Graziano v Hillam - [2022] SADC 154

District Court of South Australia
(Civil)
GRAZIANO v HILLAM
[2022] SADC 154
Judgment of his Honour Judge Slattery
19 December 2022
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS
The applicant claims to have entered into a contract with the respondent during 2017 the terms of which were that in consideration of the applicant seeking and achieving the sequestration in bankruptcy of the Peter Ivan Lewis (Lewis) the respondent would pay to the applicant the sum of $320,000.00. At the time, Lewis was indebted to the applicant under a consent judgment entered in the District Court of South Australia during 2015 in the amount of $279,045.00 which remained unpaid.
In 2017, the applicant commenced bankruptcy proceedings against Lewis. As at and before that time, the respondent claimed that Lewis was indebted to him or companies with which he was involved for amounts arising out of litigation in the Supreme Court of New South Wales and in the Court of Appeal of New South Wales. In those proceedings, some of the litigant parties were companies and entities owned or controlled, at least to some extent, by Lewis and by the respondent.
The respondent is an engineer involved in mining and Lewis was also involved as a shareholder in or as the controller of the shareholding of a number of mining companies. Some of those companies were public unlisted companies, some were no liability companies and others were private companies. In some of these companies, the respondent appears to have held, directly or indirectly shareholdings with or in common with Lewis. Some of the shareholdings in their companies were separately held. The respondent and Lewis engaged in many actions against each other in respect of their interests and these actions were heard in the Supreme Court of South Australia and the Supreme Court of New South Wales. There were a number of appeals brought from first instance decisions of those Courts. In these actions a number of orders for judgment and for costs, were made in favour of both the Lewis interests and the respondent’s interests.
Lewis directly or indirectly held or controlled a shareholding in at least three companies: Goldus Pty Ltd, Mintech Resources Pty Ltd and Mawson Gold N.L. The respondent contended that Lewis was at all or material times indebted to him or to any companies or entities which he controlled.
Following the failure by Lewis to pay the consent judgment obtained in 2015, an application was made by the applicant to bankrupt Lewis for failure to pay on a notice of demand. In the course of Federal Circuit Court proceedings, there were discussions held between the respondent and the applicant about whether the respondent may take an assignment of the debt owed by Lewis to the applicant for valuable consideration or alternatively make a payment in consideration of the applicant bankrupting Lewis. The majority of the negotiations on behalf the applicant were conducted by the applicant’s agent, Mr Frank Carbone.
In the course of the negotiations between them, the applicant’s solicitor prepared a proposed written agreement allegedly containing the terms of the parties’ bargain. Later in the negotiations, and in response, the respondent through his solicitors prepared and circulated to the applicant a form of written agreement that he proposed be executed by the parties.
The applicant and the respondent each refused to execute any agreement proposed by the other. During the course of the exchanges between the parties about the terms of their respective proposed contracts, Lewis became bankrupt on his own petition. Mr Stephen Duncan was appointed the trustee of the bankrupt estate of Lewis.
Whether there was an identifiable offer and acceptance between the parties sufficient for the formation of a contract; and if so, on what terms?
Whether an oral contract was made between the parties that, in the absence of writing, was enforceable between them and, if so, on what terms?
Whether any of the parties were obligated to execute and thereby become bound to any form of written agreement, and if so, on what terms?
Held:
1.      There was no offer and acceptance between the parties sufficient for the formation of any form of binding contract.
2.      There was no oral contract formed between the parties that, in the absence of writing, was enforceable between them.
3.      Neither of the parties bound themselves to execute any form of written agreement.
4.      The applicant’s claim is dismissed.
Bankruptcy Act 1966 (Cth) s 56, s 58, s 86; Corporations Act 2001 (Cth) s 588C; Criminal Law Consolidation Act 1935 (SA) clause 3 schedule 11, referred to.
JF Hillam Pty Ltd v Mooney and Hill [1988] SASC 730, discussed.
Agius v Sage [1999] VSC 100; Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309; Australian Broadcasting Corporation v XIVth Commonwealth Games Limited [1988] 18 NSWLR 540 ; Branir Pty Ltd v Olvston Nominees (No 2) Pty Ltd 117 FCR 424; Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] 229 CLR 386; Elfic Ltd & Ors v Peter Ivan Macks & Ors and GIO Insurance Ltd and The Commonwealth Bank of Australia Ltd. [2000] QSC 18; Gye v McIntyre (1991) 171 CLR 609; Holt v Bunney [2020] SASCFC 89; Integrated Computer Service Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd [1988] 5 BPR 11,110; Malthouse v Adelaide Milk Supply Co-operative Ltd [1922] SASR 572; Pacific Carrier Ltd v B.N.P Paribas [2004] 218 CLR 451; Realestate.com.au Pty Ltd and James Kelland Hardingham & Ors v RP Data Pty Limited and James Kelland Hardingham & Ors [2022] HCA 39 ; Roux v Australian Broadcasting Commission [1992] 2 VR 577 ; Royal and Sun Alliance Life Assurance of Australia Ltd v Feeney 80 SASR 229 ; Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd [1985] 9 ACLR 909 ; Sinclair, Scott and Co Ltd v Naughton [1929] 43 CLR 310 ; Smith v Hughes [1871] LR6 QB 597 ; South Australian Management Corporation v Sheahan & Ors (1995) 16 ACSR 45 at 58; Stevens v Keogh [1946] 72 CLR 1 ; Trendtex Trading Corporation v Credit Suisse (1982) AC 679 , considered.

GRAZIANO v HILLAM
[2022] SADC 154
Civil

This action relates to a claim by the applicant under a contract allegedly made on 18 July 2017 with the respondent. The alleged terms of the contract required the respondent to pay to the applicant the sum of $320,000.00 upon the applicant obtaining an order for the bankruptcy of a debtor, Mr Peter Ivan Lewis (deceased) (“Mr Lewis”). The alleged contract revolves around the relationships between the plaintiff and the Defendant with a Peter Ivan Lewis, mining companies in which Mr Lewis allegedly had an interest, the debt owed by Mr Lewis to the applicant and the consequences of the dealings between Mr Lewis and the respondent.
For the reasons which follow, I dismiss the claim of the applicant.
The applicant’s claim is that he entered into a contract with the respondent which required the applicant to seek the sequestration of the estate of Mr Lewis in bankruptcy in consideration for which, the respondent would pay to the applicant the sum of $320,000.00. In order to understand the genesis of this alleged arrangement, it is necessary to understand some of the background of the relationships between the respondent and Mr Lewis and the applicant and Mr Lewis. Before analysing the pleadings in this matter, it is appropriate that I briefly summarise those relationships.
Mr Lewis was formerly the speaker of the House of Assembly in the State of South Australia. After achieving the requisite years of service, he retired from Parliament and took his Parliamentary Pension as a lump sum payment. He then involved himself in a number of mining ventures through a number of companies. There are unresolved questions about whether Mr Lewis controlled these companies, whether they were controlled on his behalf or they were controlled by others for or on behalf of other interests connected with Mr Lewis. The respondent Mr John Frederick Hillam, (“Mr Hillam”) is the principal of a number of companies involved in the mining field. He is a qualified geologist. Over a number of years, he became involved with Mr Lewis in a number of mining ventures through their various companies. Over time, the relationship between them soured significantly. A number of actions between them were commenced in the Supreme Court of New South Wales. The parties to one of those actions, No. 48042 of 2010, were Mr Hillam as plaintiff and as Defendants, (1) Mr Lewis, (2) Mintech Resources Pty Ltd, (3) Goldus Pty Ltd, (4) Mawson Gold N.L., (5) Razorbark Iron Pty Ltd and (6) Royal Resources Limited. Each of the second, third and fourth Defendants were said to be ‘Lewis companies’.
The action proceeded to trial, and it became the subject of a decision of the Trial Judge, Sackar J. It is not necessary to survey the issues arising for determination in that proceeding.
The terms of the judgment made by Sackar J were as follows:
1.That there be judgment in favour of the plaintiff against the first, second and third Defendants in the sum of $130,000.00.
2.That the first, second and third Defendants pay interest on the sum of $130,000.00 calculated in accordance with s 100 of the Civil Procedure Act 2005 from 23 November 2009 to 2 August 2012.
3.That the claim against the fourth Defendant be dismissed.
4.That the first, second and third Defendants pay the plaintiff’s costs of and incidental to the unpaid consultancy fees claim, such costs to be assessed or agreed.
5.The plaintiff pay the first - fourth Defendants’ costs of and incidental to the equity performance promise claim, such costs to be assessed or agreed.
6.The court directs the first to third Defendants to file and serve any application and supporting affidavit for a stay of execution in relation to order 1 herein by 10 August 2012, such application to be returnable before His Honour on 28 August 2012.
7.The court directs the plaintiff to serve any affidavits in reply by noon on 24 August 2012.
Mr Hillam subsequently commenced an appeal to the NSW Court of Appeal against the judgment of Sackar J. There were only four respondents to that appeal; the fifth and sixth Defendants before Sackar J appear not to have been named as respondents on the appeal and it is not known if those companies were associated with Mr Lewis. In the action before Sackar J, each of the second, third and fourth respondents were said to be companies owned or controlled by Mr Lewis.
The judgment on the appeal was delivered on 1 November 2013; the following orders were made by the Appeal Court:
1.Appeal allowed in part.
2.Set aside Order 1 made in the Equity Division on 9 August 2012 and order in lieu thereof:
“That there be judgment in favour of the plaintiff against the first, second and third Defendants in the sum of $170,000.00.”
3.Appeal otherwise dismissed.
4.That the appellant pay 90 per cent of the respondents’ costs of the proceedings in this Court.
It may reasonably be expected that the costs order in favour of Mr Lewis and the three Lewis companies in the appeal would exceed the sum of $40,000.00, the increase in the judgment sum and perhaps the whole of the judgment amount.
That is in addition to the costs orders in favour of Mr Lewis and the Lewis companies made by Sackar J at para 5 of his Honour’s orders. No orders were made by Sackar J against the fifth and sixth Defendants and it may be assumed that those companies took no active part in those first instance proceedings and no remedy was pursued against them.
In summary, Mr Hillam obtained a comparatively minor judgment with a small costs order in his favour and suffered personal costs orders against him at first instance and a major costs order against him on the appeal. He possibly will not have the benefit of any favourable monetary balance and may suffer a considerable monetary deficiency as a result of those proceedings. On the evidence before the Court, it appears likely that the amount of those costs may exceed the sum of $170,000.00 and the benefit of any costs orders in Mr Hillam’s favour.
In the proceedings in the Supreme Court of New South Wales, Mr Lewis obtained an adjudication of costs against Mr Hillam in the sum of $217,842.56 together with adjudication costs of $12,296.06. It is not known what amount was assessed for costs in favour of Mr Hillam under order four of the orders made by Sackar J.
Three years later, in May 2015, Mr Antonio Graziano (“Mr Graziano”), the applicant in this action, obtained a judgment by consent against Mr Lewis in the sum of $279,045.00 in the District Court of South Australia.
Mr Lewis did not pay Mr Graziano the amount due on this consent judgment and consequently Mr Graziano issued a Bankruptcy Notice against Mr Lewis which was served on 28 October 2016; the notice demanded payment of the sum of $290,160.71. The notice of demand was not met and a Bankruptcy Petition was issued by Mr Graziano against Mr Lewis on 12 December 2016. For reasons that are not pertinent to this discussion, the petition was adjourned from time to time after 7 February 2017 when it was first heard before the Federal Court. On 13 June 2017 this petition was due to be heard as an application to bankrupt Mr Lewis on the unpaid creditor’s petition.
Prior to February 2017, Mr Hillam and Mr Lewis had been involved in a number of mining companies. At a time prior to June 2017, Mr Hillam desired to take control of some of these mining companies which until that time were controlled by Mr Lewis. After his bankruptcy, any asset in the bankrupt estate of Mr Lewis fell into his bankruptcy apart from after acquired property. Insofar as any particular shareholding in them gave Mr Lewis control over these mining companies such rights and the shareholding would then fall into the bankruptcy of Mr Lewis and so the control of his trustee in bankruptcy. The trustee of the bankrupt estate of Mr Lewis would stand in the shoes of Mr Lewis as the owner or controller of those interests. Insofar as Mr Hillam may wish to become the owner of those interests of Mr Lewis in those companies, it would be necessary for him to deal with the trustee the bankrupt estate of Mr Lewis.
In part, Mr Hillam also claimed an as yet unsubstantiated interest in the companies with which Mr Lewis was involved and claimed that as a result of dealings between them, he was wrongfully kept out of an interest in those companies by the acts of Mr Lewis. These claimed interests and rights were problematic on a number of levels. In order to maintain any right to them, ordinarily Mr Hillam would be required to prove his entitlements. Mr Lewis would not and did not accept Mr Hillam’s claims. The trustee in bankruptcy would likely adopt the same attitude.
One of the assets that fell into the bankruptcy of Mr Lewis was the adjudication in the Federal Court in favour of Mr Lewis for the unpaid costs in the amount of $230,000.00 which was also attracting an interest component payable by Mr Hillam. On the evidence, Mr Hillam had also not been paid the judgment he obtained in 2012 against Mr Lewis in the sum of $170,000.00. As Mr Hillam had not been paid the debt owed by Mr Lewis, he became a debtor in the bankrupt estate of Mr Lewis. Having failed to pay Mr Lewis the costs adjudication (and the adjudication was subject to an appeal at that stage), Mr Hillam was susceptible to a claim by the trustee in bankruptcy for collection of that asset. At that time, it had not been contended that a right of set-off in bankruptcy existed under s 86 Bankruptcy Act 1966 (Cth)[1] under the principles of mutuality.
[1] Bankruptcy Act 1966 (Cth) s 86.
The concept of mutuality under the Bankruptcy Act 1966 (Cth) is involved with what is described as notions of reciprocity and for a set off to apply, the dealings must be between the same people and the benefit or burden of them must be in the same interest.[2] An obvious difficulty is that the rights arising under the costs judgment of the Appeal Court and at first instance belonged to Mr Lewis personally as well as to the corporate Defendants that were respondents to the appeal. These are not rights solely belonging to Mr Lewis. And so, the same problem arises that if Mr Hillam wished to succeed to the rights of Mr Lewis in the mining companies; he was left to deal with whoever controlled those interests.
[2] Gye v McIntyre (1991) 171 CLR 609.
The proper approach to the application of s 86 of the Bankruptcy Act 1966 (Cth) is that a court is required to do substantial justice between parties. At [81,67.25] the learned authors of Bankruptcy Legislation[3] say as follows:
[3] Paul Nicholls, Butterworths Annotated Bankruptcy Act 1966, 7^th Edition 2019.
[81,670.25] The object of set-off in bankruptcy is to do substantial justice between the parties where a debt is really due from the bankrupt to the debtor or his or her estate. Where there are genuine mutual debts, credits or other dealings, it would be unjust if the trustee in bankruptcy could insist on having 100 cents in the dollar on the whole of the debt owed to the bankrupt, but at the same time insist that the bankrupt’s debtor must be satisfied with a dividend of some lesser amount in the dollar on the whole of the debt owed by the bankrupt to him or her. It was to prevent such injustice that the “mutual credit” and “mutual debts” (and later “mutual dealings”) provision were introduced into bankruptcy legislation. To the extent necessary to achieve the legislative purpose of “substantial justice” to the parties, s 86 of the Act must be given the widest possible scope. However, this must be subject to limits which protect the debtors of the bankrupt from being disadvantaged by set-off being allowed in circumstances where debts, credits or other dealings have not been genuinely mutual as a matter of substance. Thus set-off under a provision such as s 86 is not available in circumstances where the benefit entitlement and liability in respect of the countervailing credits and debts do not correspond: Hiley v Peoples Prudential Assurance Co Ltd (1938) 60 CLR 468.
At [25] and [26] the court held that there must be a realistic (as compared to fanciful) prospect of success, and the need to be assured that there is no need for trial is assessed at [26]. The court dealt with the right to contribution by applying Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4; BC201500378 at [6]:
The rationale of the right to contribution, both at law and in equity, was described by Kitto J in Albion Insurance Co Ltd v Government Insurance Office (NSW) “as one of natural justice” which ensures “that persons who are under co-ordinate liabilities to make good the one loss (eg sureties liable to make good a failure to pay the one debt) must share the burden of suretyship is borne equally as between co-sureties, so that the exercise by a creditor of its contractual right under its guarantee to recover the guaranteed debt in full from one of several co-sureties does not leave that surety to bear a disproportionate share of the burden of suretyship.
The appellants and respondents each agreed to pay the full amount of the guaranteed debt. Each of them became liable to pay that debt upon demand by the Bank under cl 6.2 of the guarantee.
In Mahoney v McManus, Gibbs CJ (with whom Murphy and Aickin JJ agreed) said that: “the doctrine of contribution is based on the principle of natural justice that if several persons have a common obligation they should as between themselves contribute proportionately in satisfaction of that obligation. The operation of such a principle should not be defeated by too technical an approach” 469 at [32]-[35].

On the state of the evidence before me, it is impossible to say whether there is any aspect of mutuality between the debts of Mr Hillam owed to Mr Lewis and the debts of Mr Lewis owed to Mr Hillam, whether they arise from dealings between the same persons, that the benefit or burden of them lay in the same interest and that the credits, debts or claims all sound in money. This is because of the involvement of the companies as Defendants and respondents, their obligations under the orders of the various courts and also their rights under the same orders. It also cannot be contended that absent a bankruptcy there was, at common law, a right of set-off between Mr Hillam and Mr Lewis in relation to the judgment obtained in the Supreme Court of New South Wales and the adjudication of costs. It appears that if all of the rights and obligations belonged only to Mr Lewis, there would be a small surplus owing to Mr Lewis over and above the judgment obtained by Mr Hillam. There are obviously other entities involved so that it is not possible to consider rights of set‑off in the context of debts due between Mr Hillam and Mr Lewis.
If Mr Hillam wished to take a controlling interest in these three mining companies, it would be necessary to remove Mr Lewis. His bankruptcy is one such method. On the evidence before me, there is an inference that Mr Hillam had a particular interest in the bankruptcy of Mr Lewis. After a long and difficult relationship with Mr Lewis, Mr Hillam appeared to have an interest in the removal of Mr Lewis as director, and as the holder of a controlling interest in those companies. Although the evidence is not completely clear, it appears that Mr Hillam was trying to position himself to control those companies and that he thought he was entitled to exercise that control. Both men had historically been involved in a number of mining ventures; there is no evidence about whether they were successful or were successfully brought to profitability. Each of them held or in some way controlled the respective shareholding in their interests in their companies. It takes no commercial imagination to understand that each of them had actual or de facto control over such shareholdings. Their respective positions in those companies seem to have been the source of long‑standing disputes between them.
Mr Lewis was made bankrupt on his own petition on 22 July 2017. To the extent that the shareholding of those companies controlled by him fell into and became an asset of his bankrupt estate, then such control vested in the trustee in bankruptcy. The obligation of the trustee was to maximise the return from that asset for the benefit of the unsecured creditors. Any potential purchaser of that asset from the trustee in bankruptcy must negotiate an agreement to purchase with the bankruptcy trustee.
All of these considerations stand in the background of the current dispute. An issue for my determination is the weight, if any, to be attached to them or whether they inform the principal contention of the applicant of an agreement alleged to exist. In the evidence before the Court, there is no reliable information available about the particular companies or their status and, for example, who or what controlled those companies at the time of Mr Lewis’ bankruptcy.
It is known from the documentary evidence[4] before the Court that the companies involved were Goldus Pty Ltd (administrator appointed), Mintech Resources Pty Ltd (administrator appointed) and Mawson Gold NL. Upon the bankruptcy of Mr Lewis, Mr Stephen Duncan was appointed trustee of the bankrupt estate of Mr Lewis. Subsequent to his bankruptcy, Mr Lewis passed away and so Mr Duncan became the trustee of the bankrupt deceased estate of Mr Lewis. Mr Duncan was also the appointed administrator of Goldus Pty Ltd and Mintech Resources Pty Ltd. It is not known if Mr Duncan became the administrator of a company under a deed of arrangement, (if such was accepted by creditors) or whether, for example, a deed was proposed and rejected by creditors leading to the liquidation of those companies.
[4] Annexure A to affidavit of Mr Hillam sworn 17 January 2018, supplementary tender book 4.
It is in that general background that I now turn to the parties’ pleadings.
Paragraph 7 of the statement of claim alleges that in the period between May and July 2017, Mr Hillam and his associated entities were in dispute with Mr Lewis and his associated entities in a number of proceedings. The first was in action 48042 of 2010 in which Mr Hillam sued a number of entities associated with Mr Lewis.
There are also allegations of proceedings brought by Correla Minerals Pty Ltd, an entity associated with Mr Hillam, against Goldus Pty Ltd, an entity associated with Mr Lewis in action 287079 of 2014 in the New South Wales Supreme Court. It seems that these proceedings failed and costs orders were made against Correla Minerals Pty Ltd in favour of Goldus Pty Ltd.
By 4 July 2017, the costs orders against Mr Hillam in relation to the proceedings 48042/2010 had been assessed at $416,658.79. It is also accepted that costs orders against Correla Minerals Pty Ltd in proceedings no. 287079/2014 were assessed at $186,686.44 by the same date. Although trite, these assessed costs belonged to the successful litigant companies and not to the personal estate of their controllers. Any such rights were exercisable against the debtor entities.
The Applicant pleads that following Mr Hillam filing a Notice of Supporting Creditor against Mr Lewis, he had an interest in Mr Lewis being made bankrupt. He then contacted Mr Graziano to announce his interest in Mr Lewis and inviting Mr Graziano to come to Sydney to discuss the matters. There was a meeting at the office of Mr Hillam in Sydney shortly after 15 May 2017, at which Mr Hillam announced to Mr Graziano a common interest in seeing Mr Lewis made bankrupt. It is implicit that there was no prospect of Mr Lewis making payment of the Graziano debt. However, it is alleged that on 21 June 2017, the Solicitors for Mr Lewis proposed a compromise which was strongly opposed by Mr Hillam. A Notice of Dispute was filed by Mr Lewis at the Federal Court, complaining of deficiencies of service and a delay of filing materials. It is also alleged that in course of this dispute, the solicitors for Mr Lewis and Mr Graziano had a meeting at which a compromise offer was put by Mr Lewis.
It is alleged that is in the course of that negotiation, there was contact made between the agent of Mr Graziano and the respondent in which the respondent allegedly offered to pay to applicant the sum of $320,000.00 plus his costs and to take over the debt in exchange for Mr Graziano enforcing the bankruptcy upon Mr Lewis. It is also alleged that on the same day, the respondent promised to keep any arrangement made with the applicant, that there should be a heads agreement prepared and that it would be considered by the respondent’s solicitor.
The applicant claims that on and subsequent to 18 July 2018, the applicant accepted the offer made by the respondent, a contract was formed and there was an obligation upon the respondent to make a deposit payment of $25,000.00 and a further payment of $295,000.00 in four months’ time. There was an exchange of documents, and it is alleged that the document of agreement provided by the respondent was an act of repudiation because it did not reflect the terms of the parties’ agreement. Alternatively, it is alleged by the applicant that the respondent is to stop from denying the existence of the agreement or alternatively that the conduct of the respondent constituted misleading conduct.
The respondent denies the allegations of the applicant, agreed that there was a discussion about a payment of $320,000.00 but denies that there was any agreement reached because the discussions were only general. He also pleads that if there was to be an assignment of debt, it would be to a company controlled by him. He pleads that at no time was any agreement ever reached between the parties, that the bankruptcy of Mr Lewis occurred in circumstances where there were still negotiations occurring in relation to the content of a written agreement still to be settled between the parties, no such written agreement was finalized, there was no signed agreement and no settled agreement between the parties. The respondent denies there was any promise made by him to the applicant, that there was any concluded agreement between the parties, that there was any basis for an estoppel to be claimed and that his conduct was not misleading.
The pleadings disclose that for a long time there had been significant disputes between Mr Lewis and Mr Hillam over several commercial interests. The disputes between Mr Graziano and Mr Lewis dated back to 2007 when Mr Graziano made a loan to Mr Lewis of $250,000.00 which was not repaid. A consent judgment was obtained in those proceedings on 21 May 2015 and that judgment was stayed until 1 October 2015. It is then alleged that sometime after that judgment was obtained, Mr Hillam rang Mr Graziano to ask him what were his intentions about the bankruptcy. There is a text message on 18 May 2017, sent at 4.36 am to Mr Graziano by Mr Hillam informing that Goldus, a Lewis company, had obtained an $85,000.00 judgment on a cost order in a New South Wales proceedings and it had been paid to Goldus. Mr Hillam claimed to have other judgments against Goldus and that he had filed a new claim for $1.5 million plus interest and costs.
In evidence, I was shown a list of 35 instances where particular judgments had been delivered by different courts which involved Mr Hillam or his interests. The first was JF Hillam Pty Ltd v Mooney and Hill[5]. It includes a series of disputes between Mr Hillam and Mr Iacullo commencing from 2014, disputes between Mr Hillam and Ampol Source International Limited commencing from 2012, and disputes between Mr Hillam and the deed administrator of Goldus Pty Ltd between 2011 and 2021. There are reported judgments involving Mr Hillam at first instance and on appeal; the list does not purport to be a list of all of the actions in which Mr Hillam has been involved. Therefore, merely to contend that he was commencing a $1.5 million claim against Goldus Pty Ltd is not very informative. For example, did such a claim properly fall into the range of debts to be managed by the Deed Administrator of that company and if so, the suggestion of a further claim is largely irrelevant. These questions were not resolved on the evidence.
[5] [1988] SASC 730.
I turn then to a consideration of some of the facts of the matter in the background of the parties’ pleaded cases.
In his text message of 18 May 2017, Mr Hillam postulated that it was better to bankrupt Mr Lewis so that a liquidator (presumably he means a trustee in bankruptcy) can take his assets which are all his shares in the three main mining companies. Mr Hillam suggests a liquidator could sell the shares, meaning that Mr Hillam and Mr Graziano, or Mr Hillam solely, could bid for the shares and that he would buy the shares in another Lewis company, Mintech Limited, from the liquidator. He then makes the following comment to Mr Graziano via text:
You are more likely to get paid for your debt if we work together and I believe the best thing to happen for everybody would be for Mr Lewis to be made bankrupt. Please delete this message after you have read it.
Subsequently, there was a discussion between Mr Hillam and Mr Graziano in Mr Hillam’s office in Sydney. Topics discussed included the bankruptcy of Mr Lewis and the contention strongly put by Mr Hillam through the conversation that Mr Graziano was wasting his time with Mr Lewis in trying to get any money out of him and it was better to bankrupt him. Through the bankruptcy they (presumably meaning Mr Hillam and his interests and the interests of Mr Graziano) could have full control over Mr Lewis’ mines as well as the shares he owned in the various mining companies in which Mr Hillam had an obvious interest.[6]
[6] Exhibit A2, p 73.
There was a follow‑up text after these conversations on 29 May 2017 from Mr Hillam to Mr Graziano thanking him for his call and his update.[7] Then, three minutes later, Mr Hillam wrote to Mr Graziano telling him that Mr Lewis has to put on evidence about his own solvency in order to avoid bankruptcy and expressing doubt regarding whether Mr Lewis has gone into evidence.
[7] Exhibit A2, p 74, message 29 May 2017 9.20 am.
Mr Hillam sent to Mr Graziano a further message on 29 May 2017 at 4.33 pm[8] and informed Mr Graziano that Mr Lewis is the majority shareholder in Goldus Pty Ltd, Mintech Resources Pty Ltd and Mawson Gold NL (“Goldus”, “Mintech” and “Mawson”). Mr Hillam suggested that all of those companies have assets of some value but they had been insolvent for a long time and that Mr Lewis owed some $14 million to those companies which, he says, Mr Lewis had misappropriated from them. He alleged that as a director Mr Lewis allowed those companies to trade whilst insolvent and as the sole director would be answerable to the creditors of the company.[9]
[8] Exhibit A2, p 75, message 29 May 2017 4.33 pm.
[9] Corporations Act, 2001 (Cth) s 588C.
Mr Hillam again informed Mr Graziano that Mr Lewis must make a declaration of solvency to avoid his bankruptcy and reiterates he has further actions against two of Goldus, Mintech and Mawson and a personal debt for which he has sued Mr Lewis. This debt is allegedly in the amount of $1.5 million plus six years of interest. It is unclear how, without an extension of time, Mr Hillam could sue Mr Lewis for this debt in contract. It may be presumed that Mr Hillam was aware of this and that once Mr Lewis has gone bankrupt, there is stay of any action against him by any creditor for an unsecured debt. I have earlier mentioned difficulties that may arise for Mr Hillam with issues of estoppel. In summary, I consider these statements by Mr Hillam are in the nature of puffery and without substance.
A dominant feature of the initial discussions between Mr Hillam and Mr Graziano was Mr Hillam’s insistence that Mr Graziano ensure the bankruptcy of Mr Lewis, either separately or together with him. From Mr Hillam’s perspective there would be a consequential benefit as then Mr Hillam would have an interest in Mr Lewis being removed from the control of companies Goldus, Mintech and Mawson which would then be controlled by his trustee in bankruptcy. Mr Hillam would then be in a position to make a proposal to the trustee to purchase any shares in those companies that may be owned by Mr Lewis that fell into his bankrupt estate. This appears to be the method of reasoning employed by Mr Hillam. There is no evidence that such shareholdings did fall into the bankrupt estate of Mr Lewis other than the fact that Mr Duncan, his trustee in bankruptcy, was also appointed as the administrator.
As a result, Mr Hillam had a number of commercial and interrelated reasons to seek the bankruptcy of Mr Lewis and to use Mr Graziano to obtain that end. At the time there had been an assessment of the amount owed by Mr Hillam to the interests (corporate) of Mr Lewis and any of the debts those corporate interests of Mr Lewis owed to Mr Hillam arising from the costs orders made in the Supreme Court of NSW. Those were not only personal debts but also corporate debts.
Mr Hillam was aware that Mr Graziano held a judgment against Mr Lewis privately for almost $280,000.00 and that Mr Lewis did not have the wherewithal to discharge this debt. Mr Hillam was not prepared to bring bankruptcy proceedings himself against Mr Lewis and his focus was upon acting as a supporting creditor. So much is apparent from the text he sent to Mr Graziano and his solicitor, Mr James Wither at CWD Lawyers on 6 June 2017 at 4.41 pm which read:
We are sending our many files to Cindy today so that they can file against Mr Lewis as a supporting creditor our amount is $265,000.00 including interest.
There is no explanation how the alleged claim of $265,000.00 is made up or why, for example, Mr Hillam is not bringing his own bankruptcy action against Mr Lewis upon the debt which he alleges is owed by him.[10] The reference to “Cindy” is to Ms Cindy Hynes, a solicitor at WBH Lawyers, solicitors in Adelaide appointed to act on his behalf. On 8 June 2017, Mr Hillam lodged a notice of supporting creditor against Mr Lewis and on 13 June 2017, the bankruptcy petition of Mr Graziano against Mr Lewis was first listed before the Federal Court. No order to bankrupt Mr Lewis was made on that day and the Court gave directions about the filing of outlines of argument. Mr Lewis had instructed solicitors to raise issues on his behalf of a technical nature relating to the delivery of documents and the accuracy of documents filed in the Federal Court. Those were matters for resolution by the Court.
[10] Exhibit A2, p 75.
Mr Hillam said he would be in Adelaide on 13 June 2017 and would appear as a supporting creditor. On 13 June 2017 at 8.27 am, he sent a text message to Mr Graziano asking him whether he would see him in court. Mr Hillam hoped or expected that an order for the sequestration of the estate of Mr Lewis in bankruptcy would be made on that day. He was disappointed that this did not occur. It is not necessary for me to decide if this hope or expectation was either reasonable or realistic. After the hearing, Mr Hillam arranged for a meeting to occur at the Hilton Hotel. He wished to express his disappointment about what had transpired that day. In his evidence, Mr Graziano said after the hearing on 13 June 2017, a meeting took place between he, his agent Mr Frank Carbone and Mr Hillam at the Hilton Hotel in Adelaide. [11] Mr Graziano can recall a conversation on that day at the Hilton Hotel. Mr Hillam was not pleased about the result at the Federal Court and that Mr Hillam was highly critical of Mr Graziano’s solicitors. That was confirmed in a text message of 9 June 2017 at 12.39 pm.[12]
[11] T74 et seq.
[12] Exhibit A2, p 76.
In a further text message on 13 June 2017 at 2.41 pm, Mr Hillam said he would not be paying anything to Mr Lewis on the judgments in relation to costs and alleged that Mr Lewis owed him $3-5 million. No information was given as to how that figure is comprised. Mr Hillam said he would shut down Mr Lewis’ claim within the next few days and demand the return of the $85,000 which he has paid to Mr Lewis on the costs judgment. It is not clear what claims he is then referring to and at the end of the email he says:[13]
[13] Ibid.
Sorry I was angry about your solicitor but the line is cast now and there is no way Mr Lewis will escape this time so we should work together to make sure he is pushed over the cliff lets keep in touch.
I am satisfied that at the end of June 2017, there was no particular understanding of a contractual nature established between Mr Graziano and Mr Hillam and no other commercial relationship established. Mr Hillam wanted to see the bankruptcy of Mr Lewis. He could not be a petitioning creditor as any claim he had as a creditor would have been subject to a challenge by Mr Lewis. Otherwise, there was nothing to stop him earlier commencing his own application in the Federal Court for the bankruptcy of Mr Lewis. This he could not and did not do and I find that he was aware of the exposed nature of his own position as a claimed creditor of Mr Lewis. That is why he so vigorously sought the bankruptcy of Mr Lewis through Mr Graziano. There was a common interest in the bankruptcy of Mr Lewis. That common interest also arose in the event that both parties accepted some form of compromise from Mr Lewis and one of them wished to act to dissuade the other from such a compromise. In light of the contemporaneous material from Mr Hillam, that was at best a very remote possibility.
After 13 June 2017 there was then a change of people who were making the arrangements on behalf of Mr Graziano with Mr Hillam. Mr Hillam had, until then, dealt personally with Mr Graziano. From about then on, Mr Frank Carbone, an agent of Mr Graziano, conducted all of the negotiations with Mr Hillam on the Graziano side.

Mr Carbone was present at the Federal Court on 13 June 2017 when the Registrar made a number of orders.[14] The first was that it was necessary for Mr Graziano to file affidavits in compliance with R 4.0(4) of the Federal Court Rules. The second related to the attempt by Mr Lewis to challenge the bankruptcy because he asserted that there was an enforceable contract of compromise between he and the creditor. Such contentions of fact needed to be resolved before the application for the bankruptcy of Mr Lewis could proceed. In turn, this required the filing of the parties’ affidavits and written submissions in the bankruptcy action by 27 June 2017 and any responding affidavits by 11 July 2017. At the Court, Mr Carbone introduced himself to Mr Hillam and they had a conversation. Later, Mr Carbone attended a meeting at the Hilton Hotel at which Mr Hillam expressed his dissatisfaction with the performance of the lawyer retained by Mr Graziano. Mr Carbone said that Mr Hillam was furious that no order for bankruptcy had been made against the estate of Mr Lewis.
[14] Exhibit A1, p 11.
Mr Carbone was also involved in subsequent conversations between the solicitor (Mr David Colovic) acting for Mr Lewis, and the solicitor Mr James Wither, acting for Mr Graziano. On behalf of Mr Lewis, Mr Colovic had proposed a repayment regime of the debt of Mr Graziano in the sum of only $150,000 over a period of two years. Mr Carbone recalls that on the date this offer was made, he had a conversation about it with Mr Hillam. There were then communications between Mr Hillam and Mr Carbone about how Mr Graziano was to negotiate with Mr Lewis; the first occurred on 17 July 2017 at 10.49 am. Mr Hillam rang Mr Carbone who responded he could not speak and would return his call shortly. Mr Hillam appears to have left a message that, in relation to Mr Lewis, he had discussed the matter with his solicitors.[15] There were then a number of missed telephone exchanges and on 17 July 2017, Mr Hillam sent Mr Carbone a text message at 12.34 pm which read:
[15] Exhibit A2, p 57.
OK we just want to be sure we are doing this deal John.
There is no information about the meaning of the expression “the deal”. Mr Carbone said in evidence that the reference to “the deal” was contained within an email sent by Mr Hillam to Mr Carbone shortly prior to that text message, dated 17 July 2017 sent at 12.03 pm.[16] The first sentence of that email read:
[16] Exhibit A1, p 65.
Any offer that we might be inclined to make would be conditional that BR (bankruptcy) proceeds in the short term.
Mr Carbone said that he discussed that topic with Mr Hillam on or around 17 July 2017. Mr Hillam goes on to say in the same email:
It may not happen on Wednesday but even in this case we will still go ahead and pay the deposit and the final amount as agreed provided the BR will still happen.
If the BR is not made on Wednesday, we might have to stand in your shoes.
You should encourage Mr Lewis to spend this remaining time thinking your settlement is going to happen and reject it at the last minute on Wednesday morning.
The next relevant paragraph reads:
In our matter, we would take BR action against goldus which would also cause all his companies to fall over.
The last paragraph reads:
To ensure certainty, you should make a deal with our group on reasonable terms.
That email was sent immediately prior to the email sent by Mr Hillam to Mr Carbone at 12.34 pm saying “…we want to be sure we are doing this deal.” In his evidence, Mr Carbone said he had discussions with Mr Hillam in which Mr Hillam said he would buy the debt owed by Mr Lewis to Mr Graziano and would make a $25,000.00 deposit. It is contended that there was at the least a form of chose in action in contract for the benefit of Mr Graziano against Mr Hillam. Mr Carbone contended that the total debt owed to Mr Graziano was $320,000.00 and it was Mr Hillam who said that he would buy that debt. That is one of the issues for my determination. There is no indication whether, for example, it was expected that Mr Hillam would pay 100 cents in the dollar for this debt or why he would do so in light of the impending bankruptcy of Mr Lewis. To so do would secure to Mr Hillam the right to bankrupt Mr Lewis but that appears to be ‘cold comfort’ from an expenditure point of view. Mr Lewis may, for example, attempt to challenge the assignment of the debt and thereby procure the delay he was seeking. Conversely, after the assignment was complete, Mr Graziano would have no interest in the assigned debt and only an interest in the obligation in contract of the assignee.
This offer is described in paragraph 24 of the statement of claim as follows:
24. On 17 July 2017, the plaintiff’s agent Mr Frank Mr Carbone had a telephone conversation with the Defendant at about 8.30 am to advise that the plaintiff had been asked to consider an offer of settlement with Mr Lewis. In the course of the conversation, the Defendant said (the Defendant’s offer) that:
24.1 Mr Lewis would not keep any deal;
24.2 The plaintiff should not do a deal with Mr Lewis to compromise the petition;
24.3 The plaintiff should deal with the Defendant instead;
24.4 The Defendant pay the plaintiff $320,000 being his claim plus costs and take over the debt;
24.5 He would speak to his solicitor about how best to proceed.
In the email sent by Mr Hillam to Mr Carbone copied to his solicitor Ms Hynes,[17] no offer is actually set out. The first line of the email speaks of:
[17] Exhibit A1, p 65.
an offer that we might be inclined to make would be conditional on the bankruptcy proceeding in the short term.
The email was sent at 12.03 pm on 17 July 2017 and Mr Hillam sent the text message to Mr Carbone at 12.34 pm on the same day, suggesting that he wanted to be sure that “we are doing this deal”. Those who comprise the collective “we” used as the expression are not identified and its use is not necessarily indicative of Mr Hillam committing himself to do anything alone. It may suggest, for example, that a number of parties from the Hillam side at least may be involved in this deal. The use of the collective pronoun “we” after the words “ok” within the message may be indicative of an intention of Mr Hillam that more than one party from his side would be involved in the transaction. That is consistent with other messages received and is also consistent with the corporate position of Mr Hillam vis-à-vis debts owed to Mr Lewis or the Lewis entities. These are matters for resolution about whether there was an agreement on particular terms as has been alleged. I will consider that question later in these reasons.
On 18 July 2017, Mr Wither, prepared a proposed deed of agreement and forwarded it to Ms Hynes as a draft heads of agreement. The recitals set out some history. The fourth recital reads:
Mr Hillam is a supporting creditor and has offered to purchase the Mr Lewis debt including the right to prove in any Mr Lewis bankruptcy in the event that Mr Graziano is unable to negotiate a settlement with Mr Lewis and in the further event that Mr Lewis is accordingly made bankrupt.
Paragraph 7 of the proposed agreement obligates Mr Hillam to forthwith pay Mr Graziano the sum of $25,000.00 by 26 July 2017. That amount was never paid. The eighth paragraph reads as follows:
8.In the event that Mr Graziano is unable to negotiate payment in full from Mr Lewis and is forced to bankrupt him then Mr Lewis will at the option of Mr Graziano (such option to be exercised by notice to Mr Hillam by email or ordinary post) purchase the debt and the right to prove in the bankruptcy.
In evidence, Mr Wither said that he was concerned about the application of the principles of champerty and maintenance. I discuss the applicable principles below. He said that is why he drafted the document in the form of a ‘put and call option’, that if Mr Graziano cannot negotiate payment in full from Mr Lewis and is forced to bankrupt him, Mr Hillam will, at the option of Mr Graziano (who would need to put the obligation to Mr Hillam), be called upon to purchase the debt.
A number of issues arise. There is no dispute on the evidence that a put and call option was not discussed at any time between any of the parties. The evidence does not disclose that Mr Graziano ever considered the possibility of the negotiation of the payment in full from Mr Lewis. He was petitioning at the time for the bankruptcy of Mr Lewis upon an unpaid debt. The pre‑conditions (of the obligation) to be fulfilled are that Mr Graziano is unable to negotiate payment in full from Mr Lewis and is forced to bankrupt him. It is only then that Mr Hillam may be subject to the put and call option available to Mr Graziano requiring him to purchase the debt. The clause appears to be based upon a fallacy of an expectation of Mr Lewis paying his debt in full to Mr Graziano.
Even accepting that this was the bargain negotiated between the parties, it was a conditional bargain. In the usual course, such a clause would be drawn on the basis that upon the happening of a particular event Mr Graziano had the right, to call upon Mr Hillam to purchase the debt. In the background of the stated intention of Mr Hillam to bankrupt Mr Lewis, it appears to be inconsistent for Mr Graziano to have any earlier opportunity to negotiate a payment of the debt owed by Mr Lewis to his own satisfaction. In context, this would likely amount to an accord and satisfaction of the obligation of Mr Lewis and the legal rights of Mr Graziano even though there appeared to be no prospect of Mr Lewis paying the debt in full or reaching such an agreement. That is not the way the clause is drawn. It requires a negotiation to achieve a payment in full from Mr Lewis and in the event of failure, being forced to bankrupt Mr Lewis. It is conditional in the sense that there is a requirement for a negotiation about a payment in full of a debt owed by Mr Lewis. Mr Lewis may, for example, contest that he owes the amount claimed by Mr Graziano. He may contend that the amount claimed is excessive and the payment should never be required because it is an excessive claim. This is a remote possibility, but it is an exemplar. And any term requiring payment in full may be illusory. There is also no time limit within which the negotiation should take place, nor is there any identification of the debt except in item 1 of the recitals which indicates that Mr Graziano is a judgment creditor of Mr Lewis in the amount of $290,000.00 plus court interest and costs.
The fourth recital on page 1 of the Heads of Agreement records that Mr Hillam is a supporting creditor and has offered to purchase the Lewis debt including the right to prove in any Lewis bankruptcy in the event that Mr Graziano is unable to negotiate a settlement with Mr Lewis. The negotiation of a settlement with Mr Lewis is meaningless unless it is understood in the context of the agreement at clause 8, which requires a payment in full from Mr Lewis. To the extent that the recitals are inconsistent with the agreement, then the terms of the agreement would prevail.
Also, the content of the recitals and the paragraphs of the agreement name only Mr Hillam. In his earlier emails, Mr Hillam made a specific reference to “we”, a plural personal pronoun that appears to be deliberately inserted into the emails. In his evidence, Mr Hillam said that having regard to his own experience, he would never again enter into a contract with a personal liability. Whether that may be accepted is a matter for further consideration.
The form of the agreement was sent to Ms Hynes. The deficiencies that I have identified in the form of the agreement were not identified by Ms Hynes specifically. In the subsequent exchanges of emails, Ms Hynes did not accept or reject the content of the draft document. She asked for the provision of some documents so that she could make minor amendments. The question of whether or not the document would then be signed is a different question that was not addressed by Mr Wither.
In evidence, Mr Carbone was referred to the exchange of emails about the application by Mr Lewis to the Federal Circuit Court for an adjournment based upon the ‘compromise’ argument and about whether Mr Lewis should be bankrupted. Mr Carbone said that prior to that email, he had spoken to Mr Graziano and convinced him to accept Mr Hillam’s offer. At 5.53 pm on Tuesday, 18 July 2017, Mr Hillam sent Mr Carbone an email in which he enclosed a copy of portion of a letter between Mr Colovic, the solicitor for Mr Lewis and Mr Wither, solicitor for Mr Graziano.[18] It suggests that the parties have been working to reach a resolution of the difficulties and that the parties would request an adjournment.[19] In his email, Mr Hillam says that the solicitor (Mr Wither) has to say that no agreement has been reached, only vague proposals had been provided from the Lewis side and that there is no agreement, including for an adjournment. The next day, Friday, 19 July 2017, after the Court hearing, at 11.19 am Mr Hillam sent a text to Mr Carbone and Mr Graziano asking them to come to the Hilton Hotel for a chat.
[18] Exhibit A1, p31.
[19] This request for an adjournment was later made to the Registrar and was refused.
The statement made by Mr Hillam in relation to there being no agreement is correct as there was no agreement between any of the parties. The draft agreement put to Mr Hillam required at clause 8, in the put and call option, for there to be a negotiated agreement (the terms of which are not identified) for the payment (the time in which the payment to be is made is not identified) of the full amount of the debt (the amount of which is not identified) by Mr Lewis to Mr Graziano. The sentence in the text “…there is no agreement for anything including an adjournment…” is correct. It was Mr Carbone who then gave the solicitor Mr Wither the instructions to bankrupt Mr Lewis in the following days.
The evidence of Mr Graziano and Mr Carbone was that they went out to dinner that evening with Mr Hillam at the Coopers Alehouse. Mr Carbone suggested that there had been an exchange of promises and that Mr Hillam said that he was a man of his word and he shook hands on a deal. Mr Carbone said he told Mr Hillam that he was “going to shake his hand, we have a deal and we stick to it. Don’t muck us around.” Mr Graziano did not have a clear memory of who shook hands. He thinks that he shook hands separately with Mr Hillam and that Mr Carbone also shook hands with Mr Hillam. He can recall words such as “we have a deal” or something similar being said.
Mr Carbone said that the parties then agreed to meet at 9.30 am the next morning before court. By that time, the proposed agreement had not been signed and there had been no exchange of any signed form of agreement (whether in counterparts or otherwise). There was no order made in the Federal Circuit Court about the application to bankrupt Mr Lewis at that time and Mr Hillam made his dissatisfaction with the lawyers very plain.
The next event, according to Mr Carbone’s records, occurred on 22 July at 2.53 pm. Mr Carbone sent a message to Mr Hillam saying that he had worked out a way for the deal to be done where everyone was at arm’s length and all of the parties would be happy. There is no clear evidence about precisely what Mr Carbone meant by that email. One inference is that he was giving further instructions to Mr Wither that may have been connected with further terms to be included in a next draft of the agreement and that something had to change for a deal to be done. However, as I have already indicated, there was no negotiation about the terms of the preferred agreement; it was submitted and it was not executed. It also appears to be a reasonable inference from the text of Mr Carbone that at least he was aware that another way may needed to be found to get the ‘deal done’.
Between 22 July and 27 July, there were a number of exchanges by text between Mr Carbone and Mr Hillam. In relation to the delay before the Federal Court hearing and the issue of the contest about the delivery of the bankruptcy notice which was to be the subject of submissions and argument, Mr Hillam complained that Mr Lewis was using the time to appoint his brother as a director of his companies in which he held the shares. These exchanges occurred on 26 July 2017.[20] By 27 July 2017, Mr Carbone was enquiring of Mr Hillam why his lawyers were not responding to the request for confirmation of the $25,000.00 outstanding deposit. The text from Mr Carbone to Mr Hillam suggests that the solicitor, Ms Hynes, had informed Mr Graziano’s solicitor that she was waiting on instructions from Mr Hillam. Within 10 minutes and at 10.40 am on 27 July 2017, Mr Hillam responded to Mr Carbone and said that he was finalising the agreement. Mr Hillam informed Mr Carbone that from his point of view, the agreement was not yet finalised, he was still giving instructions to his solicitor about its content and any draft that then emanated from Mr Hillam would need to be seen by the Graziano interests. At 10.42 am on the same day, Mr Carbone responded and asked why Ms Hynes would not confirm to the solicitor for Mr Graziano, Mr Wither, the $25,000.00 deposit Mr Hillam had made into her trust account. This was to be the term of any settled agreement. At 10.42 am, Mr Hillam responded that the solicitor has the $25,000.00 but that the solicitor, Ms Hynes, is still awaiting instructions (from Mr Hillam) about her response to the other solicitors. By 11.21 am on 27 July, Mr Hillam responded again to Mr Carbone and said that he has approved the final draft of the agreement which he would consider. I think it is apparent that the form of agreement Mr Hillam would consider was not in the terms of the draft prepared by Mr Wither. If that were not so and if there was agreement on terms of the Wither draft, that could have and would have been stated. Objectively, Mr Hillam had another view and was prepared to put forward a version acceptable to him. That version had not been seen by the Graziano interests by that time.
[20] Exhibit A1, page 58.
At 1.36 pm on the same day, 27 July, Mr Hillam texted Mr Carbone and informed him that there were quite a few changes to the words to avoid any claim of abuse of process. Later, between 1.37 pm and 1.38 pm that day, Mr Carbone informed Mr Hillam that he had told Mr Graziano that as long as Mr Lewis goes bankrupt, he gets paid and he asked if that is correct. Mr Hillam responded via text at 1.40 pm on 27 July saying that is correct and that’s as simple as the agreement is, but that begs the obvious question of the terms under which this sum becomes payable, on what basis and by which person or entity and if so under what, if any conditions. Then, at 8.21 am on 28 July, Mr Hillam informed Mr Carbone that Mr Lewis had declared himself bankrupt on 27 July and a trustee had been appointed of the bankrupt estate of Mr Lewis.
The evidence of Mr Carbone and Mr Graziano was that at the meeting at the Coopers Alehouse, that the parties shook hands. There were several versions of how this occurred but I consider that any differences are immaterial. I am also satisfied that, contemporaneous with the shaking of hands, the parties thought they had some form of deal. The essential question is whether any of them where referring to the same deal. To the extent that Mr Hillam denies that fact in his evidence, I would not accept his evidence but that finding is of limited assistance. I consider that the more important issue is to identify what is the deal (if any) that is said to have been achieved or reached as at, or immediately prior to, the shaking of hands. On the evidence, that is a very difficult task.
By that time, Mr Wither had produced his draft of the agreement. It included the put and call option in paragraph 8. Included within the terms of that option are a number of conditions precedent or pre‑requisites that could not be achieved on any objective view. The first and most important was the requirement that the terms would operate in the event that Mr Graziano is unable to negotiate payment in full from Mr Lewis and is forced to bankrupt him. At the time that this document was drawn, it was abundantly clear that Mr Lewis was not in a position to pay the full amount of the debt he owed to Mr Graziano and that the debt had been outstanding for a very long period of time. There was no prospect of a negotiation with Mr Lewis to force a payment in full. Mr Graziano was forced to use a bankruptcy notice on a judgment he had already obtained by consent. No part of the judgment had been paid to Mr Graziano.

I also refer to the recent decision of the High Court in Realestate.com.au Pty Ltd and James Kelland Hardingham & Ors v RP Data Pty Limited and James Kelland Hardingham & Ors [2022] HCA 39 especially at [15] per Kiefel CJ and Gageler J and at [45] per Gordon J.
In my consideration of the facts of this matter, these are the legal principles which I have taken into account and have applied. These principles have guided my discussion and assessment of the material fact, upon which I have made my findings.
I am not satisfied on the balance of probabilities that on 18 July 2017, the parties entered a binding agreement that Mr Hillam agreed to pay the sum of $320,000.00 to Mr Graziano in two separate instalments of $25,000.00 and $295,000.00 within four months; that Mr Graziano would not compromise the debt with Mr Lewis but would instead proceed to bankrupt Mr Lewis.
I further find that in the absence of such an agreement, that none of the conduct of Mr Hillam was repudiatory in nature. I further find that there was no conduct of Mr Hillam that was promissory in nature sufficient to ground an estoppel or that there was some unconscionable departure from conduct. I also consider that any promissory conduct alleged to have occurred can only have occurred in the context of a contractual relationship alleged to have been established between the parties. As I have found that the applicant does not succeed on that claim, I also find that the applicant does not succeed on the alleged ground of estoppel.
I similarly find that the conduct of the respondents did not amount to a misrepresentation relied upon by the applicant. I consider that in relation to the estoppel and misrepresentation pleas there is also a logical non‑sequitur involved in these arguments. Leaving aside the failure of the applicant to satisfy me of the claim in contract, estoppel and misrepresentation, the position is that Mr Lewis was made bankrupt on his own petition and that his unpaid creditors amounted to $5.2 million on his statement of affairs. He was plainly insolvent. It could not be said that anything done or not done by Mr Hillam in that context could alter that position, could somehow accelerate the financial demise of Mr Lewis or lead to a conclusion of the value of negotiating with Mr Lewis. At the time Mr Lewis was aware of his financial position and accepted his insolvency and his fate by making his own application to be declared bankrupt. By so doing he rendered to nothing all of the other machinations of these parties.
If I am wrong about the formation of any contract, then the case of the applicant is that upon his successful application to bankrupt Mr Lewis, he was entitled to receive a payment from Mr Hillam of $320,000.00. I will leave to one side the difficulties I have with the requirement to pay a deposit upon a contract where the occurrence of the event that grounds the obligation to make payment is uncertain. Focusing only upon the alleged contract, its terms were not fulfilled. Mr Lewis was made bankrupt upon his own petition. No orders were made in the bankruptcy jurisdiction for the sequestration of the estate of Mr Lewis on the petition of Mr Graziano. The application fell away as a result. There is no evidence that the application of Mr Graziano “forced the hand” as it were of Mr Lewis. To the contrary, the statement of affairs in that bankruptcy disclosed unsecured creditor of $5.2 million. These debts owed to Mr Graziano were comparatively minor and it is impossible to say if Mr Hillam had any proveable debts in the bankruptcy of Mr Lewis. The obligations under the contract were not fulfilled.
If I were wrong about all of those matters, the applicant would be entitled to be paid the sum of $320,000.00 plus prejudgment interest which I would fix out a rate of 5% per annum.
I dismiss the claim of the applicant. I will hear the parties as to costs and any consequential orders.

Mutual credit and set-off
(1)Subject to this section, where there have been mutual credits, mutual debts or other mutual dealings between a person who has become a bankrupt and a person claiming to prove a debt in the bankruptcy:
(a) an account shall be taken of what is due from the one party to the other in respect of those mutual dealings;
(b)     the sum due from the one party shall be set off against any sum due from the other party; and
(c)     only the balance of the account may be claimed in the bankruptcy, or is payable to the trustee


in the bankruptcy, as the case may be.
(2)A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving   credit to the person who has become a bankrupt or at the time of receiving credit from that person, he or she had notice of an available act of bankruptcy committed by that person.