013, the Council approved Gazcorp’s s 96 application lodged on 27 February 2013. [98] The Council’s Assessment Report referred to cl 7.23 of the 2012 LEP (which, as noted above, limited retail tenancies to 1,000m2), but stated that “[b]ased on the fact that all policy surrounding the town centre has been formulated on the basis of a full-line 3,500sqm+ supermarket being provided on the subject site, it is not considered that variation for this one tenancy would adverse [sic] impact the viability and vitality of the town centre”. [99]

68. [155]

    On 21 May 2013, Woolworths pursued Gazcorp seeking revised plans [100] but, thereafter, it appears that discussions ceased for a considerable period whilst Gazcorp worked to satisfy the conditions of the 2012 Development Consent.

69. [156]

    On 20 November 2013, the Council wrote to Gazcorp confirming that all deferred commencement conditions had been satisfied, such that the 2012 Development Consent would operate from that day and lapse on 20 November 2018. [101]

70. [157]

    Throughout late 2013 and early 2014, the parties resumed working on plans for the Woolworths supermarket on the site. For example, on 13 December 2013, Mr Gazal emailed Mr Carroll outlining that “[h]opefully [we] should have some plans soon for Alexandria to discuss. Look forward to a busy year working with you guys next year!” [102]

71. [158]

    On 24 January 2014, Mr Gazal emailed Mr Carroll the relevant plans in two separate emails. [103] Mr Carroll replied in relation to the plans on 2 February 2014, indicating that he had taken a “good look at the plans” and expressing his thoughts as follows: [104]

72. [159]

    On 17 February 2014, the 2008 Development Consent lapsed and thus ceased to have effect although, as noted by the primary judge, on the available evidence, that event did not appear to have been the subject of any particular communication between the parties: PJ [141]. At the time, the parties were “continuing to discuss plans for the development of the Green Square site”: PJ [140]. The primary judge found that the “parties continued to deal with each other concerning proposed plans and associated issues throughout 2014”: at [140]. For example, on 7 October 2014, Mr Gazal emailed Mr Carroll attaching some further plans. [105]

73. [160]

    During the first half of 2015, discussions concerning the site continued on at least an intermittent basis between Mr Gazal and Mr Carroll, until the latter ceased his role with Woolworths in July 2015.

74. [161]

    On 9 July 2015, Mr Gazal met with a number of representatives of Woolworths including Mr Lindsay Rowles (Woolworths’ Group Property Operations Manager). It appears in an email from Mr Rowles to Mr Ralph Kemmler (the Director of Property at Woolworths) that during the meeting, Mr Gazal undertook to deal with Woolworths only “due to the longstanding involvement”. [106] Mr Gazal deposed that during the meeting there was discussion concerning the latest plans for the development, rental expectations for the Woolworths supermarket, and the possibility of a further s 96 application to the Council to modify the 2012 Development Consent.

75. [162]

    On 23 July 2015, Mr Gazal sent an email to Mr Rowles in which he stated that there had been a “great meeting with Council this morning” and that Gazcorp was now going ahead with a modification application. [107] Mr Gazal provided the “first cut” of the detailed drawings for that application to Ms Georgia Munro of Woolworths on 11 September 2015. [108] These drawings depicted a Woolworths supermarket on the ground (or Botany Road) level.

76. [163]

    On 22 September 2015, Mr Gazal provided updated plans to Mr Finlay. [109] Mr Finlay responded by email on the following day stating that he and Ms Elizabeth Kennedy of Woolworths would review the plans and respond as soon as possible. [110] There were various communications between the parties concerning the plans thereafter.

77. [164]

    On 11 December 2015, Mr Brad McAndrew (one of Woolworths’ Regional Property Managers) sent an email to Mr Gazal requesting a meeting with him and Mr Richard Champion of Woolworths in the following week to discuss “the project and commercial terms”. [111] As the primary judge noted at PJ [151]:

78. [165]

    Throughout the second half of 2015, Gazcorp sought and received Woolworths’ assistance in preparing another s 96 application to modify the 2012 Development Consent, which was ultimately lodged by Gazcorp on 13 January 2016. On the same day, Gazcorp approached Coles regarding the supermarket lease, which resulted in Coles sending a draft Letter of Offer to Mr Gazal in the evening. [112]

79. [166]

    The letter dated 3 February 2016, referred to in the passage quoted at [164] above, was sent by Mr McAndrew to Mr Gazal via email on that date. [113] The letter is lengthy but, importantly for present purposes, commenced with the following: [114]

80. [167]

    Mr Gazal did not immediately respond to this letter. It appears that he wanted to obtain further legal advice, including from senior counsel. It was also a very busy time for him, with Gazcorp opening a new development at Liverpool. It may be noted, however, that this was the first time since April 2012 that Woolworths had made reference in correspondence to the AFL (see [139] above).

81. [168]

    On 5 February 2016, Mr Gazal sent an email to Mr Aaron Murray of Coles, with whom he had been dealing since about December 2015 (see [165] above), in the following terms: [116]

82. [169]

    On 29 April 2016, Mr Gazal sent an email to Mr McAndrew which attached a response to Mr McAndrew’s letter of 3 February 2016. The attached letter included the following:

83. [170]

    Woolworths responded by letter dated 18 May 2016. The letter, which was signed by Mr McAndrew, contained the following: [118]

84. [171]

    Mr Gazal responded to the above letter on the following day. His response included the following: [119]

85. [172]

    The parties thereafter continued to communicate in relation to the Green Square site. As the primary judge noted at PJ [157], “neither side departed in that correspondence from the positions that had emerged in 2016. That is to say, Woolworths continued to assert that the [AFL] remained on foot, and Gazcorp continued to assert that the [AFL] had been terminated” or abandoned.

86. [173]

    On 14 October 2016, the Council gave approval for a further modification in respect of the 2012 Development Consent (see [165] above). [120] The approved development was thus described as involving: [121]

87. [174]

    On 3 February 2017, a solicitor acting for Woolworths sent a letter to Mr Gazal stating, in effect, that Woolworths consented to all variations to the Plans and Specifications (as that expression was defined in the AFL) as reflected in the plans approved when consent was given to the modification application on 14 October 2016. [122] Woolworths’ solicitor suggested that the approved plans could therefore be substituted into the AFL in place of those that previously formed the Plans and Specifications.

88. [175]

    Notwithstanding further attempts at negotiation, the parties were unable to reach an agreement in relation to the Green Square site. Gazcorp commenced the underlying proceedings on 15 October 2018 seeking various declarations, including that the AFL had been terminated or was otherwise no longer in force. Woolworths lodged a cross-claim seeking a declaration to the effect that the AFL remained on foot.

89. [176]

    As to the question of abandonment, the primary judge held that he would infer that the parties had mutually agreed to abandon the AFL by no later than about the beginning of 2014, in circumstances where (at PJ [220]):

    1. (1)

       Gazcorp’s obligations under the AFL to carry out the Landlord’s Works were obligations in respect of the works required to complete construction of a shopping centre essentially as envisaged by the 2008 Development Consent;

    2. (2)

       in April 2010, Gazcorp had made it known to Woolworths that it would not be proceeding with the development the subject of the 2008 Development Consent, and Gazcorp did not thereafter suggest to the contrary;

    3. (3)

       after April 2010, Woolworths made no calls upon Gazcorp to commence works pursuant to the 2008 Development Consent, or to suggest that Gazcorp was obliged to do so, albeit that Woolworths reserved its rights in relation to Gazcorp’s obligations to carry out the Landlord’s Works;

    4. (4)

       the parties were aware from at least June 2010 that the 2008 Development Consent was due to lapse in February 2014;

    5. (5)

       from June 2011, the discussions between the parties about the development of the site related only to plans that involved a Woolworths supermarket on the ground floor (as opposed to the lower ground floor as per the 2008 Development Consent);

    6. (6)

       any rights of Woolworths under cl 9 of the AFL (see [33] above) had expired by 1 October 2012;

    7. (7)

       from December 2012, all of the dealings between the parties were directed towards advancing a development in accordance with, or based upon, the 2012 Development Consent that had been obtained on 30 November 2012;

    8. (8)

       Mr Carroll’s conduct from that time was to an extent suggestive of a recognition on the part of Woolworths that a new deal would need to be agreed in order for Woolworths to “secure the site”; and

    9. (9)

       by about the beginning of 2014, the parties must have been taken to have realised that the 2008 Development Consent would lapse on 17 February 2014.

90. [177]

    The primary judge considered that the conduct of the parties, when viewed objectively in the light of the AFL, and in particular the rights and obligations of the parties regarding the Landlord’s Works, revealed that there was a lengthy period of time, from about April 2010 until about January 2014, during which Gazcorp made no attempt to proceed with those works and indeed made it known that it had no intention of doing so. In response, Woolworths made no call upon Gazcorp to do so. The primary judge stated that the carrying out of the Landlord’s Works was a “most important aspect of the [AFL]”: PJ [221].

91. [178]

    His Honour noted, moreover, that for a lengthy period (from about June 2011), all of the dealings between the parties were directed towards advancing a development that differed significantly from the subject of the 2008 Development Consent. The primary judge observed that throughout this period, each party “stood by until a point was reached where it must have been known that the [AFL] could not in any event be performed”, because the 2008 Development Consent was about to lapse: PJ [221].

92. [179]

    The primary judge concluded (at PJ [222]–[223]) that:

93. [180]

    The primary judge held that the conduct of and correspondence between the parties after January 2014, at least until early 2016, was consistent with an acceptance that the AFL was no longer on foot, and no statements were made during that period to the effect that the AFL remained in existence: PJ [227]. His Honour held that the ongoing discussions about the Green Square site, following the lapse of the 2008 Development Consent on 17 February 2014, were directed towards reaching a new agreement based upon quite different plans.

94. [181]

    By ground 4 of its Amended Notice of Appeal, Woolworths contended that the primary judge had erred in concluding that it and Gazcorp “had evinced a mutual intention to no longer be bound by, and to abandon, the AFL”.

95. [182]

    Woolworths submitted that:

96. [183]

    Woolworths further submitted that the primary judge did not take into account that the AFL was “a highly significant commercial arrangement”, which required Woolworths to “enter a lease of supermarket premises for a term of up to 30 years, with a commencing rent of $1,700,000 plus 2% to 2.5% of the supermarket’s annual turnover”. Woolworths submitted that it was “inherently unlikely” that parties to an agreement of this significance would treat it as being “off altogether” (adopting the language of Masters v Cameron at 432), at least absent that being made clear “in the plainest terms”.

97. [184]

    Woolworths concluded its written submissions on this point by arguing that:

98. [185]

    In response, Gazcorp submitted that Woolworths’ argument that if the parties had abandoned the AFL, then they would have “engaged in immediate and extensive negotiations in relation to entering into a substitute agreement – but they did not” ignored the correspondence between the parties set out at PJ [70]–[162], the entirety of which the primary judge stated that he had regard to (at PJ [204]). Within that body of correspondence were examples of Gazcorp making it clear to Woolworths that it could not, and would not, be proceeding with the development as contemplated by the AFL because, inter alia, it was no longer feasible to do so in the prevailing financial climate (particularly due to the then extant Global Financial Crisis; see, for example, at [114] above): see PJ [209].

99. [186]

    Gazcorp pointed to several examples of communications between the parties in which they were seeking to do a new deal based on plans for an entirely different shopping centre. This submission was skilfully developed in oral argument by Mr Lawrance SC, for Gazcorp, who took the Court carefully through significant differences between the plans by reference to which the 2008 Development Consent was granted and the plans being worked through by the parties in the period from 2009 onwards. Those differences were not accurately described as contemplating a “slightly different development,” contrary to Woolworths’ submission noted at [184] above.

100. [187]

     Gazcorp submitted that Woolworths’ suggestion that the primary judge failed to take into account that the AFL envisaged a long-term and significant commercial arrangement was without foundation, as the primary judge recognised that the terms of the AFL were of central significance to the issue of abandonment (PJ [193]) and, from that starting point, his Honour engaged in a close examination of the conduct of the parties from 2009 through to 2014 (PJ [204]–[219]). Gazcorp submitted that this objective assessment formed the basis of his Honour’s conclusion that there had been mutual intention to abandon the AFL and, in so concluding, the primary judge did not consider that the parties had lightly treated the AFL as being “off altogether”.

101. [188]

     Cases such as the present require a court objectively to characterise the conduct of the parties in the context in which it occurred.

102. [189]

     The starting point of the analysis must be the AFL itself, which placed a clear obligation on Gazcorp to cause the Landlord’s Works to be carried out “in accordance with the Plans and Specifications” and all governmental consents “as expeditiously as possible”: cl 2.1; see [18] above.

103. [190]

     Gazcorp unequivocally failed to do this and made its intention not to do so clear from an early point in time. Equally clearly, whilst there was an early and formal reservation of rights by Woolworths, at no time did it seek to enforce the AFL or require Gazcorp to perform its obligations thereunder. This was in part because, at various times, Woolworths wished to secure additional presences on the site, initially through the inclusion of a Big W store but later, after the Big W proposal was rebuffed by the Land and Environment Court, through the inclusion of a liquor store and other potential retail outlets.

104. [191]

     Literally years passed during which no reference whatsoever was made by the parties to the AFL, and their conduct in that period was wholly inconsistent with a mutual intention that the AFL remained on foot. The 2012 Development Consent, pursued by Gazcorp with the support of Woolworths, was inconsistent with Gazcorp holding an intention to perform, or Woolworths insisting on the performance of, the AFL. It involved a supermarket of a different size to that which was the subject of the AFL, in a different location (indeed on a different floor) on the site, and with a significantly different configuration including in respect of its loading bays. The 2012 Development Consent, moreover, provided for a reduced number of car parking spaces, all of which were to be on one level.

105. [192]

     As summarised by Gazcorp, and at the risk of repetition, the works approved by the 2012 Development Consent were plainly a significantly different development, including that:

     1. (1)

        the location of the proposed supermarket in the AFL was on the lower ground (Wyndham Street) level, whereas in the 2012 Development Consent it was located on the ground (Botany Road) level. As such, the proposed supermarket under the 2012 Development Consent needed to be serviced by two goods lifts via a revised loading dock on the lower ground (Wyndham Street) level;

     2. (2)

        a further consequence of the proposed supermarket being elevated to the ground floor in the 2012 Development Consent was that its size and shape was different from the proposed supermarket in the AFL;

     3. (3)

        there was only one level for car parking in the whole centre under the 2012 Development Consent, whereas (even on Woolworths’ view) the AFL required two basement levels with car parks. As such, the space for car parking reduced significantly to 205 spaces under the 2012 Development Consent compared to a total 614 spaces, 385 of which were for retail outlets, in the AFL. In this respect, cl 2.5(c) of the AFL only allowed Gazcorp to reduce the number of retail car park spaces by a maximum of 5% (19 car parks); that is, from 385 to 366 spaces.

106. [193]

     The effect of the lack of reference by the parties to the AFL and the supermarket it contemplated after April 2012 (see [139] and [167] above) was only reinforced by the fact that the expiry of the 2008 Development Consent occurred in February 2014 without comment or action from either party. The AFL became incapable of performance after that point in time because there was no consent in force thereafter which permitted the AFL to be performed in the manner required by cl 2.1. An application for a s 96 modification of the 2012 Development Consent would have been most unlikely to succeed given the need for the modified development to be “essentially or materially the same” as the approved development: Moto Projects (No 2) Pty Ltd v North Sydney Council (1999) 106 LGERA 298; [1999] NSWLEC 280 at [55]. There were very significant differences between the supermarket as recorded in the plans the subject of the 2012 Development Consent and that referred to in the lapsed 2008 Development Consent.

107. [194]

     Particular submissions were made in relation to statements by various Woolworths representatives, officers and employees, in particular Mr Carroll, regarding the need to “cut a new deal” for the Green Square site and for a Letter of Offer to issue in relation to the plans designed for the purposes of the 2012 Development Application. Gazcorp called these statements in aid of its abandonment argument, whereas Woolworths submitted that Mr Carroll lacked authority to bind it and that an important legal consequence such as contractual abandonment should not have been derived from informal correspondence.

108. [195]

     So much may be accepted, but neither my conclusion nor that of the primary judge turned or depended on this correspondence so much as the failure by Woolworths to treat the AFL as being on foot for a period of years and its undertaking of, and acquiescence in, conduct quite inconsistent with it remaining on foot. In any event, the significance of Mr Carroll’s statements lies in the insight they provided into Woolworths’ overall position; he was the officer charged with dealing with Gazcorp and the position which his statements disclosed may reliably be taken to reflect the lack of commitment, on Woolworths’ part, to the deal as originally secured by the AFL.

109. [196]

     Whilst there was force to Mr Stoljar’s submission that Woolworths should not lightly be taken to have given up its rights, it is difficult to conclude that, at least after October 2012, it ever intended to insist on the construction of a shopping centre containing a sub-ground floor supermarket at Green Square of the kind for which the AFL provided. Woolworths knew how to protect and/or reserve its rights but the only relevant reservations came in its letter of 5 October 2010 (see [123] above) in relation to the recovery of “costs, expenses and damages” and a similar letter of 18 October 2011 (see [133] above). An earlier lodgement of a caveat by Woolworths was withdrawn on 20 May 2011 (see [127] above). The letter of 18 October 2011, moreover, was described as “only a mechanical letter” (see [134] above). Apart from a reference to the AFL on 13 April 2012 (see [139] above), it was to be the last reference by the parties to the AFL until February 2016 (see [167] above). The totality of the parties’ conduct in the interim was inconsistent with either of them treating the AFL as on foot. At no time did Woolworths, moreover, ever act on its asserted reservation of rights.

110. [197]

     In reaching the same conclusion as the primary judge, like his Honour, I have not taken into account various internal documents of Woolworths which suggested that the AFL had been “surrendered” or that there was no agreement on foot. Mr Lawrance, for Gazcorp, contended that these documents constituted admissions. It is unnecessary to determine that issue, save to say that, had they been taken into account, Woolworths’ position would have been weakened and not strengthened.

111. [198]

     For all of the above reasons, the primary judge was correct to conclude that the AFL had been abandoned by about the beginning of 2014.

Frustration

1. [199]

   The primary judge held that, in the event that his Honour’s conclusion as to abandonment was incorrect, and if the AFL had not already been abandoned, it was terminated by frustration on 17 February 2014, when the 2008 Development Consent lapsed. This was because it was no longer possible for Gazcorp lawfully to carry out the Landlord’s Works under the AFL.

2. [200]

   The primary judge outlined that the parties entered into the AFL on the common assumption that Gazcorp would continue to be able lawfully to carry out the Landlord’s Works, and that the terms of the AFL obliged Gazcorp to cause the Landlord’s Works to be carried out: PJ [230]. The primary judge further held that it could not be said that either party assumed responsibility under the AFL for the continuation of “a state of affairs where Gazcorp was able to lawfully carry out the Landlord’s Works”: PJ [232]. His Honour concluded that Gazcorp’s proposition that this common assumption proved to be mistaken was also made out, noting (at [233]) that:

3. [201]

   The primary judge summarised Woolworths’ submissions in this respect as follows (PJ [235]):

4. [202]

   However, the primary judge rejected this submission at [236], stating that:

5. [203]

   Accordingly, the primary judge held that if the AFL had not already been abandoned, then it was terminated by frustration on 17 February 2014 (when the 2008 Development Consent lapsed) as it was no longer possible for Gazcorp lawfully to carry out the Landlord’s Works under the AFL. His Honour determined that the lapse of the 2008 Development Consent was “an event that brought to an end a state of affairs the parties had assumed would continue to exist during the life of the contract”: PJ [240]. Gazcorp was required to carry out the works in a lawful manner. The primary judge held that to carry them out in an unlawful manner would be radically different from the terms of the AFL.

6. [204]

   By grounds 5–8 of its Amended Notice of Appeal, Woolworths challenged the primary judge’s findings on frustration, as follows:

7. [205]

   Woolworths submitted that the frustration of the AFL required an express finding that it became incapable of performance on 17 February 2014, because the circumstances in which performance was called for would have rendered it a thing radically different from that which was undertaken, referring to Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 357; [1982] HCA 24 (Codelfa). Woolworths contended that the fact that a “mere difference” in the relevant state of affairs could be identified was not sufficient for frustration and that there must be a “radical difference”, citing Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 (Davis Contractors). Woolworths submitted that the fact that one means of performing the AFL had ceased to be available (namely, the provision of a Woolworths supermarket on the lower ground floor per the 2008 Development Consent) did not establish frustration, because other means could be employed consistently with the AFL (namely, the provision of a Woolworths supermarket on the ground floor in accordance with the 2012 Development Consent).

8. [206]

   Woolworths submitted that the gravamen of the primary judge’s reasoning on the issue of frustration was that the AFL “did not provide for significant differences such as the deletion of levels, or provision for a supermarket on a different level” (PJ [236]). With regard to the first of these matters (the deletion of levels), it was contended that the AFL did not require Gazcorp to construct a mixed use building containing any specific number of levels, and so this issue was irrelevant. In any event, Woolworths submitted that the change of levels in the development as a whole would not have the consequence that performance of the AFL was “radically different”.

9. [207]

   As to the second matter identified by the primary judge at PJ [236], namely the provision of a supermarket on a different level, Woolworths submitted that it was true that, pursuant to the 2012 Development Consent, the Woolworths supermarket would be on the ground floor (or Botany Road level) and not the lower ground floor (or Wyndham Street level). However, Woolworths submitted that the essential criteria stipulated in the AFL remained, such that this alteration could not be described as a “radical difference” for the purposes of the doctrine of frustration.

10. [208]

    Woolworths contended that there was an “air of unreality in the conclusion of frustration”, submitting that:

11. [209]

    In response, Gazcorp submitted that Woolworths did not explicitly take issue in the proceedings below with the proposition that there was a common assumption that Gazcorp would continue to be able lawfully to carry out the Landlord’s Works. Gazcorp submitted that Woolworths sought to qualify this assumption by its own submission that the primary judge fell into error insofar as the common assumption finding was itself based on the assumption that the “2008 [Development] Consent was essential to the performance of the [AFL] and would continue to exist unchanged”. However, Gazcorp submitted that no such assumption underlay the primary judge’s reasons. Gazcorp pointed to PJ [230], which made plain that the common assumption was based on the AFL obliging Gazcorp to cause the Landlord’s Works to be carried out lawfully; the assumption was not that the 2008 Development Consent would continue to subsist, but rather that Gazcorp would be able lawfully to carry out the Landlord’s Work.

12. [210]

    Gazcorp further submitted that, since 14 December 2012, it had not been possible to obtain a new development consent in accordance with the terms of the AFL, due to the 2012 LEP coming into effect. Clause 7.23(3) of the 2012 LEP prohibited the granting of a development consent for a property identified as a “Restricted Retail Development” on the “Retail Premises Map” for spaces of greater than 1,000m2. Gazcorp’s property was identified as a “Restricted Retail Development” on the Map. As such, from 14 December 2012, Gazcorp submitted that it could not obtain a new approval to undertake either: (a) the Landlord’s Works as specified in the AFL (as originally entered into), because those works would require the construction of retail space of approximately 14,949m2; or (b) construction of the Woolworths supermarket, ignoring the rest of the centre, because it alone was to be 3,800m2.

13. [211]

    Like the principles relating to the abandonment of contracts, there was no real dispute between the parties as to the applicable principles concerning frustration.

14. [212]

    In Davis Contractors at 729, Lord Radcliffe stated that frustration occurs:

15. [213]

    The fact that a mere difference can be identified is not sufficient for frustration — there must be a “radical difference”: Davis Contractors at 729. In Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage and Towage) Ltd (The “Sea Angel”) [2007] 2 Lloyd’s Rep 517; [2007] EWCA Civ 547 at [111], Rix LJ stressed the importance of the “radically different” test, outlining that:

16. [214]

    The above passages from Davis Contractors were cited with approval by the High Court in Codelfa. At 357, Mason J observed that the “critical issue is whether the situation resulting from the [allegedly frustrating event] is fundamentally different from the situation contemplated by the contract”. His Honour outlined that the essential criterion of frustration is thus a:

17. [215]

    Nettle JA (as he then was), in oOh! Media Roadside Pty Ltd (Formerly Power Panels Pty Ltd) v Diamond Wheels Pty Ltd (2011) 32 VR 255; [2011] VSCA 116 at [70] (oOh! Media), summarised the law to be that a contract is not frustrated unless a supervening event:

18. [216]

    In some cases, it has been sufficient to engage the doctrine of frustration that events have given rise to a “fundamental commercial difference” between contemplated and actual performance (see Albert D Gaon & Co v Société Interprofessionelle des Oleagineux Fluides Alimentaires [1960] 2 QB 318 at 347), or to a “fundamentally different situation”, for which the parties made no provision “so much so that it would not be just in the new situation to hold them bound to its terms”: see Ocean Tramp Tankers Corporation v V/O Sovfracht (The “Eugenia”) [1964] 2 QB 226 at 238.

19. [217]

    As outlined in Pioneer Shipping Ltd v BTP Tioxide Ltd (The “Nema”) [1982] AC 724 at 752, the doctrine is not to be relied on simply “to relieve contracting parties of the normal consequences of imprudent commercial bargains”.

20. [218]

    With respect to the role of foreseeability in relation to circumstances said to amount to frustration, in oOh! Media at [74] Nettle JA stated that:

21. [219]

    The effect of frustration is to discharge the parties from the obligation to perform, or to be ready and willing to perform, their contractual obligations: see Joseph Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd [1942] AC 154 at 163. The discharge takes place “forthwith, without more and automatically”: see Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] AC 497 at 505.

22. [220]

    In Denny, Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265 at 274–275, Lord Wright said that the “data” for the decision of a frustration issue “are, on the one hand, the terms and construction of the contract, read in the light of the then existing circumstances, and on the other hand the events which have occurred”. In oOh! Media at [69], Nettle JA noted that for the purposes of frustration, it is permissible to have regard to relevant surrounding circumstances to assist in the interpretation of the contract.

23. [221]

    With respect to fault, frustration must not be the “act or election of the party seeking to rely upon it” and an event cannot give rise to frustration if there were “blame or fault on the side of the party seeking to rely on it”: J Lauritzen AS v Wijsmuller BV (The “Super Servant Two”) [1990] 1 Lloyd’s Rep 1 at 8.

24. [222]

    On appeal, Mr Stoljar, for Woolworths, argued strongly that the primary judge should not have concluded that the AFL was frustrated. He submitted that there was fault on the part of Gazcorp in not at least substantially commencing work in accordance with the 2008 Development Consent, which would have meant that the Consent did not lapse and it did not become unlawful for the shopping centre the subject of that approval to be developed. In terms of the authorities referred to above, the submission was that Gazcorp had “undertaken responsibility” for a certain state of affairs, namely the non-lapse of the 2008 Development Consent, to be achieved and then maintained by the timely commencement of the Landlord’s Works.

25. [223]

    Mr Stoljar pointed to the fact that Gazcorp was under clear obligations in the AFL to act as expeditiously as possible in causing the Landlord’s Works to be carried out (cl 2.1) and that cl 2.4 imposed a “best endeavours obligation” as to the time for completion, which should have had both the shopping centre and the supermarket at a state of practical completion well prior to the lapse of the 2008 Development Consent.

26. [224]

    There was a debate between the parties as to whether the pleading of this issue was required. It is not clear on the authorities whether an absence of fault on the part of the party invoking the doctrine of frustration is a precondition to the party so doing or, rather, whether the existence of fault is a matter to be raised by way of defence.

27. [225]

    Because of the earlier conclusions reached in relation to variation (with the accepted consequences as to frustration in that different context) and abandonment, it is strictly not necessary to resolve this issue and, for reasons explained below, there is a degree of artificiality in so doing. As a matter of general principle, however, it is plain that, where a party has in some way relevant to the alleged frustrating event been at fault, such a party should not be permitted to contend that its performance of the contract is discharged by frustration. That aspect of the doctrine is an application of the general maxim that a party should not be permitted to take advantage of its own wrong: New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France [1919] AC 1. In any such consideration, questions of acquiescence or the extent of any acquiescence may also arise.

28. [226]

    In the present case, whilst Gazcorp did not cause the 2008 Development Consent to expire — that happened by effluxion of time — it could be argued that it was responsible for the consequences of that lapse, namely the fact that performance of the AFL was no longer lawful after the consent had lapsed. In other words, had Gazcorp commenced to construct the shopping centre in accordance with the 2008 Development Consent well prior to 2014, as it was undoubtedly required to do under the AFL, it would not have been unlawful to perform the AFL after 17 February 2014.

29. [227]

    In this sense, it may have been appropriate to describe Gazcorp as being relevantly “at fault” but that would only be the case if the matter was viewed in isolation and on the assumption that the AFL had not been abandoned by the date it was said to have been frustrated. If, however, as the primary judge correctly in my view held, the AFL had been abandoned by that date, no question of fault could arise because contractual obligations under the AFL would be treated as discharged or of no continuing vitality. That is why I have earlier described this question as artificial in the present case.

30. [228]

    For completeness, I agree with the primary judge’s conclusion that, for the purposes of the doctrine of frustration, there was a radical difference between performance of the AFL in accordance with the 2008 Development Consent and in accordance with the 2012 Development Consent. The works permitted by the 2012 Development Consent were not “essentially as envisaged” by the 2008 Development Consent.

31. [229]

    I also agree with his Honour’s conclusion, which was relevant to his findings on frustration, that the term “Centre” (as defined in and for the purposes of the AFL) was the shopping centre as envisaged by the 2008 Development Consent and not simply a shopping centre to be constructed on the site and containing space for a supermarket of a designated size, irrespective of its location and configuration within the centre.

Conclusion

1. [230]

   For all of the above reasons, the appeal should be dismissed with costs.

2. [231]

   MEAGHER JA: I agree with Bell P.