Maroubra Pty Ltd v Murchison Queen Pty Ltd - [2003] WASCA 12

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: MAROUBRA PTY LTD -v- MURCHISON QUEEN PTY LTD & ORS [2003] WASCA 12

CORAM: MURRAY J
TEMPLEMAN J
WHEELER J

HEARD: 22 NOVEMBER 2002

DELIVERED : 14 FEBRUARY 2003

FILE NO/S: FUL 78 of 2002

BETWEEN: MAROUBRA PTY LTD (ACN 009 009 074)
Appellant
AND
MURCHISON QUEEN PTY LTD (ACN 057 907 963)
First Respondent
JEFTO RADOVANOVIC
Second Respondent
STEVE UREMOVIC
Third Respondent

Catchwords:

Appeal - Judge's findings of fact - Turns on own facts

Legislation:

Nil

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant:     Mr A Metaxas
First Respondent           :     Mr P T Williams
Second Respondent      :     Mr P T Williams
Third Respondent          :     Mr P T Williams

Solicitors:

Appellant:     Metaxas & Vernon
First Respondent           :     Williams & Co
Second Respondent      :     Williams & Co
Third Respondent          :     Williams & Co

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Gjergja & Atco Controls Pty Ltd v Cooper [1987] VR 167
Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd [1986] AC 207
Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd (1999) 21 WAR 350
Royal Botanic Gardens and Domain Trust v South Sydney Council (2002) 186 ALR 289
Whiteley Muir and Zwanenberg Ltd v Kerr (1966) 39 ALJR 505

MURRAY J: I entirely agree with Wheeler J that, for the reasons given by her Honour, the appeal should be dismissed. The trial Judge carefully considered the evidence, made his decisions about the credibility of the witnesses, and arrived at a conclusion which was well open to him. The appellant simply failed to prove its case.
TEMPLEMAN J: I have had the advantage of reading in draft the reasons to be published by Wheeler J.
I agree with those reasons and the order proposed by her Honour. There is nothing I wish to add.
WHEELER J: The appellant was the lessee of a mining lease known as the "Eagle Hawk Mine". It alleged at trial that in about mid 1998 the second respondent Mr Radovanovic verbally offered to purchase the lease, the mine and the equipment at the mine site for $534,000, which offer was verbally accepted. It alleged that an enforceable contract came into existence at that time. It was the appellant's case that the offer was made by the second respondent to one Terrance Daniel Reid in the presence of Mr Reid's son Shayne and one Mr Benton.
His Honour considered that both Mr T Reid and Mr Radovanovic were unsatisfactory witnesses, in that both were verbose and tended to avoid giving direct answers to the questions put to them. Further, his Honour noted that under cross‑examination both gave evidence that did not fit comfortably with their pleaded cases. He thought that neither man had a clear recollection of what had taken place. He treated the evidence of both those witnesses with caution and gave greater weight therefore to the evidence of comparatively neutral witnesses such as Mr Rowett, an accountant.
So far as the relevant conversation in mid 1998 was concerned, his Honour noted that the surrounding evidence indicated that at that time Mr Radovanovic did not actually have money in hand or financial resources to pay the amount specified. It seems that that was known to everyone concerned. His Honour noted that the offer did not make provision for payment of the purchase price on a specified date, and that subsequent events indicated that the plaintiff was prepared to "let the matter of settlement run on".
As to the substance of the relevant conversation, his Honour considered it significant that in his evidence‑in‑chief Mr T Reid said that his acceptance was conveyed by the words "We are happy with the price".

Mr Benton's evidence, his Honour noted, did not seem to identify any precise moment at which an acceptance of the offer was conveyed to Mr Radovanovic, and the evidence of both of these witnesses referred to some discussion concerning the need for papers to be drawn up. All of those observations of his Honour were accurate.

His Honour noted that it was true that Mr Radovanovic under cross‑examination did seem to accept that the parties had entered into an agreement at the relevant time. The way in which his Honour treated that evidence was the subject of close examination by counsel for the appellant. I set out the relevant passages of his Honour's reasons below:
"93 It is true that the defendant Radovanovic under cross‑examination seemed to accept that the parties had entered into an agreement. A question in that form was allowed notwithstanding an objection taken by counsel for the defendants. However, Mr Radovanovic was an unsophisticated witness and one could not necessarily assume that his acceptance that an 'agreement' had been made should be taken as a reference to a legally enforceable agreement. His evidence, and the evidence generally, is open to the interpretation that both parties had communicated a willingness to make a deal at the figure of $534,000 but had not committed themselves to a contractual relationship. Put shortly, Mr Radovanovic was minded to purchase the mine for $534,000 but subject to being able to raise finance on terms that were never crystallised.
94 For these reasons, I am not satisfied on the balance of probabilities that a binding verbal contract was entered into by the parties in mid 1998 as alleged by the plaintiff. Put shortly, I am not satisfied that a firm offer capable of acceptance was actually accepted by the second defendant as alleged by the plaintiff. Further, and in any event, when the facts and matters relied upon by the plaintiff are viewed objectively, I am not satisfied that an intention to create binding legal relations between the parties was sufficiently manifested. In my view, the parties managed to agree the price at which the Eagle Hawk Mine was to be sold but otherwise the question of contractual obligations was left in abeyance so that Mr Radovanovic could proceed with his attempts to raise finance."
There appears to be a factual error in his Honour's reasons, in that there was no objection by counsel for the defendants (respondents) in relation to a question in the form indicated. There was an objection by counsel for the appellants to a question in very similar form asked of the appellant's witness Mr T Reid in cross‑examination, and I shall return to this matter later.
Otherwise however, counsel for the appellant relied heavily upon the admissions elicited during cross‑examination as the foundation of a submission that his Honour's finding that no binding verbal contract was entered into was in error. It was submitted that there was no foundation for his Honour's suggestion that the second respondent had any difficulty with language. It was further submitted that the court could not infer any lack of capacity and that to do so would be grossly unfair to the appellant. As to the second part of this submission, I do not read his Honour's reasons as inferring any lack of capacity on the part of Mr Radovanovic, but simply as an assessment of the significance of the answers which he gave in the context of his apparent understanding of the matters in issue.
The short answer to the submissions of the appellant is that this was the very common type of trial in which the evidence was not all one way. Further, such evidence as there was, was potentially open to a variety of interpretations. His Honour appears to have attended closely to the way in which the witnesses gave their evidence, to have made findings of credibility, and to have assessed the probable accuracy of the witnesses' evidence in the light of the way in which evidence was given by the witnesses and, based on that assessment, to have drawn conclusions about the significance of the documents which were in evidence before him. It is my view that nothing in his Honour's reasons suggests that he was in error in the way in which he approached that task.
In order to explain that view, I turn first to the evidence of Mr Radovanovic in cross‑examination, upon which the appellant heavily relied. At pages 164 ‑ 165 of the appeal book, there is a passage of cross‑examination in which counsel for the appellant put to Mr Radovanovic an unexecuted agreement which the latter "prepared", and which it appears Mr T Reid refused to sign on the basis that the deposit for which it provided was too low. The cross‑examination proceeded as follows:-
"If you look at the second paragraph in the body of the document under 'Whereas' at (b) you will see it says:
The purchaser has agreed to purchase and the vendor has agreed to sell the tenement and rights associated therewith upon and subject to the terms of this agreement.
That was the fact, wasn't it?---What's that?
That was the fact; there was an agreement between Maroubra and you. Gascoyne Mining was the name of an entity or a business name that you had selected. Is that correct?---Yes. I've drawn this agreement to Mr Reid to sign, yes.
Yes, and Gascoyne Mining was the entity representing your interests?---At the time.
Yes, and it recites an agreement between you and Mr Reid?---Yes.
That was the truth. There was an agreement between you and Mr Reid, wasn't there?---This document, is it signed?
No, don't worry about whether the document is signed please, Mr Radovanovic. The document recites that there was an agreement, and there was an agreement, wasn't there, in 1998?---I was trying to send the agreement to Mr Reid so we have the agreement, yes. That's what I was trying to achieve.
Mr Radovanovic, wasn't there a verbal agreement in existence in 1998 between you and Mr Reid?---Yes, there was.
For you to buy the mine?---That's correct.
And the assets associated with the mine, for $534,000?---Yes, there was a verbal agreement, yes.
In 1998?---Yes."
At pages 168 ‑ 169, the following passage appears:
"Mr Radovanovic, you have told me that there was a verbal agreement for the purchase of the mine and its related assets in 1998?---That's correct.
That was the basis upon which you paid Mr Reid, or Maroubra, more specifically, $5000 in March 1999, wasn't it?---At the time that was the basis to secure the deal so I can engage the option of someone to do the feasibility study on the lease.
Yes, but the deal - the deal - was the agreement you had made in 1998, wasn't it?---The verbal deal?
Yes?---The verbal deal, yes.
That was the deal?---The verbal deal, yes.
Yes, and that deal, that arrangement or contract, was never brought to an end, was it? That agreement continued right up until 13 December 99?---No, it's not. It doesn't."
It is to be noted that neither passage of cross‑examination attempts to elicit from Mr Radovanovic the words uttered by any party which led to the "agreement", and apart from the reference to the agreement being one for him to "buy the mine" for $534,000, there is no cross‑examination directed to eliciting its terms. It is also to be noted that at both passages some of Mr Radovanovic's answers appear to proceed from the assumption that there was something further which had to be done before there was a binding agreement between himself and Mr Reid. In the first passage, it emerges reasonably clearly from his response "I was trying to send the agreement to Mr Reid so we have the agreement", while in the second passage the reference to an apparent need to "secure the deal" suggests that there was no binding agreement at the relevant time, and also introduces the concept of an "option". The reference to a "verbal deal" is a very loose one. Read with the earlier part of the cross‑examination from which I have quoted, it may suggest that the "verbal deal" was not seen by Mr Radovanovic as a binding one. Further, the concept of a "deal" itself is a very loose one and appears to me to be capable of encompassing a large number of arrangements, only some of which will be of a contractual nature.
Even in the short passages from which I have quoted, there is some indication that either Mr Radovanovic was confused by the questions or that he had difficulty in expressing himself clearly. I do not think it is necessary to set out passages at length from the cross‑examination, but it is certainly my impression from reading the transcript that Mr Radovanovic had a good grasp of technical concepts to do with the running of mining tenements and so on, but that some of his answers otherwise do not entirely meet the question asked. This could suggest either deliberate evasion, or a lack of appropriate comprehension or vocabulary, or on occasion both.
As counsel for the appellant accepted during the course of argument before us, a trial Judge is not required to accept as true every admission elicited during the course of cross‑examination of a witness. In particular, while the use of leading questions is permitted in cross‑examination, the dangers arising from such questions must be borne in mind. Questions which readily suggest their own answers can lead witnesses, particularly witnesses without a very sophisticated command of English, into agreeing with a question the full import of which they do not really comprehend. The questions in relation to the agreement which are contained in the passages which I have quoted above clearly call for conclusions, and conclusions which it is ultimately the task of a trial Judge to draw, having regard to the content of the relevant conversations. In my view, his Honour was not required to proceed from the answers given in cross‑examination by Mr Radovanovic to the conclusion that there was a binding contract entered into as at mid 1998.
Questions of a leading nature relating to whether there was or was not an agreement in 1998 were also asked of Mr T Reid, the principal witness to this issue for the appellant. His evidence, and an objection, appear at 81 ‑ 82 of the appeal book in the following terms:
"Perhaps assist me if you can, Mr Reid. Is it not your evidence that you entered into a verbal agreement with Mr Radovanovic in mid‑1998 to sell the tenement and the mine and equipment for $530,000?---In mid ‑ we agreed - he come up and offered us a price, sir, in the presence of my son and, I think, Mr John Benton - what you're referring to, I think. There was no price agreed to before this. Jeff had come and made suggestions that he would like to buy the mine, buy out the total lot. He wanted to buy all our equipment as well.
Okay?---And I think there was no deal done until I went down and actually put a deposit on this, and then from there we went out to Rowett's office and that's the only time that this deal was done.
I see?---We just spoke about it.
I see. Right. Just so that I understand the situation you are saying that no agreement had been concluded between yourself and Mr Radovanovic or Murchison Queen Pty Ltd in mid‑1998?---Verbal, talk. Nothing was done until he give me a deposit. There was never any - the only time that there was really a contract for him to recognise, or so I could recognise the contract, was at Rowett's office.
METAXAS, MR: With respect, the witness is being permitted to talk in terms of conclusions and summations which expose a range of things but most significantly that he is not a lawyer and if he is confined to the facts we won't have the introduction of his opinions as to what was a binding agreement and what wasn't. I really, with respect, think he needs to be confined to the facts."
Shortly thereafter, having given in evidence further details of the proposal which Mr Radovanovic had put to him in mid 1998, Mr T Reid was asked in relation to that proposal whether he had accepted it. The answer was: "I'm not sure whether we accepted it right there and then but we were quite happy with the numbers he was talking about".
Two observations can be made about these passages. The first is that it appears to have been Mr Reid's evidence in cross‑examination that no concluded agreement was reached in mid 1998, Mr Reid drawing a clear distinction between the "talk" at that time and a concluded agreement which he seemed to think had arisen at some time thereafter. The second observation is that although the objection by counsel for the appellant was not upheld, his Honour did acknowledge some force in the submission which was made, so that it would have been clear to counsel, by the time he came to cross‑examine Mr Radovanovic, that there were dangers in simply asking him whether there was or was not an "agreement".
So far as the evidence of the principal witnesses was concerned, then, the position seems to have been that neither Mr Benton nor Mr Shayne Reid gave evidence which unequivocally pointed to there having been a contract entered into at the time of the relevant conversation in mid 1998. Mr T Reid's evidence‑in‑chief appeared to be to the effect that there had been, and Mr Radovanovic's evidence‑in‑chief appeared to be to the effect that there had not. Both Mr Reid and Mr Radovanovic gave evidence in cross‑examination which appeared to be opposite in effect to their evidence‑in‑chief relating to this issue. Looking at that evidence alone, one can well see why his Honour found that he was not satisfied that a firm offer capable of acceptance was actually accepted in mid 1998.
Looking at the documents upon which the appellant relied, and other surrounding circumstances, it seems to me that that evidence was capable of being understood in a number of ways. It appears to me that there were five items of such evidence, four of which are referred to in the appellant's outline of submissions. They were:-
1.The agreement for sale of the mining tenement prepared by Mr Radovanovic and referred to in the first passage of cross‑examination from which I have quoted. It recited a verbal agreement to sell the tenement and all rights associated therewith for $534,000. However, a number of things are to be noted about this agreement. Although Mr Radovanovic agreed in cross‑examination that he had prepared it, there does not appear to be any evidence as to how he came to prepare it. It appears that he may well have adapted it from some legal document available to him. The relevant recital does not provide any help in understanding when it was that, according to the recital, the agreement had been entered into. Mr T Reid refused to sign the agreement. His evidence was that he refused because of the low deposit, but it does appear from the evidence surrounding this document that at least the manner of payment of purchase price was something which had not been agreed. This was an important consideration given that it was understood on all sides that Mr Radovanovic did not at mid 1998 actually have $534,000.
2.In March 2000 Mr Radovanovic prepared a memorandum of understanding between the appellant and the first respondent under which the first respondent was to pay $500,000 for the plant and equipment at the mine; taking into consideration what had then been paid under an earlier memorandum of understanding, the total was consistent with there being an agreement for sale in the sum of $535,000. That of course was some considerable time after mid 1998, when it was alleged the agreement had been entered into, and the parties had been engaged in a variety of negotiations in the interim. It is difficult to see how this document advances the appellant's case for an agreement as alleged in mid 1998.
3.In March 1999 Mr Radovanovic paid a sum of $5,000 to Mr Reid, the object of which was said by Mr Radovanovic to be to "secure the deal". Again, this begs the question as to what the content of "the deal" was, when it was entered into, and what were its terms. Further, it is at first blush, if anything, inconsistent with there having been a binding agreement arrived at in mid 1998, that a payment should be made so many months later and in such a small amount.
4.In June 2000 Mr Radovanovic forwarded to Mrs Reid a document referring to a verbal agreement between himself and Mr T Reid for the purchase of the Eagle Hawk Mine for the sum of $400,000. It was pointed out to us by the appellant's counsel that in cross‑examination Mr Radovanovic was unable to explain the figure of $400,000 (although it appears to me that he did make some attempt at an explanation) and that he agreed that throughout his discussions with Mr Reid the figure of $534,000 was the only figure ever mentioned. This appears to me to be an issue that goes to his general credit rather than to the question of whether there was an agreement of the kind alleged by the appellant in mid 1998.
5.Finally, in March 2000 there was a letter written by the appellant's solicitors to Mr Radovanovic seeking that he "confirm by written response that you agree with my client's position that there is no legally enforceable agreement in place", and suggesting that any document which may suggest that any contract or agreement existed was part of a transaction involving the "possible sale of the mine lease and plant and equipment ... for a total of $530,000" (emphasis supplied). As I understand Mr T Reid's evidence under cross‑examination in relation to this letter, his position was that there had been an agreement for sale but that he by then wished to extricate himself from it. The explanation given is not entirely consistent with the terms of the letter, which terms are more consistent with the position taken by Mr T Reid under cross‑examination in the passages from which I have quoted.

A variety of other issues, largely directed to the question of the credit of Mr Radovanovic, were canvassed during the course of argument in relation to this appeal. However, given that his Honour in any event expressed reservations about Mr Radovanovic's evidence, as he did about Mr T Reid's, it does not appear to me to be necessary to explore those issues. In my view, this was plainly a case in which the findings which his Honour made on the evidence were justified by that evidence, particularly in the light of the views which his Honour expressed in relation to the principal witnesses in the case. I would therefore dismiss the appeal.