Adaz Nominees Pty Ltd (As Trustee for the Rado No 2 Trust) & Ors v Castleway Pty Ltd (As Trustee for the Castleway Trust) & Anor [2021] HCATrans 186 (5 November 2021)

Last Updated: 9 November 2021

[2021] HCATrans 186

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M128 of 2020

B e t w e e n -

ADAZ NOMINEES PTY LTD ACN 006 228 119 (AS TRUSTEE FOR THE RADO NO 2 TRUST)

First Applicant

CORTEK DEVELOPMENTS PTY LTD ACN 004 997 773

Second Applicant

ASPHALT ROADS PTY LTD ACN 005 374 247

Third Applicant

ROADING GROUP PTY LTD ACN 097 993 292 (AS TRUSTEE FOR THE RADO INVESTMENT TRUST NO 2)

Fourth Applicant

ROADING INVESTMENTS PTY LTD ACN 104 325 797 (AS TRUSTEE FOR THE RADO INVESTMENT TRUST NO 3)

Fifth Applicant

LOOILLA PTY LTD ACN 092 067 322 (AS TRUSTEE FOR LOOILLA TRUST)

Sixth Applicant

BELLONIC PTY LTD ACN 092 015 838 (AS TRUSTEE FOR BELLONIC TRUST)

Seventh Applicant

TYNONG PASTORAL CO PTY LTD ACN 060 828 364 (AS TRUSTEE FOR TYNONG PASTORAL UNIT TRUST)

Eighth Applicant

PARTNERS IN PROPERTY PTY LTD ACN 120 760 125

Ninth Applicant

TYNONG PROPERTY DEVELOPMENTS PTY LTD ACN 081 950 647 (AS TRUSTEE FOR AMARCO SERVICES TRUST)

Tenth Applicant

and

CASTLEWAY PTY LTD ACN 131 870 481 (AS TRUSTEE FOR THE CASTLEWAY TRUST)

First Respondent

GERARD DAMIAN KEEGHAN

Second Respondent

Office of the Registry
Melbourne No M134 of 2020

B e t w e e n -

ADAZ NOMINEES PTY LTD ACN 006 228 119 (AS TRUSTEE FOR THE RADO NO 2 TRUST)

First Applicant

CORTEK DEVELOPMENTS PTY LTD ACN 004 997 773

Second Applicant

ASPHALT ROADS PTY LTD ACN 005 374 247

Third Applicant

ROADING GROUP PTY LTD ACN 097 993 292 (AS TRUSTEE FOR THE RADO INVESTMENT TRUST NO 2)

Fourth Applicant

ROADING INVESTMENTS PTY LTD ACN 104 325 797 (AS TRUSTEE FOR THE RADO INVESTMENT TRUST NO 3)

Fifth Applicant

LOOILLA PTY LTD ACN 092 067 322 (AS TRUSTEE FOR LOOILLA TRUST)

Sixth Applicant

BELLONIC PTY LTD ACN 092 015 838 (AS TRUSTEE FOR BELLONIC TRUST)

Seventh Applicant

TYNONG PASTORAL CO PTY LTD ACN 060 828 364 (AS TRUSTEE FOR TYNONG PASTORAL UNIT TRUST)

Eighth Applicant

PARTNERS IN PROPERTY PTY LTD ACN 120 760 125

Ninth Applicant

TYNONG PROPERTY DEVELOPMENTS PTY LTD ACN 081 950 647 (AS TRUSTEE FOR AMARCO SERVICES TRUST)

Tenth Applicant

AGNES CRAWFORD RADO

Eleventh Applicant

IAN ARTHUR LEE

Twelfth Applicant

STEPHEN RADO

Thirteenth Applicant

and

CASTLEWAY PTY LTD ACN 131 870 481 (AS TRUSTEE FOR THE CASTLEWAY TRUST)

First Respondent

GERARD DAMIAN KEEGHAN

Second Respondent

Applications for special leave to appeal

KEANE J
GORDON J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA BY VIDEO CONNECTION TO BRISBANE, MELBOURNE AND SYDNEY

ON FRIDAY, 5 NOVEMBER 2021, AT 12.29 PM

Copyright in the High Court of Australia

____________________

KEANE J: In accordance with the Court’s protocol when sitting remotely, I will announce the appearances for the parties.

MR N.C. HUTLEY, SC appears with MR R.M. GARRATT, QC and MS F.R. CAMERON for the applicants in both matters. (instructed by Maddocks)

MR B.W. WALKER, SC appears with MR B.G. MASON and MR M.A. HOSKING for the respondents in both matters. (instructed by Kyriacou Lawyers)

KEANE J: Yes, Mr Hutley.

MR HUTLEY: Thank you, your Honour. As your Honours will have seen, the contract and a number of provisions.....concerned with what might be paid to the manager, Castleway, and what services it would render. Relevantly to the first ground are the clauses 2 and 3, which are at application book 274, being a schedule to the judgment. Those clauses were the sole focus of the analysis which the majority undertook at application book 228, paragraph 136 to 147.

It was in those clauses that the court derived the purpose of “maximisation of the TPC Group Profit”, which your Honours see identified in paragraph 137 at the top of 229. Group Profits was the taxable profit of the group as adjusted, and your Honours will see that at application book 278, line 50 – I do not need to take your Honours to it.

It was in those clauses, apparently, that the relevant benefit was found also, and your Honours can see that from paragraph 139. Whilst the majority, at paragraph 21 at application 190, referred to and set out clause 5, your Honours see, thereafter that clause dropped from the majority’s analysis relevant to the implied terms.

To the contrary, the centrality of that clause in identifying any, and, if so, what relevant benefits were promised under the contract and/or its purpose of particular provisions, appears in the reasons of Justice McLeish, and your Honours will see that in his reasons at application book 269 between paragraphs 281, 286 and 287. And, your Honours, particularly at 286 and 287, where his Honour has observed that one cannot, as it were, divine the purpose of this agreement let alone the benefits without fundamental regard to clause 5.1.

Of course, the $20 million donation was made, as found, bona fide and fell clearly within the discretion conferred by clause 5.1, as Justice McLeish found at paragraph 286, and no contrary suggestion was made in the reasons of the majority. The majority.....between paragraphs 106 and 118.....

KEANE J: Mr Hutley ‑ ‑ ‑

MR HUTLEY: Yes, your Honour.

KEANE J: ‑ ‑ ‑ we have trouble hearing you when you turn your head away from ‑ ‑ ‑

MR HUTLEY: I do apologise, your Honour.

KEANE J: Yes, thank you.

MR HUTLEY: I was taking your Honours to the recitation of some of the case law between – at the paragraphs which I had indicated, 106 to 118. It is noteworthy that the as yet undetermined question in this Court derived from the statement of Justices McHugh and Gummow in Byrne, which your Honours will see at application book 219, paragraph 114, and your Honours will know the paragraph and the reference in the last three lines:

or, perhaps, be seriously undermined ‑

et cetera, seems central to the analysis of the majority, and your Honours will see that at paragraph 141 on page 229., and that question was observed upon by Justice McLeish at paragraph 290, application book 272. We would submit that alone would justify a grant of special leave to resolve that question as it is not only relevant to questions of breach, but fundamental to whether the term should be applied at all, as is clear from paragraph 141 of the majority’s reasons.

However, we submit there are further methodological issues which should commend this case to your Honours. The search for the purpose of particular provisions of a contract seems to have led the majority to focus on the provisions in which they said, alone, the purpose was to be divined, rather than the contract as a whole. Similarly, the search for the relevant benefits provided by particular provisions has followed that identical course, including relying upon the identified purpose of profit maximisation, which they have found, and your Honours will see that, particularly at 137 to 141.

We submit that the reasoning between 136 and 142 departs fundamentally from what we submit is proper principle. In this regard, can we take your Honours to the statement in Secured Income, which your Honours will see at paragraph 269 on page 265 of the application book, dealing with the benefit provision, and the statement of Sir Anthony Mason, particularly towards the bottom of the passage:

In such a case, the correct interpretation ‑ ‑ ‑

KEANE J: Mr Hutley.

MR HUTLEY: Yes?

KEANE J: If you turn your head away, we cannot hear you.

MR HUTLEY: I am sorry, your Honour, I will raise it again. The passage:

In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself.

That is a focus on the entirety of the contract to find that form of promise. Now, in other words, as here, if a party, by a contract, is expressly exposed to the good faith discretions of the other party, as to the extent of a reward of a particular benefit, then that cannot be rectified through the implication of a term. That is the bargain.

GORDON J: It raises another point, though, Mr Hutley, does it not, and that is the proper construction of this bespoke agreement. In other words ‑ ‑ ‑

MR HUTLEY: I am sorry, your Honour?

GORDON J: It raises another question, and that is the proper construction of this bespoke agreement. The trial judge, for example, resolved it, at least on this basis, on the way in which he construed the way in which you calculated the profit.

MR HUTLEY: I accept that, your Honour.

GORDON J: So you have these quite remarkable factual circumstances where very small donations, relatively, are made in the prior years, and then you have a fact which is, I understand, not in dispute, the creation of a quite significant charitable foundation.

MR HUTLEY: Your Honour, not just small donations in the past, there was also the fact that an entire project property had been donated to charitable purposes – that was the church, your Honour will recall. I will just give your Honour a reference to that. Your Honours can see that at application book 222, paragraph 121(c).

So, in other words, that is an introduced project, as found by the Court of Appeal, and it had been wholly dedicated to charitable ends. So, this organisation had a history of charitable ends and, importantly, your Honour, the clause ‑ ‑ ‑

GORDON J: Letting someone use a property is relatively different, is it not, from setting up a charitable foundation which affects the calculation of the profit?

MR HUTLEY: Your Honour, that may be, but the Court of Appeal’s construction, in our respectful submission – which overturned his Honour’s construction – is inescapable having regard to the definition in Schedule 2, at application book page 278, and the definition of calculation of the TPC Profit – that is the point upon which that point departed. In our respectful submission ‑ ‑ ‑

GLEESON J: Mr Hutley, do you maintain the position that is set out at 143 of the Court of Appeal’s reasons as a corollary of your construction of the contract?

MR HUTLEY: I am sorry, your Honours. Your Honour, were there to be a circumstance where it was determined that my client had bona fide, in accordance with its fiduciary duties to the company, and not for the purposes of defeating the benefit under the contract, exercised a power, we say clause 5.5 means what it says. But, of course, as Justice McLeish observed at paragraph 292, page 273, testing these propositions by what might be called extreme examples have to make assumptions of fact which, were it truly to occur in the way posited, would be a hotly contested question of fact, and the likelihood would be that a court may well conclude that that was a departure from some implied term, rather than these implied terms. So, in other words, we would submit one should not test these questions by, as it were, narrow extremes.

But on the construction, as found by the Court of Appeal, they have found an implied term of profit maximisation which simply cannot – a purpose of profit maximisation which, when one reflects upon it, is utterly at odds with clause 5 because it – one could introduce projects, and the company could bona fide determine not to develop them for many years, and, on the construction of the Court of Appeal, that would be a breach because it would be contrary to the purpose of profit maximisation. So in other words, the Court of Appeal has, in finding the purpose, which was fundamental to its determination, has ignored the negotiated structure of the agreement, and that negotiated structure ‑ ‑ ‑

KEANE J: Mr Hutley, the example you give is an example where, as a matter of ordinary business, in the ordinary reasonable conduct of the business, the realisation of the profit is delayed. The question here is not about the management of the business with a view to realising and maximising the profit when you realise it, this is a case where the transaction in question has the inevitable effect of minimising the profit when realised.

MR HUTLEY: Reducing it. Sorry, your Honour.

KEANE J: Reducing it, when realised.

MR HUTLEY: Quite. But your Honour, also this contract, just to answer your Honour’s question, one only is entitled to profits with respect to introduced products after the contract is terminated. With respect to non‑introduced profits, one is not, and the example that your Honour assumed of delaying a non‑introduced profit for a long time would have an immediate effect upon the profit maximisation purpose, which the court referred to, and harm Castleway.

So we submit that the purpose as found is simply antithetical to the contract. But, your Honour, thus, what we submit is the case turned upon the construction which was arrived at, and the implication of the term, by reference to the statements of Justices Gummow and McHugh, and your Honours, that is an open question and has not been determined in this Court, and this is a vehicle to do it.

If your Honours ‑ and unless the Court of Appeal’s construction, which overturned the first instance construction, were reversed, this is, in our respectful submission, a perfect vehicle to do it, on the first ground, because the Court of Appeal did not find this power rendered the rights nugatory, they could not, as was found, because he did receive a very substantial return in the year in question. Did not render it nugatory, and was not necessary. So, in our respectful submission, this is a vehicle for the determination of that admittedly open question, an important question, for your Honour. Could I move to the second ground?

GORDON J: I thought you had abandoned the second ground.

MR HUTLEY: No, I am sorry, what I am about to call the third ground, your Honour. The second ground I was going to address. The second ground essentially turns on this question, your Honours. The.....dealt with a problem concerning what was an introduced product. The introduced products were found to be, as per paragraph 177 of the reasons at 241, that is, to be an introduced product one had to be actually introduced. The court – the respondents conducted the trial on a very limited basis, and your Honours will see that at paragraph 178 of the application book at page 241. His Honour at trial made declarations that some12 introduced projects were introduced projects, and that is at paragraph 9 of his orders at application book 146.

Now, the Court of Appeal – his Honour did that and there was no evidence led with respect to those 12 projects. That was because of historical reasons as to how the case was commenced which is a declaration and construction issue and not factual determinations with many of the projects. The Court of Appeal of its own motion relied upon an assertion of Mr Keeghan, which your Honours will see at application book 250, paragraph 209, that he introduced the projects even though the balance of the paragraph shows that what he meant was different to the conclusion at 177. He said that introduction was sufficient if he had worked on the project, not that if he had introduced it in fact. And one can see that that is the case because the very Dandenong Church which I referred to earlier was as project which had been purchased by Mr Ron Rado in the late 1980s. That is application book 221 to 222, paragraph 120, subparagraph 20 and 121(c) ‑ long before any dealings with the controller of Castleway.

So, in other words, the court in effect developed its own idea, relied on a piece of evidence which had not been relied upon at trial or before the Court of Appeal to conclude that these 12 projects were introduced projects. In our respectful submission, this is a visitation case and also an example of where a Court of Appeal should not depart from the way the case has been conducted by the parties. So that is the second ground.

The fourth ground, your Honours, is a short ground. That turns on the true construction of section 58 of the Supreme Court Act. Your Honours will find that at application book 351, if your Honours go to
that. The rate fixed by section 2 under the Penalty Interest Rates Act 1983 is a maximum. And if your Honours look at the clause:

unless good cause is shown to the contrary –

We say that does not require a good cause to be shown to depart from the maximum. The Court of Appeal said it did, and that is contrary to what the High Court ‑ Chief Justice Barwick said in Ruby v Marsh [1975] HCA 32; (1975) 132 CLR 642 at 653 dealing with a cognate Act, an earlier Act, section 79 of the Supreme Court Act, the terms of which your Honours will see under the headnote at 642. The relevant passage of Sir Garfield Barwick your Honours will see at the bottom of 652 onto the top of 653, and particularly – yes.

Each of these reasons incidentally, in my opinion, calls for the judge to award a rate of interest related to the marketplace, subject to the limit allowed by the legislation. That is, in other words, that apart from the maximum, you do not have to show cause. The court has the discretion up to the maximum, and that should be exercised having regard to market interest rates. Those are our submissions. I am sorry for going over time.

KEANE J: Thanks, Mr Hutley. Yes, Mr Walker.

MR WALKER: If your Honours will excuse us, neighbours in chambers are now occupying the same chair. Your Honours, in our friend’s argument, clause 5 is being asked to do too much work. As your Honours have seen, and my friend drew your attention to it being reproduced at page 190 of the book, in paragraph 21 of the reasons, the parties have agreed that:

The TPC Group is not bound to follow or accept any advice or recommendation by the Manager.

And, obviously enough, that would mean that, following introduction, or, for that matter, management advice, it would still be for TPC to make final dispositive decisions concerning activities which might otherwise earn a profit, and that is the point. Clause 5.1 operates at an anterior stage.

Once projects have been undertaken that do produce what the parties, without any strain, call “profit”, then, in our submission, there is no room for clause 5.1 to detract from the entirely orthodox way in which the Court of Appeal saw the existence of an implied duty of cooperation, particularly in its negative guise, and its breach by the extraordinary, unprecedented conduct which, far from being commercial, far from having anything to do with developing land for profit, worked an effect by reason of provisions of the taxation legislation designed to encourage charitable donation, which, it need hardly be said, formed no part, explicitly or implicitly, of what might loosely be called a kind of joint venture, all the more obviously so where the remuneration for our client turned upon the generation, measured in numbers, of a margin that might be called “profit” from the land development. Not something which includes, of its nature, the pre‑tax return conduct of making a non‑real estate development linked charitable donation.

Now, of course, there may be charitable donations of a kind which so‑called PR consultants might commend – and also commend as to their publicity – which could well and easily be understood to be part of the deductible expenditure going towards what might be called a cost incurred with respect to real estate development but this $20 million was nothing of that kind.

It is for those reasons, in our submission, that their Honours in the Court of Appeal, in particular in their paragraph 142 – your Honours will see it at page 230 – correctly understood that the application of clause 5.1, in its division of responsibility and liberty between the parties, had been left behind in the sequence – not dropped from judicial consideration, they did consider it, but it did not apply after the question of the derivation of profit had been concluded by successful trading.

In paragraph 142, at the top of page 230 , without reading from it, your Honours will appreciate that a very important conclusion was reached, that it is for the very reason that the terms of Schedule 2 would permit resort to the tax return – that there should be desistence from.....not by way of any cost to real estate development would so radically affect the profit upon which our client depended for remuneration – the quality of his work would not be reduced, of course, by such subsequent conduct by way of charitable donation – the usefulness of it to the parties, including the counterparty, by way of deriving or generating real estate profits would not be reduced by the subsequent conduct of the charitable donation.

KEANE J: Mr Walker, why would not one construe deductible expenses in this context as meaning necessarily deductible business expenses?

MR WALKER: In our submission, that is an obvious solution to all of this, without the apparatus of implied term, yes.

KEANE J: It does seem the majority of the Court of Appeal did make heavy weather of reaching a conclusion that does seem to cry out as a matter of a commercial construction of the agreement.

MR WALKER: Respectfully, yes. I was not below, but the word “profit” rather indicates a fruitful source of arguments to that end, yes.

GORDON J: Mr Walker, I put this to Mr Hutley, but the trial judge, at least at paragraphs 70 to 73 at pages 33 to 34, seemed to adopt that approach. What is wrong ‑ ‑ ‑

MR WALKER: Yes, quite so. Yes, that is right, but it does present ‑ ‑ ‑

GORDON J: In other words, if one starts with the construction of the agreement – which is what Justice Keane put to you – and when one identifies those paragraphs, what is wrong with them?

MR WALKER: Nothing. What they produce is that what was done by way of calculation was not in accordance with the bargain, and the long way around was taken to reach the same, we would submit, commercially satisfying outcome, namely – I do not just mean for us; I mean viewing this transaction – this dealing appropriately, namely, that they were not at liberty to affect by non‑real estate development activities, charitable donation, the profits from land development which would provide the denominator for the calculation of fee.

GORDON J: .....the focus from profit sharing, which is the way the trial judge analysed it, to profit maximisation, which is an unfortunate term but adopted by the majority of the Court of Appeal.

MR WALKER: It is an unfortunate term. Maximisation taken literally, that is, to the uttermost, does not however appear to have driven any particular part of the majority’s conclusion and what we submit is that a proper outcome in this case can be reached either by interpretation of a perfectly particular contract, that is, a particular wording in the particular context between these particular parties that produces an interpretation outcome, and it is also the particular wording of the contract. My learned friend calls in aid, after all, 5.1 that produces the longer way round – the heavy weather perhaps – of the way in which the Court of Appeal reached exactly the same conclusion concerning the effect of the applicant’s conduct on the proper calculation of the fee.

In our submission, it is for those reasons that this case certainly does not in the interests of the administration of justice present itself as an appropriate case for a grant of special leave and does not throw up any matter of principle at all required to be determined by this Court in order to do justice between these parties. It is for those reasons, in our submission, that there is nothing of doctrinal interests extending beyond the interests commercially of these parties in the unfortunate and quite extraordinary circumstances now presented to Court which should attract a grant of special leave.

With respect to the second complaint, namely, that the Court of Appeal got the bit between its teeth with respect to consequential relief, in our submission, again, neither in the visitation sense, nor more generally, is this a case where the interests of the administration of justice would require or justify this Court devoting its attention to this aspect of a commercial dispute. As my friend fairly points out, the litigation, which is scarcely a copybook commercial dispute settlement, evolved, not least by response to unfolding events after the commencement of the proceedings. Those unfolding events, of course, included the fact that at the time of important adjudications there had not been the certification of a fee, that is, there not being the inclusion or not of the effect of the $20 million charitable donation.

Things moved on. And when my learned friend draws to attention evidence in a witness statement of our client concerning his understanding of introduction, this was not an alien element, it was, as a result of the Court of Appeal acting properly as a court seeking to determine as many issues as it properly could in an appeal by way of rehearing, requesting, and then being supplied by us in proper response to that request, whatever evidence there had been at first instance on certain issues.

Now, that is a completely case‑specific matter, not just of case management but of an assessment by judges of what the interests of justice in practical terms justified, given the very full powers – it is not a question of ultra vires – possessed by a court in an appeal by way of rehearing. In our submission, it would be an unusual case for a grant of special leave to correct the Court of Appeal to achieve by adjudication on evidence matters which would bring to an end the dispute which had been brought before the court.

In other words, it is as if the plea is that the High Court should, as as matter of principle, that is, if it is to extend beyond the interests of these particular parties in this particular case, as a matter of principle discourage a court from doing what can fairly and properly be done to bring an end to matters. That is contrary to anything that might be called overriding purposes or overarching values.

Your Honours, it follows that there is, in our submission, nothing to be seen in the passage to which our learned friend draws attention, the well‑known reasons of Mr Justice Mason in Secured Income Real Estate extracted at page 265, paragraph 269, bearing in mind that the words emphasised at the end of the extract, that is, the intention of the parties as manifested by the contract itself, drives one back in this case to the very consideration of what this contract did manifest as objectively as to the intention of the parties concerning this concept of profit upon which a fee
would be calculated in light of such alien, extraordinary, unprecedented matters as a $20 million tax‑deductible charitable donation.

As to the appeal that is made to the different approach taken by Justice McLeish in the Court of Appeal and, in particular, without needing to take your Honours to it, the passage my learned friend noted at application book 273, paragraph 292, we would stress, with respect, that one could not or should not get into anything like either death by 1000 cuts or a Dutch auction, to mix my metaphors. That is, a certain amount is qualitative in its effect, another amount, presumably lesser, is merely quantitative in effect, and those two have opposite effects concerning the validity or efficacy of such an expenditure to affect the fee earned.

That, in our submission, is rather at odds with the more obvious proposition that making a donation which has nothing to do with real estate development – and it does not matter whether it would be $20,000 or $20 million or $200 million, from that point of view – is, in our submission, quite plainly of a kind objectively calculated to have a more or less depressive effect on the remuneration which had been agreed by the parties to be calculated by reference to results, that is, results of real estate development. He was not being paid for the size of charitable donations that he permitted to be made by earnings.

And it is for those reasons, in our submission, that this is a case unfit for special leave by reason of the highly special, and scarcely likely to be replicated very often, if at all, circumstances of disputes between members of an extended family about a commercial arrangement where, self‑evidently, hostilities have produced, at the end of the run, this coup that was administered, designed to have, and in any event objectively having this devastating effect contrary, in our submission, either to an implied term or to the plain meaning, properly interpreted, of the contract. May it please the Court.

KEANE J: Mr Hutley, anything in reply?

MR HUTLEY: As to the last point, the findings of the court were, which is not in contest, is that this decision to make this donation was in no way motivated by any intent to harm my learned friend’s client. But next, clause 5, my learned friend took you to the first sentence of clause 5.1, but the gravamen of the bargain is the second sentence of clause 5.1, and the gravamen of the bargain is that the organisation conceded that all matters of operation lay with my client.

Can I then turn to the construction issue, which appears to be potentially standing in the way of special leave. Your Honours, could I take
your Honours shortly to 278 of the application book, which is the schedule, Schedule 2, and paragraph 2 at the bottom deals with the:

Calculation of TPC Group Profit

If one goes to the top of the next box on 279:

Total Taxable Income (loss) as per income tax returns for the TPC Group Entities and associated entities set out in Annexure A to this Agreement

As the Court of Appeal said, departing from the reasons of the trial judge, at paragraph 75 and following, at page 210, those words were intractable. And, in our respectful submission, they are intractable because ‑ and it becomes, in effect, and my learned friend shows that the logic of his position has to be that any ‑ as he said, towards the end of his submissions ‑ any dollar donated by way of charitable donation must, by definition, not be a business deduction, and one would have to construe this contract on the basis that one would have to fill it out as every payment which was made during the course of the running of this group and subjected to a criteria as being an ordinary expense in a development property, a property development business.

That is exactly what the parties, and as the Court of Appeal negotiated, what was not to happen. You have to understand that part of the surrounding circumstances to this agreement is that the principal of Castleway was on the board of directors of my client. So these parties set out a very prescriptive detailed statement as to how these benefits were to be determined, and that is why the Court of Appeal came to the conclusion they did.

That is what drove the Court of Appeal into an exercise, which we have addressed, which as we respectfully submit is heterodox and is indefensible, and one cannot overcome what may with the benefit of hindsight be seen to be a bad bargain by, in effect, in our respectful submission, destroying or altering true principle with respect to these implied terms and that is what has occurred, in our respectful submission. Those are our submissions.

KEANE J: Thanks, Mr Hutley. The Court will adjourn briefly to consider the course it will take in this matter. Adjourn the Court please.

AT 1.11 PM SHORT ADJOURNMENT

UPON RESUMING AT 1.14 PM:

KEANE J: In this case the applicants’ prospects of success on the appeals they seek to bring are not sufficient to warrant grants of special leave. It should be understood that in saying this we are not to be taken to endorse all the reasoning of the majority of the Court of Appeal. The applications should be dismissed with costs.

Adjourn the Court please.

AT 1.15 PM THE MATTER WAS CONCLUDED