Allison v Tuna Tasmania Pty Ltd - [2018] TASFC 5

[2018] TASFC 5

COURT: SUPREME COURT OF TASMANIA (FULL COURT)

CITATION: Allison v Tuna Tasmania Pty Ltd [2018] TASFC 5

PARTIES:  ALLISON, Paul Francis
  v
  TUNA TASMANIA PTY LTD
  FARRER, John Frederick
  FARRER, Sharon Tina
  LAWRENCES MOTORS PTY LTD as trustee of
  The Farrer Superannuation Fund and as trustee of
  The Farrer Superannuation Fund (No 2)
  HAVENFLASH PTY LTD as trustee of
  The Farrer Family Trust

FILE NO: 1207/2015
JUDGMENT

APPEALED FROM: Allison v Tuna Tasmania Pty Ltd [2015] TASSC 31

DELIVERED ON:  11 September 2018
DELIVERED AT:  Hobart
HEARING DATES:  9, 10, 11 April 2018
JUDGMENT OF:  Pearce J, Brett J, Martin AJ

CATCHWORDS:

Appeal and New Trial – Appeal – General principles – Points and objections not taken below – When not allowed to be raised on appeal – Course of conduct at trial – Generally – Breach of fiduciary duty based on contract to enter into a partnership not raised at trial.

Water Board v Moustakas (1988) 180 CLR 491; Whisprun Pty Ltd v Dixon [2003] HCA 48, 77 ALJR 1598, applied.

Aust Dig Appeal and New Trial [90]

Contracts – General contractual principles – Formation of contractual relations – Matters not giving rise to binding contract – Vagueness and uncertainty – Agreement subject to further agreement or arrangement – Contract to enter into a partnership not established.

Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600; Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1, applied.

Aust Dig Contracts [7]

REPRESENTATION:

Counsel:
             Appellant:  A Morris QC, J P Murphy
             Respondents:  S B McElwaine SC, T Williams
Solicitors:
             Appellant:  No solicitor
             Respondents:  Timothy Williams

Judgment Number: [2018] TASFC 5
Number of paragraphs: 133

Serial No 5/2018
File No 1207/2015

PAUL FRANCIS ALLISON v TUNA TASMANIA PTY LTD,
JOHN FREDERICK FARRER, SHARON TINA FARRER,
LAWRENCES MOTORS PTY LTD as trustee of
the Farrer Superannuation Fund and as trustee of
the Farrer Superannuation Fund (No 2), and
HAVENFLASH PTY LTD as trustee of the Farrer Family Trust

REASONS FOR JUDGMENT FULL COURT

PEARCE J
BRETT J
MARTIN AJ
11 September 2018

Orders of the Court

Appeal dismissed.

Serial No 5/2018
File No 1207/2015

REASONS FOR JUDGMENT FULL COURT

PEARCE J
11 September 2018

I agree with Martin AJ.

File No 1207/2015

REASONS FOR JUDGMENT FULL COURT

BRETT J
11 September 2018

I agree with Martin AJ.

File No 1207/2015

REASONS FOR JUDGMENT FULL COURT

MARTIN AJ
11 September 2018

Introduction

In 2003 the appellant, Paul Allison, commenced an action against the second respondent, John Farrer, and entities associated with Mr Farrer. The circumstances giving rise to the action occurred more than 23 years ago. The appellant claimed that between September and November 1994 he and Mr Farrer agreed to go into a fishing business venture together. He claimed that their arrangement was such as to give rise to a fiduciary relationship between them, and that Mr Farrer, in breach of his fiduciary duty to the appellant, appropriated the proposed business to himself and his interests. In the action he claimed equitable compensation and other relief from Tuna Tasmania Pty Ltd, Mr Farrer and his wife Sharon Farrer, the corporate trustee of two superannuation funds controlled by Mr Farrer and the corporate trustee of a Farrer family trust. Tuna Tasmania Pty Ltd, at all material times from its incorporation in November 1994, was a company controlled by Mr Farrer. John Farrer died on 7 March 2016. Sharon Farrer is appointed as representative of his estate for the purposes of the appeal.
The trial of the action took place in December 2014 before Blow CJ without a jury. On 17 July 2015 the learned trial judge published written reasons for ordering judgment for the respondents: Allison v Tuna Tasmania Pty Ltd [2015] TASSC 31. In finding for the respondents, the learned trial judge summarised his conclusions in the following terms at [35]:
"[35] Mr Allison's claims in this action are all claims for equitable relief. They are founded on only two contentions: a contention that he and Mr Farrer formed a partnership, and a contention that he and Mr Farrer made a contract governing the allocation of units in a unit trust. No other basis for equitable relief, such as proprietary estoppel, was pleaded. I have rejected both of the fundamental contentions relied on by Mr Allison. Judgment must therefore be entered for the defendants."
Mr Allison appeals against the dismissal of his claim on a number of grounds asserting errors of law and fact. The appellant does not challenge the learned trial judge's conclusion that there was no partnership agreement. However the appellant contended that the trial judge erred by not finding an "agreement for a partnership". For the reasons which follow, the appeal should be dismissed. In summary:
(a)the case advanced on appeal that there was an agreement between the appellant and Mr Farrer which contemplated the formation of a partnership or some other form of commercial arrangement, as distinct from a partnership agreement, was not the case advanced by the appellant at trial. The interests of justice compel the conclusion that this Court should not now permit that case to be taken on appeal; and,
(b)in any event, the evidence does not establish the existence of such an agreement.
Most of the grounds of appeal were directed to supporting ground 1:
"1The learned trial judge erred in law and in fact in finding that no partnership or agreement for a partnership existed between the appellant ('Allison') and the Second Named Respondent ('Farrer')."
The trial judge summarised the essence of Mr Allison's case as follows at [9]-[10]:
"[9] Mr Allison's case, as pleaded, is that he and Mr Farrer met in Melbourne in about September 1994; that, in the course of that meeting, he proposed that they enter into an equal partnership to conduct a fishing business in common for their mutual profit; and that Mr Farrer orally accepted that offer.
[10] Mr Allison's evidence was somewhat unsophisticated. He said that he went to Melbourne for the AFL Grand Final in September 1994, and went to the home of a Mr Chaplin, where he met Mr Farrer. He gave evidence that he sought to persuade Mr Farrer to invest in the Tasmanian fishing industry, and that Mr Farrer replied with words to the effect of, 'Yes, we should have a crack at this.' In his evidence in chief he did not assert that anything more formal or more detailed was said between him and Mr Farrer that day in relation to their future arrangements. Under cross-examination he conceded that no partnership agreement had been entered into at that time, but asserted that Mr Farrer was very excited. By the end of the trial, Mr Allison's case was not that an oral partnership agreement was made in Melbourne, but that it should be inferred from a body of circumstantial evidence that the relationship that was formed between him and Mr Farrer was one whereby they agreed to carry on business in common with a view to profit, and that it followed that a partnership between them had been created."
Earlier in the judgment the trial judge summarised the subsequent events that were the basis of Mr Allison's claim that Mr Farrer had acted in breach of fiduciary duties he owed to Mr Allison as a result of the partnership:
"[2] … In late October 1994 the two men saw a Hobart solicitor, Mr Boland, in relation to their activities. Amongst other things, Mr Boland advised the setting up of a unit trust with a corporate trustee holding newly acquired assets, and assets to be acquired in the future, upon trust for the unit holders. Mr Farrer arranged for his solicitors and accountants in Queensland to establish the necessary structure. He arranged for all the shares in the trustee company and all the units in the unit trust to be held by himself, his wife, and entities that he controlled. Mr Allison contends that he and Mr Farrer had an arrangement whereby half of the units in the unit trust were to be issued to him, or perhaps to individuals or entities that he would influence or control, and that Mr Farrer acted dishonestly and in breach of the fiduciary duties owed by a partner by making arrangements that placed assets and profits beyond Mr Allison's reach. …"

Basis of case at trial

At the outset of his appeal submissions, senior counsel for Mr Allison addressed what he described as a "misconception" in the written submission of the respondents. In particular he drew attention to the following paragraphs:
"16Blow CJ correctly observed that the paragraph 10 pleading received little attention at the trial. The appellant now seeks to frame his case as turning upon a contract 'of partnership' formed between 1 October and about 3 November 1994, the express terms of which are pleaded at paragraph 10.
17The appellant must be confined to his pleaded case. He did not conduct his case on any alternative basis other than a partnership. He did not plead that the partnership agreement was entered into at any time other than as pleaded at paragraph 9 of his amended claim. He did not plead, from that time, the parties were bound by equitable obligations to implement the partnership as agreed, in any particular way. He had previously alleged in the alternative a joint venture or pre-contractual discussions giving rise to fiduciary obligations. This pleading was abandoned upon delivery of the amended claim.
18Examples of what could have been pleaded, and pursued at trial, as alternatives to the partnership contention, are:
(a)     A joint venture whereby the parties retained ownership of asserts contributed, but agreed to share the return from the use of those assets;
(b)     That Farrer had made representations on which Allison relied to his detriment such as to create an estoppel;
(c)     That Farrer had taken unconscionable advantage of Allison and thereby was unjustly enriched at the expense of Allison; or
(d)     The making of financial and non-financial contributions in furtherance of a failed joint enterprise." [Footnotes omitted.]
Counsel for Mr Allison also referred to par 30 of the respondents' written submissions which identified the central issue as whether, at the Melbourne meeting, Mr Allison and Mr Farrer entered "into an oral equal partnership agreement to conduct a fishing business in common for their mutual profit". This and other like submissions were, contended counsel, misconceived because Mr Allison's pleaded case was not restricted to breaches of fiduciary duties that existed by reason of a partnership agreement.
Counsel submitted that the pleaded case encompassed fiduciary duties arising out of an agreement between Mr Allison and Mr Farrer, reached in Melbourne or subsequently, which contemplated the formation of a partnership agreement or some other form of commercial arrangement. Counsel contended it was irrelevant whether a partnership agreement came into existence at the Melbourne meeting or subsequently, or not at all. As Mr Allison and Mr Farrer agreed to jointly engage in commercial activities, and to share equally the profits of those commercial activities, the nature of the relationship between Mr Allison and Mr Farrer was a fiduciary relationship with attending fiduciary duties.
In responding to questions from the Court, counsel for Mr Allison initially seemed to suggest that, even if Mr Allison and Mr Farrer did not enter into any agreement, the relationship which arose from their negotiations with a view to entering into a partnership and their mutual engagement in a commercial venture, gave rise to fiduciary duties owed by Mr Farrer to Mr Allison. Counsel appeared to suggest that this basis for the existence of fiduciary duties was encompassed by the pleadings in pars 9 and 10.
There is little doubt that circumstances may exist which give rise to fiduciary duties which precede the creation of a settled agreement, for example through a course of dealing between prospective partners: United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1, Fraser Edminston v AGT (Qld) Pty Ltd [1988] 2 Qd R 1 at 10. The possibility that such circumstances may exist in this case was specifically adverted to by Cox CJ in Tuna Tasmania Pty Ltd v Allison [2003] TASSC 4 at [8]-[11]. However, in the course of argument, the existence of fiduciary duties on any basis other than an agreement in the formal sense was expressly disclaimed by counsel for the appellant, who conceded that such a contention fell outside the pleadings.
Counsel for Mr Allison made further concessions which significantly narrowed the scope of this appeal. He agreed that:
(a)Mr Allison's challenge to the finding of the trial judge that Mr Allison had not proved the existence of a partnership agreement could not succeed. No partnership came into existence.
(b)The "Agreement" pleaded in par 9 of the statement of claim, when referring to an agreement to enter into a partnership, is intended to convey only an agreement in the legal sense; that is, a binding and enforceable contract, and not something falling short of such a contract.
(c)The "Agreement" pleaded in par 10 of the statement of claim was a variation of the Agreement pleaded in par 9 and, in itself, was also an agreement in the legal sense.
Counsel for Mr Allison pointed out that pars 9 and 10 of the statement of claim plead only facts, and not conclusions of law. The legal consequences of the asserted facts are identified in par 12, namely, that Mr Farrer owed specified duties to Mr Allison "in connexion with the Agreement and in connexion with relationship between them established or contemplated by the Agreement". The duties specified in par 12 are commonly identified as fiduciary duties.
It is clear from the reasons of the trial judge in the passage earlier cited that his Honour took the view that Mr Allison's claims for equitable relief were founded on only "two contentions: a contention that he and Mr Farrer formed the partnership, and a contention that he and Mr Farrer made a contract governing the allocation of units in a unit trust". His Honour did not deal with a claim that fiduciary duties arose because a binding contract to enter into a partnership came into existence, either during the Melbourne meeting (par 9) or subsequently (par 10).
The trial judge is a very experienced judge and it is necessary to examine how the issues were framed at trial in order to understand why his Honour did not deal with this issue. In addition, counsel for the respondents submitted that Mr Allison should not be permitted to advance this case on appeal because it was not part of his case at trial.
As will be seen from the reasons which follow, in my opinion Mr Allison did not present the wider case at trial. His case was limited to the breach of fiduciary duties said to exist by reason only of a partnership agreement. No other basis for the existence of fiduciary duties was advanced at trial.
The starting point is the further amended statement of claim and, in particular, the essential paragraphs dealing with the claim that an "Agreement" existed between Mr Allison and Mr Farrer:
"Part B: The Agreement
9In about September 1994:
(a)   Allison and Farrer met in Melbourne; and
(b)   in the course of that meeting:
(i)Allison orally proposed to Farrer that they enter into an equal partnership to conduct a fishing business in common for their mutual profit; and
(ii)Farrer orally accepted that offer.
10Between about September 1994 and about 3 November 1994, Allison and Farrer further orally agreed that:
(a)   the Fishing Business would be conducted through a corporate trustee to be known as 'Tuna Tasmania Pty Ltd';
(b)   each of Allison and Farrer would own 50% of the shares in Tuna Tasmania;
(c)   each of Allison and Farrer would be a director of Tuna Tasmania;
(d)   Tuna Tasmania would act as the trustee of a unit trust, to be known as the 'Tuna Tasmania Unit Trust';
(e)   each of Allison and Farrer would:
(i)own 50% of the units in the Trust; and
(ii)derive equal profits from the Fishing Business through those units;
(f)    Allison would assist in capitalising Tuna Tasmania as trustee of the Trust by:
(i)causing the title to the Greshanne to be transferred to Tuna Tasmania as trustee of the Trust, as set out in Part G of this pleading; and
(ii)giving Tuna Tasmania the opportunity to acquire the Risdon Vale land, and to have the title to the Risdon Vale Land transferred to Tuna Tasmania as trustee of the Trust, as set out in Part H of this pleading;
(g)   Allison would be responsible for:
(i)conducting operations of the Fishing Business; and
(i)the purchase of further fishing vessels and licences as agreed from time to time between Allison and Farrer; and
(h)   Allison would be paid a wage for the personal exertions referred to in subparagraph (g)(i) hereof;
(i)    Farrer would:
(i)assist in capitalising Tuna Tasmania by advancing money to it as trustee of the Trust for the purchase of further fishing vessels and licences as agreed from time to time between Allison and Farrer; and
(ii)be responsible for the financial and administrative aspects of the Fishing Business;
(j)    Farrer would, in accordance with the terms of the Agreement set out in subparagraphs (a) to (e) hereof:
(i)incorporate Tuna Tasmania; and
(ii)form the Trust; and
(k)   each of Allison and Farrer would have the authority to bind the other in respect of the operations of the Fishing Business.
Part C: Farrer's Fiduciary Duties
11As a consequence of the Agreement:
(a)   Allison reposed trust and confidence in Farrer;
(b)   Allison's trust and confidence in Farrer arose in circumstances where Alison was particularly vulnerable to a breach thereof:
(c)   Farrer stood to benefit himself or others, to the exclusion of Allison, by a breach of that trust and confidence; and
(d)   in the premises, Allison was entitled to expect that Farrer would act in his (Allison's) interests in and for the purposes of:
(i)the Agreement; and
(ii)the relationship between them established or contemplated by the Agreement."
As to the conduct of the trial, on appeal counsel for Mr Allison acknowledged that the evidence and submissions focussed on whether Mr Allison and Mr Farrer entered into a partnership agreement. Counsel acknowledged that the way in which the trial had been conducted might reasonably have led the trial judge into believing that Mr Allison had abandoned the "full scope of the pleaded case"; but suggested there was no such abandonment. Of course this submission relies upon the proposition that the pleaded case encompassed, absent a partnership agreement, the existence of fiduciary duties owed by Mr Farrer to Mr Allison by reason of a contract to enter into a partnership.
In considering the scope of the case encompassed by the statement of claim, and in particular by pars 9 and 10, counsel for Mr Farrer drew attention to the terms of the statement of claim filed in March 2003 which asserted alternatives to the existence of a partnership agreement. The relevant paragraphs are as follows:

"JOHN FARRER'S FIDUCIARY DUTY
5In about September 1994 in Melbourne, Paul Allison:
(a)   explained orally to John Farrer the matters alleged in paragraph 1;
(b)   discussed with him the requirements for creating a fishing business, and, in particular, capitalising such a business and the acquisition of fishing boats and licences;
(c)   offered to enter into a partnership with John Farrer to conduct a business ('the Fishing Business') in common for their mutual and equal profit.
6In about September 1994 in Melbourne, John Farrer orally accepted the offer alleged in sub-paragraph 5(c).
7Between about September 1994 and about 3 November 1994, Paul Allison and Joh Farrer agreed on the following further matters:
(a)   the Fishing Business would be conducted through a corporate trustee to be known as Tuna Tasmania Pty Ltd;
(b)   each of Paul Allison and John Farrer would own 50% of the shares in Tuna Tasmania;
(c)   each of Paul Allison and John Farrer would be a director of Tuna Tasmania;
(d)   Tuna Tasmania would act as the trustee for a unit trust, to be known as the Tuna Tasmania Unit Trust;
(e)   each of Paul Allison and John Farrer would own 50% of the units in the Tuna Tasmania Unit Trust and derive their equal profits from the Fishing Business through those units;
(f)    Paul Allison would assist in capitalising Tuna Tasmania by:
(i)causing the title to the Greshanne to be transferred to Tuna Tasmania as trustee for the Tuna Tasmania Unit Trust; and
(ii)transferring the title to the Risdon Vale Land to Tuna Tasmania as trustee for the Tuna Tasmania Unit trust;

(g) Using the experience and knowledge alleged in sub-paragraphs 1(c) to 1(d) (inclusive), Paul Allison would be responsible for:
(i)the purchase of further fishing boats and licences as agreed from time to time by Paul Allison and John Farrer; and
(ii)the conduct of the fishing operations;

(h) John Farrer would:
(i)register Tuna Tasmania and form the Tuna Tasmania Unit Trust on the basis alleged in sub-paragraphs 7(b), 7(c), 7(d) and 7(e);
(ii)assist in capitalising Tuna Tasmania by lending money to it for the purchase of further fishing boats and licences as agreed from time to time by Paul Allison and John Farrer; and
(iii)be responsible for the financial and administrative aspects of the Fishing Business;

(i)     Paul Allison would be paid a wage in return for his conducting the fishing operations; and
(j)     each of Paul Allison and John Farrer would have the authority to bind the other in respect of the operations of the Fishing Business alleged in this paragraph.
8Because of the facts alleged in paragraphs 5, 6 and 7, a partnership was formed between Paul Allison and John Farrer at some time between about September 1994 and about 3 November 1994 on the terms alleged in sub-paragraph 5(c) and paragraph 7.
9Alternatively, because of the facts alleged in paragraphs 5, 6 and 7, a joint venture was formed between Paul Allison and John Farrer at some time between about September 1994 and about 3 November 1994 on the terms alleged in sub-paragraph 5(c) and paragraph 7.
10Alternatively, the facts alleged in paragraphs 5, 6 and 7 constituted detailed discussions between Paul Allison and John Farrer which were directed at forming a partnership or, alternatively, a joint venture on the terms alleged in sub-paragraph 5(c) and paragraph 7.
11Because of the facts alleged in paragraph 8, or, alternatively, paragraph 9, or, alternatively, paragraph 10, Paul Allison:
(a)   reposed trust and confidence in John Farrer in circumstances where:
(i)he was particularly vulnerable to a breach of that trust and confidence;
(ii)John Farrer stood to benefit himself, and, or alternatively others, to the exclusion of Paul Allison by a breach of that trust and confidence; and

(b) was entitled to expect that John Farrer would act in his interests in and for the purposes of the relationship established between them.

12 Because of the facts alleged in paragraph 11, John Farrer owed to Paul Allison a duty ('John Farrer's Fiduciary Duty'), absent Paul Allison's fully informed consent, and within the scope of the Fishing Business, to:
(a)act towards Paul Allison with perfect openness, fairness, honesty and good faith;
(b)act bona fide in Paul Allison's interests, and, in particular to refrain from:
(i)personally profiting in preferment to Paul Allison;
(ii)allowing others to profit in preferment to Paul Allison;
(iii)placing himself in a position where his personal interests or the interests of others conflicted with Paul Allison's interests;
(iv)placing himself in a position where there was a serious danger of conflict between his personal interests or the interests of others on the one hand and Paul Allison's interests on the other.

13   The scope of John Farrer's Fiduciary Duty encompassed:
(a)     the matters alleged in sub-paragraphs 5(b) and 5(c) and paragraph 7; and
(b)     all activities properly incidental to or necessary to the Fishing Business."

The further amended statement of claim filed in 2013, and upon which the trial was conducted, omitted any reference to a "joint venture" or discussions directed at forming a partnership or a joint venture. Counsel for the respondents submitted that in deleting such references and pleading only an "Agreement" reached in September - 3 November 1994, Mr Allison had abandoned any claim on a basis other than the existence of a partnership agreement. This view, argued counsel, becomes unassailable when the change in the pleadings is viewed in the context of the conduct of the trial.
At trial, the opening remarks of senior counsel for Mr Allison, who also appeared on the appeal, set the tone. The opening commenced as follows:
"I think we have, your Honour. Your Honour will have gleaned from the pleadings that this is a partnership dispute. May I say at the outset and there's really no secret about this, we don't come to your Honour's Court advancing our client, Mr Allison, as a man of angelic antecedents or as pure as the driven snow. I think it would be fair to say that if the case we advanced depended entirely or substantially on his word against that of Mr Farrer, there's a fair chance we wouldn't be here. But the existence of the partnership agreement is corroborated by two witnesses.
Mr Boland's evidence will be unequivocal that he was told by Mr Farrer that there was to be a partnership between the two of them with a view to conducting fishing operations for a profit and that the contributions of the parties would include as they did the following: …". [My emphasis.]
Counsel then outlined Mr Allison's case as to his contributions to the subsequent operations. In the course of those remarks, counsel spoke of the acquisition of "several vessels used by the partnership" and the advertising of a vessel for sale "some time before the partnership came into existence". Counsel explained the circumstances of a vessel called the Merinda and said the acquisition of that vessel took place when "Mr Farrer had repudiated the partnership". Reference was made to the acquisition of two blue fin tuna licences and work by Mr Allison on behalf of "what we say was a partnership".
The opening proceeded with references to evidence which counsel described as "only consistent with the existence of some form of commercial relationship between Mr Farrer and Mr Allison". Counsel described Mr Allison's "day-to-day involvement in the operation of the partnership business" and made the point that the provision by Mr Farrer to Mr Allison of detailed financial records was "entirely consistent with the existence of a partnership". Counsel continued:
"The documents which were provided have all been disclosed of course and they will take on an added relevance in this case insofar as we claim an account of profits, but for present purposes it suffices to say that the sharing of such information is entirely consistent with what we claim was a commercial relationship of the kind which under Tasmanian law constitutes a partnership.
That is the agreement. Your Honour will note that I have not in mentioning the witnesses who will corroborate the agreement to form a partnership I've made no reference to the evidence of Stephen Chaplin because whether or not we're able to call him is a matter yet to be seen, so I don't open his evidence at this stage.
The evidence we say is compelling as to the existence of at the very least some form of commercial relationship and that's where something of a mystery arises in the pleadings in this case." [My emphasis.]
After addressing the respondent's defence, counsel for Mr Allison said:
"I describe that as a curious plea, because it seems to have no relevance to an action based on the existence of a partnership. There is no part of partnership law that involves a court dealing with the affairs of the partners weighing up the relevant, or respective contributions of the partners, and assessing some form of proportionality to either detriment suffered or contribution made ...". [My emphasis.]
Having mentioned the acquisition of vessels and other work performed by Mr Allison, counsel spoke of complications in the evidence relating to the vessel Greshanne, which counsel described as "effectively provided to the partnership" by Mr Allison. After outlining how Mr Allison came to make the Greshanne available, reference was made to land described as the Risdon Vale land. The assertion was made that instead of acquiring the land for himself "as part of the partnership relationship with Mr Farrer", Mr Allison made that opportunity available to Tuna Tasmania which acquired the land.
Counsel informed the trial judge of the role of a solicitor, Mr Christopher Boland, and spoke of Mr Boland as "dealing specifically with Mr Allison in the capacity as a spokesman for and a member of the co-partnership". Counsel continued:
"Your Honour, once we reach the point of concluding that there was a partnership created it's all downhill, there is no issue but that Mr Farrer has repudiated the existence of the partnership as he does to this day with his pleadings in this proceeding. … Those companies we would say because Mr Farrer controlled them, had the same knowledge as he did and therefore necessarily were knowing participants in the breach of trust involved in registering partnership assets in the name of a company which was set up in such a way as to exclude Mr Allison." [My emphasis.]
The opening remarks then referred to Mrs Farrer and the fact that she had paid nothing for the allocation of her share "of the partnership assets". Counsel continued:
"Our case, as I say, is therefore once we get to the point of establishing the existence of a partnership a very simple one. If your Honour at the end of the day is with us on the creation of the partnership then everything which flows from that necessarily flows to the point that Mr Allison is a half owner of Tuna Tasmania Pty Ltd and the assets in its name and is entitled to an account of the profits which have been generated through that vehicle over the intervening time" [my emphasis].
Finally as to the opening remarks, counsel for Mr Allison again identified the issue as to whether a partnership came into existence as "the only real issue":
"So we say that there is in those time bars [sic], and that the only real issue that your Honour is ultimately going to have to determine is whether a partnership was formed, and in the case of Mrs Farrer but none of the other defendants whether she was either a knowing recipient of the trust property or a volunteer who received trust property without paying any consideration for it. Your Honour, that is in substance the plaintiff's case." [My emphasis.]
During the opening remarks counsel for Mr Allison did not mention the existence of a fiduciary relationship between Mr Allison and Mr Farrer by reason of a contract other than a partnership agreement. The only basis upon which it was asserted that Mr Farrer owed fiduciary duties to Mr Allison was the existence of a partnership agreement reached during the meeting in Melbourne on Grand Final day in 1994. This position was maintained throughout the trial.
At the conclusion of the evidence, the trial judge was provided with lengthy written submissions. Mr Allison's submissions commenced with an Executive Summary:
"Part I Executive Summary
1The central issue in this case – indeed, the only real issue – is whether, in late 1994, Mr Farrer agreed with Mr Allison to enter into a joint business venture of a kind which meets the statutory description of a 'partnership' in section 6(1) of the Partnership Act 1891 (Tas); that is, 'the relation which subsists between person carrying on a business in common with a view of profit'.
2On this issue, the Plaintiff's case must succeed for the following reasons.
3For the reasons set out in Part II of these submissions:
(a)   the evidence of Mr Boland should be accepted in all respects;
(b)   Mr Allison's evidence should be accepted, especially where it is corroborated by the testimony of Mr Boland, or there is no acceptable evidence to the contrary; and
(c)   Mr Farrer's evidence should be rejected where it is contradicted by another witness or uncorroborated.
4Based on the testimony of Mr Boland – supported, in material respects, both by Mr Allison's evidence and by the contents of his (Mr Boland's) own contemporaneous files – there can be no question but that Mr Farrer and Mr Allison did agree to '[carry] on a business in common with a view of profit'.
5Were it necessary, Mr Boland's testimony is also supported by overwhelming circumstantial evidence, as summarized in Part III of these submissions.
6Once it is established Mr Farrer agreed with Mr Allison to enter into a joint business venture of a kind which meets the statutory description of a 'partnership', the inescapable conclusion is that Tuna Tasmania Pty Ltd ('Tuna Tasmania') and the Tuna Tasmania Unit Trust – entities created and structured on Mr Boland's advice, bearing a name which Mr Farrer admits was coined by Mr Allison – became the vehicle through which the joint business venture was to be conducted. The fact that Mr Farrer secretly instructed his Queensland lawyers to allot the shares in Tuna Tasmania only to himself and his wife, and to issue the units exclusively to corporate entities controlled by him, cannot alter the legal effect of the existing agreement.
7Of the defendants other than Mr Farrer, it sufficies to say that:
(a)   Mr Farrer is a director of each of the corporate defendants, so that his knowledge of the agreement with Mr Allison is also the knowledge of each of them, and
(b)   the only other defendant, Mrs Farrer, was, by her own admission, a pure volunteer who paid nothing for her share in Tuna Tasmania.
8Accordingly, all defendants are mulcted with the fiduciary obligations flowing from the partnership agreement between Mr Allison and Mr Farrer." [Footnotes omitted.]
A lengthy section of the written submissions dealt with the credibility of Mr Boland, Mr Allison and Mr Farrer, after which there was reference to circumstantial evidence:
"[61]Even if the testimony (and files) of Mr Boland were not available, there is a substantial body of circumstantial evidence leading inexorably to the conclusion that Mr Farrer and Mr Allison agreed to '[carry] on a business in common with a view of profit'."
The submissions then dealt with the acquisition of the vessel Greshanne and Mr Allison's role in that episode, following which the submissions stated:
"[67]All of this is explicable only on the footing that Mr Farrer and Mr Allison agreed to '[carry] on a business in common with a view of profit'."
The same conclusion was urged in respect of the dealings with the vessel Merinda:
"[76]Again, all of this is inexplicable absent an agreement between Mr Farrer and Mr Allison to '[carry] on a business in common with a view of profit'."
The submissions then dealt with various dealings in connection with the Risdon Vale land and Mr Allison's role in that regard, following which the same proposition was advanced:
"[85]Why would he have done that, if there was no agreement between him and Mr Farrer to '[carry] on a business in common with a view of profit'."
After a section of the submissions dealing with the work performed by Mr Allison, the recurring theme was again repeated:
"[90]The only intelligible explanation for Mr Allison's doing all of that work – and doing it without remuneration – is that he and Mr Farrer had agreed to '[carry] on a business in common with a view of profit'."
The repeated references to Mr Allison and Mr Farrer having agreed to "[carry] on a business in common with a view of profit" were plainly references to s 6(1) of the Partnership Act 1891 which provides:
"(1) Partnership is the relation which subsists between persons carrying on a business in common with a view of profit."
Part V of Mr Allison's written submissions dealt with legal issues. There is no reference in Part V, or in any other part of the written submissions, to principles or authorities concerning the creation of fiduciary duties by reason of a relationship other than a partnership.
The first section of Part V was addressed to the legal principles and the facts which Mr Allison submitted established the existence of a partnership:
"Part V The Law
Section A: Nature and incidents of the Partnership Contract
105The facts establish the elements of a partnership between Mr Farrer and Mr Allison, namely, they agreed to carry on business in common with a view of profit.
106A partnership is formed by a contract between the parties.
107It might be said that Mr Farrer decided at some time – probably not long after the initial meeting with Mr Boland – not to proceed with the partnership which had been agreed upon. So much is obvious. For example …
108However, none of that is relevant to the formation of the partnership. Under the objective theory of contract, it is the relevant words or conduct viewed objectively that determine a party's contractual intention. Viewed objectively, the facts in this case can lead to no conclusion other than that Mr Farrer intended to enter a contract of partnership with Mr Allison.
109It is therefore not open to the defendants to rely on Mr Farrer's obvious subjective intention to deny the existence of the partnership.
110It is also not open to the defendants to submit that the fact that a corporation was to hold the partnership assets and to distribute the profits in any way detracts from the existence of the partnership. By (objectively determined) agreement between the partners, the assets can be held wholly by one partner, by all of them, or by a stranger.
111The relevant terms of the partnership contract were:
(a)     The assets would be held by the corporate trustee of a unit trust whose units were held by the partners equally.
(b)     The shares in the corporate trustee would be held equally by the partners.
(c)     Mr Farrer would:
(i)supply the necessary funds, either from his own resources or entities he controlled; and
(ii)attend to administrative and related matters.
(d)     Mr Allison would:
(i)find and negotiate the purchase of suitable boats and licenses; and
(ii)manage the field operations.
112It is irrelevant that Mr Farrer's agreement was required before money was spent, because:
(a)     Mr Farrer's trust funds were supplying cash to the business; and
(b)     in any event, most partnership agreements contain similar terms.
113It is also irrelevant that Mr Allison was not required to contribute money:
(a)     The partners agreed that Mr Allison would not supply money.
(b)     In any event, many valid partnerships do not require equal contributions of money: one partner might supply labour, skill, knowhow, commercial opportunities and contacts, machinery, patent rights and so on; or nothing, as in the case of many husband/wife partnerships." [Footnotes omitted.]

The next section of the written submissions concerned the fiduciary relationship between Mr Farrer and Mr Allison. This section spoke only of the nature of the relationship established by the "partnership contract" and asserted that Mr Allison had proved "the formation of the partnership". Subsequently references were made to the assets of the partnership being held in trust for the partnership, and the proposition was advanced that Mr Farrer's intention was irrelevant "under the objective theory of contract" and, therefore, "a partnership was formed". In dealing with possible defences, the written submissions asserted that the partnership assets, "including the units", were held by Tuna Tasmania on an express trust.
The written submissions were supplemented by oral submissions, but counsel indicated at the outset of those oral submissions that he was seeking only to respond to oral submissions made by counsel for other parties.
During the trial reference had been made to particulars of a superseded version of the statement of claim. Counsel for Mr Allison, in his submissions to the trial judge, addressed that issue:
"The fact is inescapable that the case articulated in the first version of the statement of claim more than a decade ago is in some ways subtly, but in some ways fundamentally, different from the case in the amended statement of claim and the further amended statement of claim. …
So we come to court on a statement of claim dating from April 2013, which is different from the statement of claim previously pleaded and the particulars furnished of that statement of claim.
Our learned friends make merry with the fact that according to the particulars the entire terms of the partnership were negotiated in telephone calls prior to the initial meeting with the solicitor, but when one turns to the current statement of claim, the further amended statement of claim, your Honour will see in paras 9 and 10 that the case is precisely the case which was presented in this Court. It begins on para 9 with the meeting in September 1994 in Melbourne and continues in para 10 with the plea that between about September 1994 and about 3 November 1994 Allison and Farrer further orally agreed to certain things and that the range of dates necessarily includes the meeting with Mr Boland at which those matters were discussed.
Now – so whilst, as I've said, we accept that it is an entirely legitimate forensic tactic to draw attention to the differences between the case that's now pleaded and the case as previously pleaded, the action is to be determined on the basis of the current pleading and it cannot be said that we are in any sense bound [by] an earlier version of the pleading or the particulars thereof." [My emphasis.]
Counsel then referred to the evidence of Mr Boland and said:
"That is the central element of Mr Boland's evidence and if I might express myself this way, had Mr Murphy and I set out to coach Mr Boland to give evidence in a form which would bring the case squarely within the definition of a partnership in s6(1) of the Partnership Act, needless to say we didn't do so, but had we done so we could not have urged him to say anything more cogent as to the – to bring the case within the words, the relation which subsists between persons carrying on a business in common with a view to profit:
'We have gone into business together. We are looking at commercial opportunities but generally targeting the fishing industry'."
Subsequently reference was made by counsel to the suggestion that APAI had entered into the partnership rather than Mr Allison. Further references were made to the formation of the partnership in submissions relating to the Risdon Vale land and to the contention that Mr Allison brought the Risdon Vale land "to the partnership". The same theme concerning the existence of the partnership was maintained throughout the oral submissions.
The case for Mr Allison at trial was advanced only on the basis that fiduciary duties owed by Mr Farrer to Mr Allison arose by reason of the existence of a partnership which fulfilled the requirements of s 6(1) of the Partnership Act. It is common ground that, during the trial, there was no suggestion that even if a partnership did not exist, nevertheless Mr Farrer owed fiduciary duties to Mr Allison by reason of a contract to enter into a partnership.
In my view it is not in the least surprising that the trial judge did not deal with a contention that Mr Allison and Mr Farrer entered into a legally binding contract to enter into a partnership. On the appeal counsel conceded he had to accept that "it was not unreasonable for [the trial judge] to treat the case as being limited to the question of partnership".
As to how the pleadings were framed, it should not be overlooked that pars 9 and 10 of the statement of claim are in Part B which is headed "The Agreement". The dictionary to the statement of claim defines "The Agreement" as "the agreement referred to in Part B of this pleading". On the pleadings, therefore, Mr Allison relied on only one agreement. On appeal, counsel for Mr Allison ultimately identified "the Agreement" either as a partnership agreement or a contract to enter into a partnership, both covered by par 9. Counsel explained par 10 as pleading a variation of the agreement pleaded in par 9.

Case on appeal

The pleadings having referred only to a single agreement, and the entire case having been presented on the basis that the agreement pleaded in pars 9 and 10 was a partnership agreement, the trial judge cannot be criticised for having failed to deal with a suggestion that, absent a partnership agreement, the parties entered into a legally binding contract to enter into a partnership.
In these circumstances, should Mr Allison be permitted to pursue an appeal on the basis that although the trial judge might have been misled by the conduct of the trial, nevertheless his Honour was bound to deal with the issue of fiduciary duties based on a contract to enter into a partnership, and his failure to do so was an error? Further, should Mr Allison be permitted on appeal to seek judgment in his favour on the basis that the evidence established the existence of fiduciary duties by reason of a contract to enter into a partnership?
The principles to be applied in the situation were discussed by the High Court in Water Board v Moustakas (1988) 180 CLR 491. The plaintiff had been hit by a bus and injured during the course of his employment while working in a street. He sued both the driver and owner of the bus, together with his employer. The trial judge found that the employer had not been negligent, but did not deal with the point taken on appeal that the employer was negligent in not having erected a barrier to prevent the plaintiff from moving into the second lane of the road and into the path of the bus. This point had not been taken during the trial as the plaintiff's case at trial was based entirely upon him remaining in the first lane of the road. There was no suggestion at trial that the employer should have erected a barrier to prevent the plaintiff from moving from the first lane into the second.
The Court of Appeal held that although such a case of negligence "emerged" during the trial, it would be unfair to the employer to enter judgment for the plaintiff against it "on a set of facts to which it [the employer] has never had an opportunity of presenting a defence". In those circumstances the Court of Appeal ordered a retrial.
The employer's appeal to the High Court was successful. In their majority judgment, Mason CJ, Wilson, Brennan and Dawson JJ discussed the relevant principles:
"[13]     More than once it has been held by this Court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied. …
[14]     In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. In cases where the breach of a duty of care is alleged, the particulars should mark out the area of dispute. …
[15]     It is necessary to look to the actual conduct of the proceedings to see whether a point was or was not taken at trial, especially where a particular is equivocal. The particular in question in this case falls into that category. The allegation that the employer failed to provide adequate barriers did not indicate the purpose for which it was contended that barriers ought to have been provided. The case presented by the plaintiff, however, made it quite clear that it was being alleged that the barriers ought to have been provided to prevent traffic from crossing into the first lane. The plaintiff could have presented his case in the alternative, upon the basis that the employer was negligent in failing to provide a barrier to prevent him from straying into the second lane. The relevant particular, because of its breadth, would have allowed such a case to be put. But it was not put. The plaintiff presented his case solely on the basis that he remained in the first lane and the imprecision of the relevant particular cannot be the means of attributing to the plaintiff a case which he did not make.
[16]     The employer was never required to meet a case that the plaintiff was hit by the bus in the second lane and it was entitled in conducting its defence to rely upon the case which was actually put. …
[17]     It is true that in Maloney [Maloney v Commissioner for Railways (NSW) (1978) 52 ALJR 291] (at p 294; p 152 ALR) it was recognized that in 'very exceptional cases' a plaintiff's omission to put at trial a case formulated on appeal may not be conclusive against him. But it was pointed out that the opportunity to assert the new case at another trial should only be granted where the interests of justice require it and such a course can be taken without prejudice to the defendant. No exceptional circumstances arise in this case where the parties adopted the course which they took of their own choice. Moreover, it could hardly be said that a new trial could be held now, more than ten years after the accident, without prejudice to the defendant." [497-498; footnotes omitted.]
In Whisprun Pty Ltd v Dixon [2003] HCA 48, 77 ALJR 1598, the High Court was concerned with the decision of the Court of Appeal that the trial judge had not properly considered the respondent's case. In their judgment, Gleeson CJ, McHugh and Gummow JJ were of the view that the "case formulated by the Court of Appeal was never run at the trial" [50]. In the context of a trial in which each of the parties was represented by senior counsel "whose long and extensive experience in the conduct of trials of actions for damages for personal injury was reflected in an appreciation that the best advocacy is selective and economical" [18], the majority were of the view that the appeal should be allowed. The following observations highlight relevant considerations [51]-[52]:
"It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial. Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action. Not only is the successful party put to expense that may not be recoverable on a party and party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.
As Water Board v Moustakas makes clear, a point may be a new point even though it is within the pleadings or particulars. The pleadings and particulars are frequently decisive in determining whether a party is seeking to raise a new point on appeal. But they are not conclusive. To determine whether a party is raising a new point on appeal, it is 'necessary to look to the actual conduct of the proceedings'." [Footnotes omitted.]
In Water Board v Moustakas the particulars were equivocal. Assuming in favour of Mr Allison that the pleadings under consideration encompassed a contract to enter into a partnership as an alternative to a partnership agreement, as discussed in the High Court decisions, it is necessary to consider the conduct of the trial. A single agreement was pleaded and, throughout the trial, the appellant identified that single agreement as a partnership.
Would it be in the interests of justice to permit Mr Allison to advance on appeal the case that a contract to enter into a partnership was established at trial when that case was not put to the trial judge? While the respondents had difficulty in identifying particulars of prejudice, the following points were made:
·     In order to meet a "more dangerous and broader case", it is likely that the focus of the cross-examination would have been different, including concentration upon Mr Allison's professed expertise and the possibility of a defence based upon misrepresentation as to that expertise.
·     The basis upon which Mr Allison asserted he acted would have been brought into sharp focus.
·     Issues such as whether there was anything special about the Cape Cleveland or the licences to fish might have been explored.
·     Facts relevant to the law of contract concerning contracts to enter into an agreement would have been explored, particularly with respect to the essential terms required to be agreed in order to found an enforceable contract. This would involve exploring issues such as the certainty of terms, the parties, how the proposed partnership would be structured, and the consideration for the contract to enter into a partnership.
In considering the content and certainty or otherwise of the terms of a contract to enter into a partnership, regard should be had to the finding of the trial judge that there was "a body of evidence that suggested a strong unwillingness on Mr Allison's part to have any assets or income in his own name." [26]. His Honour concluded [26]:
"Given his apparent attitude to the ownership of assets and the receipt of income, it is highly unlikely that he would have been willing to enter into a 2-man partnership, rather than some other sort of arrangement in which his involvement was not obvious."
Those findings were well supported by the evidence. There was some cross- examination on the topic, but it appears likely that further exploration of this issue would have occurred if the respondents had been aware that they were meeting a case that a contract had been made to enter into a partnership.
Even assuming that pars 9 and 10 of the statement of claim encompassed a contract to enter into a partnership as an alternative to a partnership agreement, in my opinion it would be unfair to the respondents to permit Mr Allison to pursue the wider case on appeal, being a case which was not mentioned during the trial. In my view it is highly likely that, if the wider case had been advanced at trial, the respondents would have sought to meet that case with additional evidence, and the focus of cross-examination would have been enlarged. Mr Allison abandoned the earlier pleading and chose to confine the basis of his case at trial. He has not identified any circumstances which would justify this Court allowing him to pursue the wider case on appeal. In my view, permitting Mr Allison to proceed in that way in this Court would be contrary to the interests of justice.
Further, if this Court were to allow the appeal on the basis that the trial judge erred in failing to deal with the issue of a contract to enter into a partnership, what would follow? A new trial is not sought. What Mr Allison now seeks is a judgment in his favour. As has already been made clear, the events which give rise to the action occurred more than 23 years ago. Mr Allison had many years to formulate and present his case. In my view it would be unfair to the respondents for this Court to determine the issue against the respondents, when the respondents did not have full opportunity to test the case at trial. This Court could not safely conclude that, had the case been presented at trial, it would have made no difference to the evidence, conduct or focus of the trial, and that judgment could be justly ordered against the respondents, or any of them, on the basis of the new case. An order for a new trial would be unfair to the respondents. The unfairness in this situation would be as is identified in Whisprun (above) in the passage to which I have referred. The unfairness is added to by the fact that, since the trial, Mr Farrer has died.
For these reasons, in my opinion it would not be in the interests of justice to permit Mr Allison to challenge the judgment on the basis that the trial judge erred in failing to deal with the issue of a contract to enter into a partnership.
It follows that the appeal should be dismissed. Notwithstanding that finding, however, in my view it is appropriate to deal with the merits of Mr Allison's contention that the evidence established the existence of a contract to enter into a partnership. As will become apparent, in my opinion the evidence failed to prove that such a contract was made.

Contract to enter into a partnership

Ground 1 of the notice of appeal complains that the learned trial judge erred "in law and in fact" in finding that "no partnership or agreement for a partnership" existed. As mentioned previously, on the appeal counsel for Mr Allison specifically conceded that "there was no partnership that actually came into being". In my view, that concession was properly made. Having considered the evidence, in my view, the trial judge was correct in finding that there was "never a partnership between the two men" [29].
As explained earlier in these reasons, the trial judge did not deal with the issue of a contract to enter into a partnership. His Honour treated par 10 of the statement of claim as seeking relief on an alternative basis to a partnership, namely, a contract between Mr Allison and Mr Farrer "pursuant to which he [Mr Allison] became entitled to half the issued units in the Tuna Tasmania Unit Trust". His Honour observed that this contention "received little attention at the trial". As the transcript demonstrates, however, such a contention did not receive any attention at trial.
The findings of the trial judge with respect to the question of a contract pursuant to which Mr Allison became entitled to half the issued units of the Tuna Tasmania Unit Trust might bear upon whether Mr Allison could have succeeded with a claim based upon fiduciary duties arising out of a contract to enter into a partnership. In this context, therefore, it is appropriate to examine his Honour's reasons for judgment in their entirety.
Initially, counsel contended that either a contract to enter into a partnership was reached at the Melbourne meeting, and was subsequently varied by further oral agreement, or it was concluded at a meeting on 28 October 1994 through a combination of conversations in Melbourne and subsequently.
Questioned by the Court as to whether he conceded that the evidence was not capable of establishing that a legally enforceable contract to enter into a partnership was concluded at the Melbourne meeting, counsel for Mr Allison responded that he was not able to abandon that position. He added that whatever agreement was reached at the Melbourne meeting, it was superseded by a contract made at the meeting with Mr Boland on 28 October 1994 (and the Melbourne meeting informed the discussion in Mr Boland's office).

Although counsel baulked at making a specific concession, in substance counsel conceded that the evidence did not establish that a binding contract to enter into a partnership was reached at the Melbourne meeting. In my opinion that concession was properly made. Taking Mr Allison's evidence concerning the Melbourne meeting at its best from his point of view, and having regard to all the evidence, the content of the Melbourne meeting was far removed from a conversation capable of establishing a contract to enter into a partnership.
The critical witnesses were Mr Allison, Mr Farrer and Mr Boland. The trial judge regarded Mr Boland as a reliable witness, particularly as to what was said at the meeting in his office on 28 October 1994.
As to the evidence of Mr Allison and Mr Farrer, his Honour was clearly unimpressed by both witnesses:
"[15]In assessing the evidence, I have taken the view that both Mr Allison and Mr Farrer, the two principal witnesses, were extremely unreliable.
[16]The following comments were made about Mr Allison's evidence in counsel's final written submissions:
'That Mr Allison was in many ways an unsatisfactory witness cannot sensibly be denied. Much of his evidence, especially under cross-examination, was unresponsive and discursive. Some parts of his testimony were hard to follow, some parts practically unintelligible.
There is some explanation for this in the fact that Mr Allison is dyslexic and has difficulties in expressing himself; also in the fact that he is clearly a person of limited education and (as it may reasonably be inferred) of less than average intelligence.'
[17]Those comments were made by his own counsel. The submissions of opposing counsel were far less charitable.
[18]Mr Farrer is much brighter than Mr Allison, but it is clear that he was willing resort to dishonesty when it suited him. Under cross-examination he conceded, with enormous reluctance, that he had told lies to a man named Nielsen in 1995 in order to improve to his commercial position. That concession led to the following question and answer:
'And how is his Honour to know that if you were prepared to tell lies in May of 1995 to improve your commercial position you're not prepared to tell lies in December of 2014 [the month of the trial of this action]? … It's up to his Honour to make his decision'."
Ground 6 of the notice of appeal complains that the trial judge erred because he "equated the reliability of Allison and Farrer as witnesses". I do not agree. His Honour observed that not only was Mr Farrer much brighter than Mr Allison, it was clear that Mr Farrer "was willing to resort to dishonesty when it suited him". By way of contrast, his Honour did not suggest that Mr Allison was dishonest in any way similar to the dishonesty of Mr Farrer. He described Mr Allison only as "extremely unreliable" and, in my opinion, this was an accurate description. In addition, I would add that my reading of the evidence of Mr Allison left me with the strong impression that there were times when Mr Allison was evasive and less than truthful.
As to the Melbourne meeting on 1 October 1994, the day of the AFL Grand Final, the trial judge summarised Mr Allison' evidence as follows:
"[10] Mr Allison's evidence was somewhat unsophisticated. He said that he went to Melbourne for the AFL Grand Final in September 1994, and went to the home of a Mr Chaplin, where he met Mr Farrer. He gave evidence that he sought to persuade Mr Farrer to invest in the Tasmanian fishing industry, and that Mr Farrer replied with words to the effect of, 'Yes, we should have a crack at this.' In his evidence in chief he did not assert that anything more formal or more detailed was said between him and Mr Farrer that day in relation to their future arrangements. Under cross-examination he conceded that no partnership agreement had been entered into at that time, but asserted that Mr Farrer was very excited. By the end of the trial, Mr Allison's case was not that an oral partnership agreement was made in Melbourne, but that it should be inferred from a body of circumstantial evidence that the relationship that was formed between him and Mr Farrer was one whereby they agreed to carry on business in common with a view to profit, and that it followed that a partnership between them had been created."
Ground 3(h) complains that the trial judge erred in finding that Mr Allison conceded no partnership agreement had been reached in Melbourne because "the evidence was plain that Mr Allison meant that there was no written (as distinct from oral) agreement". In addition Mr Allison's written submissions refer to the cross-examination on this issue and assert that the trial judge erred in finding that "by the end of the trial, Mr Allison's case was not that an oral partnership agreement was made in Melbourne, but that it should be inferred from a body of circumstantial evidence …".
In examination Mr Allison said he was selling an idea in connection with tuna fishing off the coast of Tasmania and that Mr Farrer demonstrated strong interest. In response, Mr Farrer said words to the effect of "Yes, we should have a crack at this." The meeting concluded with Mr Farrer saying words "similar" to "Well we'll do it and I'll give you a ring in a couple of days time … when I get back to Brisbane."
Mr Allison said that a couple of days later he received a call from Mr Farrer who said he wanted more information and would come to Tasmania.
The cross-examination of Mr Allison was lengthy and, at times, intense. As to whether an agreement was reached at the Melbourne meeting, the relevant evidence was as follows:
"Well if you weren't the owner of the Greshanne or APAI Pty Ltd was not the owner of the Greshanne, you could not possibly have discussed the Greshanne in Melbourne, could you?.......Possibly, possibly not, no.
No, because there's nothing to discuss, is there?......No.
Mmm. Absolutely right, isn't it? You didn't own it, you couldn't---……Well at that time, at the Grand Final Farrer was nothing, just an interested party, and it was only from that day onwards and a couple of days later he started saying 'well yeah, we'll do a deal'.
But there was no agreement entered into at the Grand Final, was there?.......No, except he virtually said that he'd do a deal, you know, it looked too good.
But there was no agreement entered into on the day of the Grand Final - ……Oh –
- was there?……Him and – him and Mr Chaplin were – who worked for Mr Farrer was frothing at the bit.
Now -……But there was no written – your Honour, there was no written agreement.
Not even a verbal agreement, was there?……Beg yours?
There wasn't even a verbal agreement?……Not a hundred percent that day, no.
No, there wasn't even -……Not a hundred percent.
There wasn't any percent, was there?……Oh yes.
So do you say -……That's why he got back in touch with me a couple of days later from Brisbane.
But there was no agreement entered into -……Only a verb – no.
- on Grand Final -……No.
That's right, isn't it?……Yeah.
Thank you. And more importantly, at the Grand Final, there was no offer then of a partnership between yourself and John Farrer?……Oh yes, there was, I told them that's what I was there for, I needed a partner with some bounce, with some money.
Ah Mr -……To back the idea.
There was no agreement entered into, was there?……Verbally no.
Well what was said, Mr Allison at the Grand Final day meeting?……Well I give them a speech and said, 'Listen this is a story about – this is a story with tuna and it's going to take off. Now I need a partner, you know, an investor, and it's the way to go, backed up with crayfish' The crayfish pots were going to skyrocket, so all I did was give a spiel, your Honour, of what we proposed to do.
That's it, you just gave a spiel as to what you proposed to?……Yeah.
Right. And you came back to Tasmania in the hope that something might come out of it?……Well I wasn't hoping too much it was a good idea and I knew that someone would – you know that one day it would happen.
One day? But you came back to Tasmania having given your spiel with a hope, and nothing more, that Mr Farrer, or indeed, Mr Chaplin, night contact you and the matter could proceed forward?……Yeah, well –
That's right, isn't it?……- I wasn't relying on them too much but –
No, and that's -……- yeah, they wasn't the only people –
- a fact?……- we was canvassing.
No, you were out there trying to flog this idea to other people, weren't you?……Ah well I was – we were trying we had a good idea and we knew that craypots were going to go through the roof and we knew it was – I was under the care of Mr Buchanan and –
Now I want you to -……- that's exactly what happened.
Look, you went to Melbourne, to try and flog an idea, to find somebody who might be interested in going into business with you?……Well I had the right ideas.
That's right, isn't it, that's what you went to Melbourne for?……Mm.
Or was it – did you go to Melbourne specifically to meet Mr Farrer?……I'd organised, Mr Farrer said he was coming down to Melbourne, he had to pay his annual hundred thousand dollars to Mr Steve Chapman (sic) for consultancy fees and he would be there and he'd talk to me about it.
But most certainly, when you left Melbourne there was no offer to conduct a partnership?……No, but –
Thank you, Mr Allison?……- he never stopped –
Thank you. ……He never stopped questioning me about it and he was very excited."
The trial judge had the advantage of seeing and hearing Mr Allison at length. In my view the evidence supports rather than undermines the conclusion reached by the trial judge.
It is now the case for Mr Allison that if a contract to enter into a partnership did not come into existence at the Melbourne meeting, it existed at the end of the meeting with Mr Boland on 28 October 2004. Prior to that date, according to Mr Allison he sourced a vessel named the D'Entrecasteaux for Mr Farrer. He said he told Mr Farrer about it and advised that it would be a good acquisition.
That vessel was for sale by public tender. The trial judge found that on 25 October 1994 Mr Farrer gave instructions to submit a tender:
"On 25 October 1994 Mr Farrer instructed Mr Boland, whose name had been given to him by Mr Allison, to submit a tender for the purchase of that vessel for $188,010. On the same day an employee of Mr Boland wrote a letter offering that price on behalf of 'John Frederick Farrer of Tuna Tasmania'. That tender was accepted the following day. Mr Farrer subsequently caused TTPL [Tuna Tasmania Pty Ltd] to be incorporated. It was incorporated on 3 November 1994. The next day, it paid for the D'Entrecasteaux, and took title to that vessel."
In a written statement tendered as his evidence-in-chief, Mr Farrer denied meeting Mr Allison in Melbourne on Grand Final day. He said he and Mr Chaplin ran into Mr Allison at the Hilton Hotel before the Grand Final, and after the final Mr Allison found them again at that Hotel. According to Mr Farrer there was a general discussion over a few beers during which Mr Allison spoke of running a successful cray fishing business in Tasmania. Mr Farrer said he told Mr Allison he was interested in looking at investments in the Tasmanian cray fishing industry, but it was not a business meeting and it did not turn into such a meeting.
As to the D'Entrecasteaux, Mr Farrer said he was surprised when Mr Allison phoned him after he had returned from Melbourne to Rockhampton and told him that he had unsuccessfully tendered for that vessel. According to Mr Farrer, Mr Allison advised that another tender was possible and it would be a good investment. After seeking advice from a Mr Gary Lowe, Mr Farrer decided to put in a tender.
In addition to identifying the opportunity to tender for the D'Entrecasteaux, prior to the meeting of 28 October 1994 Mr Allison suggested to Mr Farrer that there be a purchase of a package of fishing licences, after which Mr Farrer contacted the broker on 26 October 1994 and requested that information be sent to Mr Boland. A draft contract was sent to Mr Boland on 26 October 1994 and, on 27 October, Mr Farrer flew to Hobart and met the broker. A contract was signed with the broker on 28 October 1994.
The trial judge obviously accepted the evidence of Mr Allison as to the meeting in Melbourne which necessarily means that he rejected the evidence of Mr Farrer in that regard. The Melbourne meeting, as described by Mr Allison, and the conduct of Mr Allison with respect to the D'Entrecasteaux and the fishing licences, provide, therefore, the context in which the meeting in Mr Boland's office occurred.
The trial judge found that the meeting in Mr Boland's office occurred on 28 October 1994. His Honour's initial summary of the meeting is set out at [8] of these reasons. Subsequently his Honour returned to the events of that meeting:
"[27] As I said at [2] above, Mr Allison and Mr Farrer went to see Mr Boland in late October 1994 in relation to their activities, and Mr Boland advised the setting up of a unit trust with a corporate trustee holding assets upon trust for unit holders. In Mr Allison's evidence in chief, he said the following about the conversation at that meeting:
'I never knew anything about unit trusts and not much about companies, but yes, he [Mr Boland] went on with how we could structure it. Mr Farrer was asking him the best way to do it, I remember that, and he was saying it was some unit trust, I remember that. And there was two companies going to run it.'
He went on to recount conversation to the effect that he was to have 'fifty per cent of the shares and Mr Farrer was the other fifty per cent'. When Mr Boland gave evidence, he confirmed that the proposal that was discussed involved Mr Allison receiving 50% of the shares in the trustee company and 50% of the units in the unit trust. For the purpose of determining whether or not a partnership was created, it does not really matter whether there was a discussion about a 50:50 arrangement or not. The important point is that the evidence of Mr Allison, Mr Farrer and Mr Boland as to what was said at that meeting is entirely inconsistent with the proposition that Mr Allison and Mr Farrer intended to enter into a two-man partnership. Plainly, they both intended that a more sophisticated structure should be set up, and one was. Mr Allison had reserved the business name Tuna Tasmania. Mr Allison, Mr Boland and Mr Farrer all gave evidence that it was proposed that that name be used as the name of the new company. Mr Boland and Mr Farrer both gave evidence that it was proposed that the unit trust would be named the Tuna Tasmania Unit Trust."
After discussing the date of the meeting, the trial judge discussed his conclusion as to the existence of a partnership between Mr Allison and Mr Farrer:
"[29] Before that meeting, there had been discussions between Mr Allison and Mr Farrer, and they had started to make plans for the carrying on of a business in the fishing industry, but they had not commenced to carry on business. No one had caught or sold any fish. APAI might have been using the Merinda to carry on the business of fishing, but I am not satisfied that Mr Farrer had any interest in that enterprise prior to 28 October 1994. There is a distinction between the carrying on of business in partnership and the taking of preliminary steps by intending partners prior to the commencement of business: Keith Spicer Limited v Mansell [1970] 1 WLR 333; Pioneer Concrete Services Limited v Galli [1985] VR 675 at 705-708. At the time of the meeting in Mr Boland's office, Mr Allison and Mr Farrer had gone no further than taking preliminary steps. They had had some conversations. Mr Farrer had successfully tendered for the purchase of the D'Entrecasteaux. It had not been delivered. It had not been paid for. Similarly, Mr Allison had made some sort of arrangement for the acquisition of the Greshanne, but it had not been delivered or paid for either. They had not started fishing. They had not commenced to carry on business. It follows that they were not then in partnership. Any arrangement that they had was abandoned with a view to possibly implementing the proposal for the creation of a unit trust structure. There was never a partnership between the two men. Mr Allison's primary claim in this action must therefore fail."
As I have said, counsel for Mr Allison has now acknowledged that there is no basis upon which this Court could interfere with his Honour's finding that a partnership did not exist. However, as to the issue of a contract to enter into a partnership, although the trial judge did not deal with that specific issue, his Honour dealt with par 10 on the basis that it was the case for Mr Allison that a contract was made between him and Mr Farrer pursuant to which he was entitled to half the issued units in the Tuna Tasmania Unit Trust. His Honour's findings in this regard necessarily reflect upon the contention that by the end of the meeting in Mr Boland's office on 28 October 1994, a contract to enter into a partnership had been made.
After referring to par 10 of the statement of claim, the trial judge said:
"[31] The defendants denied the whole of that paragraph. It is clear from the evidence as to the meeting in Mr Boland's office on 28 October 1994 that Mr Allison and Mr Farrer reached an understanding as to some of the matters pleaded. It is clear that they both proposed that there would be a fishing business using vessels and licences whose acquisition was financed by Mr Farrer. It was contemplated that the business would be conducted through a company that would act as the trustee of a unit trust. Mr Farrer did not agree to that structure at that meeting because he wanted to take advice from solicitors and accountants in Queensland. He sought their advice in the days following the meeting, and decided to accept Mr Boland's advice as to the appropriate structure. I am prepared to accept that Mr Allison expected that he or his nominees would receive half of the units in the unit trust, and that Mr Farrer induced that expectation. However I am not satisfied that a contract was entered into at the meeting or at any later time."
Ground 2 of the notice of appeal asserts that the fact that Mr Farrer induced Mr Allison to expect that he or his nominees would receive half of the units in the unit trust "ought to have led, axiomatically, to a finding that, objectively":
"(a)there was an agreement to that effect between the parties; and
(b)that agreement was consistent with the partnership, or agreement for a partnership, asserted by Allison."
I do not agree. Given the events that subsequently occurred, including the respective roles of Mr Allison and Mr Farrer, the inducement of the expectation might give rise to causes of action in equity and remedies, but it does not necessarily follow that a contract to enter into a partnership was concluded at that meeting or before about 3 November 1994 (being the date pleaded in par 10).
The trial judge returned to the meeting of 28 October 1994 and to his conclusion as to whether a contract came into existence pursuant to which Mr Allison became entitled to half the issued units in the Tuna Tasmania Unit Trust:
"[32] The most reliable evidence as to what was said at the 28 October meeting was that of Mr Boland. He gave evidence to the effect that he proposed the unit trust structure with a view to tax minimisation; that Mr Farrer requested him to put his advice in writing; and that he provided that advice in a letter dated 4 November 1994. Under cross-examination Mr Boland said that, as a result of the meeting, his understanding was that Mr Allison and Mr Farrer 'were going to take equally in the units and equally in the shares in the trustee company'. However, later in his cross-examination, he made it clear that any such arrangement was discussed only in relation to the initial issue of units, and that future contributions of assets could have resulted in adjustments of unit holdings to depart from the initial 50:50 allocation. At the time of the meeting, no arrangements had been made in relation to the acquisition of any vessels other than the D'Entrecasteaux and the Greshanne.
[33] At the end of the 28 October meeting, the establishment of a unit trust structure with a 50:50 initial allocation of units was no more than a proposal. Mr Boland, having proposed the structure, hoped that Mr Farrer would engage him to do the necessary legal work to put that structure in place. But Mr Farrer engaged Queensland solicitors and accountants to put the structure in place, to the disappointment of Mr Boland. That gave Mr Farrer an opportunity to arrange for all the units, shares and directorships to go to him, his wife, and entities controlled by them. There is no evidence that, at any time after the 28 October meeting, Mr Allison and Mr Farrer orally agreed that they would proceed to implement the 50:50 proposal discussed with Mr Boland. Mr Farrer acted unilaterally in putting the proposed structure in place with the significant variation that Mr Allison did not become a unit holder or even a shareholder."

The critical time is the conclusion of the meeting in Mr Boland's office. While all the subsequent events, and in particular the activities of Mr Allison after that meeting, were relied upon by Mr Allison as circumstantial evidence that a contract to enter into a partnership existed, counsel for Mr Allison identified the meeting with Mr Boland as the point at which the contract to enter into a partnership was made (although par 10 identified 3 November 1994 as the latest date).
In considering the meeting in Mr Boland's office, it is appropriate to put aside the evidence of Mr Farrer who said that no mention was made by either Mr Boland or Mr Allison of any involvement of Mr Allison or the company APAI in any partnership or joint venture. Similarly, according to Mr Farrer there was no mention of Mr Allison having any interest in Mr Farrer's business. He said his discussion with Mr Boland in the presence of Mr Allison was based on a total ownership being in the hands of Mr Farrer or entities he controlled. It is clear that his Honour rejected that evidence and, in my view, he was correct to do so.
Mr Allison said he took Mr Farrer to Mr Boland's office "for the purpose of drawing up a partnership between us". Mr Allison gave the following evidence:
"Do you recall Boland asking anything when you arrived and introduced yourselves?……I couldn't remember all the story that went with that.
All right. Was there any discussion about why you were there?......Yes.
What was that discussion?......To draw up a---
No, who's talking? Who's saying this?......Well the purpose we went there was to draw up a partnership.
No, no, I'm sorry, I'm not asking you about the purpose you went there. That's something in your own mind…….Right.
I want to focus on what was actually said at the meeting, do you follow me?......Yes.
All right. So what was said about the purpose for being there?......That they were going to draw up a partnership agreement and how it was to be set up in a unit trust and different things, I can't recall everything, but yes.
I see, all right. At that stage did you have a name for the proposed operation?......Yes, I'd had that picked out well before, Tuna Tasmania Proprietary Limited.
All right. And was it you who came up with that name?......Oh Les Buchanan who started me off in the industry. He and I discussed it and that seemed to be the appropriate name.
All right. And was that name mentioned at the meeting with Boland?......Yes.
All right. And was there any talk about how it would be set up, you mentioned a unit trust and so on?.......Yes, your Honour, I never knew anything about unit trusts and not much about companies, but yes, he went on with how we could structure it. Mr Farrer was asking him the best way to do it, I remember that, and he was saying it was some unit trust, I remember that. And there was two companies going to run it.
All right. Was there any talk about as between yourself and Farrer who'd, what your proportions would be, what your shares would be?.......Fifty-fifty, we was to be fifty-fifty. I was to have fifty percent of the shares and Mr Farrer was the other fifty percent.
All right. And was there any discussions about what would happen with profits?.......Yes. After expenses we was to split it as a normal partnership agreement.
All right. What was the outcome of the meeting? Was Mr Boland asked to prepare the documents?......To my knowledge he was, yes.
Was there any discussion concerning advisors that Mr Farrer might have in Queensland with the solicitors or companies?........Yes, I can remember Mr Farrer saying that he had his accountants, some good friend of his was you know doing odd, you know, organizing something. I can't – the other side of the unit trust that was – he got all the advice off Mr, off Boland and he was taking it back to Brisbane to run it over his accountant that was from what I can recollect.
Right. Do you recall whether at that meeting or maybe at a different time during this visit by Mr Farrer to Tasmania there was any discussion about the funds that Mr Farrer had available to put into this venture?......Yes. Mr Farrer said. 'One way to get, to raise money I've got to have the Greshanne in Tuna Tasmania', and then he kept talking about his, he said he had his own superannuation fund with fifty-five members I think he said if me memory's right, and when he bought the business he had control of that money and he could use that. He told me that he could borrow a million dollars off the Greshanne to start which would raise the capital to start us off with.
Now again, either at the meeting at Mr Boland's office or at some stage while Farrer was in Hobart did you have any discussions about what your individual role would be in the venture and what his role would be?......Yeah. I knew Mr Farrer was a busy man with all his business enterprises up in Queensland he was one of the biggest car dealershipers in Queensland.
I don't want to keep interrupting you but -……Oh –
- I – you're now saying things that you knew, I'm really more interested in your conversation?……Oh right, well I was to run – I knew Mr Farrer couldn't be here but I had the knowledge to run the – run the shipping side of it and that was my job to run everything down this end of the world, for example, ships on slips, maintenance, hiring of – hiring workers, storage, stocking up, all that sort of stuff, that was to be my job.
And what was to be Mr Farrer's job?……He was to handle all the administration – you know the paperwork etcetera and that side of it, all the finance side of it.
All right. Now you – you've mentioned already that it was important to him for the Greshanne to be put in Tuna Tasmania's name, was there any discussion about the value of the Greshanne?……Well there was all different values on that – on the boat but the –
Yeah, no, well the -……Yes.
No please; in your talks with Mr Farrer were figures discussed?……Yes.
All right, what was – what did you say to him or he say to you?……Well I told Mr Farrer that the boat was worth a million dollars.
Yes.……I said 'I picked it up for three hundred and fifty grand' or words to that effect, and I said 'It's a bargain' that was about – that was about it, I just told – he knew the value of it anyway.
Yeah. All right, and was there any discussion about Tuna Tasmania paying you for the Greshanne?……No, the only thing that was mentioned if it was ever – if it was ever to be sold it, if it was no good for the company I had to get back five hundred odd thousand dollars."
From those passages in the examination of Mr Allison it is unclear whether the discussion about funds to be provided by Mr Farrer, the respective roles of Mr Allison and Mr Farrer and the Greshanne occurred at the meeting or subsequently.
In summary, the main points that emerge from the evidence of Mr Allison concerning the meeting on 28 October 1994 are as follows:
·     From Mr Allison's perspective, the purpose of the meeting was to draw up a "partnership" and the discussion concerned drawing up a "partnership agreement and how it was to be set up in a unit trust".
·     The name for the proposed operation was to be Tuna Tasmania Pty Ltd.
·     Mr Farrer asked Mr Boland "the best way to do it" and Mr Boland was saying "it was some unit trust" and there were "two companies going to run it".
·     Each was to have 50% of the shares, and after expenses the profits would be split "as a normal partnership agreement".
·     The outcome of the meeting was that Mr Boland was asked to prepare documents and Mr Farrer was taking the advice of Mr Boland "back to Brisbane to run it over his accountant".
·     Either at the time of the meeting or at some stage while Mr Farrer was in Hobart, they discussed Mr Allison running the shipping side of it and everything in Tasmania, while Mr Farrer would handle the administration being the paperwork and the finance side.
The trial judge found that the most reliable evidence as to what was said at the meeting was that of Mr Boland. That finding is hardly surprising and is not challenged.
At the time of the meeting Mr Boland had been a legal practitioner for approximately 11 years and in a sole practice since 1991. He had acted for Mr Allison on a professional basis.
Mr Boland said the meeting occurred on a Friday afternoon and he recalled the meeting because at the end of it Mr Farrer asked him to hold $50,000 in cash over the weekend in his safe. That request was declined. In addition, subsequently Tuna Tasmania instituted an action against him for professional negligence and he had been required to answer extensive interrogatories over time which refreshed his memory.
During cross-examination Mr Boland said he did not make a file note and acknowledged that he usually makes file notes of meetings. When it was suggested to him that the inference could be drawn that there was no file note because he did not consider the meeting to be important, Mr Boland said the meeting was important because he followed it up with the letter of 4 November 1994. However, he acknowledged it would be reasonable to infer that he did not consider the meeting to be important, subject to the qualification that he followed up with the letter. Mr Boland said he had not refreshed his memory from the files and had not seen the files since 1999 when they were collected from his office by solicitors acting for Mr Farrer.
Returning to the examination of Mr Boland, he gave the following evidence as to the conversations at the meeting:
"Yes, now you were telling us about the meeting in October '94…….Yes. Mr Allison came with Mr Farrer and came to my office. I knew Mr Allison. I was introduced to Mr Farrer. I enquired as to the purpose of their attendance. Paul Allison said in the presence of Mr Farrer 'we've gone into business together, we're looking at commercial opportunities but generally targeting the fishing industry.' John Farrer specifically then said in the presence of Paul 'you know, we're looking at a structure'. Well Paul said 'yes, we want you to act ongoing'. And on that basis after some time I recommended a unit trust be established. Paul Allison came up with the name Tuna Tasmania, John Farrer liked that name, and it was discussed that Tuna Tasmania Proprietary Limited would be the corporate trustee of the Tuna Tasmania unit trust. I explained to them that that was a useful vehicle in the circumstances and subsequent to that Mr Farrer called me several times …
And just focus on the meeting at your office. Was there any discussion about what the different roles of Mr Allison and Mr Farrer would be?.......Yeah, definitely. Mr Allison was to source opportunities and using his entrepreneurial skills negotiate deals, and Mr Farrer through his entity was to be the financier.
Right. Now you've already testified that you suggested a corporate trust structure. What became of that proposal at the meeting?......I was requested to put it in writing.
Yes……And send it up to Mr Farrer's solicitor in Queensland, a Mr White, because Mr Farrer said Mr White wasn't up to speed with tax matters and corporations issues. I provided that advice under a letter to Mr Farrer dated the 4^th of November 1994. That advice also provided other matters we discussed with Mr Farrer directly."
From the brief evidence-in-chief of Mr Boland, the main points that emerge are as follows:
·     Mr Allison said in the presence of Mr Farrer, "we've gone into business together, we're looking at commercial opportunities but generally targeting the fishing industry".
·     Mr Farrer "specifically" then said in the presence of Mr Allison, "you know, we're looking at a structure".
·     Mr Allison said, "yes, we want you to act ongoing".
·     Mr Boland recommended a unit trust be established and Mr Allison came up with the name Tuna Tasmania which Mr Farrer liked.
·     It was discussed that Tuna Tasmania Pty Ltd would be the corporate trustee of the Tuna Tasmania Unit Trust.
·     The discussion included reference to Mr Allison sourcing opportunities and using his entrepreneurial skills to negotiate deeds, while Mr Farrer through his entities would be the financier.
·     Mr Boland was requested to put the proposed corporate trust structure in writing to Mr Farrer's solicitors and he provided that advice by letter of 4 November 1994.
During cross-examination Mr Boland pointed out that the meeting lasted about two or three hours and there were a lot of things said. His answers in evidence-in-chief were "essentially the overview of what was stated and what was put to me and what my instructions were". As to other things that were said, Mr Boland gave the following evidence:
"So you have a memory of other things that were said at the meeting?……Yeah, there were – you know, 'Hello Chris, this is a nice building, what do you do', talking about general matters - business, 'what are you going to target?' – 'Oh commercial matters, particular fishing' – John was interested in fishing, talking about issues of fishing. We then discussed a unit trust going through the full detail of how it should be capitalised for the purposes of capital gains in future. He raised that issue of the fifty thousand dollars cash that he wanted me to keep in the safe at the end of the meeting – all those matters were discussed at some length.
So what other matters were discussed -……As I said –
- what was the length at which they were discussed – what other memories do you have of that meeting?……I have no other memory than what I've said, I've said we discussed issues about Westella, we discussed issues about fishing, we discussed issues about you know the state of the play in the Tasmanian economy, if you like, we discussed a unit trust. I put to them my recommendation, and that took some time to explain, and Mr Farrer asked me to put it in writing and send to his solicitor in Queensland, Mr White, for the reasons that I've explained."
Questioned later in cross-examination as to his beliefs, Mr Boland gave the following evidence:
"As a result of your meeting, from that point did you believe that Mr Allison was going to become a joint shareholder in Tuna Tasmania Pty Ltd?.......My understanding was that they were going to take equally in the units and equally in the shares in the trustee company, yes.
And did Mr Allison and Mr Farrer tell you anything about who were to be the directors of Tuna Tasmania?.......No, they did not.
So have you been made aware of the statement of claim in this matter by Mr Allison?......I haven't even seen the statement of claim in this matter.
All right. So the assertion of Mr Allison is that the fishing business would be conducted through a corporate trustee known as Tuna Tasmania Pty Ltd. That's consistent with what you're saying any instructions were?
MR MORRIS QC:   May the record show that the witness nodded in response to that.
WITNESS:   I would say as trustee for the Tuna Tasmania unit trust, yes.
MR WILLIAMS:   So each of Allison and Farrer would own fifty percent of the shares in Tuna Tasmania?......That's as I understood it, yes.
And each of Allison and Farrer would be a director of Tuna Tasmania?......Ah well, not necessarily. We didn't discuss directorships and my dealings with Paul he would very rarely put his hand up for a position of director or authority. He usually – someone else or his son which coincidentally had the same name.
So you'd be very surprised if any part of the arrangement had been that Mr Allison would be a director of Tuna Tasmania?.......Well as I say, for circumventing he rarely put his hand up to be in an official capacity, so it didn't surprise me that he's not."
Mr Boland was cross-examined further about the discussions during the meeting of 28 October 1994:
"So this was really a greet and meet where -……First meeting, yes.
Yes.……Now I was disappointed that I didn't even get the business from that meeting all that I did was provide another solicitor with advice who did all the work.
Mm, so would it be fair to say at that meeting when both persons came to you there was no agreement about a structure because that was the matter you were asked to provide advice about?……No, they accepted the – well they were asking advice about a structure, yes, they'd gone into business they wanted to structure it, I gave that advice and Mr Farrer's solicitors in Queensland incorporated – established a unit trust and did all the paperwork, based on the advice that I gave him.
So did they ask you about a unit trust or -……Well I gave them advice about the unit trust, that's specifically what it was about, I recommended to them that the unit trust would be the appropriate vehicle to conduct their joint venture enterprise as opposed to a joint venture by agreement..."
Mr Boland was then cross-examined about various ways people can go into business together, including a partnership. He said that the basis of the business was that Mr Allison and Mr Farrer had "established a business" in which "they were looking to exploit commercial activities in Tasmania, in particular fishing activities". Against that background he gave advice about setting out "separate entities so that they could affect the transfer of the asset" which could not be done in a partnership.
Mr Boland was pressed on the partnership issue:
"So there's no doubt in your mind that they weren't in partnership?.......Look, they came to me to establish – they'd gone into business together. I'm not saying a partnership or anything. They've never even raised it with me. I'm giving the advice about a joint venture to deal with what they said to me for commercial exploitation of businesses in Tasmania, in particular to exploit the fishing industry. The recommendation that I gave against that was a unit trust with these addendums held on so that they could transfer the asset. I maintain that that was good advice, appropriate advice and the best advice in the circumstances.   If you were establishing a partnership you couldn't do what you could do, you'd lose your licence, you'd lose the endorsement, you'd have capital gains issues and it would be wrong, Mr Williams.
Are you aware that the plaintiff's case is that they were in partnership?……I haven't even – I haven't read the statement of claim, I don't know partnership, I'm looking at what I say – whether they've confused partnership, this, that and the other, it was a joint venture, it was clearly the unit trust arrangement that they discussed and were sent off.
So you didn't see the need to enquire as to what the intention -……Mr Williams, I can only repeat my answer.
HIS HONOUR: No, no, wait for the question.
WITNESS:   I can only repeat my answer.
HIS HONOUR: No, no, no, no, please, wait for Mr Williams' question.
WITNESS:   Sorry.
MR WILLIAMS (Resuming):   You didn't see the need to ask whether each party would retain ownership of assets contributed?……No, because they said that they'd gone into business together."
Mr Boland said that there was no discussion about finance, but there was discussion about the Greshanne. There was no mention of the Greshanne "going across", but he thought Mr Allison and Mr Farrer were talking about "consolidating all the assets because they'd gone into business and they were putting across to Tuna Tasmania". He got the "firm impression" that it was "a possibility" that the Greshanne would represent a capital contribution by Mr Allison. It was Mr Boland's understanding that Mr Allison and Mr Farrer "would receive fifty percent of the units each in whatever entity".
Mr Boland agreed it was not his understanding that Mr Allison would be entitled to 50% of the units because of a contribution through the transfer of the Greshanne. It was Mr Boland's understanding that Mr Allison was entitled to 50% of the units "because that was their agreement". He also acknowledged that adjustments would be required depending upon contributions and "how they would go about it".
In summary, the main points emerging from Mr Boland's cross- examination were as follows:
·     The meeting of 28 October 1994 was "really a greet and meet".
·     Mr Allison said that "we've gone into business together, we're going to target commercial opportunities in Tasmania, in particular fishing". Mr Farrer was present.
·     Mr Boland understood it was a joint venture for commercial exploitation of businesses in Tasmania, in particular the fishing industry.
·     Mr Allison and Mr Farrer did not mention any other basis of entering business together, such as a partnership. They were seeking advice about a structure for the business, and Mr Boland gave advice concerning a unit trust arrangement which was not a partnership.
·     The structure could not be a partnership.
·     Mr Boland understood that Mr Allison would be introducing the opportunities and negotiating, while Mr Farrer would be the financier.
·     Mr Boland understood that all the assets of the business would be "put across to Tuna Tasmania".
·     Mr Boland understood that at the time of the meeting it was agreed between Mr Allison and Mr Farrer that Mr Allison would be entitled to fifty percent of the units.
·     Mr Boland was asked to provide his advice to solicitors for Mr Farrer in Queensland.

In addition to the content of the meeting of 28 October 1994, as par 10 pleaded agreement by 4 November 1994, reference should be made to Mr Boland's letter of 4 November 1994 to Mr Farrer's solicitor in Queensland. This letter (AB 955) set out in some detail Mr Boland's opinion concerning the establishment of the trust and conditions upon which it should be established. Mr Boland provided examples of different structures and their consequences. He also gave advice as to holding fishing licences in a separate company, with Tuna Tasmania Pty Ltd owning all of the shares in the company as trustee for the unit trust.
The letter by Mr Boland of 4 November 1994 clearly demonstrates that no structure for the proposed business venture had been agreed.
In the passage earlier cited, the trial judge found that "the establishment of a unit trust structure with a 50:50 allocation of units was no more than a proposal" and that there was no evidence that after the meeting of 28 October Mr Farrer and Mr Allison "orally agreed that they would proceed to implement the 50:50 proposal discussed with Mr Boland" [33]. The question presently under consideration is whether, in conjunction with all the other evidence, the evidence concerning the meeting of 28 October 1994 is capable of establishing that Mr Allison and Mr Farrer concluded a contract to enter into a partnership.
As to the terms of the contract which came into existence by the end of the meeting in Mr Boland's office on 28 October 1994, counsel for Mr Allison submitted that the terms are found in pars 9 and 10 of the statement of claim. Counsel contended that the substance of the contract was agreement to enter into an equal partnership to conduct a fishing business in common for the mutual profit of Mr Allison and Mr Farrer. The terms were as follows (taken from par 10):
"(a)the Fishing Business would be conducted through a corporate trustee to be known as 'Tuna Tasmania Pty Ltd';
(b)each of Mr Allison and Mr Farrer would own 50% of the shares in Tuna Tasmania;
(c)each of Mr Allison and Mr Farrer would be a director of Tuna Tasmania;
(d)Tuna Tasmania would act as the trustee of a unit trust, to be known as the 'Tuna Tasmania Unit Trust';
(e)each of Mr Allison and Mr Farrer would:
(i) own 50% of the units in the Trust; and
(ii) derive equal profits from the Fishing Business through those units;
(f)Mr Allison would assist in capitalising Tuna Tasmania as trustee of the Trust by:
(i)causing the title to the Greshanne to be transferred to Tuna Tasmania as trustee of the Trust, as set out in Part G of this pleading; and
(ii)giving Tuna Tasmania the opportunity to acquire the Risdon Vale land, and to have the title to the Risdon Vale Land transferred to Tuna Tasmania as trustee of the Trust, as set out in Part H of this pleading;
(g)Mr Allison would be responsible for:
(i)conducting operations of the Fishing Business; and
(ii)the purchase of further fishing vessels and licences as agreed from time to time between Mr Allison and Mr Farrer; and
(h)Mr Allison would be paid a wage for the personal exertions referred to in subparagraph (g)(i) hereof;
(i)Mr Farrer would:
(i)assist in capitalising Tuna Tasmania by advancing money to it as trustee of the Trust for the purchase of further fishing vessels and licences as agreed from time to time between Mr Allison and Mr Farrer; and
(ii)be responsible for the financial and administrative aspects of the Fishing Business;
(j)Mr Farrer would, in accordance with the terms of the Agreement set out in subparagraphs (a) to (e) hereof:
(i)incorporate Tuna Tasmania; and
(ii)form the Trust; and
(k)each of Mr Allison and Mr Farrer would have the authority to bind the other in respect of the operations of the Fishing Business."
It is obvious that the evidence of Mr Allison and Mr Boland, considered in conjunction with all the other evidence, falls well short of establishing a contract containing the terms pleaded in par 10. The evidence demonstrates that there had been a broad discussion about going into business together, but there are many ways in which such a business might have been conducted. No agreement had been reached as to how the business would be structured. The trial judge correctly found that Mr Farrer had not agreed to any form of structure and wanted to seek advice from his solicitor in Queensland [31]. No agreement was reached as to a corporate trustee. As the trial judge correctly found, these matters were in the form of a proposal only.
Contrary to the pleading in par 10, there was no discussion to the effect that Mr Allison and Mr Farrer would each be a director of Tuna Tasmania. While there was a general proposal in Melbourne that Mr Allison and Mr Farrer would share in the profits, no agreement was reached at the meeting with Mr Boland that each would "derive equal profits from the Fishing Business through those [the trust] units".
Similarly, on 28 October 1994 there was no discussion, and certainly no agreement, as to the matters pleaded in sub-pars (f) and (g) in par 10. Nor was there any suggestion that Mr Allison would be paid a wage as pleaded in sub-par (h). Mr Allison gave evidence to the contrary.
Finally, there was no evidence to support the assertions in sub-pars (i)-(k) that the matters set out in those sub-paragraphs were discussed or agreed in the meeting with Mr Boland.
The principles relating to the formation of a contract to agree are governed by the law of contract.
In Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600, the High Court was concerned with a lease that granted the lessee an option of a further lease at rental to be mutually agreed and, failing agreement, at rental to be fixed by an arbitrator. The primary question before the High Court was "whether the renewal agreement contained in the lease is a concluded agreement." (604). In their joint judgment, Gibbs CJ and Murphy J said at 604:
"It is established by authority, both ancient and modern, that the Court's will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future. Consequently, if the lease provided for a renewal 'at a rental to be agreed' there would clearly be no enforceable agreement. On the other hand, it is also well established that the parties to a contract may leave terms – even essential terms – to be determined by a third person: see the cases cited in Godecke v Kerwan. In the present case, the lease itself provides the entire mechanism for determining the rental for the renewed term. There is no further agreement required of the parties". (Footnote omitted.)
In ANZ Banking Group v Frost Holdings Pty Ltd [1989] VR 695, the respondent submitted a proposal to the appellant for the production and supply of calendars, and the proposal was accepted in principle, but subject to provision of further design concepts. After the respondent had provided upgraded features for the calendar, the appellant decided not to proceed. In allowing an appeal from the trial judge who had awarded damages for breach of contract, the Court of Appeal concluded that there was "no agreement between the parties upon essential terms of the plaintiff's proposals" (700). The judgment of Kaye J with whom Marks and Teague JJ agreed, continued at 700 and 701:
"'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 it's 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'; per Sugarman J in the Full Court of the Supreme Court of New South Wales, quoted on appeal with approval by Menzies J in Thorby v Goldberg (1964)112 CLR 597, at 607. See also May and Butcher Ltd v R (HL) [1934] 2 KB 17, at 20, per Lord Buckmaster and, at 22, per Lord Warrington.
An agreement by a term of which a relevant or critical term will be the subject of future agreement between the parties is not enforceable. This general principle of the law of contract was stated by Viscount Dunedin in May and Butcher Ltd v R, at 21 in the following passage: 'To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties. In the system of law in which I was brought up, that was expressed by one of those brocards of which perhaps we have been too fond, but which often express very neatly what is wanted: "Certum est quod certum reddi potest." Therefore, you may very well agree that a certain part of the contract of sale, such as price, may be settled by someone else. As a matter of the general law of contract all the essentials have to be settled. What are the essentials may vary according to the particular contract under consideration. We are here dealing with sale, and undoubtedly price is one of the essentials of sale, and if it is left still to be agreed between the parties, then there is no contract.'
Referring to the same principle of law, Lord Wright in Scammell and Nephew Ltd v Ouston [1941] AC 251, at 268-9 stated: 'There are many cases in the books of what are called illusory contracts, that is, where the parties may have thought they were making a contract but failed to arrive at a definite bargain. It is a necessary requirement that an agreement in order to be binding must be sufficiently definite to enable a court to give it a practical meaning. Its terms must be so definite, or capable of being made definite without further agreement of the parties, that the promises and performances to be rendered by each party are reasonably certain'."
The problems attending a claim that an agreement to agree is an enforceable contract were well illustrated in Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1. The parties had entered into heads of agreement with respect to a proposed coal mining joint venture which was described as "complex". The heads of agreement provided that the parties would negotiate "in good faith". The Court of Appeal allowed an appeal against the finding of the trial judge that there was a legally enforceable agreement. In a judgment with which Waddell A-JA agreed, Kirby P (as he then was) provided a helpful summary of the approach of the common law to agreements to agree [4]:
"It is important, for an appreciation of the course which Clarke J took, to examine in some detail the relationship between the parties to the proceedings. This is so because his Honour acknowledged that it is a basic tenet of the common law of contracts that courts will not enforce an agreement to agree. The reason for this reticence is not a dogged reluctance to give effect to the promissory intention of parties. It is rather a conclusion that, in such cases, the parties have not sufficiently formulated an intention, their agreement being inchoate and never getting beyond negotiations: G Scammell and Nephew Ltd v H C & J G Ouston [1941] AC 251 at 269. Before taking the serious step of lending the authority of law to the enforcement of an agreement, the law typically insists that such agreement should be apt to constitute a legally binding bargain: Aotearoa International Ltd v Scancarriers A/S [1985] 1 NZLR 513 at 516. That is why final agreement Aotearoa International Ltd v Scancarriers A/S [1985] 1 NZLR 513 at 516. That is why final agreement on the essential terms of a contract which a party comes to law to enforce must be shown to attract the aid of the courts. In 1857, Lord Wensleydale said:
'… An agreement to enter into an agreement upon terms to be afterwards settled between the parties is a contradiction in terms. It is absurd to say that a man enters into an agreement till the terms of that agreement are settled.'
See Ridgway v Wharton (1857) 6 HLC 238 at 30510 ER 1287 at 1313."
The heads of agreement under consideration in Coal Cliff Collieries v Sijehama was extensive, but Kirby P noted that it was essential to analyse the heads of agreement "to decide whether its proper characterisation is merely an agreement to agree or whether, as Clarke J held, it contained legally enforceable obligations for the breach of which damages would be awarded" [18]. In the course of his following discussion, Kirby P observed that the provisions of the heads of agreement were "entirely open to negotiation and agreement" on "fresh or additional terms" [18] and concluded that the heads of agreement "reflected the highly provisional nature of the dealings the parties had had to the point of the heads of agreement" [18]. In his Honour's view, the heads of agreement was "quite simply a staging post on the way to a final agreement" and represented evidence of the "emotional and even moral commitments of the parties to continue their negotiations". However, "it was in terms, too vague and uncertain to attract an enforcement" [18]. Further, his Honour noted that "a proposal is a commitment for the future not one presently accepted as legally binding" [18].

As to agreements to agree, Kirby P enunciated the following principles [40]:
"Agreements to agree:
It is established law both in England and Australia that agreements to agree or contracts to make contracts containing terms which have not yet been ascertained are not legally enforceable. The principle was stated clearly by Lord Wensleydale in Ridgway v Wharton (1857) 6 HLC 238 at 30510 ER 1287 at 1313:
'… An agreement to enter into an agreement upon terms to be afterwards settled between the parties is a contradiction in terms. It is absurd to say that a man enters into an agreement till the terms of that agreement are settled. Until those terms are settled he is perfectly at liberty to retire from the bargain.'
See, also, Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284 at 289; Chillingworth v Esche [1924] 1 Ch 97 at 113-114 and May & Butcher Ltd v The King reported [1934] 2 KB 17(n) where Lord Buckmaster (at 20) said:
'… It has long been a well recognized principle of contract law that an agreement between two parties to enter into an agreement in which some critical part of the contract matter is left undetermined is no contract at all.'
In the same case Viscount Dunedin said (at 21):
'… To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything which is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties'."
Although the Court of Appeal in Coal Cliff Collieries v Sijehama was concerned with an agreement to negotiate in good faith, the observations of Kirby P are particularly helpful and met with approval in the judgment of Allsop P, with whom Ipp and MacFarlan JJA agreed, in United Group Rail Services Ltd v Rail Corporation NSW (2009) 74 NSWLR 618. Again, the court was concerned with the term of a contract providing for each party to undertake "genuine and good faith negotiations", but Allsop P identified the fundamental principle to be applied in the circumstances under consideration at [56]:
"[56] Before turning to the terms of the clause in question, given the juristic debate that has taken place about agreements to negotiate in good faith, it is helpful to begin with some essential propositions founded on accepted authority and principle. First, an agreement to agree is incomplete, lacking essential terms: Booker Industries (at 604). (That is not a question of uncertainty or vagueness, but the absence of essential terms.)"
Applying these principles, in my opinion the evidence is not capable of establishing the existence of a legally enforceable contract to enter into a partnership. Essential terms had not been agreed. While there was a broad commitment from Mr Allison and Mr Farrer to go into business together with a view to sharing the profits, and there was a proposal with respect to the structure that might be appropriate, Mr Farrer had not agreed to the structure and wanted to seek his own advice. Other essential terms had not even been discussed.
In my view this conclusion is inescapable notwithstanding that, subsequently, Mr Allison behaved in a manner which demonstrated his belief that he and Mr Farrer were in business together. Even accepting his evidence that he believed he had a 50% interest in a trust structure which he did not understand, and the finding of the trial judge that Mr Farrer induced Mr Allison's belief, Mr Allison failed to establish the existence of a contract to enter into a partnership.

Miscellaneous matters

There are two miscellaneous matters to be mentioned. First, Mr Allison's written submissions refer to the trial judge over-ruling an objection under the rule in Browne v Dunn (1893) 6 R 67 (HL). Essentially the submissions complain that his Honour should not have permitted counsel for the respondents to address alleged inconsistencies between the evidence of Mr Allison and earlier pleadings and answers to particulars and interrogatories. There is no ground of appeal concerning his Honour's ruling and, in any event, it is a matter of no consequence. This Court should not entertain those submissions.
The second matter concerns a claim in relation to "issue estoppel" which was not pleaded and was not raised before the trial judge. Further, this issue is not the subject of a ground of appeal.
In these circumstances, in my view this Court should not entertain a complaint based upon the application of the principles of issue estoppel. In any event, the submission is misconceived.
At trial Mr Allison sought to gain advantage from the absence of a Mr Stephen Chaplin who was present at the Melbourne meeting. Mr Chaplin had provided an affidavit in previous proceedings, which counsel submitted was accepted. In those circumstances counsel contended the respondents are "issue estopped" from denying facts which the previous judge found to be true.
The submission falls at the first hurdle both factually and legally. The previous proceedings involved an application to show cause why a caveat lodged with respect to the ship "Cape Cleveland" should not be removed. Mr Chaplin has provided an affidavit giving his version of the Melbourne meeting. On the basis of that affidavit, and an affidavit sworn by Mr Allison, the judge determined that certain findings were open. Those findings led his Honour to refuse the application for an "unqualified removal" of the caveat.
The proceedings for the removal of the caveat were interlocutory in nature and the judge was not required, and did not purport to determine, issues of credit or make final determinations of fact. In particular, his Honour did not find that the facts asserted by Mr Chaplin in his affidavit were true. No question of issue estoppel arises.
For these reasons, in my opinion the appeal should be dismissed.