Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd - [2009] NSWCA 386

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Abadeen Group Pty Ltd & Anor v Bluestone Property Services Pty Ltd & Ors; Brown & Ors v Hodgkinson & Ors [2009] NSWCA 386
This decision has been amended. Please see the end of the judgment for a list of the amendments.

FILE NUMBER(S):
40156/09
40157/09

HEARING DATE(S):
30 September 2009

JUDGMENT DATE:
7 December 2009

PARTIES:
CA 40156/09
Abadeen Group Pty Ltd (First Appellant)
Brooke Brown (Second Appellant)
Bluestone Property Services Pty Ltd (First Respondent)
Namsauh Holdings Pty Ltd (Second Respondent)
St Kilda Rd Developments Pty Ltd (in liquidation) (Third Respondent)

CA 40157/09
Justin Brown (First Appellant)
Sharlotte Pty Limited (Second Appellant)
Abadeen Group Pty Ltd (Third Appellant)
Lighter Quay Investments Limited (Fourth Appellant)
Greenberg Investment Development Limited (Fifth Appellant)
Lance Hodgkinson (First Respondent)
Bluestone Property Services Pty Ltd (Second Respondent)
230 Palmer Street Pty Ltd (Third Respondent)
Daniel Hausman (Fourth Respondent)
Crown Street Developments Pty Ltd (Fifth Respondent)
St Kilda Rd Developments Pty Ltd (in liquidation) (Sixth Respondent)
Gorcha Pty Ltd (Seventh Respondent)

JUDGMENT OF:
Hodgson JA Campbell JA Sackville AJA

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
SC 4043/08, 2008/08

LOWER COURT JUDICIAL OFFICER:
Palmer J

LOWER COURT DATE OF DECISION:
8 April 2009

LOWER COURT MEDIUM NEUTRAL CITATION:
Brown & Ors v Hodgkinson & Ors [2009] NSWSC 262

COUNSEL:
I Jackman SC and J P Donohoe (Appellants)
P Durack SC and R Francois (Respondents)

SOLICITORS:
Pattin Bell Davey Lawyers (Appellants)
Clayton Utz (Respondents)

CATCHWORDS:
CONTRACT - terms of a commercial agreement recorded in a handwritten note - whether parties signing the note intended to conclude an enforceable bargain - significance of a statement that a solicitor would have to draft an agreement properly - whether the parties needed agreement as to all terms necessary to conclude a contract

LEGISLATION CITED:
Conveyancing Act 1919, s 54A

CATEGORY:
Principal judgment

CASES CITED:
Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147
Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; 5 CLR 647
Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622
Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153
Clifton v Palumbo [1944] 2 All ER 497
G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631
L’Estrange v Graucob Ltd [1934] 2 KB 394
Masters v Cameron [1954] HCA 72; 91 CLR 353
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451
Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603
Sinclair, Scott & Co v Naughton [1929] HCA 34; 43 CLR 310
Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248
Thorby v Goldberg [1964] HCA 41, 112 CLR 597
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165

TEXTS CITED:

DECISION:
Appeals dismissed with costs

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40156 of 2009
CA 40157 of 2009
HODGSON JA
CAMPBELL JA
SACKVILLE AJA
7 December 2009

ABADEEN GROUP PTY LTD & ANOR v BLUESTONE PROPERTY
SERVICES PTY LTD & ORS
BROWN & ORS v HODGKINSON & ORS

Judgment

HODGSON JA: I agree with Sackville AJA.
CAMPBELL JA: I agree with Sackville AJA.
SACKVILLE AJA: Two appeals are before the Court. Both arise out of a meeting which took place on Saturday 12 August 2006 at the Lord Dudley Hotel in Paddington between Messrs Justin Brown, Lance Hodgkinson and Daniel Hausman (“Lord Dudley meeting”). The purpose of the Lord Dudley meeting was to discuss a buyout by Messrs Hodgkinson and Hausman, or companies associated with them, of the interests of Mr Brown, or companies associated with him, in a joint venture to develop a large property in Miller Street, Cammeray (“Cammeray Development”).
The upshot of the Lord Dudley meeting was a handwritten document which was signed by the three participants (although, as will be explained, Mr Hodgkinson appears to have signed two or three days later). The handwritten document (“Lord Dudley document”), which is reproduced below ([51]), recorded terms relating to the buyout of Mr Brown’s interest not only in the Cammeray Development, but in another large development on St Kilda Road, Melbourne (“Chevron Development”).
The Lord Dudley document does not incorporate details that ordinarily might be expected in a document intended to constitute a record of a binding contract. It does not expressly record, for example, the names of the contracting parties, the identity of the persons or corporations which were to make or receive payments, or the mechanism by which certain properties subject to mortgages were to be transferred. Nonetheless, Mr Brown and his companies maintain that the agreement reached at the Lord Dudley meeting was intended by the participants to constitute a binding contract, as evidenced by the their signatures on the Lord Dudley document.
Mr Brown and four companies associated with him (“appellants”) instituted proceedings in the Supreme Court against Messrs Hodgkinson and Hausman and five companies associated with them (“respondents”). The appellants claimed a declaration that they or their nominees and the respondents or their nominees concluded a contract on or about 12 August 2006 to buyout the appellants’ interest in the Cammeray and Chevron Developments (“Lord Dudley Agreement”). The appellants, among other consequential relief, sought an order that the respondents specifically perform the Lord Dudley Agreement and, in the alternative, equitable compensation and damages.
In separate proceedings, but which were treated as a cross-claim, three companies associated with Messrs Hodgkinson and Hausman sought orders against Abadeen Group Pty Ltd (”Abadeen”), one of the appellants, and Ms Brooke Brown, the wife of Mr Brown. The cross-claimants (as I shall describe them) sought orders for the payment of sums totalling $950,000, being amounts paid or benefits provided to Abadeen or Ms Brown (“cross-defendants”) by one or other of the cross-claimants after 12 August 2006. These payments or benefits were said to have been made or provided otherwise than in discharge of a debt or contractual obligation and to have unjustly enriched the cross-defendants.
In a judgment delivered on 8 April 2009, following a four day hearing, Palmer J rejected the appellants’ claims. His Honour held (at [84]) that in the circumstances in which the Lord Dudley document was made:
“the parties’ common intention was no more than to record briefly as an aide memoire, and to acknowledge accordingly, points of an agreement to be worked out in more detail later and incorporated in a binding legal document”.
Accordingly, his Honour entered judgment for the respondents on the appellants’ statement of claim.
Since the defence to the cross-claim was based squarely on the enforceability of the Lord Dudley Agreement and since his Honour held that the Lord Dudley Agreement was unenforceable, it followed that the cross-claim had been made out. Accordingly Palmer J awarded judgment for the cross-claimants in amounts totalling $950,000, plus interest.
The first appeal is by the appellants against Palmer J’s decision entering judgment for the respondents. The second appeal is by the cross-defendants against the orders made on the cross-claim.
I explain the parties to the litigation and the case pleaded by the appellants later (at [76]-[85]). It is convenient to defer this explanation until the uncontroversial facts have been recounted. I note, however, that one of the respondents, 519 St Kilda Road Developments Pty Ltd (“519 St Kilda”), was placed into liquidation after the trial. At the outset of the appeal, the Court granted leave to the appellants to continue the appeal against 519 St Kilda.
Unless the context requires otherwise, hereafter I shall use the term “appellants” to include the cross-defendants. Similarly, unless the context requires otherwise, I shall use the term “respondents” to include the cross-claimants.
COURSE OF EVENTS
Messrs Brown, Hodgkinson and Hausman were friends and property developers. Through their various companies, they entered into joint ventures in relation to the Cammeray and Chevron Developments. Messrs Hodgkinson and Hausman were also joint venturers, through their respective companies, in separate, smaller developments at 230 Palmer Street, East Sydney (“230 Palmer Street Development”) and Crown Street, Darlinghurst (“Crown Street Development”).
The Joint Ventures
Chevron Development
The site for the Chevron Development (“Chevron Site”) was acquired in late 2003 by 519 St Kilda. Mr Hodgkinson was a 50% shareholder in 519 St Kilda through Bluestone Property Services Pty Ltd (“Bluestone”), while Mr Hausman held a 50% interest in 519 St Kilda through Emily Nominees Pty Ltd (“Emily”). Both Messrs Hodgkinson and Hausman were directors of 519 St Kilda. The Chevron Development was to involve the construction of 300 apartments, together with commercial and rental components.
Mr Brown was not recorded as having any shareholding in 519 St Kilda or any interest in the Chevron Site. However, Palmer J found (at [26]) that Mr Brown was a “silent partner” in the Chevron Development, controlling “one-third of the equity”. This interest was held through Greenberg Investments Development Ltd (“Greenberg”), a company incorporated in the British Virgin Islands, but apparently administered in Hong Kong. Palmer J found (at [26]) that Mr Brown was neither a director nor shareholder of Greenberg, but controlled the company “although how and to what extent is not clear from the evidence”.
Mr Hodgkinson gave evidence that Mr Brown advanced funds for the Chevron Development and that, apart from bank statements, there was no other documentary record either of his involvement or that of Greenberg. This came about, according to Mr Hodgkinson, because Mr Brown did not want any documentation in relation to the transaction and Mr Hodgkinson was quite content to accept the funds provided by Mr Brown on that basis. Mr Hodgkinson also said that the funds advanced by Greenberg were repaid, but that had the Chevron Development proceeded Mr Brown (through Greenberg) would have been entitled to a share of any profits. Mr Hausman’s evidence was broadly similar, although he said that the partners’ equity in the Chevron Development at the stage that Greenberg advanced funds was only $3 million and that the financier was taking 97% of the risk.
Mr Hausman’s comment was a reference to the fact that 519 St Kilda borrowed $127 million for the Chevron Development from various financiers, including Capital Finance Group (“Capital Finance”), the first tier financier. The documentation for the Chevron Development included a first mortgage of the Chevron Site to Capital Finance; loan facility agreements between 519 St Kilda and the second and third tier financiers (Babcock and Brown Ltd (“Babcock and Brown”) and CRS Investments Pty Ltd (“CRS”), respectively); guarantees by Bluestone, Emily, Mr Hodgkinson and Mr Hausman to Babcock and Brown and CRS; and an equitable mortgage by Emily and Bluestone to Capital Finance of their shares in 519 St Kilda.
On 18 October 2004, 519 St Kilda entered into a contract for the sale of Lot 221C in the Chevron Development to Ms Brown for a price of $425,000. In December 2004, 519 St Kilda entered into a contract for the sale of Lot 728 to Abadeen for a price of $750,000.
On about 16 March 2006, Lighter Quay Investments Pty Ltd (“LQI”), a company controlled by Mr Brown, entered into contracts with 519 St Kilda to purchase 17 units in the Chevron Development. These contracts were described by the parties as the “Lighter Quay Renounceables” because 519 St Kilda could terminate them without penalty within a certain period.
As at 12 August 2006, Stage 1 of the Chevron Development, comprising 68 units, was nearing completion and Stage 2, comprising 232 units, was approximately eight months away from completion. Mr Hodgkinson said in his evidence that the results of the sale program, which had commenced in 2004, had been poor in terms of quantity and price. Only about one third of the units had been sold, under contracts worth approximately $50 million.
A chart showing the structure of the Chevron Development, helpfully prepared by the respondents, is reproduced as Appendix A.
Cammeray Development
The precise date at which the site for the Cammeray Development (”Cammeray Site”) was acquired is not clear, but it appears to have been in late 2005. The Cammeray Development was to have consisted of 39 residential units and 5000 square metres of retail space.
The Cammeray Site was acquired by Gorcha Pty Ltd (“Gorcha”). Initially, all shares in Gorcha were held by Mr Brown through Greenberg. However, in mid-2005, Messrs Hodgkinson and Hausman each acquired 30% of the shares in Gorcha, through Bluestone and Emily, respectively, leaving Greenberg with 40% of the company’s shares. The directors of Gorcha were Messrs Brown, Hodgkinson and Hausman.
Gorcha borrowed approximately $17 million for the Cammeray Development from financiers, including Capital Finance. The documentation included a facility agreement between Gorcha and Capital Finance dated 30 September 2005; guarantees to Capital Finance provided by Messrs Brown, Hodgkinson and Hausman and by Greenberg, Bluestone and Emily; and an equitable mortgage of shares in Gorcha by Greenberg, Bluestone and Greenberg in favour of Capital Finance. As at 12 August 2006, construction on the Cammeray Development was expected to begin in early 2007, with completion scheduled for mid-2008.
A chart relating to the structure of the Cammeray Development is reproduced at Appendix B.
230 Palmer Street Development
Messrs Brown and Hodgkinson entered into a joint venture in 2003 with respect to the 230 Palmer Street Development which was carried out by 230 Palmer Street Pty Ltd (“230 Palmer Street”). Messrs Brown and Hodgkinson each held 50% of the shares in 230 Palmer Street, through Sharlotte Pty Ltd (“Sharlotte”) and Bluestone, respectively. Messrs Brown and Hodgkinson were the directors of 230 Palmer Street, but Mr Brown ceased to be a director on 3 August 2006.
As at August 2006, the 230 Palmer Street Development consisted of a site (“230 Palmer Street Site”) on which five residential units and two retail shops were constructed. The 230 Palmer Street Site was subject to a first mortgage to St George Bank on which approximately $4.5 million was owing.
A chart relating to the structure of the 230 Palmer Street Development is reproduced at Appendix C.
Crown Street Development
In 2003, Messrs Hodgkinson and Hausman acquired a site in Crown Street, Darlinghurst (“Crown Street Site”) through Crown Street Developments Pty Ltd (“Crown Street”). Each held a 50% interest in Crown Street through Bluestone and Namsauh Holdings Pty Ltd (“Namsauh”), respectively. Messrs Hodgkinson and Hausman were the directors of Crown Street.
As at August 2006, the Crown Street Development consisted of 10 residential units and two retail shops. Crown Street had borrowed about $6.1 million from the Bank of Western Australia on the security of a first mortgage over the Crown Street Site.
A chart relating to the structure of the Crown Street Development is reproduced at Appendix D.
Events Leading to the Lord Dudley Meeting
According to the findings made by Palmer J, by late 2005 Mr Brown wished to sell out of the Cammeray Development. He discussed with Messrs Hodgkinson and Hausman the basis on which his interest (held through Greenberg) would be acquired by them or their interests. Messrs Hodgkinson and Hausman required additional finance to fund any buyout and, accordingly, applied to Investec Bank (Australia) Ltd (“Investec”) for a loan that would include funds for a buyout. The negotiations between the three men continued until mid-2006 without any resolution.
On 3 July 2006, Mr Brown sent an email to Mr Hausman stating that Greenberg required a “1.5 mill payout on the Investa [sic] deal as it has commitments to fulfil”. The reference to the “Investa deal” appears to be to the loan being negotiated with Investec.
On 4 July 2006, Investec made an offer of financial accommodation to Bluestone and Namsauh. The offer was for a facility of $3.319 million on the security of second mortgages over various properties, including the 230 Palmer Street Site and the Crown Street Site, and fixed and floating charges over the assets of Bluestone and Emily (including their shareholdings in 519 St Kilda and Gorcha). The offer was subject to a variety of conditions to be performed by the borrowers, including obtaining valuations showing a minimum combined market value of the properties of $19.8 million. The facility was to be available for “Buyout of 3^rd partner’s interest [in the Cammeray Development], working capital and capitalised interest for nine months.”
Shortly after 4 July 2006, Mr Hausman told Mr Brown that Investec’s offer was $500,000 less than had been sought because Investec insisted on a lower loan to valuation ratio than the borrowers had proposed. Mr Brown’s response – which Palmer J characterised (at [35]) as “typical of his attitude” – was that the financing of the buyout was not his problem and that he wanted his money immediately.
On 14 July 2006, Mr Brown sent an email to Mr Hausman as follows:
“In order to be clear moving forward from our discussions yesterday, subject to Lance [Hodgkinson’s] approval,
1.$1.2 mill to be paid from Investec in the next month
2.300k plus the second mortgage costs will be paid by 31 Oct 2006, second mortgage costs will be approx 25k per month
3.JB [Mr Brown] to sign contracts for the Crown St and Palmer St properties, settlement will occur no later than 31 March 2007, all holding costs for these properties will be borne by you until settlement. JB will be able to sell all or part of the properties that will not settle prior to March 31
4.Brooke’s [Ms Brown’s] Chevron apt will be settled at 150k
5.Abadeen’s apt at Chevron will be provided at no cost by 1 December 2006
6.The Chevron discounts will not be taken into account with JB’s profit share.
Mate, I think this is what we agreed, could you confirm today …”
Palmer J observed (at [37]) that, to an outside reader, the terms of the email were “cryptic to the point of obscurity”. However, he noted that the proposal envisaged a cash payment of $1.2 million within a month out of the proceeds of the Investec loan.
Mr Hausman replied to Mr Brown’s email the same day as follows:
“I agree all 6 points are integral elements of our deal, the specifics of which still need to be agreed by both Lance and myself.
We need to internally work through Points 1 & 2 as Investec as you are aware have clipped us back $500k.
I also need to table the Land Tax issue at Chevron. Are you in a position to contribute anything?”
The land tax issue related to a liability of approximately $746,000 that had to be discharged to enable the settlements of units to occur.
On 19 July 2006, Bluestone obtained a valuation of the 230 Palmer Street Development showing a market value of $5.1 million. On 25 July 2006 Crown Street obtained a valuation of the Crown Street Development of $8 million.
On 20 July 2006, Mr Hausman sent an email to Mr Brown saying that the:
“best we can do is 850k on settlement of Investec loan, anticipated in 2 weeks, 500k on 30^th October and 150k 4 weeks after that”.
Mr Hausman said in the email that $300,000 in land tax for the Chevron Development had to be paid by the following Friday.
Mr Brown replied saying that this was a “long way from what we discussed”. His lender was not prepared to accept $850,000 as a part payment and would accept only a minimum of $1.1 million. Mr Brown said that he, too, did not have funds to pay for land tax the following Friday.

Mr Hausman’s reply was as follows:
“Mate, the new feaso is very average. Its currently sitting on about 5m profit due to 26.5m now being the relevant land content comprising 17.5m Capital, 6.3m Babcocks, 3m exit fee Babcocks by sep 30 etc.
Not trying to be arrogant but the fact that I’m not trying to wriggle out of the current buyout package of 4.5m I think is gentleman like.
This deal will need some serious massage.
I’m very stressed about Land tax for Chevron. The 3 of us need to sit down and discuss this, in particular the immediate money required as well as the 550k we have thrown in since November last year when Byrne [of Capital Finance] turned the tap off.
On Cammeray.
I think in the circumstances say 950k now, 450k 30^th October and 100k 4 weeks after is the max we could do.
With the cash and stock deal, you are effectively getting 70 to 80pc of the profit and we don’t have any pre commitments or building contract yet”.
On 27 July 2006, Mr Hausman sent an email to Mr Brown, as follows:
“Everything agreed with the exception of the 20k per month servicing of your loan and subject to Investec Drawdown of Funds.”
The email then referred to payments of land tax that had been made for the Chevron Development, making $533,000 paid by “us” since November 2005. Mr Hausman noted that “we are juggling Chevron debtors [presumably creditors] big time” and warned that:
“This is all coming out of our pockets hence squeezing our situation and making it hard to entertain your 20k per month.
At this point in time we have paid approx $920,000.”
Mr Brown replied as follows:
“I understand your point, however they are separate issues.
I’m covering your cashflow issues as much as I can but there is a limit, I will cover it by 5k a month until Nov, after that up to you guys..
With regard to chevron, when someone gives me proper accounts which you guys were being paid 30k a month to manage, happy to discuss and pay my share for what is fair, also now I’m not getting bought out I want to get day to day involved on the sales front now”.
On 11 August 2006, Investec made a revised offer to Bluestone and Namsauh in a document headed “Facility Letter – Real Estate Investment Facility”. Subject to the satisfaction of special conditions relating to the grant to Investec of a second ranking charge over the interests of Bluestone, Emily and Namsauh in the Cammeray and Chevron Developments (but not over the 230 Palmer Street Development), Investec offered to lend $2.1 million. Of this amount, $1.5 million was to be used for working capital, $223,000 for capitalised interest and $377,000 to acquire “partner’s interest in the Cammeray [Development]”. The offer was subject to a number of conditions precedent.
Lord Dudley Meeting
The Lord Dudley meeting took place during the afternoon of Saturday, 12 August 2006. The three participants held lengthy discussions in the public bar of the Hotel while consuming a number of schooners of beer. The discussions centred first on Mr Brown’s interest in the Cammeray Development, but later extended to a buyout of his interest in the Chevron Development.
In the course of the meeting, the handwritten Lord Dudley document was produced. It was mostly written by Mr Brown, using a felt-tipped pen to write on a single sheet of A4 lined paper taken from a notebook. The Lord Dudley document was signed by Messrs Brown and Hausman at the meeting, but there was a conflict in the evidence as to when Mr Hodgkinson signed the document (see [53]ff below).
There was also conflicting evidence as to what was said at the meeting. His Honour found (at [58]) that a memorandum of 14 August 2006 (to which I refer at [58] below) supported the evidence of Messrs Hodgkinson and Hausman that at the Lord Dudley meeting:
“there was an express statement by Mr Hodgkinson that he wished Mr Baxter [the parties’ solicitor] to draft an agreement properly”.
Later in the judgment (at [83]), Palmer J said that he accepted Mr Hodgkinson’s evidence “to the effect that he said he wished Mr Baxter to advise on the transaction”. In fact, Mr Hodgkinson’s evidence was that he said at the Lord Dudley meeting that:
“we need to send [the Lord Dudley document] off to David Baxter to put in a proper legal document that binds everyone”.
It seems clear enough that his Honour, who preferred the evidence of Messrs Hodgkinson and Hausman to that of Mr Brown, intended to make a finding in the terms expressed in the judgment at [58] ([reproduced at [48] above) and that the finding made later in the judgment at [83] ([reproduced at [49] above) was expressed somewhat loosely. Mr Jackman SC, who appeared with Mr Donohoe for the appellants, did not seem to dispute this interpretation of the judgment.
Lord Dudley Document
The Lord Dudley document is reproduced below:

[<img src="/scjudgments/2009nswca.nsf/files/Abadeen5.gif/$file/Abadeen5.gif" alt="Letter">]

A transcription of the Lord Dudley document is as follows:
“(1)        Cammeray  24 24 50
40 18.33
(1)          800K paid next week
(2)          450K paid 30 October
(3)          250K paid 15 November
(4)30K to be paid on or before 15 December 2006 – if the above amounts are not paid in full by the 15 December then interest of $20K per month will be paid.
(5)JB will exchange and settle 230 Palmer St ~~with~~ by 15 Dec 2006. Both JB/LH to cover costs.
(6)Crown St will be made available for settlement by JB by 30 ~~March~~ May 2007 or earlier.
(7)Brooke’s apt will be reduced by 150K and settled within 4 months or earlier, subject to capital consent.
(8)Abadeen’s apartment (val of 750K) will be made available by March 2007 – part of Cammeray buyout.
(2)          Chevron                (3) 387 – whatever consultants costs have
been paid by bluestone Abadeen will
pay and any Development
management fees up to 40 K
will also be paid by Abadeen.
(1)JB will take $2.55 mill of his choice of apartments from lighter Quay renounceables at no cost. 30 ~~March~~ May 2007.
(2)          JB has no further costs going forward.
$18,333 payable to Lance by JB.”
Mr Hodgkinson’s Signature
Palmer J found (at [57]) that Messrs Brown, Hodgkinson and Hausman each signed the Lord Dudley document. As I have noted, there was no dispute that Messrs Brown and Hausman signed the document at the Lord Dudley meeting, but there was conflicting evidence as to when Mr Hodgkinson signed the document.
According to Mr Brown, Mr Hodgkinson signed the Lord Dudley document at the meeting (evidence that was consistent with Mr Brown’s claim that he thought that he had a binding agreement when he left the meeting). Mr Hodgkinson’s version was that he did not sign the document until two or three days later, that is on the following Monday (14 August 2006) or Tuesday (15 August 2006). Senior counsel for the appellants cross-examined Mr Hodgkinson at the trial with a view to establishing that he had in fact signed the document at the meeting. Mr Hodgkinson rejected the suggestion and maintained that his recollection was correct, although acknowledging that it was possible that his recollection was imperfect.
Neither party made any submission to Palmer J that anything turned on this conflict in the evidence. The respondents apparently considered it unnecessary to pursue the issue, while the appellants unsuccessfully endeavoured to persuade his Honour to accept that Mr Brown was a reliable witness. In these circumstances, it is not surprising that his Honour did not find it necessary to make a specific finding as to when Mr Hodgkinson signed the document.
On the appeal, Mr Jackman submitted that, given his Honour’s preference for Mr Hodgkinson’s evidence over that of Mr Brown, this Court should proceed on the basis that Mr Hodgkinson had indeed signed the document two or three days after the Lord Dudley meeting. Mr Jackman suggested that Mr Hodgkinson had probably signed on the following Monday or Tuesday (14 or 15 August 2006). He submitted that the opportunity for Mr Hodgkinson to consider his position over a two or three day period, added weight to the appellants’ case that the parties intended to enter into a binding agreement.
I shall deal with Mr Jackman’s submission later ([141] below). However, I am content to proceed on the basis that Mr Hodgkinson signed the Lord Dudley document on Monday, 14 August 2006 or Tuesday, 15 August 2006.
Events After the Lord Dudley Meeting
On 14 August 2006, Mr Brown sent a memorandum to Messrs Hodgkinson and Hausman. The memorandum, to which Palmer J attributed considerable significance, was as follows:
“I have had our handwritten agreement tidied up and typed in order for David Baxter to establish a Heads of Agreement, as follows:
1.            Cammeray Buyout
a.Greenberg will be paid $800,000 by 11 August 2006.
b.Greenberg will be paid $450,000 by 30 October 2006.
c.Greenberg will be paid $250,000 by 15 November 2006.
d.Greenberg will be paid $30,000 by 15 December 2006 for interest contribution.
e.In the event all monies are not paid by 15 December 2006, a $20,000 per month interest fee will be paid to Greenberg.
f.Justin Brown will exchange and settle 230 Palmer Street by 15 December 2006. Both Justin Brown and Lance Hodgkinson to cover holding costs till this date. Justin Brown will have rights to sell all or part of the properties by settlement.
g.Crown Street will be made available for settlement by Justin Brown by 30 March 2007 or earlier. Justin Brown will have rights to sell all or part of the properties with settlement occurring not before 30 March 2007.
h.Chevron apartments:
i.Brooke’s Chevron apartment will be reduced by $150,000 and to be made available for settlement within 4 months, subject to Capital’s consent.
ii.In the event Capital’s consent is not granted, then the $150,000 will be made available at settlement of the property.
iii.Brooke will be able to lease the property immediately.
iv.Abadeen’s apartment will be made available at no cost by March 2007 as part of the Cammeray buyout.
2.            Chevron Buyout
a.Lighter Quay will have the choice of up to $2,550,000 of apartments from Lighter Quay renounceables, to be made available at no cost on or before 30 May 2007 or apartment refinancing, which ever occurs earlier.
b.Greenberg may elect to rescind Abadeen contract and take up to $750,000 of value from Lighter Quay renounceables.
c.             Justin Brown has no further costs going forward.
3.            Other Items
a.Abadeen will be able to use the Cammeray and Chevron project for marketing purposes as an acknowledged involvement.
b.Justin Brown acknowledges he owes Lance Hodgkinson $18,333.00.
c.Bluestone currently owes Colliers $50,000 from the 3EB project.
d.Justin Brown and Lance Hodgkinson agree a fee in total of $70,000 is owed to Bluestone. A reconciliation of any part of this outstanding amount and any other consultants [sic] costs for the 387 Alfred Street project paid by Bluestone.
e.Points 3a, 3b, 3c and 3d above, to be reconciled, then Justin Brown will pay outstanding amount to Colliers. This is to occur prior to 18 August 2006.” (Emphasis added.)
As Palmer J noted (at [59]), this memorandum added to or varied some terms recorded in the Lord Dudley document:
•          the date for settlement of Crown Street was said to be 30 March 2007, whereas in the Lord Dudley document the date had been altered from 30 March to 30 May 2007 (cl 1(g));
•          Mr Brown added a provision entitling him to sell the properties immediately, provided settlement of the sale was not to occur before 30 March 2007 (cl 1(g));
•          Mr Brown added a right in Ms Brown to lease immediately the property to be transferred to her (cl 1(h)(iii));
•          Greenberg was to be entitled to elect to rescind the Abadeen contract and take up $750,000 of value from the Lighter Quay Renounceables (cl 2(b)); and
•          the “Other Items” in Mr Brown’s memorandum referred to a number of adjustments between the parties not identified in the Lord Dudley document (cl 3).
On 15 August 2006, Bluestone and Namsauh accepted Investec’s offer of finance contained in its Facility Letter. A number of guarantors also executed Investec’s Facility Letter, including Messrs Hodgkinson and Hausman, Gorcha, Emily, 230 Palmer Street and Crown Street.
On the same day, 15 August 2006, Mr Hodgkinson saw his solicitor, Mr Baxter. Mr Jackman accepted on the appeal that the evidence did not establish that Mr Hodgkinson saw Mr Baxter before signing the Lord Dudley document.
On 22 August 2006, Mr Brown sent a further email to Mr Hodgkinson as follows:
“You are clearly on email, as you were able to respond with a ‘thanks mate’, however, you seem unable to respond with any detail, such as ‘YES, you will have your $800K tomorrow’.
I’m sick of having to ask over and over and over again for confirmation of your payment to me.
If you’re going to pay, then let me know when, if not, then it’s about time you let me know.
A clear response is required immediately … no more of this cowardice behaviour
Are you paying me $800K tomorrow or not????????????????????????????????”
Mr Hodgkinson’s response was terse:
“JB, as this is a settlement of three Properties settlement will take place once all the paperwork is tickoff”.
Mr Brown replied in combative mode:
“Lance, I don’t understand … I ran around madly trying to get this done for yourself and Daniel [Hausman] and everything you’ve asked for I’ve bent over backward to get done.
If you value our friendship, the $800K will be in my account tomorrow morning, with confirmation of such tonight. Otherwise, I will be calling Brendan at Investec myself at 9.30 am, informing him that David Baxter has released documents to Investec prior to my approval and notification, as I specifically advised against.
I’ll also be advising Brendan that yourself and Daniel have received the money but have no intention of paying Greenberg what is owed.
Lance, this is now beyond a joke. You play when it suits you to be a friend, however, you seem, particularly of late, to go out of your way to place me in difficult situations to advance yourself.
That’s not a friendship, and if this is not sorted as detailed above, I will treat our friendship in the same manner I perceive you too … non existent.”
On 22 August 2006, a letter was sent on Greenberg’s letterhead to Mr Brown. The letter opened as follows:
“Further to our protracted negotiations, I write to confirm that the Director of the above company has agreed to relinquish control of the above company [Greenberg] to nominated parties once the below presented conditions are fulfilled”.
The balance of the letter, except for an immaterial last paragraph, reproduced the text of Mr Brown’s email of 14 August 2006. The letter was signed on behalf of Craigside Company Ltd (“Craigside”), described as “Director” of Greenberg.
The following day, 23 August 2006, Mr Hodgkinson caused Bluestone to pay $400,000 to Abadeen. Seven days later, on 30 August 2006, Mr Hausman arranged a further payment of $150,000 to Abadeen, this time through Namsauh.
Although the evidence to which the Court was referred on the appeal is not clear on the point, it appears that by this stage Investec had advanced the funds under the Facility Letter accepted on 15 August 2006. The payment of $400,000 on 23 August (or most of it) seems to have been made out of the funds advanced by Investec. The evidence to which the Court was referred does not establish how much, if any, of the $150,000 paid on 30 August 2006 and of the further payment of $250,000 made on 15 September 2006 (referred to below) came out of the funds advanced by Investec.
On 25 August 2006 a further letter was written to Mr Brown on Greenberg letterhead, signed on behalf of Craigside. The first three paragraphs of the letter were as follows:
“Further to our protracted negotiations, I write to confirm that the Director of the above company [Greenberg] has agreed to relinquish control of the above company to Bright Worth Limited [controlled by Mr Hodgkinson] and Newtown Investors Limited [controlled by Mr Hausman] in equal share or nominee once the below presented conditions are fulfilled:
Greenberg Investment Development Limited holds no other assets or liabilities and will not incur any prior to settlement.
We confirm that once settlement occurs, all future instructions will solely be taken from Bright Worth Limited and Newtown Investors Limited in 50% equal share or their nominee”.
The balance of the letter again set out the text of Mr Brown’s email of 14 August 2006.
Although each of the letters from Greenberg was addressed to Mr Brown, Mr Hodgkinson agreed in his evidence that he asked for and received the letters. He asked for the letters because he wanted an acknowledgement that the companies in whose favour the Greenberg interests were to be relinquished would be the two companies referred to in the letters.
In late August or early September 2006, Mr Hodgkinson spoke to Mr Hausman and asked him to ensure that no further payments were made to Mr Brown until he or his companies signed the contracts of sale relating to the 230 Palmer Street and Crown Street Sites. On 1 September 2006, Abadeen’s bank account showed that a deposit of $200,000 had been dishonoured, presumably because Mr Hodgkinson gave instructions to stop payment on a cheque for that amount.
Shortly after this, probably on 5 September 2006, Mr Hausman sent a handwritten note to Mr Baxter (the solicitor) as follows:
“Please release these 2 cheques to Justin Brown once contracts on Crown St and Palmer St are unconditionally exchanged”.
On 15 September 2006, the two cheques, were released. One cheque was from Bluestone in the sum of $200,000, payable to Abadeen. The other was from Namsauh in the sum of $50,000, also payable to Abadeen.
On 14 September 2006, 230 Palmer Street and Sharlotte entered into a contract for the sale to Abadeen of the 230 Palmer Street Site for a price of $5.1 million. The contract did not provide for a deposit. The completion date was to be 15 December 2006, reflecting cl 1(d) of the Lord Dudley document. The contract was expressed to be subject to tenancies, but said nothing about the transfer being subject to the existing mortgage to St George Bank.
On the same day, 14 September 2006, Crown Street, as vendor, entered into a contract with Abadeen, as purchaser, for the sale of the Crown Street Site. The purchase price was $8.0 million, but no deposit was payable. Completion was to be on 18 May 2007, the date referred to in the Lord Dudley document. The contract made no reference to the existing mortgage over the Crown Street Site to the Bank of Western Australia, on which $6.1 million was owing.
The contract for the sale of Lot 221C in the Chevron Development to Ms Brown was settled on or about 12 December 2006 for a price of $275,000, being $150,000 less than the contract price.
On 27 February 2008, 230 Palmer Street served on Sharlotte a notice of termination of the contract of sale relating to the Palmer Street Site. On 28 February 2008, Crown Street served on Abadeen a notice of termination of the contract of sale relating to the Crown Street Site.
THE PARTIES AND THE PLEADED CASE
In the light of this account of events, it is convenient at this point to identify the parties to the proceedings and to summarise the appellants’ pleaded case in relation to the agreement on which they rely for the relief they claim. As Palmer J remarked (at [15]), the words in the Lord Dudley document are “meaningless to the uninformed reader”. It is necessary to refer to the pleadings to ascertain the terms the appellants sought to derive from that document.
The Parties
The plaintiffs in the proceedings instituted in the Supreme Court were:
•             Mr Brown;
•             Sharlotte;
•             Abadeen;
•             LQI; and
•             Greenberg.
They are the appellants in the first appeal.

The defendants in the proceedings (ignoring one corporation not a party to the appeal) were:
•             Mr Hodgkinson;
•             Bluestone;
•             230 Palmer Street;
•             Mr Hausman;
•             Crown Street;
•             519 St Kilda; and
•             Gorcha.
They are the respondents to the first appeal.
The cross-claimants were:
•             Bluestone;
•             Namsauh; and
•             519 St Kilda.
They are the respondents to the second appeal.
The cross-defendants were:
• Abadeen; and
• Ms Brown.
They are the appellants in the second appeal.
The Appellants’ Pleading
The amended statement of claim (“ASC”) pleaded that on or about 12 August 2006, the plaintiffs (the appellants to the first appeal) entered into an agreement:
“pursuant to which in consideration for [sic] the Plaintiffs selling their interest on the Chevron Apartments and Cammeray Development to the Defendants or their nominees. [sic] the defendant’s [sic] agreed to pay certain monies to the Plaintiffs and to transfer certain parcels of Real Property to the Plaintiffs”.
The particulars stated that agreement was partly in writing and partly oral. The written part of the agreement was the Lord Dudley document which was signed on or about 12 August 2006:
“by Brown for and on his own behalf and on behalf of Sharlotte and each of Abadeen, [LQI] and Greenberg”.
The Lord Dudley document was said to have been:
“also signed by Hodgkinson on his behalf, Hausman on his own behalf and both of them respectively on behalf of their nominees on or about 12 August 2006”.
The oral part of the alleged agreement was alleged to have been made in the course of the Lord Dudley Hotel meeting. The substance of the oral part of the agreement was that:
“the Defendants and their nominees were jointly and severally responsible for the performance of their obligations”.
The pleaded agreement was described in the particulars, ungrammatically, as follows:
“The value of the Plaintiffs [sic] interests in the Chevron Apartments and Cammeray Developments it [sic] was at an agreed amount and the Plaintiff’s [sic] should give up their interests in the Chevron Apartments and Cammeray Developments and transfer to Hodgkinson and Hausman and their associated entities those interests for a price to be paid by Hodgkinson and Hausman and or their associated entities by transfer to the Plaintiff [sic] of the properties as agreed together with cash funds as agreed and referred to in paragraphs 56 to 69 below”.
The ASC pleaded that the express terms of the agreement included terms that:
•          the “Defendants would pay the Plaintiffs” $800,000 on or before 17 August 2006, $450,000 on or before 30 October 2006 and $250,000 on or before 15 November 2006;
•          if these amounts were not paid in full by 15 December 2006, “interest of $20,000 a month would be paid by the Defendants to the Plaintiffs until the balance” was paid in full;
•          Mr Brown and/or his nominee and 230 Palmer Street would exchange and settle the contract for sale of the 230 Palmer Street Site by 15 December 2006 and
“the Defendants [would] make all the necessary arrangements to effect the settlement of the Crown Street Development to Brown and or his nominees by … 30 May 2007 or earlier”;
•          Ms Brown would purchase Lot 221C in the Chevron Development from 519 St Kilda:
“with a discount from the purchase price of $150,000.00 to be settled within 4 months of the execution of the Agreement, subject to the consent of Capital Finance”;
•          the Defendants would do all such things:
“necessary to transfer title of apartments out of the Chevron Development, of Mr Brown or his nominees [sic] choice to the value of $750,000 to Brown and or his nominees at no cost on or before March 2007”;
•          the Defendants would do:
“all such things to deliver up and transfer to Brown and or his nominees apartments to the value of $2.55 million under the Lighter Quay Renounceables at no cost by … 30 May 2007”;
•          the Plaintiffs would have no further costs of projects nor remain liable for the subsisting costs into the future; and
•          the Defendants would be jointly and severally liable for the performance of their obligations under the agreement unless it was otherwise expressly provided.
The Defence
The respondents further pleaded that the Lord Dudley meeting did not give rise to a contract because:
(i)there was no intention to conclude a bargain unless and until a formal written agreement was signed by the parties;
(ii)          there was no meeting of minds as to the terms of the contract;
(iii)         the necessary parties to the contract were not identified; and
(iv)         there was no agreement as to essential terms.
The respondents pleaded that if there was an intention to conclude a contract, the agreement was void for uncertainty. They also relied on the absence of a memorandum in writing of the contract, thereby rendering it unenforceable pursuant to s 54A of the Conveyancing Act 1919.
PRIMARY JUDGMENT
Palmer J, after recounting the evidence as to the Lord Dudley meeting, said (at [51]) that he was satisfied that Mr Brown had very little recollection of what was actually said. His evidence was a reconstruction, coloured by his own very strong view that a binding agreement had been reached at the Lord Dudley meeting.
His Honour noted (at [52]) that both Messrs Hodgkinson and Hausman denied saying anything that indicated their agreement to be bound immediately and gave evidence that it had been agreed to refer the terms to the solicitor so that a formal legal document could be prepared.
Palmer J said (at [53]–[54]) that it was inherently improbable that Messrs Hodgkinson and Hausman would have said anything to indicate that they would be immediately bound. First, they were having difficulty in raising the finance for the buyout, as they had told Mr Brown. Secondly, the buyout of Mr Brown’s interest in the Chevron Development was raised for the first time at the tail-end of the discussion:
“It was a complex and very large development and Mr Brown’s interest in it, held through Greenberg, was far from transparent. Yet, Mr Brown asserts that, notwithstanding the other parties’ difficulties in securing finance for the buyout of his interest in the Cammeray Development, they agreed almost on the spur of the moment to bind themselves unconditionally and immediately to buyout Mr Brown’s interest in the Chevron Development as well.” (at [54])
For these reasons, Palmer J was not satisfied that the parties said or did anything which evinced a common intention that what had been written down at the meeting should be immediately and unconditionally binding on them.
Palmer J then referred (at [57]) to the parties’ conduct after the meeting. He pointed out that Mr Brown’s email of 14 August 2006, referred to Mr Baxter establishing “a Heads of Agreement”:
“Mr Brown, as an experienced property developer, uses ‘Heads of Agreement’ as a term of art: a preliminary document which will contain the main points of an agreement and may, or may not, be expressed to be legally binding: … If Mr Brown intended Mr Baxter to prepare a preliminary agreement in the form of ‘Heads of Agreement’, it suggests that what he had obtained in the form of the Lord Dudley Agreement was no more than a note containing points which the parties had signed to acknowledge that, at least thus far, they were in agreement”.
In his Honour’s view (at [58]), Mr Brown’s email supported the evidence of Messrs Hodgkinson and Hausman that Mr Hodgkinson had expressly stated at the meeting that he asked Mr Baxter to draft an agreement properly.
The matters to be clarified by Mr Baxter in the Heads of Agreement included (at [62]) the following:
“- what were the rights to be transferred – for example, was it to be Greenberg’s shares in Gorcha or was it to be control of Greenberg itself – an issue that emerged subsequently;
- when were the interests to be transferred;
- which entities would acquire what assets;
- what steps were subject to the performance of other steps;
- what was to happen if part of the Cammeray transaction or part of the Chevron transaction could not be achieved because financiers’ consents could not be obtained;
- was Greenberg’s interest in the Chevron Development to be transferred if its interest in the Cammeray Development could not be transferred, and vice versa;
- what special conditions, if any, applied to the transfer of interests in land”.
To this point, according to his Honour (at [64]), the evidence overwhelmingly suggested that the parties manifested no common intention to be bound legally unless and until Mr Baxter put their agreement into proper legal form. However, the appellants argued at trial that such a conclusion was negated by the fact that Messrs Hodgkinson and Hausman went ahead with performance of the Lord Dudley Agreement notwithstanding that the parties had not executed a formal agreement.
Palmer J noted (at [66]–[67]) that Mr Hodgkinson had testified that he had arranged the payment of $400,000 to Abadeen in response to pressure from Mr Brown who had said that he was desperate for money. After recounting the email exchanges on 22 August 2006 ([62]-[63] above), his Honour accepted (at [69]) that Mr Brown:
“used all of his powers of persuasion to induce Mr Hodgkinson and Mr Hausman to make payments to him as quickly as possible in anticipation that the buyout would eventually be fully worked out and documented”.
His Honour concluded (at [70]) that:
“the payment of $400,000 by Bluestone to Abadeen on 23 August was not made pursuant to a specific term of the Lord Dudley Agreement and did not evidence a common intention of the parties that the Lord Dudley Agreement was immediately binding and enforceable. It was an attempt by Mr Hodgkinson to appease Mr Brown by making a payment on account of a transaction yet to be fully negotiated and concluded”.
Palmer J took a similar view of the payments to Abadeen of $150,000 on 30 August 2006 and of $250,000 on 15 September 2006. His Honour was satisfied (at [72]) that:
“in August 2006 both Mr Hodgkinson and Mr Hausman were endeavouring to make payment of the amount $800,000 referred in the Lord Dudley Agreement. However, they were not doing so in recognition that a concluded agreement existed but, rather, were making the payments in a spirit of co-operation with Mr Brown and at his forceful insistence”.
Palmer J rejected (at [75]) the appellants’ submissions that the contracts of sale of 14 September 2006 were entered into in performance of the agreement recorded in the Lord Dudley document. The terms of the contract between Sharlotte, 230 Palmer Street and Abadeen required Sharlotte to find $5.1 million to fund the purchase of the Palmer Street Site, leaving 230 Palmer Street to discharge the mortgage of $4.5 million on settlement. Therefore, upon completion of the contract 230 Palmer Street would retain the $600,000 equity in the property. His Honour considered (at [75]) that this was inconsistent with the appellants’ explanation of cl 1(f) of the Lord Dudley document, which was to the effect that the 230 Palmer Street Site was to be transferred to Sharlotte subject to the mortgage and for no consideration. His Honour also considered (at [78]) that precisely the same difficulty arose with the contract between Crown Street and Abadeen relating to the Crown Street Site.
In his Honour’s view, the question was not what the parties could have done to accommodate the contracts to the terms of the Lord Dudley Agreement. Rather the question was whether the contracts were consistent with the terms of the Agreement. Since they were not, the contracts did not support the appellants’ case.
Palmer J expressed his conclusions as follows:
“[82]      I accept, as [the respondents submit], that what has happened is that those parts of the Lord Dudley Agreement which were easily performable – i.e. the payment of cash and the reduction of the purchase price of Mrs Brown’s apartment – were performed in anticipation that the complicated parts of the buyout transaction would be worked out in detail and embodied in a legally binding document drafted by Mr Baxter. There were many complications to be worked out. When the parties tried to implement the complicated parts of the transaction – e.g. the transfer of interests in 230 Palmer Street and Crown Street Developments – the transactions unravelled because their implications had not been properly thought out and agreed.
[83]        I do not accept Mr Brown’s evidence to the effect that the parties said anything at the Lord Dudley Hotel meeting to assert expressly an intention that the Lord Dudley Agreement would be immediately binding. I accept Mr Hodgkinson’s evidence to the effect that he said he wished Mr Baxter to advise on the transaction. This evidence is supported by Mr Brown’s memorandum of 14 August 2006.
[84]        I find that the circumstances in which the Lord Dudley Agreement was made lead [sic] to the conclusion that the parties’ common intention was no more than to record briefly as an aide memoire, and to acknowledge accordingly, points of an agreement to be worked out in more detail later and incorporated in a binding legal document. Those circumstances are:
–the nature of the proposed transaction, its complexity and the size of the amounts involved;
–the fact that a substantial part of the transaction, the buyout of Mr Brown’s interests in the Chevron Development, was raised for the first time in the course of the Lord Dudley Hotel meeting;
–             the informality of the meeting place;
–the informal and rudimentary nature of the handwritten document produced at the meeting;
–the omission from the document of many critical terms as to how the transaction was to be implemented;
–the presumption that people expect that agreements for the transfer of real estate will not be binding until contracts are exchanged;
–the circulation on 14 August of a memorandum by Mr Brown referring to the preparation of Heads of Agreement by Mr Baxter”.
Accordingly, the appellants’ claim for specific performance of the Lord Dudley Agreement failed, as did the appellants’ claims for relief that were dependent on the enforceability of the Agreement. Since the defence to cross-claim was founded on the enforceability of the Lord Dudley Agreement, the cross-claim had to succeed.
SUBMISSIONS
Appellants’ Submissions
The appellants did not challenge the factual findings made by the primary Judge. However, they submitted that, in determining whether the parties’ intention, objectively assessed, was to enter into a binding contract, it was important to recognise that a binding agreement could be reached even if the terms were to be supplemented “by refinement” or by agreement on matters left for future negotiations. The facts found by his Honour when objectively viewed, so the appellants argued, demonstrated that the Lord Dudley Agreement was intended to be binding and that the unresolved issues were “matters of detail” which the Court could fill out in order to give effect to the agreement. While the Lord Dudley Agreement did not suffer from “the excesses of formality”, it was consistent with the informality of the parties’ pre-existing business relationship.
As refined in oral argument by Mr Jackman, the appellants’ submissions focussed on four areas where the primary Judge was said either to have failed to deal with the evidence or to have dealt with it inadequately.
The first was a “contextual matter”. According to Mr Jackman, it was significant that Messrs Brown, Hodgkinson and Hausman had entered into an undocumented joint venture arrangement with Mr Brown (through Greenberg) in relation to the Chevron Development. This demonstrated a preparedness by the parties to the Lord Dudley Agreement to enter into complex and valuable transactions in an informal way.
Secondly, Mr Jackman submitted that the signatures affixed to the Lord Dudley document operated as a “formal and solemn communication of agreement”. Mr Jackman also contended that this Court should find, consistently with Palmer J’s preference for Mr Hodgkinson’s evidence over that of Mr Brown, that Mr Hodgkinson signed the Lord Dudley document two or three days after the Lord Dudley meeting. The significance of the delay was that Mr Hodgkinson had the opportunity to reflect on the terms of the Lord Dudley Agreement and thus his signature should be taken as supporting the conclusion that the agreement was intended to be binding.
Mr Jackman submitted that the finding that Mr Hodgkinson had said at the meeting that he wanted Mr Baxter to draft an agreement properly was not inconsistent with the parties intending to conclude a binding agreement at that time. Although the appellants did not address the issue in their written submissions, Mr Jackman said that the case fell within the so-called fourth category of cases involving an agreement which contemplates that the matter will be dealt with by a formal contract: cf Masters v Cameron [1954] HCA 72; 91 CLR 353, at 360, per curiam; Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, at 628, per McLelland J. That is, the parties intended to be bound immediately by the terms agreed, but expected to make a further contract in substitution for the first, containing additional terms. Thus, notwithstanding Mr Hodgkinson’s statement at the meeting and the contemplation that there would be a formal contract, the parties should be taken as having intended to enter into an immediately binding agreement.
Thirdly, Mr Jackman submitted that the gaps in the Lord Dudley document could be filled by a process of construction and implication, in substance as follows:
(i)The parties in the Lord Dudley Agreement could be deduced from the fact that the Lord Dudley document was signed by each of Messrs Brown, Hodgkinson and Hausman. Each of the signatories was clearly intended to be a party. In addition, so Mr Jackman argued, they signed on behalf of 519 St Kilda, Crown Street, 230 Palmer Street, Abadeen and LQI, since one or other of the signatories was a director of each of these companies. (Mr Jackman did not identify Sharlotte as a party, although it was identified as a party in the ASC.) At one point, Mr Jackman identified Ms Brown as a party, but later he said that she was not a necessary party because she was not required to do anything, although she was to receive a benefit from the Lord Dudley Agreement.
(ii)Mr Brown was to relinquish his interest in the Cammeray Development by transferring control of Greenberg to Messrs Hodgkinson and Hausman, as suggested in the letters of 22 August and 25 August 2006 from Greenberg to Mr Brown.
(iii)The intention of the parties was that Messrs Hodgkinson and Hausman jointly and severally undertook to make or to procure the making of the payments referred to in cll 1(a)-1(d) of the Lord Dudley document. Mr Brown was obliged, inter alia, to procure the shareholders of Greenberg (which was not a party to the Lord Dudley Agreement) to transfer control of and the shares in Greenberg to Messrs Hodgkinson and Hausman or their nominees.
(iv)Mr Hodgkinson (who was the sole director of 230 Palmer Street) undertook to procure 230 Palmer Street to transfer the 230 Palmer Street Site to Mr Brown or his nominee. Mr Brown was to be entitled to elect whether he would pay out the mortgagee or take a transfer of the property subject to the mortgage to St George Bank. However, either way, he was to receive 230 Palmer Street’s equity in the Site for no consideration (other than relinquishing his interests in the Chevron and Cammeray Developments).
(v)A similar arrangement was to apply in relation to the transfer of the Crown Street Site by Crown Street to Mr Brown or his nominee.
(vi)The purchase price to be paid by Ms Brown to acquire Lot 221C in the Chevron Development would be reduced by $150,000, subject to the consent of the first mortgagee (Capital Finance). At first, Mr Jackman said that if Capital Finance did not consent, the arrangements recorded in the Lord Dudley document under the heading “Cammeray” would fall away. Later, he said that if Capital Finance did not consent the entire Lord Dudley Agreement might fall away.
(vii)The property which Abadeen had contracted to purchase from 519 St Kilda was to be transferred to Abadeen without any further payment by it. If Abadeen had paid the deposit of $75,000 (as to which there was no evidence) it would be refunded to Abadeen.
(viii)LQI would take transfers of so many of the 17 properties subject to the Lighter Quay Renounceables as would amount to a value of $2.55 million. The transfers would be at no cost to LQI and the remaining contracts would be cancelled.

Fourthly, Mr Jackman relied on the events after the Lord Dudley meeting as pointing to an intention to conclude a binding contract, if not on 12 August 2006 then two or three days later when Mr Hodgkinson added his signature to the Lord Dudley document. Mr Jackman acknowledged that the express terms of the contracts of sale relating to the 230 Palmer Street and Crown Street Sites were not in accordance with the terms of the Lord Dudley Agreement as outlined by him. However, he submitted, in effect, that the contracts of sale had to be understood as intended to reflect the terms of the Lord Dudley Agreement – that is, that Mr Brown or his nominee was to receive the benefit of the equity in each of the properties.
Respondents’ Submissions
Mr Durack SC, who appeared with Ms Francois for the respondents, in substance supported the reasoning of the primary Judge. The tenor of these submissions is reflected in the reasoning which follows.
The respondents also relied on a notice of contention in which they sought to uphold the decision of the primary Judge on grounds he did not need to address. In particular, the respondents submitted that if, contrary to their primary contentions, the parties intended to enter into a binding agreement at or shortly after the Lord Dudley meeting:
• the agreement recorded in the Lord Dudley document was void for uncertainty; and
• in any event, the agreement was unenforceable by reason of the absence of a note or memorandum in writing satisfying the requirements of s 54A of the Conveyancing Act 1919.
REASONING
Principles
There was no dispute between the parties as to the principles to be applied in determining whether the parties to the Lord Dudley meeting reached a binding agreement (whether at the meeting itself or upon Mr Hodgkinson signing the Lord Dudley document two or three days later). The Court seeks to ascertain the objective intention of the parties, being:
“the intention that a reasonable person, with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, would conclude that the parties had concerning the subject matter of the alleged contract”.
Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603, at 655 [262], per Campbell JA (with whom Mason P and Tobias JA agreed) citing, among other authorities, Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451, at 461-462 [22], per curiam.
The search for the objective intention of the parties must be undertaken even where the parties expressly contemplate in an apparently informal document, or in communications made at the time the informal document is prepared (Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, at 332, per Mahoney JA; at 334, per McHugh JA), that a formal contract is to be executed. As McHugh JA (with whom Kirby P and Glass JA agreed) said in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, at 634:
“The decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-334, 337. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.
Even when a document recording the terms of the parties' agreement specifically refers to the execution of a formal contract, the parties may be immediately bound. Upon the proper construction of the document, it may sufficiently appear that ‘the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms’: Sinclair, Scott & Co Ltd v Naughton ([1929] 43 CLR 310, at 317])”.
In determining whether the parties intended to conclude a contract, their post-agreement conduct may be taken into account. The conduct may be relevant, among other purposes, in order to show that:
“it was not in the contemplation of either party that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up embodying all the matters incidental to a transaction of such a nature”.
Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; 5 CLR 647, at 669, per Griffiths CJ. See also Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, at 547-548, per Gleeson CJ (with whom Hope and Mahoney JJA agreed); Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153, at 163-164, [25], per Heydon JA.
The search for the objective intention of the parties for the purpose of determining whether a binding agreement was reached must always depend on the facts of the particular case: Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248, at [29], per Giles JA (with whom McColl JA and Young CJ in Eq agreed). However, in assessing the facts in the present case it is helpful to bear in mind some observations made in the authorities.
In ABC v XIVth Commonwealth Games, Gleeson CJ explained the importance, in the context of a “Masters v Cameron dispute”, of understanding the commercial context of the dispute. His Honour said (at 548):
“a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract. In some cases, such as transactions involving the sale and purchase of land, or leases, courts may properly feel well equipped to form a view on such matters without the need for much evidence. In many cases, however, of which the present is a good example, there is a need for evidence in one form or another as to what subjects would be regarded as requiring agreement between the parties. In this case the best evidence on that subject is to be found in the actual communications between the parties and, in particular, in the issues which they in fact addressed when they set about drafting their detailed contract.
It is to be noted that the question in a case such as the present is expressed in terms of the intention of the parties to make a concluded bargain: see, eg, Masters v Cameron (at 360). That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention”. (Emphasis added.)
It is also permissible to consider whether it was inherently likely that the parties to a transaction would have intended to bind themselves to an informally expressed agreement or whether they intended to await a formal contract: B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147, at 9151-9152, per Mahoney JA, citing Clifton v Palumbo [1944] 2 All ER 497, at 499, per Lord Greene MR.
The fact that the parties to an agreement expressly contemplate that “the matter of their negotiation shall be dealt with by a formal contract” does not necessarily mean that they have not entered into a binding contract: Masters v Cameron, at 360, per curiam. Indeed, two of the three classes of case identified in Masters v Cameron result in a binding agreement notwithstanding that the parties contemplate that a formal contract will be executed later. Whether or not there is a fourth class of case (cf Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd at 628, per McLelland J; G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd, at 634-635, per McHugh JA; Tasman Capital Pty Ltd v Sinclair, at [25]-[26], per Giles JA), the parties may intend to be bound immediately by the terms they have agreed, while expecting to make a further contract in substitution for the first, containing additional terms: Sinclair, Scott & Co v Naughton [1929] HCA 34; 43 CLR 310, at 317, per Knox CJ, Rich and Dixon JJ. As was said by Giles JA in Tasman Capital Pty Ltd v Sinclair, at [29]:
“Uncertainty and incompleteness in what has been agreed and the prospect of refinement and future agreement are material to whether the parties intended to make a concluded bargain, but once the intention be found the court will seek to uphold the bargain by resolving the uncertainty and fulfilling the incompleteness; although if that can not be done by accepted principles of construction and implication, the intention as found may fail”.
The respondents submitted that the finding that the parties did not have a common intention to enter into a binding agreement was in part related to the primary Judge’s assessment of the credit of Mr Brown, on the one hand, and Messrs Hodgkinson and Hausman on the other. However, the appellants did not challenge any of the findings of primary fact made by his Honour. They directed their submissions to the proposition that, the facts found by his Honour and the matters not in dispute (having regard to the credibility findings) warrant this Court in concluding that the parties’ common intention was to conclude a binding contract at or shortly after the Lord Dudley meeting.
I am content to proceed, without deciding the point, on the basis that this Court is in as good a position as the primary Judge to determine the common intention of the parties on the basis of his Honour’s findings and the uncontested evidence.
Application of the Principles
Gaps in the Agreement
The Lord Dudley meeting took place in the context of prolonged and unresolved discussions that had taken place between Mr Brown, on the one hand, and Messrs Hodgkinson and Hausman, on the other, concerning Mr Brown’s increasingly urgent desire to be bought out of the Cammeray Development. If this was to occur, it was not a relatively simple matter of agreeing on a price and the timing of any payments to be made in return for, say, a transfer of shares in a company.
Mr Brown’s interest in the Cammeray Development was held through Greenberg’s 40% shareholding in Gorcha. Greenberg had been incorporated in the Virgin Islands and was administered in Hong Kong. Capital Finance and other financiers had lent approximately $17 million to Gorcha on security that included a guarantee by Greenberg and an equitable mortgage of Greenberg’s shares in Gorcha. As the primary Judge correctly pointed out (at [53]-[54]), there were many issues to be addressed before the terms of a buyout could be finalised.
For Greenberg to relinquish its interest in the Cammeray Development and for Mr Brown to be relieved of any possible detriment in consequence of Greenberg’s involvement in the Development, Greenberg’s interest had to be transferred to Messrs Hodgkinson and Hausman or their interests. How and when was this to be done? Was it to be by a transfer of Greenberg’s shares in Gorcha? Or was it to be, as Mr Jackman suggested, by Mr Brown relinquishing control of Greenberg in some way to Messrs Hodgkinson and Hausman? Bearing in mind his Honour’s finding (at [26]) that Mr Brown was neither a shareholder nor director of Greenberg and that the extent of his control of Greenberg was “not clear from the evidence”, how was a transfer of control to be effected so as to avoid any risk to Messrs Hodgkinson and Hausman? The Lord Dudley document did not address these issues and it was neither pleaded nor suggested that the issue was discussed between the parties at the Lord Dudley meeting.
The “price” for relinquishing Mr Brown’s interest in the Cammeray Development, as recorded in the Lord Dudley document, included the entry into and completion by specified dates of contractual arrangements relating to the 230 Palmer Street Site and the Crown Street Site. The nature of these contractual arrangements is not recorded in the Lord Dudley document. Assuming Mr Brown was to receive financial benefits from the transfers, what were those benefits to be? If Mr Brown was to receive the equity held by 230 Palmer Street in the 230 Palmer Street Site and the equity held by Crown Street in the Crown Street Site, how were the transactions to be effected? Were the properties to be transferred subject to the existing mortgages or was Mr Brown to receive a transfer of unencumbered title in return for paying out the mortgages? If the former, what was to happen if the mortgagees did not consent to the transfers?
The price to be paid to Mr Brown or his interests included payment of the amounts specified in cll 1(a)-1(d) of the Lord Dudley document, a total of $1.53 million by 12 December 2006. Who was to pay these amounts and to whom were they to be paid? Mr Jackman submitted that Messrs Hodgkinson and Hausman were jointly and severally liable to make the payments or procure the payments from one or other of their companies. However, the Lord Dudley document did not address this question. Moreover, Mr Jackman’s submission appears to be at odds with the appellants’ pleaded case, which alleges that the seven “Defendants” would make the payments to the “Plaintiffs”.
The complexities of the arrangements discussed at the Lord Dudley meeting increased once the parties considered a buyout by Messrs Hodgkinson and Hausman of Mr Brown’s interest in the Chevron Development. As his Honour found, this issue arose only towards the end of the Lord Dudley meeting and was a matter to which the parties apparently had not previously directed their attention.
Mr Brown’s interest in the Chevron Development had been created informally, through Greenberg as a silent partner. The transfer of that interest (whatever its precise nature) presented similar issues to those that arose in relation to Greenberg’s interest in the Cammeray Development, although Greenberg had no shareholding in 519 St Kilda that could be readily transferred. The Lord Dudley document did not address these issues and the parties did not discuss them.
The parties also did not advert to the need to obtain the consent of the mortgagee (Capital Finance) to the proposed transfer of the Lighter Quay Renounceables. What was to happen if the mortgagee did not consent? And what was to happen if it proved feasible to carry out the arrangements relating to the Cammeray Development, but not for the Chevron Development (or vice versa)?
Filling the Gaps?
Mr Jackman attempted to overcome the apparent absence of agreement on significant issues by the process of construction and implication to which I have referred (at [106] above). The ways in which he suggested that the gaps might be filled perhaps might have been adopted, with or without variation, had the parties turned their minds to the issues. But, as the primary Judge remarked in a slightly different context, the question is not what the parties might have done, but what they did.
On the basic question of the parties to the agreement the Lord Dudley document is silent, except for the three signatures to the document. No doubt it might be inferred that Messrs Brown, Hodgkinson and Hausman were intended to be parties to any contract, but an objective observer would find it difficult to determine what, if anything, the signatories intended with respect to the other parties affected by the Lord Dudley Agreement. If, as Mr Jackman said, Messrs Hodgkinson and Hausman were not necessarily obliged themselves to make the payments recorded in cl 1 of the document, but merely to procure the payments, why would the same analysis not apply to the other obligations recorded in the document? In that case, contrary to Mr Jackman’s submission, there would presumably be no need for the corporations to be parties to any contract. The uncertainty apparent in argument concerning Ms Brown’s position as a contracting party shows that various choices were open and that the signatories to the Lord Dudley document had not turned their minds to them.
Similarly, the signatories’ failure to address important issues concerning the transfer of the 230 Palmer Street and Crown Street Sites left open choices that require guesswork for an outside observer to resolve. In particular, it is not clear why the signatories should be taken to have intended that Mr Brown was to be able to elect whether to pay out the mortgages or take the transfers subject to the existing mortgages. The existence of a right of election might have very important commercial consequences, but the topic was never the subject of discussion between the parties, much less the question of when and how an election might be exercised.
The consequences of a refusal by one or other of the mortgagees to consent to the various transfers of real property would also have serious commercial consequences. So, too, would an inability to complete one part of the contemplated transaction. It is possible to speculate what the parties would have done had they been alerted to the difficulties, but the fact is that they did not advert to the issues.
The Lord Dudley document affected or potentially affected the interests of a significant number of persons and corporations in one way or another. These included Messrs Brown, Hodgkinson and Hausman; Ms Brown; Gorcha; Greenberg; Emily; Bluestone; 230 Palmer Street; Crown Street; Namsauh; and 519 St Kilda. The document did not record which of these persons and corporations, other than the signatories themselves, was to be a party to any agreement. Were the parties to be limited to the signatories? Or were others to be parties and, if so, which of the others?
It is not surprising, given the circumstances in which the Lord Dudley document came into existence, that the issues to which I have referred were not addressed by the parties. By this I do not attribute particular significance to the location of the Lord Dudley meeting or to the fact that the negotiations were apparently accompanied by the consumption of schooners of beer. I do not give these matters the same weight as the primary Judge. The reasonable bystander is likely to be open-minded as to the locations at which business people might reach concluded agreements and even about their refreshments of choice.
Rather I have in mind that these were business people negotiating about matters of considerable complexity, involving large sums of money and the transfer of various forms of valuable property, including real estate. Although the Lord Dudley document was signed (an issue to which I shall return), it was in a form that, to the extent an objective observer could follow it at all, plainly left many gaps. These gaps would suggest to the objective observer that the parties contemplated that further negotiations would be required in the many unresolved issues before a binding contract could be concluded. Even if Mr Hodgkinson had not expressly stated that he asked Mr Baxter to draft an agreement properly, it is difficult to conclude that the parties intended to commit themselves immediately (or upon Mr Hodgkinson signing the Lord Dudley document) to a binding agreement.
The Requirement for a “Proper” Contract
The statement that, on his Honour’s findings, Mr Hodgkinson made at the Lord Dudley meeting concerning his desire for the solicitor to draft an agreement properly adds force to this conclusion. This is not a case, for example, where correspondence sets out all the essential terms of an enforceable agreement and indicated that acceptance of an offer will be “legally binding”, even though it contemplates the execution of a formal contract which will supersede the correspondence: cf G R Securities v Baulkham Hills Private Hospital. Nor is it a case where some terms of the agreement are clearly intended to have immediate effect, such as the employment of one of the parties and the purchase of a client list, even though the parties contemplate a further agreement containing additional terms: cf Tasman Capital Pty Ltd v Sinclair. Of course, each case must turn on its own circumstances, but an objective observer in this case would consider that the very point of requiring a formal contract to be prepared by a solicitor was to address issues not resolved by the parties at the Lord Dudley meeting. In my view, Mr Hodgkinson’s statement, having regard to the form and terms of the Lord Dudley document and the commercial context, strongly supports the conclusion that the parties did not intend to be bound immediately, but only on execution of formal documentation

The events that immediately followed the Lord Dudley meeting also tend strongly against the contention that the parties intended to enter into a binding contract. For the reasons the primary Judge gave (at [57]-[58]), Mr Brown’s email of 14 August 2006 is inconsistent with him being bound by the Lord Dudley Agreement. Mr Jackman explained the email on the basis that Mr Brown was trying to renegotiate the terms of the concluded contract. But that was not the tenor of the email, in which he purported to have “tidied up” the “handwritten agreement”. Moreover, Mr Brown (or, so I infer, someone acting at his behest) incorporated the terms of his email into the letters of 22 and 25 August 2006 sent on behalf of Greenberg to Mr Brown himself. The proper inference from this correspondence is that Mr Brown did not regard the parties as having reached a binding agreement at the Lord Dudley meeting.
Other Factors
Other circumstances relating to the Lord Dudley meeting and its aftermath need to be taken into account. Although they are not unequivocal, they tend to support the conclusion that the parties did not intend to commit themselves to a binding agreement.
As the primary Judge found (at [53]), the Lord Dudley meeting took place at a time when Messrs Hodgkinson and Hausman were having difficulties in raising the finance required to buyout Mr Brown’s interest in the Cammeray Development. Mr Jackman challenged this finding on the ground that the Investec’s revised offer of finance had been made on 11 August 2006, the day before the Lord Dudley meeting, and was accepted three days after the meeting. Mr Jackman’s submission on this point overlooked, or paid insufficient attention to, the conditions attached to the Investec offer. The offer was for a loan of $2.1 million but only $377,000 of this sum was to be used to acquire Mr Brown’s interest in the Cammeray Development. This fell far short of the amounts to be paid as recorded in the Lord Dudley document. There was no evidence that Messrs Hodgkinson and Hausman had an alternative source of funding available. To an objective observer, it would be surprising if Messrs Hodgkinson and Hausman intended to commit immediately to an obligation to make payments for which they did not have funding.
As the primary Judge also found (at [54]), the buyout of Mr Brown’s interest in the Chevron Development was discussed for the first time at the Lord Dudley meeting. The additional size and complexity of the transaction by reason of the inclusion of terms relating to a Chevron Development buyout increases the inherent unlikelihood of the parties intending to be bound immediately.
Mr Jackman placed considerable emphasis on the signatures endorsed on the Lord Dudley document. He relied on Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165, for the proposition that a signature should be regarded as conclusive evidence of an intention to be bound by the contents of a document. However, the quotation from Professor Atiyah to that effect (cited at 181 [45]) has to be understood in the context of the Court’s observations (at 180-181 [45]) that:
“to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document … that the person who signs … is willing to take the chance of being bound by [the] contents”.
See, too, the discussion (at 181 [45]) of L’Estrange v Graucob Ltd [1934] 2 KB 394.
The very issue in the present case, however, is whether the Lord Dudley document was intended to create legal relations. The fact that all three participants at the meeting signed the document (then or later) is a factor to take into account in determining whether they intended to be contractually bound by its terms. But it is far from conclusive. All relevant circumstances must be taken into account.
Mr Jackman’s reliance on the delay of two or three days before Mr Hodgkinson signed the document does not, in my opinion, carry the matter any further. Mr Hodgkinson acknowledged in his cross-examination that the delay had given him an opportunity to make a more deliberate decision to sign the document. However, he was not asked why, having had that opportunity, he had signed the document. Had he been asked, he may well have given a similar response to that of Mr Hausman when he was asked why he had not written down certain conditions in the Lord Dudley document. Mr Hausman said that he thought that he “would leave that to our lawyers”. The fact that Mr Hodgkinson had an opportunity to consider his position is quite consistent with him intending not to be bound by the Lord Dudley Agreement until the execution of a proper contract drafted by lawyers.
In my opinion, little weight can be attached, for the purposes of determining whether the Lord Dudley Agreement was intended to be binding, to the informality of the arrangement entered into in relation to Greenberg acquiring an interest in the Chevron Development. Mr Hodgkinson’s evidence was that he was prepared to accede to Mr Brown’s wishes that there should be no documentation “on that particular project” (Black 162). The significance of these words is that, as Mr Jackman accepted, the arrangements between Mr Brown and one or both of Messrs Hodgkinson and Hausman in relation to the developments were recorded in formal and detailed documentation that was plainly intended to be legally binding. Thus there was formal documentation, including unit trusts, evidencing the parties’ respective interests in the Cammeray and 230 Palmer Street Developments, as well as in a separate development known as the 282 Oxford Street development. Similarly, the conditional purchase by LQI of units in the Chevron Development was effected by formal contracts of sale (the Lighter Quay Renounceables).
An objective bystander would take into account that the circumstances in which the parties entered into the informal arrangement relating to the Chevron Development were quite different from the rather fraught circumstances in which the parties negotiated the Lord Dudley Agreement. The bystander would also take into account that on several occasions entered into after the informal Chevron Development arrangement, the parties fully documented their relationship. Moreover, as his Honour found (at [58]), Mr Hodgkinson expressly stated at the Lord Dudley meeting that any agreement should be properly drafted by the solicitor.
Mr Jackman’s reliance on the actions taken by the parties after the Lord Dudley meeting encounters the difficulty that their conduct, objectively viewed, does not demonstrate the existence of a binding contract containing the terms alleged by the appellants. It is true that one transaction was completed that reflected a term recorded in the Lord Dudley document. The lot in the Chevron Development that Ms Brown had agreed to purchase was transferred to her in December 2006 at the reduced price of $275,000, as contemplated by cl 1(h) of the Lord Dudley document. However, none of the other actions taken by the parties can be said to be unequivocally referable to the terms recorded in the Lord Dudley document.
A total of $800,000 was paid to Abadeen between 23 August and 15 September 2006. The primary Judge found (at [72]), however, that Messrs Hodgkinson and Hausman caused their payments to be made, not in recognition of the existence of a concluded agreement, but “in a spirit of co-operation with Mr Brown and at his forceful insistence”. The sum of $800,000 was not paid, as the Lord Dudley document contemplated, in a single instalment within a week, but in three separate instalments. The final instalment of $250,000 was made only after Abadeen, at Mr Hodgkinson’s insistence, executed contracts to purchase the 230 Palmer Street and Crown Street Sites. Nothing in the Lord Dudley document made payment of any of the sum mentioned conditional on entry into contracts to purchase those properties, much less contracts in the form actually executed. Furthermore, the additional payments contemplated by cll 1(b) and 1(c) of the Lord Dudley document were never made.
The terms of the contracts for the purchase of the 230 Palmer Street and Crown Street Sites, for the reasons given by the primary Judge, are simply inconsistent with the terms recorded in the Lord Dudley document, at least as interpreted by the appellants. In my view, Mr Jackman’s valiant attempts to reconcile the terms of each contract with the Lord Dudley document were unsuccessful.
The letters from Greenberg of 22 and 25 August 2006 to Mr Brown ([64], [67] above) suggest that the parties to the Lord Dudley meeting may have had in contemplation some form of transfer of control of Greenberg to companies associated with Messrs Hodgkinson and Hausman. But the correspondence, which was apparently not followed up, does not make clear the mechanisms by which control would be transferred, nor the manner in which the interests of Messrs Hodgkinson and Hausman would be secured and their instructions faithfully carried out.
No Intention to Enter into a Binding Contract
When the Lord Dudley document is considered in the context of the commercial dealings between the signatories, including the events post-dating the Lord Dudley meeting, a reasonable person would conclude that the parties did not intend to conclude a binding contract. The primary Judge was therefore correct to reach the conclusion he did.
Notice of Contention
There is no need to address the issues raised in the respondents’ notice of contention. However, I shall briefly express a view on the question of whether, if the parties intended to conclude a binding agreement, the agreement would be insufficiently certain to be enforced.
As Gleeson CJ pointed out in ABC v XIVth Commonwealth Games, in the passage already quoted ([114] above), the question whether the parties intended to make a concluded bargain is not the same as whether they have reached agreement on all terms that are, in the circumstances, legally necessary to constitute a contract, although the two questions are closely related. In Thorby v Goldberg [1964] HCA 41, 112 CLR 597, Menzies J (with whom Owen J agreed) accepted (at 607) the following principle as correct:
“It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential or critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties. Again, there is no binding contract where the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intention”.
In my view, for reasons that have already been explained, the parties did not reach agreement at the Lord Dudley meeting on all matters that were essential to a concluded contract. Basic questions such as the identity of the parties, the terms on which valuable properties were to be transferred to Mr Brown or his companies and the consequences of an inability to secure the consent of mortgagees to the proposed arrangements, were left to future negotiations.
ORDERS
Both appeals must be dismissed, with costs.
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APPENDIX A

[<img src="/scjudgments/2009nswca.nsf/files/Abadeen1.gif/$file/Abadeen1.gif" alt="Appendix A">]

APPENDIX B

[<img src="/scjudgments/2009nswca.nsf/files/Abadeen2.gif/$file/Abadeen2.gif" alt="Appendix B">]

APPENDIX C

[<img src="/scjudgments/2009nswca.nsf/files/Abadeen3.gif/$file/Abadeen3.gif" alt="Appendix C">]

APPENDIX D

[<img src="/scjudgments/2009nswca.nsf/files/abadeen4.gif/$file/abadeen4.gif" alt="Appendix D">]

AMENDMENTS:

07/12/2009 - Format changes - Paragraph(s) [59], [76], [77], [78], [85], [109]

LAST UPDATED:
7 December 2009