Tavefund Pty Limited v Stephen Fitzgerald & Co Pty Limited [1989] ACTSC 57 (7 December 1989)

SUPREME COURT OF THE ACT

TAVEFUND PTY LIMITED v. STEPHEN FITZGERALD & CO PTY LIMITED
S.C. No. 633 of 1986
Buyer and Seller

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Buyer and Seller - leasehold interest - dispute as to area leased - whether dispute referred to experts within "arbitration" clause - whether determination of experts was intended to be final and binding on parties - estoppel.

Practice and procedure - action for recovery of balance of purchase price - cross-claim for damages for breach of contract - application for amendment after judgment reserved - application and submissions delivered to chambers without leave of Court - procedure undesirable.

Davis v. Dougall (1889) 15 VLR 424 at p 427

Leotta v. Public Transport Commission (NSW) (1976) 50 ALJR 666

Cheshire & Fifoot's Law of Contract (5th Australian edition) p 614 para 2010

Thompson v. Palmer [1933] HCA 61; (1933) 49 CLR 507 at p 547

Sargent v. A.S.L. Developments Limited [1974] HCA 40; (1974) 131 CLR 634

HEARING

CANBERRA
7:12:1989

Counsel for the Plaintiff: Mr. J.D.K. Meldrun, Q.C.

with Mr. S. Campbell

Solicitors for the Plaintiff: Vandenberg Reid Pappas & McDonald

Counsel for the Defendant: Mr. T.J. Higgins, Q.C. with
Mr. D. Ephraums

Solicitors for the Defendant: Freehill Hollingdale & Page

ORDER

The application to amend the further amended reply and defence to further amended cross-claim or set-off be refused.

There be judgment for the defendant on the plaintiff's claim.

The cross-claim be dismissed with judgment for the plaintiff on the defendant's cross-claim.

The plaintiff pay the defendant's costs of the plaintiff's claim and the defendant pay the plaintiff's costs of the defendant's cross-claim.

DECISION

This is an action by the plaintiff (the seller) against the defendant (the buyer) for recovery of the balance of the purchase price alleged to be due under a contract for the sale of a leasehold interest in land. Liability is denied and in the alternative the buyer makes a counterclaim for damages for breach of the same contract. Ascertaining the precise issues between the parties involves a liberal approach to the pleadings. Before stating what I understand those issues to be, it may be preferable to outline the factual background.

2. The seller was the lessee from the Commonwealth of land at Kingston being Block 5 Section 20 situated at 6 Kennedy Street. The seller obtained the consent of the appropriate government authority or authorities and subsequently the approval of the Court on 10 February 1984 to a change in the purposes clause of the lease from residential purposes to commercial purposes. The seller had been given to understand by the authorities that any building erected on the land was not to exceed 418 square metres in area, and that a term to that effect would be inserted into a substitute lease to be issued by the Commonwealth. After the approval by the Court of the change in the purposes clause, the Commonwealth proposed the issue of a substitute lease, containing the variation of the purposes clause. According to the evidence of Ms. McNee, the solicitor for the buyer, which I accept, the substitute lease proposed by the Commonwealth was obtained from the seller's solicitors up to a week before the exchange of the contracts or within a day after that exchange. In the event it was the seller's interest in that substitute lease which was the subject of the contract, although the substitute lease did not issue from the Commonwealth until 30 August 1985, the date of settlement. The substitute lease provided in clause 3(b) that the maximum gross area of the building should not exceed 418 square metres. The term "gross area" was not defined but in clause 1(b) "gross floor area" was defined to mean the sum of the gross areas of the floor or floors of the building measured from the external faces of the exterior walls or from the centre lines of buildings separating the building from any other building. The definition went on to provide that "gross floor area includes stairwells at each floor level, plant rooms, elevator shafts and storage areas".

3. In the meantime the seller had an architect draw up plans (the plans) for a two-storey office building. When the plans were drawn up the parties entered into the contract which is dated 1 March 1985 (exchange of contracts may not have been until a later date). A copy of the plans was annexed to the contract.

4. The relevant clauses of the contract are as follows:

"28. The Buyer acknowledges that the works
referred to in Annexure "A" being the
approved plans and Annexures "B" and "C"
being letters from Angus Hall Architect of
5 February, 1985 and 21 February, 1985 are at
the date hereof those which the Seller
intends to include or otherwise in the
improvements. If for any reason whatsoever,
the Seller cannot provide the exact feature
or inclusion listed, the Seller shall at its
sole discretion be at liberty without formal
approval from the Buyer to supply and install
a feature or inclusion of a similar standard
and price.
35. Arbitration
If any question difference or dispute ("the
dispute") whatsoever arises (whether during
the progress of the construction of the
improvements or affects completion or abandonment
and whether before or after the termination
or breach of agreement) between the
Seller and the Buyer upon or in relation to
the performance of the construction of the
improvements including any rectification work
required to be performed in the defects
liability period;
(a) the parties shall first make every
effort to endeavour to resolve the
dispute amicably;
(b) in the event that agreement is not
reached as contemplated by paragraph
(a), the parties shall then make every
effort to select a person whose opinion
on the outstanding issues both parties
would respect and in the event that such
a person is selected the parties shall
submit the issues to such person to make
a determinataion and the parties agree
that such determination (including a
determination as to how the costs of the
submission and its resolution are to be
borne) shall be deemed to be that of an
expert and shall be final and binding on
them both; and
(c) in the event that the parties are unable
to resolve the dispute as contemplated
in the preceeding paragraph (a) and (b),
each party shall then be entitled to
institute proceedings to have the issue
determined by a court of law.
39. Deposit and interest
.....
(b) Interest which accrues on the deposit
shall be dealt with as follows:
(i) If this agreement is duly completed,
one half (1/2) of all such interest
shall be paid to the Buyer and one
half (1/2) of all such interests shall
be paid to the Seller.
(ii) If the deposit is refunded to the
Buyer, one half (1/2) of all such
interest shall be paid to the Buyer
and one half (1/2) of all such
interest shall be paid to the Seller.
(iii) If the deposit is forfeited to the
Seller or in any case to which
paragraphs (i) or (ii) of this
sub-clause do not apply, all such
interest shall be paid to the Seller.
....."

5. According to the plans the building was designed to consist of four office units. Unit 1 and Unit 2 are situated on the ground floor and Unit 3 and Unit 4 are situated on the upper floor. Each of the units is made recognizable on the plans, if not identified, by the printed word "Unit" next to the appropriate number. Underneath that identifying feature in each case appears a figure immediately followed by the symbol "m2". The latter figure and symbol is, in my view, intended to designate an area measured in square metres which is associated with the particular unit. In relation to each of the four units those measurements are expressed as follows:

"Unit 1 92m2
Unit 2 92m2
Unit 3 119m2
Unit 4 116m2"

6. It is obvious that the total of the areas so shown is 419 square metres, which is only one metre in excess of the 418 square metres expressed to be the maximum gross floor area of the building in clause 3(d) of the proposed lease which was the subject of the contract for sale.

7. In accordance with schedule item 8(4) and clause 29 of the contract, the solicitors for the buyer paid the deposit of $86,000 into a cash management account in a building society. (The statement of claim makes reference to a deposit of $860,000, which is clearly a mistake and I treat it as such.)

8. On 25 July 1985 the buyer's solicitors wrote to the seller's solicitors in relation to a number of matters including the "internal measurements" of floor Units 1 and 2. The letter stated "measurements of the internal areas taken by an independent valuer with extensive surveying experience indicate that the internal area of Unit 1 is 76.17 sq m and of Unit 2 is 81.17 sq m". After referring to some alleged pre-contractual representations the letter continued as follows:

"Our client had the reasonable expectation that
for the purchase price of $860,000 it would
acquire a property with office accommodation
comprising a total area of 419 sq m, 184 sq m of
which would be available for letting as commercial
office space on the ground floor. In fact,
however, our client is to get considerably less
than that, the difference being an area of 26.66
sq m. Our client considers that this difference
is material and that it is entitled to a reduction
in the purchase price. Accordingly, we are
instructed that it hereby claims, pursuant to
Clause 18 of the Agreement, an amount of
$62,206.66 being the lost rental for 26.66 sq m
capitalised at the rate of 9% per annum, which is
the current capitalisation rate for investment
properties in Canberra."

9. Following receipt of this letter, Mr. Reid, the solicitor for the seller, wrote a reply which was never sent. However, in addition he telephoned Ms. McNee. There were a number of telephone conversations between the solicitors betwen then and 15 August. I accept Mr. Reid's evidence that the first of those conversations was probably on or shortly after 29 July 1985. The substance of that conversation was that Mr. Reid denied "that the areas on the plan annexed to the contract were in any way to be taken as indications of net lettable area".

10. Following further conversations between the solicitors, Ms. McNee wrote a letter on 15 August, the terms of which were agreed to over the telephone by Mr. Reid. The letter was addressed to the President, Australian Institute of Valuers. The relevant parts read as follows:

"We act for the Purchaser of the above property,
Stephen FitzGerald & Co. Pty. Limited, but address
you also with the consent and authority of the
Vendor, Tavefund Pty. Ltd. for whom Messrs
Vandenberg Reid Pappas & Macdonald act.
The subject property is located at 6 Kennedy
Street, Kingston and is one of several in that
area that have been redeveloped for commercial
purposes in recent months. A dispute has arisen
between the parties in relation to the areas of
two ground floor office suites.
Under the terms of the Agreement for Sale the
parties, in the advent of a dispute and the
absence of resolution of it by themselves have
agreed that a third party, approved by each of
them, should be appointed to resolve the matter
and that further in this regard the appointee will
be regarded as an expert and his or her decision
will be final and binding on each of the parties.
On behalf of both the Vendor and Purchaser we
should be grateful if you would confirm your, or
your nominee's availability to act as an expert in
relation to the resolution of this dispute."

11. Ms. McNee wrote a letter in similar terms to the Master Builders' Association of the ACT on the same date.

12. On 19 August 1985 Mr. Reid wrote to Ms. McNee a letter, the relevant parts of which read as follows:

"Further to prove this correspondence and
discussions we confirm that our client wishes the
provisions of special condition 35 of the
Agreement to now be put into effect on the basis
that a dispute has arisen.
We note you are to contact a representative of the
Master Builders Association and a representative
of the Australian Institute of Valuers to act as
arbitrators and to provide us jointly with a
decision on the dispute as soon as practicably
possible. We note that the cost of such
arbitration will be born (sic) equally by the
partners and that the representative from the
Master Builders Association will be fully conversant
if not an expert in commercial building matters."

13. On 21 August 1985 Ms. McNee wrote to Mr. Reid a letter which includes the following paragraph:

"Resolution of Dispute
We confirm that arrangements have been set in
place for the resolution of the dispute between
our respective clients by two third-party
experts. Further, we confirm that the parties
have agreed that the amount in dispute will be set
aside and held in either firm's trust account and
that completion of the agreement will take place
notwithstanding that this money has been set aside."

14. On 30 August 1985 settlement of the purchase took place, the buyer withholding from the purchase price the sum of $62,206.66 with the comment in Ms. McNee's letter of 29 August 1985 to Mr. Reid that that sum was being held "in relation to the outstanding dispute between our clients under clause 37 of the Agreement for Sale". Apart from that sum so withheld the purchase price was paid.

15. On 3 September 1985 Ms. McNee wrote to Mr. P.C. Gustavsen, the nominee of the Master Builders' Association, and a letter in identical terms to the President of the Canberra Chapter of the Australian Institute of Valuers. The relevant parts of the letters read as follows:

"The vendor and purchaser are in dispute as to the
effect on the bargain struck between them for the
purchase of Block 5 Section 20 Kingston ("the
property") and the construction thereon of 3
commercial office units.
The buyer says that -
1) The plans annexed to the Contract say that
those units were to be 92 sq m in size; it
purchased the property and made its
commercial decision to enter into the
contract on the basis of that representation.
2) The vendor's agent advised the buyer that the
net lettable area of the two units was to be
92 sq m or very close to that figure.
The vendor says that -
1) The dimensions on the plan were never designed
to indicate net lettable area and are
purely for general building requirements;
2) The units have been constructed in accordance
with the plans."

16. The letter continues:

"The experts are requested to adjudicate and
determine from all of the facts available terms of
settlement which appear fair or reasonable in the
circumstances. If the experts are in a position
to indicate which factors were material in coming
to their decision both parties would be
particularly appreciative."

17. Mr. Reid agreed in his evidence that he approved of the terms of this letter before it was sent, and that he did not see anything inaccurate about it.

18. Mr. Reid went on leave on 26 September 1985. According to his evidence he told Ms. McNee before then that the opinion of the experts that had been sought in the correspondence just referred to was to be advisory only. I shall return to this piece of evidence in a moment.

19. He further said, after reference to his diary, which was not in evidence, that his next conversation with Ms. McNee was on 13 October, which was "the first day back" after his return from leave. That evidence, however, is in the face of the letter written by Ms. McNee dated 10 October 1985, marked for the attention of Mr. Reid, referring to "our oral advice to you today", and to a letter "of even date" relating to the determination by Messrs Street and Gustavsen on 4 October 1985. The reference to a letter "of even date" is curious. It must, I find, be a reference to a letter of 9 October 1985 which enclosed a settlement statement, based on the determination, for the proposed distribution of the moneys withheld at settlement pending resolution of the dispute. Mr. Reid and Ms. McNee were in agreement to a substantial extent on the content of the telephone coversation but they differed on the date. According to Ms. McNee it took place on 10 October. In this regard I prefer the evidence of Ms. McNee. It is supported by her letter dated 10 October. Although Mr. Reid said that he recollected the date by reference to his diary, his diary was not tendered in evidence. Further, 10 October 1985 was a Thursday and 13 October was a Sunday. I find that the content of the conversation was along the following lines:
McNee: "Have you had a chance to look at the determination

arrived at by Street and Gustavsen?"

Reid: "Yes, I have. It's strange, they seem to blame your

fellow and then penalize mine. Your chap should have
made further enquiries and yet they have come down in
his favour."

McNee: "Yes, the thing is they ultimately have come down in my

client's favour."

Reid: "My fellow will hit the roof."
McNee: "Well, he agreed that it be resolved this way and I

hope he is not going to renege now.

Reid: "I'll have to get instructions."
McNee: "They have agreed to resolve it this way. If you are

suggesting that the moneys just sit while your client
decides what further action is going to be taken, then
this is unacceptable. Your client agreed that we use
this mechanism to resolve the dispute and they should
now abide by the umpire's decision."

Reid: "Okay, but that is not the end of the matter. Do you

mind if I ring these people, Street and Gustavsen and
ask them to point the finger at someone? I wanted them
to do that in their determination so that my fellow
would know where to turn. We might have a case against
the agent or the architect. We do not know and the
determination does not help us."

McNee: "You are free to take whatever action against whoever

you please, but in the meantime I believe that the
funds should be distributed in accordance with the
determination and the terms of the agreement."

Reid: "Well, on that basis, go ahead. My client reserves his rights."

20. On 14 October 1985 (which was the Monday following the conversation just referred to) Ms. McNee wrote to Mr. Reid in the following terms:

"We refer to our letter of 10 October 1985, and,
in accordance therewith and as we have heard
nothing from you, we have instructed the National
Bank of Australia Limited to withdraw the sum of
$68,669.00 and we shall disburse same once such
sum has been cleared through our trust account."

21. The "oral advice" referred to in Ms. McNee's letter of 10 October 1985 is likely to have been given subsequent to the letter dated 9 October 1985. But whether that oral advice was given in a conversation which occurred before or after Ms. McNee's letter of 9 October 1985 was received by Mr. Reid, is impossible to determine. Curiously, the evidence of neither solicitor referred to anything which corresponds with the oral advice referred to in the letter of 10 October 1985. Nevertheless, I find that it is likely that this was a verbal communication between Ms. McNee and Mr. Reid on 10 October 1985 relating to the proposed disbursement of the retention funds.

22. In the light of the above facts and findings, I return to the matter of the conversation which Mr. Reid said occurred in his office with Ms. McNee and Mr. Gustavsen present before he went on holidays on 26 September. He claimed in answer to a question put in cross-examination that at that meeting he told Ms. McNee that the opinion of the experts was to be advisory only. He made no written note of that conversation. To some extent he later contradicted that by saying that the subject of the effect of the expert's opinion was not discussed at the meeting. Furthermore, Mr. Gustavsen was not called, and no explanation was forthcoming as to his absence. Finally, Ms. McNee was not cross-examined on this aspect. (That is a somewhat neutral point and Mr. Reid was not cross-examined on this aspect either.) On the whole, I am not satisfied on the probabilities that Mr. Reid told Ms. McNee prior to his departure on leave that the opinion to be obtained from the experts was to be advisory only.

23. The funds remaining in the National Bank account were distributed by Ms. McNee on 15 October 1985, after payment to agents of the fees payable to the experts, by payment of one third to the seller and two thirds to the buyer. The exact figures were as follows:
Tavefund Pty. Limited - $23,004.55
Stephen FitzGerald & Co. Pty. Limited - $44,464.45
Jones Lang & Wootton $ 1,200.00
Total: $68,669.00

24. I turn now to the pleadings.

25. The claim made by the plaintiff in the statement of claim dated 22 April 1986 is that it was entitled to receive on settlement of the purchase the sum of $862,974.50 (being the sale price of $860,000 together with one half interest earned on the deposit in accordance with clause 39(b) of the contract), that the buyer has paid $820,382.43 only (which is admitted) and that the seller is entitled to the balance of $42,592.07. In support of that claim the plaintiff relies solely on the written contract and the fact that the deposit earned $42,592.07 until the date of settlement. That latter fact is not alleged precisely in the statement of claim, but the case was conducted at the hearing on the basis that it was correct, and it has never been disputed in the dealings the parties have had with each other. I find it proved.

26. The matters raised in defence by the buyer are to be found in paragraph 10 of the undated amended defence and further amended cross-claim (which I shall call the defence and cross-claim). It is alleged that the reference to the experts, Messrs. Gustavsen and Street, and the determination by those persons in accordance with the reference, had the effect of operating as a variation of the purchase price. Accordingly, so it is alleged, when the retention sum made up of the deposit and interest was disbursed by Ms. McNee on 15 October 1985 in accordance with the determination, the total sum due on settlement was paid.

27. Alternatively, the buyer says by way of defence in paragraph 11 of the defence and cross-claim that the seller is estopped from denying that it has been paid the whole of the purchase price.

28. Again, in the alternative, but by way of cross-claim, the buyer claims damages for breach of the contract based on an alleged failure of the seller to complete the construction of the building in accordance with the contract. The buyer concedes that if it is successful in its defence, then there is no room for its cross-claim, and that only in the event of the Court rejecting its arguments in support of the defence, is it appropriate to turn to the matters raised by cross-claim.

29. It should be noted for the purpose of the record that in paragraph 12 of the defence and cross-claim the buyer claims compensation pursuant to the provisions of the contract, but that claim was abandoned at the hearing.

30. In paragraph 2 of its further amended reply and defence to further amended cross-claim or set-off dated 29 August 1988 (the reply), the seller expressly denies that the dispute that was referred to Messrs Gustavsen and Street was a dispute within clause 35 of the contract and implicitly denies that the determination was final and binding in accordance with clause 35(b). The seller further denies in paragraph 3 that the distribution of the deposit and interest "was intended to be and was in fact a final resolution of the issues between the parties". (It may be noted here that this purported denial is in truth a positive assertion of a negative proposition, because it seeks to deny something that is not expressly alleged.) It should also be observed that an assertion in paragraph 4 of the reply that clause 35(b) was unenforceable in that it purported to oust the jurisdiction of the Courts was abandoned at the hearing.

31. At this stage I should mention also that after hearing the evidence of the witnesses and the submissions of counsel and announcing that I would reserve my decision, the seller attempted to add to the arguments put before the Court and to further amend its reply. The method adopted to achieve this end was unorthodox and should not be repeated. Written submissions and a draft of the proposed amendment were simply delivered on behalf of the seller to my chambers. The proper course would have been by way of notice of motion, or if by consent, to arrange for the case to be relisted for mention. However, the method to some extent had its intended result. I relisted the matter for mention forthwith of my own motion. In the meantime counsel for the buyer had received a copy of the documents received by me and, on the day the case was relisted for mention, was able to put before me written submissions in answer to those of the seller both on the question of whether the amendment should be allowed and on the issues that would be raised by the amendment if it were allowed. The essential issue raised by the proposed amendment is an alleged waiver on the part of the buyer to treat the determination of the experts pursuant to clause 35(b) as final and binding. This waiver is alleged to have arisen by reason of what was said by Ms. McNee immediately prior to the disbursement of the deposit and interest. Waiver is a matter which according to the conventional rules of pleading must be expressly pleaded: see for example Davis v. Dougall (1889) 15 VLR 424 at p 427.

32. It was submitted on behalf of the seller, however, that regardless of the absence of waiver as an issue on the pleadings, certain parts of the cross-examination of Mr. Reid, and the matters raised in re-examination as a result, went either solely or principally to the question of waiver. It occurred to me at the time of such cross-examination and re-examination that the matters raised were of doubtful relevance, but there was no objection on the part of either counsel. However, on reflection, I am of the view that this material had some relevance to the nature and terms of the arrangement between Mr. Reid and Ms. McNee relating to the reference to Messrs Gustavsen and Street. The extent to which anything said by Mr. Reid or Ms. McNee after learning of the determination of the experts, even though directly relating to the disbursement of the deposit and interest, might be taken to be some evidence of what they had agreed would be the basis of the reference to the experts. The extent to which those later conversations shed light on the nature and terms of the arrangement is something to which I shall return in a moment. However, I reject the submission that the cross-examination and re-examination now relied on by the seller was necessarily referable to a question of waiver, or solely or principally so referable.

33. The matter of a possible waiver on behalf of the buyer was not raised in the case until the address at the end of the hearing by counsel for the seller, and the only answer that was made by counsel for the buyer at the hearing was that waiver had not been pleaded and was irrelevant. I am not convinced that, if waiver had been pleaded or otherwise had become a live issue in the case prior to counsel's addresses, the cross-examination of Mr. Reid and the examination-in-chief of Ms. McNee would have proceeded differently. I bear in mind that it is the duty of the Court under s.24 of the Australian Capital Territory Supreme Court Act 1933 to decide as far as possible all matters in controversy between the parties, and that it is appropriate to allow an amendment to the pleadings to reflect the true dispute which has emerged during the hearing both by way of evidence and by way of submissions presented on behalf of the parties (see Leotta v. Public Transport Commission (NSW) (1976) 50 ALJR 666). Nevertheless when evidence and argument has concluded it is, in my view, inappropriate that the pleadings should be amended to allow an issue to be decided, which although in retrospect may be glimpsed as having been raised during the hearing, was not subject to that degree of scrutiny, investigation and ventilation which is necessary if the dispute between the parties is to be finally resolved by a determination of that particular issue. In the circumstances I refuse the application for amendment.

34. I take the point put in the written submissions for the seller that in contrast to the claim by the seller in the statement of claim which is based expressly and solely on the terms of the written contract, the cross-claim by the buyer as pleaded does not condescend to particulars of the agreement alleged in paragraph 7 and that "there has been no exploration by the parties of the basis upon which the plaintiff denied ..... that distribution of the moneys was intended to be and was, in fact, a final resolution of the issues between the parties". It was, however, open to those acting for the seller to request particulars of the alleged agreement. Apparently that was not done. The seller cannot be heard at this stage to complain of lack of particularity, although of course that may be the basis for a comment that the buyer's claim is not precise enough to warrant acceptance.

35. Having regard to the content of the correspondence and of the conversations between Mr. Reid and Ms. McNee which I find to be established as matters of fact, I further find that it was intended by the parties that the reference to the experts was to be a reference under clause 35 of the contract.

36. A further argument was put on behalf of the seller that regardless of the intention of the parties, the matters that were referred to the experts were not capable of constituting a dispute or being resolved under clause 35(b). In the same vein it was submitted that the decision of the experts was not a determination within that clause. I accept that there may be situations in which a party to a contract may utilize the dispute-solving mechanisms of that contract for the purpose of resolving a dispute which does not arise out of that contract. I accept also that the terms of a contract may be such that certain disputes arising out of the contract may be referred to the dispute resolving mechanisms provided for in the contract, whereas other disputes so arising may not be so referred. The ambit of arbitration clauses and the like in any particular contract must depend on the terms of the contract itself. In this case the question turns on the interpretation of clause 35. That clause commences with the use of the words "any question, difference or dispute (the dispute) whatsoever" and whilst there must be some restriction on the range of disputes envisaged, the use of the word "whatsoever", in my view, means that a narrow interpretation should not be placed upon the other words in the clause. The words secondly appearing in brackets, whilst not entirely clear in meaning, evince an intention that the clause is to apply to disputes whether they arise before, during or after the construction of the building. However, it is submitted that insofar as the clause is restricted to disputes which arise "in relation to the performance of the construction of the improvement" it does not apply to the dispute which did in fact arise and which was referred to the experts. It is submitted that what was referred to the experts was not a dispute about "the performance of the construction of the improvements" but about the meaning and interpretation of the plans annexed to the contract. If the latter submission is correct, then it would follow, so it seems to me, that the parties could never avail themselves of the provision of clause 35 unless and until they were agreed as to its interpretation and meaning. In other words, clause 35 could not be utilised for the purposes of obtaining the determination of a third party relating to the performance of the construction of improvements, unless they were agreed as to what was meant by "performance" and by "construction of the improvements". As the construction of a written contract is conventionally regarded as a matter of law, there may be room for an argument that parties should not be taken to be referring a question solely directed to interpretation to a lay person unless their intention is clear. However, that is not the situation in the present case. What is involved here is a building which has or has not been constructed in accordance with plans annexed to a contract. The determination of questions relating to the performance of the construction involves the determination of an initial question as to what was meant by the figures and symbols appearing on the plan. Even if that question is one of law, it is proper, in my view, to regard it as a question which was concerned with the "performance of the construction of the improvements".

37. The next submission, as I understand it, was that the determination was not a determination in accordance with clause 35. The determination was an award of two-thirds of the deposit and interest to the buyer and one-third to the seller. The submission is made that clause 35 does not authorise the making of an award of such a nature. However, in my view, clause 35 does not limit the scope of the award making power and the agreed reference to the experts in Ms. McNee's letter of 3 September 1985 sought "terms of settlement which appear fair and reasonable in the circumstances". Whilst it is difficult to see how the experts arrived at their determination, they no doubt did so in accordance with concepts of good sense and fairness. I am not convinced that their award was not a determination within clause 35.

38. Accordingly, I conclude that it was intended by the buyer and the seller that the reference to the experts be a reference under clause 35 of the contract, that the dispute so referred did fall within clause 35 and that the determination of the experts was intended to be final and binding on both parties.

39. I do not think that this finding can be affected by anything that was said after the determination in the conversations between Ms. McNee and Mr. Reid on 10 October. It is important to bear in mind that the buyer relies for its defence upon the reference of the dispute to the experts and the subsequent determination pursuant to clause 35. The eventual disbursement of the deposit and interest, pursuant to the determination, on behalf of the buyer is not to the point insofar as it relates to the matters raised by way of defence. Nothing said in those conversations or raised in the correspondence subsequent to 10 October 1985 goes to prove that it was not the intention of the parties, prior to the determination by the experts, to accept that determination as final and binding pursuant to clause 35.

40. In the circumstances, I find that the defence of variation of the purchase price raised in paragraph 10 of the amended defence succeeds. I would add, however, that I am satisfied that the defence of estoppel raised in paragraph 11 also succeeds. I am disposed to add that the defence of estoppel succeeds even if the reference to the experts falls outside the scope of clause 35. The buyer relied upon the representation or promise by the seller that it would accept the decision of the experts, that representation was relied upon to the extent that the buyer placed the deposit in the cash management account as agreed and, in my view, the seller cannot now be heard to say that the decision of the experts was not final and binding.

41. Reference to authority is hardly necessary but a passage in Cheshire & Fifoot's Law of Contract (5th Australian edition) is to the point. At p 614 para 2010 the authors state:

"In principle, the concept of estoppel, the object
of which is 'to prevent an unjust departure by one
party from an assumption adopted by another',
should apply to conduct by a party to a contract
which induces the other to assume that the
contract is discharged or varied."

The authors' quotation is from the judgment of Dixon J., as he then was, in Thompson v. Palmer [1933] HCA 61; (1933) 49 CLR 507 at p 547. The passage concludes:

"..... there is in principle no reason why a party
whose conduct leads the other to assume that the
contract is at an end should not be estopped from
denying its discharge, provided that the
assumption was reasonably made, and that
resilement from it would cause injustice".

That seems to me with respect to be an accurate statement of the law which is pertinent to the present case and which justifies a decision in favour of the buyer on the matter of estoppel. Moreover, as was said by Mason J., as he then was, in another case involving termination of contract, Sargent v. A.S.L. Developments Limited [1974] HCA 40; (1974) 131 CLR 634 at 655 "it is perhaps not of much importance whether one ascribes this result to the doctrines of election, waiver or estoppel ....".

42. The defence being successful, it is unnecessary to go on to consider the cross-action. However, a good deal of the time at the hearing was taken by evidence which related to the cross-action only, and this should be reflected, in my view, in the award of costs.

43. There will be judgment for the defendant on the plaintiff's claim. The cross-claim is dismissed with judgment for the plaintiff on the defendant's cross-claim. The plaintiff is to pay the defendant's costs of the plaintiff's claim and the defendant is to pay the plaintiff's costs of the defendant's cross-claim.