Nicholson v Owners of the Vessel “The Sea-Ya”
[2005] FCA 257
•15 MARCH 2005
FEDERAL COURT OF AUSTRALIA
Nicholson v Owners of the Vessel “The Sea-Ya” [2005] FCA 257
Nicholson and anor v Owners of the VESSEL 42’ Riviera Flybridge Cruiser Registration Number JMG 42N “The Sea-Ya”
NSD 1974 OF 2004ALLSOP J
15 MARCH 2005
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1974 of 2004
BETWEEN:
MARK NICHOLSON
FIRST PLAINTIFF/ THIRD CROSS DEFENDANTBRONWYN NICHOLSON
SECOND PLAINTIFF/ THIRD CROSS DEFENDANTAND:
PETER ZIZZA AS OWNER OF THE VESSEL 42’ RIVIERA FLYBRIDGE CRUISER REG NUMBER JMG 42N
"THE SEA-YA"
DEFENDANT/ CROSS CLAIMANTDES LAST PTY LIMITED TRADING AS SYDNEY BOAT SALES
FIRST CROSS DEFENDANTDESMOND LAST
SECOND CROSS DEFENDANTJUDGE:
ALLSOP J
DATE OF ORDER:
15 MARCH 2005
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The cross claim against the first and second cross-defendants be dismissed.
2.There be a declaration in accordance with paragraph 55 (b) of the cross claim that no binding and enforceable contract for sale of the Vessel was entered into between the Cross-Claimant and the Third Cross-Defendants on 16 December 2004.
3.The relief sought in the statement of claim filed 7 January 2005 be dismissed.
4.The application be stood over to a date to be fixed to deal with the question of costs.
5.Time for filing and serving a notice of appeal be extended up to and including 19 April 2005.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1974 of 2004
BETWEEN:
MARK NICHOLSON
FIRST PLAINTIFF/ THIRD CROSS DEFENDANTBRONWYN NICHOLSON
SECOND PLAINTIFF/ THIRD CROSS DEFENDANTAND:
PETER ZIZZA AS OWNER OF THE VESSEL 42’ RIVIERA FLYBRIDGE CRUISER REG NUMBER JMG 42N
"THE SEA-YA"
DEFENDANT/ CROSS CLAIMANTDES LAST PTY LIMITED TRADING AS SYDNEY BOAT SALES
FIRST CROSS DEFENDANTDESMOND LAST
SECOND CROSS DEFENDANT
JUDGE:
ALLSOP J
DATE:
15 MARCH 2005
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This litigation arose out of the arrest of the vessel “The Sea-Ya” in December 2004. The central issue in the controversy is whether a legally binding contract was reached between the plaintiffs and the defendant to buy and sell respectively the Riviera 42’ motor cruiser named the “Sea-Ya”, for $439,100 subject to specific terms to which I will come. The plaintiffs say that a contract was agreed between them (through the first plaintiff, the husband of the second plaintiff) and the defendant (through brokers, the first and second cross-defendants) and that the defendant has purported to change his mind at a point in time that was too late, that is, after a binding contract was formed.
That case was founded upon a body of evidence located in affidavits of the brokers (Messrs Last and Rosenberg) and the first plaintiff. The gist of that case was that with the full knowledge and express consent of the defendant, the broker accepted an offer made by the first plaintiff for the vessel. Thereafter, for reasons which were personal to him the defendant purported to withdraw the boat from sale.
The defendant, on the other hand, says, in complete contradiction of the evidence of the brokers, that he expressly withdrew the vessel from sale some three to four weeks before Mr Nicholson appeared as a prospective buyer. The precise date of this withdrawal does not matter, but it was either 9 or 10 November on the defendant's evidence. On the evidence put forward by the defendant, the brokers entirely lacked authority to hold the vessel out for sale and to negotiate with Mr Nicholson and they engaged in conduct, on this hypothesis, in negotiation with Mr Nicholson which was not only inappropriate and misleading but, to a degree, dishonest.
There was an evidential aspect of the case which is not, properly understood, a central issue as to the effect of the contract between the defendant and the brokers as to termination. The agreement between the defendant and the brokers was undoubtedly contained in substance in a listing agreement signed in circumstances, to which I will refer briefly, in due course in June 2004. The agreement was subject to a term as follows:
(g)It is hereby expressly agreed by the parties hereto that the sole agency hereby created shall be for a minimum period of four months and the date hereof. Thereafter the agreement can be cancelled with four weeks notice.
On the defendant's evidence, at the very least, notice was given, but on his evidence in one sense there was a complete withdrawal of authority. The precise role of that four-week provision does not call for determination. The better view would be probably be that no vessel could be sold without the defendant's authority and what the four weeks did was to give the brokers a measure of protection in relation to commission should be the boat be sold within those four weeks.
The above is the starkness of the fundamental conflict. In descending into detail at various points along the chronology there was a multitude of individual conflicts of evidence many of which were taken up in cross-examination. However, the fundamental matters for me to decide are in a sense the following.
First, which basal version of the facts is the accurate representation of what happened in 2004? Did Mr Zizza plainly and unequivocally, as he stated, withdraw the vessel from sale in early November and consequently did the brokers thereafter for their own reasons continue to market the vessel and indeed purport to reach at least a consensus ad idem with Mr Nicholson? Secondly, and in large part dependent upon the answer to that first question, what did happen on 16 December 2004? Thirdly, on the assumption that I do not accept Mr Zizza's evidence about that basal matter, what does the evidence disclose as to what, objectively speaking, can be taken to be the parties’ intention as to when the parties were to be legally bound? Fourthly, assuming all those questions are answered favourably to the plaintiffs, whether or not there are matters which properly understood would still deny the existence of an enforceable contract by reason of notions of either uncertainty or whether finally relief in the nature of specific performance should be refused?
Extensive written evidence was filed by way of affidavits. Extensive cross-examination took place. I should begin with a comment for the assistance of the parties and not by way of the slightest criticism of them. The difficulty of the use of affidavit evidence in areas of conflict or cases of conflict such as this was brought out in this case. People swore affidavits at earlier dates that would indicate that at the earlier dates in the circumstances and place of swearing those matters were believed or recalled. It does not follow from that when those affidavits are read and when deponents are cross-examined about their recollection, that in the witness box their recollection is more doubtful, that no weight should be put on the affidavit. That finding is often difficult enough in contested evidence cases that where one has a conflict of earlier sworn affidavit material and later sworn oral material and cross-examination the task of both the cross-examiner and the trier of fact is made more complex. The use of pre-trial statements and disclosure of evidence is a salutary procedure now entrenched in conduct of litigation in this Court and in this State, if not this country, and it has saved hearing time in many cases. I think it has saved hearing time in this case. However, real consideration should be given, it seems to me, to using statements as exchanges of anticipated evidence, rather than antecedently sworn evidence.
With that said it is appropriate now first to comment upon the witnesses. I appreciate the difficulties and dangers in relying on impression and demeanour. However, in a case such as this, one must necessarily rely to a significant degree on one's impression because of the starkness of conflict of evidence. The recency of events is such that the fundamental differences (as opposed to many of the peripheral differences) between Mr Zizza and Mr Rosenberg in particular, and to a lesser degree Mr Last, are difficult to attribute to mere faulty recollection. I will however in the way I make my findings of fact only make my findings to the extent I think I need to express them for the resolution of this controversy. There are some surrounding circumstances, which assist in the resolution of the factual determination. Some are more powerful than others. I will, in due course, also say something as to what the difficulties of some of the recollection says about what I think was the somewhat secondary importance of some matters at the time to the parties to the conversations.
I should say at the outset of these reasons that I was at times critical of Mr Thomas' approach to this cross-examination. However if I may say so, Mr Thomas thoroughly and forcefully tested those witnesses he cross examined and I feel obliged to say in my reasons something which I said to him on a number of occasions on reflection: that while I thought some of the cross-examination was taking some time that was unnecessary, in the end this was a matter for counsel and no party should think that I was not significantly assisted by the way that both Mr Thomas and other counsel in this case handled themselves in a difficult case of oral evidence contradiction.
Mr Rosenberg, the principal broker for the first cross-defendant, was vigorously cross-examined at some length by Mr Thomas. The cross-examination of Mr Rosenberg enabled me to form a clear view in my mind that Mr Rosenberg was at all times attempting to be honest with me. At times he became upset, at times he was careless, indeed at times his evidence was less than precise in detail and was sometimes muddled. To a degree that muddlement, if I may use that expression, was an idiosyncratic reaction of Mr Rosenberg and in part, I think, and this is not a criticism of counsel, it was a reflection of the nature and direction of the cross-examination.
I am satisfied that Mr Rosenberg was generally contemporaneously a competent and diligent broker. His habits as to note taking were, it might be said, not particularly tidy, but I think he is a conscientious and competent man. Mr Rosenberg had somewhat unfortunately apparently been shown statements of persons in the case apart from those which his evidence contradicted. Nevertheless after thorough testing I was left with the clear impression that he was honest and attempting to be of assistance. The same generally can be said of Mr Last.
Mr Zizza, on the other hand, at times struck me as being less than frank and somewhat evasive in his approach to his evidence. His evidence contained a certain number of inconsistencies when pressed. Although as I said earlier in relation to Mr Rosenberg, I do not take a huge amount from the great number of inconsistencies displayed variously throughout the evidence by all parties. However, some of the inconsistencies in Mr Zizza's evidence were of recently given material. Weighing up all the material I have the misfortune to conclude that I am not prepared to accept Mr Zizza's evidence when it conflicts with Mr Rosenberg and, in particular, Mr Last.
I am assisted in these conclusions by the surrounding circumstances to which I will come and the basal nature of the conflict of evidence and its simplicity. Overall I would simply conclude that I prefer the evidence of Messrs Rosenberg and Last to Mr Zizza. Before I come to the various matters of surrounding circumstance in detail it is necessary to remember the basal dispute in the case. Mr Zizza said that he made clear from 9 or 10 November that the boat was off the market and for five weeks thereafter he was harassed by telephone calls which only when they came through to him he consistently and forcefully said to the brokers that they were to stop ringing him and that the boat was off the market.
The brokers' evidence on the other hand was that up until 16 December inclusive the marketing of the vessel and the negotiations with Mr Nicholson had been done entirely with the consent and authority of Mr Zizza, although he was hard to get on the phone.
What then occurred in human terms on the brokers' evidence was that Mr Zizza changed his mind. The brokers' evidence was that Mr Zizza, on one occasion at least, said to Mr Rosenberg or Mr Last that his wife would divorce him should he sell the boat. Through my acceptance of the brokers' evidence I accept that something like that was said. That is not to say, of course, that the truth of those matters underlay Mr Zizza's behaviour. One hears that kind of expression when (for reasons which may be apparent here) an excuse is required for someone to change their mind. Thus, on the brokers' version of events, Mr Zizza changed his mind at a late stage and at a stage where the brokers thought it inappropriate and, to a degree, morally wrong that a change of heart should be manifested.
There was an important telephone conversation between Mr Zizza and the solicitor acting for the plaintiffs. The plaintiffs are citizens of New Zealand and originally retained New Zealand solicitors. Shortly after the dispute arose as to whether or not there was a concluded contract, Messrs Ebsworth and Ebsworth were retained to act on behalf of the plaintiffs. A partner of that firm, Ms Wilmshurst, on 22 December 2004, shortly before lunch, telephoned Mr Zizza, the details of Mr Zizza's phone number having been provided by the brokers. A conversation to the following effect then apparently took place, as deposed to in paragraph 5 of Ms Wilmshurst’s affidavit.
At approximately 11.45 am on 22 December 2004, I telephoned Mr Zizza on the mobile phone number, [number], which had been provided to me by Des Last and I had a conversation with Mr Zizza to the following effect:
WILMSHURST: “Hello, my name is Danella Wilmshurst. I am a solicitor acting for Mark Nicholson in relation to the purchase of the Riviera.”
ZIZZA:“Yes. So?”
WILMSHURST: “You may not wish to speak with me. You may prefer to engage a lawyer.”
ZIZZA:“I don’t care. I will speak to you. There’s nothing to be said. I just changed my mind. That’s all there is to it. I can change my mind.”
WILMSHURST: “I think you should be aware my client is thinking of arrest action. We are looking to enforce the sale agreement.”
ZIZZA:“That’s fine. I will hit you with a writ as soon as you get off the plane.”
WILMSHURST: “I am in Sydney. Look, the purpose of my call was to give you the courtesy of notice of the possibility of arrest and so you might have an opportunity to retain a lawyer or to have any dialogue about this matter either through your lawyer or directly with Mark Nicholson. There’s obviously no point discussing it further.”
That conversation was not expressly denied by Mr Zizza in terms. However, he had a different version of the conversation which was in the following terms at paragraph 17 of his affidavit of 30 December 2004.
On about 22 December, 2004, I received a telephone call from another female solicitor who identified herself as a solicitor acting on behalf of Mr and Mrs Nicholson in relation to the boat. I had a conversation with her in words to the to following effect:
She said: “I believe you had a boat for sale.”
I said “ I did but I took it off the market and it’s no longer or sale.”
She said: “I am instructed that my clients have a binding contract to purchase the boat an they want to take action against you.”
I said“The boat is not for sale. If you take any action against me I’ll sue you. You must have different rules in New Zealand.”
She saidI am not from New Zealand. I’m from Sydney”
There was other conversation to a similar effect to the conversation above.
Ms Wilmshurst was cross-examined about the conflict by Mr Thomas in an entirely appropriate manner, reflecting his instructions. Over objection of counsel for the plaintiffs, I allowed certain cross-examination of Ms Wilmshurst as to her view of the similarity of the relevant parts of the versions. I explained to counsel my reasons for allowing the cross examination in the following terms at page 416 of the transcript:
HIS HONOUR: Mr Thomas, I don't want you to be under any
misunderstanding. The questions that I have allowed you to ask because I
took the view that the question you asked of the witness that I first allowed
in that series may be a precursor to some further questions which it hasn't
been.But I don't want you to think that I would take the answers to those
questions any further than the witness is a speaker of English and a reader
of English, is acceding to a proposition as to the substance of the meaning
of two paragraphs and two sentences.
MR THOMAS: Yes.
HIS HONOUR: And the reason I rejected a very similar question earlier
was because it wasn't going to help me because I can read them. They are
very similar or they are not. I have allowed you to do that with Ms
Wilmshurst because I thought it may be that I had earlier cut you off from
some other questions in a flow and I thought that might be unfair, but you
shouldn't be under any misapprehension. The worth of that evidence thus
far is that Ms Wilmshurst is a reader and speaker of English, has acceded to
a proposition as to the similarity of content of those two paragraphs. It
doesn't say anything about her evidence. All right, all I'm saying is I don't
want you to be under any misapprehension as to how far you have gone,
that's all.
The relevant parts of Ms Wilmshurst's evidence in this respect were as follows.
MR THOMAS: You see, you attribute to him the words, there is nothing
to be said, I just changed my mind, that's all there is to it, I can change my
mind.Correct?
MR YOUNG: I object, your Honour, my friend has gone right through
this conversation already, putting all the bits.
HIS HONOUR: I will allow it.
THE WITNESS: Yes.
MR THOMAS: He asserts that he said, I did but I took it off the market
and it's no longer for sale? --- Yes.
I suggest to you that although the words are different both versions are
talking about a change in the position in relation to the sale of the vessel.
MR NELL:I object, your Honour.
HIS HONOUR: I reject the question.
MR THOMAS: I suggest to you that he said words to the effect, I took it
off the market and it's no longer for sale? --- That's not correct.
But he said words to the effect, I did have it on the market and it's no
longer for sale? --- Not correct.
You say that he used the words, I changed my mind, that's all there is to it,
I can change my mind, or words to that effect, is that right? --- Yes.
And you say that he never made mention of taking it off the
market? --- That's right.
But I put it to you that although the words are different when one compares
them the effect of them is the same.
MR NELL:I object.
HIS HONOUR: I will allow the question.
THE WITNESS: Could you repeat the question.
MR THOMAS: I suggest to you that although the words are different the
effect of the words is the same? --- Yes it could be.
…
And in giving your evidence concerning this conversation you are not
suggesting that these were the precise words used by you or Mr Zizza
during the conversation? --- No.
And it is for that reason that you prefaced the conversation by saying:
I had a conversation with Mr Zizza to the following effect.
? --- Yes.
That evidence of Ms Wilmshurst, if I may say so with respect, was perfectly properly given and amounted to the proposition, no more, than that there was a similarity as can be seen from reading of the respective pieces of evidence. However, Ms Wilmshurst's evidence that Mr Zizza said words to the effect that “he had changed his mind, that's all there is to it, I can change my mind”, is important it seems to me, because it resonates in the balance of the evidence.
If it be the case that Mr Zizza had from the beginning of November clearly and unequivocally withdrawn this boat from sale, and if it be the case that he had been harassed for five weeks by the brokers, I doubt very much whether that would have been the substance of the explanation given to the solicitor. That is not the only matter in this case that assists me in my conclusion conformably with my view of the witnesses in the witness box, however, it is a not unimportant consideration. He would not have used, it seems to me, that form of expression and I have little doubt having seen Mr Zizza that he would have used fairly short, to the point, no doubt respectful language, to make plain to Ms Wilmshurst what the position was.
The brokerage run by Mr Last was a business that on the evidence before me was not in particular financial difficulty and I see no particular economic reason for it to have acted in a way that conflicted so fundamentally and indeed unethically with the clear instructions of the client.
I will come to the other surrounding and extrinsic circumstances in a moment but some time was spent in cross-examination on the evidence in the early chronology of 2004. Mr Zizza was cross-examined closely about these events, as were other witnesses. Mr Zizza, I thought, if I may say so, somewhat doggedly clung to a sequence of events which was important to him. However, to the extent it is necessary, it seems to me that the likely sequence of events, and I so find, is as follows. That Mr Zizza either attended the marina in late May or rang up Mr Rosenberg after a brief encounter or conversation to the effect that he had a boat for sale. He was told that someone would come out to look at the boat and appraise it. Thereafter, some time in early June, Mr Rosenberg attended the marina at which Mr Zizza kept his boat, looked at the boat and discussed with Mr Zizza a price of either $465,000 or $469,000. On this occasion Mr Rosenberg mentioned the need for a brokerage agreement. It may well be that Mr Rosenberg had intended to give Mr Zizza a copy of that agreement on that occasion but one was not signed on that occasion. Thereafter was a conflict as to whether the brokerage agreement was signed before what was referred to as the photo shoot or the photo shoot occurred before the signing of the brokerage agreement. To the extent it is necessary to find, I find that the listing agreement was signed first.
One of the aspects about this cross-examination of this earlier period about Mr Zizza was that he was less than precise in the way it had developed in the evidence. His earlier affidavit indicated a sequence of the listing agreement being signed before the photo shoot. During the course of his evidence about these matters I gained the impression on a number of occasions that he was not attempting to be clear and that he would attempt to break up the cross-examination, sometimes deliberately it seemed to me, with a lack of understanding when it looked as though a concession was likely being called for or having to be given.
I also reject his evidence that he thought the vessel was worth $440,000. This was the asking price 12 months earlier. As an experienced businessman I doubt whether he would have believed this to be its real value at least as a real value below which no offer would be contemplated. Also, importantly, in relation to Mr Zizza's credit, as to the conversations which Mr Rosenberg dealt with in paragraph 17 of his affidavit of 14 January 2005, it is important to note that in Mr Zizza's affidavit of 27 January 2005 this paragraph was not contradicted, yet in his oral evidence Mr Zizza was adamant that from the time, in effect, on his evidence, of the signing of the listing agreement but on my findings of the photo shoot, he heard not a word from the broker. To the extent it is necessary I find that Mr Zizza said during the course of the months that the vessel was marketed that he would require either $430,000 or $440,000 initially to keep, in my view, the brokers up to their task but I would not conclude that Mr Zizza viewed that as a non-negotiable floor below which he was not prepared to consider possible offers.
The initial requirement for a base sum in his pocket, $30,000 or $40,000 more than he paid for the vessel less than a year before is perfectly understandable and commercially sensible as a clear and unequivocal message to the brokers to do the best they could if they wanted the commission. It is not in my view a likely benchmark which a businessman such as Mr Zizza would have put on an asset such as this as a non-negotiable benchmark if he really did want the vessel sold.
As I have said earlier, there are a number of extrinsic circumstances which tend towards the confirmation of my impression of the witnesses. As I have said I find it unlikely that there were no conversations for three months in particular if Mr Zizza had any desire to sell the vessel. His evidence was that he wanted to sell and re-buy another vessel before Christmas. If that were the case I think there would in all likelihood have been conversations of the kind referred to by Mr Rosenberg in his evidence. Importantly, also, Mr Zizza says that he withdrew the vessel in early November. As I have earlier said, in some parts of his affidavit one can glean that this was 9 and 10 November. On the evidence, it seems to me unlikely that thereafter the brokers would spend time and money putting together a video and otherwise marketing the vessel when on any version of the arrangement between the brokers and Mr Zizza the commission was inclusive of advertising, unless the listing agreement was breached or earlier notice otherwise given in which case a sum of $1,000 would be paid. Thus, the activity of the brokers in continuing to market the vessel to the extent it involved the expenditure of moneys, as it naturally would have, was unlikely to have been done at their own cost and at their own risk as to cost in the face of a clear and unequivocal withdrawal of the vessel.
Next, though it is not of monumental importance in this case, some aspects of the evidence of Mr Leech give important corroboration to the brokers' version of events. Mr Leech overheard some conversations. Those conversations were allowed in evidence with the limitation under s 136 of the Evidence Act 1995 (Cth) that they were only admitted for the fact of their having occurred. However, the conversations in paragraphs 7 and 8 in particular of Mr Leech's affidavit together with the cross-examination that took place on them tend towards an external reality conformable with what Mr Last and Mr Rosenberg said in their evidence. Further, the fact that Mr Leech was instructed thereafter, that is, after 19 December, to take steps to arrange insurance with third parties strikes me as consistent with the version of events propounded by the brokers. I should say that Mr Leech was a young, trainee broker who is still employed by the brokerage but struck me as being transparently honest and frank.
One other factor which assists me in coming to the conclusion I have and otherwise to confirm for me my views on credit is that at no time did Mr Zizza complain to anyone about Mr Rosenberg's apparent harassing of him. Mr Zizza accepted in his cross-examination at one point that he recognised that Mr Last was Mr Rosenberg's boss. Shortly thereafter, in some of the answers he gave he appeared to recognise what might be the importance of this and qualified the earlier clear answer he gave. I find that he did understand that Mr Last was in charge and I think that if he had thought that Mr Rosenberg was harassing him in the way that he said, Mr Zizza would have had no hesitation in calling Mr Last and speaking to him in a fairly plain and direct way.
Related to that is the fact that at no time did Mr Zizza seek return of the keys to his vessel in respect of which sale he was being harassed. Mr Zizza, I accept, is a very busy, hardworking builder who was in these months working in the western and northwestern suburbs of Sydney. However, the brokers were not far from where he lived. The brokers' establishment was not far from the marina where he kept his boat. If there was harassment going on and quite unauthorised attempts to sell his boat I think a natural step for him to take would have been to retrieve the key so that the brokers could not gain access to the vessel.
There is an internal and human coherence in what much of what the brokers said in the lack of movement and interest in the vessel at $465,000 or $469,000 given that less than 12 months before it had been advertised for $440,000 and sold for $400,000. As the price came down some interest was shown. The ultimate consensus ad idem, that in my view was ultimately reached by the parties in circumstances to which I will come, reflected to Mr Zizza (after commission) an accretion in capital terms over 10 months, having paid $400,000, of some six per cent or thereabouts. As a matter of likelihood it seems to me that a businessman who was willing to sell his boat would not have seen that as a poor return.
Mr Zizza's evidence was that he withdrew the boat because the festive season was approaching. It may well be that ultimately when the agreement was reached netting that accretion of value for the sale of his vessel that that consideration was what weighed on him in taking the view that not only domestic harmony but also no doubt his own desire to use the boat for the festive season and for the private arrangements which he and his family made for the carriage of deaf children on the vessel on Boxing Day and New Year's Eve necessitated that the boat not be sold.
Another body of extrinsic circumstances, though less compelling, is that some of the detail which might be said by those acting for Mr Zizza to be lighted upon as embellishment by Mr Rosenberg in particular as to the events after 16 December were peculiarly vulnerable. The detail as to the conversation with Mr Zizza, that Mr Zizza was in Wollongong, where he was not, the explanation of Mr Zizza that his daughter must have been on the internet the night before, did throw themselves up for exposed consideration. I do not think that these were dishonest embellishments and whether or not Mr Zizza was in Wollongong, there is a consistency to his wishing to place himself outside his usual environment in order, as Mr Nell said in submissions, to gain a little time to think.
My considerations as to whose version of events to accept in the fundamental distinction that I have to deal with is affected importantly by the evidence of and concerning 16 December. It is not unfair on Mr Rosenberg and indeed Mr Zizza to say that to a degree both their evidence about this was somewhat muddled. That can be said in particular in relation to Mr Rosenberg.
In relation to 16 December, if I may put it this way, the cross-examination and the evidence in answer to the cross-examination were both at times somewhat confused and that is not said disrespectfully of either the cross-examiner or Mr Rosenberg. One of the difficulties was the prior swearing of material another was the attempt at reconstructions through extrinsic material and the human call on the recollection.
An important consideration, and one that I have given most careful consideration to, was the difficulties in reconciling at least one if not more of the confused versions or sequences of events of that day identified by Mr Rosenberg with the objective telephone records. Briefly put, and relevantly, those records would indicate that after a long telephone conversation of some 20 minutes between someone at the brokers’ office and someone at the Nicholsons’ home, which I take to be Mr Rosenberg and Mr Nicholson, there was a brief telephone conversation with Mr Zizza shortly thereafter, which Mr Rosenberg in his cross-examination accepted would not have been enough time to deal with all the matters which he said he dealt with with Mr Zizza over the telephone after the conversation with Mr Nicholson.
I do not propose to examine every nook and cranny of the evidence and cross-examination of Mr Rosenberg. It is sufficient to note that at times in cross-examination the sequence of events of 16 December varied. In particular, there was a longer telephone conversation with Mr Zizza before the longer telephone call between the brokers and New Zealand. An email had been sent overnight. It is not at all clear from the various versions what the precise sequence was. However, one must recognise the fundamental choice that needs to be made to resolve this controversy about what happened on 16 December. Whether or not the matter is to be understood by reference to a muddled sequence, including when the email was first opened, or whether the matter is to be analysed by reference to an unwillingness to accept the utter completeness or accuracy of the phone records, a decision has to be made as to whether or not Mr Rosenberg's evidence is truthful and in substance accurate when he says that he had a discussion with Mr Nicholson dealing with the email sent by Mr Nicholson to him and which is found at page 152 of the tender bundle.
The email was said to have been sent at 1.32 pm New Zealand time, Wednesday, 15 December 2004. The conversation with Mr Nicholson took place on 16 December. The email was in the following terms:
Hi Steve,
Certainly this exercise has been a learning curve for us all.
To recap:
Where we stated: Just dealing with the basics.
Purchase price $442500
Shipping 5000
Cradle transpt 500
TOT $448000Now: Not including freight to Brisbane. Road freight quoted at $5500
Purchase price $442500
Shipping 12300
TOT $454800A difference of $6880 – my proposal is to split this down the middle.
Purchase price would be subject to:
-Shipping price as quoted
-Survey with an undertaking that reasonable faults to be rectified or remedied. The problem being that I would be locked into transport.
-Sea trial
The settlement time is dictated by the shipping schedule.
Steve I’ll ring you at 9.00 am your time.
Regards Mark
In the morning of the 16 December Mr Rosenberg and Mr Nicholson discussed that email. In particular with the assistance of paragraph 30 of Mr Nicholson's affidavit one can see in the conversation that the subject term "that shipping price as quoted" fell away in negotiations and that the body of the calculations contained in the email resulted and resolved into an offer that could be seen from the face of the email as one for $439,100 subject to two conditions that reasonable faults to be rectified or remedied, satisfactory survey report and sea trial.
The satisfactory survey report was not mentioned in the email but can be taken and was expected by all parties as a standard condition.
The second fundamental aspect of that day was that at some time after that conversation - whether or not there had been some conversation with Mr Zizza beforehand alerting him to the content of the email does not matter, whether or not some time after that conversation with Mr Nicholson Mr Rosenberg obtained the express instructions of Mr Zizza to accept that offer, that is, $439,100 for the vessel subject to those three conditions – Mr Rosenberg's affidavit sets out a body of material that he said to Mr Zizza following that conversation.
Mr Rosenberg accepted in cross-examination that this was unlikely to have been a conversation to have been limited to 50 seconds as the telephone records identified. Having seen Mr Zizza in the witness box and what appears to be an habitual direct and clipped way of expression, and I do not say that intending to be in the slightest disrespectful, it seems probable to me that that conversation might have only taken a fairly short period of time. However, Mr Rosenberg was of the view that it probably would have taken longer but said he could not account for the state of the telephone records.
Thus the content of what occurred on that day is not entirely satisfactory. But as I said earlier one has to understand the fundamental conflict between Mr Rosenberg and Mr Zizza about this day and these events. Mr Zizza's evidence was that he said that after he had been told by Mr Rosenberg that he had taken a deposit, when in fact he had not as yet, and about the price, Mr Zizza said:
I keep telling you I don't want to sell the boat.
Mr Rosenberg said:
The buyers are genuine. They have paid the deposit. You won't get a price like this again. Please think about it.
Mr Zizza's boat was not for sale on this version.
I appreciate fully that the brevity of that conversation may more conformably fit within the state of the phone records. However, I am not prepared to decide the credit in this case, in substance, on that point in circumstances where having viewed the witnesses under extensive cross-examination, formed a view as to their truthfulness; and in the light of all the other surrounding circumstances in relation to the telephone records I am not prepared to work on the hypothesis that the telephone records, extracts and summaries of which were tendered, are necessarily 100 per cent accurate. They may be and the answer may be in the muddled order of the conversations. No evidence was led as to the technical underlying procedures used by telephone companies in that regard, and that is not a criticism of solicitors and counsel. I am not prepared, given ordinary human experience, to decide the credit in this case on that external and extrinsic fact. Though, if I may say, it has been a consideration, which has caused me to give even greater consideration to the credit issues than I might otherwise have done. But in all the circumstances I am not prepared to conclude from that matter alone, and taken with all the other surrounding circumstances, that Mr Rosenberg's fundamental evidence should be rejected.
It is necessary to say something about some other witnesses. I will keep my comments to a minimum, consistent with the matters of caution to which I earlier referred. Mr Rosik, gave evidence for Mr Zizza corroborating peripheral but important matters about conversations on a building site which Mr Rosenberg had deposed to. I gained the impression from Mr Rosik, if I may put it this way, that he was a loyal and longstanding employee and, if I may use the expression, retainer of Mr Zizza. He gave his evidence at some points in what may said to be a quietly partisan and aggressive way. My findings about him depend to a degree on my view of Mr Zizza's credit and to a degree on the surrounding circumstances in relation to Mr Zizza's evidence. In my view he gave his evidence with the desire, I think, to assist Mr Zizza where he could. I regret to say that I place little weight on his evidence.
Mrs Zizza gave some evidence as to what happened at the time of the signing of the agreement when Ms Silver was in attendance at the Zizzas’ home. In fairness to Mrs Zizza I should resolve some of those issues, although the precise extent of Ms Silver's explanation of the listing agreement is not in any way central to the resolution of the case. Ms Silver gave evidence that she explained every section of the listing agreement to Mr Zizza in his home. That notion of "section" later became clear in her cross-examination was not related to each clause but was related to the sections of the agreement which she saw as important. Precisely what those were at the end of her cross-examination I was less than clear about. Mrs Zizza gave evidence that Ms Silver did not read through with Mr Zizza each and every clause of the agreement. I accept that evidence. However, Mrs Zizza’s evidence was that she was outside the room for a period of time while she went to get her keys and when she went to another part of the house or the room "to put the jug on and I didn’t hear [Ms Silver]". There was an occasion in her absence for Ms Silver to be discussing the listing agreement with Mr Zizza and Ms Silver may have discussed in somewhat more detail the agreement than was as observed by Mrs Zizza. To the extent that Mrs Zizza's evidence might be seen on reading the transcript during cross-examination to be supportive of her husband's evidence that he told the brokers time and again to stop ringing him, that evidence tended to be forced on the cross-examiner and I place no real weight on it. It is unnecessary for me to make any further comment about Mrs Zizza's evidence.
Mr Francqueville was not cross-examined. Some of his evidence upon which there was no cross-examination went to support Mr Zizza's evidence. To the extent that Mr Francqueville's evidence contradicted what Mr Nicholson or others said, given his lack of cross-examinations, findings would to a degree flow thereafter. However, those matters in my view were peripheral to the resolution of the case.
Mr Nicholson, the first witness in the case, was cross-examined at some length. After taking into account all the evidence, including Mr Young's evidence, and carefully re-reading his cross-examination, I think that it is fair to say that there was a degree of exaggeration in some of his evidence about the vessel. He is a person experienced with boats of this kind. He gave some evidence about the comparative seaworthiness of this vessel with another model which was contradicted by Mr Young in cross-examination and in some questions by me. While these are small matters in the overall scheme of things I think they may have reflected in a certain approach to the evidence in the litigation, which would give me some caution to accept his evidence entirely unvarnished. However, he was on the other side of the record as it were in the transaction and there is little doubt that his version of dealing with Mr Rosenberg is accurate. There was some cross-examination of him on a number of other matters, such as how he portrayed in his evidence-in-chief other steps that he had taken. If I may say so, with respect to Mr Thomas, there was some force in that cross-examination and some of those matters underpin my caution in relation to Mr Nicholson's evidence. That caution will become important in a moment when I deal with the central and critical finding in this case concerning intention to be bound. But before leaving that aspect of Mr Nicholson's evidence I should say that to the extent that the brokers gave evidence that they thought Mr Nicholson after 16 December was in the throes of taking or about to take steps which might see him commit himself to a not insignificant sum of money, I accept that the brokers had a reasonable apprehension that that may occur given what had passed between them through Mr Rosenberg and Mr Nicholson.
I think from what I have said it should be plain to the parties that in my view the following are the sequence of events. In late May, as I have said, Mr Zizza approached the brokers, the boat was appraised, a listing agreement was signed. Prior to the listing agreement and during and after the appraisal discussion about listing price took place. Thereafter a photo shoot was undertaken, advertising took place and, in accordance with Mr Rosenberg's evidence, communications took place as best as Mr Zizza's telephone reluctance permitted about the lack of interest and the need to reduce the price. By about the end of September the price was reduced, with Mr Zizza's knowledge and consent, to $459,000 and later around about the advent of Mr Nicholson’s interest the price was reduced again. Once Mr Nicholson was on the scene, negotiating then the substance of what occurred between Mr Rosenberg and Mr Nicholson can be gleaned in substance from Mr Rosenberg's and Mr Nicholson's affidavits. It is unnecessary to recount that in any detail.
This concluded with the events of 16 December in which, after the discussion in substance described by Mr Rosenberg and Mr Nicholson in their affidavits, Mr Zizza gave consent to the acceptance of the offer, in effect, of $439,100 with the three conditions I have earlier identified. I have no doubt that the conversation between Mr Nicholson and Mr Rosenberg and thereafter Mr Rosenberg and Mr Zizza understood "reasonable faults" to mean faults which reasonably need repair or remedy. Therefore I am satisfied that on or about 16 December 2004 the parties had reached a working consensus ad idem reflected by the evidence of Messrs Rosenberg and Nicholson, and reflected by the terms of the deposit receipt which was on that day sent to Mr Nicholson. That deposit receipt is Annexure A to these reasons.
At the time the deposit receipt was sent no deposit had been received. The brokers did not sign the document. At some time later Mr Nicholson had signed the document but did not send it back. Mr Zizza was sent another document. A standard form internal house document called a Seller Confirmation Gross Figure Agreement, a copy of which is annexed as Annexure B to these reasons. It is to be noted that the asterisked paragraphs do not reflect what Mr Rosenberg had discussed with Mr Nicholson nor what Mr Rosenberg had received instructions to accept from Mr Zizza. What was clear, however, was that the brokers wished Mr Zizza to sign the document presumably striking out what did not apply at the bottom of the page. Mr Zizza did not sign that document and the communications and attempted communications with him were in substance, I find, is as set out in Mr Rosenberg's and Mr Last's affidavits.
Even on those affidavits there was no apparent unequivocal change of position. However, it is plain that by 21 December the position was such that Mr Rosenberg sent to Mr Nicholson a facsimile in the following terms.
Dear Mark,
due to family issues, the owner of the Riviera has called us this morning and has withdrawn the boat from sale at this stage. I have contacted the shipping company and informed them not to accept your contract as I have not been able to contact you direct. Please understand and accept my most sincere apology for all your time and effort so far. Could you please furnish us with account details so we can transfer the funds back to your account.
Please contact me at your earliest convenience. Once again please accept our most sincere apologies.
It is to be noted, in particular in the light of the matters to which I will come shortly, that the brokers refer to, "the owner withdrawing the boat from sale" at this stage. In this context it is also important to understand the conversation which Mr Rosenberg had with Mr Zizza when it appeared that Mr Zizza was backing out of the deal. Mr Rosenberg said he said to Mr Zizza on 21 December, the following:
Rosenberg:“It’s not right for you to try and back out now. We went through all this before you accepted the offer.”
Zizza:“My wife will divorce me if I sell it”
Rosenberg:“Please, Peter, stick to our agreement.”
Zizza:“I’ll call you back at 12 o’clock, I’ll see what I can do.”
Also important to understand is what Mr Rosenberg says he said to Mr Zizza when obtaining the instructions from Mr Zizza after the phone call with Mr Nicholson. Amongst that conversation he says he said, which I accept, the following:
By accepting this it means we will take the deposit and the buyer will commit to non-refundable transport costs. Do you understand this? It is really important you appreciate the buyer will be committed.
The commitment to which Mr Rosenberg was referring in his conversation with Mr Zizza was the commitment to non-refundable transport costs. Those last two conversations, of course, were internal conversations between principal and agent. However, they go to reflect, it seems to me, the broker's appreciation of the position that it was in his view wrong for Mr Zizza to back out of the deal in the circumstances that obtained up to date. When I say "deal" I intentionally use the colloquial. What the broker did not say in my view in those conversations was: “it is important you understand that once we do this there is a contract.”
As I said these are not aspects of direct evidence of what passed between the parties in their communings leading up to the formation of the consensus ad idem. However, they are matters which reflect upon the approach of the broker, Mr Rosenberg, who had those conversations and who participated in those communings which allows me to draw, and assists in my drawing of, the conclusions about what did happen in the negotiation conversations from November with Mr Nicholson. To that issue I now turn.
Before dealing with the evidence it is important to understand the purpose of this topic. The task of the Court is to understand and make findings about what were the facts and matters which occurred both as to the creation of documents inter se and the communications between the parties in order to assess what a reasonable person, looking at the events objectively, would understand the parties to intend. That approach is necessary not only for the answering of a question as to whether a consensus ad idem was reached, but also as to the question: when and in what circumstances the parties, as a matter of objective analysis, intended to be legally bound assuming there to be a reached agreement or consensus ad idem?
As I said earlier, I am satisfied that Mr Rosenberg is a competent and diligent broker. Competence can take many forms in life. It can, in the view of some, be only present with the perspicacious dotting of every "i" and the crossing of every "t". Some disagree about that view of life. People can be conscientious and diligent and not maintain the most pristine or comprehensively detailed attendant paperwork. That is not to say that good order and consistency, in particular in business, is not in certain circumstances both important and necessary. However, I think that Mr Rosenberg did attempt in the conduct of his affairs, contemporaneously, to be diligent and competent and honest and I think Mr Last in the running of his business attempted to do the same.
That being the case, they were both aware of, indeed Mr Last participated in the development of, broking industry standards of approach and conduct upon which there was cross-examination. One of the matters which was contained in those documents was the necessity for written acknowledgment by the parties of a bargain for position. It is unnecessary to go to the precise terms of the industry association documents; one at least of them appeared on the website of Sydney Boat Sales, although it did not form any part of the contractual terms of the arrangement. Nor is there any evidence that there was any adversion to it by the parties in negotiation so as to draw it into the known body of facts between the parties. However, all those matters together with what I perceive to be Mr Rosenberg's and Mr Last's fundamental competence, if I may use the expression, assist in understanding some important evidence which was given in the case by both Mr Last and Mr Rosenberg.
Mr Nicholson, in paragraph 10 of his affidavit of 13 January, stated the following in discussion which occurred at an early stage in his communications with the brokers after finding the vessel on the website:
Steven went into some detail about the format that the sale process would take and the documents provided relating to ownership and any encumbrances on the boat. Steve, as I recall, covered the sale process in considerable depth explaining concisely his position as a broker though would assist in obtaining shipping prices and provide a list for the selection of a marine surveyor as a gesture of good will.
It is unnecessary to go to the parts of the cross-examination where these matters were touched on. It is not intended to be a criticism of Mr Thomas in the slightest, given that this was the first witness, to say that the issue of precisely what was said between Mr Rosenberg and Mr Nicholson was fairly lightly touched on. Thus, I have no basis to conclude that Mr Nicholson was attempting to be other than honest and complete in this attempt at summary. However, in the light of the cross-examinations of Mr Rosenberg and Mr Last and the other evidence of Mr Nicholson and Mr Young, which gives me caution about some of Mr Nicholson's evidence, I do not see the absence of material in this paragraph, or this paragraph as a whole, in any way gainsaying what Mr Rosenberg and Mr Last later said. Nor do I see in the light of my reservations about Mr Nicholson's evidence anything that he said in cross-examination as a proper contradiction to be weighed in any real way against the evidence of Mr Last and Mr Rosenberg, to which I will come.
It may be that Mr Nicholson had overlooked in his memory the matters to which I am referring. I need make no further finding in that regard about that. However, the fact that Mr Nicholson had forgotten what I think was said does not reduce its importance to an objective observer looking at the body of negotiation over a tolerably short span of time from November to December. The broker, of course, in this respect clearly being the agent of the seller.
The evidence to which I refer was first given by Mr Rosenberg in cross-examination. After having been cross-examined about good practice and the broking industry standards and documents he said the following on pages 127 and 128 of the transcript:
I know it is my usual practice when I believe when somebody is negotiating seriously on a boat to go through with them the process of buying a boat, which includes taking deposits, which includes survey. You know there are a whole lot of things. It is a reasonably lengthy discussion.
He later said in the same body of cross-examination:
I would have told him that when an offer is made I will not put the offer forward unless I am of the understanding that I will receive a deposit if the offer is accepted. That is what I say to every customer who I deal with. Now, ongoing from that, if the offer is accepted and I receive a deposit we will move to the next step which is organising survey.
Later, in that part of the cross-examination, the following exchange took place:
Did you tell him that the final agreement would not be made until such time as both parties had signed an agreement for the sale of the boat? --- I don’t recall whether I said that or not.
Well would it be your ordinary practice in the course of your work as a broker? --- Not necessarily. I would say – in the course of my work as a broker I would point out that I would need to get an agreement signed. However, that – yes, that is exactly what I would say.
So, you would ordinarily tell people – and you have no reason to doubt that you told Mr Nicholson – that you would have the parties sing an agreement in relation to the sale of the boat? --- After the offer was accepted, yes.
Before turning to Mr Last's evidence, which in my view together with other documentary material assists in comprehending the content of that evidence, it is appropriate to say at this point that the evidence was given during a cross-examination which as I have said earlier was testing and thorough. It was a cross-examination to which Mr Rosenberg from time to time took exception, not unnaturally. But in saying that, again, I am not seeking in the slightest to criticise Mr Thomas. Role of counsel in a case such as this, in a vigorous cross-examination on behalf of the client, is one that is often not fully understood by the recipient of the attention, and Mr Rosenberg from time to time felt that. The reason I raise this at this part of the cross-examination is that this was not a free and gentle exchange of information at this point, and it might be said and, from time to time, I observed with Mr Rosenberg that the vigour of the cross-examination, at times, provoked as it often does with witnesses, a level of conflict rather than discourse. Once again, the reason I say that is not a criticism of either Mr Rosenberg or Mr Thomas, but rather to reflect upon the brevity and, to a degree, cryptic nature of that evidence, although in all the circumstances, its meaning is plain.
The plainness of its meaning is to be assessed by reference to other evidence. The first of that evidence is the evidence of Mr Last, which was given in cross-examination. It is necessary to recall that Mr Last was the proprietor of this business; he was Mr Rosenberg's boss. Both Mr Last and Mr Rosenberg, on the evidence, had taken up boat broking, if I may use the expression without the slightest disrespect, later in life; although I assume, after many years of interest in the subject, but, as I have said, both appear to me to be competent and diligent men. The evidence is that the layout of the brokers’ office was such as to enable clear over-looking and over-hearing of conduct of others in the office.
Two trainees gave evidence before me, Ms Silver and Mr Leech. Both appeared to be people who were supervised and instructed conscientiously by Mr Last.
The reason these matters are said by me now is that I think the following evidence of Mr Last needs to be understood in the context that, to the extent he says there was a practice in his office, he would know what that practice was. Like Mr Rosenberg, he was cross-examined about standard procedure in discussion with purchasers. He said the following on page 356 of the transcript, in answer to the following questions from Mr Thomas:
So, is there any document that is generated by your business, and sent to a potential purchaser, which makes it clear to a potential purchaser that a deposit paid, or any offer accepted, is subject to vendor's written approval?‑‑‑No, it is explained to them very carefully.
Later in that cross-examination Mr Last said in answer to the following question:
What you meant by that was that there is a practice within the conduct of the business whereby potential purchasers have explained to them that any deposit they pay, or offer that they make, and any acceptance which is communicated to them by a vendor, is subject to the vendor's written approval?‑‑‑Yes.
In the same body of examination he said his expectation or understanding was that Mr Rosenberg, as his senior broker, would have explained that to Mr Nicholson.
I find that that expectation or understanding was based on Mr Last's knowledge of the practice of the business, and his knowledge of the familiarity of Mr Rosenberg's habits and conduct, and his knowledge of Mr Rosenberg as a conscientious and competent broker.
That evidence of Mr Last gives some more flesh, it seems to me, to the answers in cross-examination of Mr Rosenberg obtained by Mr Thomas, in the circumstances to which I earlier referred. I am confident in my own mind that the matters to which Mr Rosenberg was referring on pages 127 and 128 of the transcript, are the same as the practice that Mr Last was referring to on pages 356 and 357 of the transcript.
The likelihood of that occurring, it seems to me, is bolstered by the Broking Industry Association documents, which reflect advice to that effect and, indeed, by the very terms of the deposit receipt themselves, which tend towards the likelihood that for the sake of clarity and good order, writing was required or, at least, signed and written confirmation of the arrangement was required.
Another circumstance, which assists in that, is that this was not a $10,000 or $20,000 purchase of whitegoods; this was a $400,000 plus purchase of a very valuable, and on Mr Nicholson's evidence, nigh on unique chattel. I think that the nature of the purchase assists in understanding the likelihood of the conversation, which I find took place between Mr Rosenberg and Mr Nicholson as to the importance of writing, and that a signed agreement would be required from the vendor and the purchaser.
One matter that gives me comfort in the conclusion I have drawn about that conversation is as follows: one might have thought that it is strange that conversations over such a confined matter so recently occurring would be the subject of such a body of confusion as, to a degree, occurred in this case and, in particular, around the 16 December. I think one matter that can assist in understanding that is not only the difficulty of cross-examining on two sworn versions, that is, in the witness box, contemporaneously, and antecedently at the time the affidavit was sworn, but also the intuitive understanding of the parties that what was occurring was negotiation. Again, the parties’ intuitive understanding is not direct evidence of what the objective circumstances that passed between the parties were, but they give me some comfort as to the conclusions I have drawn about the conversation between Mr Rosenberg and Mr Nicholson.
That is not to say that I do not recognise in Mr Rosenberg's evidence, and Mr Last's conduct at the time, that they thought, at the time, that Mr Zizza was behaving poorly. That, in human experience, is not an uncommon attitude when parties have reached, in business terms, a bona fide consensus ad idem. Many a purchaser and vendor for the sale of the land might have been seen to express precisely the same views when the bargain is resiled from before exchange. That human expression of view, whether by words or conduct, is not determinative of whether the parties intended to be legally bound. It is only determinative, or reflective, of what the parties think the right thing to do in the circumstances is. In the light of the fact that the conversations of a kind took place between Mr Rosenberg and Mr Nicholson, in my view the parties did not intend, objectively, that they would be legally bound by any arrangement until there was a signed note or agreement to that effect from both sides communicated to the others.
To the extent it is necessary to be more precise in my finding, based on the evidence of Mr Rosenberg and Mr Last, in particular, I conclude that Mr Rosenberg said to Mr Nicholson at an early stage in the negotiating process, and in a manner that was important to be understood between the parties about the sale process, that first, a signed agreement or memorandum would be required from both parties before being contractually bound; and secondly, any deposit paid or offer accepted was subject to the vendor's written approval. That in a sense, as I have said, is a combination or a distillation of the evidence of Mr Last and Mr Rosenberg. For the reasons I have identified, I think it proper to read those two bodies of evidence together in the light of the way they fell out.
That is enough to dispose of the primary claim. The relief sought in the statement of claim supporting the claim was in paragraphs 1 and 2 of the statement of claim filed on 7 January 2005, and those paragraphs were in the following terms.
1.A declaration that there is a binding and valid contract between the Plaintiffs and Mr. Zizza for the purchase of the Vessel for the prive of $439,100.00 and upon the terms and conditions set out in the document entitled “Deposit Receipt” signed by the First Plaintiff and dated Thursday 16 December 2004 (“the Purchase Agreement”)
2.An order that the owner of the Vessel (Mr Zizza) specifically perform the Purchase Agreement including inter alia by completing the sale of the Vessel to the Plaintiffs for $439,100.00 upon the terms and conditions of the Purchase Agreement and thereby conveying title to and possession of the Vessel to the Plaintiffs.
I made on the first day of the hearing, 23 February 2004, an order under O 29 r 2(a) of the Federal Court Rules, in the following terms:
1.Pursuant to Order 29 rule 2(a) of the Federal Court Rules, the Cross Claimant’s claim for damages against the Third Cross Defendants for the alleged unjustified arrest of the vessel “Sea Ya” (being the claim pleaded in paragraphs 42 to 54 of the Cross Claim filed 12 January 2005 and the relief claimed in paragraph 55(d) of that Cross claim) be heard separately from and after the determination of all the other issues raised in these proceedings.
What I have not decided today is the question of unjustified arrest. That can await the further resolution in these proceedings, or the disposition by agreement between the parties. The orders that I make today are necessarily interlocutory by reason of the existence of the order I made on 23 February. Though that comment may not apply to the cross-claim against the brokers.
The orders that I will make today in relation to the main claim is a dismissal of the application, dismissal of the claims for declarations and orders in paragraphs 1 and 2 of the statement of claim.
Before turning to the cross-claim it is appropriate for me, I think, to say something as to findings I would otherwise make should I be wrong in relation to the major findings. If I had reached another view as to the legally binding nature of what had occurred there were still issues as to certainty and specific performance, to use the general rubrics, under which much of the addresses took place.
Given my views as to the disposition of the case, I think I can be brief in relation to this. But for the assistance of the parties or anyone at a later point of time should it become necessary to consider it, my views are briefly as follows. I think in the light of modern legal approach to the construction and dealing with contracts that there was a sufficient certainty in all the circumstances, given the discussions that took place, to lead to the conclusion that the agreement was binding. The notion of the reasonable fault was clearly, as I have said, faults that reasonably need to be corrected that are not de minimus.
In reaching this conclusion I have had recourse to consider the perennially helpful cases of Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503; [1932] All ER Rep 494 and Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429, in relation to this matter. Here, properly understood, there was between businessmen here sufficient certainty, and sufficient framework of analysis for the Court to decide what were remedies that needed to be undertaken at Mr Zizza's cost.
More difficult in these cases is the question of whether or not the conditions were conditions precedent to the formation of contract, or conditions precedent to the performance of the contract. I have had helpful assistance from the parties in relation to those matters. There are a number of cases which deal with this issue. In particular, see Astra Trust v Adams [1969] 1 Lloyd’s Rep. 81; John Howard & Co (Northern) Ltd v J P Knight Ltd [1969] 1 Lloyd’s Rep. 364; Varverakis v. Compagnia De Navegacion Artico S.A. (The "Merak") [1976] 2 Lloyd’s Rep 250; Albion Sugar Co. Ltd. v. William Tankers Ltd. and Davies (The "John S. Darbyshire") [1977] 2 Lloyd's Rep. 457; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Bakri Navigation v The Ship “Golden Glory” (Gummow J, unreported, 5 June 1991); and SVI Systems Pty Ltd v Best & Less Pty Ltd [2001] FCA 279.
I do not need to reach a concluded view about this. I think it inappropriate given the potential ramifications of any judicial expression that concerns this subject matter, given the daily carriage of commercial transaction concerning the buying and selling of both small and large vessels to express a concluded view of principle. I do not think any appellate court would be disadvantaged if it does not receive what views I may be able to express extempore on this issue now.
It is sufficient for me to say, I think, that it does appear that the modern Australian view, reflected in what may be seen to be the more detailed analysis by the High Court in cases such as Perri v Coolangatta Investments Pty Ltd, and the development of the importance of notions of good faith in contracts, tends towards the view taken by Gummow J in Bakri Navigation, which was intuitively my approach to the matter: that in all the circumstances, if the parties did intend to be legally bound they intended to be bound in such a fashion as would ensure that the vendor made the vessel available and took steps to co-operate in the performance of the contract, and that the survey requirement was a condition for the benefit of the purchaser.
However, I need not reach a final view about that. It may be, as with many cases of many issues of this kind, it all depends on the particular facts in the circumstances. Thus, here, given that my view is that the parties did not intend to be legally bound until in writing, I do not think it arises. However, if there had been signed memoranda my view would be that there probably was a contract with performance subject to a condition, rather than a contract subject to a condition.
The final issue is the appropriateness of interim relief for specific performance. The matter is a finely balanced one. I think some of the evidence of Mr Nicholson was a little exaggerated as to the advantages of this particular model of Riviera compared to others. Mr Young's evidence made that plain, I think. However, what must be decided is the question whether damages are adequate in all the circumstances. I do not think that that analysis requires an unreasonably strict view about the position of the plaintiffs. There was some evidence from Mr Young in cross-examination about the comparative availability of other boats, however, that evidence was fairly general. No detailed exposition was made as to the fit-out and other aspects of the vessel, which were said to be important by Mr Nicholson, other than notions of seaworthiness, which I do not accept.
I think in all the circumstances with a vessel in a private sale of this value there is sufficient to understand that parties may, not unreasonably, form a view as to the particularity and speciality of the goods for their particular purpose. I am not persuaded that Mr Nicholson, or his wife, in this respect were being unreasonable or fanciful. This type of vessel, the Riviera 42’, on the evidence is expensive and not easily available on the open market. I would be prepared to conclude that there was a sufficient degree of speciality and importance of this vessel to the Nicholsons to make it unjust in the circumstances not to award specific performance.
That is not to say that I accede to some of the statements in some of the texts that this is a general discretion simply to be exercised judicially. I think the history of Equity would tend to show that the question is as to the sufficiency of damages at common law, being the touchstone by reference to which the matter is considered, not a general discretion as to justice in which that forms part. That, once again, is a statement by way of obiter. However, it simply goes to explain the view I would take based on the test I would use.
I turn to the cross-claim. It follows from my reasons and the orders that I make on the main claim that the material underlying the orders sought in paragraphs 55(a) and 55(b) would justify those declarations. I do not think it necessary to make a declaration of the nature of that in paragraph 55(a) of the cross claim, but I do think it is appropriate to make the declaration sought in paragraph 55(b).
The cross-claim against the brokers was put on a number of bases. But fundamentally, with one exception to which I will come, that cross-claim was propounded on the basis of the acceptance of the evidence given by Mr Zizza as to what had happened and not happened in the second half of 2004. It is apparent from what I have already said, and the findings that I have made, that I do not accept that evidence. Given that I have made a number of findings about credit in a long extempore judgment, I want there to be no misunderstanding about the position of the brokers. I accept in large and substantial part their evidence. As I have earlier said, there are difficulties in some respects and inconsistencies. But by and large I accept their evidence as to what happened and I would conclude from that that they attempted conscientiously to do their best for a client who was difficult to reach and speak to. It is plain from my views, and my findings, that they should not have been joined in this litigation and they should not have been sued.
I have said in other cases, in other contexts, that litigation is not a game. It is an unpleasant, and costly, but necessary, evil that needs to be undertaken to resolve and quell controversies between citizen and government and between citizen and citizen. On the findings I have made and the way I have come to my views as to the evidence these brokers as cross-defendants should not have been joined and should not have been put through the cost and experience of an unpleasant piece of litigation. Those views, I need to make perfectly plain, are not criticisms in the slightest of any legal practitioner whatsoever. They are reflections of my views on what the underlying reality of what happened was.
It is necessary to say that because for the reasons that are, no doubt, plain by this stage, I think a question of costs arises in relation to the conduct of this case given the views I have come to about its disposition.
The qualification to my conclusion that the cross-claim largely falls with the findings of fact that I have made, relates to the communication that the broker sent to Mr Nicholson on or about 21 December. It was submitted that even on their evidence, they did not have instructions to, in effect, repudiate the contract.
Two answers can be made to that. First, a factual answer; second, a legal answer.
The factual answer was, in my view, that in the position they found themselves in, that is, Mr Rosenberg’s summation of the position no doubt with the knowledge of Mr Last, reflected in the facsimile of 21 December, was a reasonable and honest summation of the position that they found themselves in. They were entitled to think, by that stage, whatever the precise terms of Mr Zizza's equivocation and withdrawal in the telephone conversations and whatever the precise terms of what was said on the phone by the third party, by 21 December, they reasonably, and in my view sensibly, came to the view that this deal was not going ahead. I have already made a comment on what I think flows from their views that the vessel was withdrawn from sale. I do not need to make any other comment about that but it seems to me that the response of the brokers in the impossible position they had been placed in, after 16 December, was at all stages appropriate and not to be criticised.
The second answer to that matter is that if the contract was repudiated, the purchasers never accepted this, but the second aspect of that legal argument is that there was no contract to be repudiated. Thus, in my view, the cross-claim against the first and second cross-defendants should be dismissed.
The orders that I make today, are as follows:
1.The cross claim against the first and second cross-defendants be dismissed.
2.There be a declaration in accordance with paragraph 55 (b) of the cross claim.
3.The relief sought in the statement of claim filed 7 January 2005 be dismissed.
4.The application be stood over to a date to be fixed to deal with the question of costs.
I indicated yesterday that I would indicate to the parties tentative views as to costs. I propose to do so now. They are tentative views as will be plain from the expression.
As to the brokers, the comments I have made based on my assessment of the evidence have, no doubt, been noted. An issue arises, in my view, as to whether, in those circumstances, the brokers’ position should not be put in place such that they leave this litigation with as little financial detriment as is reasonable. I will leave to the parties acting for the brokers to assess whether, in their view, the comments I have made fall within any recognised category of argument to that end.
The costs as between the plaintiffs and the defendant are more troublesome. Normally costs follow the event and that is an outcome that may be arguable. I will need to be persuaded that there should be any flow on to the plaintiffs of the costs payable to the brokers. However, the costs as between the plaintiffs and the defendant of the trial raise more difficult considerations. They are evident from what I have said. However, in summary, they are these, expressed perhaps in terms of questions, which need to be answered by various parties.
Although the Nicholsons have failed, should they pay for a six day hearing? Secondly, what is the effect on that question of the fact that Mr Last’s and Mr Rosenberg's evidence was given during the course of the hearing and the difficulty or ease with which one might extract oneself from a running hearing. In all the circumstances, given the flow of events, the difficulty and speed with which the matter was brought on, what is a fair and just division of monetary responsibility for the running of a six day case when, on the findings that I have made, the case could almost certainly have been disposed of, with some cross-examination, in about two days. How that plays out in submissions and whether they are appropriate questions to ponder, or whether other questions should be pondered, will be a matter of submission.
There may or may not be evidence required in the disposition of the matter as to costs and, therefore, I will deal with costs at a time when the parties have had due time to reflect on my reasons and what steps, if any, they wish to take hereafter, and so that legal advisers may properly contemplate and advise their clients.
Therefore, the fifth order I make is that to the extent necessary, I will extend time for the filing of any application for leave to appeal or any notice of appeal to a date up to and including 19 April 2005.
I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate:
Dated: 8 April 2005
Counsel for the Plaintiffs: Mr G J Nell Solicitor for the Plaintiffs: Ebsworth & Ebsworth Counsel for the Defendant and Cross Claimant: Mr G M Thomas Solicitor for the Defendant and Cross Claimant: R F Bergagnin & Co. Counsel for the Cross Defendants: Mr M W Young Solicitor for the Cross Defendants: Dixon Holmes Du Pont Lawyers Date of Hearing: 23, 24 February, 3, 7, 11 and 14 March 2005 Date of Judgment: 15 March 2005 ANNEXURE “A”
ANNEXURE “B”
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