A & M Investments Pty Ltd v Eastfire Pty Ltd [2004] QDC 430

DISTRICT COURT OF QUEENSLAND CITATION: A & M Investments Pty Ltd v Eastfire Pty Ltd [2004] QDC 430 PARTIES: A & M INVESTMENTS PTY LTD (Defendant) And EASTFIRE PTY LTD (Plaintiff) FILE NO/S: APL 2/02 DIVISION: Civil PROCEEDING: Appeal ORIGINATING COURT: District Court, Maroochydore DELIVERED ON: 27 October 2004 DELIVERED AT: Maroochydore HEARING DATE: 4th and 5th October 2004 JUDGE: Judge J.M. Robertson ORDER: [1] Plaintiff’s claim dismissed [2] Judgment for the defendant with costs CATCHWORDS: CONTRACT – intention of parties, communication of acceptance, unilateral mistake, estoppel, rectification of contract Cases cited: Masters v Cameron (1954) 91 CLR 353 Hyde Management Services Pty Ltd v A. Sargeant & Co Pty Ltd (1991) Q Conv R 54-374 Empirnall Holdings Pty Ltd v Machon Paul Painters Pty Ltd (1988) 14 NSWLR 523 Campomar Sociedad Limitada v Mike International Ltd (2000) 202 CLR 45 Taylor v Johnson (1983) 151 CLR 422 COUNSEL: GD Beacham (for the Appellant) GW Diehm (for the Respondent) SOLICITORS: Corrs Chambers Westgarth (for the Appellant) J J Riba & Company (for the Respondent) [1] Mr Andrew Matt is a newsagent in Maryborough. At present his company Eastfire Pty Ltd (Eastfire) operates two newsagencies, including one in the Station Square -- 1 of 11 -- 2 Shopping Centre. The centre is owned and operated by the defendant company A & M Investments Pty Ltd which is one of a number of companies controlled by the Green family from Bundaberg. [2] In 1997, Mr Matt had a newsagency in another centre known as the Maryborough Plaza. He became aware of the Greens’ plans to build the Station Square Centre and he formally gave a written expression of interest in leasing space on 6 November 1997. At this stage, he was interested in 145 square metres of space. His initial contact was with Mr Trevina who was the letting agent for the proposed shopping centre. Later he had discussions about a possible lease with Mr Shaun Green and Mr Trevina. [3] At an early stage he made it clear that he would require a financial incentive to move his business from its existing site. He had discussions with the agent and Mr Green about various incentives, and finally they settled upon a contribution to the fit out of his business as an appropriate incentive. [4] At an early stage, Corrs Chambers Westgarth were retained by the defendant to prepare a draft master lease. The original plans for the development changed and ultimately the centre was quite large involving a number of major tenants and over 35 speciality shops and businesses. The solicitors prepared a master lease based on general instructions from the defendant. [5] On 19 August 1999 a draft copy of the proposed standard lease agreement was sent to the Green Group by the solicitors. That draft contained clause 4.12 which is in the following terms: “4.12 Ceiling and shop front installation allowance (a) Where the Lessee has: (i) complied with the terms of this Agreement; and (ii) duly installed in the Premises as part of the Lessee’s Works: (A) the ceiling (“Ceiling”); and/or (B) the shop front (“Shop Front”); the Lessor must pay to the Lessee within 14 days of the Opening Date: (iii) a Ceiling Allowance being the sum that is derived by multiplying $25.00 by the Lettable Area of the Premises expressed in square metres; and/or (iv) a Shop Front Allowance being the sum that is derived by multiplying $900.00 by the lineal metreage of the Shop Front. (b) (i) Where in the opinion of the Lessor the area of the Ceiling is less than the Lettable Area of the Premises the Lessor may, at its option cause the Ceiling to be measured. -- 2 of 11 -- 3 (ii) A certificate produced by the Lessor under this clause shall be conclusive evidence except in the case of a manifest error. (iii) If the Lessor elects to cause the Ceiling to be measured the amount payable by the Lessor under clause 4.12(a) shall be that sum which is derived by multiplying the area expressed in square metres of the Ceiling stated in the certificate by the Lessor by $25.00. (c) The Ceiling and Shop Front form part of the Premises and shall become the property of the Lessor.” [6] Prior to this, Mr Matt received from Mr Trevina an offer to lease dated 14 September 1998. He retained Mr Riba of J J Riba & Company Solicitors to advise him in relation to the lease. He had had an unpleasant experience with a landlord previously, and he was careful to obtain advice before committing. By this time, he had agreed to take 165 square metres of space. [7] It is common ground that Mr Matt and Mr Green reached an agreement that the Greens would contribute $55,000 to Eastfire’s fitout in the centre. [8] It is common ground that prior to late April / early May 2000 there was no discussion between Mr Matt and/or his solicitor and the Greens and/or Mr Trevina or the solicitors about the contents of Clause 4.12. [9] Eastfire has sued the defendant for a sum of money calculated in accordance with Clause 4.12. The defendant says that there was never any concluded agreement to lease with Eastfire which included 4.12. Alternatively, it counterclaims for rectification of contract on the basis that Clause 4.12 was included by mistake. [10] Mr Matt accepts that he never discussed with anyone on behalf of the defendant an incentive of the kind specifically covered by Clause 4.12. He also agrees that there was agreement with the defendant that it would contribute $55,000 towards his shop fit out. His evidence goes even further. He told me that he was not happy with the amount and had a meeting in October 1999 with Lee Trevina, Shaun Green and his father and possibly the defendant’s project manager, in which Mr Matt sought to obtain more money. He was told that the defendant would not increase its offer beyond $55,000 which represented 10% of the incentive budget. He left that meeting with the clear understanding that he would get no more than $55,000 towards his shop fit out. [11] I accept Mr Shaun Green’s evidence that in his early discussions with the solicitors a number of incentive options were discussed including a contribution to shopfront and ceiling. A copy of the standard master agreement was forwarded to the Green Group on 19 August 1999 by Mr Hassall, a partner with Corrs. Prior to this, Natalie Gerrard a solicitor with Corrs had been communicating with Mr Trevina about the specific lease for Eastfire. On 30 July 1999 she forwarded a draft agreement for lease and lease to Mr Riba. Both the standard agreement forward to the Greens on 19 August 1999 and the agreement sent to Mr Riba on 30 July 1999 contained Clause 4.12. However, the agreement sent to Mr Riba did not refer to the agreed contribution of $55,000 to the shop fit out. At that time, there was no final agreement as to how the contribution should be reflected in the agreement between the parties. Mr Riba then provided a comprehensive advice to Eastfire by letter -- 3 of 11 -- 4 dated 21 September 1999, which included an explanation as to the effect of Clause 4.12. In response to that letter, Mr Matt rang Mr Riba on 28 September 1999 and, in that conversation, Mr Matt raised the $55,000 fit out contribution. Mr Riba then wrote to Corrs on 1 October 1999 and said this (at 4): “Our client was advised when the first offer was presented to him by Frank Knight that he would receive a contribution of $55,000 towards the cost of his fit out. Your client may not wish to refer to that contribution in the Lease, however the agreement must be documented to record your client’s promise to make that payment and to specify when and how that payment will be made.” [12] Clause 4.12 was not mentioned. [13] When Mr Green received the draft standard lease agreement from Corrs soon after 19 August 1999 he read it through and noticed Clause 4.12. He wrote beside the clause the word “out” and I accept his evidence that he then instructed the solicitors to remove the clause from the draft, and to include it only if the solicitors were specifically instructed to include such a clause. When he received an amended agreement from Corrs soon after 13 September 1999, Clause 4.12 had been removed, and replaced with clause 4.19 beside which Natalie Gerrard has noted: “this clause 4.19 only prints if instructions received advising Lessor is contributing.” [14] As is obvious, the draft that was being discussed between Mr Riba and Corrs included Clause 4.12; almost certainly for the reason that it was forwarded to Eastfire prior to Mr Green instructing his solicitors to remove it unless instructed otherwise. [15] I accept Mr Green’s evidence that he never instructed Corrs to include Clause 4.12 in the Eastfire Lease. As I have noted, it is common ground that prior to late April 2000, the parties had never discussed an incentive of the kind referred to in Clause 4.12. [16] Upon receipt of Mr Riba’s letter dated 1 October 1999, Ms Gerrard sought instructions from Mr Trevina. Mr Trevina was authorised to give instructions on lease terms, and in relation to the $55,000 contribution he was asked for specific instructions. He telephoned Ms Gerrard on 6 October 1999 and her diary note records (in relation to this issue) “GH & S Green to discuss”. It is clear to me therefore that in relation to this issue Mr Trevina did not have final say, and he was referring the matter to Mr Green and Mr Hassall. Mr Trevina was not called to give evidence on behalf of the defendant and Mr Diehm submits that I could draw a Jones v Dunkle inference as a result. Mr Green was never asked about Mr Trevina’s present whereabouts or availability but, in any event, I am satisfied that his role in providing instructions to the solicitors was limited. He was not authorised, I infer, to give instructions on matters such as incentives, without referring to the defendant. [17] Corrs then received instructions to include in the lease a clause reflecting the parties agreement concerning the fit out contribution. Ms Gerrard wrote to Mr Riba on 14 October 1999, and included a proposed new Clause 4.12A which reflected the agreement of the client to contribute $55,000 to Eastfire’s fitout. -- 4 of 11 -- 5 [18] Negotiations continued between the solicitors, including in relation to the terms of Clause 4.12A, and the matter dragged into November. [19] I am satisfied that Mr Matt was keen to gain a lease in the new centre and, at this time, was becoming anxious that he might miss out. He denied that he was anxious, but Mr Riba said he was and contemporaneous diary notes from his file support this conclusion. A diary note recorded by one of Mr Riba’s staff on 22 November 1999 records that Mr Matt told her that “he had heard rumours that someone else was trying to muscle in on his territory”, and that “if there was a signed agreement or lease then he would feel better.” [20] Negotiations continued but were directed mainly to Mr Matt’s desire to have exclusive rights to be the only newsagent in the centre to which he defendant would not agree. Finally, under cover of letter dated 17 February 2000, Ms Gerrard forwarded final documentation to Mr Riba, which included both Clauses 4.12 and 4.12A. Eastfire signed the agreement to lease and this was returned to Corrs under cover of letter dated 7 March 2000. The agreement was left undated. On 13 March 2000, Ms Gerrard forwarded the signed documents to Mr Green and included a certificate by her firm that “the documents are in the standard form as varied by any instructions received from A & M Investments Pty Ltd”. No doubt comforted by this certificate, Mr Green and another director executed the agreement and he inserted the date 16 March 2000. I accept his evidence that he did not read through the agreement before signing. At the time, the centre opening was pending – it opened on 3 April 2000 – and there were a number of leases on his desk for signature, and he resolved to sign, and not return the documentation to the solicitors until he had the opportunity to read them. He commented that at this time he was under a lot of pressure, and spending more time at the centre (where he had his office) than at home. [21] He did not get around to reading the lease agreement until approximately a month later. He then noticed Clause 4.12. Later after the dispute arose about Clause 4.12 he crossed it out and initialled the change and returned the document to his solicitor. He contacted Ms Gerrard to express his concern that Clause 4.12 was in the Eastfire Lease and should not be and he asked her to check if it was in any of the other leases. This lead to Ms Gerrard’s letter to him of 18 April 2000 in which she informed him that there were 7 leases (including Eastfire) which contained the Clause. This letter was disclosed for the first time on the morning of trial and subsequently became Exhibit 8. [22] In the meantime, Mr Matt had completed his fit out, and at some time prior to 2 May 2000, he approached Mr Green requesting payment of the $55,000 and the sum calculated by reference to Clause 4.12 which was $16,262.70. [23] It is common ground that his company was paid $55,000 but that the defendant has refused to pay any monies pursuant to Clause 4.12. [24] Mr Matt sought advice from Mr Riba and he contacted Corrs. Ms Gerrard faxed him on 2 May 2000 in which she said (inter alia): “… our client has not executed the Agreement for Lease as it does not accurately reflect the agreement reached between the parties regarding fitout. Our client and your client agreed that our client would contribute the sum of $55,000.00 towards the cost of your client’s fitout (see your letter dated 1 October 1999 and subsequent -- 5 of 11 -- 6 correspondence). It was not agreed that our client would contribute an additional amount to the cost of your client’s shop front and ceiling (items to which the fitout contribution would normally be attributed). Therefore, our client requires the deletion of clause 4.12 of the Agreement for Lease.” [25] In fact, the defendant had executed the agreement on 16 March 2000. On 9 May 2000, Mr Riba wrote to Corrs in the following terms: “We have taken instructions from our client. Our client instructs us that it was agreed that your client would contribute the sum of $55,000 towards the cost of our client’s fitout and that your client would, in addition to this amount, contribute to the cost of our client’s shop front and ceiling. Clause 4.12 of the Agreement for Lease has always been included in the Agreement for Lease. We confirmed the existence of the clause in our letter to our client dated 21 September 1999. We confirmed with our client in our summary of the lease conditions that our client would receive the ceiling and shop front contribution. There was no suspicion on the part of our client or ourselves that any error had occurred. The lease was negotiated between our respective offices over a very long period of time. Your client has only now suggested (after fitout is complete) that the inclusion of the shop front and ceiling contribution is an error. Our client has completed its fitout and the money which our client expected to receive in the form of a contribution, has been expended in reliance upon your client’s promise to make that contribution. The lease documentation was prepared by your office and offered to our client for signing. It included the contribution. Our client allocated and expended money on fitout and thereby acted to its detriment when it relied on your client’s representations contained in the lease documentation. If Clause 4.12 was included in the Agreement for Lease in error, the error has mislead our client. Our client has suffered loss and our client is not prepared to agree to the deletion of Clause 4.12 of the Agreement for Lease. There are a number of reasons why your client is now obliged to honour the representation that it made within Clause 4.12, not least of which, is that a contract now exists between our clients. The contract exists, notwithstanding that your client may not yet have signed the documentation. The submission of lease documentation to our client was an offer made by your client. That offer was accepted by our client’s execution of the documentation.” [26] As I have noted, in relation to the first paragraph of this letter, Mr Matt acknowledges that at no time did he ever have discussions with the defendant about the specifics of Clause 4.12; and even on his evidence alone, it could not be said that there ever was an oral agreement that the defendant would contribute to the costs of his shop front and ceiling in addition to the $55,000 contribution to the fit out. [27] Given the lack of antecedent discussion about the subject matter of Clause 4.12 it was not surprising that Mr Matt was cross-examined closely on his reaction when first reading the clause in the draft sent to Mr Riba on 30 July 1999. -- 6 of 11 -- 7 [28] At page 140 line 34 to page 41 line 15, the following exchange took place between Counsel for the defendant and Mr Matt: Mr Beacham: “When you saw that (that is 4.12) there were two possibilities, weren’t there: it was either a mistake or the landlord, without ever being asked, was offering you a sum of money that we now know to be approximately $16,000?” Mr Matt: “Well, it wasn’t two possibilities to me, it was only one – there was only one” Mr Beacham: “Well?” Mr Matt: “I mean. Can I answer this?” Mr Beacham: “Go ahead” Mr Matt: “Okay. The – everything else in the lease document wasn’t a mistake. My rent wasn’t a mistake. My options wasn’t a mistake” His Honour: “No-one’s suggesting it was, so …” Mr Matt: “Yeah, but they’re saying it’s – you know, I’ve got no way of knowing it’s a mistake” His Honour: “Are you asking him? You’ve given him two options. Are you asking him what did he think?” Mr Beacham: “I’m asking him to acknowledge that there were two options as to why that clause was in the lease: A or B? And I understand Mr Matt to be asserting that there, in fact, was only one option? Mr Matt: “But there was only one option to me” His Honour: “And what was that?” Mr Matt: “It was – it was what was in my lease was what I was supposed to get at the end of the day” Mr Beacham: “Well, I suggest to you, Mr Matt, that there was another possibility at the time and you would have considered it. In fact, you did consider it, and that was that it was there by mistake?” Mr Matt: “No, that’s not right” Mr Beacham: “Well, it’s a term that obliges the landlord to pay you a sum of money. It turns up there without you asking for the landlord to pay you that sum of money. Did you consider that that was likely to be the case that the landlord would gratuitously offer you a sum of money?” Mr Matt: “Well, in fact, in the newsagency industry, I can tell you for a fact, all new shopping centres, it’s a standard clause in a lease” -- 7 of 11 -- 8 [29] Mr Matt told me that the fit out contribution contemplated by Clause 4.12 was very important to his decision to go forward with the lease as he was borrowing all the money for the fit out from the National Australia Bank, and this sum of just over $16,000 he planned to use as working capital. I think that he has convinced himself of this but I do not accept that Clause 4.2 was in any way a major incentive for him continuing with the negotiations. I have already referred to his anxiety towards the end of 1999 about securing a lease, and there is no doubt he regarded the move to the defendant’s new centre as potentially profitable and advantageous from his point of view. In fact, the $16,000 represents a very small proportion of the overall fit out which ultimately was near to $300,000. [30] The plaintiff’s claim as finally pleaded contains a number of strands. Firstly, it says that by executing the Agreement to Lease forwarded to Mr Riba by Corrs on 17 February 2000, it was in effect accepting an offer to lease implicit in the tender of the agreement under cover of the letter of that date. Alternatively, it pleads that by executing that agreement and returning it to Corrs, and at the same time paying the Lessor’s legal fees on or about 7 March 2000, it made an offer to lease to the defendant which was accepted by the defendant permitting the plaintiff to go in to occupation; the defendant executing the unaltered agreement on 16 March; and/or accepting the plaintiff’s offer by its silence until late April 2000. The plaintiff pleads that the defendant’s actions in removing Clause 4.12 is unconscionable and that the defendant should be estopped from asserting that that term is not part of their contract. [31] The defendant’s case is that it was always the intention of the parties not to be legally bound until they both had executed the agreement to lease. Such a contract is the third category described in Masters v Cameron (1954) 91 CLR 353 at 360: “Where parties who have been in negotiation reached agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by formal contract, the case may belong to any of three classes …. thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.” [32] As to the fact of execution of the unaltered agreement on 16 March 2000, Mr Beacham submits that as such unconditional acceptance was not communicated to the plaintiff, there was no concluded contract. [33] Alternatively, the defendant’s case is that if I find that there was a concluded agreement, nevertheless I should be satisfied that Clause 4.12 was included by mistake, and order rectification. Is there a concluded agreement [34] There are a number of features of the dealings between the parties which strongly point to a mutual intention not to be bound unless and until they executed a formal contract. [35] When the plaintiff signed a non-binding expression of interest for space in the proposed centre on 6 November 1997 it acknowledged: -- 8 of 11 -- 9 “We understand that there is no contractual commitment until such time that final lease terms and conditions have been agreed by both parties and the appropriate lease documentation is signed and executed.” [36] The agreement contains a provision for execution of the document by both parties, and was an agreement to lease for 7 years at an annual rent of approximately $93,000, suggesting that the parties would require the security of a fully executed document. The plaintiff executed the agreement and when returning the documents to Corrs requested the return of the “fully executed documents”. The plaintiff did not date the document which shows that it was leaving the date to be completed by the defendant when it signed and bound itself to the Contract. Some of these features were present in Hyde Management Services Pty Ltd v A. Sargeant & Co Pty Ltd (1991) Q Conv R 58,827 at 58,830 which persuaded de Jersey J (as the Chief Justice then was) to hold that the transaction fell into the third category of contract described in Masters v Cameron. [37] Mr Matt made it clear in his evidence that he did not want to commit to any terms without Mr Riba’s approval. He agreed in cross examination that he wanted to have the right to back out right up until the point when he signed off on the agreement. When Mr Riba spoke to Mr Matt on 26 November 1999 (at a time when he was getting anxious), Mr Riba advised him that he did not have a lease until all parties had signed. [38] All of these features of the dealings between the parties indicate that the clear intention of the parties was that they not be bound until both had signed an agreement to lease. [39] Insofar as the plaintiff continued at trial to pursue its claim based on paragraphs 17 and 19A(a) and (h) of its second further amended statement of claim filed by leave at the start of the hearing on 4 October 2004, this finding disposes of that claim. [40] However, the defendant did execute the agreement on 16 March 2000 without alteration. This acknowledgement in Mr Green’s evidence in chief seemed to take both Counsel by surprise. The question for me is whether that acceptance was communicated to the plaintiff in a way that bound the defendant to the unaltered terms of the agreement to lease. [41] The plaintiff was never informed that the defendant had executed the agreement on 16 March 2000. The chronology is set out above, and it appears that when Mr Green read the agreement he crossed out Clause 4.12 and returned it to his solicitors. [42] The plaintiff’s case is that the acceptance by execution of the agreement by the defendant although not communicated to the plaintiff or Mr Riba is, in the circumstances here, deemed to have been communicated by conduct. The conduct alleged is the silence of the defendant and its conduct in permitting the plaintiff to continue its fit out and otherwise act to its financial detriment and then to enter into occupation in time to commence trading on 3 April 2004. The plaintiff further alleges that the defendant by its actions is estopped now from asserting that the agreement does not contain Clause 4.12. [43] There can be acceptance by silence if the plaintiff is reasonably entitled to assume that a concluded contract is on foot, and then acts accordingly: see Empirnall -- 9 of 11 -- 10 Holdings Pty Ltd v Machon Paul Painters Pty Ltd (1988) 14 NSWLR 523 per Mc Hugh JA (as his Honour then was) at 534. [44] I am not satisfied in the circumstances here that it can be said that the plaintiff was reasonably entitled to assume acceptance of the agreement including Clause 4.12 because of the delay that occurred as a result of the matters discussed above on the basis of the evidence of Mr Green. The parties had never discussed such a clause, and indeed on the issue of incentives had reached a final agreement that $55,000 and no more would be paid towards the plaintiff’s fit out. [45] I find that it is probable that when he read Clause 4.12, Mr Matt realised it had been inserted by error and decided to proceed in the hope that he would get the benefit of the clause in the event that the defendant accepted the agreement with the term included. This is probably why he never queried its inclusion either with his own solicitors, or in correspondence with the defendant’s solicitors. I do not accept his evidence that he thought it was a normal clause in a commercial lease. He was cautious with landlords. He’d been “hoodwinked” in the past. He must have known that such a clause would only be there if it had been specifically discussed and agreed to by the landlord. It is fanciful to suggest that this was some form of unilateral magnanimous gesture by the defendant, in circumstances in which it had been made crystal clear to Mr Matt in the October 1999 meeting that he would get no more than $55,000 towards his fit out. [46] Mr Diehm submits that the numbering of the fit out clause, that is as 4.12A would have confirmed in his client’s mind that 4.12 was part of the agreement with the defendant. Mr Matt is clearly a canny businessman with a good understanding of commercial matters. He must have realised that 4.12 was not part of the agreement with Mr Green, and I don’t think the numbering used by the solicitors, who were labouring under an error, would have had any effect on him. [47] I found Mr Shaun Green to be a plausible, careful and honest witness. His explanation for the delay in actually reading the agreement he’d signed is perfectly reasonable in the circumstances. It was a frantically busy period leading up to the centre’s opening on 3 April and a number of leases had mounted up. He was entitled to assume that the solicitors had followed his instructions and not included Clause 4.12 in the agreement. How this came about is explained above, but the delay could not constitute acceptance in my opinion. Nor does the conduct of allowing the plaintiff to fit out and go into occupation constitute acceptance by conduct. I have found that the inclusion of Clause 4.12 did not affect Mr Matt’s desire or intention to gain a lease in the defendant’s centre. He got the incentive he bargained for, even if ultimately he was unhappy about the amount. It could not be said that the conduct of the defendants amounted to a misrepresentation, or that it could have mislead the ordinary or reasonable member of the class of persons i.e. potential tenants, of which the plaintiff was a member: Campomar Sociedad Limitada v Mike International Ltd (2000) 202 CLR 45 at 85-87. [48] It follows that the defendant has not accepted an agreement to lease which included Clause 4.12, nor has it acted in an unconscionable way, and the plaintiff’s claim must fail. -- 10 of 11 -- 11 Mistake [49] If I am wrong in this conclusion and if it is found that there was a concluded agreement between the parties, nonetheless I would have found that the inclusion of Clause 4.12 was a mistake, and I would have ordered rectification of the contract by deleting Clause 4.12. [50] If it is established on the evidence that one party is mistaken about the terms of a document and the other party knows, or ought to know of the mistake and takes steps to avoid alerting the innocent party to the mistake, for example by remaining silent then a court can order rectification. Mr Diehm contended for a more limited application of the principle by reference to the judgement of Mason ACJ, Murphy and Deane JJ in Taylor v Johnson (1983) 151 CLR 422 at 432. He submits that what is needed is actual knowledge of the mistake, rather than implied or assumed knowledge. Certainly the passage to which he refers, which is replicated in the headnote, does tend to support his argument but, at p432-3 in the same judgment and almost immediately after the passage relied upon by Mr Diehm it is said: “More over, and perhaps more importantly, it is a principle which is best calculated to do justice between the parties to a contract in the situation which it contemplates. In such a situation it is unfair that the mistaken party should be held to the written contract by the other party whose lack of precise knowledge of the first party’s actual mistake proceeds from wilful ignorance because, knowing or having reason to know that there is some mistake or misapprehension, he engages deliberately in a course of conduct which is designed to inhibit discovery of it.” [51] Certainly in some later cases it seems to have been assumed that actual knowledge is not always required, and some of the authors of the standard contract texts have also assumed this. For example, the authors of Chesire and Fifoot’s Law of Contract in the 8th Australian Edition, say this (as 12.51): “Unilateral mistake and unconscionability – Taylor v Johnson. As already noted, it should be made clear that a mistake made by one party by itself has no legal effect. There must be something more. The extra ingredient is actual or constructive knowledge of the mistake by the other party such that to insist on the contract would be unconscionable. A unilateral mistake by one party, known to the other, raises the quintessential dilemma in the law of mistake. The moral answer is clear: the court should set aside a contract when one party knows that the other has entered it on the basis of a fundamental misapprehension.” (my emphasis) [52] In this case, I am satisfied that Mr Matt did know and decided to say nothing, and wait to see if the defendant would sign with Clause 4.12 included. -- 11 of 11 --