Knowledge Business Accelerator Limited v Marianne Gregorienna Reiner

[2003] NSWSC 435

CITATION:	Knowledge Business Accelerator Limited & Anor v Marianne Gregorienna Reiner & Anor [2003] NSWSC 435
HEARING DATE(S):	30/04/03; 01/05/03; 02/05/03; 14/05/03
JUDGMENT DATE:	26 May 2003
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Nicholas J
DECISION:	Plaintiff entitled to order for specific performance
CATCHWORDS:	CONTRACT - SALE OF SHARES - SPECIFIC PERFORMANCE - whether intention of parties to enter into binding agreement - whether Second Plaintiff breached and thus repudiated agreement - whether Second Plaintiff disentitled to relief by reason of unclean hands - whether Plaintiffs entitled to order for specific performance - HELD - Plaintiffs entitled to order for specific performance
CASES CITED:	Brambles Holdings Ltd v Bathurst City Council (2001) 52 NSWLR 153 Geebung Investments Pty Ltd v Varga Group Investments (No. 8) Pty Ltd (1995) Aust. Contract Reports 90-059 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Masters v Cameron (1954) 91 CLR 353 Souter v Shyamba Pty Ltd [2002] (Unreported, NSWSC, 3 October 2003)
PARTIES :	Knowledge Business Accelerator Limited - First Plaintiff Hani Iskander - Second Plaintiff Marianne Gregorienna Reiner - First Defendant Reincorp Pty Ltd - Second Defendant
FILE NUMBER(S):	SC 50187/02
COUNSEL:	M Tyson - Plaintiffs P Barham - Defendants
SOLICITORS:	Ebsworth & Ebsworth - Plaintiffs Somerville & Co - Defendants

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

NICHOLAS J

26 May 2003

Marianne Gregorienna Reiner & Anor

JUDGMENT

1 HIS HONOUR: The Plaintiffs seek a declaration that on 8 April 2002 the First Plaintiff, Second Plaintiff (Mr Iskander) and the First Defendant (Mrs Reiner) entered into a binding agreement that included the following terms:

(a) that the First Defendant would pay the First Plaintiff $50,000.00 on 29 June 2002;

(b) that in consideration of the payment of the sum of $50,000.00, the First Plaintiff would transfer to the First Defendant or her nominee all its shares in the capital of Mortgage Genius Pty Ltd and Investment Genius Pty Limited; and

(c) that the Second Plaintiff would resign as a director of Mortgage Genius Pty Ltd and Investment Genius Pty Ltd.

They also seek an order that the agreement be specifically performed, and ancillary orders.

2 The Plaintiffs contend that the parties intended that the handwritten note (the note) signed by Mr Iskander and Mrs Reiner at a meeting on the afternoon of 8 April 2002 constituted a legally binding agreement although it was expected that it would be incorporated into a more formal document prepared by solicitors. It was also agreed that Mr Iskander would resign as a director of Mortgage Genius Pty Ltd and Investment Genius Pty Ltd.

3 The Defendants contend that only the price of the shares was agreed upon, and that it was not the intention of the parties to enter into a legally binding agreement unless and until they executed and exchanged formal contracts prepared and approved by their solicitors. Although the Defendants admit that it was agreed to appoint a solicitor to document the terms of the discussion, they say that the contemplated formal contract would include important matters yet to be negotiated and agreed upon, which were not included in the note.

Background

4 The relevant history and essential facts leading up to the signing of the note on the afternoon of 8 April 2002 are not in dispute and are summarised hereunder.

5 On 21 June 2002 Mortgage Genius Pty Ltd (the company) was incorporated. Its directors were Mr Iskander and Mrs Reiner. The First Plaintiff and the Second Defendant were equal owners of its share capital, each holding 1,000 shares. It carried on business as a mortgage broker. Mr Iskander and Mrs Reiner were also directors of Investment Genius Pty Ltd which carried on business as a real estate consultant. The First Plaintiff and the Second Defendant were equal owners of its share capital.

6 From about early 2002 the relationship between Mr Iskander and Mrs Reiner deteriorated, as did the fortunes of the businesses. By the end of March 2002 the company apparently lacked sufficient funds to enable it to continue trading. The relationship between Mr Iskander and Mrs Reiner had seriously deteriorated. Mr Iskander was not prepared to finance operations whilst Mrs Reiner was involved with the company. It is common ground that by April 2002 the position had been reached that they were unable to agree as to the future conduct of the businesses and could not work together.

7 By 4 April 2002 it was Mrs Reiner’s belief that the company was insolvent, although Mr Iskander disagreed. That day they met on several occasions when options for the future conduct of the company were discussed, including closing the business down, or the buyout by one of the interest of the other. As Mrs Reiner’s diary note of this date indicates, the purpose of these meetings was to reach a final outcome of the situation. It is plain that the parties were conscious of the importance to each other to do so. However, these discussions were to no avail.

8 On 5 April 2002 Mr Iskander and Mrs Reiner sought advice from the company’s solicitor, Mr Michael Neylan, as to its possible insolvency and options for winding up. At his suggestion they consulted an accountant, Mr Barton. His view was that the company was not then insolvent but cautioned them against making new contracts to buy supplies. According to Mrs Reiner’s diary note Mr Barton thought they were on thin ice and should make a decision that day or close the door.

9 Later that day there was another telephone conference with Mr Neylan whose view was that voluntary administration was the preferred course of action.

10 It is Mr Iskander’s evidence, which I accept, that following that conference he handed to Mrs Reiner a memorandum dated 5 April 2002 which contained his offer to her, or to parties related to her, to sell the shares he controlled in the company. Two options were offered. The first was a cash option under which his shares were offered for a cash sum of $50,000.00, transfers to take place upon payment but no later than 29 June 2002. The second option was described as a “Share Dilution Option”. Under both options Mr Iskander would resign as a director of the company and its subsidiaries. The offer was made conditional upon acceptance or rejection no later than 5pm, Saturday, 6 April 2002.

11 Shortly afterwards Mrs Reiner informed Mr Iskander that she needed the weekend to think about the offer, but was not interested in the passive equity option because she didn’t want anything to do with him in the future. The date for her response was changed to Monday, 8 April 2002.

8 April 2002

12 At about 9.30am on 8 April 2002 Mr Iskander and Mrs Reiner met in the company’s office. Mr Iskander described the meeting as brief and acrimonious. His offer of 5 April 2002 was rejected. Mrs Reiner put another proposal which included payment of $50,000.00 for the shares with payment in about three years. Her proposal was rejected, and Mr Iskander then stated that his offer was a fixed $50,000.00 cash for the shares payable by 29 June 2002, or nothing.

13 As no agreement was reached, a meeting with Mr Riad Tayeh, a registered liquidator specialising in corporate insolvency work, was arranged. He had had no previous association with either person or with their companies. The meeting took place in the office early in the afternoon with Mr Iskander and Mrs Reiner in attendance. Initially the plight of the company and options for its future were discussed, and Mr Tayeh described the processes involved in voluntary administration and liquidation.

14 The option of a buyout by one shareholder from the other was then discussed. The evidence of each of Mr Tayeh, Mr Iskander and Mrs Reiner as to this conversation is substantially to the same effect and the parties did not challenge each other’s version of it. I find that the sequence was that Mr Iskander stated that he was willing to let Mrs Reiner buy his shares for $50,000.00 payable on 29 June 2002 provided that there be agreement at this meeting, with no further discussions or negotiations. Mr Tayeh then asked Mrs Reiner if she would be willing to pay Mr Iskander $50,000.00 by 29 June 2002 for his share as had been discussed previously. Mrs Reiner replied that she would, but was unable to pay within the timeframe sought. She then asked to be permitted to make some phone calls to see if she could raise the money. She then left the room and returned about 15 minutes later.

15 The dispute between the parties in this case really arises from the conflicting versions of the conversation which took place following the return of Mrs Reiner to the room.

16 It is convenient first to summarise the relevant evidence for the Plaintiffs. The substance of Mr Iskander’s evidence, which is corroborated by the evidence of Mr Tayeh, is as follows.

17 On her return Mrs Reiner said words to the effect “We have a deal”, and that her first husband would provide the money. According to both Mr Tayeh and Mrs Reiner, Mr Iskander said in response to Mrs Reiner: “Good. We have a deal”.

18 Mr Iskander then said words to the effect: “I will not leave this meeting until we have written down the agreement and signed it”.

19 Over the next two hours Mr Iskander and Mrs Reiner discussed and agreed upon matters consequential upon the sale of the shares. Mr Iskander wrote down on a page from his notebook each item after agreement had been reached about it. Mrs Reiner was looking over his shoulder and was able to see what was written. At the end of the conversation the note was given to Mrs Reiner, which she read and then signed. It was also signed by Mr Iskander.

20 The text of the note is as follows:

“8/4/2 1200 NOON

MONDAY RIAD TAYEH (de Vries Tayeh)

- $50K by 29 June

- Not payment $5,500 set up fees

- Marianne accepts Bruce Gall consulting fees up to the time she told him.

- Hani keeps his mobile #

- Hani take out his computer from storage

- Hani to introduce Marianne to Insomnia and all other supplier details.

- Copy of all MG files back to server.

- Hani to work till Friday

- All companies involved inc. IG. are covered by this agreement.

- Hani will negotiate Bruce Gall and if ncc necessary Hani will cover the first $1000”.

21 Mr Iskander photocopied the document and handed a copy to each of Mrs Reiner and Mr Tayeh. He said to Mrs Reiner “Lets shake hands. This is now it. The deal is done”.

They then shook hands.

22 I turn to the evidence of Mrs Reiner in her affidavit sworn 13 February 2003. Her oral testimony was to the same effect.

23 In para 51 of the affidavit she said:

“MR: “I have managed to get some money from my ex-husband and could pay you the $50,000 for your interest in the business subject to a formal contract to be approved by my lawyers”.
HI: “Let’s document it and put down the major points of the agreement”.
Iskander then commenced writing”.

24 In para 53 of the affidavit she said that in response to Mr Iskander saying “Good we have a deal” she said: “Not until the legal documents are signed”.

25 In para 54 of her affidavit she asserted that the note did not contain terms and conditions that she considered essential such as a restraint of trade clause which had been discussed “hypothetically” earlier that day. She said she certainly did not intend to be bound by a handwritten document prepared by Mr Iskander. There was no further identification of the terms and conditions to which she referred.

26 Each of Mr Iskander and Mr Tayeh deny that Mrs Reiner stated that the agreement was subject to a formal contract to be approved by her lawyers or to the signing of legal documents.

Mr Iskander also denied that in their discussions Mrs Reiner ever sought a restraint of trade clause from him or that he had agreed to such a clause.

Events after the note was signed

27 In deciding which version should be accepted, and whether or not it was the intention of the parties to make a binding agreement then as evidenced by the note, I have taken into account evidence of events and conduct which took place after the note had been signed. Well-settled principles justify the court in doing so (eg: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 para 24 and Geebung Investments Pty Ltd v Varga Group Investments No. 8 Pty Ltd (1995) Aust. Contract Reports 90-059 p 14562). Essentially, the evidence was not in dispute and was as follows.

28 Mr Iskander and Mrs Reiner received, and replied to, an e-mail from Mr Joshua Theunissen, a solicitor with Ebsworth & Ebsworth, the firm which acted for the company from time to time. This e-mail, sent at 4.42pm, so far as is relevant, is in the following terms:

“Agreement for Sale of Shares
I refer to my discussions with Hani today in which he asked me to provide a quote for preparation of an agreement for the sale of shares in Mortgage Genius and Investment Genius as follows:
1. Marianne (or nominee) will buy all shares owned by Hani in both Mortgage Genius and Investment Genius for $50,000.
2. Settlement for the transfer of shares will occur on 29 June 2002 with payment by bank cheque.
3. On execution of the agreement, Hani will resign as the director of Mortgage Genius and cease to be a signatory on relevant bank accounts.
4. The transfer of shares will happen on settlement, however all documents for the transfer of those shares will be signed on execution of the agreement held in escrow by an escrow agent (this could be us, your accountants, or any other appropriate person).
5. Hani consents to Marianne operating Mortgage Genius as she sees fit.
6. Marianne will give Hani a personal guarantee regarding aspects of completion of the transaction, as the purchaser may be a nominee of Marianne. To better secure all obligations, Marianne will give a charge (i.e. equitable mortgage) over the shares. Marianne holds in Mortgage Genius.
…
Could you please let me know whether you would like to proceed with this matter. While I understand it is a matter of great urgency, it is also important to get the agreement right so that it properly reflects the understanding and agreement of the parties. If there are any matters set out above which need refinement, please let me know”.

29 Mr Iskander’s reply, sent at 6.29pm to both the solicitor and Mrs Reiner was follows:

“RE: Agreement for Sale of Business
I am sending this email on behalf of the (sic) Marianne and I, copying Marianne. You will also receive from Marianne a direct email confirming the following feedback.
1. We are happy to proceed with you writing the agreement and invoicing Mortgage Genius $1000 as quoted. We agree that in this matter you are acting for the company, not the individual shareholders. We would like to keep the agreement as simple as possible in number of pages, this way we can avoided (sic) multiple revisions.
2. The Agreement should apply to two companies: Mortgage Genius Pty Ltd and Investment Genius Pty Ltd (formerly known as Business Genius. All of the other companies are subsidiaries of Investment Genius so no shareholder changes apply, only resignations as director by Hani.
3. Please note that currently there are two shareholders: Reincorp Pty Ltd and Knowledge Business Accelerator Limited, each with 1000 shares (2000 shares in total) in each of Mortgage Genius and Investment Genius.
4. It will be that “Reincorp and/or its nominees” who will buy the shares currently owned by Knowledge Business Accelerator Limited.
5. Marianne Reiner will provide a personal guarantee that the transaction will take place and the money will be paid on 29th of June 2002. Please do not include any reference as to a charge over the shares held by Reincorp.
Marianne will write to you in a separate email with a query regarding outstanding invoices”.

30 Mrs Reiner’s reply sent at 7.05pm to the solicitor, was as follows:

“FW: Agreement for Sale of Shares
I confirm Hani’s email with a small alternation to paragraph 2 in that all subsidiaries are of Mortgage Genius and not of Investment Genius”.

31 On 9 April 2002 at 8.15am, Mrs Reiner sent to the solicitor and Mr Iskander an e-mail in the following terms:

“Agreement for Sale of Shares
My own commercial lawyer is back from holiday and I would like to get her quote for the preparation of the Agreement.
Please do not proceed until I have a chance to talk to her sometimes (sic) today”.

32 On 10 April 2002 Mrs Reiner sent an e-mail to a Mr C J Boyd, solicitor, which, so far as is relevant, in the following terms:

“Salle (sic) of Business
As discussed on the phone, my business partner Hani Iskander and I have agreed to my buying his 50% of the business on the following conditions:
1. Purchase price is $50,000.
2. The Agreement should apply to two companies: Mortgage Genius Pty Ltd and Investment Genius Pty Ltd (formerly known as Business Genius Pty Ltd).
…
4. A nominee clause will be required to allow for a possible change of ownership.
5. I will provide a personal guarantee that the transaction will take place and the money will be paid on the 29th of June 2002. No other security will be provided.
6. Settlement to take place on 29 June 2002.
7. On execution of this agreement, Hani will resigns (sic) a director of both Mortgage Genius and Investment Genius and cease to be a signatory on all bank accounts.
8. Although the transfer of shares will take place on settlement, I feel it may benefit me if all document (sic) for the execution of this transfer are signed on execution of this Agreement and held by you in escrow.
9. I will have a right to operate both companies as I see fit with no money owed to Hani in relation to past or future sales.
10. There is a potential dispute between Hani and myself in relation to Mr Bruce Gall who was consulting to Mortgage Genius. Hani committed Mortgage Genius to $5,500 expense on top and above of regular consulting fees without an authority to do so. I was only aware of consulting fees of $2,500 per month and learnt about thew (sic) situation last week. However, in the interests of seeing this transaction though, I agreed that we will negotiate with Bruce Gall trying to decrease the amount. However, Hani will pay $1,000 towards this (sic) fees.
Basically, that’s it. I would like the Agreement to be very simple so there is as little open for interpretations (sic) as possible. I also attached (sic) a hand-written agreement we reached in the presence of a third party.
I would appreciate a fixed quote for the preparation of the agreement”.


The attachment referred to was the document signed at the meeting on 8 April 2002.

Mrs Reiner advised Mr Iskander of the e-mail and gave him a copy of it.

33 Mr Iskander gave evidence, which I accept, as to activities after 8 April 2002. He left the business on the afternoon on 12 April 2002. By that time arrangements had been made about the mobile phone and its number, for the return of a marketing and sales training manual to the company, for the handing over of the companies files to Mrs Reiner, for the provision of a handover list of information about the operation of various functions in the office and other matters relevant to the conduct of the business by Mrs Reiner after his departure.

34 I do not overlook the evidence of Mr Gregory Barry Booth who had been employed by the company as its operations manager from about September 2001 until 1 July 2002. In summary, he said that on the afternoon of 8 April 2002 following the meeting attended by Mr Tayeh Mrs Reiner told him that she had just bought the company from Mr Iskander for $50,000.00 and that he was to resign as a director and would be leaving on Friday (12 April). She added “I’ve ripped him off - $50,000.00 was cheap”. He also described subsequent events and conversations with Mrs Reiner which happened on occasions in April, May and June 2002 which indicated that she was winding down the operations of the company.

35 Mrs Reiner denied that there was a conversation after the meeting as described by Mr Booth and denied his version of some matters in the months referred to. It seemed to me that Mr Booth was but faintly challenged in cross-examination as to his evidence, and I found him to be a witness of truth. Where his evidence conflicts with that of Mrs Reiner I prefer his. Accordingly, I accept his evidence as to the conversation and the other matters.

The issues considered

36 I am satisfied that the evidence of Mrs Reiner that she said to Mr Iskander and Mr Tayeh the words “…. subject to a formal contract to be approved by my lawyers” (or words to like effect) and the words “Not until the legal documents are signed” (or words to like effect) should be rejected. I find that no such words were spoken.

37 Further, I am satisfied that her evidence referred to in para 25 above as to the omission from the note of essential terms including a restraint of trade clause, and that she did not intend to be bound by the note should also be rejected. It is to be noted that there was no evidence, even in her case, that such matters were discussed or adverted to by anybody during the afternoon meeting.

38 I am satisfied, that having regard to the circumstances (including the events of 4, 5 and of the morning of 8 April) in which it came to be written and signed by them, the note was intended by Mrs Reiner and Mr Iskander to be an immediately binding contract for sale although it was expected to be incorporated into a formal contract, and I so find. In my opinion the terms of the note are capable of having contractual effect. In particular, I find that the entries “$50K by 29 June” and “All companies involved inc. IG. are covered by this agreement” record that it was the shares in both Mortgage Genius Pty Ltd and Investment Genius Pty Ltd which were to be sold for $50,000.00 by 29 June 2002.

39 My reasons for these conclusions are as follows.

40 My observations of each of Mr Iskander and Mr Tayeh enable me to hold that they were honest witnesses whose evidence I accept. Mr Tayeh provided entirely independent corroboration of Mr Iskander’s account of events at the meeting. I accept the denials by each that Mrs Reiner spoke the words to the effect of those referred to in para 36 above. Generally, to the extent that their evidence differs from that of Mrs Reiner, I prefer theirs.

41 In rejecting the evidence of Mrs Reiner referred to, I am bound to say that I found her to be an unimpressive witness whose evidence should not be accepted unless supported by independent evidence, written or oral. Under cross-examination she was evasive and, sometimes, implausible when responding to questions which tested the case she sought to make. She impressed me as an intelligent and sharp person who would be quick to secure and safeguard her interests in a commercial transaction, and well able to do so.

42 I am satisfied that Mr Iskander and Mrs Reiner convened the meeting with Mr Tayeh with the intention, and for the purpose, of finalising that afternoon all matters concerning the conduct of the business. A number of options for achieving this were discussed and rejected, after which Mr Iskander offered to sell his shares to her. I am satisfied that when he offered to sell the shares to her, Mrs Reiner accepted that any agreement was to be made then. I find that upon acceptance of the offer she intended to be immediately bound, as evidenced, inter alia, by her conduct in signing the note and shaking hands.

43 Mrs Reiner left me in no doubt that had the document not contained all the terms of an agreement which she regarded as important she simply would not have signed it. In particular, if it was intended that the agreement was conditional upon completion of formal legal documentation and/or had there been agreement on a restraint of trade clause I have no doubt that she would have ensured, prior to signing it, that the note included appropriate words to record those matters.

44 Objective facts support the finding that the parties intended to be bound that afternoon, and negate the contention that agreement was conditional upon formal legal documentation and/or that it would include a restraint of trade clause. They include the following:

· It was urgent that there be resolution of matters between Mr Iskander and Mrs Reiner concerning the companies and their business.

· Mrs Reiner’s statement to Mr Booth after the meeting on 8 April 2002.

· The e-mails sent on 8 April 2002 after the meeting. I find them to be confirmatory of the agreement for the sale of the shares in the companies. The subject of each was described as “Agreement for Sale of Shares”. The penultimate paragraph in the solicitor’s e-mail records the great urgency of the matter, and invites instructions to ensure that the document to be prepared “properly reflects the understanding and agreement of the parties”. Mr Iskander replied on behalf of Mrs Reiner and himself. His reply was confirmed (with a minor exception) by Mrs Reiner. These communications contain no reference to the conditions for which the Defendants now contend. I am satisfied that, in the circumstances, Mr Iskander’s e-mail may be taken as reflecting the understanding and agreement of Mrs Reiner as well as himself.

· Mrs Reiner’s e-mail of 10 April 2002 to Mr Boyd. In my opinion its terms are substantially consistent with, and serve to confirm, the agreement recorded in the note. The provisions sought to be added are relevant only to the implementation of that agreement. The words of the opening and penultimate paragraphs, and the incorporation of the note itself, evidence confirmation that the note recorded an agreement which she accepted was binding. No reference is made to the conditions for which the Defendants now contend.

· The fact that, at least, on 8, 9 and 10 April 2002 Mrs Reiner had not retained a solicitor, including Mr Boyd. It seems to me inherently unlikely in the circumstances that Mrs Reiner intended to postpone the making of a binding agreement which would (in her words) achieve a final outcome, until such time as she had retained a solicitor and a formal contract approved by him or her had been executed by the parties.

· The events referred to in para 33 above being matters which involved both Mr Iskander and Mrs Reiner in giving effect to the handover of operations consequential upon agreement for the sale of the shares.

45 Accordingly, I find that the note evidences a binding contract made on 8 April 2002 for the sale by the First Plaintiff of its shares in the capital of Mortgage Genius Pty Ltd and Investment Genius Pty Ltd to Mrs Reiner, or her nominee, for the sum of $50,000.00 to be paid by Mrs Reiner to it on 29 June 2002. It is a case of the first category described in Masters v Cameron (1954) 91 CLR 353 at 360. An agreement was made and each party is bound to honour it.

46 Having regard to the above findings it is unnecessary to deal in detail with all of the submissions on behalf of the Defendants. I should, however, indicate briefly my conclusions as to some of the issues raised by them.

47 It was put that Mrs Reiner’s diary note of the discussion on the morning of 8 April 2002, which included a reference to a requirement for a “restriction of trade (clause) for three years” is indicative of the intention that any agreement would include such a clause. The submission is not accepted. Mr Iskander denies that such a clause was discussed at all on the day, and I have indicated my preference for his evidence where it conflicts with that of Mrs Reiner. Furthermore, what is there recorded as items of discussions were not agreed upon. Those items were not, as it were, carried over into, and revived at, the afternoon discussion. In the afternoon the discussions began afresh, and the terms of the agreement which I have found was made arose from that occasion.

48 It was submitted that telling against a finding that an agreement was made on the afternoon of 8 April 2002 is subsequent correspondence in which numerous matters of importance were identified as yet to be negotiated and agreed upon before inclusion in a formal contract. It was said that the matters outstanding included questions as to identification of the parties to the agreement, the allocation of the purchase price, the tax effects for the parties of the transaction, whether there was to be a restraint of trade or non-competition clause, whether there were to be releases, the form of assignment of intellectual property, and the form and details of a personal guarantee from Mrs Reiner. It was put that the fact that these matters had not been referred to in the relevant discussions or in the note demonstrated that the parties neither intended to reach a binding agreement nor succeeded in doing so. I disagree. The evidence did not prove that Mrs Reiner intended that agreement for the sale and purchase of the shares would be subject to negotiation and agreement of some or all of these matters and subsequent incorporation of any agreed term in relation to them in a document. Also, in my opinion, the matters raised in the correspondence between the parties and their solicitors between 10 April and 28 June 2002 do not derogate from the finding that the share sale agreement was made. Absent evidence as to the circumstances in which the communications were made they, taken separately or together, provide no basis for concluding that no binding agreement had been reached on 8 April 2002.

49 In any event the proper resolution of the question concerning what are said to be outstanding matters may be achieved by adopting the approach taken in Souter v Shyamba Pty Ltd [2002] Unreported, NSWSC, 3 October 2002 by Palmer J, at para 26 in which he said:

“Fourth, the parties had already had advice from their solicitors. They knew that there were additional matters which could be incorporated into a subsequent formal contract, if agreement on those matters were reached. But the 1 May document contains the essential terms of the transaction, namely, the parties, the property, the price and the promises. From those essential terms all other essential matters would necessarily follow by implication. What did not follow by necessary implication and could not be agreed later for incorporation into a formal contract would simply remain at the risk of the relevant party”.

In this case those outstanding matters which did not follow by necessary implication and could not be agreed later for incorporation into a formal contract would simply remain at the risk of the relevant party.

50 It was also put that, assuming a binding agreement made on 8 April 2002, Mr Iskander was in breach of a term which obliged him to present to Mrs Reiner a document which recorded its terms, and was otherwise in breach in that he failed, or refused, to provide to Mrs Reiner, or to her companies, certain intellectual property including passwords and computer files, and failed to return to them a certain marketing manual. It was contended that these breaches evidenced repudiation of the agreement by Mr Iskander which had been accepted by Mrs Reiner who terminated the agreement. Alternatively it was put that such conduct of Mr Iskander disentitled him to the relief sought by reason of the application of the doctrine of unclean hands.

51 The evidence satisfies me, and I find, that Mr Iskander did not act in breach of the agreement as alleged by Mrs Reiner, or at all. Assuming, without finding, that the terms alleged were part of the agreement, the evidence contradicts her contentions. Her e-mails of 9 April and 10 April 2002 may be fairly read as amounting to a rebuff of Mr Iskander’s attempt to engage Mr Theunissen to prepare the contemplated document. Furthermore, in my opinion, the subsequent correspondence between the solicitors for the parties during April, May, and June 2002 when read in context provide no support for this submission, which I reject.

52 As to alleged breaches by Mr Iskander in failing to provide, or to return, to Mrs Reiner or her companies the several items referred to, I accept Mr Iskander’s evidence which is to the effect that, in fact, there were no such failures on his part. The evidence makes plain that he did all that he reasonably could to provide, or return, the items complained about.

53 It is sometimes helpful to be reminded of the passage in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 from the judgment of Deane, Brennan JJ (p 657) in which it was said that repudiation of a contract is a serious matter, not to be lightly found or inferred. The evidence in this case does not establish conduct which meets the objective test stated by their honours (p 658) in that it cannot be said to convey to a reasonable person in the situation of Mrs Reiner repudiation or disavowal either of the agreement as a whole or of a fundamental obligation under it.

54 Accordingly, I find there to be no evidentiary basis upon which it could be found that Mr Iskander repudiated the agreement, or engaged in conduct which disentitles him to the relief sought. The Defendants’ submissions are rejected.

Conclusion

55 There is no issue that on 28 June 2002 Mr Iskander resigned as a director of Mortgage Genius Pty Ltd, Investment Genius Pty Ltd and the subsidiaries of Mortgage Genius Pty Ltd effective from 29 June 2002. By letter dated 28 June 2002 the Plaintiffs’ solicitors wrote to the Defendants’ solicitors enclosing draft share transfer forms and proposing a time for settlement of the transaction on 29 June 2002 at their offices. No response was forthcoming from, or on behalf of, the Defendants. Mrs Reiner has made no payment in respect of the purchase of the shares.

56 I note that there is no issue as to the Plaintiffs’ readiness, willingness and ability to complete the contract. The Plaintiffs, therefore, are entitled to an order for specific performance of that contract.

57 On the evidence, the appropriate declaration and orders to be made should be in accordance with paras 1, 2, 3, 4, 5 and 6 of the Summons. In the circumstances it is appropriate that I direct the Plaintiffs to bring in short minutes of orders. The parties may also address me in relation to costs. Arrangements should be made with my Associate by 2 June 2003 for the relisting of this matter.

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Last Modified: 05/29/2003