Albarran v Thin Seam Mining Pty Ltd

[2005] NSWSC 372

CITATION:	Albarran v Thin Seam Mining Pty Ltd [2005] NSWSC 372
HEARING DATE(S):	21/07/04, 22/07/04, 23/07/04, 20/10/04, 08/02/05, 09/02/05, 10/02/05 Written submissions: 17/02/05
JUDGMENT DATE :	26 April 2005
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	Further amended originating process dismissed with costs

CATCHWORDS:	CONTRACTS - formation - whether oral contract formed - ESTOPPEL - whether oral representation made - turns on own facts - no question of principle
CASES CITED:	Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
PARTIES:	Richard Albarran and Geoffrey David McDonald - Plaintiffs Thin Seam Mining Pty Limited - First Defendant Bellpac Pty Limited - Second Defendant David Watson and Scot Turner - Third Defendant JAM 2002 Pty Limited - Fourth Defendant Island Fork Construiction Limited - Fifth Defendant Greenfuels Holding Company LLC - Sixth Defendant Sandwork Pty Ltd - Seventh Defendant Rag Trading Asia Pacific Pte Limited - Eighth Defendant Great Pacific Capital Limited - Ninth Defendant
FILE NUMBER(S):	SC 4469/03
COUNSEL:	Mr M.R. Aldridge SC - Plaintiffs Mr F.G. Lever SC - Defendants
SOLICITORS:	Nash O'Neill Tomko Lawyers - Plaintiffs Piper Alderman - Defendants

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY, 26 APRIL 2005

4469/03 – RICHARD ALBARRAN & ANOR v THIN SEAM MINING PTY LIMITED & 8 ORS

JUDGMENT

1 On 30 April 2003, the plaintiffs, Mr Albarran and Mr McDonald, were appointed administrators of the first defendant, Thin Seam Mining Limited (“TSM”), under Part 5.3A of the Corporations Act 2001 (Cth). TSM operated a coal mine on the southern coalfields of New South Wales. The mine was owned by GPC Bellambi Pty Ltd, an associated company of the ninth defendant, Great Pacific Capital Ltd (“GPC”). The appointment of administrators was in consequence of a resolution of directors under s.436A. TSM eventually executed a deed of company arrangement providing returns to creditors of the order of 20 cents in the dollar. In the meantime, the events giving rise to these proceedings occurred.

2 By their further amended originating process, the plaintiffs seek declaratory relief against GPC as follows:

“A declaration that the Ninth Defendant indemnify the Plaintiffs for their remuneration up to $90,000 plus GST, disbursements and liabilities as Voluntary Administrator of the First Defendant, to the extent that such remuneration, disbursements and liabilities are not met from their entitlements as statutory or equitable lienees over the assets of the First Defendant.”

(All other claims originally pursued by the plaintiffs have been disposed of by compromise.)

3 The indemnity the plaintiffs say they were given by GPC was oral. There are no pleadings, but the case the plaintiffs seek to make is described in their written submissions delivered after the evidence had concluded:

“1. The Plaintiff’s case is quite simple. At the meeting on 30 April 2003, Mr Au-Yeung agreed with Richard Albarran that the Ninth Defendant would indemnify the administrators for their costs (remuneration), disbursements and liabilities as voluntary administrators, which included the costs incurred by the administrators in operating the mine. Their remuneration, but not the disbursements and liabilities, was capped at $90,000 plus GST.
2. This appears from the evidence of Richard Albarran in his affidavit sworn 12 September 2003 at paragraphs 11-14.
3. Paragraph 11 clearly imports a condition that the appointment would not be taken unless an indemnity was given, it already having been made clear to Mr Albarran that the intention of Messrs Au-Yeung, Cook and Mahon was that the mine must continue to operate. In paragraph 12 an offer is made – I will cap my fees but the trading liabilities are impossible to estimate. A discussion on the fees followed and it was agreed that Mr Au-Yeung’s liability for fees would be capped at $90,000 plus GST. Paragraph 13 indicates that the fees themselves were not capped, but the administrators would look elsewhere for any additional amount. The deal was then said to be agreed.
4. It was a simple oral indemnity, unlimited as to costs and expenses but limited as to fees. It was what was needed to keep the mine operating. Mr Au-Yeung negotiated with accountants that he knew and believed he controlled, T327.20. The liabilities of trading on the mine would be the same irrespective of the administrator appointed. The fees of the administration however was a variable in the equation.
5. This agreement is strongly corroborated by other witnesses and the general circumstances. It would have been prudent to have put it in writing, but grossly reckless, and indeed unlikely, for Albarran to accept an appointment with an indemnity for fees capped at $90,000 but with an open-ended liability in a “big numbers” business, an exposure of hundreds of thousands of dollars a week for continuing to operate the mine (see T414.5). Indeed, at T418.15 – T420 Mr Au-Yeung reports Richard Albarran’s concerns regarding his personal liability prior to taking on the appointment. Of course, the mine could have been shut down but it was essential to GPC that it was not.
6. Further and alternatively, the statements made by Mr Au-Yeung, clearly intended to be relied upon, were relied upon by the Plaintiffs to their detriment, and create an estoppel against the Second and Ninth Defendants from which they cannot resile.”

4 Four persons are mentioned in this extract. Mr Albarran has already been identified. Mr Au-Yeung was a principal of GPC accepted, as I understand it, as having authority to speak for and bind that company. Mr Cook and Mr Mahon were directors of TSM.

5 It will be seen from the extract from submissions that the plaintiffs’ case is put on a twofold basis: first, that the ninth defendant (GPC) agreed by contact to indemnify the plaintiffs in the way alleged; and, second, that the ninth defendant (GPC) is estopped from denying that it agreed to indemnify the plaintiffs in that way. Each branch of the case depends on findings about what Mr Au-Yeung said to Mr Albarran at and in the context of the meeting in question.

6 There is no dispute that a conversation took place on the relevant occasion between Mr Albarran and Mr Au-Yeung. There is, however, a dispute as to what was said. The conversation occurred in part at and in part outside a meeting that Mr Albarran initially said took place on 29 April 2003. Other evidence has the meeting occurring on 30 April 2003 and, on balance, I think that it occurred on that date. Mr Albarran accepted in a later affidavit that the meeting may have been on 30 April 2003. The meeting was attended by Mr Albarran, Mr Au-Yeung, Mr Zucker (a lawyer employed by GPC), the two directors of TSM, being Mr Mahon and Mr Cook, and Mr Gallant of NOT Lawyers, the solicitors for the plaintiffs. The meeting had been arranged to discuss matters relevant to a proposal that TSM enter into Part 5.3A administration.

7 It is relevant to record the reasons why the various persons I have mentioned were at this meeting – also, that it appears that Mr Albarran and Mr Gallant arrived after the other participants who accordingly had some discussions before they arrived. Mr Cook and Mr Mahon were, as I have said, the directors of TSM which, at that point, was in a state of financial stress. A statutory demand served by a United States corporation called Greenfuels (a creditor in respect of a loan) was about to expire and TSM had neither the funds to pay the debt nor any basis for seeking an order setting aside the statutory demand. Mr Au-Yeung was a principal of GPC which had, in 2002, become party to heads of agreement envisaging equity investment in TSM. Mr Au-Yeung was, in principle, interested in investing in and giving financial support to TSM, provided that its debt problems could be resolved. Mr Mahon’s evidence is that Mr Au-Yeung’s willingness to have GPC provide assistance and support to TSM was conditional on TSM’s “going through voluntary administration”. Mr Albarran, as an insolvency practitioner, was the proposed appointee (or one of two proposed appointees) as administrator of TSM. Mr Gallant was Mr Albarran’s lawyer.

8 Relevant events at the meeting (and outside it) are recorded in Mr Albarran’s affidavit of 12 September 2003 as follows:

“9. During the course of this meeting, Larry Cook spoke on behalf of the directors of TSM, and said words to the following effect on a number of occasions:
‘It is critically important that creditors are paid in full. If we do not pay creditors in full, this mine has got too much history, and we will not have a business. Creditors have been hurt by Allied, and if we do not look after them, we will never be able to get supplies.’
On each occasion that Larry Cook said words to the effect referred to above, Danny Au-Yeung said words to the following effect:
‘I agree.’
or
‘Yes, this important.’
10. Following the discussions referred to in the paragraphs above, Danny Au-Yeung said words to the following effect to the meeting:-
‘This has to look right. People don’t get paid, they don’t support. We cannot carry forward without doing it right.’
11. The discussion then continued on the subject of the costs and expenses of the administration. I said to the meeting words to the following effect:
‘This is how it works with our fees. Ordinarily, our fees and expenses come out of the assets of the company, however, in the current circumstances, the company does not appear to have sufficient cash to enable us as administrators to continue to trade. This means that directors will need to find enough money to fund the voluntary administrators’ fees and expenses for the trading period. If I take the appointment, I will be personally liable for the costs and expenses of trading on the mine. I will be liable to all suppliers during any trade on period. I will not take the appointment unless I know that I am covered for those costs and expenses. Unless I get that comfort, I will not take the job.’
12. Following my comments to the meeting referred to in the numbered paragraph above, Danny Au-Yeung then said words to the following effect:
‘How much are you going to charge us?’
I responded in words to the following effect:
We usually charge on an hourly basis, and the fees are what the fees are, depending on time spent. However, I am prepared to cap my fees at $120,000 for the job. The trading liabilities are impossible to estimate.’
Larry Cook then responded in words to the following effect:
‘That’s expensive.’
Danny Au-Yeung then said words to the following effect:
You okay, Richard, we go outside, we talk, just the two of us, and do a deal.’
13. Danny Au-Yeung and I then left the meeting, and had a discussion in an adjoining office. The discussion was in words to the following effect:
Danny Au-Yeung:
‘Let’s do a deal. Richard, I look after you. I am a client of your firm. You trust me. You get paid. You not lose money. If I tell you, you okay, you okay.’
Richard Albarran:
‘That’s fine, Danny, but I need to know how much you are saying that you will pay. I have already told you that I am prepared to cap my fees at $120,000 for the VA period.’
Danny Au-Yeung:
‘Ah, Richard, that too much. Come on, let’s do deal. We do it for $70,000. We do a lot of work together in the future.’
Richard Albarran:
‘No, I can’t do that. I will do it for you for $90,000. If there is more, I will get it back from the company. If there are more assets, I will only look to you for $90,000 for my fees. Do you understand, if there is a shortfall, I have capped your cost at $90,000 for fees.’
Danny Au-Yeung:
Okay, we do deal.’
We then shook hands.
14. Danny Au-Yeung and I then returned to the meeting. When we returned to the main meeting, Danny Au-Yeung said words to the following effect:
‘It’s all okay. [Looking at the directors] You sign.’
Larry Cook then signed the appointment document in his capacity as one of the two directors of TSM. Larry Cook then passed it to Amon Mahon. Amon Mahon was reluctant to sign the appointment document. Danny Au-Yeung, looking at Amon Mahon, said words to the following effect:
‘How about you, fat boy, you sign.’
Amon Mahon then signed the appointment document.”

9 Mr Au-Yeung’s account of the relevant conversation is set out in his affidavit of 25 November 2003. He deposed:

“I recall Cook saying at that meeting, words of the following effect:
‘It is important the creditors get 100 cents in the dollar because there’s a history attaching to this coal mine and it will be hard to do business unless that occurs. They can only get paid if there is coal production and moneys received from the coal produced.’
Mr Albarran said:
‘We can get away with less than 100 cents in the dollar.’
‘As a voluntary administrator I will be personally liable for any debts that were incurred during my time as administrator. Ordinarily our fees and expenses come out of assets of the company and that is supported by the Corporations Act giving us priority over certain assets of the company.’
I said:
‘How much are you going to charge?’
He said:
‘$120,000 for the job.’
He also quoted some hourly rates which I no longer recall. I said:
‘Let’s go outside and talk,’
which we did.
I then said to Mr Albarran words to the following effect:
‘If we become an investor we want to minimise costs, as any additional costs incurred in the voluntary administration becomes a further cost of the investment. Money is a sensitive issue. What is the best you can do?’
He said:
‘$70,000 plus legals. ’
I said:
How much will legals be?’
He said:
‘$20,000.’
I said:
‘Can you do the whole job including legals at around $90,000?’
He said:
‘OK, we’ll do the whole job for $90,000 being our fees and legals.’
We did not discuss an additional amount for GST.”

10 Mr Au-Yeung otherwise denies the account in Mr Albarran’s affidavit as quoted above. In particular, he denies that it was agreed that GPC or any company associated with it would be liable for the fees of Mr Albarran and Mr McDonald if they became administrators. As to paragraph 14 of Mr Albarran’s affidavit, Mr Au-Yeung deposed that, when they returned to the meeting, he said words to the effect, “Richard’s fees will be $90,000”. Mr Au-Yeung’s affidavit continues:

“Otherwise we did not have the conversation deposed to by Mr Albarran. The directors signed various voluntary administration appointment documents. Simon Gallant then called a solicitor at Freehills to inform that person that TSM was in voluntary administration. The background to this was that the administrators were apparently appointed on the expiry date of a Corporations Act statutory notice served on TSM issued by Freehills on behalf of Greenfuels.”

11 Mr Zucker’s account of the meeting, as set out in his affidavit of 26 November 2003, is as follows:

“4. The discussion between Messrs Mahon, Cook and Au-Yeung mainly concerned the asset and liability position of Thin Seam Mining. Mr Au-Yeung wrote numbers concerning assets and liabilities on a white board in the meeting room.
5. A short time after the meeting started, two other gentlemen were shown into the boardroom. They introduced themselves as Richard Albarran a partner of Hall Chadwick chartered accountants, and Simon Gallant of NOT Lawyers. Each of them gave me business cards.
6. Larry Cook then gave the meeting a general overview of the current situation of Thin Seam Mining during which he said words to the effect:
‘We have received a statutory demand from one of our secured creditors, Greenfuels. The demand expires tomorrow.’
There followed some discussion involving Larry Cook, Richard Albarran and Simon Gallant on the effect of the expiry of a statutory demand. The discussion then moved to the appointment of Mr Albarran as an administrator and the technical aspects of that appointment namely how long it would last, the effect of the administration on secured and unsecured creditors and the day to day operations of the company.
7. At one point Mr Cook said words to the effect:
‘Well I don’t think we have a choice, I don’t like it but we have to try and get some breathing space for the company. However any administration has got to pay our creditors 100 cents in the dollar.’
Mr Albarran replied words to the effect:
‘Well you should think about that carefully. In most administrations, creditors would be paid much less even 10 or 20 cents in the dollar.’
Mr Cook replied:
‘We can’t do it to these people. They have already been stung a couple of times. We will not be able to carry on business unless they see a plan which gives them their money back in full even if it does take a while.’
Mr Au-Yeung said words to the effect:
‘I agree. We need to have creditors on side. If coal production starts up again, these people can be paid in full provided that there is some time to do this.’
There was then some discussion concerning costs of the administration.
Mr Au-Yeung said words to the effect:
‘How much are you going to be charging?’
Mr Albarran replied:
Well for a job this size it would be on hourly rates, different rates for different people involved in my organisation. Most of the work will be done by my employed staff at lower charge out rates but I really can’t give you a figure.’
Mr Au-Yeung said:
‘I think it is better on a job like this that you give a fixed quote.’
8. Mr Albarran and Mr Gallant then left the room to talk. When they returned Mr Albarran said words to the effect:
‘I think it will cost about $120,000 plus legal fees.’
Mr Au-Yeung replied:
‘Oh come on Richard. That’s very high. You should cap your fees and the legal fees together. We go outside and have a talk.’
9. Mr Au-Yeung and Mr Albarran then left the room. They came back about 5 minutes later. Mr Albarran said words to the effect:
‘We have agreed to cap the fees including legal fees at $90,000.’
10. Mr Albarran then said to Mr Cook words to the effect:
‘Yeah. I don’t think we have much choice. I don’t like it but I think we have to do it.’
Mr Albarran then said:
‘We will prepare all the necessary papers for the appointment. Let’s meet back here later in the afternoon and sign them all up.’
The meeting then ended.
11. At about 3pm the same afternoon, the same parties convened in Mr Au-Yeung’s office boardroom. Mr Albarran presented a number of papers concerning the administration. Mr Albarran then read the various papers aloud to the meeting and presented them to Mr Cook and Mr Mahon to sign. After the documents were signed Mr Au-Yeung arranged for copies to be made.”

12 Mr Zucker’s account was the subject of comment in Mr Albarran’s affidavit of 23 February 2004. He there made only one point: that he did not say the words “including legal fees” attributed to him at paragraph 9. Otherwise, Mr Albarran does not dispute Mr Zucker’s account, his only comment being that he thought the meeting may have occurred on 30 April 2003 as Mr Zucker deposed and not on 29 April 2003 as Mr Albarran himself had first stated. Mr Albarran confirmed this position in relation to Mr Zucker’s affidavit in cross-examination.

13 Mr Gallant swore an affidavit late in the proceedings (in fact, after the hearing had begun) and, as he admitted in cross-examination, had read the affidavits of all other relevant witnesses before he knew that he would be asked to attempt to re-capture his memory of events that occurred more than a year earlier. His evidence really does nothing to resolve differences, except to the extent that he denies that statements about the agreed figure of $90,000 were accompanied by references to the sum including legal fees.

14 Mr Mahon’s account of the meeting is given in his affidavit of 14 December 2004. He did not, in that affidavit, set out his own, independently re-captured, recollection of events at and connected with the meeting. Rather, he said that he had read paragraphs 8 to 12 of Mr Albarran’s affidavit (see paragraph [8] above) and:

“I agree that words were spoken at this meeting, to the effect of the words referred to by Mr Albarran in this section of his affidavit.”

This limits the usefulness of Mr Mahon’s account. He merely endorsed Mr Albarran’s version of events without, it seems, being exposed to the competing versions.

15 Mr Mahon also deposed that he had read Mr Albarran’s paragraph 14 and agreed that Mr Albarran and Mr Au-Yeung had left the meeting for a short period. He gave the following account of what happened when they returned:

“… Mr Au-Yeung, having returned from the meeting, said words to the effect:
D.AY: It’s all ok, you sign.’
And looking at me:
D-AY: ‘How about you fat boy, you sign.’
AM: ‘Danny, I am still worried about this.’
D-AY: ‘Amon, don’t worry, GPC will be looking after everything. There will be no losers in this. All we have to do is have this voluntary administration, to clear the creditors’ position up. Creditors are getting paid 100 cents in the dollar. GPC is underwriting everything. Don’t worry, just sign.’ ”

16 I must deal at this point with an important issue. The declaration the plaintiffs seek refers to indemnity in respect of three distinct items, being “their remuneration up to $90,000 plus GST”, “disbursements” and “liabilities as voluntary administrator of the first defendant”. Even if Mr Albarran’s affidavit evidence already mentioned is accepted in its entirety, there can be no finding that any entity for which Mr Au-Yeung was speaking made a promise or representation in relation to protection of the administrators against their liabilities as voluntary administrators (that is, the third of the items I have mentioned). The references in paragraph 9 of Mr Albarran’s affidavit to the need for creditors to receive 100 cents in the dollar did not, on Mr Albarran’s account, elicit from Mr Au-Yeung any words that could conceivably be the source of a contractual promise of indemnity given by or through Mr Au-Yeung or a representation that the administrators would be indemnified. Mr Au-Yeung is reported to have said “I agree” or “Yes, this is important” in response to words spoken on several occasions by Mr Cook. Those expressions of agreement or concurrence signified acceptance of Mr Cook’s proposition that the business would fail and suppliers would not supply unless creditors were paid in full. But they cannot, on any basis, be regarded as embodying promises or representations by Mr Au-Yeung to Mr Albarran.

17 At paragraph 10 of Mr Albarran’s affidavit, Mr Au-Yeung is reported as saying that things had to be done “right” and that if people did not get paid, they would not support. Mr Albarran says that these words were spoken by Mr Au-Yeung “to the meeting”, from which it must be inferred that they were by way of general observation, as distinct from any form of promise or representation to Mr Albarran. But even if the words were directed to Mr Albarran, they did not convey any promise or representation as to any particular future act or conduct of GPC or anyone else for whom Mr Au-Yeung may have been speaking.

18 At paragraph 11 of Mr Albarran’s affidavit, he says that he made “to the meeting” a statement about two matters, being the administrators’ fees and the expenses of trading during administration. He spoke of a need, in light of the apparent insufficiency of cash within the company, for “directors … to find enough money to fund the voluntary administrators’ fees and expenses for the trading period” [emphasis added]. Then, having pointed out that an administrator would be personally liable for the expenses of trading, he said he would not take the appointment “unless I know that I am covered for those costs and expenses”; and “[u]nless I get that comfort, I will not take the job”.

19 At paragraph 12, Mr Albarran deposes to what happened after he made the statement reported at paragraph 11. The only response or reaction he quotes is from Mr Au-Yeung who asked a question:

“How much are you going to charge us?”

This was followed by a description by Mr Albarran of the usual fee basis and, on his account, a statement that “[t]he trading liabilities are impossible to estimate”.

20 Mr Au-Yeung’s response (by way of the question, “How much are you going to charge us?”) to Mr Albarran’s statement at paragraph 11 cannot be construed as a promise or representation that GPC or someone else for whom Mr Au-Yeung spoke would indemnify the administrators in respect of anything. Mr Albarran had, after all, spoken of “directors” needing to find sufficient funds for the trading period. With the “directors” – Mr Cook and Mr Mahon – present in the room, there is no reason why Mr Au-Yeung should have regarded the expression of need on the part of Mr Albarran as some form of invitation to him (Mr Au-Yeung) to provide financial support or some form of inquiry whether he would provide such support. And when Mr Au-Yeung responded with a question (“How much are you going to charge us?”), he could only have been referring to the administrators’ fees, they being the only element of the totality Mr Albarran says he mentioned in respect of which the administrators would be able to exercise any discretion as to quantum. Likewise with Mr Cook’s reaction to Mr Albarran’s answer to Mr Au-Yeung’s question (“That’s expensive”): Mr Cook could only have been speaking of the quoted figure of $120,000 for fees.

21 Taking Mr Albarran’s affidavit evidence at face value, the events at the meeting before Mr Albarran and Mr Au-Yeung left the room temporarily cannot, on any basis, be seen to justify any finding of any promise or representation on behalf of GPC of the breadth relied upon by the plaintiffs’ case.

22 Nor do I think that any promise or representation (except, perhaps, as to fees) can be spelled out of Mr Au-Yeung’s alleged statement to Mr Albarran outside the meeting recorded in paragraph 13 of Mr Albarran’s affidavit:

“Let’s do a deal. Richard, I look after you. I am a client of your firm. You trust me. You get paid. You not lose money. If I tell you, you okay, you okay.”

23 Had Mr Albarran agreed unreservedly to what Mr Au-Yeung thus allegedly said, it might have been possible to regard the conversation as a source of the broad indemnity for which the plaintiffs contend. But, on Mr Albarran’s own evidence, he did not agree unreservedly. He says he said:

“That’s fine, Danny, but I need to know how much you are saying that you will pay.”

24 What was, on Mr Albarran’s evidence, a general assurance by Mr Au-Yeung that Mr Albarran would “get paid” and “not lose money” was not unequivocally embraced or accepted by Mr Albarran. Rather, after saying, “That’s fine, Danny” (which, standing alone might have been regarded as an acceptance of any offer conveyed by Mr Au-Yeung words of assurance, or, at least, an indication that they would be relied on), Mr Albarran sought to elicit from Mr Au-Yeung an explanation of “how much you are saying that you will pay” [emphasis added]. There was, in other words, a request by Mr Albarran for clarification or refinement of the original assurance (which arguably conveyed an offer or representation) by way of precise monetary quantification. Mr Albarran was saying, in effect, “It is all very well for you to make fuzzy statements that everything will be okay; but what I really need you to tell me is how much you are actually going to put up in cold hard cash”. From the point at which that inquiry was made of Mr Au-Yeung by Mr Albarran, the conversation was exclusively concerned with the prospective administrators’ fees. Indeed, Mr Albarran, having sought the clarification or refinement (by way of explanation of “How much you are saying that you will pay?”) spoke immediately of the quantum of fees, mentioning a capped figure of $120,000, to which Mr Au-Yeung responded by referring to $70,000, whereupon Mr Albarran mentioned $90,000 and referred to circumstances in which he would “look to you for $90,000 for my fees”, to which Mr Au-Yeung responded, “Okay, we do deal”.

25 If regard is then had to Mr Albarran’s acceptance, in his affidavit of 23 February 2003 and in cross-examination, of the correctness of Mr Zucker’s account of the meeting (except for the words “including legal fees” in Mr Zucker’s paragraph 9), the conclusion that the plaintiff’s case (except, possibly, fees) is simply not made out on Mr Alabarran’s own evidence becomes even stronger.

26 The plaintiffs nevertheless say that subsequent events are consistent with Mr Au-Yeung, on behalf of GPC, having agreed to indemnify the administrators in relation to the costs of operating the business in administration or, as the form of declaration the plaintiffs seek puts it, “liabilities as voluntary administrators of the ninth defendant”. That is a proposition that needs to be examined and tested. The legitimacy of having regard to subsequent conduct in determining whether a contract was formed was confirmed in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153.

27 There can be no doubt that GPC and Mr Ay-Yeung had an interest in seeing TSM restored to health. The associated company, GPC Bellambi, was the owner of the mine and it would have been much better for it for the existing operator to continue in business, rather than having to clear the site for a new operator. It is natural, therefore, that Mr Au-Yeung should have been active in seeking ways to see TSM’s creditors satisfied in full through a successful deed of company arrangement. There was accordingly an incentive for Mr Au-Yeung to be supportive. As I have said, GPC had, in 2002, become party to heads of agreement which envisaged financial support by it of TSM by way of equity investment.

28 The plaintiffs rely heavily on the evidence of Mr Williams who, at the time in question, was a business associate of Mr Au-Yeung but later fell out with him. Mr Williams refers, in his affidavit, to several conversations with Mr Au-Yeung in which Mr Au-Yeung allegedly said that GPC (or some generally expressed “we”) would ensure that creditors were paid 100 cents in the dollar and would pay costs necessary to keep the business going. Mr Williams’ testimony is that Mr Au-Yeung told him these things both before the meeting on 30 April 2003 and immediately after it (Mr Williams was in the same offices at the time, but not in the meeting room). Mr Williams also refers in his evidence to a meeting on 3 May 2003 with Mr Coggles and Mr Scott, representatives of a company that was a significant creditor of TSM in respect of equipment supplied and from which Mr Au-Yeung wished to see the restructured TSM acquire further equipment. Mr Au-Yeung allegedly said to them that GPC was “underwriting the administration and all costs” and wished to see in place an arrangement ensuring that the equipment supplier would be paid.

29 Mr Williams attended the meeting of creditors held on 7 May 2003. He did so at Mr Au-Yeung’s request. Mr Au-Yeung, according to Mr Williams’ evidence, briefed him beforehand as follows:

“If any questions are asked about GPC, please say that GPC will be funding the deed to ensure that creditors get 100 cents in the dollar and that GPC will be underwriting the costs of the administration and the costs to maintain TSM mining.”

30 Outside the creditors’ meeting, according to Mr Williams, he spoke with Mr Mitchell, an official of the CFMEU, the union covering workers at TSM’s mine. Mr Williams passed on to Mr Mitchell the message he had been given by Mr Au-Yeung. (The CFMEU later took direct action towards obtaining payment of back wages – a move which gave rise to a hasty transaction for the sale and purchase of coal to raise the necessary cash.)

31 The meeting of creditors was chaired by Mr Albarran. The minutes attribute statements to him as follows:

“The Chairman advised that the Administrators were continuing to trade the business of the company. The Chairman also confirmed, as detailed in his report dated 1 May 2003, that the Directors of the company were working with a potential investor to put forward a Deed of Company Arrangement (‘DCA’) that allowed for the payment in full of all creditor claims. The Chairman advised that whilst the Directors had made a commitment to pay creditors 100 cents in the dollar, they were yet to confirm the timing of the payments. …
The Chairman advised the company was trading utilising approximately $200,000 that was held in company’s bank account at the date of the appointment. The Chairman advised that he had received a verbal undertaking by the potential investor that he would guarantee any losses incurred by the Administrators whilst they are trading the business.
A creditor asked what would be the quantum of the trading losses incurred by the company whilst in Administration. The Chairman advised creditors that the losses incurred would depend upon the length of the Administration. The shortfall for the current week would be approximately $40,000, however at this time he could not provide an estimate of the costs to be incurred as they were contingent on many factors.
The Chairman advised that he was indemnified from the assets of the company for trading losses and secondly would look to the investor to meet any shortfall.”

32 Mr Williams was present at the meeting. It is said by the plaintiffs, and not disputed by the GPC, that he made no demur when Mr Albarran made the statements recorded in the minutes with respect to meeting of trading losses by the “potential investor”. After the meeting, Mr Williams wrote a memorandum which he addressed to Mr Au-Yeung, Mr Cook and a Mr Lee. It referred to the creditors’ meeting held “this morning”. In a section dealing with “questions from the floor”, he wrote:

“ 4.1. Details of secured, unsecured and related party creditors
$350,000 – Primary Employees
$3.0 million – Secured – 4 parties with charges
$2.0 million - Unsecured
$6.0 million - Related
4.2. Is business trading at a loss?
Not sure, but $40,000 shortfall for wages this week, $200,000 in bank at Commencement Administration
4.3. How are shortfalls covered?
Have commitment from third party investor to cover shortfall losses. Expect administration to only go 30 days.
4.4. Is investor indemnifying Hall Chadwick?
Have verbal commitment.
4.5. What is the typical cash flow positive?
Not sure, depends of [sic] coal production lost over 3 days with shaft falling in.
4.6. Are there any claims on assets and what assets are there?
Several claims on fixed assets with claims as late as last night from Mine Owner on coal stockpile.
4.7. Are you still selling coal?
Yes.
4.8. If third party investor is making up losses does that include all monies to creditors?
That is up to the directors to formulate a proposal. They have already indicated 100 cents in the dollar.
4.9. What are the terms the investor is coming in?
Still under negotiations.
4.10. Who are the investors?
Not at liberty to disclose at this stage. Will be able with the notice to creditors if they go ahead in 21 days.
4.11. What will the DCA, if any, propose?
Directors have indicated 100 cents in the dollar.
4.12. Is this investor the same investor as TSM wrote to us about several weeks ago?
Not sure.”

33 The notice to creditors dated 1 May 2003 concerning the first meeting of creditors referred to an intention of the directors to ensure that obligations to all creditors were met in full. There was reference to goods and services being ordered by the administrators but no reference to any underwriting of costs by any other person.

34 Mr Williams also played a part in the formulation of a deed of company arrangement proposal during the early part of May 2003. On or about 12 May, he prepared some draft explanatory material about the deed proposal. In broad terms, it involved financial support by GPC and the equipment suppliers. At the end of the draft material appeared the following:

“PROPOSAL

· Pay out (by way of assignment) secured creditors within 30 days of approval of the deed.

· Pay out employee superannuation for continued workforce support (Key element #6).

· Pay out DBT $528,000 within 30 days of approval of deed. Condition precedent for RAG marketing and equipment financing arrangements (Key element #1).

· Pay administration costs.

· Pay unsecured creditors in full from coal sales at the rate of $2.00 per tonne as per production and revenue schedule attached.

· Island Fork Construction (related party) will subordinate payment of $7.5m debt until all other unsecured creditors are paid in full.”

(DBT was the equipment supplier. Island Fork Construction was a company owned by Mr Mahon.)

35 Mr Williams kept a detailed diary of matters to do with his work and business. It contains various references to payment of 100 cents in the dollar to creditors and payment of the liabilities incurred in the administration. The two were consistently linked by him. The significance of this linkage emerges from part of Mr Williams cross-examination:

“Q. I think it is fair to say, and I will take you to them step by step, in all three of your notes you have made the link between paying the costs of the administration and paying the creditors 100 cents in the dollar?
A. Correct.

Q. It is correct, is it not, that that link is because of the evidence you gave on the last occasion, the money to be used to be pay those costs was to come from two sources: the sale of coal produced by the colliery during the administration period and I think also from the stockpile of coal which was at the mine?
A. It was to come from three sources. It was, well, indirectly the sale of the coal, but any income revenue generated from the operations and the sale of coal that was produced during that period and realising the value in the stockpiles of coal that were on-site.

Q. They were the three sources from which the costs that you have referred to in your diary for 28 April 2003 were to come from?
A. That's correct. As at 28 April that wasn't clearly defined, but did become so.

Q. So, during the course of, I think the following week or so, the discussions that you had with Danny Au-Yeung and others, it was clear that the source of the funds to pay unsecured creditors the cost of the administration and the professional fees of Hall Chadwick were to come from the three sources that you have identified?
A. No, that's not actually correct. The fees for Hall Chadwick were to come - weren't clearly defined at that point, but as we moved forward to prepare, or Thin Seam Mining prepared to do the company arrangement, there were was agreement reached that fees that would be paid would be paid out of that and also would be underwritten in part by Great Pacific Capital.

Q. So when you say the fees, you are only there referring to the professional fees, not the costs of the administration?
A. That was my understanding.

Q. And that was always your understanding from any discussions with - I will take it step by step - discussions with Messrs Mahon and Cook from Thin Seam Mining?
A. Yes. Again, the understanding was that the professional fees were to come from the revenue and if not, would be supported by an agreement with Great Pacific Capital, GPC, and the operating costs were to be covered by, effectively, endeavouring to generate positive cashflow through the administration period and that would be supported by coal stockpiles as and when required.

Q. This was consistent during your discussions with Larry Cook and Amon Mahon, the directors of Thin Seam Mining?

A. It was mainly Larry Cook. Amon Mahon wasn't involved in the latter part of this.

Q. At least Larry Cook of Thin Seam Mining?
A. Yes.

Q. Danny Au-Yeung of Great Pacific Capital?
A. Yes.

Q. And also the discussions you had with Geoffrey McDonald and Richard Albarran?
A. I had limited dialogue with Geoffrey McDonald. In fact, it was only on the 29th, in the phone call - I was introduced to Geoffrey McDonald on 9 May at Hall Chadwick's offices briefly. So there wasn't any dialogue with Geoffrey McDonald.

Q. Richard Albarran?
A. Richard Albarran was the point of contact, yes.

Q. I think on the last occasion you said, in answer to some questions I put to you, that certainly in the first affidavit half of May 2003 you and the others were confident that the mine would generate sufficient coal sales to pay the costs of the administration?
A. Yes, and that was supported by the arrangement with RAG for the coal offtake.”

36 The understanding here stated by Mr Williams is consistent with the skeleton information he prepared in connection with the deed of company arrangement proposal, namely, that payment of administration costs and the meeting of claims of creditors in full were both elements to be incorporated in and achieved under the deed. This is also consistent with Mr Albarran’s own account of something reported by him in his affidavit of 26 August 2003 as having been said by Mr Au-Yeung at a meeting he there says took place on 28 April 2003 between himself, Mr Au-Yeung and the directors of TSM. Mr Albarran there deposed that Mr Au-Yeung said:

“GPC wants to invest in the mine and is prepared to fund a deed proposal to pay creditors 100 cents in the dollar. GPC will also fund the ongoing costs of trading the business.”

37 Cross-examination made it clear that the meeting thus referred to by Mr Albarran was the meeting which, in a later affidavit, he described as the source of the oral promise or representation made by GPC through Mr Au-Yeung. Mr Albarran’s fuller account of conversations at (and outside) that meeting, as recounted at paragraphs [8] above, did not emerge until a later affidavit.

38 Proposals directed towards a deed of company arrangement ensuring 100 cents in the dollar for creditors continued until mid-May. On or about 15 May, Mr Au-Yeung made it clear that he would not fund any such deed proposal. The plaintiffs, as administrators, then ceased to conduct the business and put the mine on to a care and maintenance basis. Mr Albarran’s evidence about the significance of that event, for the purposes of the present dispute, comes from the following passage in his cross-examination:

“Q. After 15 May 2003 you certainly didn't continue as a deed administrator on the basis of anything that was promised to you by Danny Au-Yeung or anybody from Great Pacific Capital; isn't that case?
A. Once I became aware that Danny was advising he didn't have - once I became aware that Danny was saying there was no indemnity, I ceased to trade immediately. My obligations to the creditors is still to maximise the available return to the creditors of the company. The reason for my continued negotiations with the directors was with a view to maximising that return to the creditors. The directors had indicated that they were potentially attempting to sue Mr Au-Yueng so they could gain access to the mine and continue to mine and hopefully put forward some sort of a scheme.”

39 In a report to creditors dated 19 May 2005, Mr McDonald referred to suspension of trading operations following withdrawal of GPC from the deed proposal. The report also said that purchase orders to the extent of $256,812.59 had been placed by the administrators. The report then referred to 34,000 tonnes of coal held by TSM in stockpile, to which a value of $604,725 was attributed. Mr McDonald then said:

“It is expected that the coal will be sold prior to the major meeting of creditors and the proceeds will be made available to creditors, following the discharge of my trading liabilities and costs of Administration.”

40 The report also contained the following under a heading “Trading Liabilities”:

“As previously mentioned, the company is continuing to trade throughout the Administration period and accordingly, I will be incurring approximately $1,000,000 in trading liabilities. Of this sum, in excess of $600,000 relate to employee expenses.
I advise that, pursuant to Section 443A of the Act, I am personally liable for debts properly ‘incurred’ during the Administration period and pursuant to Section 556 of the Act, I am entitled to a priority in respect to these expenses. I further advise that, as Administrator, I have a right to be indemnified out of the company’s assets for my trading expenses (Section 443E(1) of the Act). This right ranks ahead of unsecured claims and debts of the company secured by a floating charge (Section 443E(2) of the Act).”

41 Later in the report, Mr McDonald said:

“I will be seeking the approval of the fees of the Administrators, fixed in the sum of $90,000 plus GST. This approval will be for the approval of the Administration up to the date of the major meeting (27 May 2003).”

42 Evidence given by Mr Zucker of a conversation among Mr McDonald and Mr Au-Yeung and himself shows that disputes broke out at this time about ownership of the coal. Mr Zucker said that the GPC Group, as mine owner, wanted to make sure that money received from coal sales came to it. Mr Zucker’s account of the conversation thereafter is as follows:

“McDonald: ‘I am in there and personally liable. Danny, if you fuck me over you will pay. I want you to be under no misunderstanding about this. Don’t fuck me over or you will regret it.’ (He was then shouting) ‘Danny, are you trying to rip me off?’
Au-Yeung: ‘Geoff, I’m just trying to protect our assets.’
McDonald: ‘Well I think you’re a crook and you are trying to rip me off. I’m telling you if you fuck me over you will regret it. I just want an answer. It’s a simple question. Are you going to try and stop me selling the coal and recovering the proceeds for the administration.
[Zucker]: ‘Well I think we have to work out which coal belongs to Thin Seam Mining and which belongs to us. I think there is probably a mixture in the stockpile.’
McDonald: ‘Well you work it out but don’t cross me.
Au-Yeung: ‘Geoff we will work together on this, I don’t want to have a problem.’
McDonald: ‘It sounds like you’re trying to rip me off. If I suffer you will personally suffer.’
Au-Yeung: ‘Let me think about it and get back to you.’ ”

43 Mr Zucker refers to a subsequent speaker phone conversation between Mr Au-Yeung and Mr McDonald during which Mr Zucker was present with Mr Au-Yeung:

“McDonald: “I have put arrangements in place so that you will feel pain. You are going to suffer and I have arranged for that to happen.’
[Zucker]: ‘This is Ron Zucker here. Do I understand you to be making a threat against Danny?’
McDonald: ‘What I am saying is that Danny will physically feel pain and I have made arrangements for that to happen.’
Au-Yeung: ‘I don’t think that we should continue this conversation. ’”

44 Mr McDonald initially deposed to a conversation between Mr Au-Yeung and himself resembling in some respects that reported by Mr Zucker. In his second affidavit, however, Mr McDonald conceded the accuracy of Mr Zucker’s account. He said in cross-examination that he was very angry with Mr Au-Yeung “and threatened to cause him the same pain as he caused me”. The source of the anger was explained in cross-examination as follows:

“But the acrimony was over title or ownership of coal mined at the Balgownie Colliery, wasn't it?
A. Amongst other things, yes.

Q. That was the source, the sale of that coal was to be the source of payment of Hall Chadwick fees and the expenses of running the colliery, wasn't it?
A. More important the half a million dollars of expenses, yes, the fees were secondary on my mind.

Q. I am sure they were. The fact was without the coal you realised that you would have difficulty paying the expenses of the administration?
A. Yes.

Q. And that was what was making you angry during your correspondence with Danny Au-Yeung during May 2003?
A. The anger was him changing his story, that was the anger.

Q. You say that he changed his story in relation to the ownership of the coal being mined at the colliery?
A. I say that he changed his story in respect of the ownership of the coal, in respect of ownership of plant and equipment, and in respect of his cover or indemnity of my firm.

Q. It is the coal and ownership of plant and equipment that features in your correspondence during May 2003, isn't it?
A. Yes.”

45 The correspondence thus referred to is correspondence that passed between Mr McDonald and Mr Au-Yeung in relation to the matters that caused Mr McDonald to become angry and, as he put it, to threaten to cause Mr Au-Yeung the “same pain” as Mr McDonald felt Mr Au-Yeung had caused him.

46 After the conversation in which Mr McDonald made what Mr Au-Yeung described as an “intemperate response”, Mr Au-Yeung wrote to Mr McDonald on 16 May 2003 saying, among other things:

“Our position in relation to stock is clear. Thin Seam Mining is the mine operator. GPC Bellambi is the mine owner. The coal is the property of the mine owner. The mine operator would be entitled to receive a payment per tonne mined. The mine owner has a statutory responsibility to pay royalties on coal production. Coal cannot be sold or removed without the mine owner’s consent and any funds received from coal sales belong the mine owner.”

47 Mr McDonald replied on 22 May 2003 saying:

“Please be aware that I do not accept the contents of your correspondence on 16th May 2003.
The conduct of the parties Thin Seam Mining Pty Ltd and your company has been different to that set out in your correspondence.
Furthermore, you have made representations which contradict your letter and allowed my Partner and I, as Administrators of the company, to act on those representations to our potential detriment.”

48 Mr Au-Yeung wrote to Mr McDonald on the same day, 22 May 2003, setting out his position on “various matters”, being ownership of coal, licence to occupy the mine property and ownership of plant and equipment.

49 On 26 May 2003, Mr Au-Yeung wrote to Mr McDonald referring to receipt of two letters from Mr McDonald on 23 May 2003 and a number of telephone conversations. After saying that he needed to “set the record straight” on a number of matters, Mr Au-Yeung proceeded to deal with matters under several headings: “Threats”, “Indemnity”, “Employee Wages”, “Lease” and “Future Arrangements”. Under the second heading, he said:

“On a number of occasions you have asserted that I agreed to indemnify you and Richard Albarran in relation to your Administration. I deny any such suggestion. What I have consistently said is that we should work together to ensure that through the sale of assets you do not suffer any loss.”

50 Mr McDonald said in a letter to Mr Au-Yeung also dated 26 May 2004:

“I have stated openly that your failure to honour your commitments is causing me pain and anguish and that I will use whatever legal methods to force you to honour your commitments. This may cause you to feel the same pain and anguish that I have been feeling. After I had mentioned these facts the other day, you too would have had an unexpected visit from the Union and a number of it’s [sic] members.”

51 On 28 May 2003, Mr McDonald wrote to GPC Bellambi, attention Mr Au-Yeung, proposing a “resolution of the dispute between Thin Seam Mining Pty Limited and your company”. This dealt with matters relevant to GPC Bellambi as mine owner. Another letter dated 29 May 2003 addressed to Mr Au-Yeung, GPC Bellambi, reads in part as follows:

“At the outset of this administration, it was your promise that sufficient funds would be injected to enable the company to meet its obligations, expand its mining capacity and move forward with a deal payable to creditors out of the ongoing cash flow. You have now resiled from that promise. Rather than embark upon litigation now, I encourage you to consider whether discussions should now be had with a view to moving forward.”

52 Following yet more discussions and correspondence, Mr McDonald wrote to Mr Au-Yeung on 30 May 2003. The letter reads in part as follows:

“In light of our discussions yesterday, I believe that it would be appropriate for GPC Bellambi Pty Limited to provide a letter of undertaking to the Administrators confirming that you will underwrite and guarantee that the costs of Administration will be discharged.”

53 Mr Au-Yeung replied on 3 June 2003:

“As we have said on a number of occasions, we have never agreed to provide you with an indemnity or guarantee for these costs nor have we agreed to underwrite them. Our position on this issue is unchanged.”

54 Matters rested there until 12 August 2003 when NOT Lawyers, on behalf of the plaintiffs, sent a letter of demand to “Great Pacific Bellambi Pty Limited” outlining claims of the kind eventually pursued against GPC in this litigation.

55 It is clear that, in May 2003, Mr McDonald’s concern about being exposed for the expenses of the administration (as well as the anger he consequently vented upon Mr Au-Yeung) was principally to do with what he regarded as a change of position by Mr Au-Yeung on the matter of ownership of coal stocks: whereas, at least on Mr McDonald’s evidence, he had been led to believe that the coal was owned by TSM and would accordingly be available to be applied towards costs of the administration, Mr Au-Yeung, as a principal of the mine owner, GPC Bellambi, later said that the coal was owned by that company. Mr McDonald’s reference, in the extract from cross-examination at paragraph [44] above, to ownership of coal, ownership of plant and equipment and “his cover or indemnity of my firm” as being the cause of his anger is supported only in relation to the first of these, so far as the situation in May 2003 was concerned. Mr McDonald eventually conceded that in the last answer in that extract.

56 The plaintiffs, as administrators, expected that their expenses of trading the company would be covered by the proceeds of sale of coal. They also had a general expectation that GPC – which had entered into heads of agreement envisaging equity investment in 2002 – would sponsor a deed of company arrangement which saw all expenses of administration covered and creditors paid 100 cents in the dollar. They may have separated these two elements in their own thinking, but there was no such separation on the GPC side – as is shown by Mr Williams’ evidence and the draft material he prepared for a deed of company arrangement. When, in the later part of May 2003 (after the deed proposal had fallen through), the plaintiffs sought to draw the distinction, GPC consistently resisted.

57 I should add that I consider the minutes of the creditors’ meeting of 7 May 2003 and Mr Williams’ memorandum of events at the meeting to be consistent with this position. GPC, although not named in the minutes (and presumably not named at the meeting), was described as “the potential investor”. It was portrayed as the source of the proposed deed of company arrangement and the protection in relation to trading losses during administration. The linkage between the two is evident in both the minutes and Mr Williams’ memorandum.

58 In my judgment, the events after the crucial conversations of 30 April 2003 do not demonstrate actions of the parties inconsistent with the conclusion, based on the terms of the conversations (as recounted by Mr Albarran), that Mr Au-Yeung did not make any promise or representation that GPC, come what may, would meet the plaintiffs’ “liabilities as voluntary administrator of the first defendant”. To the extent that the plaintiffs seek a declaration extending to that element, they have failed to make out the necessary case.

59 It remains to consider whether there was a relevant agreement or representation that GPC would indemnify the plaintiffs for their remuneration (fees) or disbursements (including legal fees) or both and, if so, whether the indemnity extended also to GST.

60 It is clear from all accounts of the events at the meeting before Mr Albarran and Mr Au-Yeung left the room temporarily that there was discussion and negotiation about the administrators’ fees, that Mr Albarran mentioned a sum of $120,000 and that someone said in response that this was high. It is also clear from all accounts that, when Mr Albarran and Mr Au-Yeung returned, there was reference to an agreed figure of $90,000, although there are different accounts as to whether something additional was said about GST or inclusions of legal fees.

61 On Mr Albarran’s evidence, the agreed figure of $90,000 was acknowledged and accepted by Mr Au-Yeung (“Okay, we do deal”) in the context of a statement by Mr Albarran:

“I will do it for you for $90,000. If there is more, I will get it back from the company. If there are more assets, I will only look to you for $90,000 for my fees. Do you understand, if there is a shortfall, I have capped your cost at $90,000 for fees.”

62 Mr Au-Yeung’s account is quite different. He says that a figure of $90,000 was agreed on the basis that it was notionally made up of $70,000 for fees (nominated by Mr Albarran as the “best” he could do) plus $20,000 for legal expenses as estimated by Mr Albarran. Mr Au-Yeung places the agreement as to $90,000 in a context quite different from that described by Mr Albarran. According to Mr Au-Yeung’s evidence, the discussion about amounts was preceded by his statement and question as follows:

“If we become an investor we want to minimize costs, as any additional costs incurred in the voluntary administration becomes a further cost of the investment. What is the best you can do?”

63 In that context, agreement on a figure of $90,000 (whatever may have been the additional elements, if any) did not amount to a contractual promise or a representation that GPC would see the agreed sum paid to the administrators come what may. Rather, GPC, as the potential investor, was seeking to limit the extent of the overall commitment that it would incur if and when the potentiality of investment was converted into reality. The investment referred to was that to be made through the proposed deed of company arrangement.

64 Having regard to the subsequent events to which I have referred, I am satisfied that the conversation between Mr Albarran and Mr Au-Yeung in which an agreed figure of $90,000 was struck was not the source of any contractual promise or representation by GPC as contended for by the plaintiffs. Mr Au-Yeung, on behalf of GPC, was in the process of defining the context of an investment proposal to be brought to fruition in due course through a deed of company arrangement. There is no apparent reason why he should have singled out the administrators’ fees for special and separate treatment by way of an undertaking to pay apart from the overall investment.

65 The last point to be mentioned is the informality of the alleged promise or representation on which the plaintiffs seek to rely. A major firm of chartered accountants and insolvency practitioners negotiating a fee agreement or a third party indemnity for fees would, in the ordinary course, seek to put the resultant agreement into written form, even if only by way of a short letter. Prudence would indicate a particularly compelling need for writing where the supposed protection came from an oral representation allegedly made by one person to another when only the two of them were present. Yet the plaintiffs never sought to reduce the alleged agreement to writing or even to write to Mr Au-Yeung confirming it. This reinforces the probability, independently established, that there was no separate and stand-alone commitment to indemnify as contended for by the plaintiffs.

66 The plaintiffs have not established an entitlement to the relief they seek against GPC. The further amended originating process is therefore dismissed with costs.

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