Amphora Investments Pty Ltd & Lewis v Carlton & United Breweries (Qld) Ltd [1990] QSC 356

10 30 40 so 60 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION '~ 1,1~ I · ?l~ "lo/ 3 SL No. 4569 of 1987 BEFORE MR. JUSTICE WILLIAMS BRISBANE, 22 OCTOBER 1990 REVISE[) CCVi:::S !2SUEO !: Court r-;€'p-:rtiilJ Bureau ! Date, /)____; /( / Jo I ;;....... ~J (Copyright in this transcript is vested in the Crown. Copies thereof must not·be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: BETWEEN: AMPHORA INVESTMENTS PTY. LTD. -and- GEOFFERY MICHAEL LEWIS -and- CARLTON AND UNITED BREWERIES (QLD) LTD. -and- CARLTON AND UNITED BREWERIES -and- AMPHORA INVESTMENTS PTY. LTD. -and- GEOFFREY MICHAEL LEWIS -and- ROBERT EUGENE MURPHY JUDGMENT First Plaintiff Second Plaintiff Defendant Plaintiff First Defendant Second Defendant ThirdDefendant by Counter c.lairn .. HIS HONOUR: which I publish. I have prepared reasons for judgment, For those reasons I have come to the -Govt. Printer, Qld. 1 10 20 30 40 50 60 -- 1 of 42 -- ( ,,_ conclusion that the action should be dismissed and the counter-c·l.aim1: should also be dismissed. At this stage the orders that I make are that the action be dismissed with costs. I order that the 10 counter cla.pn:. be· dismissed with costs. 20 30 40 50 60 · -Govt. Printer, Old. 2 10 30 40 50 60 -- 2 of 42 -- IN THE SUPREME COURT f) / ' ·OFQuEENSLAND ~ / C 1 . COMMERCIAL CAUSES JURISDICTION Before Mr. Justice Williams BETWEEN: BETWEEN: AMPHORA INVESTMENTS PTY. LTD. GEOFFREY MICHAEL LEWIS CARLTON AND UNITED BREWERIES (OLD) LTD. B~ ORIGINAL ACTION and - CARLTON AND UNITED BREWERIES (OLD) LTD. AMPHORA INVESTMENTS PTY. LTD. GEOFFREY MICHAEL LEWIS ROBERT EUGENE MURPHY JUDGMENT - G.N. WILLIAMS J. 90/356 No. 4569 of 1987 First Plaintiff Second Plaintiff Defendant Plaintiff First Defendant Second Defendant Third Defendant BY COUNTER-CLAIM Delivered the 22nd day of October, 1990. -- 3 of 42 -- - joint venture - whether binding agreement reached - v. Cameron (1954) 91 C.L.R. 353 considered - fiduciary ations during negotiations - U.D.C. v. Brian Pty. Ltd. 1 9 8 5 ) 1 5 7 C. L. R. 1 considered - promissory estoppe1 Wa1 ton stores v. Maher (1988) 164 C.L.R. 387 and A.G. of Hong Kong v. Humphreys Estate (1987) A.C. 114 considered - he1d no contract and no promissory estoppe1 established. Counsel: Solicitors: L. Bowden for Plaintiff. E. Lennon Q.C. with P. Morrison Q.C. for Defendant. Bowdens for Plaintiff. Morris, Fletcher & Cross for Defendant. Hearing dates: 16th - 26th July, 1990 and 30th July, 1990. -- 4 of 42 -- BETWEEN: BETWEEN: COURT JURISDICTION AMPHORA INVESTMENTS PTY. LTD. GEOFFREY MICHAEL LEWIS CARLTON AND UNITED BREWERIES (OLD) LTD. BY ORIGINAL ACTION and - CARLTON AND UNITED BREWERIES {OLD} LTD. AMPHORA INVESTMENTS PTY. LTD. GEOFFREY MICHAEL LEWIS ROBERT EUGENE MURPHY JUDGMENT - G.N. WILLIAMS J. No. 4569 of 1987 First Plaintiff Second Plaintiff Defendant Plaintiff First Defendant Second Defendant Third Defendant BY COUNTER-CLAIM Delivered the 22nd day of October, 1990. -- 5 of 42 -- 2 It is not in dispute that in late 1984 and were discussions between Lewis, the second plaintiff, and representatives of the defendant, Carlton and United Breweries ( Qld) Ltd. ( hereinafter ref erred to as "C. U. B.") with respect to some possible joint venture arrangement involving the Homestead Hotel. Further, it is not in dispute that the first plaintiff, Amphora Investments Pty. Ltd. (hereinafter referred to as 11 Amphora 11 ) entered in to a tenancy agreement with C. U. B. with respect to that hotel on 11th March, 1985. By its terms that agreement provided for a tenancy until 28th June, 1985, with a provision for holding over (cl. 5). There was a request from Amphora that the tenancy he converted "to be a weekly,tenancy determinable by two months notice in writing given on either side" (letter 30th April, 1985), which was acceptable to C.U.B. ( letter 13th May, 1985), but it would appear that the formalities were not attended to. On that basis Amphora remained tenant after 28th June pursuant to the holding over provision in the agreement. Though C.U.B. did not formally admit the allegation in its pleading, there was no substantial dispute at trial that Amphora expended something of the order of $1. 2 million on effecting renovations and improvements to the Homestead Hotel between September 1985 and January 1986. That work was carried out to the knowledge of C. U. B. , if not pursuant to express approval given therefore. Numerous disputes then arose between the parties, and many of them were resolved under the terms of an agreement dated 21st April, 1988. It is sufficient for present purposes to record that in accordance with the terms of that agreement Amphora vacated the hotel premises, and C.U.B. -- 6 of 42 -- 3 paid an agreed figure to reimburse Amphora for its expenditure on renovations and improvements to the premises. Thereafter it could not be asserted that C.U.B. had been unjustly enriched by the conduct of Amphora in expending money on the premises. However, Lewis and Amphora contend either that a joint venture agreement had in law been concluded between C.U.B. and one or other of them, or that in the circumstances C.U.B. was estopped from denying the existence of such an agreement. Amphora and Lewis claim in this action damages for breach of that joint venture agreement, and it was contended that the principal measure of the damages suffered was half the accretion in the . capital value of the hotel over the relevant period. Depending upon the evidence accepted by the Court, and how the calculation was made, the submissions on behalf of the plaintiffs indicated a range of between $275,000.00 and $1.6 million for damages. C.U.B. denied that any joint venture agreement was entered into with either Amphora or Lewis, and further contended that, on the evidence, no estoppel arose. Based on the amended statement of claim, and the way in which the case was conducted, there are eight separate and distinct scenarios on which it was said that one or other of the plaintiffs could succeed. summarised as follows:- Those eight contentions can be 1. Paragraph 3 of the amended statement of claim alleged that on 12th December, 1984 a joint venture agreement was entered into between Amphora and C. U. B. The allegation appears to be that the contract was entered into by Lewis as the agent of Amphora. The terms of that alleged -- 7 of 42 -- 4 agreement are set out in paragraph 4. Paragraphs 5, 6 · fE{)~ I f. ;. 17, 18, 19 and 20 are all relevant to the claim based on that alleged agreement. The last three paragraphs assert that C.U.B. repudiated the joint venture agreement on 28th January, 1986 and that such was accepted. The claim for damages is based on that alleged repudiation. 2. Alternatively, by paragraph SA of the amended statement of claim it is alleged that either Amphora and/ or Lewis entered into a joint venture agreement with C.U.B. on or about 1st March, 1985. It is asserted that the terms of that agreement are pleaded in paragraphs 4 and 5. Paragraphs 16 to 20 inclusive of that statement of claim also apply to this cause of action; the same act of repudiation is alleged, with the same consequences. 3. Alternatively paragraph 9 of the amended statement of claim alleges an agreement for joint venture made on 12th December, 1984 between Lewis and C.U.B. The terms of that alleged agreement are set out in paragraph 10. Paragraphs 11, 12, and 16 to 20 inclusive of that statement of claim are also relevant. Again it is the same act of repudiation which is relied upon, with the same alleged consequences. 4. By paragraph 11A of the amended statement of claim it is alleged that, alternatively, a joint venture agreement was entered into on 1st March, 1985 between Amphora and/or Lewis and C.U.B. Again paragraphs 12 and 16 to 20 inclusive of that statement of claim relate to this contention. The same act of repudiation as before is the -- 8 of 42 -- 5 breach relied on, and the consequences are said to be the same as for the previous scenarios. 5. Then in the further alternative it is alleged in paragraph 22 of the amended statement of claim that on 12th December, 1984 one J.A.N. Norgard on behalf of C.U.B. represented to Amphora that C. U. B. was prepared to enter into a joint venture agreement in relation to the Homestead Hotel. The terms of the proposed joint venture are set out in paragraph 23, and in paragraph 24 it is alleged that the agreement was represented to commence on 30th June, 1985. Paragraph 25 alleges that there were follow up representations as to the preparedness of C.U.B. to enter into that joint venture, such representations being made in the period 29th January, 1985 to 11th March, 1985. Then it is asserted in paragraph 26 that Amphora, in reliance upon all those representations, entered into possession of the hotel on 11th March, 1985. The allegations then made in paragraphs 34 to 44 inclusive of that statement of claim are relevant to this cause of action. In broad terms those paragraphs assert the expenditure by Amphora of $1 .2 million on improvements, allege that the expenditure on improvements was carried out with the knowledge and agreement of C.U.B., allege that trading losses were sustained particularly during the period March 1985 to February 1986, and finally allege that the capital value of the hotel increased markedly between December 1984 and April 1988. It is further alleged in those paragraphs that C.U.B. caused the expenditure of money, time and effort by -- 9 of 42 -- 6. 6 Amphora and/or Lewis with respect to the such expenditure was, to the knowledge of C.U.B., in the expectation - created by C.U.B. - that a formal joint venture agreement would be executed. As C.U.B. failed to fulfil that expectation, and as Amphora suffered detriment, it is asserted that C. U. B. is estopped from denying the existence of the joint venture agreement. Damages are then sought on the same basis as they are claimed for scenarios 1 to 4. Alternatively it is then alleged (paragraph 24A) that on or about 1st March, 1985 C.U.B. by Kevin Murphy represented to Amphora and/or Lewis that.C.U.B. would enter into a joint venture agreement. To similar broad effect is the allegation in paragraph 25 though it refers to representations made during the period 29th January, 1985 to 11 th March, 1985. Paragraph 25 of the statement of claim is relevant to those contentions, as are paragraphs 34 to 44 inclusive. The allegations as to estoppel are the same as asserted with respect to the previous scenario, and the damages claim is also the same. 7. Paragraph 28 alleges, again in the alternative, that on 12th December, 1984 Norgard on behalf of C.U.B. represented to Lewis that C.U.B. was prepared to enter into a joint venture agreement with him. Paragraphs 29 to 32 inclusive and 34 to 44 inclusive of the amended statement of claim relate to this contention. Again identical allegations are made with respect to estoppel and damages as apply to the two previous scenarios. ( '( -- 10 of 42 -- 7 8. The final alternative claim originates from paragraph 30A of the amended statement of claim. It alleges that on or about 1st March, 1985 C.U.B. by Kevin Murphy represented to Amphora and/or Lewis that C.U.B. would enter into a joint venture agreement. To similar broad effect is the allegation in paragraph 31 though it refers to representations made during the period 29th January, 1985 to 11th March, 1985. Paragraphs 32 and 34 to 44 inclusive again are relevant to those contentions. Similar allegations as to estoppel and damage are made as with scenarios 5, 6 and 7. It does seem that there has been an error in drafting paragraphs SA, 11A, 24A and 30A. In each the allegation is made that the dealing was with Lewis and/or Amphora. It seems to me that sense can only be made of the amended statement of claim as a whole if scenario 2 is limited to a dealing with Amphora, scenario 4 limited to a dealing with Lewis, scenario 6 limited to a dealing with Amphora, and finally scenario 8 limited to a dealing with Lewis personally. I will adopt that approach. As at 12th December, 1984 and 1st March, 1985 Lewis did not have any interest in Amphora. That company had been incorporated by Bowdens, the solicitors' for the plaintiffs, and neither Lewis nor R.E. Murphy acquired an interest in it until 8th March, 1985. The minutes of a directors' meeting of that date were admitted in evidence, and they record the acquisition of the shares in Amphora by Lewis and R.E. Murphy. I am satisfied on the evidence that the discussions which took place on 12th December, 1984 with respect to Lewis being -- 11 of 42 -- 8 involved with C. U. B. in a joint venture relating to the Homestead' Hotel resulted from the previous association between Lewis and C.U.B. Lewis had been involved in a number of C.U.B. projects, particularly the management of the Broadbeach Hotel, and was highly regarded by a number of senior executives in C. U. B. Previously he had been promised as a reward an interest in a C.U.B. hotel and I am satisfied that it was in consequence of that consideration that the meeting of 12th December, 1984 took place. It follows that I accept the contention of C.U.B. that the discussions proceeded on the basis that any offer would be made initially and primarily to Lewis personally. However, I also accept the practi~al reality of Lewis' financial position, which I am satisfied was known to C.U.B. in the period December 1984 to March 1985. Lewis personally was just not in a position to raise the necessary capital to enter into a joint venture project of the type under discussion. It follows that it must have been understood by both Lewis and C.U.B., at least through its representatives involved in the discussions in December 1984 and March 1985, that Lewis would have to find equity partners through some legal arrangement in order to be in a position to become associated in the joint venture. C.U.B. was clearly aware of that, and that is why it was prepared to enter into the tenancy agreement of 11th March, 1985 with Amphora. But equally I am satisfied that C.U.B. would not have accepted as a joint venturer any company of which Lewis was not either the majority shareholder, or at least a principal shareholder. That was well known to both Lewis and R.E. Murphy. Because of that consideration both Lewis and R.E. Murphy were concerned to keep -- 12 of 42 -- 9 from the knowledge of C.U.B. the involvement of persons by the name of Harrison and Bruce in Amphora. The notes prepared by R.E. Murphy on 6th March, 1985 indicate not only his thinking, but also that of Lewis, on this point. It was therein suggested that the initial shareholding should be such as to indicate that Lewis held 75 per cent of the shares, though there would be an undisclosed deed of trust with respect to two-thirds of that holding providing that the ultimate beneficiary of those shares would be Shandy Pty. Ltd., 'a unit trustee for Harrison and Bruce. It is clear that it was proposed to keep the true position from C.U.B. "until such time as all agree that it will not adversely affect the relationship with Carlton"; or, as Lewis conceded under cross-examination, the involvement of Harrison and Bruce was to be concealed until C.U.B. had signed. Some of the critical meetings took place about six years before trial, and each witness was able to refresh his memory as to what was then said by perusing contemporaneous documents. The major witnesses on behalf of C.U.B., in particular K.R. Murphy, had no precise recollection of conversations except in so far as their recollections were refreshed by reading such documents. Lewis and R.E. Murphy asserted a much more detailed recollection of what happened from late 1984 through 1985, but I am not satisfied that all of their detailed evidence is accurate. The matters giving rise to this dispute have been important issues for each of Lewis and R.E. Murphy over recent years and each of them has, no doubt, gone over the events in question in his mind on numerous occasions. Whilst I am satisfied that each of them firmly believes in the truth of the evidence he gave, I am ·, -- 13 of 42 -- 10 equally satisfied that the evidence of each is the product of a reconstruction in the mind as to what happened, using the extensive contemporaneous documentation as an aide- memoir. In consequence I have placed greater reliance on the contemporaneous documentation rather than on the recollections of the witnesses in determining what relevant agreement, if,any, was reached in 1984-85. Much was made during evidence and addresses of the discrepancy between the evidence of Lewis and K.R. Murphy as to when the document ex. 13 was handed by the latter to the former. There was agreement that a meeting was held at the offices of C. U. B. shqrtly before lunch on 28th February, 1985. Lewis, R. E. Murphy, and Carter ( their solicitor) were present representing the plaintiffs, and C.U.B. was represented by K.R. Murphy, Booker, and Baggott (their solicitor). The meeting became heated and broke up without agreement being reached. Each camp then went to have lunch at a separate nearby restaurant, and the C.U.B. group during that time drafted an "offer" to be put to Lewis. ,There is agreement that that "offer", which became ex. 1 3, was handed by K. R. Murphy to Lewis in the former' s office and that some conversation was directed to its contents. But there is dispute as to whether it was handed over on the afternoon of 28th February or on the morning of the following day, 1st March. Lewis did concede under cross-examination that he may have been mistaken in saying he got the document on 1st March, but nevertheless he remained fairly adamant that such was the case. Other witnesses gave evidence of incidental matters which tended to suggest that the hand-over took place on one, -- 14 of 42 -- 11 rather than the other, of those occasions. In the end result it is not critical for me to resolve the conflict. But having considered the evidence and the arguments directed thereto I am of the view that more probably than not the document was handed over on the afternoon of 28th February. Certainly the more important discussions between Lewis, R.E. Murphy, and Carter as to the document took place on 1 st March and that may well explain why each of them now believes that the document was received on that date. But I do not regard the dispute as to the date on which ex. 13 was received as of any real significance when evaluating the credibility of the various witnesses. Of more importance on the issue of conflict of evidence relating to ex. 26. credibility is the ,- J Lewis gave evidence that K.R. Murphy telephoned him in April 1985 and they had a discussion about a number of matters relevant to the arrangements then existing and to be made between the parties. His evidence was that subsequently R.E. Murphy made a written note of what he, Lewis, recounted of the conversation; the note so made became ex. 26. But the evidence of R.E. Murphy was that ex. 26 was a note of a telephone conversation he had directly with K.R. Murphy; his evidence is that K.R. Murphy telephoned him and Lewis was not present at the time. He said that the conversation took place on 26th April, 1985. Finally, K.R. Murphy gave evidence with respect to a meeting he had personally with Lewis on that date. He referred to a diary entry for 26th April, 1985 (ex. 120) and said he had a meeting at 11 o'clock on that day with Lewis alone. The subject matter of the conversation, as noted briefly in the diary entry, broadly corresponds with the -- 15 of 42 -- 12 more detailed account of a conversation on that date ex. 26. I got the distinct impression that K.R. Murphy was relying heavily, if not exclusively, on his diary note with respect to the evidence he gave as to the meeting on that date. Thus there are three competing versions as to the communication between the parties on 26th April, 1985. It is difficult to justify any particular finding given the disputed evidence. But after considering the evidence, and the submissions made thereon, I have come to the conclusion, on he balance of probabilities, that there was a face to face meeting between Lewis and K.R. Murphy on that date, and that shortly thereafter Lewis recounted t~e terms of that conversation to R.E. Murphy who made a written note of what Lewis said - that is the document which became ex. 26. Consideration of what was said as to ex. 26 is important because it indicates why I have decided to treat the evidence of both Lewis and R.E. Murphy with caution where it is not clearly supported by a contemporaneous document. R.E. Murphy has undoubtedly read ex. 26 on many occasions over recent years, and as it is in his handwriting I have no doubt he has convinced himself that he was an actual party to the conversation. Lewis can recall the conversation recorded in the exhibit but his recollection is made somewhat uncertain because the memo of the conversation is not in his handwriting. It will be recalled that the first four scenarios pleaded are based on there being an enforceable agreement between C.U.B. and either Lewis or Amphora. Such an agreement is said to have been reached either on 12th December, 19,84 or 1 st March, 1985. ' -- 16 of 42 -- \/ i \ ___ ,,) 13 The latter date is nominated in the statement of claim but it is clear when regard is had to the oral evidence that it relates to the occasion when the "offer" being ex. 13 was handed to Lewis. I have already recorded my finding that such document was handed over on the afternoon of 28th February but that does not really affect what is pleaded. There is no doubt that the allegation in the pleading that there was an agreement on or about 1st March is based on the handing over of ex. 13 in the context of what was said at that time. Whether those events occurred on the afternoon of 28th February or on the morning of 1st March is not to the point; the real question is whether or not there was a binding agreement reached at the time that offer was handed over. ,) As previously noted as at 12th December, 1984 and 1st March, 1985 neither Lewis nor_ R.E. Murphy had any interest in Amphora. Interestingly it was on 1st March, 1985 that R.E. Murphy gave Carter instructions "to draft documentation for company, unit trust and related agreements"; Amphora was acquired on 8th March. That means if there was an agreement on 12th December, 1984 or 28th February, 1985 it had to be fundamentally between Lewis and C.U.B; one could simply not have an agreement on either of those dates between Amphora and C.U.B. There have been a number of cases in which a Court has considered the situation where a person has entered into a contractual relationship as agent for a company not then incorporated. One only need refer to Surnmergreene v. Parker (1950) 80 C.L.R. 304, Vickery v. Woods (1952) 85 C.L.R. 336, and Black v. Smallwood (1966) 117 C.L.R. 52. Depending on the circumstances there may be a contract which is binding on the person who entered into the negotiations, but -- 17 of 42 -- 14 that is not invariably so. Often the conclusion will be that a conditional agreement only was reached; that is, the parties to the negotiations have agreed upon the terms of a contract to be formally entered into by the company after its incorporation or acquisition (a situation a~alogous to the third class referred to by the High Court in Masters v. Cameron (1954) 91 C.L.R. 353 at 360). It was the case for the plaintiffs that the ultimate joint venture arrangement should be between C.U.B. and a company in which Lewis was a significant shareholder. I quote from the written submissions of the plaintiffs: "It was always agreed that Lewis should structure himself through a company." On that basis I cannot conclude on the evidence that there was a binding agreement made between Lewis and C.U.B. on either 12th December, 1984 or 28th February, 1985. It was submitted on behalf of the plaintiffs that the evidence brought the case within the first class referred to by the High Court in Masters v. Cameron at 360, \( namely where "the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect." As the Court there went on to point out, in such a situation the parties are immediately obliged "to perform the agreed terms whether the contemplated formal agreement comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document." But in my view it cannot be ignored that what was being discussed here was a joint venture agreement to operate a -- 18 of 42 -- 15 multi million dollar business. In such circumstances it would only be reasonable for each party to want to know full details of the other's involvement, and to ensure that such other party had the capacity to meet its financial obligations to the venture. I am satisfied on the evidence that Norgard and K.R. Murphy were conscious of such considerations in their negotiations with Lewis. Whilst Norgard and K.R. Murphy had authority to negotiate and reach agreement on particular terms to be included in the joint venture agreement, it is clear on my view of the evidence that all parties to the negotiations realised and intended that there was to be no legally binding joint venture agreement until a formal agreement was executed by the parties thereto. This was clearly a case in which the intention of the parties was not to make a concluded bargain at all, unless and until a formal contract was executed -the third class referred to Masters v. Cameron at 360. I am satisfied on the evidence that it was the intention, at least of those negotiating on behalf of C.U.B., that the terms of the joint venture agreement could not formally be agreed upon until the identity of the other joint venturer was known, and was acceptable to C.U.B. I have already adverted to the fact that C.U.B. required Lewis to be at least the principal participant in their joint venture partner. Once the negotiations for a joint venture commenced a fiduciary relationship was brought into existence and the participants were bound by considerations of mutual confidence and trust (United Dominions Corporation Ltd. v. Brian Pty. Ltd. (1985) 157 C.L.R. 1 at 11-12, and Fraser Edmiston Ptv. Ltd. v. A.G.T. {Old) Pty. Ltd. (1988) 2 Qd. R. 1 -- 19 of 42 -- 16 at 9-10)·. The conduct of Lewis and R.E. Murphy in seeking withhold from C.U.B. the full involvement of R.E. Murphy and any involvement at all by Harrison and Bruce breached that fiduciary obligation. Once the conclusion is reached that the parties did not intend a joint venture agreement to come into effect until a formal document so providing was executed there is really no need to canvass the other bases on which it is said that one or other of the plaintiffs could succeed in contract. But nevertheless, particularly because so many alternative arguments were canvassed during the trial, I propose to deal with some of the evidence relevant to the question whether or not there was an agreement reached either on 12th December, 1984 or 28th February, 1985. There was general agreement that Lewis and Carter met with Norgard and K.R. Murphy at the offices of C.U.B. in Brisbane on 12th December, 1984. I am satisfied that prior to that date Lewis had had a number of discussions with senior employees of C.U.B., including K.R. Murphy, with regard to his becoming involved, probably on a joint venture basis, with C.U.B. in the operation of an hotel. Probably in December 1984, but certainly before the meeting of the 12th, C.U.B. had provided Lewis with a number of documents relevant to joint ventures it had set up in Victoria; those documents became exs. 1-8 inclusive. Both Lewis and Carter had perused those documents prior to the meeting on 12th December. I find that the main purpose of the meeting was to enable Lewis and Carter to raise any queries they may have had with the { -- 20 of 42 -- 17 Victorian documentation. But the discussions did go further. By that time both sides were in general agreement that the Homestead Hotel provided the best opportunity for a successful joint venture between them. On 12th December there was some discussion about the valuation of the Homestead Hotel for purposes of a joint venture, and the figure of $2.6 million was proposed. I am also satisfied that Norgard said that it would not be possible to make any fundamental changes to the Victorian joint venture documentation, but it was pointed out that some changes would be necessary to meet the requirements of Queensland law. There was also discussion about Lewis having a tenancy of the Homestead Hotel for a period of about six months leading up , to the commencement of the joint venture. Further there was some discussion as to the revaluations of the property which were to be made every three years during the currency of the joint venture and the consequences of that. Much time was taken in discussing the arrangements for the interim lease; in particular there was discussion as to the weekly rental and the value of plant, furniture, fixtures and fittings. Broad agreement, at least, was reached on a number of those items. But having considered all of the evidence given by the various witnesses as to what transpired on that date, I have been unable to come to the conclusion that any enforceable agreement was then reached. The subsequent correspondence and relationship between the parties in my view confirms that conclusion. After the meeting Lewis prepared a two page letter dated 2 0 th December, 1 9 8 4, with seven pages of annexure, which was -- 21 of 42 -- 18 forwarded to Norgard. It was headed "Application Tenancy /Joint Venture Involvement". The first paragraph thereof is in these terms: "Following our recent discussions, I make this submission to you for your formal consideration of me in relation to the Homestead Hotel being my choice of a suitable Carlton property in accordance with the service agreement I entered into when I undertook to manage the Broadbeach Hotel." In my view it is significant that neither in the heading nor in that first paragraph was it asserted that an agreement was reached on 12th December. Rather the document suggests the contrary to me. In my view the "submission" of Lewis is really an "offer", to use the terminology of the law of contract. It ( was for the "formal consideration" of C.U.B. - that is not compatible with there then being a binding contractual arrangement between the parties. Lewis went on to say in that letter: "I believe that a tenancy agreement for a fixed six month period followed immediately by the joint venture (( (each document signed simultaneously and conditional on each other) should commence on the 4 th March, 1985." It was then suggested that the joint venture should commence from (( 4th September, 1985 "according to existing documentation (after minor clarifications). 11 Most of the detail in the letter and its annexures related to the interim lease and the improvements costing about $360,000.00 which Lewis proposed to carry out during the term of the lease. There is general agreement that the letter of 20th December, 1984 was discussed on 29th January, 1985 at a meeting betwee~ Lewis, K.R. Murphy, and Booker. K.R. Murphy had virtually no recollection of that meeting because he could not locate any -- 22 of 42 -- 19 memorandum thereof, but in the end he did not dispute that it took place. At that meeting it was agreed that the weekly rental payable during the period of the interim lease should be increased to $4,500.00 and that the joint venture should commence no later than 30th June, 1985. The next significant document is the telex of 26th February, 1985 from Carter to Baggott. It recounted the history of negotiations and referred to the meeting of 12th December, 1984, the letter of 20th December, 1984, and the meeting on 29th ij,- 1 January, 1985. It went on: "Discussions between the writer and your Mr. Baggott have revealed a divergence in understanding as to the agreement although it was obvious that both parties were veri genuine in their respective efforts to bring the arrangements to consummation." The main aim of the telex was to obtain a written reply to the letter of 20th December, and written confirmation of the variations agreed to on 29th January. The telex also contained the following relevant passages: "Our client has sought to have certainty as to his future beyond 30 June whether that be by way of a lease running beyond that date or by way of the joint venture arrangements currently under consideration . . . . He considers that to take up a tenancy without any.thing in writing from your firm or your client, on terms to be decided and with the matter of the joint venture deferred is patently unsatisfactory . . . . Our client feels that without the status of a tenancy and without the agreement being at least evidenced by an exchange of letters or telexes he is unable to do anything at the present time. Finally, our client wishes to assure your client that he is anxious to commence the arrangements finally settled on 29 January, particularly in view of the 'flagship' aspect discussed on 12 December. Because your Mr. Baggott advised that this firm's instructions appeared to be at variance with your instructions it is essential that a reply telex issue covering all the points raised in the letter to Mr. Norgard of 20 December as varied in the meeting of 29 January. At the same time this firm should be -- 23 of 42 -- 20 supplied with all the documentation that came under discussion in December modified for Queensland purposes. The importance of having documentation on hand is pointed up by the fact that an important clause was mentioned to our client as late as today for the first time. Secondly, it appears that joint venture arrangements so confidently discussed in December were only finally approved by the relevant management structure within your client yesterday. For these and all the other reasons mentioned above documentation is so essential." It is significant, if not critical, in my view, that that telex does not assert the existence of any agreement by that date with respect to a joint venture. The solicitor for Lewis was not asserting that there was an agreement in force which C.U.B. was departing from. Rather the solicitor was demanding that immediate steps be taken to create a binding legal agr~ement ' ) containing the matters on which there had been general agreement at meetings between the parties. The next important event was the meeting on 28th February, 1985 to which I have already referred in some detail. According to the oral evidence of R.E. Murphy it was called at the request of Carter "to achieve some finality in the arrangements." Carter spoke on behalf of Lewis and R.E. Murphy, and the meeting became quite heated. K.R. Murphy gained the impression that Carter was trying to "bully" C. U. B. into completing the joint venture documentation. It is agreed on all sides that the meeting broke up for lunch without any agreement being reached. The C.U.B. representatives over their lunch prepared a document to be delivered to Lewis. I have already made a finding that it was handed over on the afternoon of 28th February, and not the following day 1st· March. The document in question covered two pages and was headed "Offer". The term "offer" is then used on ( -- 24 of 42 -- 21 three occasions in the document; most importantly the second page dealt with an "offer of joint venture on identical terms as set out in the Victorian documentation ( subject to completion of blanks) which Lewis has already seen, except where Queensland law requires otherwise." I accept the evidence of Lewis that when K.R. Murphy handed the document over to him he said: "That's the deal, that's the offer we're making to you". I also accept the evidence of Lewis that thereafter they went through the "offer" and some variations were agreed upon, namely the variations noted by Lewis on his copy of the "offer" - ex. 13. All but one of those variations related to the interim tenancy period; the only variation to the three paragraphs dealing with the "offer of joint venture" was the insertion of the words "prior to 28th June, 1985" in the third paragraph. Of most significance, second page where it was in my said: view, is paragraph 2 on the "No undertaking as to a continuation of tenancy past 28th June is given by C.U.B. where satisfactory joint venture documentation has not been entered into by that date (i.e. documentation satisfactory to C.U.B.)." Lewis did not raise any objection to that proposition when he read the "offer". Notwithstanding there being no substantial response from C.U.B. to the issues referred to raised in the telex of 26th February, Amphora entered into formal agreements with C.U.B. on 11th March relating to the leasing of the hotel. Next came the directors' meeting of Amphora on 28th March, 1985. It was primarily concerned with the lease of the Homestead Hotel for six months, and the renovations which were to be -- 25 of 42 -- 22 carried out during that period. The minutes note that the reconstruction of the discotheque should be completed by 30th June. Whilst the minutes are instructive as to the overall relationship between Amphora and C.U.B. as perceived by Lewis and R.E. Murphy as at that date, the only matter to which specific reference need to be made is the item under the heading "Relationship with C.U.B."; it is in the following terms: "The tenuous nature of the relationship was discussed and it was agreed that every effort should be made to minimise outside awareness of the total relationship until such time as the joint venture was properly in place.'' The language used is imprecise and I can only give it meaning if the expression "properly in place" means "formally agreed upon" or "evidenced by properly executed documents". In a memorandum dated 24th April, 1985 to Lewis, R.E. Murphy noted the "absence of achieving any progress towards the joint venture documentation after some 3 months of talking about it" and went on to speak of the "total rejection of assistance in having any aspects of the joint venture resolved through discussions with our solicitors." Carter was due to go overseas on 27th April, 1985 and in a series of telexes he sought to obtain the joint venture documentation from Baggott prior to that date. On 22nd April, 1985 he telexed saying he would be "most grateful if all documentation properly adapted for Queensland purposes could be delivered to our offices well prior to 26th April so that the writer can read it and advise before his departure." That telex also raised queries as to what provision, if any, there would be ( -- 26 of 42 -- 23 in the documentation for "guarantee of principal debt" and "tie clauses". I have already dealt extensively with the memorandum of 26th April, 1985 (ex. 26) and made a finding thereon. But there was no dispute as to the actual content of the discussion had that day with K.R. Murphy. The memorandum notes him saying: "No letters of comfort, no more special concessions to G.M.L.". That was reference to a request from Lewis that Amphora be given a letter of comfort to show to its financiers. The memorandum also recorded that C.U.B. "say G.M.L. is not organised with his finance." It then went on to record the following: "we have no tenancy and no J/V doc's settled. Go away and sort things out. Come back for a meeting if necessary. We might have to extend the lease if documentation is not in place by 28/6." There seems to be no doubt that in that memorandum Lewis and R. E. Murphy were happy to have recorded the assertion that Amphora had no tenancy extending beyond 28th June and that the joint venture was not evidenced by any documentation. It can also be said that the notation made by Lewis on the letter from C.U.B. of 28th June, 1985 is hardly consistent with a belief that there was then in existence a binding joint venture agreement. Lewis said in evidence that as at that date it was "a very strange relationship" between Amphora and C.U.B. On 9th July, 1985 A.J. Eden (who was acting as solicitor in the absence of Carter) wrote to Lewis a letter covering a number of topics; relevantly he said: "As discussed with you, you are in a position of some vulnerability pending firming up of arrangements with Carlton and United Breweries (Queensland) Limited. If -- 27 of 42 -- 24 you need any assistance in relation to those negotiations could you please contact us." That letter was not challenged by either Lewis or R.E. Murphy and it confirms that as at July 1985 the parties were still in a position of negotiation - there was then no binding joint venture agreement. Amphora remained in possession of the hotel after 28th June and the correspondence relating to a variation of the term of the lease was noted at a directors' meeting of Amphora held on 19th July, 1985; immediately thereafter the following was recorded in the minutes: "There has been no clarification of the timing of the joint venture and it was resolved, that, as the offer is still open at the $2.6m agreed' with C.U.B., there was no point in pushing them for completion of documentation until such time as it suits us." The use of the term "offer" confirms the view which I have taken of the state of negotiations between the parties as at that date. The stance reflected in the minutes echoed the observation by (ti Carter in a letter of 18th July, 1985 to R.E. Murphy that the ~ joint venture arrangement had been "pushed into the background." Lewis on behalf of Amphora wrote to Booker on 1st October, 1985 primarily dealing with the securing of finance for the improvements to the Homestead Hotel which Amphora was carrying out as lessee, but the letter contained the following paragraph of relevance for present purposes: "To keep matters tidy I am also seeking detail of progress on preparing the lease for the Homestead Hotel. While speaking of documentation, do you orKevin have any further detail on the Joint Venture? I have accepted that the valuation that will be usedwhen the documentation is ready is the valuation of$2. 6 million as discussed in the C. U. B. offices inDecember 1984 but of course I expect C.P.I. ((t. <• -- 28 of 42 -- 25 adjustments to this. Our discussions with financiers have proceeded along these lines." Then in another letter dated 14th January, 1986, again primarily concerned with the improvements, Lewis on behalf of Amphora said to Booker: "Also, if the joint venture was in place at the time of carrying out renovations Carlton and United and Amphora Investments Pty. Ltd. would have been sharing much of the capital costs now involved on a 50/50 basis which has not occurred and will not occur now." That appears to be a clear acknowledgment that there was no enforceable joint venture agreement as at that date. On 28th January, 1986 C.U.B., under the hand of Booker, replied to Amphora's letter of 14th January. Substantially the letter was in reply to matters raised with respect to the improvements, but it did contain the following response to what was said as to the joint venture discussions: "We note your comment with respect to discussions re the joint venture agreement, and again confirm recent verbal advice that the Company is not in a position to proceed at this time, with the proposed rental increase as above having been calculated on the basis of a continuation of your tenancy for at least the short term future." Of significance is the fact that Lewis on behalf of Amphora replied by letter dated 10th February, 1986 and did not refer at all to that statement. One can only assume that Amphora was accepting as at February 1986 that there was to be no joint venture agreement in the foreseeable future. When those documents are considered, and when the conduct I have referred to is taken into account, it is clear that there was no agreement reached with respect to a joint venture either on 12th December, 1984 or 28th February, 1985 (or for that matter -- 29 of 42 -- 26 on any date within the relevant time span). At no stage prior to the commencement of these proceedings did Amphora, or Lewis, or R.E. Murphy assert that there was an enforceable agreement for a joint venture. Whilst in December 1984 and early 1985 in the course of discussions there was broad agreement reached on a number of points relevant to a joint venture none of the persons who participated in the negotiations believed that a final agreement had been reached. The constant reference to "documentation" throughout the subsequent correspondence confirms my finding that it was the intention of the parties that there should be no legally binding joint venture agreement until the appropriate documentation ha9 been formally executed. It follows that for the various reasons hereinbefore set out neither plaintiff has succeeded in establishing an agreement that would support the claim of the plaintiffs in so far as it is based on contract. In consequence it becomes necessary to consider the alternative bases on which the plaintiffs claim they are entitled to succeed. That involves a consideration of scenarios 5, 6, 7, and 8 referred to above. It is necessary to say a little more about the allegations made in the amended statement of claim because it is not unimportant to identify the representation relied upon, the expectation allegedly created, and the matter or conduct induced thereby which allegedly constituted the detriment to the plaintiffs. Before looking at those matters, however, the following relevant dates and facts should again be noted. The first significant meeting at which the possibility of a joint venture { -- 30 of 42 -- 27 agreement was discussed was that held on 12th December, 1984; but it will be remembered that at that meeting a tenancy for a fixed term of six months was also canvassed as a preliminary to any joint venture agreement. Ultimately a formal tenancy agreement was executed on 11 th March, 1985 and on that date Amphora entered into possession of the Homestead Hotel for a fixed term expiring 28th June, 1985. When 28th June, 1985 passed it was asserted by C.U.B. that Amphora was in a position of holding over, and in the letter of 30th July, 1985 C.U.B. spoke of negotiations for a new tenancy. Thereafter in August 1985 Amphora sought approval from C.U.B. to carry out the improvements which were initially to be completed during the term of the tenancy which expired the previous 28th June. Approval was granted and work commenced in September 1985; it was completed in about January 1986. Amphora expended in all some $1 . 2 million on those improvements. Amphora experienced trading losses in the period March 1985 to February 1986 (particularly in the period September 1985 to January 1986 when work was being carried out), but trading from February 1986 until early 1987 was successful. During 1987 income from the nightclub dropped and losses were incurred. Eventually Amphora vacated the hotel premises on 21st April, 1988 in accordance with the terms of settlement agreed to on that date. Paragraphs 22 and 28 of the amended statement of claim (scenarios 5 and 7) allege that relevant representations were made at the meeting on 12th December, 1984 which has been considered in detail above. The principal representation relied on is that C.U.B. "was prepared to enter into a joint venture 11 with Amphora (para. 22) or Lewis (para. 28). In my view it is -- 31 of 42 -- 28 important to not€ the language used. The allegation is that c.u.B. was "prepared to enter into a joint venture" not that a joint venture relationship then existed between the parties, nor that agreement for joint venture had been reached with the relevant documentation to be signed. If the pleaded representation is construed as a representation that C.U.B. was prepared to negotiate towards a joint venture then that would be supported by the evidence; I would find on the evidence that at the meeting of 1 2th December, 1984 Norgard by his words and conduct represented that C. U. B. was prepared to negotiate towards a joint venture, and would sign the necessary documentation if agreement was reached. ; I would also find that Norgard was enthusiastic about the concept of a joint venture between C.U.B. and Lewis but, as I have held above, that was subject to a contract being formally entered into. I have canvassed previously the significance of the letter from Lewis of 20th December, 1984. That letter in my opinion clearly demonstrates that Lewis did not have an expectation as a result of what occurred on 14th December that he could rely on a joint venture relationship coming into existence between himself and C.U.B. As Lewis did not then have any interest in Amphora that company cannot be in any better position than Lewis with respect to any representation made at the meeting of 12th December. I am not satisfied that the expenditure of money on improvements by Amphora between September 1985 and January 1986, nor the incurring of trading losses in the period March 1985 to February 1986 by Amphora, nor the conduct of Lewis and R. E. Murphy in expending time and effort in an endeavour to •• t -- 32 of 42 -- 29 increase the trade and goodwill of the hotel was the product of any expectation created by any representation made by Norgard on behalf of C.U.B. on 12th December, 1984. It therefore follows that the relief claimed based on the allegations contained in paragraphs 22 and 28 of the amended statement of claim ( scenarios 5 and 7 above) must fail. Of greater significance is the contention that representations giving rise to an estoppel were made during the period 29th January to 11 th March, 1985. Again (see, for example, paragraph 28) it is alleged that the principal representation was that C. U. B. "was prepared to enter into a joint venture". The observations made above with respect to that particular alleged representation are also apposite here. But. then in paragraph 24A the representation is stated in a somewhat different way. There it is said that on 28th February, 1985 (the relevant date in accordance with my findings} K.R. Murphy represented to Amphora that C.U.B. "would enter into a joint venture agreement 11 ; the contents of ex. 13 are said to constitute associated representations. But again the problem for the plaintiffs is that the negotiations between the parties were clearly understood on either side as being subject to a formal agreement being entered into. In making that finding I rely on what I have said previously. That really puts an end to the contention of the plaintiffs. It is not necessary to refer to the facts on which the Privy Council gave judgment in Attorney-General of Hong Kong v. Humphreys Estate (Queen's Gardens) Ltd. (1987) A.C. 114; it is sufficient to record the statement from the reasons at 127-8: -- 33 of 42 -- 30 "In the present case the government acted in the hope that the voluntary agreement in principle expressly made 'subject to contract' and therefore not binding would eventually be followed by the achievement of legal relationships in the forms of grants and transfers of property. It is possible but unlikely that in circumstances at present unforeseeable a party to negotiations set out in a document expressed the 'subject to contract' would be able to satisfy the Court that the parties had subsequently agreed to convert the document into a contract or that some form of estoppel had arisen to prevent both parties from refusing to proceed with the transactions envisaged by the document." That decision was reviewed in depth by members of the High Court in Walton Stores (Interstate) Ltd. v. Maher (1988) 164 C.L.R. 387; I would especially refer to the judgments of Mason C.J. and Wilson J. at 405-6, and Brennan J. at 421-2. The former at 406 observed~ that "Humphreys Estate illustrates the difficulty of establishing an estoppel preventing parties from refusing to proceed with a transaction expressed to be 'subject to contract'." The reasoning in those cases establishes that a basic assumption by one party that the other parties to contractual negotiations will not in all probability withdraw l from the transaction is not of itself sufficient to found an estoppel where the negotiations were proceeding on the basis that ( enforceable legal obligations would be created by execution of a formal document. But there are also other difficulties confronting the plaintiffs and something should be said about those matters. It was an essential part of the case for the plaintiffs as pleaded that the money spent on improvements to the hotel between September 1985 and January 1986 would not have been outlayed but for Amphora's belief that the joint venture would proceed, a belief known to C.U.B. But in my view the evidence does not -- 34 of 42 -- 31 such an allegation. On 5th March, 1985 C.U.B. wrote to Amphora offering a tenancy of the hotel on the terms and conditions therein set out. The letter made no mention of a joint venture agreement, nor did it specifically refer to the renovations which the tenant proposed to complete during the term. Those matters were raised by Lewis in his reply to Booker of 7th March; relevantly that letter stated: "Tenancy period ends 28/6/85 should be related to it being subject to entering the joint venture as indicated in Kevin's offering in writing on Thursday. I acknowledge the rental clause but our agreed discussions were to fix the $4,500.00 rental until the 28/6/85 to make allowances for the renovations outlined in my letter of 20th December, 1984." The offer "on Thursday" referred to was that which became ex. 13 and has been considered above. Despite the fact tha_t Lewis '} expressly raised those matters in the letter of 7th March the formal tenancy agreement, which was executed by C.U.B. as landlord, Amphora as tenant, and Lewis as guarantor on 11 th March, 1985, did not contain any reference to them. In those circumstances it can hardly be said that there was a continuing representation by C.U.B. that the tenancy, and future obligations of the tenant, were in some way subject to the parties entering into a joint venture agreement. On 30th April, 1985 Lewis on behalf of Amphora wrote to K.R. Murphy seeking the approval of C. U. B. for the tenant to undertake the modifications to the hotel previously discussed. By that letter a request was also made that the tenancy be converted from one for a fixed term to a "bi- monthly tenancy". Significantly there was no mention of a joint venture agreement in that letter; the request was not that the tenancy be extended until the joint venture documents were in -- 35 of 42 -- 32 place, but rather that there be a tenancy for an indeterminate period. That was followed by another letter from Lewis to K.R. Murphy dated 10th May, 1985 again discussing in some detail the proposed renovations. The letter sought confirmation of the fact that C.U.B. would accept that work to the value of $28,000.00 was the responsibility of the landlord. Again there was no mention made of any joint venture. The reply from C.U.B. of 13th May, 1985 dealt only with the proposed amendment to the tenancy. The next relevant letter was that from C.U.B. to Amphora of 30th July, 1985 in which C.U.B. asserted that Amphora was holding over the subject premises pursuant to cl. 5 of the tenancy agreement and that such tenancy was terminable on two months notice. Amphora does not appear to have responded to that letter, and it appears to have acquiesced in the assertion made by C.U.B. that it was holding over. It was following the receipt of that letter that Lewis wrote to K.R. Murphy setting out full details of the proposed renovations and submitting a formal "request for your approval of the proposed works". The schedules attached to that letter disclosed that it was proposed to carry out work costing in excess of $800,000.00. Interestingly the letter also set out some -"objectives" of Amphora with respect to the hotel, but there was no mention at all of a joint venture· arrangement between the parties. There was a further letter dealing with the proposed improvements from Lewis to Booker dated 18th August, 1985; again it did not mention a joint venture but did particularise the foreseen advantages to the parties of the improvements being completed. Then comes the letter which in my view is most important on this aspect of the case; it is dated t -- 36 of 42 -- 33 1 st October, 1985 and is from Lewis on behalf of Amphora to Booker on behalf of C.U.B. The full text of the letter is as follows: "All the paperwork necessary in securing finance for the hotel improvements is now at an advanced stage and I am confident that it should be completed shortly with your assistance. Our financiers, N.Z.I. Securities Australia Limited are seeking from C.U.B. the waiver and signed original letters as per the draft copies which are attached. As per your letter to me of 11th March, 1985 we have the right to mortgage or charge our plant, equipment, fixtures and fittings in the hotel. In addition to our personal guarantees and real estate collateral, as part of the security, we are giving a Fixed and Floating charge over Amphora Investments Pty. Ltd. which will cover its assets excluding the licence and· stock of the hotel. We are currently proceeding along these lines. . ') To keep matters tidy I am also seeking detail of progress on preparing the lease for the Homestead Hotel. Whilst speaking of documentation, do you or Kevin have any further detail on the Joint Venture? I have accepted that the valuation that will be used when the documentation is ready is the valuation of $2.6 million as discussed in C.U.B. offices in December 1984 but of course I expect C. P. I. adjustments to this. Our discussions with financiers have proceeded along these lines~ Once the papers are ready for N.Z.I. please give me a call and I will arrange to have them collected personally." The letter does raise the question of the joint venture but significantly it also refers to "preparing the lease" for the hotel. In the context in which that appears it is obviously a reference to the new lease mentioned in the letter from C.U.B. of 30th July, 1985. What then was to be the relationship between the new lease and the joint venture? The whole tenure of the letter of 1st October, 1985 rather suggests to me that Amphora and Lewis had made a business decision to proceed with the improvements to the hotel on the basis of an extended lease -- 37 of 42 -- 34 regardless of whether or not a formal joint venture agreement was entered into. In arriving at that conclusion I have also had regard to the memorandum of 26th April, 1985, the letter of 9th July, 1985, and the minutes of Amphora of 19th July, 1985 to which I have referred previously; much of what I said previously in dealing with the question whether or not there was an actual agreement for joint venture in place is relevant to the issue I am now considering but I will not formally repeat what has already been said. It is sufficient to say that bearing in mind the minute of 19th July, 1985, there is nothing in the letter of 1st October, 1985 which suggests that the time had arrived for Amphora to push for completion of the joint venture documentation. In October 1985 it would appear that the parties acknowledged that the holding over provision in the tenancy agreement of 11th March, 1985 still governed the relationship between the parties (see, for example, the letter from C.U.B. to N.Z.I. Securities dated 7th October, 1985). On 15th October,1985 Lewis on behalf of Amphora wrote to C.U.B. seeking deferral of rent until the renovations were completed. The proposal was accepted by C.U.B. as is evidenced by its letter of 19thNovember, 1985. Again it is worth noting that such correspondence contained no reference to a joint venture. Then there is a letter dated 17th September, 1986 which is somewhat curious to say the least given the allegations made by the plaintiffs in this action. C. U. B. had written a letter dated 3rd September, 1986 informing Amphora that the Homestead was not one of the hotels in Queensland which it had decided to put on (i -- 38 of 42 -- 35 the market for sale. The letter made it clear that C.U.B. had "no plan to change status of your hotel in the foreseeable future", but it mentioned that with respect to those hotels it was putting on the market it had decided to give the existing tenant a right of pre-emption. It would appear that there were some discussions on 15th September, 1986, and on 17th September Lewis on behalf of Amphora wrote to C.U.B. "relating to our tenancy and our future with the Homestead Hotel". The letter noted amongst other things an assurance given by C. U. B. that "our tenancy is secure for a minimum period of 12 months". It then goes on: "We accept the offer made to us as tenants of the first right of purchase of the freehold of the property at fair market price should C.U.B. decide not to continue as owner for whatever reason. Your offer that our tenancy is secure for a minimum period of 12 months goes part way in allowing us the opportunity to recoup some benefit from the high investment we made in chattels and renovations at the Homestead last year." I find it surprising that the letter should be couched in such terms, and make no reference to joint venture, in the light of the assertions made in the amended statement of claim that the expenditure on improvements was only made in the belief that a joint venture would proceed. Though written well after the completion of the improvements the attitude evidenced by the contents of the letter is not, in my view, consistent with the allegations made in the amended statement of claim. It is in the light of the evidence I have recently reviewed that I have concluded that the plaintiffs have not made out that the $1. 2 million was expended in the belief that the joint -- 39 of 42 -- 36 venture would proceed and that such belief was known to and encouraged by C.U.B. at all material times. It is also interesting to observe that the matters formally alleged to constitute representations all occurred in the period up to 11th March, 1985 which is the date on which the tenancy agreement was executed. Nothing that occurred thereafter is said to constitute a relevant representation. But there was no real detriment incurred until September 1985 when the expenditure on the improvements commenced and trading was affected by the closure of some parts of the hotel. The decision to proceed with the improvements appears to have been a business decision taken in the light of the facts as they existed in about September ( l 1985, and I have real difficulty in seeing how statements made prior to 11th March were still operative given what had occurred in the meantime. If it be the case that by July Amphora had decided not to press for joint venture documentation until it suited its own interests, it is difficult to see how the alleged (. representations prior to 11 th March operated to create a relevant expectation in September. In the course of written submissions on behalf of the plaintiffs it was said that the plaintiffs would not have entered into the tenancy agreement of 11th March, 1985 (nor the ancillary agreement with respect to plant and stock in trade) had it not been for the joint venture part of the transaction. But even if that is so the tenancy was for a fixed term until 28th June, and it was the contention of the plaintiffs that thereafter there was to be a joint venture agreement. It is not alleged in the action that between 11th March and 28th June either plaintiff suffered ' -- 40 of 42 -- any significant financial detriment and in consequence it cannot really be said that it was the entering into of the agreements of 11th March, 1985 which constituted the detriment suffered by the plaintiffs. The answer to the argument raised in the written submission is that if that be so then by 28th June it ought to have been obvious to the plaintiffs that execution of a formal joint venture agreement was unlikely in the foreseeable future and in consequence Amphora ought then to have withdrawn from all dealings with C.U.B. The evidence indicates in my view that the real reason why the plaintiffs continued operating the hotel after 28th June was that they believed that tenancy of that hotel on a long term basis was a sound business investment. I am also conscious of the fact that R.E. Murphy said in evidence that Amphora would not have carried out the work of improvements "without security of tenure in the form of a joint venture" and that Lewis said to similar effect that Amphora would not have spent a dollar without security of tenure - unless a joint venture was in place. But those sentiments are not in my view confirmed by a consideration of the documentary evidence which indicates the relevant attitudes of the plaintiffs during 1985. It follows that the plaintiffs have not made out a case based on estoppel and in consequence the whole action fails. In those circumstances it is not necessary for me to embark upon any consideration of compensation or damages on the basis that the plaintiffs succeeded either in contract or in equity. The assessment of damages would be significantly affected by the findings made which entitled the plaintiffs to relief. As there are so many variables it is not feasible to assess quantum. -- 41 of 42 -- 38 But there is one observation which I should make which is relevant to the situation where the plaintiffs succeeded in equity. The monetary relief primarily claimed is one-half of the capital accretion in the value of the hotel from December 1984 to April 1988. I cannot see that even if the plaintiffs were successful in establishing an estoppel that such an amount would be recoverable. The decision of the High Court in Walton Stores v. Maher clearly recognises that the relief granted in equity is compensatory in nature. (See also Richers v. Hogben (1986) 1 Qd.R. 315.) As Brennan J. said in Walton Stores v. Maher at 423: "The object of the equity is not to compel the party bourid to fulfil the assumption o~ expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who is being induced to act or abstain from acting thereon." It follows that if the plaintiffs were successful on the .... '• basis of an estoppel they would not necessarily be entitled to •· one-half of the accretion in value of the hotel over the relevant period. The issues raised in the counter-claim were not litigated and the counter-claim should formally be dismissed. The action should be dismissed. • -- 42 of 42 --