Moshos v French

[2015] NSWCA 106

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Moshos v French [2015] NSWCA 106
Hearing dates:	12 March 2015
Date of orders:	23 April 2015
Decision date:	23 April 2015
Before:	Macfarlan JA at [1]; Emmett JA at [2]; Leeming JA at [89]
Decision:	Appeal dismissed with costs.
Catchwords:	CONTRACT – general contractual principles – formation – whether sufficient evidence exists to establish that the appellant and first respondent had entered into a binding agreement EVIDENCE – inferences – whether it could be inferred from certain objective facts that discussions between the appellant and first respondent had given rise to a contract
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), r 28.2
Category:	Principal judgment
Parties:	Vasilis Floros Moshos (Appellant) Kenneth Geoffrey French (First Respondent) Local Appliance Rentals Pty Ltd (Second Respondent)
Representation:	Counsel: Mr B Loukas (Appellant) Mr M Cashion SC with Mr J Baird (Respondents) Solicitors: Kings Law Group (Appellant) Kosmin and Associates (Respondents)
File Number(s):	2014/219508
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Supreme Court of NSW Jurisdiction: Equity Division Citation: Vasilis Floros Moshos v Kenneth Geoffrey French (No 2) [2014] NSWSC 862 Date of Decision: 27 June 2014 Before: Darke J File Number(s): 2013/290093

Judgment

1. MACFARLAN JA: I agree with Emmett JA.

2. EMMETT JA: The appellant, Mr Vasilis Moshos, claims that, in November 2007, he entered into a legally binding agreement with the respondent, Mr Kenneth French, pursuant to which Mr French would incorporate a company, to be known as Local Appliance Rentals Pty Ltd (the Company), and Mr Moshos and Mr French would cause the Company to apply for and obtain a “Centrepay facility”. Mr Moshos asserted that the agreement was that, once the Centrepay facility had been granted, Mr French would arrange for 50 per cent of his shareholding of the Company to be transferred to Mr Moshos. The Company was in fact formed and the Centrepay facility was granted. However, Mr French has declined to transfer shares to Mr Moshos, because he denies that any such agreement was made.

3. As a consequence, Mr Moshos commenced proceedings in the Equity Division seeking orders for specific performance of the alleged agreement and damages for breach of the agreement. A preliminary question of whether Mr Moshos and Mr French had entered into a binding agreement as alleged was formulated for answer by the Equity Division. On 27 June 2014, a judge of the Equity Division (the primary judge) answered the question “no”. As a consequence, the primary judge ordered that the proceedings be dismissed and ordered Mr Moshos to pay Mr French’s costs of the proceedings. By notice of appeal filed on 23 September 2014, Mr Moshos appeals from the orders made by his Honour.

Background to the dispute

4. In 2003, Mr Moshos had incorporated Hunter Security Group Pty Ltd (Hunter), which was engaged in the business of hiring out household security systems. Hunter had a financing facility with Beverage Rentals Pty Ltd (Beverage), whereby finance would be provided to approved customers of Hunter who acquired security systems from it. In 2004, Hunter expanded its business operations to include the hire of household goods. In the course of those operations, Mr Moshos became aware of the “Centrepay facility”, which is a facility provided by Centrelink, a Commonwealth government agency. Under a Centrepay facility, Centrelink makes payments directly to suppliers that provide goods or services to persons who are entitled to receive benefits from Centrelink. The amounts of the payments are deducted from benefits payable to such persons and are paid to the suppliers on behalf of the relevant person. In mid-2004, Hunter obtained a Centrepay facility. That facility provided Hunter with an alternative means of enabling its rental customers to meet their rental obligations.

5. Hunter’s business was quite successful until a dispute arose with Beverage, which ultimately led to the voluntary administration and then the winding up of Hunter in late 2006. Hunter’s Centrepay facility was cancelled in 2006 when Hunter went into liquidation. Mr Moshos believed that, as a former director of a failed company, the prospects of another company with which he was directly involved obtaining a Centrepay facility were detrimentally affected. That belief was based on the fact that applications for a Centrepay facility made by companies of which he was a director and shareholder or only a shareholder had been refused without reasons being given. In November 2007, he was working as a salesperson or consultant for several companies, including Home Services Group (Qld) Pty Ltd (Home), Ben-Rentals (Qld) Pty Ltd (Ben Rentals) and a company that he referred to as “Easy Rentals”. From late 2006 to the middle of 2007, Mr Moshos operated in that capacity for various companies engaged in the goods rental industry. During that period, he had no involvement with any company that used a Centrepay facility.

6. At some time during 2007, Mr Moshos decided that he wanted to pursue more substantial opportunities in the goods rental industry. He believed that the most desirable corporate model would be a rental company that had a Centrepay facility to provide finance to rental customers, either itself or through a related entity. Mr Moshos conducted some research concerning such finance providers, in the course of which he located Mr French.

7. For some time before November 2007, Mr French had been involved with a business known as “Direct Lending Group” and a business known as “Latitude Finance”. Mr French operated both businesses with his wife, Ms Megan Perston, who had accounting expertise. Prior to that time, Mr French had been giving thought to the establishment of a company that would provide finance in connection with a business engaged in the rental of water coolers. It appears to have been envisaged that customers would enter into rental agreements directly with the proposed company, which would make payments to an outside business or entity that was responsible for sales. It was also envisaged that the customer’s weekly rental payments would be made to the proposed company through a direct debit system.

8. Mr Moshos made contact with Mr French and arrangements were made to meet at Manly, near Brisbane, Queensland, on 31 October 2007. Another meeting was to take place on 5 November 2007.

9. On 1 November 2007, Mr Moshos sent an email to Mr French under the subject “Share holdings all cool”. The email was in the following terms:

Monday is fine with all of us, thus far … and as we discussed the shareholdings are fine with all of us too.

I will call you on Sunday to discuss times and place etc.

Later on the same day, Mr French replied in the following terms:

Sounds fine. It might be a good idea to get the guys thinking about names for the business ready for Monday. Talk to you on Sunday. If you can’t get me, leave a message where we are going to meet and I will be there.

That exchange is somewhat Delphic and is quite equivocal as to the existence of a binding agreement. Mr Moshos and Mr French gave quite different versions of the discussions between them, with a view to explaining what was meant by the exchange of emails.

10. In any event, a further meeting took place on 5 November 2007 as arranged. Mr Moshos gave affidavit evidence, on which he was cross-examined, as to the discussions at the meetings. Mr French also gave affidavit evidence, on which he was cross-examined, in which he effectively denied the version of events deposed to by Mr Moshos. There is no contemporaneous evidence of the discussions, save for the two brief email communications.

11. The Company was incorporated on 7 November 2007, but at that time, its name was Local Rentals Pty Ltd. (The Company’s name was changed to Local Appliance Rentals Pty Ltd in May 2013.) On that day, Mr Moshos created a new email account with Gmail in the name “[email protected]”. Also on 7 November 2007, Ms Perston established a domain name and an email facility for the Company in the name “localrentals.com.au” through Domain Central. On 12 November 2007, Ms Perston established three email addresses in respect of the Company, in the names “[email protected]”, “[email protected]”, and “[email protected]”. Ms Perston paid fees to Domain Central for that service.

The alleged agreement

Communications in October and November 2007

12. Mr Moshos said that, at the meeting on 31 October 2007, he explained to Mr French how the “rent to buy” industry works. He said that a customer rents the item in question, but does not buy it. When the rental period is over and/or the rent has been paid, the customer can pay a nominal amount to become the owner of the item. I interpose that the arrangement sounds somewhat like a hire purchase agreement, although it is not clear whether the customer has the right to acquire ownership at the end of the rental period.

13. Mr Moshos said that he told Mr French that he had been involved in both successful and unsuccessful operations that had been affected by needing third parties and by not having control. He said that he had the ideal business model for the rental industry and that finance was an integral part of it. He said that the ideal business model for a rental business was to have a head company with one or two shopfronts, together with a Centrepay facility: the rental business enters into contracts and can either finance the contracts itself or rely on a related finance company.

14. Mr Moshos said that, in response to Mr French’s enquiry as to what a Centrepay facility was, Mr Moshos explained that it was a facility made available by Centrelink to people who have a pension or other kind of government benefit from Centrelink. A person who receives payments from Centrelink can direct Centrelink to pay a certain amount each fortnight out of the payment to an entity that has a Centrepay facility. Accordingly, the government makes the payment and one does not have the issue with people receiving their benefit and then deciding they do not want to make the payment that fortnight. Mr Moshos said that people can cancel the Centrepay direction but rarely do so, since it is only when people have money in their accounts that they do not want to pay it out. If it is taken out beforehand by Centrelink, people accept it more easily.

15. Mr Moshos said that Mr French said he could see the obvious benefits involved in a Centrepay facility, both in granting finance and in debt recovery, and asked how one could be obtained. Mr Moshos said he told him that it was difficult but that he knew how it was done. However, he said, the issue was that a company with a Centrepay facility that he had been associated with had been liquidated and Centrelink knew that he was a director. He said that he was worried that if he was on the record as having been involved with another company that applied for a Centrepay facility, then the application could be turned down. He said that having Mr French involved, “as a cleanskin in the rental industry”, would benefit them both.

16. Mr Moshos deposed that he then said words to the following effect:

[I]f we do agree on who owns how much of the proposed rental company, we’d set up a company, with you listed as sole director and shareholder initially. When the Centrepay facility came through, my share of ownership would then be placed as a shareholding on the register. You should still remain as sole director though. Obviously, as a separate issue, there is really no capital injection necessary to start up the business; however, to improve the value of our shares and maybe even receive some wages, we’d both also be working for the company from the outset. Although our efforts would primarily be so we can obtain the Centrepay facility, I would channel customers through the rental company instead of doing consulting and sales for other companies.

17. Mr Moshos said that the conversation continued along the following lines:

FRENCH: So, are you suggesting a 50% share each in the rental company?

MOSHOS: That’s my proposal. I only need to confirm the 50% share issue in the rental company with my brother and cousin, as I’m currently assisting them with consulting and sales with their rental companies and if we do this, their interests will be affected. That’s my issue though; anything I agree with them would come out of my share – it wouldn’t affect your share.

FRENCH: Well, Bill, your proposal is a real opportunity. It would give me a 50% share in the rental company with little capital injection needed and I would also receive the flow-on benefits from the finance side. I accept your proposal; however, I do realise that there is nothing binding until you confirm [that] your brother and cousin are fine with the 50% share issue.

18. Mr Moshos said that his email of 1 November 2007 was sent after a discussion with his brother and his cousin. He gave no evidence of any further communication with Mr French prior to receipt of Mr French’s email of 1 November 2007.

19. Mr Moshos said that, following the exchange of emails, he met Mr French on 5 November 2007 and discussed various issues, including the name of the Company, the business name and the proposed Centrepay facility. Mr Moshos deposed that he said the following to Mr French:

MOSHOS: I have thought about the name for the company and the business. I have been involved in businesses where the customer believes his interests aren’t being taken care of because he is too small for the company to care about. The name should represent that the business is in his area and is available for him. That then leads to the franchising operations later on, instead of increasing the size of the head company.

FRENCH: That makes sense. What name then?

MOSHOS: How about Local Rentals? You know what I mean. Local means smaller and in the customer’s area. It’s not some multinational that the customer can’t or doesn’t reckon its [sic] worth his while contacting.

FRENCH: I like it. I like it a lot. That’s great. I agree the company name should be Local Rentals Pty Ltd and I suppose the business name will simply be Local Rentals.

MOSHOS: That’s right.

FRENCH: Alright, I’ll arrange to incorporate it immediately. As agreed, I’ll be the sole director and shareholder listed on the register until the Centrepay facility is obtained and then your shareholdings will be shown.

MOSHOS: That’s what we agreed. As soon as the company is registered, I’ll create an email address for it.

20. Mr Moshos said that he then told Mr French that the person from Centrelink whom he had to contact in Brisbane was Mr Matt Tighe. Mr Moshos said that he told Mr French that he should contact Mr Tighe and tell him that he was from a rental company looking to obtain the Centrepay facility to use for his customers. Mr Moshos said that he told Mr French that Mr Tighe would tell him the details that he needed. He said that the Company would have to supply Mr Tighe with “proposed rentals contracts, marketing materials, affordability criteria and so on”. Mr Moshos said that he had all that and said “we’ll be fine”.

21. Mr French swore an affidavit on 19 February 2014 in which he denied that there were conversations in October and November 2007 as deposed to by Mr Moshos. Mr French said that, at their meeting, Mr Moshos introduced himself as “Ben”, from Ben Rentals, which caused him to believe that Mr Moshos was an owner of that business. (In his second affidavit, sworn 28 April 2014, Mr Moshos denied ever saying that.) Mr French agreed that there was a general discussion about the appliance rental industry and said that he had a good understanding of the industry as he had had several discussions with other companies in the industry regarding the provision of finance. He said that he had done a substantial amount of financial modelling and implementation modelling with regard to the “rent to buy” model. He denied that at any stage he said words to the effect that he accepted Mr Moshos’s proposal. However, he agreed that he did say words to the effect that there was “nothing binding”.

22. Mr French agreed, in his February 2014 affidavit, that he attended a meeting with Mr Moshos (being the meeting said to have taken place on 5 November 2007) at which a cousin of Mr Moshos and the cousin’s girlfriend, and several other associates of Mr Moshos, were present. Mr French said that he believed that those associates of Mr Moshos were partners in Ben Rentals. He denied that a conversation took place to the effect deposed to by Mr Moshos, relating to the suggestion of “Local Rentals” as the business name of the company that both men were allegedly going to set up. Mr French said that there had been a business in his local shopping centre called “Local Lenders” from which he got the idea for the name “Local Rentals”. Mr French also denied that there was any discussion concerning the Centrepay facility at the meeting on 5 November 2007.

23. Mr French swore a second affidavit on 29 April 2014, in which he deposed to two conversations with his wife, Ms Perston. He said that, in or about October 2007, he told her that he had received a telephone call from “Ben” at Ben Rentals and that Ben was looking for ongoing finance for his home appliance rentals business. He subsequently told Ms Perston that he had had a meeting with “Ben from Ben Rentals” and that there was a possibility of providing ongoing finance. He told her that they would use the model previously developed for businesses that rent out water coolers to householders. Mr French told Ms Perston that they would set up a new company to be the vehicle from which finance would be provided and the payments collected directly from the rental customers. Later, Mr French told Ms Perston that Ben’s name was really Bill, and that he had other partners in Ben Rentals. He said that he was surprised as Bill had always given him the impression that Ben Rentals was his business. He said that he told Bill that he wanted to meet the other partners before he would provide any finance to Ben Rentals. Ms Perston also swore an affidavit on 29 April 2014 corroborating the evidence given by Mr French in his affidavit concerning his discussion with her.

24. Mr Moshos also relied on an affidavit sworn by Mr Georgios Emmanouilidis sworn on 3 April 2014. Mr Emmanouilidis said that he had attended a meeting in late October 2007 with Mr French, together with Mr Emmanouilidis’s then girlfriend. Mr Emmanouilidis said that he had never been involved in the corporate structure or business operations of Ben Rentals in any way and denied that there were ever any discussions at the meeting with Mr French in relation to issues associated with Ben Rentals. He said that the only reason he attended the meeting was that he understood that there were to be discussions as to business issues associated with a new company that was to be owned by Mr Moshos and Mr French.

25. Mr Emmanouilidis said that Mr Moshos said words to the following effect:

MOSHOS: I have thought about the name for the business. I suggest we call it Local Rentals. Local means like a smaller operation and in the customer’s area. Customers don’t like dealing with multinationals or big corporations because … the customer doesn’t think they care about them or its [sic] worth their while contacting them.

FRENCH: I like it a lot. I agree the company name should be Local Rentals Pty Ltd and I suppose we can call the business Local Rentals.

MOSHOS: That’s right and if it takes off, we can then look at franchises for specific localities.

FRENCH: Alright, I’m really happy with that. I’ll arrange to incorporate the company immediately. As agreed, I’ll be the sole director and shareholder listed on the register until the Centrepay facility is obtained and then your shareholdings will be shown.

MOSHOS: That’s what we agreed. Also, as soon as the company is registered, I’ll create an email address for it.

Clearly, there is a striking similarity between the evidence of Mr Emmanouilidis and that of Mr Moshos about that conversation.

Developments in February and March 2008

26. It appears that Mr Tighe wrote to Mr French on 16 November 2007. No such letter was in evidence, but a letter of 17 March 2008 from Mr French to Mr Tighe referring to Mr Tighe’s letter of 16 November 2007 was in evidence. The primary judge inferred from that letter that Mr French made contact with Mr Tighe shortly after the incorporation of the Company. On 17 March 2008, Mr French sent to Mr Moshos, by email, copies of his letter to Mr Tighe of 17 March 2008, additional information required by Mr Tighe to process Mr French’s application to become a registered Centrepay organisation and a copy of the form of rental agreement to be used by the Company. Mr Moshos responded by email on the following day, saying “sounds good”.

27. The case advanced by Mr Moshos was, and is, in effect, that he and Mr French were to be parties to an arrangement whereby Centrelink would be deceived into granting a Centrepay facility to the Company on the basis that, in the short to medium term, Mr French would be the sole director and shareholder of the Company. Insofar as there may be thought to be impropriety in such an arrangement, that is a matter that would militate against a conclusion that the discussions deposed to by Mr Moshos actually took place. On the other hand, that matter is by no means decisive.

28. On 18 February 2008, Mr French sent an email to Mr Moshos in connection with his proposed reply to Mr Tighe. He told Mr Moshos that he needed a few items from him, which were taken straight from Mr Tighe’s letter. The items that he sought from Mr Moshos were an outline of the sales methods, providing examples of any sales pamphlets or advertising material; a full list of product range and prices, if available; and the Company’s assessment process for a customer’s capacity to pay for goods. It appears that Mr Moshos provided a response, the information in which was incorporated into the additional information sent to Mr Tighe under cover of Mr French’s letter of 17 March 2008.

29. On 8 March 2008, Mr Moshos sent an example of a spreadsheet to Mr French. Mr Moshos asserted that the spreadsheet was sent in connection with the business of the Company. Mr French, on the other hand, asserted that the spreadsheet was concerned with Ben Rentals, and was subsequently used by Ms Perston in the work she was doing in relation to the finance provided to Ben Rentals. The primary judge found that at least one of the two customers whose details are included in the spreadsheet was a customer of Ben Rentals and the details so included were of a rental agreement with Ben Rentals. Thus, the inference is open to be drawn that the spreadsheet had nothing to do with the Company.

30. The additional information provided by Mr French to Mr Tighe consisted of the responses to questions raised by Mr Tighe. The first question, and response, was in the following terms:

Your company’s business structure, business model and governance arrangements

At this particular point in time, the company, being a new company, has a relatively simply business structure. Namely, a Pty Ltd company with a sole director and sole shareholder, Mr Kenneth French. It is not envisaged that this will change in the short to medium term.

[…]

In terms of governance arrangements, they will obviously develop and increase in sophistication over time as the company grows.

Mr Kenneth French has had many years’ experience in small and medium business and has also owned a corporate training consultancy in Sydney with large company and government clients. His partner, Megan Perston, has an accounting degree, has worked in chartered accountancy (Deloittes) and has a corporate background in designing business systems and processes.

Ms Perston will consult to Local Rentals Pty Ltd to develop appropriate systems and governance.

[…]

In the long term, the company may reach the size where it requires a Board of Directors. However, this is clearly some time down the track. As an interim measure, it is envisaged that the company will have a more informal “advisory board” who will act as a sounding board as the company grows. Such advisory board members may be engaged in, and have expertise in, the form of finance, marketing and corporate governance.

31. By 10 December 2007, Latitude Finance had commenced providing finance to Ben Rentals in respect of rental agreements between Ben Rentals and its customers. Between 10 December 2007 and 26 February 2008, almost $65,000 was provided by Latitude Finance in respect of about 20 such contracts. Ms Perston was involved in the administration of those arrangements.

32. The primary judge found that it was apparent that, by 17 March 2008, difficulties had emerged in relation to the finance provided to Ben Rentals by Latitude Finance. There were difficulties in keeping track of where the finance was being applied within Ben Rentals. Mr Moshos became involved in attempts to sort out the difficulties between Ben Rentals and Latitude Finance and attended meetings with Mr French and Ms Perston about those matters. Ms Perston prepared detailed documents dealing with those matters. She sent two such documents to Mr Moshos by email in March 2008. It appears that Mr Amit Kaushal, who was a director of Ben Rentals, also became involved in trying to sort out the difficulties between Ben Rentals and Latitude Finance.

33. In her affidavit of April 2014, Ms Perston said that a meeting took place in March 2008 between Mr Moshos and Mr French. She said that the following exchange took place:

MOSHOS: My partners are causing the issues with [Ben Rentals]. Is there a possibility of working with me only rather than with all the current partners?

FRENCH: Yes, they do seem to be causing the problems. OK, there is a chance that perhaps just you and I could do something together in the future that does not involve them. But the most important thing now is to try to sort out this mess with [Ben Rentals].

In cross-examination, Mr Moshos denied that any such conversation took place.

Developments in April 2008

34. On 7 April 2008, Mr French sent an email to Mr Moshos in which he said, inter alia:

Thanks for all the work last week. I think you will agree that it was important to know where the business is going and to finally get on top of the database.

It was good to meet Amit and I think he has a bright future. He seems to have a pretty good grip on the business and had some good ideas to progress the business.

As I have been battering into you all week the most critical thing in the business is the cashflow. There are some serious problems here which have to be addressed. Namely the substantial debts and the unfunded liabilities of the deposits.

As you and Amit have agreed, the chasing up of the arrears is the most critical thing that must happen now before any further funding arrangements can be discussed. It is of great concern that the arrears are at 35% of contracts. This level of arrears is unsustainable and the company is missing out on considerable revenue.

As I indicated to you and Amit last week, I think the way forward might be some sort of franchise or licence arrangement with Megan and myself [sic] providing the funds and doing the admin and you guys each running your own shows but without the headache of doing the books and the paperwork.

I think we should have a meeting with you and the guys early next week to discuss the way forward, especially now that we should have the Local Rentals facility by then. Obviously with the two defaults that Ben Rentals has will make it virtually useless as an ongoing company because we will not be able to use it for any sort of funding application.

[…]

As I said before I don’t want to have any discussions until we have the arrears under control but you have assured me that you and Amit will have that under control this week so we should be able to schedule a meeting for next week.

35. On 15 April 2008, Mr French sent an email to Mr Moshos with the heading “Home”. In the email, Mr French said:

Following on from our discussions the other week I would like to know what is happening with regard to Home. When you left you said you would give me a list of the set-up costs to date so I can pay my half. You haven’t mentioned anything more about it so I can only assume that you want to keep it for yourself. If you want to just go on by yourself then please let me know so I can plan accordingly. I have kept substantial funds available for you which I could have placed elsewhere and I cannot hold them any longer.

I felt we had made progress and reached an agreement, however now I am not so sure. I will therefore make my position clear again in writing just so there are no misunderstandings. I want to have you aboard as a 50/50 partner in Local Rentals but that would require you to being Home into the partnership. If you don’t want to do that that’s fine but then you would have to revert back to the same deal that I have offered the other guys which would mean that I will just run Local Rentals myself.

It’s time to get off the fence and make a decision one way or another. I would appreciate it if you would get back to me by the end of today.

It is clear that the references to “set up costs” and “my half” are references to Home. Mr Moshos said that the email caused him significant concern; nevertheless, he did not reply to it.

36. The email is quite inconsistent with there having been a binding agreement entered into in November 2007, as claimed by Mr Moshos. The email certainly suggests a proposal for a “50/50” partnership in the Company. However, the gist of the email is that that was a recent proposal and that any earlier proposal involved the “deal” that Mr French had offered “the other guys”, which would involve the Company being run by him alone. The email makes clear that any proposal for a “50/50” partnership involved bringing Home into the partnership.

37. Mr French said in his affidavit of February 2014 that, prior to sending the email of 15 April 2008, he had had a discussion with Mr Moshos in which he asked what Mr Moshos’s intentions were with regard to Home. He said that Mr Moshos replied that he intended continuing to operate Home in competition with the Company. He said he wanted to keep Home for himself.

38. In his affidavit of April 2014, Mr French expanded on the matter of Home. He said that he had a meeting with Mr Moshos in April 2008, before sending the email of 15 April 2008, in which he told Mr Moshos the following:

Mr Kaushal has told me that you have an appliance rentals business called “Home”. You have not previously divulged the existence of this to me. If we are able to have any business relationship with each other, you will have to be prepared to put this business into the mix otherwise you will be operating a business competing with the Local Rentals business.

I am prepared to pay half the costs you have already incurred in the business of “Home”. If you are serious about being a partner in the Local Rentals business, you need to provide me with a list of set up costs so that I can pay my share.

39. Clearly enough, Mr French’s evidence as to those discussions is consistent with, and explains the content of, the email of 15 April 2008. On the other hand, as I have said, Mr Moshos did not respond to the email. He simply says that the email “concerned me significantly”.

40. Company extracts in respect of Home indicate that Mr Antonis Moshos, Mr Moshos’s brother, held a shareholding in that company and was a director of it until 17 November 2007. The primary judge also found that Mr Moshos had a sales and consultancy role with Home in the period from November 2007 to April 2008. Those facts may cast doubt on the version of the discussions deposed to by Mr French, in that it may be unlikely that Mr Moshos would have spoken in the way described if he had no more than a consultancy role up until April 2008. On the other hand, Mr Moshos offers no explanation as to the content of the email of 15 April 2008. It certainly does not support his assertion that a binding agreement had been made in November 2007 under which he would receive 50 per cent of the share capital of the Company.

Developments in May 2008

41. It is common ground that, in early May 2008, the Company obtained a Centrepay facility. However, the precise terms of the arrangement were not in evidence.

42. On 14 May 2008, Mr Moshos sent an email to Mr French in which he asked Mr French to “organise the paperwork today for the share allocation for the local company”. That elicited no response from Mr French and, on 19 May 2008, Mr Moshos sent another email to Mr French in the following terms:

When u get a chance, could u organise the papers to sign the [sic] for the shareholding allocation ASAP.

43. That email prompted a response in the following terms from Mr French some hours later on 19 May 2008:

Sorry not to get back to you but I have not had time to scratch myself. As to the shareholding, I have spoken to my solicitor and as your shareholding is really part of being a working partner, rather than just a shareholder who has put up money for a true share, he believes we need an agreement between us that is an agreement basically in his words as to “who is going to do what and how each person is to be remunerated”. We obviously need to work on this.

Also, I am not going to do anything until we sort out the Ben Rentals mess. Every day it seems to get worse, not better, and we have had only one arrears come back on so far. The quicker we can get this under control the quicker we can move on. We must have the systems in place to handle any new contract so that we don’t have the disasters that we have now.

Could you please tell me how we can get service calls if we don’t have an invoice or a con note for the delivered goods.

44. In the evening of 20 May 2008, Mr Moshos sent an email to Ms Perston under the heading “Combining the 2 spreadhseets [sic]”. At that time, Mr Moshos had not seen Mr French’s email of 19 May 2008. In his email to Ms Perston, Mr Moshos said:

cool no problems … remember that’s how it was originally …

anyway, I am going to sydney tomorrow, so I will go and visit the respective customers.

I tried ringing ken this arvo but no answer if u could let him know …

cheers

B

p.s. we need to sort out promptly the LR Share holding situation asap., I have emailed ken, awaiting response

There appears to be no explanation of the references to “spreadsheets”.

45. It may be that this email from Mr Moshos was sent in reply to an earlier email from Ms Perston. That would explain the tenor of the first line of the email, and it would also explain the annotation “Quoted text hidden” that appears below Mr Moshos’s email in the evidence. However, neither Mr Moshos’s nor Ms Perston’s affidavit evidence mentions any such earlier email. On 21 May 2008, Ms Perston responded to Mr Moshos, asking whether he had finished combining the two spreadsheets into one.

46. On 22 May 2008, Mr Moshos sent a further email to Mr French saying that they needed to talk as soon as possible. The following day, Mr French sent a response, in which he indicated that he would call Mr Moshos on 25 May 2008, when he would “have a chance to chat”. It appears that some discussion took place on 25 May 2008, but the versions of the discussion given by each of Mr Moshos and Mr French are diametrically opposed.

47. Mr Moshos said that the content of the conversation was as follows:

MOSHOS: Ken, how come you haven’t transferred my shares in Local Rentals? We agreed on this over six months ago.

FRENCH: I told you in my email. This Ben Rentals nightmare has to be sorted out before I do anything with the shares. Also, the solicitor told me that we have to have a proper agreement in writing before there’s anything binding.

MOSHOS: Ken, we have an agreement and it’s simple. We both own 50% of the company and now the Centrepay facility has been obtained, my share is to be reflected on the company register. We were supposed to have this all sorted.

FRENCH: Look Bill. You didn’t pay anything for your share. We had a working partner arrangement. My solicitor told me it’s completely different.

MOSHOS: You didn’t pay anything for your share either Ken. I brought the rental business experience, the business model and the Centrepay facility to the company. You brought the finance part of it. That was the deal. That’s it. I want my shares.

FRENCH: Well, I have been advised that we didn’t have an agreement on the shareholdings. I am prepared to agree to something on a working partner basis.

MOSHOS: We have an agreement Ken. You can’t expect to simply own the whole company. That is simply not right.

FRENCH: Bill, that’s my advice. I’ll arrange for my proposal on how we progress from here to be forwarded to you.

MOSHOS: You can forward a proposal if you want Ken. Actually, do that. Be very aware though that we have an agreement and I will not vary that one bit unless your proposal is consistent with what I should already have.

FRENCH: Don’t worry about it Bill. I’ll arrange for the proposal to be given to you as soon as I can mate. I have to really go now.

48. In his first affidavit, Mr French denied that any conversation took place to the effect set out by Mr Moshos. However, in his second affidavit, he said that in a discussion with Mr Moshos in the afternoon of 25 May 2008, he had said:

Bill, I made it very clear in my email to you. You are obviously going to keep “Home” for yourself and operate it in competition to the Local Rentals business. Look Bill, I have made my position quite clear. Phone me when you have made a decision. Until then there is no point talking round and round in circles.

49. On 27 May 2008, Mr Moshos sent a further email to Mr French with the subject line “Failed Local Plan”. For the first time, so far as the evidence goes, Mr Moshos used the Gmail email address that he had established for the Company on 7 November 2007. Further, although all other emails from Mr Moshos were addressed “Dear Ken”, the email of 27 May 2008 was addressed “Dear Kenneth”. Finally, the email was purportedly sent on behalf of the Company.

50. The remainder of the email was as follows:

As to our discussions on Sunday,

the company wants a detailed plan as to when and how the local plan is goin to work, by tomoro.

The start date was on the 26th of May, it is now the 29th of May, in keeping with the original plan.

The co. wants a detailed explanation of the security of licences and areas and shares.

As your record shows above these issues have not been adhered to, the company wants a commitment from you in writing of all these issues.

on behalf of the company

Please respond by 12pm 28th of May 2008

Mr French did not respond to the email. Further, Mr Moshos deposed that, following the email, the password to the Company email account was changed such that he could no longer log in.

51. There was no further communication between Mr Moshos and Mr French until the commencement of the proceedings in the Equity Division in September 2013. Ms Perston also said that she had no further contact with Mr Moshos, save for a telephone call from him in late 2008 or early 2009 when Mr Moshos asked some questions about how the rental business was going. Mr Moshos denied that any such conversation took place.

Conclusions of the primary judge

52. The primary judge had “considerable reservations” about the accuracy and reliability of the evidence given by Mr Moshos and, to a lesser degree, Mr French. His Honour set out a number of matters that led to that assessment of the reliability of their evidence. His Honour also concluded that the version of the discussion on 5 November 2007 given by Mr Emmanouilidis should be treated with considerable caution, on the basis that it is almost identical to the version given by Mr Moshos in his affidavit evidence. His Honour made the same observation in relation to the close similarities that existed between portions of the affidavits sworn by Mr French and Ms Perston in April 2014. His Honour treated with considerable caution the versions of conversations that were set out in practically identical terms in both of their affidavits.

52. On the other hand, his Honour found that Ms Perston created a favourable impression in the relatively short time that she was in the witness box. She gave her evidence clearly and directly. Apart from the reservation just referred to, his Honour generally accepted Ms Perston’s evidence as reliable. In particular, his Honour accepted her evidence, in preference to the denial by Mr Moshos, that there was a conversation between Mr Moshos and Mr French in March 2008 in which Mr Moshos asked Mr French whether there was any possibility of working with him only, rather than “with all the current partners”. That evidence was not directly challenged and his Honour accepted that Ms Perston had a recollection of such a conversation.

53. The primary judge observed that the success of the claim by Mr Moshos, that a binding agreement was reached with Mr French, depends upon acceptance of the thrust of the accounts given by him of the meetings on 31 October 2007 and 5 November 2007. His Honour concluded, having regard to the considerable reservations that he had as to the accuracy and reliability of the evidence of Mr Moshos, and for the further reasons that his Honour outlined, that he was not prepared to accept the key parts of the accounts given by Mr Moshos. His Honour therefore concluded that his claim must fail.

54. The primary judge accepted that, when Mr Moshos made contact with Mr French, he had an interest in getting involved in a business model that would entail a rental company with a Centrepay facility and access to finance, either directly or through a related entity. At the same time, Mr French had an interest in a business model that would entail the establishment by him of a company that would finance and enter into rental contracts with customers, and make payments to an outside entity that had responsibility for the sales force. His Honour considered that it was likely, in those circumstances, that, when Mr Moshos and Mr French met, there was a discussion about the establishment of a company that would operate in the rental goods industry. His Honour said that there did not seem to be any real dispute that there was discussion at those meetings about setting up a new business in that industry.

55. The primary judge said that, while Mr French conceded that the purpose of the incorporation of the Company was to conduct a business of entering into rental contracts with consumers, he maintained that, when he was first approached, Mr Moshos said that he wanted funds for Ben Rentals. Mr French also asserted, in effect, that the Company was set up as a vehicle so that Mr Moshos and “his partners” in Ben Rentals could be the sales people and run their own businesses under the umbrella of the Company, which would provide finance. His Honour referred to the denial by Mr French that he was happy in November 2007 to offer Mr Moshos half of the shares in the proposed company. His Honour accepted that evidence of Mr French. His Honour did not accept the evidence of Mr Moshos that, on 31 October 2007, Mr French accepted a proposal that involved the incorporation of a company in which Mr Moshos would, after the company obtained a Centrepay facility, hold 50 per cent of the shares. Specifically, his Honour did not accept that a conversation occurred to the effect deposed to by Mr Moshos (extracted at [16]-[17] above).

56. The primary judge did not consider that an agreement to the effect claimed by Mr Moshos was supported by the terms of the emails exchanged on 1 November 2007. His Honour considered that the language used in those emails was imprecise and open to various interpretations and did not, in terms, indicate that any binding agreement had been reached. His Honour considered that the emails were consistent with Mr Moshos and Mr French wishing to continue their discussions at a further meeting to be held on 5 November 2007 and that the references to “all of us” by Mr Moshos and the reference by Mr French to “the guys” suggested that the subject matter of the discussions that had been held on the previous day, and were to continue on 5 November 2007, involved more than Mr Moshos and Mr French.

57. The primary judge considered that, viewed in that light, the reference by Mr Moshos to “the shareholdings” in his email of 1 November 2007 was more likely a loose reference to the interest of Mr Moshos and his colleagues in whatever ventures they were then involved in, rather than to a shareholding to be taken by Mr Moshos in a new company or the shareholdings to be taken in such a new company by Mr Moshos and Mr French. His Honour characterised the email from Mr Moshos as an indication that all concerned on his side were happy for the discussions to continue and that the response from Mr French was an indication of a similar willingness on his part. His Honour did not accept the evidence given by Mr Moshos or Mr Emmanouilidis that, on 5 November 2007, Mr French said, in the context of the incorporation of a new company, that “as agreed, I’ll be the sole director and shareholder listed on the register until the Centrepay facility is obtained and then your shareholdings will be shown”.

58. The primary judge was satisfied that there was a discussion on 5 November 2007 about the name of the proposed new company and its business, the incorporation of the company and the obtaining of a Centrepay facility. His Honour did not resolve the dispute as to who thought of the name “Local Rentals”. His Honour was satisfied that there was discussion about the provision of finance and the payment of an agent’s fee to Ben Rentals, as well as the provision of finance on a trial basis, until the Company had a Centrepay facility.

59. The primary judge considered that it was likely that the discussions that occurred between Mr Moshos and Mr French included some discussion about Mr Moshos becoming a shareholder in the Company. However, his Honour did not consider it likely that there was any such discussion at the meetings held in October and November 2007. Rather, his Honour considered that it was very likely that there were such discussions in March and April 2008. His Honour considered that the terms of the email sent by Mr French on 15 April 2008 suggested that there was discussion about the shareholding. Further, the emails from Mr Moshos of 14 May 2008, 19 May 2008 and 20 May 2008 also suggest that such discussions had taken place.

60. The primary judge did not consider that Mr French’s email of 15 April 2008, which referred to having “reached an agreement”, or his email of 19 May 2008, which referred to “your shareholding” and being a “working partner”, led to any different conclusion. His Honour did not construe the language of those emails as references to the meetings held in October and November 2007. Instead, his Honour considered that it was more likely that they referred to the discussions that occurred from March 2008, after Mr Moshos had expressed a desire to reach an agreement with Mr French on his own. His Honour accepted Mr French’s evidence that the reference to “an agreement” in the email of 15 April 2008, and the reference to “working partner” in the email of 19 May 2008, were both intended as references to discussions about Home, which occurred in early April 2008.

61. The primary judge was fortified in his conclusion by the failure by Mr Moshos to have asserted, in writing, that a binding agreement had been reached in October or November 2007. His Honour observed that the alleged agreement was simple in its terms and that there was no reason why Mr Moshos could not have put his position clearly in writing, at least in response to the emails from Mr French of 15 April 2008 and 19 May 2008. His Honour did not accept the evidence given by Mr Moshos concerning the conversation on 25 May 2008 (see [47]) and preferred Mr French’s version of that conversation.

62. The parties had formulated questions pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW), which provides that the court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings. The questions and the answers given by the primary judge were as follows:

1. Did Mr Moshos and Mr French enter into a binding contract as alleged, and if so, on what terms? No.

2. Is Mr French in breach of any such contract? No.

3. Was any trust created in respect of Mr French’s shares in the Company as alleged, and if so, on what terms? No.

4. Is Mr French in breach of any such terms? No.

In light of those answers, orders were made for the dismissal of the proceedings and for Mr Moshos to pay Mr French’s costs of the proceedings.

The appeal

64. The notice of appeal filed on 23 September 2014 contains twelve grounds of appeal, some of which overlap and have a tendency to be repetitive. The grounds of appeal may be summarised as follows:

1. Having found that there were likely to have been discussions between Mr Moshos and Mr French about shareholding in the Company, the primary judge erred in failing to accept the evidence of Mr Moshos, where he was the only witness who deposed to shareholding discussions having occurred and what they were and where Mr French denied that there were any shareholding discussions;

2. Having found that the email of 15 April 2008 referred to the issue of Mr Moshos becoming a shareholder in the Company, and to Mr French’s belief that the parties had reached an agreement, the primary judge erred in failing to find that the parties had agreed that Mr Moshos was entitled to a 50 per cent shareholding in the Company under an agreement that was “simple in its terms”;

3. Having made the findings referred to in appeal ground (2), the primary judge erred in finding that the references to “an agreement” in the email of 15 April 2008 and to a “working partner” in the email of 19 May 2008 were both intended as references to discussions about Home;

4. The primary judge erred in finding that the references to shareholdings, agreements and partners in the emails of 15 April 2008 and 19 May 2008 were about Home and not about the Company;

5. The primary judge erred in finding that it was a relevant factor that Mr Moshos did not assert in writing that a binding agreement had been reached, in circumstances where the email of 15 April 2008 expressly stated that an agreement had been reached and where Mr Moshos demanded his shareholding entitlement in the emails of 14 May 2008, 19 May 2008, 20 May 2008, 23 May 2008 and 29 May 2008 (presumably a reference to 27 May 2008), in that the assertion of a binding agreement was implicit in the requests and demands made by Mr Moshos that he be given his shareholding entitlements;

6. The primary judge erred in finding that there were no negotiations for a shareholding for Mr Moshos in the Company in October and November 2007 in circumstances where the defence filed by Mr French denied that there was any agreement “as the negotiations were never concluded and no agreement was reached”;

7. The primary judge erred in finding that there were no shareholding negotiations in October and November 2007 in circumstances where there was no evidence supporting the finding and the finding was contrary to all of the evidence;

8. Having found that there was discussion at the meeting of 5 November 2007 about the name of the Company and its business, the incorporation of the Company and the obtaining of a Centrepay facility, the primary judge erred in finding that there was no discussion about Mr Moshos becoming a shareholder in the Company in October and November 2007;

9. Having made the findings referred to in ground 8, the primary judge erred in failing to find that the parties also agreed in October and November 2007 that Mr Moshos was entitled to a 50 per cent shareholding in the Company;

10. Having found that Mr French conceded that the purpose of the incorporation of the Company was to conduct a business of entering into rental contracts with consumers, the primary judge erred in accepting the evidence of Mr French that the Company was set up to be the provider of finance to Mr Moshos and his partners;

11. The primary judge failed to provide reasons for his finding that there was no shareholding discussion between the parties in October and November 2007 in circumstances where such findings were contrary to the evidence available to him and the admissions of Mr French;

12. The primary judge erred in failing to find that the parties agreed that Mr Moshos was entitled to a 50 per cent shareholding in the Company.

65. While none of the grounds was abandoned, counsel for Mr Moshos limited his oral argument, on the hearing of the appeal, to one general proposition. The proposition was that, in the light of the primary judge’s reservations about the accuracy and reliability of the evidence given by both Mr Moshos and Mr French, it was appropriate to have regard to a number of objective facts from which an inference should be drawn that the discussions that took place on 31 October 2007 and 5 November 2007 gave rise to a binding contract.

66. Counsel for Mr Moshos relied on some eight different matters which, it was contended, point towards there having been an agreement reached in November 2007 and that all of the matters together made it more probable than not that discussions had taken place that resulted in a binding agreement coming into existence. It was submitted that Mr Moshos would not have done the things referred to if he had no interest in the Company, thereby rendering the ultimate inference contended for the more plausible. The eight matters are as follows:

1. The emails exchanged between Mr Moshos and Mr French on 1 November 2007 refer to “shareholdings”;

2. It is improbable that, in October and November 2007, there were no discussions about shareholding in the proposed new company;

3. There was no reason in October and November 2007 for establishing a new company if there was not going to be joint ownership;

4. On 7 November 2007, Mr Moshos established an email account with Gmail in the name “[email protected]”;

5. Mr Moshos assisted Mr French in obtaining a Centrepay facility, and Mr French actively asked for such assistance;

6. On 8 March 2008, Mr Moshos provided to Mr French an example of a working spreadsheet;

7. The email of 15 April 2008 refers to “agreement” and “50/50 partnership”;

8. Mr Moshos made demands for shares in the Company by emails sent on 14, 19 and 20 May 2008.

The grounds of appeal

67. Ground 1 is based on a misapprehension of the finding made by the primary judge. A fair reading of his Honour’s reasons indicates that, in saying that the clear likelihood was that there were discussions about Mr Moshos becoming a shareholder, his Honour was referring to discussions that took place in March and April 2008. The case advanced on behalf of Mr Moshos in the proceedings was that a binding agreement was made in the discussions that took place in October and November 2007. Mr French denied that there were discussions at that stage.

68. The primary judge did not construe the references to having “reached an agreement” and to “your shareholding” and to being “a working partner” in the emails of 15 April 2008 and 19 May 2008 as references to the discussions held in October and November 2007. His Honour found that it was more likely that they referred to discussions that took place from March 2008 and onwards. His Honour accepted Mr French’s evidence that the reference to “an agreement” in the email of 15 April 2008 and the reference to “working partner” in the email of 19 May 2008 were intended as references to discussions about Home, which occurred in early April 2008. The reference to Mr Moshos being brought on board as a “50/50 partner in Local Rentals” is not in any way inconsistent with there having been no such discussion in October and November 2007 as Mr Moshos contended.

69. The references in the email of 15 April 2008 to Mr French’s belief that the parties had “reached an agreement” and the statement that he wanted “Mr Moshos on board as a 50/50 partner in Local Rentals” were not found by the primary judge to constitute references to Mr Moshos becoming a shareholder in the way pleaded. His Honour accepted Mr French’s evidence that he was intending to refer to discussions about Home, which occurred in early April 2008. While his Honour found that the reference to wanting to have Mr Moshos on board as a “50/50 partner in Local Rentals” was a reference to becoming a shareholder in the Company, that was the only part of the email that referred to that possibility. His Honour expressly found that it was not likely that there was any such discussion at the meetings held in October and November 2007. That is the time alleged by Mr Moshos when an agreement was made. Grounds 1, 2, 3 and 4 are not made out.

70. As for ground 5, when the primary judge referred to the failure of Mr Moshos to assert, in writing, that a binding agreement had been reached, his Honour was referring to the agreement alleged by Mr Moshos, namely, an agreement made in discussions in October and November 2007. At no stage did Mr Moshos assert that a binding agreement had been made in the discussions that took place at that time. That is clearly a relevant factor. If such an agreement had been made, it would be very curious that Mr Moshos failed to refer to such agreement by way of response to Mr French’s email of 15 April 2008. There is no substance in ground 5.

71. The primary judge did not accept that there were any discussions in October and November 2007 about Mr Moshos becoming a shareholder in the proposed new company. His Honour then went on to say that, even if there were, his Honour was not satisfied that any concluded agreement was then reached, as alleged by Mr Moshos. That is not inconsistent with the paragraph in the defence that says:

As to the whole of the Statement of Claim, [Mr French] and [the Company] deny that there was any agreement between [Mr Moshos] and [Mr French] in relation to the shareholding in [the Company] or at all as the negotiations were never concluded and no agreement was reached.

There was no admission in that denial that there were negotiations in October and November 2007 that did not result in concluded agreement. Ground 6 must be rejected.

72. Ground 7 appears to be misconceived in asserting that the primary judge erred in finding that there were no shareholding negotiations because there was no evidence supporting such a finding. Mr Moshos had the evidentiary burden of persuading his Honour that there were discussions that led to a binding agreement. It is misconceived to speak of there being no evidence supporting a finding that there was no agreement. Insofar as there is a bald assertion that such a finding was contrary to all of the evidence, it is necessary to have regard to the other grounds. Ground 7 has no substance and must be rejected.

73. The fact that there was discussion at the meeting on 5 November 2007 about the name of the proposed new company and its business, and the proposal to incorporate such a company and obtain a Centrepay facility, does not in any way indicate that there was discussion about Mr Moshos becoming a shareholder in such a company. There may well have been good reasons for Mr Moshos to agree to assist Mr French in establishing a new company with a Centrepay facility. For example, such a company might be able to provide financial assistance to customers of the businesses with which Mr Moshos was connected. There was no reason why Mr Moshos would have to be a shareholder in such a company. There is no substance in grounds 8, 9 or 10 and they must be rejected.

74. Ground 11 is a bald assertion that the primary judge failed to provide reasons for his conclusion that there was no shareholding discussion between the parties in October and November 2007 in circumstances where such findings were contrary to the evidence. His Honour dealt in admirable detail with the evidence and gave clear reasons for rejecting the evidence relied on by Mr Moshos. Ground 11 has no substance and must be rejected. Ground 12 has no particularity and therefore has no substance.

The eight matters relied on by Mr Moshos

75. The matters relied on by counsel for Mr Moshos in arguing the appeal are, for the most part, covered by the reasoning for rejecting the 12 grounds of appeal. Nevertheless, it is desirable to say something about the matters by way of demonstrating that none of them unequivocally points towards there having been an agreement concerning shareholdings in the proposed new company made in the discussions in October and November 2007. Further, those matters taken all together do not point to that conclusion.

76. As to the first, the exchange of emails on 1 November 2007 is equivocal. They certainly support an inference that there was a discussion on 31 October 2007 about “shareholdings”. On the other hand, it is certain that, at the time of the exchange of the emails, there was no binding agreement. There was a proposal for further discussion involving “the guys”. If a proposal for a “50/50” shareholding in the proposed new company had been advanced in the October discussion, one might have expected an explicit reference in the email from Mr Moshos. Mr French advanced an explanation for the reference to “shareholdings” and the primary judge accepted that explanation (see [58]). That is a feasible explanation. Once it is accepted that there is a feasible or reasonable explanation of the reference to “shareholdings”, the exchange gives rise to no inference such as is relied on by Mr Moshos.

77. As to the second, there is no reason why the primary judge should have concluded that it was probable that there were discussions about shareholdings in the proposed new company. There is nothing to indicate that the object of the discussions was a proposed joint arrangement. Mr Moshos was engaged in the goods rental business. Mr French was engaged in the finance business. There is no reason to conclude that it was probable that Mr Moshos wanted to become involved in the finance aspect, rather than simply wanting to have a financier who would assist in the business in which he was engaged.

78. As to the third, there may be any number of reasons why it was desirable to establish a new company, even if there was no intention for it to be jointly owned. For example (and this was not explored in the evidence one way or the other), it may be that, in order to obtain a Centrepay facility, investigations of the legal entity that was to hold the facility would be required. There was no evidence as to the background of the entities with which Mr French was associated. The fact that Mr Moshos was unable to obtain a facility for any company with which he was associated suggests that it would be desirable to have a new company with no antecedents that might militate against the grant of the facility. The mere fact of establishing a new company does not give rise to an inference that there was going to be joint ownership.

79. As to the fourth, obtaining a Gmail account is quite equivocal. There may have been good reason for Mr Moshos to secure the account for his own purposes. It is not necessarily consistent with the proposed new company being jointly owned. A fact that points clearly in the opposite direction is that, as soon as the Company was registered, Ms Perston established a domain name and a series of email addresses that had nothing to do with Mr Moshos.

80. As to the fifth, the fact that Mr Moshos afforded assistance to Mr French in connection with obtaining a Centrepay facility for the Company is entirely equivocal. It is perfectly consistent with the desire on the part of Mr Moshos to ensure that the finance company that was going to assist the businesses with which he was connected would have such a facility. It was in the interests of those businesses to ensure that the financier had access to that facility. That was a benefit to him by reason of his association with the businesses. It does not point in any way to Mr Moshos assisting a company in which he was going to be a shareholder.

81. As to the sixth, the spreadsheet provided by Mr Moshos to Mr French in March 2008 appears to refer to customers of businesses with which Mr Moshos had an association. There is nothing in the spreadsheet to suggest that it was for use in connection with the financing business that Mr French was proposing to undertake through the Company. Even if it were, that would do no more than indicate that Mr Moshos was assisting in the establishment of a financier that would assist the businesses with which he was associated.

82. As to the remaining matters, the emails of April and May 2008 are either quite inconsistent with the agreement alleged by Mr Moshos or entirely equivocal as to whether any such agreement was made in October and November 2007. The email of 15 April 2008 clearly refers to “what is happening with regard to Home”. For the reasons given above, the reference to “the set up costs” can only be a reference to the set up costs for Home. Mr French explained that there was discussion about the possibility of Mr Moshos being “a 50/50 partner in Local Rentals”, but only on the basis that the interests of Mr Moshos in Home be brought into the partnership. Whatever discussions may have occurred that led to the email of 15 April 2008, it is abundantly clear that the email is inconsistent with there being an extant binding agreement under which Mr Moshos was to be given one half of the share capital of the Company. Mr Moshos was invited to “make a decision one way or another”.

83. The email of 15 April 2008 elicited no response from Mr French. It beggars belief that, if there had been a binding agreement in existence, as he contended, he would not have responded to the email of 15 April 2008 immediately, confirming the arrangements that he alleged were already in place. Indeed, as the primary judge found, at no time did he assert in writing that an agreement had been made in October and November 2007. Such an agreement could have been reduced to writing in two or three sentences at the most.

84. Mr Moshos points to his emails of 14 May 2008 and 19 May 2008 asking for “the paperwork” to be organised and for “the papers to sign” to be organised. The emails refer to “share allocation” and “the shareholding allocation”. While the name of the Company is not mentioned, it is probably clear enough that that would have been understood as “the local company” referred to in the email of 14 May 2008. Nevertheless, the two emails are equally consistent with there being discussions along the lines of those recorded in the email of 15 April 2008. That is to say, there was a proposal extant as at 15 April 2008 for Mr Moshos to come “aboard as a 50/50 partner”. However, there were conditions for that to occur, namely, bringing Home “into the partnership”. However, Mr Moshos has never contended for an agreement such as that evidenced by the email of 15 April 2008, which would have involved bringing Home “into the partnership”. The emails of 14 and 19 May 2008 are equivocal in relation to the existence of an agreement made in October and November 2007.

85. Further, Mr French’s response of 19 May 2008 is clearly inconsistent with the existence of a binding agreement. Rather, it is consistent with an agreement of the nature adverted to in the email of 15 April 2008. If Mr Moshos was to join a “partnership” it would be necessary for there to be an agreement between the shareholders as to their respective rights. That is adverted to in the email of 19 May 2008. It appears that Mr Moshos did not see that email before he sent his email of 20 May 2008. However, there was no response to the email of 19 May 2008 along the lines that one would expect if Mr Moshos believed he had a binding agreement as from October and November 2007. There is no evidence of any assertion that there was a requirement for a shareholders’ agreement. Had there been a binding agreement, the immediate response one would expect from Mr Moshos would have been that there was no need for such an agreement because they already “had a deal”.

86. The final communication between the parties is the curious email of 27 May 2008, in which Mr Moshos assumed the guise of the Company, writing to Mr French as “Dear Kenneth”, in circumstances where he had previously addressed him as “Ken”. The email was sent from the address established by Mr Moshos on 7 November 2007. There is no evidence that that address had been used by him at any other time prior to 27 May 2008. The email gives the impression of having been contrived by Mr Moshos to suggest that he was the Company, not merely that he was a 50 per cent shareholder in the Company and not a director. None of the emails points towards the existence of the binding agreement in October and November 2007.

Conclusion

87. None of the grounds relied on by Mr Moshos in his notice of appeal has been made out. None of the material relied on in the course of oral argument supports the conclusion that the primary judge erred in rejecting the case advanced by Mr Moshos. It follows that the appeal must be dismissed with costs.

88. LEEMING JA: I agree with Emmett JA.

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Decision last updated: 23 April 2015