Armour v Fewster No. DCCIV-02-10

ARMOUR v FEWSTER
[2003] SADC 67
Judge Robertson
Civil
Nature of the Proceedings.

The Plaintiff seeks damages for breach of contract. The Plaintiff claims that on 4 April 2001 he entered into an oral agreement with the Defendant to acquire the entire shareholding of the Defendant and his father, Alan Fewster, in AWB Ltd. (“AWB”) at a price of $2.20 per share. At the time, the Defendant and Alan Fewster were the owners of thirty thousand nine hundred and ninety two B Class Shares (“the Shares”). It is the Plaintiff’s case that the Defendant has refused to complete the contract for the sale of the shares and as a result he has suffered loss. The Plaintiff claims damages in the amount of $39,049.92, being the difference between the price the shares were sold on the Stock Exchange, when AWB listed on 22 August 2001, and the price of $2.20 per share which the Plaintiff alleges was the agreed purchase price for the shares.
The Defendant denies that any agreement for the purchase of the shares was entered into between the Plaintiff and himself on 4 April 2001 or at any other time. For the present, the question of liability is the only issue. At the commencement of the Trial, the issue of damages was also to be determined. However, this position changed towards the end of the hearing when both parties agreed that the issue of liability should be determined in the first instance. The question of damages has been adjourned until such time as the liability issue has been resolved.
I now turn to give consideration to the evidence.
Shares in AWB Ltd.
Although the evidence is not entirely clear, it appears that the B Class shares in AWB found their genesis in what were called Wheat Industry Fund Units, known as “WIF Units”. These units had been issued by the Australian Wheat Board to wheat farmers as a result of a levy being charged for wheat sold to the Australian Wheat Board. When AWB was incorporated, it issued B Class shares in the company to the holders of WIF units on a one for one basis.
The Seller’s Register.
It was the intention of AWB to register on the Australian Stock Exchange. However, prior to its registration on the Stock Exchange, AWB established a register entitled “Sellers Register” for the purpose of enabling those shareholders who wished to sell their shares before AWB listed to be identified. The Sellers Register enabled a prospective buyer to identify those shareholders who wished to sell their shares and to make contact with the shareholder directly. A buyer could obtain a computer printout of the current list of shareholders who had registered on the Sellers Register. The Register simply contained the name of the shareholder, the state of residence and the contact telephone number or fax number. The number of shares held by a shareholder was not part of the information contained on the Sellers Register.
The Registration of the Shares on the Sellers Register.
The Defendant and Alan Fewster have operated in partnership for many years, as primary producers in Western Australia. They had previously carried on a business of wheat farming. As a result of carrying on this business they became the registered holders of WIF Units. The Defendant and Alan Fewster later exchanged these Units for thirty thousand nine hundred and ninety two B Class shares in AWB.
On 27 March 2001, the Defendant and Alan Fewster sent a form to Computershare Investor Services Pty Ltd (“Computershare”), the company operating the Sellers Register, requesting their names be placed on the Register. The form was signed by both of them. It provided the telephone number of the Defendant and indicated that the contact name was that of the Defendant. A section of the form contained the following reference, “Number of Units Offered for Sale”. Alongside that reference the Defendant and Alan Fewster wrote “30,992”.
Telephone Conversations between the Plaintiff and the Defendant.
As I stated earlier, it is the Plaintiff’s case that an oral agreement was made between the Defendant and himself whereby the Plaintiff agreed to purchase the entire holding of AWB shares of the Defendant and Alan Fewster for $2.20 per share. The Plaintiff says that such an agreement was made during a telephone conversation he had with the Defendant on 4 April 2001. It was the Plaintiff’s evidence initially, that the agreement was reached during two telephone conversations on 4 April 2001, however, he conceded in the end that he was in error and that there was only one telephone conversation. I will return to this matter later on in these Reasons.
It is the Defendant’s case that whilst a telephone conversation did take place between the Plaintiff and himself on 4 April 2001, when the subject of the Plaintiff purchasing the AWB shares was discussed, the Defendant denies that any agreement was reached between them for the sale of the shares.
It is not disputed between the Plaintiff and the Defendant that three subsequent telephone conversations were held between them in which the AWB shares were discussed. The first of those conversations was held on 11 April 2001. There were two further telephone conversations between the Plaintiff and the Defendant on 19 April 2001. Whilst there is agreement between them that those telephone conversations took place, there is significant disagreement regarding the contents of each conversation.
The determining factor in this litigation will be the assessment and resolution of the credit issues arising from evidence of the Plaintiff and the Defendant. The assessment of the credit of the Plaintiff and the Defendant not only takes into account the telephone conversation of 4 April but also the subsequent telephone conversations and other outside factors, which I will refer to later. I propose to undertake this assessment after I have recounted the evidence of witnesses who gave evidence during the Trial.
Before I turn to consider the evidence regarding these telephone conversations, I need to refer to some of the evidence of both the Plaintiff and the Defendant relating to events which took place prior to their first contact with each other in the telephone conversation of 4 April 2001.
Plaintiff’s evidence regarding prior involvement with AWB shares.
Some considerable time prior to April 2001, the Plaintiff had acquired WIF Units from WIF Unit holders. The Plaintiff is a practising solicitor. He has also been involved in the buying and selling of shares for many years. After AWB was incorporated, he obtained B Class shares in exchange for his WIF Units. He continued to be interested in AWB shares and when the Sellers Register was established he used that Register to contact shareholders for the purpose of acquiring further AWB shares. He had acquired further AWB shares from other shareholders, prior to April 2001.
The Plaintiff’s practice in using the Sellers Register to acquire shares.
In acquiring AWB Shares from shareholders prior to April 2001 the Plaintiff said he had used two earlier editions of the Sellers Register. Computershare would regularly update the Sellers Register to accommodate the constantly changing content of the Register, brought about by shares being sold and new registrations on the Register.
The Plaintiff said that he would use the Register to contact shareholders by telephone, using the telephone number recorded in the Sellers Register. He said that in speaking to a prospective seller he adopted a particular practice if he reached an agreement to acquire the shares. He said that he would have the printout of the Register in front of him at the time of the telephone conversation. The Plaintiff said that if he reached agreement for the purchase of shares he would place a tick alongside the name of the person on the Register. He said that, if agreement was reached, he would inform the seller that he would send a letter confirming the sale and enclosing a share transfer form. The Plaintiff said that he would tell the seller that the letter would also contain instructions regarding the completion of the sale transaction.
The Plaintiff said that he also kept a written record of the transaction on a pad. On the transaction pad he would record the seller’s name and address, the date of purchase of the shares, the number of shares purchased and the price.
The Plaintiff said that he or his wife would then send the letter and the share transfer form to the seller shortly after the agreement for sale had been reached. The Plaintiff said the letter was in standard form. He said his practice was to place a tick on the transaction pad alongside where the transaction was recorded to signify that the letter had been sent. The Plaintiff said that when the Share Transfer and Share Certificate were returned by the seller and he had forwarded the cheque for the purchase price then he would place a further tick alongside the recorded transaction to signify that all of those matters had taken place.

Defendant’s evidence regarding placing the shares on the Sellers Register.

I mentioned earlier that on 27 March 2001 the Defendant and his father placed their AWB shares on the Sellers Register. The Defendant said that whilst the shares were placed on the Register, it was not his intention nor that of Alan Fewster to sell the shares at that time. He said there were two reasons why the shares were placed on the Register. The first was that they were interested in ascertaining how much the shares were worth. He said that they had received a substantial dividend in December 2000 and that he and his father thought they were worth about three dollars per share.
The second reason was that in early March he and Alan Fewster had purchased an apiarist business. Discussions had taken place with the Commonwealth Bank for a temporary extension of the overdraft of the partnership account to enable settlement to take place on the purchase. During the course of those discussions an officer of the Bank indicated that the Bank would like the shares placed on the Sellers Register. The Defendant said that he did not feel it was necessary, but out of courtesy to the Bank, he proceeded to place the shares on the Sellers Register.
The Telephone conversation of 4 April 2001 between the Plaintiff and the Defendant.
It is during this conversation that the Plaintiff claims that the contract for the sale of the shares was formed. The Plaintiff says that the Defendant agreed to sell the entire holding of AWB shares for $2.20 each. The Defendant denies that he agreed to do so. There is some common ground between the parties regarding some of the conversation that took place on that occasion. However, as I said earlier, there is an enormous divergence in the evidence of the Plaintiff and the Defendant respectively regarding whether the Defendant agreed to sell shares.
(i) Plaintiff’s evidence of 4 April 2001 telephone conversation.
The Plaintiff said that he had received from Computershare the current Sellers Register. He turned to the last section of the Register which contained the names of the most recent shareholders who had placed their name on the Register. The Plaintiff said that when he received the list, he was in the Melbourne office of his firm Piper Alderman. The names of the Defendant and Alan Fewster were amongst the names of the most recent registrants.
The Plaintiff said that he telephoned the contact telephone number recorded in the Sellers Register alongside the names of “Alan and Kimberley Fewster”. The Plaintiff said that he spoke to a person who introduced himself as Kim Fewster. In carrying on the conversation the Plaintiff said he adopted the same practice which he had used on previous occasions. The Plaintiff said that he asked the Defendant how many shares he held and was told approximately thirty three thousand. He said that he thought he made an initial offer of $1.80, which the Defendant refused. He said that his normal practice in those circumstances was to ask the person what price was being sought. He said the Defendant told him he wanted $2.20 per share. The Plaintiff said that he thought that the price was a little too high but agreed to pay that sum for each share. He said initially that the discussion where the price for the shares was agreed took place in a second telephone conversation during that evening. The Plaintiff said that he told the Defendant he would send a letter confirming the transaction and enclosing a share transfer form. He said that he asked the Defendant to sign the share transfer form and return it with his share certificate and that a cheque would then be sent for the shares. He said that the Defendant gave him his postal address.
In the course of his evidence, the Plaintiff produced the Sellers Register, which he said he was using at the time of the telephone call. The Register contained the following written endorsement at the foot of the page containing the names of the Defendant and Alan Fewster:-
“33,000 ~~want~~ ^at $2.20
Kim Fewster,
P.O. Box 30, ‘deal!’
Muchea, WA 6501.”
It was the Plaintiff’s evidence that he recorded the word “want” when the Defendant informed him of the price per share he was seeking and he deleted that word and recorded above it “at” after he agreed to pay the price sought. He said he recorded the word “deal!” at the time he agreed to pay the Defendant’s price. He said he also placed a tick alongside the telephone number of the Defendant. The Register with these endorsements was admitted into evidence although the Plaintiff used the endorsements to refresh his memory to give his oral evidence.
The Plaintiff also produced a sheet of his transaction pad on which was recorded the date, the name of the Defendant and postal address. Underneath that was recorded the symbol for “approximately”, then 33,000 at $2.20. Alongside the name of the Defendant was recorded the landline telephone number, being the same number which was recorded in the Sellers Register. It was the Plaintiff’s evidence that he recorded this information on the Transaction pad. He said he wrote the entries on the transaction pad, sometime later in the day of 4 November. The Plaintiff said that he recorded that the transaction involved approximately 33,000 shares because the Defendant had indicated in the telephone conversation that he could not recall the exact number of shares but thought that he and his father held about 33,000 AWB shares.
It is not disputed that a letter in standard form was sent to the Defendant which indicated the sale of approximately 33,000 AWB shares at $2.20 per share and that the Defendant received the letter. The letter is dated 4 April 2001. The letter contained instructions for completing the transaction and enclosed the share transfer to be signed. The Plaintiff said that as he was in Melbourne at the time, he arranged for his wife to send the letter. He said he did not know whether it was sent on the night of 4 April 2001 or the following day.
As I mentioned earlier, the Plaintiff said in his evidence that he had two conversations with the Defendant on 4 April 2001, and it was in the second of the two conversations that he agreed to pay $2.20 per share. However, later in his evidence he accepted that there must have only been one conversation in which the sale of the shares was discussed on that night. This concession was brought about because his telephone records from his telecommunications carrier indicated a telephone call to the Defendant’s telephone number a little after half past five, eastern standard time, on 4 April 2001. The duration of this call was recorded as a little over five minutes. There was a further telephone call to the same number approximately half an hour later which lasted only seven seconds. The Plaintiff could not explain why he telephoned that number half an hour after the first call. However, he accepted that because of the short duration recorded, it was impossible for there to have been a second telephone conversation as he deposed.
The Plaintiff said that he called the Defendant again on 11 April 2001, because he had not received the signed Share Transfer and the Share Certificate from the Defendant. I will come to this telephone conversation shortly. In the meantime, it is now necessary to refer to the Defendant’s evidence regarding the telephone conversation of 4 April.
(ii)The Defendant’s evidence of the 4 April 2001 telephone conversation.
The Defendant said that he received a telephone call from the Plaintiff in the afternoon of 4 April 2001. He agreed that the Plaintiff said that his call was for the purpose of purchasing AWB shares.
There were differences between the Defendant’s evidence-in-chief and his evidence in cross-examination regarding discussion on the price of the shares. He said in evidence-in-chief that the Plaintiff initially offered him $1.80 and that his response was that it was a ridiculous offer. He said that the Plaintiff then offered him $2.00 a share and that his response was that it was still a ridiculous offer. The Defendant said that after he mentioned to the Plaintiff that the lady at Computershare had told him that shares in AWB were going for $2.20 per share, the Plaintiff then offered him $2.20. The Defendant said that his response of “ridiculous” to the first two offers arose because it was his belief that the shares were worth at least $3.00 per share.
By contrast, in cross-examination, the Defendant said that after he told the Plaintiff that he and his father owned approximately 33,000 shares he said that the Plaintiff asked him how much he wanted for the shares. He said that in response, he told the Plaintiff that he did not know what the shares were worth but the lady at Computershare said she had observed some transactions go through at $2.20 per share. The Defendant said it was after he made that statement that the Plaintiff offered $2.20 per share.
Although there is no evidence by the Defendant regarding the immediate response he made to the offer of $2.20 per share, the Defendant said that he told the Plaintiff that as the shares also belonged to his father, he would need to speak to his father and his accountant. He said that it was on that note that the conversation concluded. He said that the Plaintiff told him that he would contact him later.
The Defendant denied that the Plaintiff said that he would be sending a letter of instructions regarding the sale of the shares and enclosing a share transfer. Furthermore, he denied that there was any conversation regarding how the sale transaction was to be completed. It was the Defendant’s evidence that an agreement was not reached regarding the sale of the shares.
Plaintiff’s evidence of 11 April 2001 telephone conversation with the Defendant.
I mentioned earlier that the Plaintiff said that he had not received the Share Certificate and Share Transfer from the Defendant, so he telephoned the telephone number of the Defendant on 11 April 2001. The telephone records of the Plaintiff’s telecommunication carrier indicate that the call was made at about quarter to one eastern standard time. The Plaintiff said that he was in his Melbourne office at the time. He said that the telephone was answered by a woman. The Plaintiff said that in response to his question, the woman confirmed that the letter enclosing the share transfer form had been received. The Plaintiff said that the woman told him that he should speak to Kim and he said that she gave him the Defendant’s mobile telephone number.
The Plaintiff said that he telephoned the mobile telephone number and spoke to the Defendant. He said that he asked the Defendant whether he would be signing the share transfer form and sending it back. He said the Defendant said that he would be doing that. The Plaintiff said that was the end of the conversation. He said it was a short conversation.
The Plaintiff said he made a brief note of each conversation on his transaction pad shortly after the conversation with the Defendant concluded. He used those notes to refresh his memory when giving his evidence. The Plaintiff denied that the conversation was in the terms put to him by Counsel for the Defendant. The conversation put to the Plaintiff in cross-examination was in terms of the evidence-in-chief of the Defendant save that it was also put to him as part of that conversation that the Defendant said words to the effect that he had not spoken to his accountant. The Defendant did not mention this when giving his evidence on the topic.
Defendant’s evidence of 11 April 2001 telephone conversation with the Defendant.

The Defendant denied that the conversation took the form described by the Plaintiff. He said he was on the tractor in one of the paddocks when he spoke on his mobile telephone to the Plaintiff. The Defendant said that Mr Armour asked him whether he had received a transfer form. The Defendant said that he replied that he had not. He said the Plaintiff asked him what he was going to do. The Defendant said he replied that he would get back to him. He said that was the end of the conversation.
The Plaintiff’s evidence of the first conversation on 19 April 2001.
The Plaintiff said that following the telephone conversation with the Defendant of 11 April, he expected to receive from the Defendant the completed Share Transfer form and the Share Certificate. He said that as he had not received those documents, he telephoned the Defendant again on 19 April. The Plaintiff said that the Defendant apologised for not calling him. He said that the Defendant told him that he had spoken to his accountant and his accountant had advised him that for taxation reasons he should not sell the shares in the current financial year and that as a result of that advice he had decided not to proceed with the transaction. It was the Plaintiff’s evidence that this was the first occasion that the Defendant had mentioned his accountant. He said that he told the Defendant that he was happy to defer completion of the sale until after 30 June. The Plaintiff said that the Defendant rejected this offer and said that he did not wish to proceed with the transaction. The Plaintiff said that he informed the Defendant that they had an agreement and that he wanted him to complete it. He said that the Defendant stated that he was not bound to complete anything because he had not signed any documents. The Plaintiff said that he informed the Defendant that there did not need to be a document signed for there to be an agreement and that he should obtain some legal advice. He denied that in any earlier conversation the Defendant had said that he had to discuss the matter with his father and his accountant.
At the time of the telephone conversation, the Plaintiff was in his Adelaide office. At the conclusion of the telephone conversation, he drafted a letter to be sent to the Defendant demanding that the Defendant complete the transaction. The letter was prepared on Piper Alderman letterhead and was signed by another solicitor in the office. The letter also referred to the conversation that the Plaintiff had with the Defendant on that day. The evidence of the Defendant is that he received the letter some time after 19 April.
The Defendant’s evidence regarding the first telephone conversation on 19 April 2001.
The Defendant said that he could only recollect vaguely the conversation. He agreed that the Plaintiff asked him why he had not returned the transfer. He said that he informed the Plaintiff that he had told him earlier that he would need to talk to his father and his accountant. The Defendant said that he told the Plaintiff that they had decided not to sell any of the shares. He said that the Plaintiff stated that there was an oral agreement. The Defendant said he rejected the Plaintiff’s claim that there was an agreement and said that he had informed the Plaintiff earlier that he needed to talk with his father and his accountant before he did anything. He said that he did not recall the Plaintiff suggesting that the sale of the shares be delayed until the new financial year. The Defendant denied that the Plaintiff said that he should obtain some legal advice.
The Plaintiff’s evidence of the second telephone conversation of 19 April 2001.
In the early part of the evening of 19 April, the Defendant called the Plaintiff at home. The Plaintiff said that the Defendant informed him that he had received legal advice that the contract that he had entered into was binding. The Plaintiff said that the Defendant indicated his difficulty was that the shares were also registered in his father’s name and his father was refusing to sign the share transfer form. He said that the Defendant indicated that he had telephoned a number of shareholders whose names had appeared on the Sellers Register and based on the information he had received that he thought the price of $2.20 was a fair price. However, he said his father was still refusing to sell the shares. The Plaintiff said that his response was that whilst he understood the Defendant’s problem, he insisted that the transaction be completed.
The Plaintiff said the telephone call concluded with the Defendant indicating that he would call him back. The Plaintiff said that the Defendant never telephoned again. He said that sometime following that telephone call he instituted legal proceedings.
The Defendant’s evidence of the second telephone conversation on 19 April 2001.
The Defendant said that he telephoned the Plaintiff in the early evening of 19 April. He said he could remember the occasion vaguely. The Defendant said he told the Plaintiff that he would be seeking legal advice. He denied that he said that he had received legal advice and that advice was that there was a binding contract. He said that he could not recall whether he told the Plaintiff that he had telephoned other people on the Sellers Register. However, he confirmed that between the first telephone call on that day and the telephone call during the evening, he had spoken to other persons on the Sellers Register, regarding the price of the shares.
The Evidence of other Witnesses at the Trial.
The Defendant called other evidence in support of his case. The first was a solicitor, Mr D G Taylor, who had been the solicitor for the Defendant and his father over a number of years. He stated he was consulted on 30 April regarding the letter from Piper Alderman to the Defendant dated 19 April. His evidence was that he could not recall speaking to the Defendant or his father regarding AWB Shares prior to that date. He said he responded to the Piper Alderman letter denying that any agreement had been reached. I find Mr Taylor to be a reliable witness and I accept his evidence.
Mr Boylan, counsel for the Defendant, submitted in his final address, that the relevance of Mr Taylor’s evidence is to establish that the Defendant did not seek legal advice from Mr Taylor prior to 30 April 2001. He said that this evidence supports the evidence of the Defendant that he did not mention that he had obtained legal advice in the second telephone call of 19 April 2001.
Mr Paul Vella, gave evidence that he has been the accountant for the partnership of the Defendant and his father for a number of years. He said that on 11 April 2001, in the early part of the evening, he spoke to the Defendant on the telephone. He said that amongst the topics which were discussed, was the AWB shares. He said the Defendant indicated that he had received an offer for the shares of about $2.20. He said that the Defendant expressed concern about the level of the partnership overdraft. Mr Vella said discussion took place regarding the sale of the shares and that the proceeds would assist with reducing the overdraft. He said that he advised the Defendant that there was no need to sell the shares because of the assets owned by the partnership. I find Mr Vella to be a reliable witness and I accept his evidence.
Alan Fewster, the Defendant’s father, gave evidence. Mr Fewster said that there had never been any intention to sell the AWB shares. He said that the Defendant had informed him that the Bank had suggested that the shares be placed on the Sellers Register and that was the reason that he signed the form instructing Computershare to place them on the Register. He said that he felt the shares were worth at least $3 at the time.
In cross-examination he accepted that, in an earlier affidavit in these proceedings, he said that he and his son had jointly formed the view that they may need to sell part of the shares to avoid the necessity of extending the overdraft. He agreed that in the earlier affidavit, he stated that he and the Defendant had formed the view they might need to sell shares to the value of $10,000 to $15,000. He explained that what he said in the affidavit was inaccurate. He said that he should have included in the affidavit a reference to the Bank suggesting that it might be useful to sell part or all of the shares.
I found the evidence of Mr Allan Fewster regarding the purpose of placing the AWB shares on the Sellers’ Register to be confusing. On the one hand, he said there was never any intention to sell the shares. On the other hand, he acknowledged making statements in the prior affidavit, which were inconsistent with that evidence.
His explanation regarding the statements made in the affidavit did not assuage my concern regarding the inconsistency between the affidavit and the evidence he gave. As a result, I am not prepared to rely upon his evidence on that topic. I do not accept his evidence that there was never any intention, on the part of he and the Defendant to sell the shares at the time the shares were placed on the Register. Apart from the matter I have just referred to, Mr Fewster’s evidence was of very little assistance in resolving the issues in the trial. However, I am prepared to accept his evidence that the Defendant never requested that he sign a share transfer.
Evaluation of the Credit of Both the Plaintiff and the Defendant.
As I mentioned earlier, the central issue in this Trial is whether an oral agreement was made between the Plaintiff and the Defendant regarding the sale of the AWB shares, during the telephone conversation on 4 April 2001. I further mentioned earlier that in the end, that issue would be determined by the credit fundings regarding the evidence of the Plaintiff and the Defendant. In determining the issue of credit I acknowledge that I need to take into account the evidence of other witnesses.
In evaluating and assessing the evidence of the Plaintiff and the Defendant, it needs to be recognised that the events, the subject of the evidence of each of them took place some eighteen months earlier. The passage of time is a factor which always needs to be considered when assessing the reliability of the memory of a witness.
I formed the view that the Plaintiff was a careful person. In giving his evidence he was measured and careful in answering questions. Generally he responded directly to the question. The Plaintiff readily conceded propositions in cross-examination, where it is appropriate to do so, although such concession may have been to his disadvantage. I thought that generally, he displayed a reasonably reliable memory of conversations, although there were times when his memory faltered. One important factor which needs to be taken into account in evaluating the Plaintiff’s evidence is his evidence that there were two conversations between the Defendant and himself on 4 April 2001 and that it was in the second conversation that the agreement for the sale of the shares was finally made. As I said earlier, the telephone records demonstrate that there could not have been two telephone calls of the nature described by the Plaintiff. In cross-examination, he conceded that he was in error in stating that there were two telephone calls. The Plaintiff had given similar evidence in an affidavit which had been filed for the purpose of an earlier application in the proceedings.
After considering the Plaintiff’s entire evidence, and in particular his evidence regarding each of the telephone conversations held with the Defendant, I reached the conclusion that I could generally rely upon his evidence. As I mentioned a moment ago, I have, in arriving at this conclusion, included in my evaluation of the Plaintiff’s credit his error regarding the two conversations on 4 November. Even taking that into account I remain satisfied that generally I can rely upon his evidence. On some occasions, I thought that his evidence involved some degree of unconscious reconstruction, but, as I said, generally I felt that his memory was reliable.
In considering the Plaintiff’s evidence of the telephone conversations of 4 April and 11 April the Plaintiff had the advantage of being able to refer to contemporaneous notes to refresh his memory. At one point, it was suggested by Mr Boylan that I should find that the notes were fabricated. I reject this submission. There is no evidence to suggest that they were fabricated. I accept the Plaintiff’s evidence regarding the manner and times in which he made the notes upon which he relied to refresh his memory in giving his evidence.
By contrast to the Plaintiff, I found the Defendant to be generally an unconvincing witness. I have formed the view that he had a relatively poor recollection of the telephone conversations. Indeed, with respect to the telephone conversations of 19 April, the Defendant conceded that he had a vague memory. Regrettably, I also formed the view that at times he was disingenuous in giving his evidence.
There were times when the Defendant gave inconsistent evidence. An example of inconsistent evidence was the evidence he gave regarding the discussion on offers for the shares made in the telephone conversation of 4 April. I mentioned this earlier. There were other inconsistencies in his evidence.
I gained the impression that there was a substantial element of reconstruction by the Defendant, in giving his evidence regarding the various telephone conversations he held with the Plaintiff. I felt that much of the time, he was not relying upon his memory when giving his evidence regarding the conversation. An example of reconstruction is demonstrated in his evidence regarding the first conversation on 19 April. In cross-examination (pages 279-280) the Defendant gave the following evidence:-

“QYou might explain it to him. Can you tell the court what you said after you apologised to Mr Armour.
AMr Armour asked me had I – why didn’t I send back the transfer form. I said to Mr Armour that in our first conversation we hadn’t agreed to sell them, I told him I had to speak to my father and my accountant. That’s what I re – I told Mr Armour again that I’d spoken to my father, we had agreed not to sell them, I had rung the accountant up and he had advised me that, for tax reasons, in particular he thought the price was too low, and we didn’t need to sell them either.
QI think that’s three reasons. You are saying that you said to Mr Armour three things; the first thing was that you’d spoken to your father and you had agreed not to sell them, not to sell the shares.

A That’s correct.
QYou are saying that the second reason you gave Mr Armour was you’d spoken to the accountant and the accountant said, for tax reasons, you shouldn’t sell them that year.

A That’s correct.
QAre you saying the third reason you gave to Mr Armour was the accountant said ‘You don’t need to sell them at all anyway’.
AI believe that was what I said to him. Like I said, my recollection of that conversation is not real specific.

Q So you are really just speculating.
A That’s right.”

This is but one example of many where I felt the Defendant’s evidence was a reconstruction and not a recollection. At times I felt the reconstruction was unconscious, however on other occasions I could not be certain.
I thought that much of the evidence that the Defendant gave regarding the telephone conversation of 11 April was both unconvincing and disingenuous. An illustration is found in the following passage of evidence, during the cross-examination of the Defendant (267-270):-
“QNow you spoke to Mr Armour on 11 April when Mr Armour called you.
A      Yes.
QYour evidence is that Mr Armour asked you if you’d received the transfer form, you said no you hadn’t.
A      Yes.
Q      Why didn’t you say to him ‘What transfer form?’
ABecause he assumed that – well, I don’t know. That was just -
QYour evidence is that you didn’t discuss the settlement procedure with Mr Fewster on 4 April, and that he didn’t tell you he’d be sending you a transfer form, so when he asked you on the 11^th whether you’d received a transfer form, why didn’t you say ‘What transfer form? I don’t know what you’re talking about’.
ALike I said, that conversation was in a noisy tractor, and I don’t recall that conversation at all. My mind was occupied with what I was doing. So what I actually -
Q      So, do you deny -
A      - so what I actually said I can’t accurately remember.
Q      So you can’t actually remember that conversation.
A      Not specifically, no.
QSo yesterday when you said to the court, and you said to his Honour, that when Mr Armour asked you ‘Have you received the transfer form?’ and you said ‘No, I haven’t’, you weren’t actually relying on your recollection of the conversation.
AYes, that was my recollection because I was asked a question.
QYou had received the transfer form by then, hadn’t you.
A      I had not.
Q      You’d discussed it with your wife, too, hadn’t you.
A      Before I spoke to Mr Armour?
Q      Yes.
A      No, I had not.
QAnd you’d discussed it with your father, too, hadn’t you.
A      No, I had not.
QWhen Mr Armour said to you ‘What are you going to do?’, you said you were going to send it back, didn’t you. You said you were going to send the transfer form with the certificate back.
A      My recollection was I said I’d get back to him.
QYou didn’t say that you hadn’t spoken to the accountant yet, did you.
ALike I said, my recollection wasn’t that good, but after having receiving (sic) Mr Armour’s phone call, and several others, but preceding that time, I thought it was probably an opportune time to give Paul a ring to find out if – what implications there would be if we decided to sell some.
AIn your conversation with Mr Armour on the 11^th, you didn’t say to Mr Armour ‘I haven’t spoken to the accountant yet’.
A      I don’t recall what I said to him.
QI suggest that it was a short conversation, and you said to Mr Armour ‘I’m going to send you back the documents as you requested’; what do you say about that.
A      I’ve repeatedly stated that wasn’t the case.
Q      But you can’t remember the conversation.
A      But I wouldn’t say I’d send them back.
QBut the fact is you can’t remember the conversation; is that right.
ABut I wouldn’t have said – yes, I can remember the fact that I would have said – I wouldn’t have said I would sent it back.
QI don’t want you to tell me what you would or wouldn’t have said, the fact is you cannot now remember that conversation.
AYes, I can recall the conversation, but not the substance of it.
Q      We’re after substance in this case.
A      Yes, I know you are”.
I pause here, to note that the point that was being made during this passage was that on the basis of the evidence given by the Defendant up to that time, the Defendant would not have had any expectation he was to receive any documents from the Plaintiff. It was the Defendant’s evidence that he had no expectation, following the conversation of 4 April of receiving any document from the Plaintiff. It was in those circumstances, that the point was being made that if he was not expecting any share transfer then his response to the Plaintiff’s question during the conversation was surprising.
There was further evidence given by the Defendant on this topic, which I found to be unconvincing and disingenuous. I set out hereunder that evidence (pages 271-272):
“His Honour
“QCan I ask you this: after the conversation of 4 April, did you have any expectation of receiving any document.
A      No.
Q      From Mr Armour
A      No.
XXN
QOn 11 April, if you hadn’t seen the letter, when Mr Armour asked you about the transfer, why didn’t you say ‘What transfer? What are you talking about?’.
AI did say that as far as I recall. I said ‘I haven’t received anything’.
QBy 11 April, is this the situation: you and your father have a firm view that the shares are worth $3 each or more; that’s right.
A      Well, that was on our calculation, but we don’t know.
Q      But you had a firm view about that.
A      At least, yes.
Q      You thought there were blue chip shares; that’ right.
A      Yes.
QYou had no intention of selling them at the time you listed the shares; that’s right.
A      Everything’s for sale at a price.
QAfter your conversation with Alan on the 4^th, you had reached a decision with Alan not to sell the shares at 2.20 to Mr Armour.
A      Approximately that date.
QEither at the end of the 4^th or the start of the 5^th; yes. That’s right. Well, why didn’t you say to Mr Armour on the 11^th ‘Sorry, mate, we’re not selling our shares to you’.
A Because Mr Armour’s offer may have been more. I hadn’t seen the transfer form. He didn’t tell me what was in the transfer form. He could have put in an offer for anything.
QYou knew that Mr Armour was talking at 2.20, wasn’t he.
A      He didn’t say that. I don’t recall him saying that.
QWhy didn’t you say to Mr Armour on 11 April ‘I’m sorry, we’re not dealing with you. Your offer of 2.20 on the 4^th isn’t enough’.
ABecause he didn’t ask me that, he – and I was in a – like I said, I was on the tractor, it was noisy, he asked me had I received the transfer form, I said no I hadn’t”.

This evidence needs to be seen against the Defendant’s earlier evidence relating to the telephone conversation of 4 April, when he said that he felt the Plaintiff’s offer of $2.20 was his final offer.
Whilst I have reached the conclusion that I am prepared to rely upon the Plaintiff’s evidence, there is a further sign post which tends to support the Plaintiff’s evidence. That sign post is his recording of the postal address of the Defendant on the Sellers Register, during the course of the telephone conversation with the Defendant on 4 April. It is the Plaintiff’s evidence that he was given this address by the Defendant for the purpose of sending the letter and share transfer to the Defendant. The Defendant said, in his evidence, that he could not recall giving the Plaintiff his postal address.
The receipt of the postal address supports the Plaintiff’s evidence that agreement had been reached for the sale of the shares at $2.20 each and that a discussion had taken place between the Plaintiff and the Defendant regarding how the transaction was to be completed. According to the Plaintiff, included in that discussion was a reference by the Plaintiff to sending the Defendant a letter instructing him on the manner in which the transaction was to be completed and that a share transfer form would be enclosed. In my view there is no reasonable explanation for the furnishing of the postal address other than to enable the Plaintiff to send to the Defendant a letter.
I mentioned earlier that I felt that on a number of occasions the Defendant was not frank. One such occasion, was his evidence relating to the placing of the shares on the Seller Register. As I stated, it was his evidence that he did not intend to sell any of the shares when the shares were placed on the Register. He said that he placed the shares on the Register to obtain an indication regarding the price of the AWB shares and also out of deference to the Commonwealth Bank who requested that he should place them on the Register.
In my opinion, the evidence indicates that the Defendant placed the shares in the Sellers Register to position himself to sell some of the shares if he needed to reduce the level of the overdraft. He had expressed concern to his accountant Mr Vella, at a later time, about the extent of the temporary overdraft and made enquiries of Mr Vella whether he should sell some of the shares to reduce the overdraft. Whilst this conversation took place some two weeks after the shares were placed on the Register it indicates that he had some concern about the level of the partnership overdraft and that he was alive to the possibility of selling some of the shares to reduce the overdraft if it became necessary. Indeed, by e-mail dated 15 March 2001, shortly before he placed the shares on the Register, he raised the question of the sale of the shares with an officer of the Commonwealth Bank. The Defendant stated in the e-mail that he had some shares which could be sold if the overdraft limit looked like would be reached. In my opinion this is a further indication that the Defendant had in his mind the possible sale of shares.
As I said, the Defendant was not entirely frank, in my opinion, when giving his evidence on this topic. His evidence was that the shares were never placed on the Register with an intention that they would be sold. It is clear that such evidence is relevant to the central issue, namely, whether an agreement was reached on 4 April 2001. I do not accept the Defendant’s evidence that the shares were placed on the Sellers Register for the benign reasons expressed by the Defendant. He may have felt he should place the shares on the Register to satisfy the Bank. However, in my opinion the evidence indicates that among the reasons for the shares being placed on the Register was to enable the Defendant and his father to be in a position to sell some of the shares if the financial circumstances of the partnership required them to do so. It was his failure to acknowledge that this was one of the reasons for placing the shares on the Register, which has caused me to conclude that his evidence on this topic was less than frank.
Mr Boylan in his address, sought to support the Plaintiff’s evidence by submitting that first, because of the nature of the relationship between the Defendant and his father in their partnership that it would be unlikely that the Defendant would agree to sell the shares without consulting his father and secondly, there is not any reason why the Defendant would agree to sell the shares on short notice. He submitted that with respect to the second point, that the financial position of the partnership, at the time, had not reached a level where there was any pressure to sell the shares. These are matters which I have taken into account in considering the Defendant’s credit. Perhaps the answer lies in the evidence of the Plaintiff, which I accept, when he said during the first telephone call on 19 April that the Defendant said that he was not bound by anything because he had not signed any document. One possible explanation for the Defendant agreeing to sell the shares is that he felt that he was not legally bound by any such agreement. In any event, it is idle to speculate. The important fact is that I find the Plaintiff to be a reliable witness and therefore I rely upon his evidence where it conflicts with the evidence of the Defendant.
It follows from this conclusion that I accept the Plaintiff’s evidence regarding the conversation which took place on the telephone of 4 November 2001. I reject the Defendant’s evidence that he did not agree to sell the shares during the course of that conversation. Further, I reject the Defendant’s evidence that he said to the Plaintiff, in that conversation, that he needed to consult with his father and his accountant.
Findings
In the circumstances, I make the following findings:-
·That during the telephone call of 4 April 2001, the Defendant agreed to sell to the Plaintiff the total B Class shares held by the Defendant and Alan Fewster in AWB Limited for $2.20 per share.
·That at the date of the agreement, the Defendant and Alan Fewster held thirty thousand nine hundred and ninety two B Class shares in AWB Limited.
·That the Defendant breached the oral agreement of 4 April 2001 in refusing to complete the sale transaction and transfer the shares to the Plaintiff.
As a result of my finding that the Defendant is in breach of the agreement the Plaintiff is entitled to proceed to prove any damages he has suffered as a result of that breach.
I will hear the parties regarding the question of damages.

[2003] SADC 67

9 May 2003