Gibson Motor Sport Merchandise Pty Ltd v Forbes - [2005] FCA 749

FEDERAL COURT OF AUSTRALIA
Gibson Motor Sport Merchandise Pty Ltd & Ors v Robert James Forbes & Ors [2005] FCA 749
JOINT VENTURE – incidents of - fiduciary duties arising from joint venture or negotiations for joint venture.
CONTRACT - repudiation of oral contract by unilateral variation – implied terms for termination – alternative quantum meruit claims.
OTHER ISSUES – claims for express trust, resulting trust and constructive trust – unjust enrichment – estoppel – breaches of the Trade Practices Act 1974 (Cth) s 52 and Fair Trading Act 1999 (Vic) s 9 and Fair Trading Act 1987 (NSW) s 42.
CROSS-CLAIM – account for unauthorised transactions or unverified accounts – liability to account of merchandising company – royalties.
Business Names Act 1962 (Vic), s 12(4)
Evidence Act (1995) (Cth) s 103
Fair Trading Act 1987 (NSW) s 42
Fair Trading Act 1999 (Vic) s 9
Income Tax Assessment Act 1936 (Cth) s 128A1
Partnership Act 1958 (Vic) s 5
Trade Practices Act 1974 (Cth) s 4J, s 52, s 82, s 87
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 cited
Australian Oil and Gas Corporation Ltd v Bridge Oil Ltd (1995) 14 AMPLA Bull 60 referred to
Baumgartner v Baumgartner (1987) 164 CLR 137 cited
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 followed
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 referred to
Branir Pty Ltd and Others v Owston Nominees (No. 2) Pty Ltd (2001) 117 FCR 424 followed
Breen v Williams (1995-1996) 186 CLR 71 followed
Burger King Corp v Hungry Jack’s Pty Ltd [2001] NSWCA 187 cited
Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410 cited
Canny Gabriel Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 cited
Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 cited
Cummings v Lewis (1993) 41 FCR 559 followed
Devries v Australian National Railways Commission (1993) 177 CLR 472 followed
Didymi Corp v Atlantic Lines and Navigation Co. Inc. [1988] 2 Lloyds Rep. 108 cited
Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999) ATPR 41-703 cited
Hawkins v Clayton (1988) 164 CLR 539 referred to
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) BPR 11,110 referred to
Jones v Dunkel (1959) 101 CLR 298 followed
Kelly v C.A. & L. Bell Commodities Corporation Pty Ltd (1989) 18 NSWLR 248 referred to
Masters v Cameron (1954) 91 CLR 353 referred to
Muschinski v Dodds (1985) 160 CLR 583 referred to
Narni Pty Ltd v National Australia Bank Ltd [2001] VSCA 31 referred to
Noranda Australia Ltd v Lachlan Resources N.L. (1988) 14 NSWLR 1 referred to
Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FCR 300 referred to
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 referred to
Rossiter & Curtis v Miller (1878) 3 App. Cas 1124 referred to
Seven Cable Television Pty Ltd v Telstra Corp. Ltd (2000) 171 ALR 89 referred to
Television Broadcasters Limited v Ashton’s Nominees Pty Ltd (No.1) (1979) 22 SASR 552 referred to
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 followed
Vroon BV v Foster’s Brewing Group Ltd [1994] 2 VR 32 referred to
GIBSON MOTOR SPORT MERCHANDISE PTY LTD & ORS V ROBERT JAMES FORBES & ORS
VID 372/2002
CRENNAN J
9 JUNE 2005
MELBOURNE

Index
Heading Paragraph Number

Introduction........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 1
Background facts........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 17
Joint Venture........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 72
7 December 2000 meeting........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 83
Findings – 7 December 2000........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 93
TEGA franchise........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 100
Events from 8 December until 18 December 2000........ ........ ........ ........ ........ ........ ....... 107
18 December 2000........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 116
‘GIBSON MOTOR SPORT’ business name........ ........ ........ ........ ........ ........ ........ ........ . 118
Events from 20 December 2000 until 21 February 2001........ ........ ........ ........ ........ ...... 130
Driver Agreement between Mr Lowndes and RPM........ ........ ........ ........ ........ ........ ...... 137
26 February 2001 meeting........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 148
Gibson Motorsport Merchandise Pty Ltd (‘GMM’)........ ........ ........ ........ ........ ........ ...... 156
Mr Gibson’s arrangements in relation to the Lowndes/Ford team........ ........ ........ ........ 163
Mr Watson’s arrangements in relation to the Lowndes/Ford team........ ........ ........ ....... 167
Findings – 26 February 2001........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 172
Conclusions on joint venture agreement........ ........ ........ ........ ........ ........ ........ ........ ........ 177
Gibson Services Agreement........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 181
Duration of the Gibson Services Agreement........ ........ ........ ........ ........ ........ ........ ........ . 182
Ending of Gibson Services Agreement between Synarby Pty Ltd and RPM........ ........ 185
18 May 2001 meeting........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 194
1 June 2001 meeting........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 196
13 July 2001 meeting........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 198
7 September 2001 facsimile message........ ........ ........ ........ ........ ........ ........ ........ ........ .... 201
Events after 7 September until 9 October 2001........ ........ ........ ........ ........ ........ ........ ..... 204
10 October 2001........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 223
Sale of the TEGA franchise........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 230
Witnesses........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 231
Findings – Gibson Services Agreement........ ........ ........ ........ ........ ........ ........ ........ ........ 235
Implied term for termination in the Gibson Services Agreement........ ........ ........ ........ . 236
Conclusion on Gibson Services Agreement claims........ ........ ........ ........ ........ ........ ....... 249
Management Agreement........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 253
Findings – Management Agreement........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 266
Conclusion – Management Agreement claims........ ........ ........ ........ ........ ........ ........ ...... 269
Express Trust........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 271
Five year sponsorship with Ford........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 274
Conclusion on Express Trust........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 275
Disentitlement to equitable relief........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 276
Resulting Trust........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 277
Conclusion – Resulting Trust........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 280
Unjust Enrichment........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 281
Conclusion – Unjust Enrichment........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 282
Estoppel........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 284
Conclusion - Estoppel........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 289
Buy Out Agreement........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 291
Conclusion – Buy Out Agreement........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 297
Constructive Trust........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 298
Conclusion – Constructive Trust........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 299
Gibson Motor Sport Licence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 302
Conclusion – Gibson Motor Sport Licence........ ........ ........ ........ ........ ........ ........ ........ ... 312
Trade Practices Act Breaches........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 313
Conclusion – Trade Practices Act Claims........ ........ ........ ........ ........ ........ ........ ........ ..... 329
Cross claim........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... 332
Reimbursement payments........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 333
Adelaide marketing expenses and Pumpa transporter expenses........ ........ ........ ........ ... 334
Construction work........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 338
Mr Parsons’s payments........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 343
Cross claim against GMM........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 349
Summary of Conclusions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 356

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 372 OF 2002

BETWEEN:

GIBSON MOTOR SPORT MERCHANDISE PTY LTD ACN 095 810 110
FIRST APPLICANT

ROBERT NOEL WATSON
SECOND APPLICANT

FREDERICK CHARLES GIBSON
THIRD APPLICANT

NOEL WATSON (AUST) PTY LTD ACN 005 254 848
FOURTH APPLICANT

F.C. GIBSON PTY LTD ACN 082 475 705
FIFTH APPLICANT

THE WATSON GROUP AUSTRALIA PTY LTD ACN 091 455 426
SIXTH APPLICANT

SYNARBY PTY LTD ACN 057 500 973
SEVENTH APPLICANT

AND:

ROBERT JAMES FORBES
FIRST RESPONDENT

RACECAR PREPARATION & MANAGEMENT PTY LTD ACN 095 359 041
SECOND RESPONDENT

BOB FORBES CORPORATION PTY LTD ACN 001 442 520
THIRD RESPONDENT

JUDGE:

CRENNAN J

DATE OF ORDER:

9 JUNE 2005

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 372 OF 2002

BETWEEN:

GIBSON MOTOR SPORT MERCHANDISE PTY LTD ACN 095 810 110
FIRST APPLICANT

ROBERT NOEL WATSON
SECOND APPLICANT

FREDERICK CHARLES GIBSON
THIRD APPLICANT

NOEL WATSON (AUST) PTY LTD ACN 005 254 848
FOURTH APPLICANT

F.C. GIBSON PTY LTD ACN 082 475 705
FIFTH APPLICANT

THE WATSON GROUP AUSTRALIA PTY LTD ACN 091 455 426
SIXTH APPLICANT

SYNARBY PTY LTD ACN 057 500 973
SEVENTH APPLICANT

AND:

ROBERT JAMES FORBES
FIRST RESPONDENT

RACECAR PREPARATION & MANAGEMENT PTY LTD ACN 095 359 041
SECOND RESPONDENT

BOB FORBES CORPORATION PTY LTD ACN 001 442 520
THIRD RESPONDENT

JUDGE:

CRENNAN J

DATE:

9 JUNE 2005

PLACE:

MELBOURNE

REASONS FOR JUDGMENT
Introduction

On 2 June 2002 the applicants filed an application in this Court for pecuniary and declaratory relief in respect of a range of causes of action under the Trade Practices Act 1974 (Cth) (‘Trade Practices Act’) and at general law. On 17 October 2003, a third further amended statement of claim was filed and pleadings in respect of that closed with the filing on 8 January 2004 of the cross‑respondents’ defence, to the third further amended cross‑claim, delivered 1 December 2003.
The proceeding arises out of the establishment in December 2000 of what can be described as a V8 Supercar racing team. This is a reference to a category of motorcar racing, which attracts attendances of the public and significant television coverage. Each of the parties played some role in creating and operating the team and its racing and merchandising operations over the course of approximately a year.
It is appropriate to say a little about the background to the dispute before examining the issues. It also should be noted that the precise identification of contested issues was only crystallized during final addresses, which followed extensive written submissions.
Until late 2000, Mr Craig Lowndes was a professional racing car driver in a V8 Supercar team sponsored by the automobile manufacturer, Holden Limited (‘Holden’) generally known as the Holden Racing Team (or ‘HRT’), competing in the race series run by the Touringcar Entrants Group Australia Pty Ltd (‘TEGA’). According to a standard agreement TEGA formed the Australian Vee Eight Supercar Company Pty Ltd (‘AVESCO’) to conduct its activities ‘on a more commercial and marketing oriented basis.’ TEGA’s stated objectives included supporting ‘. . . Teams and Drivers so that touringcar racing is guaranteed a place in Australian motor racing’ and pursuing ‘an equitable financial share of the revenues generated by the sports for the teams.’
It was not in contest that Mr Lowndes was a successful and popular young driver, having won the Australian Touring Car Championship in 1996, 1998 and 1999, being the youngest driver ever to have done so, and also having won the Bathurst 1000 race in 1996.
The evidence showed motorcar racing teams required considerable financial support some of which conventionally seems to have come from associated businesses such as motorcar manufacturers and petrol producers which sponsored teams. It also showed Mr Lowndes treated his position as a winning driver as creating opportunities for him to secure income through driving, sponsorship and associated merchandising.
By late 2000, Mr Lowndes was dissatisfied with his existing contractual arrangements to drive for HRT and was considering options in respect of his future career. Over the course of 2000, Mr Lowndes had become acquainted with the second applicant, Mr Noel Watson, who came to act as a manager for Mr Lowndes, assisting him in evaluating the choices that were open to him.
One of those choices involved driving for a racing team that used Ford cars made by the automotive manufacturer Ford Motor Company of Australia Limited (‘Ford’), thus a notional transfer of allegiance from Holden that was likely to attract considerable publicity.
Each of Holden and Ford owned certain intellectual property, including trade marks and was acquainted with sponsorship as a method of advertising products by reference to recognisable indicia of origin.
Other possible choices for Mr Lowndes involved developing proposals, of which Mr Watson was aware, being considered by each of the third applicant, Mr Fred Gibson, and the first respondent, Mr Bob Forbes, to create a new racing team. Mr Lowndes’s availability to drive for such a team was the impetus for these proposals.
The proposals involving Ford, Mr Gibson, Mr Forbes and Mr Lowndes coalesced in around December 2000. In January 2001 those parties were in a position publicly to announce the establishment of a V8 Supercar racing team, to be known as the ‘Gibson Motor Sport’, racing team for which Mr Lowndes was to race Ford cars. Mr Gibson had primary responsibility for the team’s racing activities; Mr Watson conducted its merchandising activities; Mr Forbes controlled and operated the company that owned most of the team’s main assets (through the second respondent, Racecar Preparation & Management Pty Ltd, (‘RPM’)).
This team competed with some success in the 2001 racing season, and continued into the 2002 season. By the end of 2001, however, the main protagonists in the litigation had had a ‘falling out’, and Mr Gibson and Mr Watson were no longer involved.
Mr Gibson and Mr Watson now bring this proceeding, together with a number of companies related to each of them and which were involved in the business arrangements described above. The primary claim is for breach of contract. The applicants contend that the ‘team’ described above was contractually structured as a joint venture in which each party made some special contribution to the team’s assets and opportunities. Within this overarching arrangement it is alleged there were a number of collateral contracts defining specific relationships between RPM and Mr Forbes on the one hand and each of Mr Gibson, Mr Watson and their related companies on the other.
It is further contended that certain trusts, express and resulting, were created over the assets of the racing team, in particular those held by RPM. There are claims of breach of fiduciary duty by Mr Forbes, and of estoppels operating in favour of the applicants. The applicants also plead causes of action under the Trade Practices Act, chiefly s 52 of that Act.
The applicants seek declarations that certain assets are held on trust; damages for breach of contract; declarations of constructive trust; an award of restitutionary damages and an account of profits in relation to the use of the putative trust assets; equitable compensation; and damages under s 82 and s 87 of the Trade Practices Act and other orders.
In addition, RPM brings a cross-claim against Mr Gibson and two of the applicant companies. The cross-claim is based upon aspects of the relationship between Mr Gibson and RPM. The cross-claimant alleges breach of fiduciary duty by Mr Gibson while acting in the position as manager of the racing team. It should be noted that a second proceeding (V 321 of 2003), brought by the first applicant and another in the present proceeding against the present second respondent seeking the second respondent’s winding up, was stayed until further order by order of Finkelstein J on 17 October 2003.
Background facts
As foreshadowed, Mr Lowndes could be described as the catalyst of the events with which this proceeding is concerned. I have mentioned already his former association with HRT and his growing dissatisfaction with his contractual arrangements with Holden.
These arrangements comprised a Management Agreement with TWR (Australia) Pty Ltd (‘TWR’), the owner of HRT. Through Mr Watson, Mr Lowndes met Mr Battye, a solicitor from Ebsworth & Ebsworth, lawyers, whom he retained to assist him in circumstances where legal action was being threatened by TWR. In his evidence given on affidavit Mr Lowndes described the Managing Director of HRT, Mr John Crennan, as being ‘the head of TWR in Australia and in effect … my manager’. Mr Lowndes said that he had become unhappy ‘that Crennan was both my manager and also ran Holden Special Vehicles (‘HSV’) and ran HRT for TWR.’

Due to the terms of his Management Agreement, Mr Lowndes’s freedom to exploit his own success was restricted. He said he saw Mr Crennan’s position ‘as a conflict’ and considered that Mr Crennan was not acting in his best interests, and that by 2000 ‘I had [had] enough of this arrangement and was hoping for an opportunity to leave HRT and Crennan’s management.’ Mr Lowndes’s decision to leave HRT at the end of the 2000 racing season was announced on or about 3 November 2000. The first V8 Supercar race for the 2001 racing season was to be held in Melbourne during the Australian Formula One Grand Prix weekend of 1 – 4 March 2001. However, due to the dispute between Mr Lowndes and HRT, by the end of 2000 Mr Lowndes had had considerable difficulty making arrangements to drive for a new team. If he were unable to find a new team by the start of the 2001 season the risk was that he might not have been able to compete that year.
It is necessary also to give some background detail about the other primary actors. Each of Mr Gibson, Mr Watson and Mr Forbes has a long-standing association with Australian motor racing. Mr Gibson was a racing car driver between 1961 and 1984. He won a major event, described as Bathurst in 1976. At various times from 1983 onwards he held positions managing racing teams. In particular, between 1990 and 1999 Mr Gibson conducted a racing car business under the business name GIBSON MOTOR SPORT. This team is said to have been highly successful, winning the Australian Touring Car Championship in 1990, 1991, 1992 and 1994 and the Bathurst 1000 race in 1992, 1994 and 1999. Each of them had longstanding relationships with Ford.
Mr Gibson was at all material times the sole and/or controlling director of F.C. Gibson Pty Ltd (‘FCG’), the fifth applicant, as well as of Angora Towers Pty Ltd and Favette Pty Ltd (non-parties who were involved in the transactions giving rise to this proceeding). The seventh applicant, Synarby Pty Ltd, was the company through which Mr Gibson issued invoices to RPM for his management services. Along with Mr Watson, Mr Gibson was also a director of the first applicant, Gibson Motor Sport Merchandise Pty Ltd (‘GMM’). While such matters were not admitted on the pleadings they were not live issues at the end of the hearing.
Mr Forbes first became involved with motor racing in the 1960s, competing as a driver in the touring car competition of the time. He has also had a long and diverse commercial career. With the formation in 1994 of TEGA as the organising body for Australian touring car racing, Mr Forbes became its founding chairman. He has since held office at various times as director of AVESCO and as a commissioner and director of the Australian Motor Sports Commission.
Mr Forbes is the sole director of the third respondent, Bob Forbes Corporation Pty Ltd, and has been a director of the second respondent, Racecar Preparation & Management Pty Ltd, since its formation on 12 December 2000.
Mr Forbes and Mr Gibson had known each other for years before the events took place, which have given rise to this litigation. They had uneventful business dealings between them. Mr Watson is said also to have had extensive involvement with the management of Australian motor sport, having been a director of TEGA and a founding director of AVESCO, and having been involved with racing teams since the 1980s.
Mr Gibson knew of Mr Watson since 1983 when both were involved with Nissan, a car manufacturer. He was said to have marketing, licensing and commercial experience and to be widely known and respected for his expertise. The fourth and sixth applicants were companies under his control utilized by him for the purposes of conducting business. As mentioned above, he was closely associated with Mr Lowndes during the latter half of 2000, and thus in a position to negotiate with teams and sponsors on the latter’s behalf. Like Mr Gibson, he was a director of the first applicant.
In or about late November 2000, discussions took place between Mr Gibson and Mr Forbes concerning the possible formation of a V8 Supercar team. This discussion was prompted by the availability for sale of assets then held by Bronzco Pty Ltd, a company controlled by Mr Garry Dumbrell. (The company name was later changed to ‘Gibson Motor Sport Pty Ltd’, but for ease of reference will be referred to in these reasons as ‘Bronzco’.)
Those assets comprised, generally speaking, everything necessary to run a V8 Supercar team in the TEGA/AVESCO race series. Mr Gibson previously owned these assets. In addition to mechanical plant and equipment, they included the business name ‘GIBSON MOTOR SPORT’ and the rights under what is called a TEGA franchise agreement. Mr Gibson had sold these assets to Bronzco in December 1999.
Independently, each of Mr Forbes and Mr Gibson claims to have had knowledge of the possibility of involving Mr Lowndes as a driver in any such new team, but each disputes how this influenced their negotiations and the contractual arrangements that eventuated. Neither Mr Gibson nor Mr Forbes claims that this topic was discussed in late November 2000 in connection with the possible sale of Bronzco’s assets, although each claims to have independently discussed the matter with Mr Watson during the course of October and November 2000.
It is not clear when Mr Forbes and Mr Gibson first discussed the position of Mr Lowndes. However, it is common ground that the topic was covered in the important meeting of 7 December 2000, which is discussed below.
Simultaneously, Mr Gibson was investigating the possibility of setting up a racing team in South Australia. This team would have been partly funded by the State of South Australia. Mr Gibson would have invested his own assets in any such venture. This proposal remained on foot until April 2001, when in Mr Gibson’s words it ‘faded away’. The parties contest the precise implications this proposal had for the course of negotiations between Mr Gibson and the other parties.
On 7 December 2000, a meeting took place between Mr Gibson, Mr Watson, Mr Forbes, and Mr Forbes’s accountant Mr Stanley, who was present for some of the time. At this meeting the initial arrangements were made for establishing the race team. The participants agreed on a number of basic points about the organisation of the team.
Among them was the most significant premise for the creation of the new team: that Mr Lowndes would drive for it and that as a result the team (as well as Mr Lowndes personally) would be sponsored by Ford. Those basic matters are common ground in this proceeding, but many further details and implications of the conversation are disputed.
The issue in dispute in this proceeding which was given greatest prominence by counsel for all parties, was whether the arrangements that were made on and from 7 December 2000 (the applicants contend in the alternative that the joint venture was negotiated from 7 December 2000 and concluded on or by 26 February 2001) were all part of a broader joint venture between Mr Gibson, Mr Watson and Mr Forbes (as the applicants contend), or whether there was no joint venture agreement but there were discrete contracts between the various parties and their nominee companies (as the respondents contend).
The applicants define the core of their putative joint venture agreement as being that ‘Watson, Forbes and Gibson would commit themselves to operate a complete motor sport business as described [in the third further amended statement of claim] for the period during which sponsorship income could support its racing activities’. In closing submissions the contract claim was described as follows:
‘When all of the tedious detail is stripped away the contractual claim is a simple one. The three principals agreed on 7 December 2000 and thereafter reaffirmed it by words and conduct over a period of time (probably until 7 September 2001). The three of them would contribute their respective resources to a successful race team centred on Craig Lowndes and Ford and that the operating company and the merchandising arm/company would be interdependent and would act for each other’s benefit. The venture was a long term venture for the life of the Ford/Lowndes sponsorship which was expected to be at least 5 years.’
Senior counsel for the applicants described the applicants’ contract case as having been refined over the hearing to various claims in respect of a joint venture in which the ‘contribution of respective resources’ made by the protagonists was described as follows:
‘. . . a venture agreed to by Watson, Gibson and Forbes on 7 December 2000 that in consideration of Gibson contributing his name, making available the workshop, securing the Dumbrell franchise, facilitating Dumbrell selling his race team assets to Forbes, and Watson using his best endeavours to procure Lowndes as a long term driver and Ford as a principal sponsor and to secure other sponsors and agreeing to set up a merchandising company, Forbes would lend the money to enable the operating company to purchase Dumbrell race assets and run the operating company (which became RPM) for so long as sponsorship was available to do so, for the benefit of the merchandising company.’
The case was opened on behalf of the applicants on the basis that the agreement between Mr Gibson, Mr Watson and Mr Forbes was not a partnership. In closing submissions it was contended that there was a partnership between those parties or an agreement for something ‘in the nature of’ a partnership. Although the respondents’ counsel was correct to suggest that claiming the parties were partners represented a significant shift in the applicants’ position, it was clear throughout the hearing that the main purpose of asserting a joint venture agreement between the parties was to found an argument that once the relationship of joint venture was found to exist, a duty of utmost good faith (of the kind relevant to a partnership) should be implied. That is, the applicants originally contended that whilst the agreement between the parties did not necessarily have all the indicia of a partnership, being a relationship which subsists between persons carrying on a business with a view to profit, it nevertheless should be treated as a partnership in which mutual trust and confidence governed the rights and duties of the parties inter se.
The applicants argue that a range of interlocking contractual and equitable duties subsisted under the alleged joint venture agreement, including contractual duties of good faith in negotiation and in dealing with the assets and opportunities of the racing team, as well as fiduciary duties. The contractual duties are said to have been implied in fact, to give business efficacy to the contract. The respondents deny the existence of any such general duties. The applicants argue in the alternative that if no contractual joint venture were formed as described above, then the parties were bound by fiduciary duties arising from the negotiation of a joint venture. The respondents deny this also.
It is common ground that it was generally agreed that Mr Forbes should provide the capital required to purchase the Bronzco assets (at least those other than the TEGA franchise). However, it should be noted that Mr Forbes consistently rejected the applicants’ description of him (or his interests) as the ‘financier’ of the team.
A significant reason for this was said by Mr Gibson to be that he needed the financial flexibility to continue to pursue a South Australian motorcar racing opportunity, while Mr Watson (as Mr Lowndes’s manager) could not legitimately have an interest in the racing team for which Mr Lowndes drove. The evidence showed Mr Lowndes insisted that there be no connection between his manager, Mr Watson, and any team for which he chose to drive.
It also seems common ground that the possibility of Mr Forbes buying the team was discussed in the week or so prior to 7 December 2000. While there was some contest of fact arising from Mr Dumbrell’s evidence about when he spoke to Mr Forbes, it is not necessary to resolve that in order to deal with the real controversy between the parties.
It was also understood that it would be Mr Forbes’s responsibility to incorporate the company that would purchase and hold the Bronzco assets. However, at the 7 December 2000 meeting it was left open whether Mr Gibson would become a partial shareholder in that company through providing a minority share of the capital required for the purchase.
The parties are in dispute over when it was agreed that Mr Gibson would purchase the TEGA franchise from Bronzco. The applicants contend that this was agreed on 7 December 2000. The respondents say that this was agreed during a telephone conversation on 10 December 2000.
This topic is linked to the disputed question of when Mr Forbes became aware of proposed changes the TEGA board was considering to the rules governing ownership of rights called TEGA franchises. Those changes would have had the effect of preventing Mr Forbes from having an interest in more than one Level One franchise.
Bob Forbes Corporation already held a TEGA franchise under which Mr Forbes’s son, Rodney Forbes, raced. In the event, the changes were not implemented, but the fact that the proposal was on foot as at 7 December 2000 is a significant part of the context. The applicants contend that Mr Forbes was aware of the proposed changes by 7 December 2000, while the respondents contend that Mr Forbes only became aware of the proposal on 8 December 2000.
The applicants contend that, because Mr Forbes knew he would be unable to hold an interest in both franchises if those changes were implemented, he agreed that Mr Gibson should hold the franchise. The applicants also say that Mr Gibson had to hold the franchise to keep the new race team separate from the team in which Mr Forbes’s son Rodney Forbes was to drive, since Ford was unwilling to sponsor a team in which Rodney Forbes drove, and moreover another driver was to be contracted for the new team but TEGA rules did not allow for more than two cars to race under any one franchise.
The respondents contend that the real reason Mr Gibson bought the franchise was that he may have needed it if he chose to pursue the South Australian proposal; that Ford had no objection to Rodney Forbes; that it was possible for three cars to race under a TEGA franchise; and that in the 10 December 2000 conversation Mr Forbes told Mr Gibson that he would allow Mr Gibson to race one car in the team using the Bronzco franchise rights in order to ensure that that franchise remained valid.
This last contention by the respondents underpins their contention that a contract was concluded between Forbes (on behalf of RPM) and Gibson (on behalf of FCG) that RPM would allow one of its cars to be raced under FCG’s TEGA franchise, and that FCG (as owner of the TEGA franchise) would pay to RPM the appearance money attributable to that car.
The applicants contend generally that each of the participants in the putative joint venture held on trust, for the joint venture, any assets that were necessary for the team’s activities or which were purchased for that purpose. The respondents deny the existence of any trusts subsisting during the term of whatever contracts existed between the parties, and contend that the various assets held by Mr Forbes, Mr Gibson, Mr Watson and their nominee companies were held absolutely – subject only to any contractual duties on the parties.
The applicants also contend that there was an express term of the joint venture agreement that Mr Gibson, Mr Watson and Mr Forbes would acquire a company (which became GMM) to conduct a merchandising business utilising the goodwill associated with the team. All three men would become directors, and they or their nominees would become shareholders, of this merchandising company. The respondents necessarily deny that these arrangements were terms of any joint venture agreement.
The applicants contend that the term of the overarching joint venture agreement was for a period defined in the third amended statement of claim to be ‘the period during which sponsorship income could support its racing activities’. Once sponsorship income became incapable of supporting the team’s racing activities, Mr Forbes, Mr Gibson and Mr Watson would each be entitled to cease being involved in the joint venture.
At this time, if Mr Forbes so chose he would be entitled to take absolute ownership of the Bronzco assets and any other plant and equipment purchased by RPM during the currency of the joint venture (that is, the joint venture’s equitable interests in those assets would dissolve). If Mr Gibson so chose he would be entitled to take absolute ownership of the TEGA franchise.
Whilst the respondents denied the existence of a joint venture agreement, they admitted there was agreement between RPM and Mr Gibson for management services, which was entered into on 7 December 2000 although they say terms of payment were agreed later. They also admitted there was an agreement on 7 December 2000 and confirmed on 18 May 2001 to pay certain commissions to Mr Watson, in particular 20% commission in the first year of the team sponsorship or sponsorships other than the initial Ford sponsorship, which is described below.
It appears to be common ground that the participants agreed that for all practical purposes Mr Gibson would be the manager of the team’s racing operations. (The applicants attached the label ‘Team Principal’ to this position, though the respondents preferred to describe Mr Gibson as ‘manager’ or ‘co-ordinator’ of the ‘operations of the Race Team’. The effect seems to me to be much the same).
The applicants claimed this to be part of the wider joint venture agreement, while the respondents say it was the subject matter of a distinct contract made on 7 December 2000 between Mr Gibson and Mr Forbes (on behalf of RPM, yet to be incorporated), which they labelled the ‘Gibson Services Agreement’.
There was no agreement in the 7 December 2000 meeting upon the terms of Mr Gibson’s profit or remuneration for performing his management role. The applicants contend that this aspect of the joint venture agreement was settled later, on or by 26 February 2001, by way of a distinct but related contract between Synarby Pty Ltd and RPM, which the applicants described both as a ‘consultancy agreement’ and the Gibson Services Agreement.
The respondents contend that it was a term of the discrete contract between Mr Gibson and Mr Forbes (or RPM) made on 7 December 2000 that Mr Gibson’s remuneration would be agreed upon subsequently, and that agreement was only arrived at on or about 18 May 2001. There is, however, no dispute that the sum to be paid to Mr Gibson (or his nominee) by RPM was $250,000 per annum.
The applicants further contend that there were express terms of the joint venture agreement that Mr Gibson would permit the joint venture to use the business name ‘GIBSON MOTOR SPORT’ and to occupy and use the workshop owned by Angora Towers Pty Ltd, and that Mr Gibson would cause his nominee (FCG) to acquire the TEGA franchise (as discussed above).
In contrast to the term of the joint venture pleaded by the applicants, the respondents contend that the discrete contract between Mr Gibson and Mr Forbes (or RPM) was terminable on reasonable notice; that it was limited in duration to the period for which Mr Lowndes would be contractually bound to drive for the team (under the agreement to be made between RPM and Mr Lowndes); and that it would terminate immediately upon Mr Lowndes ceasing to drive for the team. These terms were said to be implied to give business efficacy to the contract.
The contractual arrangements with respect to Mr Watson’s role in the racing team’s activities are somewhat more contentious. It seems clear that Mr Watson played two main roles. First, he procured sponsorship. Secondly, he managed the team’s merchandising. The details are contested.

The applicants contend that there were express terms of the joint venture agreement that Mr Watson would procure the services of Mr Lowndes as driver for the team; that he would manage the business of a merchandising company to be incorporated (GMM); that he would market and promote the race team and the joint venture and procure sponsors for the race team and joint venture; and that he would receive a commercial rate for those services, such rate to be between 10% and 20% of the sponsorship sums procured. These terms were said to have been agreed orally at the 7 December 2000 meeting.
The applicants further contend that at a later meeting, on 26 February 2001, it was agreed that Mr Watson (or his nominee) was to receive a commission of 10% of the sponsorship sum that had been arranged from Ford (the sponsorship being $1.5 million in 2001 and $3 million in each of 2002 and 2003) together with 20% commission (reducing by 2.5% per annum) on all additional sponsorship he might procure for the team, payable by RPM.
It must be noted, however, that the precise sum and structure of the Ford sponsorship had not been agreed by 7 December 2000; rather, it was agreed on 13 December 2000 at a meeting between Mr Gibson, Mr Watson, and Mr Geoff Polites of Ford. By 7 December 2000, there had been discussions between various persons which Mr Watson said led to his belief that Ford would support Mr Lowndes’s driving, and would sponsor whichever team for which Mr Lowndes chose to drive, provided Mr Lowndes drove a Ford car.
The respondents dispute that any binding agreement in respect of Mr Watson’s role was arrived at on 7 December 2000 at all. They maintain that Ford had already committed to sponsor the team, and that Mr Watson did not request commission on that sponsorship but only on additional sponsorship.
The respondents contend that at the 7 December 2000 meeting, Mr Watson proposed a 20% commission in the first year, and tailing commission (unspecified) thereafter, on additional sponsorship, and that Mr Forbes responded that if Mr Watson could obtain any additional sponsors Mr Forbes would happily pay 20% in the first year of team sponsorship. It is said that these discussions did not constitute a binding agreement, save for Mr Forbes’s agreement to pay 20% on sponsorship in the first year of the team if Mr Watson could obtain any sponsors additional to the initial Ford sponsorship.
The respondents say that on or about 18 May 2001, Mr Watson informed Mr Forbes that he would obtain additional sponsorship from ‘Dunlop/SPT’ and Mobil, and that it was agreed at this time that if Mr Watson did procure these sponsorships he would be paid 20% in the first year. The respondents do not admit that Mr Watson had procured additional sponsorships prior to 18 May 2001.
In relation to the merchandising role performed by Mr Watson and GMM, the respondents say that the discussions on and from 7 December 2000 between Mr Watson and GMM on the one hand, and Mr Forbes and RPM on the other were wholly inconclusive. The respondents’ preferred interpretation of the conversations that occurred was that Mr Watson made certain proposals and Mr Forbes said only that they ‘sounded fair’.
The principal pleading is of a joint venture concluded on 7 December 2000 with express terms as discussed above. The alternative pleading is that the joint venture agreement was concluded on 26 February 2001, which was partly implied by the course of events between 7 December 2000 and 26 February 2001.
The respondents deny both sets of allegations. It would be necessary to outline those events anyway as part of the factual context, but they must be considered in light of their significance in the pleadings.
Before dealing with the evidence in the case in more detail, it is necessary to note that the hearing of this matter exceeded the estimate and occupied 19 days. The third further amended statement of claim dated 23 October 2003 ran to some 85 pages yet some changes in the issues identified occurred in the course of the hearing. Affidavits filed and served ran to just under 600 pages, exhibits totalled almost 3,000 pages and written submissions, which were helpful and intended to save court time ran to 100’s of pages.
In a system of justice which has procedural fairness as a cornerstone, and where procedures permit a trial to be conducted by exchange of evidence in sworn affidavits, supplemented by the giving of oral evidence, there is a heavy obligation on counsel to ensure that material contests of fact do not become buried in paper and obscured by elaborate forensic efforts directed to collateral attacks on credit in respect of many issues, which do not necessarily relate significantly or proportionately to substantive or material issues, but which are now permitted in certain circumstances under the Evidence Act (1995) (Cth) s 103.
It would not be practical to refer to every single piece of evidence, aspect or event, in these reasons for judgment. There were countless disputes about conversations which did not require resolution in order to determine the material issues in dispute. All of the evidence in the proceeding, as well as the extensive submissions advanced in respect of such evidence, has been considered by me. Such findings of fact, which I proceed to make, are informed by regard to the whole of the evidence including my observations of all the witnesses when giving oral evidence, particularly about contested matters.
Joint Venture
The applicants claimed an oral joint venture agreement for a specific project, namely creating and operating a motorcar racing team for Mr Lowndes and it was said an interdependent entity for selling associated products. Various express terms of the joint venture were pleaded
It was also pleaded there were implied terms to act fairly and in good faith and to hold and exercise personal or proprietary rights held for the business for the benefit of all parties and to consult in good faith when the business concluded for the purposes of payment of just compensation for the contributions made by each co-venturer and the preservation of value in the business. It was also claimed either as a result of the joint venture, or negotiations therefor, Mr Watson, Mr Gibson and Mr Forbes owed fiduciary duties to each other. Finally, in relation to the joint venture claim, it was admitted by the applicants that there was no single entity or joint venture vehicle established.
No formal written partnership agreement was claimed but I have described above a significant shift in the applicants’ position on the issue of whether the joint venture was governed by the principles applicable to a partnership. In any event, the applicants sought to imply a term of good faith into the joint venture and sought to argue consequently that joint venture property was held on trust. It is useful to consider briefly the leading authorities relating to joint ventures. It is also necessary to note that they show that questions of whether or not a joint venture involves specific partnership duties, or more generally identified fiduciary duties, depends very much on the facts of each individual joint venture.
The applicants relied on, and sought to come within, the broad definition given to the term ‘joint venture’ in United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 10 (‘United Dominions’):
‘The term “joint venture” is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots’ law, “adventure”) will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership.’
The term ‘joint venture’ has been defined on occasions for specific statutory purposes: see Income Tax Assessment Act 1936 (Cth) s 128A(1) and Trade Practices Act s 4J. Such statutory definitions are general and for the purposes of applying the provisions of the statutes in question. It can be noted the first statutory definition referred to employs a common enough use of the phrase ‘joint venture’ to distinguish a joint arrangement, which is not a partnership, whereas the definition under the Trade Practices Act covers a joint undertaking ‘whether or not in partnership.’
Whilst the term ‘joint venture’ has no settled common law meaning in Australian law, and there is no separate body of law dealing with the special features of joint ventures, like the well‑developed jurisprudence in respect of partnership, some legal incidents of joint ventures were dealt with in United Dominions at 12-13 (per Mason, Brennan and Deane JJ) and at 14-16 (per Dawson J).
Distinctions which can be made between a joint venture and a partnership are not always simple or without controversy. The term ‘joint venture’ has conventionally and commonly been used to refer to an association for the purposes of a single undertaking rather than for the continuous ‘carrying on (of a) business’ characterising a partnership (s 5, Partnership Act 1958 (Vic)), yet, numerous single undertakings, to which the term joint venture may reasonably be applied, do not always in truth lie outside the uniform Partnership Acts or partnership principles and the collocation has certainly been used in a general sense to describe undertakings which do not have legal attributes differing from partnerships: see: J D Merralls QC., ‘Mining and Petroleum Joint Ventures in Australia: Some Basic Legal Concepts’ (1988) 62 ALJ 907; see also, extra‑judicially, Hon. Justice McPherson, ‘Joint Ventures’ in Equity and Commercial Relationships, ed. Finn, 19 at 30-32, and Hon. Mr Justice J A Dowsett ‘Operator of a Joint Venture – Principal or Agent’ (1987) AMPLA Yearbook 269, and see generally W D Duncan (ed) Joint Venture Law in Australia (1995) Ch 2. Federation Press in Association with the Centre for Commercial and Property Law, Queensland University of Technology, 1994.
While joint venture agreements are generally governed by the principles applicable to contract and property, equity, through the mechanism of a constructive trust, may be called in aid in circumstances of incomplete agreement: Muschinski v Dodds (1985) 160 CLR 583 (‘Muschinski’) at 618, or called in aid because of a breach of a fiduciary duty: Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FCR 300 (‘Ravinder v Krizaic’). Agreed contractual duties of joint venturers are not necessarily or routinely subject to any implied duty to act in good faith: Noranda Australia Ltd v Lachlan Resources N.L. (1988) 14 NSWLR 1; Australian Oil and Gas Corporation Ltd v Bridge Oil Limited (1995) 14 AMPLA Bull 60 at 70, Kelly v C.A. & L. Bell Commodities Corporation Pty Limited (1989) 18 NSWLR 248 at 258. See also the observations of Ormiston J. in Vroon BV v Foster’s Brewing Group Ltd [1994] 2 VR 32 at 96-97 (‘Vroon’).
Recognisable and common characteristics of joint ventures include:
1.Participants hold proprietary interests in the assets of the joint undertaking, often, but not necessarily, as tenants-in-common: see the abovementioned article of Mr Merralls QC.
2.Participants exercise joint control of the undertaking.
3.Participants contribute to the joint undertaking, not necessarily equally; such contributions may be disparate: Canny Gabriel Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 at 327; Television Broadcasters Limited v Ashton’s Nominees Pty Ltd (No.1) (1979) 22 SASR 552.
4.Participants in the joint undertaking enjoy rights and assume obligations, which are often several, and calculated by reference to ownership of shares and/or contributions made.
5.Participants have a joint (or community of) interest in the performance of the undertaking’s purpose: Cummings v Lewis (1993) 41 FCR 559 at 314/315 (per Cooper J);
6.Participants associate in the undertaking for mutual commercial gain which can be mutual profits.
These recognisable and common characteristics can be found in various permutations and constellations such that it is not appropriate to attempt to isolate which characteristics would be both necessary and sufficient for the constitution of a joint venture agreement. It is always a question of fact whether any particular undertaking constitutes a joint undertaking for mutual commercial gain.
As explained already, the joint venture is said by the applicants to have been agreed on 7 December 2000, and to be implied from conduct of the parties between then, and 26 February 2001, on which date it is alleged the joint venture was confirmed. Alternatively, the joint venture is said to have been agreed on 26 February 2001. There being no written joint venture agreement, I turn to consider the words and conduct relied on as evidencing the alleged oral joint venture agreement.
7 December 2000 meeting
The first question calling for a decision is whether a concluded joint venture agreement was reached by 7 December 2000. As mentioned above a meeting took place on 7 December 2000 between Mr Gibson, Mr Watson, Mr Forbes and, for the latter part of the meeting Mr Stanley. Each gives a different account of what was said although it was common ground that the parties were in broad agreement that:
(i)Mr Lowndes would drive for the team (to be acquired);
(ii)Ford would support Mr Lowndes and provide sponsorship funds to the team to help pay for the team’s expenses;
(iii)a team which was already operating would be purchased from Bronzco by Mr Forbes for the purposes of operating the team;
(iv)the team would lease the same premises as it was leasing at the time (a workshop owned by Mr Gibson’s company Angora Towers Pty Ltd);
(v)Mr Gibson would manage the team; and
(vi)Mr Watson would promote the team and seek sponsorship for it and develop and sell (through a separate entity in respect of which profits would be shared) the team’s associated merchandise, 15% of the wholesale price of which would be paid to Mr Lowndes, as a royalty.
Mr Gibson’s evidence was that he indicated at the meeting he would need to speak to his accountant about any directorship or shareholding of 20% in the company which was to own the race team assets. He contended that he agreed at the meeting that he would be happy to purchase a TEGA franchise, which Mr Dumbrell held. He gave evidence in reply that:
‘There was no discussion between Mr Forbes and I about the precise nature of my involvement with the team at our meeting on 7 December or the description to be given to my role in the team. It was always assumed by me in my discussions with Mr Watson and Mr Forbes that I would run the team. Other than our discussion about the possibility of my taking a shareholding in the company which was to acquire the plant and equipment from Mr Dumbrell, the particular terms on which I was to be involved with Mr Forbes were not discussed until 11 January 2001 when my accountant and I met with Mr Forbes in Sydney.’
When Mr Gibson was cross‑examined the following exchanges took place:
‘Mr Jopling: What’s your position as at the 7 December meeting relative to the issue of whether you’d become team principal?
Mr Gibson: I think it was automatically decided that I’d become team principal. I don’t think there was much discussion in that at all
Mr Jopling: Was it talked about at all?
Mr Gibson: It was assumed that the team would run under Gibson Motor Sport and I would run the team.
Mr Jopling: But was there express discussion between you and Mr Forbes about you becoming the team principal?
Mr Gibson: I can’t recall.
Mr Jopling: I put it to you that there was no discussion with you about the precise nature of your involvement with the team at that meeting on 7 December or and description given to your role in the team?
Mr Gibson: I’m sure Mr Forbes and I would have discussed that prior to the 7^th, that I would run the team.
Mr Jopling: I put it to you - - -?
Mr Gibson: Yes.
Mr Jopling: - - at the meeting on 7 December that there was no discussion between you and Mr Forbes about the precise nature of your involvement with the team or the description to be given to your role in the team?
Mr Gibson: Correct.
Mr Jopling: You’d agree with that?
Mr Gibson: Yes.
Mr Jopling: Your position is that you’d had a discussion about those sorts of issues beforehand, had you?
Mr Gibson: Mr Forbes and I had spoken about this for the last three months, the opportunity is there and not there and what we didn’t like doing and this sort of thing, so it was an open discussion for quite a couple of months since he started talking about Mr Forbes’ car, Rodney Forbes’ car.
Mr Jopling: It is also your understanding as at 7 December that there was a discussion that you’d buy Mr Dumbrell’s TEGA franchise for $400,000?
Mr Gibson: Yes, Mr Forbes brought that up.
Mr Jopling: And that you’d make that franchise available unless the Adelaide deal came up, in which case you’d take it over to Adelaide?
Mr Gibson: No, it was nothing to do with Adelaide. I bought the TEGA franchise for our venture. .
Mr Jopling: Was there also a discussion about you making the workshop available?
Mr Gibson: Correct.
Mr Jopling: But you weren’t going to make the workshop available out of the goodness of your heart, were you, Mr Gibson?
Mr Gibson: Not really.
Mr Jopling: Your company, Angora Tower, was the owner of the workshop?
Mr Gibson: Yes.
Mr Jopling: It was going to be entering into an arm’s length transaction with RPM in relation to the lease of those premises?
Mr Gibson: Correct.
Mr Jopling: And you were going to be charging, what, $160,000 per year?
Mr Gibson: Correct.
. . .
Mr Jopling: The cost of the lease of the premises wasn’t a contribution on your part to this joint venture, was it?
Mr Gibson: Not really.
Mr Jopling: “Not really” – you don’t have any doubt. It certainly wasn’t. You were charging RPM, the company controlled by Mr Forbes in the end, for the total sum of $160,000?
Mr Gibson: Mr Jopling, we wouldn’t have been able to succeed if they hadn’t used the property.
Mr Jopling: You weren’t contributing the lease of the premises by forgoing rent, were you?
Mr Gibson: No. . . .
Mr Jopling: So is the position that as at 7 December, you hadn’t worked out whether you were going to be a shareholder?
Mr Gibson: Correct.
Mr Jopling: You hadn’t worked out what you were going to be paid?
Mr Gibson: That really didn’t come up to a big degree on the 7^th.
Mr Jopling: You hadn’t worked out the precise shareholding of the merchandising company?
Mr Gibson: Correct.
Mr Jopling: And as you would have us believe it, the position of Ford and Lowndes hadn’t been confirmed as both sponsor and driver. Is that correct?
Mr Gibson: That’s correct.
Mr Jopling: I take it too that your position is that Dumbrell hadn’t been confirmed as a seller on your story?
Mr Gibson: Correct.
Mr Jopling The duration of the joint venture hadn’t been agreed or the partnership?
Mr Gibson: Correct.
Mr Jopling: The exit clause for the shareholding in the merchandising company hadn’t been agreed?
Mr Gibson: Correct.
Mr Jopling: The rate of commission to be paid to Mr Watson hadn’t been agreed?
Mr Gibson: Correct.
Mr Jopling: I think I said to you your remuneration, what you were going to be paid, hadn’t been agreed?
Mr Gibson: It hadn’t been discussed really.’
Also under cross‑examination Mr Gibson admitted the parties ‘could have all walked away from those discussions’ as at 7 December 2000 although he emphasised they did not and said that ‘we all shook hands at the finish of the night.’

Mr Watson gave evidence that he opened the 7 December 2000 meeting by saying ‘We need to work out how we can put together something for all of us. It is imperative that we develop a win‑win situation for all parties. By all parties I mean all of us as well as Craig and Ford.’ He also gave evidence that when Mr Forbes suggested that he and Mr Gibson take a shareholding in the company which would own the race team assets, Mr Gibson said he would need to speak to his accountant (which corroborates Mr Gibson’s evidence) and Mr Watson said ‘I can’t be a director or shareholder in the company because it will put me in conflict with Craig.’
When Mr Watson was cross‑examined about his position on 7 December 2000 he agreed he was attending primarily in his position as Mr Lowndes’s manager and stated that on that day Mr Lowndes was still embroiled in a dispute with TWR over his management contract with TWR. When asked about what he told Mr Lowndes about that meeting on 7 December 2000, the following exchanges took place:
‘Mr Jopling: You knew, when you spoke to Stanley and Forbes on 7 December that you couldn’t be seen to be an owner of any team that your Mr Lowndes was associated with?
Mr Watson: Yes.
Mr Jopling: You made that abundantly clear to them?
Mr Watson: Yes.
. . .
Mr Jopling: You told Craig Lowndes straightaway on 7 December . . .
Mr Watson: No, the 8^th.
Mr Jopling: --- that you had become a joint venturer in a team that he was going to race for. Is that your position?
Mr Watson: No, on 8 December I got hold of Craig because, he was away on the 7^th, and I told him that we had formed a new joint venture and I was going to be involved in the merchandising and the sponsorship.
Mr Jopling: Did you tell Mr Lowndes that you were going to be an owner with two other persons of the management arm, the team that Mr Lowndes was going to drive for?
Mr Watson: No, because I wasn’t.
Mr Jopling: As a co-venturer, you would claim entitlement to all the assets of the joint venture?
Mr Watson: Yes, but I wasn’t, as you put it, involved as a director or a shareholder of RPM.
Mr Jopling: So, the important thing in your mind was not to be a director and shareholder but you could be an owner by other means. Is that right?
Mr Watson: It was for Craig’s benefit too.
Mr Jopling: No, I don’t think that’s answering my question. The important thing as far as you were concerned was not to be seen as a director and shareholder of RPM, but you would call yourself and you had become an owner of the joint venture?
Mr Watson: Yes.’
As well, Mr Watson agreed in cross‑examination that he never informed Mr Lowndes or Ford that he was a co-venturer with a one‑third interest in any entity owning the team. He agreed his ownership as to one‑third was in the separate merchandising business. In his words ‘. . . he (Mr Lowndes) knew I had an ownership in the team through the merchandising business.’ Mr Watson also agreed in oral evidence that ‘more than technical structural steps . . . had to be attended to at the end of’ the meeting on 7 December 2000.
Mr Forbes gave evidence that Mr Watson did not open the meeting by speaking of the three parties collectively and said the main thrust of the meeting was to discuss his acquisition of Mr Dumbrell’s race team and what would follow after that.
It is clear from all the evidence, including the contemporaneous records made on the day by Mr Watson and Mr Stanley and Mr Forbes’s notes, some of which bore the date 7/12/2000 but part of which he said was an ‘agenda’ prepared prior, and some of which bore the date 8/12/2000, that the main discussion was about the costs of the team, how it would become self‑sufficient financially through sponsorship, in particular Ford sponsorship, and what percentage of royalty payments Mr Lowndes would receive from a separate merchandising or marketing company to be set up. There was no concluded agreement about the shares to be taken in any marketing company.
It was agreed Mr Forbes would purchase Mr Dumbrell’s team but the precise shareholding in such a team was not agreed. It was agreed in principle that Mr Gibson would manage the team on a basis to be agreed later. It was also agreed that there would be the two roles for Mr Watson described above. It was agreed by Mr Forbes that Mr Watson would be entitled to charge commission or certain sponsorships which is a topic dealt with in more detail below.
The applicants contend that the matters, which were agreed, gave rise to a concluded joint venture agreement with certain details to be concluded later. Reliance was placed on Branir Pty Ltd and Others v Owston Nominees (No. 2) Pty Ltd (2001) 117 FCR 424, especially a passage at 525 (‘Branir’). There, Allsop J. (with whom other members of the Full Court agreed) dealt with contracts arising when ‘business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting i's and crossing t’s or where they think they have done so.’ His Honour was referring to instances where parties had agreed ‘the commercial essentials and having put in place necessary structural matters . . . go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation.’ His Honour said:
‘The essential question in such cases is whether the parties’ conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to essential elements of a contract.’
The applicants also relied on Vroon’s case as supporting the proposition that where parties have reached agreement, incompleteness of the terms should not necessarily preclude implication of terms necessary to give business efficacy to the agreement in accordance with the well‑established principles in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 345/346 (‘Codelfa’) and/or a test of objective necessity which is possibly simpler, deriving from Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410 at 422 (‘Byrne’); Narni Pty Ltd v National Australia Bank Ltd [2001] VSCA 31 (per Tadgell JA with whom Buchanan and Chernov JA agreed) and Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 (‘Associated Alloys v ACN 001 452 106’).
Findings – 7 December 2000
There was no concluded agreement for a joint venture at the meeting on 7 December 2000. At the conclusion of that meeting on 7 December 2000 it remained open for all parties to continue to negotiate on the precise terms of whatever contracts were necessary to run a team for Craig Lowndes with the benefit of Ford Sponsorship monies. There were several matters supporting this finding. First, although the parties had agreed there was scope for setting up a race team for Mr Lowndes for the coming season and although they had discussed having a merchandising entity separate from an operating entity, there was no consensus on 7 December 2000 (or ‘mutual assent’ to repeat the language used in Branir and Vroon, which in turn derives from Rossiter v Miller (1878) 3 App. Cas 1124 at 1151 as referred to in Masters v Cameron (1954) 91 CLR 353 at 361 (‘Masters & Cameron’)) about the necessary structural arrangements for the conduct of the envisaged race team or the race team business. The parties had identified a single project, the duration of which would depend on Ford sponsorship and Mr Lowndes’s agreement, with which they might be associated. They had also identified, to an extent, how different skills and resources might be deployed. Identifying a common objective or purpose does not of itself give rise to a joint venture agreement.
Critically, a joint venture agreement, or a partnership, were not the only possible methods by which effect could be given to a common intention, objective or purpose to set up a race team for Mr Lowndes, sponsored by Ford, and to set up an associated but separate merchandising entity. The fact that Mr Gibson, Mr Watson and Mr Forbes agreed on certain matters at the meeting does not reveal or evidence a common intention for a joint venture agreement or a common intention to be legally bound by what might be thought to be some recognisable incidents of a joint venture agreement, such as holding proprietary interests either severally or jointly in the assets of the joint venture.
The evidence showed that discussions about the holding of interests in the necessary assets of any race team or race team business or the sharing of any fruits of the business were preliminary and were to be considered further, not only by the parties, but also by their respective advisers. Issues such as the holding of assets necessary to a joint venture, the liability of joint venture partners, and provisions for exiting a joint venture agreement, the receipt or sharing of any gains of the joint venture are essential or critical terms; they are not to be characterised as merely ‘crossing the i's and dotting the t’s’ to employ the language of Allsop J. in Branir.
Secondly, while there were disputes about the precise details of the conversations occurring, including disputes which went to credit issues rather than substantive matters, contemporaneous notes of Mr Watson, Mr Forbes and Mr Stanley showed a high level of concordance on the central issue of whether the parties had reached a consensus about the structural arrangements to be put into place. They showed all the parties proposed further deliberation and consultations with consultants and respective advisers whose details were exchanged. They also show all parties appreciated the need to secure a binding promise in respect of foreshadowed sponsorship for the team from Ford, without which Mr Forbes would not have proceeded to acquire Mr Dumbrell’s team.
Accordingly, this case is one where a large number of issues, which were essential or critical to any joint venture remained outstanding on 7 December 2000 and required final agreement between the parties. Thus, unlike Branir, this was not a case where a consensus was reached about essential or critical terms but remained undocumented. The facts did not fall within any of the three possibilities canvassed in Masters v Cameron (1954) 91 CLR 353 at 360. An analysis by reference to conventional offer and acceptance may not always be appropriate: Vroon at 81; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [71] – [79] (per Heyden JA). However, whilst accepting that proposition, the facts here viewed as a whole, and objectively from the point of view of reasonable persons, do not show a concluded bargain. Further continuation of negotiation of important matters after an alleged date for conclusion of an agreement is an important factor in assessing whether a concluded agreement has been reached: Seven Cable Television Pty Ltd v Telstra Corp. Ltd (2000) 171 ALR 89 at [87] – [123] esp. [114] (Tamberlin J.).
What is clear from this initial meeting is that any profits to be made from the race team or by any separate merchandising company were totally dependent on Mr Lowndes, on his driving skill, on his willingness to be contracted as a driver for the team, on the maintenance of his skills and his willingness to authorise use of any of his indicia (and his celebrity) for the purposes of merchandising. It was also tolerably clear that any team set up and any future profits would also depend on Ford’s willingness to sponsor and to continue to sponsor the team. As Mr Watson agreed in cross-examination ‘. . .he (Mr Lowndes) was the centre of the thing.’
It is necessary next to consider the alternative claim that a joint venture agreement was concluded on 26 February 2001 and that such an agreement was partly implied by matters occurring between 7 December 2000 and 26 February 2001. Before dealing with events after 7 December 2000, it is necessary to describe an arrangement referred to in evidence as holding a TEGA franchise.
TEGA franchise
Mr Forbes asserted that he was not aware, until 8 December 2000, of a proposal that a new TEGA Teams Agreement between TEGA and competing teams would preclude multiple holdings of TEGA franchises by one entity. Mr Gibson and Mr Watson assert that a possible difficulty with Mr Forbes acquiring Mr Dumbrell’s franchise was discussed on 7 December 2000 when it was decided Mr Gibson would purchase the TEGA franchise, which Mr Dumbrell owned through a company he controlled.
As mentioned above, TEGA was a forum representing the owners of certain cars competing in motorcar racing in Australia. As at December 2000 TEGA had entered into agreements with such owners under what was called a ‘Franchise Agreement.’ Being a signatory to a TEGA Franchise Agreement was colloquially referred to as ‘owning’ or ‘holding’ a TEGA franchise, which was capable of being sold and can therefore be characterised as a capital asset. TEGA’s consent was necessary for any assignment of rights under a Franchise Agreement.
The standard Franchise Agreement, in evidence, contained detailed obligations on what is referred to in the document as ‘the Team’ and was styled as an agreement setting out ‘the arrangement by which you (the Team) participate in motor sports events run under the control of TEGA or AVESCO.’ Elsewhere the Franchise Agreement contained references to ‘the Team and Driver franchise system’ and set out provisions limiting the number of teams, which could compete and provided for three categories of teams. It also provided for ‘prize money, trophies, awards and appearance money’ to be paid or awarded to ‘Teams’ at Levels 1, 2 and 3. The TEGA franchise in this case was a Level 1 franchise. Teams were entitled to certain shares in a dividend pool declared at the end of each session. A Team was precluded from undergoing a change in control (direct or indirect) or selling or transferring its business without the consent of TEGA. The term ‘Drivers’ was defined to mean ‘each driver with whom the Team has an arrangement (legally binding or otherwise) to drive in the Events under the name, colours or banner of the Team or in a car owned or controlled by the Team.’ It is quite clear that references to ‘the Team’ where they occur are references to the entity, which had signed the Franchise Agreement.
In or about late 2000 TEGA gave notice to its members that it was proposing a new agreement styled a ‘Team’s Agreement’ as a substitute for the standard ‘Franchise Agreement’ described above.
The assertion by the applicants that it was decided on 7 December 2000 that Mr Gibson would purchase the TEGA franchise, which Mr Dumbrell owned, is connected with an assertion by them that Mr Forbes wished to adopt a low profile as owner of the race team assets such as cars and related equipment. Mr Forbes denies this and says he did not become aware of the TEGA proposals until 8 December 2000. If it matters, I prefer the evidence on this point of Mr Gibson and Mr Watson. It is improbable that a possibility, which the evidence showed was notorious in the industry at the time, namely that the relevant rules might change, was not known to Mr Forbes as at 7 December 2000 as he asserted.
On 14 December 2000, the board of TEGA approved the transfer of Bronzco’s TEGA franchise to FCG. Mr Gibson had paid $400,000 to acquire the TEGA franchise on behalf of FCG. Thereafter, Mr Gibson remitted prize money or moneys paid to him pursuant to the franchise to RPM. Such moneys were clearly intended under the standard form TEGA Franchise Agreement to assist in defraying the costs and expenses of the running of drivers’ cars. It was RPM, not Mr Gibson, who incurred such costs and expenses. Further, it was agreed by Mr Gibson, in evidence, that allowing RPM to utilise the TEGA franchise maintained its capital value for him, as such franchises were downgraded if not used.
Mr Gibson admitted under cross‑examination that holding the TEGA franchise allowed him to pursue the separate proposal for a race team in Adelaide and also conceded the franchise was of no use without racing a car under it. He also conceded that at the end of 2001 he sold the franchise acquired from Mr Dumbrell at a profit of $250,000.
Events from 8 December until 18 December 2000
On 8 December 2001, Mr Forbes and Mr Dumbrell concluded an agreement in principle for the sale of the team assets, which Mr Dumbrell had previously purchased from Mr Gibson, for a price of $2.75 million, which sum was to be reduced by $400,000 in the event the TEGA franchise was not sold to the purchaser.
That document was entitled ‘Heads of Agreement for the Sale and Purchase of the business known as “GIBSON MOTOR SPORT”.’ The “business” to be sold was defined to include the business name ‘GIBSON MOTOR SPORT’; all plant, stock and equipment of ‘GIBSON MOTOR SPORT’ and related entities; and the Level 1 TEGA Franchise (and attaching shareholdings in TEGA). The document stated that a ‘formal Contract of Sale between the parties hereto will be executed prior to settlement.’ Mr Falconer of White Cleland, Lawyers, Consultants and Notaries, acting for Mr Gibson, had the carriage of preparing that document.
The respondents say that this step was taken pursuant to discussions, which had already occurred between Mr Forbes and Mr Dumbrell. The applicants say that Mr Gibson “facilitated” Mr Forbes’s purchase of the Bronzco assets by allowing him to take advantage of the opportunity to purchase Bronzco’s assets – an opportunity the applicants say was open only to Mr Gibson prior to 7 December 2000. Mr Dumbrell denied he had prior discussions with Mr Forbes. This dispute does not matter because there was evidence showing Mr Dumbrell was a willing, even anxious, vendor.
Much was made in evidence of when exactly it was decided between Mr Forbes and Mr Gibson (and Mr Dumbrell) that Mr Gibson would purchase, from his own funds, the level 1 TEGA franchise which Mr Dumbrell had for sale. Much was also made in evidence as to whether Mr Gibson noticed that the Heads of Agreement, perused by him on 8 December 2000, described Bronzco assets as including the GIBSON MOTOR SPORT business name. It is not necessary to resolve these debates in order to determine material disputes between the parties.
On 11 December 2000 Mr Stanley sent certain documents to Mr Kinchington, Mr Gibson’s accountant, which included the Heads of Agreement for the acquisition of the business of Mr Dumbrell and an action list dated 10 December 2000. The action list confirmed the ongoing discussions about the precise contracts between the parties, which would be appropriate in all the circumstances. It also dealt with the acquisition of the TEGA franchise in some detail. It was noted there that FCG was to purchase the TEGA franchise for $400,000 The action list also referred to the possibility that Mr Forbes would lend Mr Gibson $320,000 personally and Mr Gibson could lend the purchase price of $400,000 to FCG. Mr Stanley also noted that any direct or indirect interest of Mr Forbes in the TEGA franchise ‘would be in breach of proposed amended rules of TEGA whereby no entity can hold an interest in more than one Level One franchise.’
On 12 December 2000, RPM was incorporated at the instigation of Mr Forbes. Mr Forbes held all RPM’s issued share capital, being 8 ordinary shares. Mr Gibson had expressed interest in becoming a director of RPM, subject to advice from his accountant. The respondents say he did become a director by consenting to do on or about 11 December 2000. The applicants deny this and rely on Mr Gibson. In any event he resigned as director on or about 21 December 2000, after signing a consent to become a director on 12 December 2000; he backdated the resignation to 12 December 2000.
On 13 December 2000, a meeting took place between Mr Gibson, Mr Watson and Mr Polites at which the basic terms of the Ford sponsorship were agreed. The arrangements were then confirmed in a letter from Mr Polites to Mr Gibson dated 18 December 2000. It was agreed that Ford would provide to the racing team a sponsorship sum of $1.5 million in 2001 and $3 million in each of 2002 and 2003, on the conditions that Mr Lowndes be the team’s principal driver, and that the team race only Ford vehicles. Ford provided a written agreement for execution. The agreement was expressed to be between Ford Motor Company of Australia Limited and the Participant, who was defined as FCG. Mr Gibson immediately forwarded a copy to Mr Forbes. The agreement contained a relevant recital and clause as follows:
‘C.FORD has offered to assist the PARTICIPANT by providing to the PARTICIPANT on, and subject to, the terms and conditions set out in this AGREEMENT, certain sums of money (‘SPONSORSHIP PAYMENTS’) being the SPONSORSHIP PAYMENTS set out in Item 4 of the SCHEDULE together with the other benefits and privileges (‘BENEFITS’) which are more particularly described in this AGREEMENT, and the PARTICIPANT has agreed to accept the SPONSORSHIP PAYMENTS and the BENEFITS on and subject to the said terms and conditions.
. . .
3.The SPONSORSHIP PAYMENTS will be used by the PARTICIPANT for the express purpose of defraying the costs and expenses directly incurred by the PARTICIPANT in racing the vehicle described in Item 6 of the SCHEDULE (‘RACE VEHICLE’) in the mandatory Series V8 Supercar races (‘MANDATORY EVENTS’) and shall use the BENEFITS provide by FORD for such purposes as are directly related to the racing of the RACE VEHICLE in the MANDATORY EVENTS. In this AGREEMENT, the term ‘MANDATORY EVENTS’ shall mean the AVESCO/TEGA Shell Championship Series V8 Supercar races of the years 2001, 2002 and 2003. Listed in Item 7 of the SCHEDULE are the MANDATORY EVENTS for the year 2001. The MANDATORY EVENTS for the years 2002 and 2003 shall be notified to the PARTICIPANT by FORD by 31 January, 2001 and 31 January, 2003 respectively.’
The language used reflects, and is consonant with, the language used in the TEGA standard form Franchise Agreement.

A complex and rolled up plea alleging unconscionable conduct against Mr Forbes, BFC and RPM was abandoned at trial.
It was claimed that on 7 December 2000 Mr Forbes stated to Mr Watson and Mr Gibson ‘that he would participate in the Joint Motor Sport Business’ discussed between them on that day and subsequently failed to correct the ‘7 December 2000 representations.’ The Joint Motor Sport Business was described elsewhere in the pleadings as the undertaking of the joint venture agreement. It was alleged that by this conduct (whether Mr Forbes intended the joint venture to continue or not) Mr Forbes contravened s 52 of the Trade Practices Act and the s 9 of the Fair Trading Act of Victoria and s 42 of the Fair Trading Act of New South Wales. Section 51A of the Trade Practices Act was relied upon to the extent that the representation related to a future matter.
Whilst findings in respect of the joint venture agreement are probably sufficient to deal with these allegations of breaches of the Trade Practices Act and cognate State legislation, for the sake of completeness, the allegations that Mr Watson and Mr Forbes relied on the ‘7 December 2000 representations’ or silence by Mr Forbes, is not borne out by the evidence. Various steps, which they took after 7 December 2000, are consonant with individual agreements which they concluded with RPM, and in Mr Watson’s case, with Mr Lowndes as well.
It was clear, even by their own accounts, that neither held a belief that there was a joint venture agreement on foot when they discussed the need to finalise various contractual arrangements with Mr Battye on 14 February 2001 or when they agreed final arrangements with Mr Forbes on 26 February 2001. Also, for the sake of completeness, the evidence as it stands does not support, to the requisite standard, various allegations that Mr Forbes’s conduct caused loss and damage as particularised.
There is a further claim of breach of the Trade Practices Act. It is alleged that between 1 June 2000 until 17 January 2002, RPM and Mr Forbes represented to the applicants that the respondents intended that the joint venture agreement would continue in some form and when the applicants did not buy out the respondents’ interest in the joint motor sport business, Mr Forbes encouraged the applicants to continue to perform their part in the joint venture agreement. A cognate allegation is made against BFC in that it is alleged BFC was knowingly involved in RPM’s contraventions.
Equally, the findings already made in respect of the joint venture agreement cover this claim.
Next, there is a claim for contravention of s 52 of the Trade Practices Act and the Fair Trading Acts of Victoria (s 9) and New South Wales (s 42) by RPM and Mr Forbes in meeting with Mr Lowndes between late August 2001 to mid October 2001 without Mr Gibson and Mr Watson and bringing about Mr Lowndes’s to continue to drive for RPM without Mr Gibson or Mr Watson continuing to be involved. It is also alleged Mr Forbes’s meetings with Ford in late August to October 2001, again in the absence of Mr Gibson and Mr Watson, caused Ford to refuse to perform its obligations under the alleged Five Year Ford Sponsorship Agreement.
The findings in respect of the Five Year Ford Sponsorship Agreement cover this allegation in respect of Mr Forbes’s meetings with Ford.
As to the meeting with Mr Lowndes, the evidence already mentioned was that Mr Lowndes met with Mr Forbes and Mr Battye on 27 and 28 September 2001. Mr Lowndes did not make any decision then to exclude Mr Watson’s involvement. Indeed, at the meeting of 10 October 2001, matters were left on the basis that GMM would continue and nothing was said on 10 October 2001, which could be construed as a termination by RPM of either Mr Watson’s management agreement or any arrangement between RPM and GMM although Mr Forbes did seek a formal agreement in relation to the latter.
As to Mr Gibson’s position on 10 October 2001, Mr Forbes repudiated the Gibson Services Agreement by varying its terms in a way he knew would be unacceptable to Mr Gibson, which variation was in fact not accepted by Mr Gibson. Mr Lowndes gave evidence he made his final decision about remaining with RPM, despite Mr Gibson’s possible exclusion as team principal, on 10 October 2001. The evidence showed Mr Crompton, Mr Battye and Mrs Lowndes, as well as Mr Forbes were all having discussions with Mr Lowndes before 10 October 2001 about the future of the team. Any one or all of them may have influenced Mr Lowndes’s final decision on 10 October 2001, to continue to drive with RPM even if Mr Gibson did not continue as team principal. One of Mr Lowndes’s principal concerns was to continue earning his living and to remain with ‘the boys’, that is all the necessary staff. In all the circumstances, I find Mr Lowndes’s decision was caused by Mr Forbes’s decision to vary the Gibson Services Agreement, rather than being caused by anything said to Mr Lowndes. In all the circumstances, Mr Forbes’s conduct in meeting with Mr Lowndes in August and prior to 10 October 2001 does not and could not constitute misleading and deceptive conduct, as pleaded, giving rise to damages as claimed under the Trade Practices Act or the Fair Trading Acts of Victoria and New South Wales.
This is particularly so given that the applicants have pleaded that their loss and damage was suffered because, but for Mr Forbes’s conduct in meeting with Mr Lowndes, in their absence, they would have explained to Mr Lowndes ‘the true nature of the venture, that Gibson had not misused or misappropriated money and the continued importance of the applicants’ involvement in it (ie. the venture). . .’ None of that would necessarily have availed given Mr Forbes’s determination to take financial control.
Finally, leaving that issue to one side, and perhaps most importantly, the damages sought are damages flowing from the loss of opportunity to have exploited for themselves, what is described as ‘the Lowndes Opportunity and/or the Dumbrell Offer’ and to have thereby earned profits. The lost opportunity refers back to loss and damage claimed pursuant to other paragraphs in the statement of claim covering the loss of ‘the opportunity to conduct RPM’s business as part of a motor sport business from September 2001 until December 2006’ and a paragraph alleging a claim in addition to damages, for relief in the nature of a constructive trust. Part of the particularised damage covers the same damages awarded in respect of the contractual claims under the Gibson Services Agreement and the Management Agreement of Mr Watson with RPM. Claims to damages beyond that appear untenable, given the well understood principles of causation and the evidence relevant to these claims which has already been analysed.
Next, it was alleged that RPM (and Forbes and BFC through knowing involvement) contravened s 52 of the Trade Practices Act by engaging in misleading and deceptive conduct in passing off RPM as having an association with Mr Gibson until late March 2002, whereby RPM procured sponsorship between December 2001 and March 2002.
RPM was entitled to trade under the business name GIBSON MOTOR SPORT until it terminated the licence it had on 14 February 2002. I have already found RPM is liable for relevant licence fees in respect of any such trading. There is no evidence of RPM using an associated with Mr Gibson with any sponsor in the period between 14 February 2002 and the end of March 2002.
Further, it is alleged that Mr Forbes and BFC contravened s 52 of the Trade Practices Act and cognate sections of the Fair Trading Acts of Victoria (s 9) and New South Wales (s 42) by engaging in misleading and deceptive conduct in relation to proposals to sell Mr Forbes’s shares in RPM and BFC’s ‘interest’ in GMM. It is claimed that Mr Forbes represented he was prepared to sell his shares in RPM for a nominal sum to Mr Watson and Mr Gibson provided they would discharge any loans by him (or monies) to RPM. The evidence does not support this and findings already made in respect of the Buy Out Agreement issue cover these allegations.
Further, BFC never applied for or paid for shares in GMM and Mr Watson was well aware of this at least as early as April 2001 that the only shareholders and directors in GMM were himself and Mr Gibson.
Conclusion – Trade Practices Act Claims
In accordance with the evidence referred to in respect of the trade practices claims, and incorporated by reference in the findings otherwise in the reasons above, none of the claims under the Trade Practices Act or Fair Trading Acts was made out.
Cognate allegations were made against RPM from the date of its incorporation (12 December 2000) and BFC in that it was alleged each of RPM and BFC was knowingly involved in Mr Forbes’s representations complained about and failed to correct them.
As the evidence, including the evidence extracted in these reasons, did not support the claim that it was ever agreed that there be a joint undertaking by Mr Forbes, Mr Gibson and Mr Watson, the allegations based on the Trade Practices Act and cognate sections of the Fair Trading Acts of Victoria (s 9) and New South Wales (s 42) which depend on that assertion cannot be made out.
Cross claim
The cross claim is dependent on establishing three claims: two against Mr Gibson, the first of which was also made against FCG, and one against GMM, as third cross‑respondent, which can be summarised as follows:
1.A claim against Mr Gibson and FCG arising from Mr Gibson’s alleged breach of the Gibson Services Agreement and his fiduciary duty as manager to act in the best interests of RPM, by reimbursing F.C. Gibson Pty Ltd, from funds belonging to RPM for expenses not authorised by or incurred on behalf of RPM.
2.A claim against Mr Gibson for breach of his duties to act with reasonable care as agent for RPM and as manager for the Race Team and to exercise reasonable care to act in the best interests of the race team concerning money received from Mr Parsons.
3.A claim against GMM for an account of profits and the payment of any moneys due under what the respondents called the ‘Implied Merchandise Agreement’.
Reimbursement payments
The first claim against Mr Gibson and FCG related first to components of an invoice of FCG directed to RPM in the sum of $60,534 described as ‘Reimbursement of accounts paid to 31 December 2000 relevant to 2001 race program.’ Secondly, the first claim also included an amount of $5,977.13 paid by RPM for amounts owing to Anderson Construction. Other payments for construction were withdrawn. A third component of the claim was a payment of $10,000 to William Bond which not pressed at the close of hearing.
Adelaide marketing expenses and Pumpa transporter expenses
Mr Gibson gave evidence that he informed Mr Forbes that he proposed to charge the team for the Adelaide marketing expenses and the Pumpa Engineering transporter, which were items in the abovementioned invoice. Mr Forbes accepted that Mr Gibson or FCG should be reimbursed for the ‘Pumpa’ transporter and RPM took ownership of that asset in due course.
Mr Forbes denied, however, that he ever authorised reimbursement of the Adelaide expenses. However, it was part of the respondents’ case that the Adelaide proposal remained a ‘live’ proposal until April 2001 and Mr Stanley admitted in his oral evidence that the allegedly ‘unauthorised’ expenses had been entered into RPM’s expense accounts. Mr Forbes’s agents, his accountants, knew of the expenses. There was no evidence such expenses were not treated as expenses for the purposes of RPM’s relevant tax return. Mr Russell, the independent expert for the respondents, gave evidence, which I accept that RPM accounted for the expenses in its books as claimed.
When cross‑examined, Mr Gibson gave evidence he assumed Mr Forbes would want to become involved in the Adelaide proposal and Mr Forbes had not demurred when Mr Gibson stated he wanted to treat the Adelaide proposal as part of ‘our current motorsport program.’ Mr Forbes may well take the view that the act of not disagreeing with what Mr Gibson said does not amount to authorisation of the expenses, which would explain his evidence. Mr Battye revealed in his evidence that he understood the Adelaide proposal may have allowed RPM to expand from a two car team to a three car team. This corroborated Mr Gibson’s evidence that the Adelaide proposal could have resulted in an advantage to RPM. On the totality of evidence relevant to this topic, none of which I reject, it is not possible to be satisfied to the requisite degree that Mr Gibson or FCG is liable to RPM for breaches of the Gibson Services Agreement as alleged in respect of the Adelaide proposal expenses. I am satisfied that prior to April 2001 it was a real possibility that RPM could have obtained some commercial benefit from the proposal.
In all the circumstances, I find that neither Mr Gibson nor FCG are liable to RPM in respect of the first item of the first claim in the cross‑claim.
Construction work
In relation to expenses to Anderson Construction and an amount paid to the local council, the expenses concerned better lighting and the building of a dedicated security bay for a new car of Mr Lowndes, and filling in an external wall. Mr Gibson gave evidence that he had discussions with Mr Forbes about the expenses at the premises and pointed out the improvements were specifically for RPM as tenant. Mr Forbes suggested building expenses could be paid by the landlord who could then increase the rent. Mr Gibson also gave evidence that he heard nothing more from Mr Forbes about this at the time but as a result of Mr Forbes not being ‘happy’ with RPM paying for improvements, Mr Gibson ceased further work on them and had Angora Towers Pty Ltd pay an outstanding invoice to Anderson Constructions in the sum of $64,936.56. Mr Gibson did not increase the rent.
Mr Russell stated in his cross‑examination that he was instructed that all claims for building expenses, save for the sum of $5,977.13, had been abandoned. This was an expense relating to the filling in of an external wall.
Mr Forbes conceded in his evidence that he had told Mr Gibson filling in the external wall was a ‘good idea’ but had done so on the basis that it was an expense to the landlord. It was not surprising that Mr Gibson misunderstood Mr Forbes’s observation and misinterpreted it as an authorisation by Mr Forbes on behalf of the tenant for the improvement. Whilst the other construction expenses, in respect of which claims were withdrawn are easily understood as being improvements incurred on behalf of the tenant, there is no evidence which allows me to conclude filling in an external wall was for the specific benefit of the tenant, RPM. Mr Russell gave evidence in cross‑examination that this invoice was not merely an invoice in a series of construction invoices for work for RPM’s benefit.
When Mr Gibson was cross‑examined he distinguished between invoices. The invoice for $64,536.56, which Angora Towers Pty Ltd paid he readily conceded covered ‘landlord expenses’, whereas expenses on a separate and earlier invoice (which included the disputed sum of $5,977.13) were recognisable by Mr Gibson as ‘expenses incurred on behalf of the tenant.’ By his conduct, Mr Gibson appeared to recognise that apparent authority which Mr Forbes gave in respect of the construction expenses was able to be varied by Mr Forbes.
It seems to me on the evidence, that the cost of filling in the external wall is an expense ‘to the landlord’, which happens, it seems, to have been included on an invoice which otherwise deals with a list of items agreed to be ‘expenses occurred on behalf of the tenant.’ Accordingly, I find Mr Gibson, on behalf of Angora Towers Pty Ltd, should account to RPM for the sum of $5,977.13, which may be done by an order for repayment of that amount together with interest. It should be noted, given all the circumstances described above, I do not regard this reimbursement of $5,977.13 as amounting to a material breach by Mr Gibson of the Gibson Services Agreement.
Mr Parsons’s payments
The second claim against Mr Gibson was that he failed to act with reasonable care and in the best interests of the race team in respect of cash sums received from Mr Parsons.
Mr Parsons asked Mr Gibson if he could drive with the team on the basis of paying $50,000 in cash for each of six races. Mr Gibson gave evidence he discussed this proposal with Mr Forbes. Mr Forbes agreed with this when cross‑examined. The evidence indicated each of Mr Gibson and Mr Forbes regarded the proposal as a messy one but I am satisfied each was willing to accept the proposal because the team needed the money it could earn from accepting it. Mr Forbes said although he agreed he wanted Mr Gibson to account properly for the funds received. Independent expert accounting evidence confirmed that Mr Parson’s payments totalled $200,000, not $300,000 as had been agreed.
Mr Goodrick raised the issue of the team providing tax invoices to Mr Parsons in or about July 2001 and Mr Gibson kept asking him to refer the issue to Mr Forbes. Mr Gibson gave evidence he kept Mr Forbes informed of the arrangement with Mr Parsons. The respondents complain that Mr Gibson breached duties to act with reasonable care and diligence in respect of the transaction yet the evidence is Mr Forbes sanctioned it as helpful to the team’ financial position. Thus, the complaint is narrowly one that money was not properly accounted for. Mr Gibson and Mr Forbes ultimately had a discussion on 15 October 2001 about Mr Parsons’s payments. Mr Gibson gave Mr Forbes $40,000 in cash and otherwise explained how the balance had been spent. I am satisfied of the truth of this evidence. The narrative Mr Gibson gave in respect of these circumstances was full of verisimilitude and was not denied. Mr Gibson gave sworn evidence all of the money from Mr Parsons was spent paying team expenses.
The respondents’ final complaint about Mr Parsons’s money by the end of the hearing was that Mr Gibson has not sufficiently verified the accounting he gave to Mr Forbes in respect of these cash sums on 15 October 2001. A further complaint is that dynamometers paid for with $20,000 of Mr Parsons’s money were installations of the landlord and prima facie Angora Towers Pty Ltd should have been paid for this. Finally, a recorded cash sale of $9,600 lacks details and small expenses such as petty cash have not been verified.
Mr Gibson was not challenged in cross‑examination in relation to his sworn evidence that all of the money from Mr Parsons was spent on team expenses. From this I an entitled to infer that expenses of dynometers were incurred for the benefit of RPM even if Angora Towers Pty Ltd or Mr Gibson retained ownership of the dynometers. I am also entitled to infer that the fact that petty cash expenses were incurred is not seriously contested. Mr Russell gave evidence that the Parsons’s payments had all been brought to account as income to RPM. There is no evidence they were not treated as such by RPM for taxation purposes.
It is not possible to be satisfied to the requisite standard that Mr Gibson in all the circumstances failed to act with reasonable care and diligence as agent of RPM and as manager of the race team, or failed to exercise reasonable care to act in the best interests of RPM and the team.
Cross claim against GMM
The third claim in the cross‑claim is that the first applicant has not made any royalty payment to RPM for passing on to Mr Lowndes other than those made to Mr Lowndes on 31 July and 31 October 2001 and that it has failed to give RPM’s accountant unfettered access to its accounts as sought on 28 and 29 November 2001 after relations had broken down.
The applicants’ case in respect of GMM was that it was part of the joint venture agreement as pleaded and the applicants particularised ‘trading losses’ of $80,000 of GMM said to have arisen because stock was sold at heavily discounted prices. There was no claim in respect of these losses on the basis of any alternative contract claim between RPM and GMM, possibly in recognition of the difficulty in proving there was ever such a concluded contract. The evidence showed that Mr Watson knew in April 2001 that Mr Forbes had not consented to be a director of GMM nor had he or any nominee of his paid to take up a one‑third share subscription. Mr Watson gave evidence he did not raise this with Mr Forbes because in early April Mr Forbes and Mr Gibson had a serious quarrel. The evidence also showed that although Mr Forbes was consulted about the lease of a pantechnicon, and informed of some matters concerning GMM, GMM was run quite independently, of either Mr Forbes or RPM, by Mr Watson as manager (or a nominee company of his). In Mr Watson’s cross‑examination the following exchange occurred:
‘Mr Jopling: But GMM bought the trust, did it not, the pantechnicon?
Mr Watson: The merchandising business.
Mr Jopling: RPM didn’t have anything to do with it?
Mr Watson: No, it was never planned to be. The merchandising business has to be responsible for its own thing.’

The respondents’ claim was that there was an agreement between RPM and GMM to be implied from a course of conduct that GMM was to remit 15% royalties to RPM for distribution by RPM to Mr Lowndes (or his company) under the driver agreement in consideration for permission as required by GMM to conduct merchandising by reference to indicia owned by or under the control of RPM and/or Mr Lowndes and/or Mr Gibson.
Photographs in evidence of sample merchandise such as T-shirts show use of the Gibson name plus the stylised ‘G’ design, use of the GIBSON MOTOR SPORT name/mark, use of Mr Lowndes’s name and use of Ford’s name.
The totality of the evidence relevant to these issues indicates that there was an arrangement (never formalised) whereby RPM and/or Mr Lowndes (through RPM) authorised use of certain indicia belonging to RPM. The arrangement cannot be described correctly as an ‘Implied Merchandising Agreement’. Mr Lowndes, by virtue of his driver agreement with Ford authorised GMM to use Ford’s name. Mr Gibson and FCG by virtue of the consent to RPM, authorised GMM to use the business name GIBSON MOTOR SPORT as part of the corporate name GIBSON MOTOR SPORT MERCHANDISING PTY LTD and Mr Gibson (or FCG) acquiesced in GMM’s use of the mark GIBSON MOTOR SPORT with or without the stylised ‘G’ device. The evidence also showed royalty payments were paid as described above. Royalties were paid by GMM directly to Craig Lowndes Pty Ltd without any protest from RPM.
The evidence showed GMM had not accounted to RPM for royalties payable on sales after 1 October 2001, something which Mr Watson had originally agreed to do. There was no contest sales were made. Mr Watson gave evidence that a letter had been written to Mr Lowndes indicating that GMM would not ‘walk away from what moneys were outstanding, equally on the moneys he owed us.’ In this context, there is no evidence before me of what arrangements were reached between Mr Lowndes and his company and Mr Watson and any of his companies to achieve an orderly winding down of the management agreement between those parties, which may have had some impact on the winding down of GMM. Subject to Mr Lowndes, or his company, making a claim on RPM for such royalties, GMM is liable to account to RPM in respect of royalties for sales made by GMM between 1 October 2001 and the date upon which the last sale was made.
On the filing of an affidavit from Mr Lowndes evidencing that he has made a claim or intends to make a claim within a specified period against RPM in accordance with his driver agreement with RPM, for the payment of those royalties, I will order an account by GMM to RPM in respect of royalties payable on sales from 1 October 2001 until cessation of trading by GMM.
Summary of Conclusions
In my opinion the applicants are not entitled to the relief sought in the application other than some relief as sought in paragraph 9 in respect of the Management Agreement, the Gibson Services Agreement and the Gibson Motor Sport Licence. Further, the cross claim will be dismissed, save for the possible claim for an account by GMM to RPM dealt with above, and the minor claim in respect of the cost of external cladding of a building owned by Angora Towers Pty Ltd. I shall not make orders today but shall adjourn the matter to a date to be fixed to allow the parties to bring in short minutes in respect of final orders on liability and for directions in relation to any further hearing in respect of quantum and for final orders on the cross claim, as appropriate, and for any consequential orders, particularly in respect of orders made by Weinberg J. on 23 December 2002. Costs can be determined at the conclusion of any hearing in respect of quantum.

I certify that the preceding three hundred and fifty six (356) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Crennan.

Associate:
Dated: 9 June 2005

Counsel for the Applicant:

Peter Hayes QC

Michael Rivette

Scott Wotherspoon

Solicitor for the Applicant:

Madgwicks Lawyers

Counsel for the Respondent:

Peter Jopling QC

Peter Gray

Solicitor for the Respondent:

Allens Arthur Robinson

Date of Hearing:

15 June to 2 July 2004

9 July 2004

19 July 2004

26 to 27 July 2004

Date of Judgment:

9 June 2005

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 372 OF 2002

BETWEEN:	GIBSON MOTOR SPORT MERCHANDISE PTY LTD ACN 095 810 110 FIRST APPLICANT ROBERT NOEL WATSON SECOND APPLICANT FREDERICK CHARLES GIBSON THIRD APPLICANT NOEL WATSON (AUST) PTY LTD ACN 005 254 848 FOURTH APPLICANT F.C. GIBSON PTY LTD ACN 082 475 705 FIFTH APPLICANT THE WATSON GROUP AUSTRALIA PTY LTD ACN 091 455 426 SIXTH APPLICANT SYNARBY PTY LTD ACN 057 500 973 SEVENTH APPLICANT
AND:	ROBERT JAMES FORBES FIRST RESPONDENT RACECAR PREPARATION & MANAGEMENT PTY LTD ACN 095 359 041 SECOND RESPONDENT BOB FORBES CORPORATION PTY LTD ACN 001 442 520 THIRD RESPONDENT
JUDGE:	CRENNAN J
DATE OF ORDER:	9 JUNE 2005
WHERE MADE:	MELBOURNE

JUDGE:	CRENNAN J
DATE:	9 JUNE 2005
PLACE:	MELBOURNE

Counsel for the Applicant:	Peter Hayes QC
Michael Rivette Scott Wotherspoon
Solicitor for the Applicant:	Madgwicks Lawyers
Counsel for the Respondent:	Peter Jopling QC
Peter Gray
Solicitor for the Respondent:	Allens Arthur Robinson
Date of Hearing:	15 June to 2 July 2004 9 July 2004 19 July 2004 26 to 27 July 2004
Date of Judgment:	9 June 2005