Abadeen Group Pty Ltd v Bluestone Property Services Pty Ltd

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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

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Details
Case
[2009] NSWCA 386
Decision Date

CaseChat Overview and Summary

Abadeen Group Pty Ltd (the appellant) appealed a decision of Palmer J in the Supreme Court of New South Wales concerning a dispute over a commercial agreement. The respondents, Bluestone Property Services Pty Ltd and others, argued that if a contract was intended, it was void for uncertainty and unenforceable under section 54A of the Conveyancing Act 1919 due to the absence of a sufficient memorandum in writing. The core of the dispute revolved around a handwritten note produced at a meeting, with the appellant contending it constituted a binding agreement and the respondents arguing it was merely a preliminary record of discussions.

The primary legal issues before the Court of Appeal were whether the parties intended to conclude an immediately binding contract based on the handwritten note, and if so, whether the agreement was void for uncertainty. The court also considered the significance of a statement made at the meeting that a solicitor would need to draft a formal agreement, and whether agreement had been reached on all essential terms necessary to form a concluded contract.

Hodgson and Campbell JJA, and Sackville AJA dismissed the appeal, upholding Palmer J's findings. The court reasoned that the evidence, including the denials by Messrs Hodgkinson and Hausman that they intended to be immediately bound, and the inherent improbability of such an immediate commitment given the parties' financial difficulties and the complexity of the development, did not support the existence of a concluded agreement. Furthermore, Mr Brown's subsequent email referring to the establishment of a "Heads of Agreement" indicated that the handwritten note was likely a preliminary document, not a binding contract. The court also noted that numerous essential terms remained to be clarified by a solicitor, supporting the conclusion that there was no common intention to be immediately and unconditionally bound.

The appeals were dismissed with costs.

Orders

Orders of the court

Appeals dismissed with costs

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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”.

Ratio Decidendi

Legal Principle Established

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