Owston Nominees No 2 Pty Ltd v Branir Pty Ltd - [2000] FCA 145

FEDERAL COURT OF AUSTRALIA
Owston Nominees No 2 Pty Ltd v Branir Pty Ltd [2000] FCA 145
CONTRACT – oral agreement to grant a sub-lease or other interest over 20,000 acres of land subject to a pastoral lease for use as a wildlife sanctuary for the breeding and preservation of endangered and exotic animals – consent for change of use under a pastoral lease – lease in perpetuity under Crown Lands legislation – Statute of Frauds – requirement of evidence in writing of an agreement to transfer an interest in land – necessity to plead the doctrine of part performance – ascertainment and enforceability of terms under an oral agreement which is partly evidenced by writing – oral agreement to issue shares – admissibility of oral evidence – whether written document embodies the entirety of the agreement – establishment of precise terms of oral agreement where the written document does not adequately reflect the intentions of the parties
ESTOPPEL – proprietary estoppel – whether representations as to the granting of a sub-lease or other interest in land under a pastoral lease and reliance on those representations gives rise to an estoppel against denying the interest in land
MISLEADING AND DECEPTIVE CONDUCT – whether representations as to the granting of a sub-lease or other interest in land under a pastoral lease constituted misleading and deceptive conduct under the Corporations Law, the Trade Practices Act or the Fair Trading Act
Corporations Law s 995
Trade Practices Act 1974 (Cth) s 52
Fair Trading Act 1987 (NSW)
Crown Lands Act 1931 (NT) ss 23A, 26
Pastoral Land Act 1992 (NT) ss 3, 38, 61, 67, 68
Crown Lands Consolidation Act 1913 (NSW)
Statute of Frauds
Roach v Bickle [1915] 20 CLR 663
Davies v Littlejohn [1923] 34 CLR 174
Massart v Blight [1951] 82 CLR 423
Brown v Heffer [1967] 116 CLR 344
Regent v Millett [1976] 133 CLR 679
The Wik Peoples v State of Queensland [1996] 187 CLR 1
Pejovic v Malinic [1960] 60 SR (NSW) 184
Millett v Regent [1975] 1 NSWLR 62
BHP v Hapag-Lloyd [1980] 2 NSWLR 571
Sidney Cooke Ltd v Hapag-Lloyd [1980] 2 NSWLR 587
Francis v Francis [1952] VLR 328
Riley v Osborne [1986] VR 193
Caton v Caton [1866] LR 1 Ch App 137
Maddison v Alderson [1883] 8 AC 467
White v Nealyon [1886] 11 AC 171 (PC)
Carr v McDonald’s Australia Limited & Ors, Federal Court of Australia (Burchett J), unreported, 16 February 1994
OWSTON NOMINEES NO 2 PTY LTD & ANOR v BRANIR PTY LTD & ORS
NG 3184 OF 1995
EINFELD J
25 FEBRUARY 2000
SYDNEY
TABLE OF CONTENTS

INTRODUCTION 1

Tipperary 1

The Sanctuary 2

THE DISPUTE 4

THE NEGOTIATIONS IN SUMMARY 4

The 1990 deal 4

After the 1990 deal 7

The Macquarie Bank deal 7

The December 1993 deal 9

After the Settlement 11

PERSONAL RELATIONSHIPS 12

THE CLAIM 20

THE CROSS CLAIM 22

THE SANCTUARY 22

Overview 22

The Facts 23

The 1989 events 23

The Joint Statement of Understanding 27

February 1990 to late 1993 27

September – mid-December 1993 27

Anderson’s meetings in Jakarta 29

14 December – 23 December 1993 34

Before Settlement on 23 December 38

After the Settlement 39

THE CAUSES OF ACTION 44

Threshold Arguments 44

The Crown Lands legislation 44

Private perpetual sub-leases 51

The Statute of Frauds 52

The 1993 settlement documents preclude this action 55

Contract 58

Intention to contract 59

An enforceable agreement 60

The content of the agreement 63

The term of the agreement 65

Estoppel 67

Misleading and deceptive conduct 69

THE SHARES 70

Overview 70

The Facts 72

The Share letter 80

Intention to create a legally binding agreement 84

Was the Share letter an accurate and complete record of the agreement? 84

The Branir Shareholding Agreement 92

$A8 million payable only out of dividends 93

Branir must be debt free on the issue of shares to Owston 97

The $A8 million is payable to Bakrie not Branir 100

Security for the debt 102

In summary 103

CONCLUSIONS 103

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 3184 OF 1995

BETWEEN:

Owston Nominees No 2 Pty Limited
First Applicant

Warren Perry Anderson
Second Applicant

AND:

Branir Pty Limited
First Respondent

Tovehead Pty Limited
Second Respondent

Aburizal Bakrie
Third Respondent

JUDGE:

EINFELD J

DATE:

25 FEBRUARY 2000

PLACE:

SYDNEY

REASONS FOR JUDGMENT
INTRODUCTION
Tipperary

In 1985 and 1986 the first applicant, Owston Nominees No 2 Pty Limited (Owston), a company owned and controlled by the second applicant, Warren Perry Anderson (Anderson), a Western Australian businessman, acquired, in its capacity as corporate trustee for Anderson’s family trust, several contiguous pastoral leases from the Northern Territory Government and portions of freehold land in the Territory. As a result of these acquisitions, Owston became the operator of several cattle stations which collectively became known as “the Tipperary group of properties”, or simply “Tipperary”. The properties which comprised Tipperary were Tipperary Station itself, Elizabeth Downs Station, Litchfield Station, Fish River Station, Douglas Station, Hillcrest Station and “1006”. Their aggregate area is approximately 10,000 square kilometres.
Between 1985 and 1989 Owston spent in excess of $50 million developing Tipperary, which included the construction of a large homestead, machinery sheds, offices, bunkhouses, a school, a swimming pool, an indoor tennis court, an equestrian centre, stables, a polo field, and a 7,000 feet bitumen airstrip, and the introduction of a huge mango plantation. Large amounts of land were cleared and the properties stocked with cattle. The homestead is situated about 150 kilometres south of Darwin. The buildings and the whole development are of high quality.
The Sanctuary
As an extension of Anderson’s interest in the preservation of endangered species through his support for the work of the World Wildlife Fund for Nature, Owston also developed a wildlife sanctuary on Tipperary Station (the Sanctuary) on which it spent in excess of $3 million in capital developments. From its conception the Sanctuary was planned to be primarily a reserve for the breeding of rare and endangered species in order to preserve their gene pool for future generations. It was, apparently, not intended to be a zoo, as the wildlife were on the property for breeding and preservation purposes rather than display. The animals in the Sanctuary are not caged but roam freely in large enclosed areas and considerable efforts are made to minimise environmental and other stresses. Visitors to the Sanctuary are restricted.
The Sanctuary presently occupies an enclosed area of approximately 860 hectares (2500 acres) adjacent to and partly surrounding the homestead area on Tipperary Station. The Sanctuary was developed in stages. Stages I - III were mainly developed in the period between 1987 and the end of 1989 and Stage IV was developed in 1994. These various stages and their relation to the homestead area are shown in the map (page 5 of Exhibit A3) which is appended to this judgment (1). The stages can be briefly described:
(a)Stage I comprises a hippopotamus enclosure with a man-made lake and a rhinoceros paddock, each of which was about 7 hectares in size, 6 animal breeding pens (each approximately 2.5 hectares in size), and an extensive, under cover, aviary.
(b)Stage II comprises an area of approximately 250 hectares to the north of the Tipperary homestead area and borders the western side of the road which travels north from that area to the main road to Adelaide River and Darwin. It is enclosed by a brick and steel wall which is approximately 5 kilometres in length and stands more than 10 feet high. Where the wall crosses watercourses there are reinforced concrete culverts. The enclosure is designed to hold mega-vertebrates such as rhinoceros. Stage II also encloses a site for a substantial residence intended for Anderson himself. At present this site consists only of some foundations and a stockpile of building materials.
(c)Stage III comprises an area of approximately 350 hectares to the north of Stage II and separated from it by a fenced "raceway" through which animals can be moved. Stage III is fenced with a cyclone wire fence some 12 feet in height and approximately 9 kilometres in length. The fence is anchored in concrete so as to prevent the entry of dingos or other predators by digging under the fence. Stage III has been further developed by the construction of a pygmy hippopotamus and tapir enclosure just to the north of the fenced area containing along the northern and western boundaries 22 fenced breeding pens, ranging from 2 to 8 hectares in size. This development took place in two stages: pens numbered 1 to 10 in 1991 and pens numbered 11 to 222 in 1992 and 1993.
(d)Stage IV comprises an area of approximately 250 hectares to the west of Stages II and III and separated from them by the same raceway. Stage IV is fenced by approximately 4 kilometres of cyclone wire fencing in a similar manner to Stage III.
The Sanctuary is currently populated with approximately 1500 animals of about 29 species and 425 birds of about 54 species, most of which are rare whose survival as a species is endangered. All of them have been either bred in the Sanctuary or bought by Owston from sources overseas and in Australia. For example, Owston purchased the entire stock of rare and endangered species from Lord MacAlpine’s private zoo near Broome between 1990 and 1992 for approximately $1.2 million. Although there have apparently been some sales of surplus non-endangered animals from time to time, it is not a profit-making or commercial enterprise. The current annual cost of running the Sanctuary is said to be approximately $250,000 to $300,000.
The Sanctuary is a class B quarantine facility under the regulatory supervision of the Australian Quarantine Inspection Service and the Australian Nature Conservation Agency. Most of the exotic species which the Sanctuary has imported into Australia are not able to be subjected to the normal regime of quarantine and disease testing applied to commercial animals because they are inherently very susceptible to stress and will die if they are not handled with the utmost care. They are imported into Australia under regulations which severely restrict where they can be kept and subject them to lifetime surveillance by the quarantine authorities. These species can only be moved from the Sanctuary to another quarantine facility and such movements are a difficult and costly exercise.
THE DISPUTE
In circumstances and for reasons which will appear, Owston sold its interests in Tipperary to the respondents, half in 1989 and the other half in 1993. This case, which was originally commenced on 21 April 1995, arises from a dispute over what the 1993 sale was intended to achieve, in particular whether the Sanctuary was included in or excluded from the sale, and how and when the related corporate reorganisation was and is to be achieved. In order to explain the dispute and the chequered history of the litigation, a significant agglomeration of facts and negotiations must be examined.
THE NEGOTIATIONS IN SUMMARY
The 1990 deal
In 1989 Anderson began negotiations with Japto Soerjosoemarno (Japto), an Indonesian businessman to whom he had been introduced by an acquaintance, John Benson, about the possibility of Owston selling a 50% interest in Tipperary. Through Benson and Japto, Anderson was introduced to the third respondent, Aburizal Bakrie (Bakrie), a wealthy Indonesian businessman and entrepreneur who has been a senior adviser to Indonesian Presidents on economic matters. Bakrie visited Tipperary in mid 1989 and expressed an interest in purchasing a 50% share of the properties with Japto. These negotiations encompassed the possibility of setting up a joint venture with Anderson to develop a feedlot in Indonesia for the fattening and slaughter of Tipperary cattle for sale in the Asian and Middle Eastern markets.
In August 1989 Anderson, Bakrie and Japto executed a document entitled “Co-operation Agreement” (the 1990 deal). While it was only the first of many subsequent agreements, it provides a useful outline of the general nature of the transaction contemplated by the parties:
·     a Bakrie nominee company was to acquire a half interest in Tipperary for $US80 million
·     Anderson and Bakrie were to invest $US15 million for the further development of Tipperary
·     Bakrie’s investment was to be funded by a loan from the vendor and from banks secured by 50% of Tipperary
·     Owston was to have a right of or obligation to “buy back” its interest
·     the partnership was to include the development of a feedlot in Indonesia
Throughout late 1989 and early 1990, negotiations continued and a large number of agreements were drafted and executed, many being superseded and supplanted by further agreements and negotiations. The transaction eventually proceeded but it is only necessary for present purposes to summarise its essential features.
By an Agreement for Sale and Purchase dated 15 November 1989, the second respondent, Tovehead Pty Limited (Tovehead), purchased from Owston an undivided one half share as tenant in common in the leases and freehold constituting Tipperary for $US80 million. Tovehead was a wholly owned subsidiary of Cross Hatch Company Ltd (Cross Hatch), a Hong Kong company which was 30% owned by Japto and 70% owned by Bakrie through a further holding company called Timeswitch Investments Limited. This sale to Tovehead was settled on 13 February 1990.
Of the purchase price of $US80 million, the sum of $US56 million was provided to Tovehead through a loan from Bank Bumi Daya (BBD), an Indonesian bank. There was no evidence as to Bakrie’s relationship with this bank such as might have energised this substantial loan. The balance of the purchase price was provided by vendor finance advanced by Owston in the sum of $US24 million. This amount was lent by Owston to Cross Hatch and Cross Hatch on-lent it to Tovehead.
The operations of the joint venture in Indonesia were the subject of a Feedlot Joint Venture Agreement and a Feedlot Joint Venture Subsidiary Agreement both dated 15 November 1989. By the first of those agreements, the parties agreed to form a company to construct and operate a feedlot in Indonesia, to import cattle into Indonesia from the Northern Territory, to fatten the cattle for marketing in Indonesia, and also by way of export. The company formed to conduct these Indonesian operations was PT Tipperary Indonesia, known as “Tippindo”. The interests of the parties in Tippindo were agreed to be divided so that a Bakrie company called PT Bakrie Nusantara Corporation (Nusantara) and Japto controlled 51% of the shares on issue and Owston controlled 49%. However, by the second joint venture agreement, it appears to have been agreed that Nusantara would hold 1% of its interest in the feedlot company Tippindo for the benefit of Owston and deal with it accordingly. The beneficial interests in the Indonesian feedlot venture were thus effectively divided equally between the Australian and Indonesian parties to the joint venture.
A further document entitled “Joint Statement of Understanding” (JSU), executed by Tovehead, Japto and Owston on 1 February 1990, provided for the use by each of Tovehead and Owston of a parcel of 20,000 acres for its own purposes:
THIS STATEMENT OF UNDERSTANDING is made this 1^st day of February 1990
WHEREAS:
A.Agreement has been reached for Tovehead Pty Limited (“Tovehead”) to purchase from Owston Nominees No 2 Pty Limited (“Owston”), a half interest in certain rural properties in the Northern Territory of Australia (“the land”).
B.The parties intend to use certain parts of the land in accordance with this Statement of Understanding.
THE PARTIES STATE AS FOLLOWS:
1.USE OF LAND
1.1Owston shall use such parts of the land as it selects, not exceeding 20,000 acres for its own purposes, including construction of a private zoo.
1.2Tovehead shall use such other parts of the property as it selects, not exceeding 20,000 acres for its own purposes, including construction of a private residence.
1.3Neither Owston or Tovehead shall select, under 1.1 or 1.2, any of the currently developed land or commercial plantation.
1.4Neither Owston nor Tovehead shall carry out upon the land any other business other than the business carried out for the joint benefit of Owston and Tovehead.
1.5The parts of the land referred to in 1.1 and 1.2 shall not be utilised for any other commercial use other than personal residence and recreation including zoo.
I shall return to this document in more detail later. A schematic representation of the corporate structure as it was after the 1990 deal formed part of Exhibit A11, headed “Before Settlement”, and is appended to this judgment (2).
After the 1990 deal
After settlement, Tipperary continued to be operated by Owston for the benefit of the joint venture and the station manager, Frank Gardner, reported to Anderson. The development of the feedlot in Indonesia began in, and was completed by the end of, 1991 but for some reason it was not until the end of 1992 that Tovehead took over the running of the Tipperary properties. Owston continued to operate the Sanctuary under the day to day management of Kevin Langham who had been appointed by Anderson in late 1989.
During 1990 Anderson acquired the pastoral leases for a group of properties about 450 kilometres south east of Tipperary through a company called Moonhill Pty Limited (Moonhill). Although Anderson was the sole shareholder of Moonhill, the properties were acquired for the joint venture through loans of $7.5 million each by Owston and Tovehead to Moonhill of the working capital of $US15 million provided, whereby Tovehead acquired at least a beneficial interest in the properties which was, or the parties seem to have treated as, a 50% interest.
In 1992 Owston entered an agreement with Cross Hatch, Tovehead and Nusantara to forgive the loan of $US24 million from Owston to Cross Hatch which formed part of Tovehead’s financing for the purchase of 50% of Tipperary. The consideration for this agreement was to be the payment to Owston through Tippindo of $US3 million in 12 monthly instalments of $US250,000 although it appears that the $US3 million was never fully paid. I shall return to this quite extraordinary arrangement later.
The Macquarie Bank deal
In early 1993 Anderson became involved in a dispute with the Bank of New York (BNY) which was seeking payment of $US40 million pursuant to a guarantee given by Owston, Anderson and his wife for a loan arising out of a different commercial venture altogether. Through its Australian subsidiary Bank of New York Australia Ltd (BNYA), BNY was threatening to enforce its mortgages and charges over various assets owned by Anderson and Owston, including Owston’s remaining 50% share of Tipperary and its share in Tippindo. Such a happening would have spelt financial disaster for Anderson and a potentially significant loss to Bakrie. This possibility led to Bakrie becoming involved in the discussions with BNY, in consequence of which the Anderson and Bakrie interests had discussions with a view to Owston obtaining funding from or with the help of Bakrie to resolve its dispute with BNY.
By around September 1993 the negotiations had culminated in a proposed transaction under which the Bakrie interests, through the intermediation of Macquarie Bank, were to acquire Owston’s half interest in Tipperary and its shareholding in Tippindo for $A20 million (the Macquarie Bank deal). The mechanics of the Macquarie Bank deal involved the joint venture assets, Tipperary and the feedlot, being transferred to Tippindo in which a Bakrie nominee company would acquire a 49% interest. Owston was to retain an effective 20% interest in these assets through an issue of 40.815% of the shares in the Bakrie nominee company. The intended result of that proposal is summarised in the schematic labelled “September 1993 Deal” in Exhibit A11, appended to this judgment (3).

These negotiations were being conducted for the Anderson interests principally by Anderson himself and an adviser, Arthur Dew, who was a non-practising barrister. The Bakrie interests were represented by Bakrie himself, Nalin Rathod, an Indonesian national based in Jakarta who was the Chief Financial Officer for Bakrie’s group of companies, and Charles Graham, an Australian company manager who had worked for Bakrie on a project in Indonesia in the late 1980s and whom Bakrie engaged to manage his Australian business dealings and operations from the time of the 1990 deal. Blake Dawson Waldron (BDW), a firm of solicitors, was also engaged by Bakrie to represent his interests and acted from approximately 14 November 1989 through to the present litigation. At the relevant time in 1993, Chris Greiner, a partner, and Justin Richmond, a junior solicitor, had carriage of the matter in BDW.
The December 1993 deal
For reasons which are not now relevant, the Macquarie Bank deal foundered in around October 1993 but the Anderson and Bakrie interests continued discussions to give effect to the purchase by Bakrie of Owston’s share in the joint venture assets without Macquarie’s involvement. After tortuous negotiations via paper, telephone and fax, and not a little travel, agreement was reached on 23 December 1993 when various documents were executed by the parties to give effect to it. The primary result of the transaction was that, for $A20 million paid to BNY, Owston transferred its 50% interests in Tipperary and the Moonhill properties, and its 49% interest in Tippindo, to a Bakrie controlled company called Votraint Pty Limited (Votraint), later to be renamed Branir Pty Limited (the first respondent) (Branir). As a consequence of this and other payments, BNY was paid out and the relevant title documents released.
Four principal documents were executed and exchanged on 23 December 1993 to give effect to this transaction:
·     a Deed of Settlement between BNY, Owston, Anderson and others dealing, inter alia, with outstanding claims of BNY against various Anderson interests
·     a deed between Owston, Anderson, Bakrie, Votraint/Branir, Tovehead and others providing for the sale for $A20 million by Owston to Votraint/Branir of its half interest in Tipperary plus plant and stock, its shares in Tippindo and the Moonhill assets (which comprised the Moonhill land, and stock, moveable improvements, plant and equipment)
·     a letter dated 22 December 1993 from Votraint/Branir to Owston indemnifying Owston against any claims by BBD arising from an earlier undertaking by Owston to the bank
·     a share transfer agreement between Owston and Votraint providing for the transfer of Owston’s shares in Tippindo
The corporate structure effected as a result of the transactions on 23 December 1993 is set out in the document headed “After settlement” in Exhibit A11, appended to this judgment (4).
Two further documents were exchanged on 23 December 1999 which stand at the centre of these proceedings:
· The first was a letter of that date from Votraint/Branir to Owston signed by Graham which on its face appears to be an option in favour of Owston to be issued with 40.815% of the shares in Votraint/Branir to be exercised within 3 months (the Share letter). It was in the following terms:
Issue of Shares
Transfer of Interest in Assets
Votraint No 788 Pty Limited (“Votraint”) confirms its offer to issue to Owston Nominees No 2 Pty Limited (“Owston”) such number of shares as will result in Owston becoming the holder of forty point eight one five per centum (40.815%) of its issued share capital immediately after such issue.
The offer is made on the following terms:
1.Owston will pay to Votraint the sum of $AUS8,000,000 together with interest on that amount (as reduced from time to time) (such sum and interest being collectively called “Debt”) in respect of the period between the date on which a legally binding agreement is entered into and the date on which the whole of the Debt is paid to Votraint such interest to be calculated on a daily basis at the current Indonesian market deposit rate from time to time.
2.Any dividend received by Owston in respect of the relevant shares before the Debt is paid to Votraint shall be paid by Owston to Votraint in reduction of the Debt.
3.Owston will irrevocably direct Votraint to apply all dividends to be paid in respect of the relevant shares in partial satisfaction of Owston’s obligation to reply [sic] the Debt.
4.Owston will provide suitable security arrangements to Votraint including handing over possession of the relevant share certificate as Mr A Bakrie shall direct.
5.Owston will pay all stamp duty.
6.If Owston accepts this offer, Votraint agrees that Votraint will not incur any additional debts other in the ordinary course of the business of operating its assets.
This offer remains open for acceptance for a period of 3 months from the date of this letter. If acceptance does not take place within that period this offer will automatically lapse.
· The second was a letter dated 22 December 1993 from Votraint/Branir to Owston, initialled by Graham concerning the continuing operations of the Sanctuary (the Sanctuary letter):
Tipperary Sanctuary
We still have a little unfinished business in the matter of the future of the Sanctuary to be settled.
Please be assured that we are anxious to ensure that the operation is allowed to continue in its present form.
I have informed our people in Tipperary that the current arrangements must be continued.
After the settlement
Following the execution of these documents on 23 December 1993, operations continued at Tipperary under the management of Gardner, now working for Tovehead and Branir. The Sanctuary continued to be run by Langham under the control of Owston and Anderson.
On 23 March 1994, the last day permitted by the Share letter, Owston purported to exercise its share option by sending the following letter:
RE: ISSUE OF SHARES – TRANSFER OF INTEREST IN ASSETS
The Company is pleased to accept the offer contained in your letter of 23 December 1993.
As you would appreciate the Company as a shareholder would like to be kept advised of the affairs of Votraint from time to time and look [sic] forward to the issue of the appropriate share certificate. In particular we would appreciate copies of the accounts and details of any significant events.
Graham acknowledged receipt of this acceptance and informed Owston and Anderson that the matter was to be referred to Jakarta and Bakrie’s legal advisers. The share scrip has never been issued.
In 1995, following a proposal by Tovehead and Branir to lease part of Tipperary to Aman Resorts for use as a holiday resort, Anderson placed caveats on Tipperary, resulting in proceedings in the Supreme Court of the Northern Territory where the caveats were removed. Soon after the applicants commenced the current proceedings in this Court, initially seeking interlocutory injunctions to restrain the respondents, Tovehead and Branir, from going ahead with a lease to Aman Resorts. His concern was the health and wellbeing of the wildlife if indiscriminately exposed to the public. An ex parte injunction was granted restraining the sale or leasing of Tipperary to Aman Resorts and the sale of certain plant and equipment, but after a contested hearing, the interlocutory injunction was discharged on 31 July 1995. For a number of reasons which need not be detailed here, but which involved a complete recasting of the case just as it was ready to be heard in August 1997, and several later amendments to the pleadings, the substantive hearing of this matter did not begin until the second half of 1998 and was not completed until the middle of 1999.
Personal relationships
For a complete understanding of the relevant events, it is necessary to come to grips with some of the personal relationships that existed between the principal players. The relationship between Bakrie and Anderson transcended that of mere business associates to one of friendship and trust between wealthy and successful entrepreneurs. In my view these apparently mutual feelings were a central factor governing many of their decisions through the course of their various dealings. Indeed determining the Anderson/Bakrie relationship has assisted me in assessing where the truth probably lies. For their relationship also influenced the evidence in the case despite the intervening falling out.
From the time Anderson and Bakrie first met at Tipperary in 1989, their relationship developed both in a business and personal sense. From an early stage, Anderson referred to Bakrie as “Ichal” or “Pak Ichal”, terms of intimacy or familiarity in Indonesia. Throughout the course of their dealings together, the two regularly exchanged friendly and personable correspondence, including Christmas greetings and, in Anderson’s case, a letter wishing Bakrie well with an upcoming float of a company in Indonesia (with which Anderson was not involved). Other fond greetings were regularly exchanged and Bakrie periodically enquired in his correspondence after Anderson’s family.
The respondents sought to establish that Bakrie’s and Anderson’s close relationship broke down in 1992 or 1993, on the basis of evidence from Bakrie that he began to become unhappy with Anderson when he realised that his investment in Tipperary and the feedlot were not producing the expected returns. However, the clear evidence was that warm and friendly relations existed between the two men until late1994 at the earliest. The following exchange of correspondence between them is instructive in that regard:
Anderson to Bakrie 18 October 1994
Dear Ichal
Thank you for the meeting the other day.
I have forwarded to Nalin an offer on “Tipperary” that I believe I can put in place. The offer is with John Benson and John is meeting with Nalin shortly.
I have also spoken to Nalin at the possibility of meeting him in Singapore next week if necessary to help put this together. I believe it is an offer that is vastly better than what is out in the market place. However, if it is not satisfactory then let us talk and see what we can do.
I must say that it was good to see you the other day and have the pleasure of such a friendly meeting. I always enjoy getting together with you and this makes it hard for me to discuss callous business facts.
My friendship with you is very important to me and I wish to protect it at all times. It has passed the test of time and pressure over the years and survived.
A lot of people in Australia watch this friendship with interest and anticipation and there are also people who would like to see it “sink”. But they have no hope of that occurring.
Even Australian politicians and Indonesian ambassadors discuss the relationship and it is important for us to keep together this bond we have.
Ichal, I would like to say your support has allowed me to establish my momentum in business for which I am very appreciative and I believe it will somewhere down the track benefit us both.
Please keep in contact and let us try to make our business ventures a success. To do this I need your help and you need mine. Let us not allow our partnership to disintegrate and as I said before there are people both in your camp and mine that would like to see it fall. Let us work together to achieve a successful result.
Best Regards
Warren
Bakrie to Anderson 31 October 1994
Dear Warren
Thank you for your letter dated October 18, 1994. I was out of station and just came back on November 3, 1994.
I have read your letter with interest and before I proceed on any business matter, I would like to reconfirm the following as far as our business and personal relationship is concerned:
·Our partnership is very personal and we have helped each other in times of need. It would be very difficult for anybody to disturb our relationship. Just like you, I would also like to protect our relationship at all time.
·I also know that lot of people are jealous of us because of our success and the way we survive our relationship when the times are hard and pressure is high. I will assure you that I will not allow neither external nor internal people to break our relationship.
·Again, I must say that our mutual help to each other is the test of perfect understanding and good relationship. Lets protect it and progress the same.
…
If Nalin and Benson cannot conclude discussions, we can always slip in at the right time and conclude the transaction to our mutual satisfaction.
I am glad to know that you have some major development projects on hand in Papua Neuginne and I wish you all the best in these projects.
Please do convey my regards to Chyrile and best wishes to your kids.
With best regards
Aburizal Bakrie
It was also Bakrie’s oral evidence that he distinguished between his business and personal relationships with Anderson, so that while he may have been unhappy with the development of his investment, it did not affect his personal feelings towards Anderson. Indeed my impression was that despite this strongly contested and sometimes acrimonious litigation, the two men still have regard for each other and are reluctant antagonists, in some respects prisoners of advisers, circumstances and these proceedings themselves. Graham in particular contributed to this unfortunate state of affairs. In fact, the first overt sign of any real collapse in Bakrie’s determination to maintain the friendship came with a fax from Graham on 31 January 1995 set out in paragraph 105. The litigation followed soon after.
On the other hand, Anderson and Bakrie were indisputably the principal figures on the respective sides of this litigation. Anderson made all relevant decisions on behalf of his interests, whether they be for Owston or for a member of his family. Bakrie was similarly in control of his affairs. Although each delegated responsibility to advisers to deal with minutiae, it was clear that the central agreements were made between Anderson and Bakrie and that they expected and believed that the results of their negotiations would be implemented and be binding upon their interests. Judging from the evidence and the formal documents which passed between the parties, I believe that there was also an understanding between Anderson and Bakrie as to the moral obligations each owed to the other which transcended their formal business arrangements. These arrangements included the repayment of a debt to BBD where, unbeknowns to the bank, an agreement existed that part of the income stream from the joint venture (which on the face of the agreements was to be entirely directed to BBD) was to be diverted to Owston. The agreements set out in the Sanctuary and Share letters also fall into this category.
There were also a number of instances where decisions were taken for seemingly non-commercial reasons. The most striking example was Owston’s agreement in 1992, with hardly a word of dissent from Anderson, to forgive the $US24 million debt of Cross Hatch to Owston (which had provided this sum as vendor finance for part of the purchase by Tovehead of the first half of Tipperary in 1990) for a total consideration of $US3 million to be paid over 12 months. The respondents sought to colour this action by claiming that Bakrie had been unhappy as he realised that he had paid too much for the property and that Anderson had therefore, in effect, lowered what he knew to be too high a purchase price by forgiving the loan. I am not convinced, on the evidence, that this was the case and, although a definitive finding on whether it was that reason precisely is not possible, the evidence suggested that it was more activated by a general desire to further the goodwill between the two men. Even if the respondents’ contention was true, however, it would, as the evidence revealed, not diminish my point.
Anderson said in his affidavit of 12 September 1997:
39.In mid 1992, I had a meeting with Bakrie in Jakarta in which words to the following effect were spoken:
AB:     “I cannot pay you the $24 million.”
WA:     “What do you want me to do?”
AB:     “I want you to forgive me the loan.”
WA:     “Why would I do that? It’s a lot of money.”
AB:“In the spirit of our partnership, I think you should let us off the $24 million. We are very tight financially and cannot pay. We have a long way to go with the feed lot and Tipperary and we do not want to be at odds as partners. You will pick it up eventually out of profits.”
WA:“Well look, I can’t forgive you the whole $24 million, but part of it we could probably work something out on.”
A few days later we had a further meeting in which words to the following effect were spoken:
AB:“What about forgiving the loan for US$3 million, payable by instalments of US$250,000 a month.”
WA:     “Is that all you can raise?”
AB:     “Yes.”
WA:     “Alright.”
AB:     “I will always appreciate this gesture.”
40.Exhibited hereto and marked “WPA 31” is a copy of an agreement entitled “Agreement to Forgive Loan” which was created to document this agreement.
41.The US$3 million which was agreed to be paid by Cross Hatch under that agreement was never paid in full. This agreement later became the subject of a dispute between Owston’s bankers, Bank of New York and the Bakrie interests.
Exhibit WPA 31 referred to in paragraph 40 of the affidavit is Appendix 5 to this judgment.
In paragraph 42 of the same affidavit Anderson went on that after he raised with Bakrie his problems with BNY, Bakrie said:
AB: “How are you going with Bank of New York?”
WA: “Not too well.”
AB:“You are my partner and we’ve got to stick together on this and see it through. I will give you my support and arrange for the debt to be paid out.”
WA:“Great. I would really appreciate that.”
AB:“Well, we are partners. I appreciate you releasing me from the US$24 million last year. We will work this out. Nalin is putting together a finance restructuring plan for Bank Bumi Daya which will include your loan.”
In his oral evidence Anderson said that he agreed to forgive the loan because Bakrie was “in financial trouble” and that he, Anderson, was anxious to maintain the partnership and their close financial and personal relationship.
Bakrie’s letter to Anderson of 31 October 1994, quoted in part at paragraph 32, alleged at another part that Anderson agreed to “write off the loan” because of Bakrie’s high interest costs and lower returns than represented [sic]:
Now, coming to business matters, Nalin has discussed the proposal with me and Warren, I need your full understanding of the transaction from the beginning. As you know, when I acquired the property, after your writeoff of loan, it costed me todate, US$103,277,266. This purchase was made by me when you really needed it in 1989 and we did not negotiate your original offer of US$80 mill and this valued 100% of the property at US$160 mill. When we found that interest costs are high and project is resulting returns we expected based on your plans, you agreed to writeoff the loan which I really appreciate.
Consistent with that viewpoint, and while denying that he could not pay the money, Bakrie said in his affidavit of 26 February 1998 that he had paid too much and wanted a reduction to which Anderson agreed:
4.At Anderson’s request I did have one or two meetings with him in Jakarta in mid 1992. Words to the following effect were spoken:
Anderson:“I need to raise some money. Can you arrange for some of the Crosshatch loan to be paid”.
Bakrie:“You made us pay far too much for our share of Tipperary. We need to do something to sort this out if I am to help you”.
I deny that I ever said words to the effect “I cannot pay you the $24 million”. The conversation continued with words to the following effect:
Anderson:“What do you want me to do?”
Bakrie:“I want you to forgive me the loan.”
Anderson:“Why should I do that? It’s a lot of money”.
Bakrie:“In the spirit of our partnership, I think you should let us off the $24 million. We have a long way to go with the feed lot and Tipperary and we do not want to be at odds as partners. You will pick it up eventually out of profits.”
Anderson:“Well look, I can’t forgive you the whole $24 million, but part of it we could probably work something out on”.
I deny that I said words to the effect of “We are very tight financially and cannot pay”. I cannot recall whether it was at this meeting or a few days later that we reached agreement but I agree with Anderson’s evidence that USD 3 million was to be paid by instalments of USD 250,000 a month. However, I deny that Anderson ever asked “Is that all that you can raise?”
5.Following this I executed on behalf of Crosshatch, Tovehead and PT Bakrie Nusantara Corporation the agreement which is WPA 31.

Moreover, in a fax to Graham on 4 January 1994 to which I shall return in another context later, and in his evidence, Rathod spoke in rather vague terms of the forgiving of the loan as a type of reciprocal “give and take” arrangement by the two principals.
In substance these separate accounts are virtually identical and it is not necessary to resolve whatever dispute there might be. One thing can be said with some certainty – to forgive a debt of $US24 million (actually it was to be $US21 million after $US3 million was paid by Cross Hatch in instalments over 12 months) without any legal obligation, sanction, or apparent financial advantage is not indicative of a hard-nosed business relationship between two people in which each is striving to maximise his own financial position at the expense of the other. Whatever the reason for this dramatic occurrence, it was a stark example of the understanding between the two parties and showed the willingness of each to act in the interests of the other when necessary.
In the same manner, it will be seen later that, in negotiating with Anderson in 1993, Bakrie understood Anderson’s perilous financial position and struck a deal which allowed his counterpart to retain some interest in the joint venture assets, in the full knowledge that if he had wanted to, he could have pushed Anderson into a position where he received nothing. It was not and could not have been an accident or oversight, for Graham made it clear, loudly and often, that that was the result he favoured. Indeed, Bakrie could, it seems, have even forced Anderson into bankruptcy or at least significant financial embarrassment and loss. That he did not do so is yet another example of the personal relationship between these two men to which their immediate business concerns were subservient.
On the other hand, and in stark contrast to his friendly relationship with Bakrie, Anderson’s relationship with Graham, also central to this case, was poisonous. Some of Bakrie’s and Anderson’s correspondence referring to people on each party’s side who were trying to undermine their relationship and to their desires to withstand this pressure has already been quoted. There was other evidence of this belief. Anderson felt that Graham in particular was attempting to impede his relationship with Bakrie because of a personal vendetta and he was therefore reluctant to deal with Bakrie through Graham, preferring to talk to Rathod or to Bakrie directly. Anderson’s oral evidence was that Graham “hated him”. Graham denied this assertion, although he did concede that he “disliked” Anderson and the way he did business. Graham stated that the antipathy first arose after the 1990 deal when, in Graham’s perception, Anderson continued his apparently dictatorial role in running Tipperary, despite arrangements under the joint venture agreements for management committees and the like to meet and administer the operations in a more formal and consultative process.
Having seen the witnesses and heard the evidence, some of which will be specifically set out, I do not disagree with the applicants’ assertion that Graham, on the basis of his personal antipathy to Anderson, actively tried to destroy his relationship with Bakrie. Although Graham was in every sense Bakrie’s employee or agent, I believe that he pursued his own agenda when dealing with Anderson which did not necessarily accord with Bakrie’s understanding with or attitude to Anderson, or even Bakrie’s best interests. That this attitude was a major cause of the disputes which arose, and of this litigation being so exhaustively contested, cannot be doubted . I also have little doubt that the final falling out, and what led up to it, was brought about by Graham’s continual feeding into Bakrie’s ear, both directly and indirectly, information and attitudinal judgments which were shaped by the intensity of his disdain for Anderson and often did not accord with the facts.
Despite Graham’s antagonism to Anderson, Dew gave evidence that in his dealings with Graham, he found him to be reasonable. There was no apparent hostility in the dealings between Dew and Graham, although it is clear that Graham often did not deal in good faith with Dew, as he continued to attempt to undermine Anderson. Thus, although Graham’s antagonism appeared to be directed only at Anderson, it manifested itself in all his dealings with the Anderson interests.
THE CLAIM
By their latest amended application filed in Court on 22 January 1999, Owston and Anderson sought the following relief:
1.A declaration inter partes that in the events which have happened Owston has the following rights:
(a)     the right to exclusive use and possession of such parts of Tipperary as are currently used by it for the Sanctuary;
(b)     the right to select further parts of Tipperary for its exclusive use and possession, provided that it may not select land which is, at the date of selection, developed land or commercial plantation or which would, taken together with the land referred to in (a) and land previously selected by it, exceed 20,000 acres in total area;
(c)     all such rights over the land referred to in (a) and land selected by it pursuant to (b) (the “Greater Sanctuary Area”) as it would have if it were the lessee thereof in the terms of the underlying lease of the relevant part of Tipperary;
(d)     free and uninterrupted rights of carriageway, ingress and egress to and from the Greater Sanctuary Area in common with other users of Tipperary;
(e)     the right to use light, power and water from Tipperary; and
(f)   the right to use and occupation of two small staff houses on Tipperary.
2.An order that Tovehead and Branir take all steps necessary to grant to Owston in perpetuity and for its exclusive use and benefit absolutely a lease in registrable form at nil rental of all that piece and parcel of land on Tipperary as are currently used by Owston for the Sanctuary together with free and uninterrupted rights of carriageway including ingress to and egress from the said land in common with other users of Tipperary and together with such rights to use light, power and water from Tipperary as were enjoyed by Owston as at 23 December 1993.
3.An order that upon Owston making any selection as is referred to in paragraph 1(b) above, Tovehead and Branir take all steps necessary to extend the lease referred to in paragraph 2 above so as to include the areas so selected.
4.Alternatively, a declaration inter partes that in the events which have happened Owston has a licence from Tovehead and Branir giving to it the [same rights as set out in prayer 1].
5.An order that Tovehead and Branir execute a Deed granting to Owston in perpetuity the rights referred to in paragraph 4 above.
6.An order that, upon Owston making a selection referred to in paragraph 4(b) above, Tovehead and Branir execute a Deed granting to Owston in respect of the land so selected a licence giving to Owston the rights with respect to that land which are referred to in paragraph 4 above.
6A.A declaration inter partes that, pursuant to the right referred to in paragraph 1(b) above or, alternatively, paragraph 4(b) above, Owston may select all or part of the land comprised in the paddocks on Tipperary Station known as Turkey Flat, Jumbo, Electric Fence, Campbell’s, Boord’s and Little Gardner.
6B.A declaration that there subsists an oral contract between Owston, Branir and Bakrie in the terms of the Branir Shareholding Agreement as set out in the Second Further Amended Statement of Claim.
7.In the alternative, to the declarations sought in paragraph 6B above an order that the terms of the letter from Votraint No. 788 Pty Ltd to Owston dated 23 December 1993 be rectified or altered to conform to the terms of the Branir Shareholding Agreement as set out in the Second Further Amended Statement of Claim.
8.An order that Branir issue to Owston such number of shares in Branir as will result in Owston becoming holder of 40.815% of Branir’s issued share capital.
8A.(not now relevant)
9.A declaration inter partes that, on the registration of the shares as aforesaid, Owston shall owe to Bakrie the sum of $8 million (the “Loan”) on terms that:
(a)     the Loan shall bear interest at the Indonesian market deposit rate for Australian dollars from time to time; and
(b)     the Loan shall be able to be required by Bakrie to be repaid (and interest on the Loan shall be required to be paid) by Owston to Bakrie from, and only from, such dividends as may be declared and paid from time to time on Owston’s shares in Branir as aforesaid.
9A.(not now relevant)
10.A declaration inter partes that, on the registration of the shares as aforesaid, Owston shall owe to Bakrie the sum of $8 million (the “Loan”) on terms that:
(a)     the Loan shall bear interest at the Indonesian market deposit rate for Australian dollars from time to time; and
(b)     the Loan shall be able to be required by Bakrie to be repaid (and interest on the Loan shall be required to be paid) by Owston to Bakrie from, and only from, such dividends as may be declared and paid from time to time on Owston’s shares in Branir as aforesaid.
11.(Not now relevant)
12.Costs.
13.Such further or other orders as the Court thinks it.
This relief thus identifies two distinct subject matters for consideration: the size, operation and conduct of the Sanctuary and the issue to Owston of shares in Branir. Although the events relevant to each issue are to some extent intertwined and contemporaneous, it is necessary to deal with them separately.
the cross claim
By their amended cross claim also filed in Court on 22 January 1999, further amended in their written submissions, Tovehead and Branir sought to completely undermine the JSU – by having it declared either to be of no force and effect, or to have been a licence which was either terminated 23 December 1993 or 14 December 1994 or is terminable on reasonable notice. The significance of 14 December 1994 was not clearly disclosed. It was apparently the date on which Branir became the registered proprietor of its half share. The argument seems to be that on that date, the JSU ceased to have effect because it did not bind Branir just as it was said that the Sanctuary letter did not bind Tovehead. It is not clear what consequences flowed in respect of the company each of those documents did bind. If on the other hand, the JSU was an agreement for a licence at will, the Sanctuary would presumably have to be declared to be in the possession of the applicants until terminated. The cross claim also sought a construction of the Share letter so as to require that Owston’s shares be held by Bakrie until payment of the purchase price of $A8 million plus interest calculated at the relevant Indonesian rate. If this declaration were made, the share scrip would first have to be issued.
The Sanctuary
Overview
The applicants contended first that a binding agreement was entered into in December 1993 between Owston, Branir and Tovehead providing for:
(a)Owston to be granted a lease in perpetuity over 20,000 acres of the Tipperary properties on substantially the terms of a draft deed which passed between the parties, such land to be selected by Owston in conformity with the JSU; and
(c)the provisions of the JSU to continue to govern Owston’s rights over the Sanctuary, pending the execution of formal lease documents to give effect to its terms.
The consequence was said to be that Owston would continue to hold and conduct the Sanctuary, would be allowed to expand it by 20,000 acres, and would have the use of the necessary Tipperary facilities for its continued operation.
The applicants also asserted that in the negotiations leading up to the settlement on 23 December 1993, the respondents represented that the applicants would be granted a perpetual sub-lease over the relevant 20,000 acres including the Sanctuary, on which the applicants relied when they engaged in the operation and further development of the Sanctuary in 1994. This reliance was said to found a relevant estoppel.
Finally, they alleged that in making certain representations about the applicants’ interest in the Sanctuary, the respondents engaged in misleading and deceptive conduct in contravention of the Corporations Law, the Commonwealth Trade Practices Act and the New South Wales Fair Trading Act.
The Facts
The 1989 events
It is common ground that after Anderson’s discussions with Japto in early 1989, Bakrie visited Tipperary in mid-1989 and discussed with Anderson the possibility of purchasing a half interest in the properties with Japto. Anderson’s evidence was that during the visit he showed Bakrie the Sanctuary and the following words were said:
WA:If I do a deal with you Ichal, this is not part of it. The licences for the Sanctuary have been issued to me personally and it is my personal responsibility.
AB:That’s no problem Warren. We could take it off as your own. How big is the area?
WA:Over time I will need at least 20,000 acres.
AB:What if I want to build a house here for myself? If you’ve got 20,000 acres can I have 20,000 acres to build a house for myself as a personal asset?
WA:Fine.
In cross-examination Anderson stated that he and Bakrie had had this conversation as they drove away from Tipperary, inspecting the Sanctuary, along the road which leads to the main highway. Anderson recalled that as they drove, he said words to the effect: “I will have 20,000 acres this way” pointing to the left of the road. He then pointed to the right side of the road and said “You can have 20,000 acres that way.” They then came to a point in the road where there was a cattle grid and Anderson said words to the effect: “This is about as far as we will go and then we will go west as far as [necessary to] take in … 8,000 hectares or 20,000 acres”.
The cattle grid is no longer there but when the Court visited the property, Anderson pointed out on the ground where he recalled the discussion had taken place. He identified it on the map as being at the point on the road where it meets the northern fence line of a paddock known as “Campbells”. To reach this point Anderson and Bakrie would have driven well beyond the then existing area of the Sanctuary along a stretch of road which has the paddocks called “Turkey Flat”, “Little Gardner” and “Campbells” to the left and “Heifer”, “Station Creek” and “Gardner” to the right. Other paddocks covered by Anderson’s “left wave” were those called “Jumbo”, “Electric Fence”, and “Boords”. All these paddocks are clearly marked on Appendix 6.
Bakrie’s evidence on this matter did not differ greatly from Anderson’s. He recalled Anderson driving him up the road on his 1989 visit to the property and that they had what Bakrie termed “a casual conversation” about the parts of the land on which Anderson proposed to build a house and extend the Sanctuary. According to Bakrie, Anderson said to him: “This for you, this for me.” At this point in his evidence Bakrie waved his hands to the left and to the right. Bakrie agreed that there was a conversation about 20,000 acres for each party and admitted that the discussion concerned 20,000 acres on “each side of the road”. He agreed that Anderson made it clear that his 20,000 acres were on the same side as his house site which was located in Stage II of the Sanctuary. Bakrie did not, however, recall stopping at a cattle grid and maintained that there was no discussion of the boundaries of the 20,000 acres.
This evidence has very little material value in determining whether a binding agreement existed in respect of the Sanctuary some four and a half years later. It is significant, however, in three respects. Firstly, it reveals that from the very commencement of Bakrie’s involvement in Tipperary in 1989, there was an understanding between himself and Anderson that 20,000 acres would be used by each for his own purposes and that Anderson’s 20,000 acres would include and abut the Sanctuary. Secondly, it illustrates that there was, at this early stage, at least some delineation of the boundaries of the prospective 20,000 acres, to which Bakrie agreed or at least did not object. As some of this part of the evidence was disputed, I propose to return to it in greater detail later. Thirdly, the admitted part of these conversations between Bakrie and Anderson illustrated, as happened several times in this case, that the applicants’ evidence, initially treated derisorily by the respondents, ultimately turned out to be to a large extent undisputed, and in my view did much to lend credibility to the applicants’ claims.
During 1989 Owston instructed Timothy Somerville, a Sydney solicitor, to act on its behalf in drawing up the necessary documentation for the sale of a half interest in Tipperary to Bakrie. Somerville included in the “Co-ownership Agreement” (a document which superseded the Co-operation Agreement previously outlined) the following provisions:
5.1Owston shall be entitled to use such part of the property as it selects, not exceeding 20,000 acres for its own purposes, including construction of a private residence and zoo.
5.2Tovehead shall be entitled to use such other part of the property as it selects, not exceeding 20,000 acres for its own purposes, including construction of a private residence.
Rathod, who initially conducted the negotiations for Bakrie, raised his concern that, as drafted, the clause allowed Owston to select the homestead area as part of its 20,000 acres. Somerville assured him that this result was not the intention so Rathod redrafted the document in Jakarta to include the following provisions:
4.1Owston shall be entitled to use such part of the property as it selects, not exceeding 20,000 acres for its own purposes, including construction of a private residence and zoo.
4.2Tovehead shall be entitled to use such other part of the property as it selects, not exceeding 20,000 acres for its own purposes, including construction of a private residence.
4.3Neither party can use any of the currently developed land or commercial plantation.
4.4.Neither party can carry out any other business other than the business carried out for the joint benefit of both the parties.
4.5The allocated land shall not be utilised for any other commercial use other than personal residence and recreation including zoo.
With minor changes, this clause was incorporated into a fresh document and executed by the parties on 15 November 1989. The evidence as to these amendments was adduced as part of an argument that, in the event that Owston was held to have an entitlement to select 20,000 acres for the expansion of the Sanctuary, it could select any land apart from the homestead area and commercial mango plantations. There was a great deal of evidence as to what constituted “currently developed land” but as this evidence is closely related to the issue of the delineation of the boundaries of any entitlement of the applicants to the additional 20,000 acres for the Sanctuary, I propose to deal with it in that context.
On about 14 November 1989, BDW was retained to advise the Bakrie group of companies on the proposed purchase of the half interest in Tipperary. Adrian Ahern, a solicitor with BDW, reviewed the proposed documentation and drafted a detailed critique. As part of that critique, he commented on clause 4 of the Co-ownership Agreement and pointed out the following possible breaches of the Crown Lands legislation:
(a)that the clause relating to the zoo might constitute a sub-lease made without ministerial consent; and
(b)that a change of land use from pastoral activities or grazing to that of a zoo might be a change for which there had been no ministerial consent.

Under Northern Territory legislation ministerial consent was then and is still needed for changes to pastoral leases. Ahern therefore suggested that the clause be removed and placed in a separate document. This and other evidence supports the conclusion that the parties’ representatives agreed on the clause being removed on or about 16 January 1990 while Somerville was apparently on holidays and the matter was being dealt with by another solicitor in his office. Somerville’s evidence that the clause had been removed at the suggestion of BBD or its solicitors, Baker & Mackenzie, does not appear to be correct.
The Joint Statement of Understanding
Somerville thereafter drafted the JSU which was extracted in paragraph 14. There was copious evidence on the production of this document, adduced primarily by the respondents, who sought at length to establish that the removal of the licence clause from the Co-ownership Agreement and its embodiment in a separate document framed as set out in the JSU constituted a “demotion” in its legal stature. The respondents devoted much of their written submissions relating to the Sanctuary to establishing the precise nature of this document and the rights it conferred on Owston. They said that it was merely an exchange of negative covenants between two co-owners, which established that each party would not interfere with the other’s use of certain parts of the land. It was not, on their argument, an agreement for a lease or even a licence, as a licence would have been unnecessary and a legal absurdity as between two co-owners of the land said to be subject to it. In some contradistinction with their cross claim, the respondents also contended that in any event the JSU necessarily came to an end when Tovehead and Owston ceased to be co-owners in 1993, and Owston’s interest devolved to Branir which was not bound by it. Having regard to the applicants’ argument that it was agreed in late 1993 that the terms of the JSU would govern the parties’ relationship with respect to the Sanctuary pending a formal lease document, it will be seen that whichever of the competing arguments were accepted, the precise legal nature of the JSU at the time of its execution is not a question that needs to be determined, although it is valuable in identifying the intent of the parties.
February 1990 to late 1993
After the conclusion of the 1990 deal, the Sanctuary was and continued to be operated by Owston, employing Langham as the manager. It was in the period leading up to the 1993 negotiations for the sale of the second half of Tipperary that Owston purchased the 120 or so animals from Lord MacAlpine’s private zoo in Western Australia and relocated them to the Sanctuary.
September – mid-December 1993
During the negotiations in late 1993 for Owston to sell its remaining half interest in Tipperary to Bakrie, the question of the Sanctuary was raised and discussed. There were significant differences in the parties’ accounts of these negotiations.
The applicants’ evidence was that they raised the issue in the course of the negotiations from September onwards. Dew gave evidence that he had a discussion with Anderson in which Anderson stated that he had confirmed with Bakrie and Rathod that Owston would have 20,000 acres after settlement in which to expand the Sanctuary and that Anderson asked Dew to procure an agreement with Graham to this effect. According to Dew, he then had a conversation with Graham in which Dew presented his understanding of the agreement between Anderson and Bakrie as that:
…the current arrangements are to stay in place and he [Anderson] will have a continuing licence to operate the sanctuary…he is to have exclusive use of the sanctuary…the period will be the same as the perpetual leases and there will need to be provision for continuing rights of access…Can you speak to Bakrie because we need to get an agreement documented?
Dew stated that Graham then came back to him and said that Bakrie had agreed that Anderson could “continue to operate the Sanctuary” and that Graham would speak to Greiner about getting a draft agreement. Graham denied that this conversation occurred. Dew also said that he had many conversations with Graham and Greiner during this period in an attempt to have an agreement drawn up regarding the Sanctuary. Graham did not give any specific evidence about these alleged requests except to state that his only instructions on the issue of the Sanctuary were that it could continue to operate in its then present form.
There was some corroboration for Dew’s evidence from Langham who stated in his evidence that Graham said to him in late 1993 that:
There is an agreement between Anderson and Bakrie that Anderson can build on one side of the road on 20,000 acres and that Bakrie has the same amount of land on the other side of the road. That arrangement is to continue.
Graham denied making this statement to Langham. Langham struck me as a manifestly truthful witness. I accept his evidence on the matter.
On 30 November 1993 there was a meeting between Graham and Anderson at the Regent Hotel in Sydney. Anderson’s evidence was that he stated: “The Sanctuary must continue as it is and have security of tenure in accordance with the original agreement.” He said that Graham replied: “That is right, I will also confirm this with Nalin [Rathod].” Graham admitted that he did meet with Anderson at the Regent Hotel and that the Sanctuary was discussed but denied the substance of the conversation.
Anderson's meetings in Jakarta
By mid-December 1993, despite Dew’s evidence as to his persistent efforts to obtain a draft agreement from Graham and Greiner, nothing had been received. On 12 December 1993 Anderson flew to Jakarta and met with Bakrie and Rathod. Dew sent Anderson a fax to his hotel in Jakarta:
I have not been able to get a letter from Charlie re the Sanctuary – do you think you could get one from Nalin – if not I will continue to press Charlie.
Anderson seems then to have armed himself for a discussion with Bakrie and Rathod regarding the Sanctuary. On 13 December 1993 he was sent a fax from Umberto Gianotti, a lawyer in Perth retained by Anderson to advise him personally, the cover page of which indicated that attached were, inter alia, two documents referred to as a copy of the “Statement of Understanding re 20,000” and as a “Deed for 20,000 acres”. The draft deed was in the following terms:
THIS DEED made the day of 1993
BETWEEN:
Aburizal Bakrie of Wisma Bakrie (“ARB”), 7^th Floor, Jalan H.R. Rasuna Said Kev B-1 Jakarta 12920:
Tovehead Pty Ltd (CAN 003 745 140) (herein called “Tovehead” which term includes successors, transferees and assigns) and Votraint No. 788 Pty Ltd (CAN 061 718 876) (“Votraint” which term includes successors, transferees and assigns) both c/– Edney, Lawrence & Co., 706 Military Road, Mosman NSW 2088;
Owston Nominees No. 2 Pty Ltd (CAN 001 769 099) c/– Stubbs & Co., Level 2, 44 Hunter Street, Sydney NSW 2000 (herein called “Owston” which term shall include all servants, agents, employees, contractors, invitees and licensees approved of by Owston); and
Warren Perry Anderson of 52 Johnston Street, Peppermint Grove, Western Australia (herein called “Anderson”).
WHEREAS:
By Statement of Understanding dated 31 January 1990 Tovehead and Owston covenanted that each of Tovehead and Owston shall select any parts of “Tipperary Station” situate in the Northern Territory and described as all that land comprised in Volumes 201 Folios 43, 44, 45, 47 and Volume 198 Folio 32 (“Tipperary”) for its own exclusive use as a private zoo including a private residence and recreation but excluding any other commercial use.
NOW THIS DEED WITNESSES THAT:
1. Each of ARB, Tovehead and Votraint jointly and severally covenant and agree that Owston shall use, for a term of years, for its own exclusive use and benefit absolutely those parts of Tipperary presently used by Owston as a private zoo, residence and recreation purposes which rights will include free and uninterrupted rights of carriageway, ingress and egress to and from Tipperary in common with other users of Tipperary and the rights to use, light, power and water presently enjoyed by Owston as at the date of this Deed.
Each of ARB, Tovehead and Votraint jointly and severally covenant and agree that in the event that Tovehead or Votraint or both shall sell its or their interests in or to Tipperary, they will obtain from any purchaser of Tipperary a deed of covenant from the purchaser acknowledging and accepting the terms of this Deed.
IN WITNESS thereof the parties have executed this Deed on the date herein appearing.
The draft deed left blank the term of the agreement. Anderson apparently wrote in by hand that it was to be “for the term of the lease” and faxed it back to Gianotti on the evening of 13 December 1993. The following morning Gianotti faxed back to Anderson a revised version of the deed which provided that the grant of the 20,000 acres was for “the term of the perpetual leases”.
Anderson stated that on 14 December 1993 he met first with Rathod and showed him the draft deed and told him that he wanted a lease in perpetuity. Anderson claimed Rathod agreed and said that he would send it down to Graham to check the legalities and finalise it.
Anderson's evidence was that he then met with Bakrie on 14 December 1993 during which words to the following effect were said:
Anderson:Now, in regards to the Sanctuary, we have an agreement from our original deal that each of us have 20,000 acres. My 20,000 acres was for the Sanctuary and yours was to build a house on and have as a personal asset. To follow up on that agreement I have discussed a lease with Nalin. As part of that lease I will have right of access and a right to two small houses in the staff area with power and water for my staff. Is that okay by you?
Bakrie:Yes that is alright. I will instruct Nalin to follow up with your lawyers and finalise the lease. What term do you want?
Anderson:      The same as the perpetual lease on the land.
Bakrie:           Okay. Will the government agree to the lease?
Anderson:      Yes, they will.
Bakrie:           Okay, then let us proceed.
Anderson then told Dew that he had the agreement of Bakrie to the terms of the draft deed and asked him to proceed to get those terms executed by Graham.
In his evidence in chief, Bakrie stated that he did not recall a meeting with Anderson in December 1993 in Jakarta and denied that a conversation in the terms alleged ever took place. In cross-examination, however, his memory improved markedly. He stated that he and Anderson might have had a meeting in December 1993 and conceded that he may have been told by Rathod that Anderson had brought with him some documents concerning a proposed lease over the Sanctuary land. He did recall a conversation with Anderson about getting a lease over the Sanctuary sorted out and said that he told Anderson that he had no objection to Anderson having a lease for 20,000 acres of the property for his Sanctuary. He also admitted that he told Rathod that he had no objection to a lease and that he was happy for it to be 20,000 acres. He left the details, including the term of the lease, to Rathod’s discretion.
In his evidence in chief Rathod swore that he did not recall any meeting with Anderson in Jakarta in December 1993 and that he did not recall being shown the draft deed for the Sanctuary. He also denied that Anderson had ever spoken to him of a “lease in perpetuity” and said that he would have “remembered this phrase and would not have agreed to it”.
Rathod's evidence also changed considerably in cross-examination. He conceded that he did have a conversation with Anderson in December 1993 about the Sanctuary in which Anderson said that he wanted a lease over up to 20,000 acres. Rathod also admitted that he had understood that Anderson and Bakrie had come to an agreement about giving Anderson a lease over the 20,000 acres and that, although he did not specifically recall it, it was “possible” that Bakrie had told him to get documentation for that matter “fixed up”. He also conceded that he had in fact faxed a copy of the draft deed regarding the Sanctuary to Graham and Greiner in Sydney on 14 December 1993 with a covering note which was in evidence and stated:
Please find enclosed two drafts of the agreements as per our discussion which need to be cleared by you and fax back to me the final version so that I can get them signed by ARB and fax back to you to be handed over to Mr Anderson.
When it was put to Rathod that the clear implication of his fax was that he had in fact agreed with Anderson that a lease in the terms of the draft deed would be acceptable to the Bakrie interests subject to the legalities being sorted out, he:
(a)at first sought to say that he may not even have read the draft deed but was merely delegating the task of sorting it out to Graham and that he was simply sending Graham and Greiner the documents so that they could come back and advise him; then
(b)conceded that in saying “cleared by you” he meant that he wanted Graham and Greiner to reassure him that the document was in proper legal form to achieve his and Bakrie’s intent, not that it should be redrafted or for Graham and Greiner to put in their own ideas; but nevertheless
(c) sought to deny that when he sent the fax, he was of the view that the document had been agreed with Bakrie and merely had to be put into final legal form.
Pressed in cross-examination to admit that his oral evidence and the fax which he had sent to Graham and Greiner attaching the draft deed were inconsistent with his affidavit in which he denied ever being shown an only slightly different version of the draft deed, Rathod denied that Anderson had ever spoken to him of a lease in perpetuity and said that he never received any instructions from Bakrie to follow up on the lease. He also refused to concede that he must have read the document which was attached to his fax and had a discussion with Anderson about it, asserting that he had not read it but had merely sent it on to Graham to look at. He also continued to deny that he had had a discussion with Anderson in Jakarta about the deed although he was unable to explain how else the document came to be in his possession. Rathod’s evidence on this matter was evasive and prevaricating. I do not accept it as truthful.
Graham's evidence on this matter did not help the respondents' case. There was in evidence a copy of the draft deed bearing a note in Graham's handwriting – which Rathod eventually conceded he faxed to Graham. Unfortunately Graham's cross-examination did not reach this matter as he died shortly after Christmas in 1998, while the hearing was adjourned. Nevertheless, the draft deed, which Graham had obviously had in his possession at some point, squarely contradicted statements in his affidavit of February 1998 that:
(i)he was unaware of any meeting that Rathod had with Anderson on around 13 December 1993 and denied "that Rathod ever sent me a proposal, or advised me of the existence of a proposal, as the result of a meeting Rathod may have had with Anderson in Jakarta in December 1993";
(ii)he had never seen the draft deed about the Sanctuary until after the commencement of proceedings (it was annexed to Dew's affidavit), and had never discussed it with Dew;
(iii)Rathod had never contacted him to discuss the legal position or any other aspect of a draft agreement in relation to the Sanctuary;
(iv)he had no recollection of a formal “Sanctuary deed” ever being prepared; and
(v)he had not at any time received any instructions from Bakrie or Rathod in relation to the term of any such lease or as to any payment to be made pursuant to any such formal agreement. The only instructions he received in relation to the Sanctuary was that it could continue to operate in its then present form.
This evidence also contradicted the evidence of Anderson, Dew, Rathod and Bakrie. It was untrue. Indeed the cross-examination of Rathod, Graham and Bakrie on this issue was devastating not only to the respondents’ case in this respect but also to the credibility of the respondents’ witnesses generally. Their “flexibility” – by which I mean evasiveness, vagueness and obfuscation – on this issue and, in Graham’s case in particular, a preparedness to deliberately lie in order to bolster the respondents’ case, reflected very poorly on their credibility. I reject Graham’s evidence, virtually entirely, especially where it conflicts with the evidence of Dew and Anderson, and eventually Bakrie and Rathod.
Ultimately, there was not a great deal of dispute as to the events relating to this issue. The oral evidence of both sides, along with the contemporaneous documents, clearly supported the applicants’ proposition that Anderson went to Jakarta in December 1993 to discuss the issue of the Sanctuary with Bakrie and Rathod, that he had the draft Gianotti deed with him in those discussions, that Bakrie agreed to its fundamentals, and that Bakrie delegated responsibility for the finalisation of an agreement to Rathod who in turn passed it on to Graham and Greiner, not for advice, but to have it put into proper legal form for execution.
Notwithstanding this collapse of a significant part of their defence in this connection, the respondents continued to vehemently deny that any binding agreement had been reached, pointing to the fact that the draft deed was never signed and that it referred to Owston obtaining a lease over the land which was “presently used” by the Sanctuary rather than to the expanded area of 20,000 acres, for which the applicants now contend. The applicants submitted that the failure to sign the agreement resulted from Graham’s deliberate obfuscation in the period between receiving the draft deed from Rathod and the settlement on 23 December, rather than any lack of agreement or ongoing negotiation as to terms. They also submitted that the words “presently used” were a drafting anomaly which was to be fixed before the document was signed. Bakrie’s evidence that he had had a discussion with Anderson about 20,000 acres and did not have an objection to a lease over that amount of land being granted to Anderson, and the fact that the cover page Gianotti sent to Anderson attached to the draft deed which Anderson discussed with Bakrie in Jakarta, referred to it as a deed “for 20,000”, led to the clear inference that the words in the draft deed did not yet accord entirely with the parties’ intentions. I will return in due course to the precise nature and status of the agreement resulting from Anderson’s meetings, which is at the heart of this aspect of the case, but this finding does not preclude a conclusion that an agreement on certain terms was reached.
14 December – 23 December 1993
The applicants contended that following Anderson’s meetings in Jakarta, Graham deliberately delayed finalising the draft deed concerning the Sanctuary. In support of his evidence that he attempted to get the deed finalised with Graham and Greiner but without success, Dew recalled that he had a conversation with Graham about it in which he was told:
There are a lot of problems to get it done because I have to get Greiner to approve it, there are conveyancing matters to be dealt with, Greiner has to send it up to his agents in the Northern Territory, I have to look at it and get it into correct form and all of this we just can’t get done, in the few days remaining, for settlement.
Dew stated that he also pressed Greiner and Richmond to finalise the arrangements but they did not, saying that it was a Northern Territory conveyancing operation and that they would "have to send it up there".
Graham's oral evidence on the events relating to the Sanctuary in the lead up to settlement included that he had been chasing Rathod for a draft shareholders' agreement to be drawn up in Jakarta which would deal not only with the proposed share issue to Owston but also with the Sanctuary. There was never any agreement being drawn up in Jakarta relating to the Sanctuary, as Rathod and Bakrie stated in evidence and Graham must have known. Graham’s evidence in this respect was clearly false and in my view was designed to try and cover the fact that he had been deliberately delaying the finalisation of any agreement in order to frustrate Anderson from achieving his side of the bargain. How he thought he was serving Bakrie and his companies as his employers can only be a matter for speculation. The adverse consequences for all concerned, in terms not least of this litigation, not to mention the various operations at Tipperary, have been considerable.

In Rathod’s memorandum of 11 September 1993, which was produced after Anderson’s meeting with him in Jakarta, he stated, inter alia:
Bakrie will give Anderson 40.815% of the nominated company…For this WPA will pay A$8 million to Bakrie. The A$8 million is to be paid from Dividends of PT Tipperary Indonesia.
At this point in the deal the nominee company was to hold an interest only in Tippindo to which half of Tipperary would be transferred. No other mode of payment was mentioned.
The draft deed prepared in September 1993 incorporated in clause 4 the elements of the agreement as evidenced by Rathod’s memorandum. In part, clause 4 stated that the price of the shares would be paid to Bakrie:
… by applying the dividends paid in respect of the Anderson Shares for that purpose and Anderson shall not be obliged to pay the Issue Price other than by so applying such dividends
There could be no clearer evidence that the agreement, at least at that time, was that the $A8 million was to be paid only from Tippindo dividends.
The applicants submitted that there was nothing in the communications between Bakrie and Graham on 12 November, purporting to set out the elements of the deal that Bakrie wanted, that referred to the shares being anything other than self-funding. The fax from Graham to Dew on that day speaks of the shares being “allocated to Warren” but does not mention any mechanism for Owston or Anderson to pay for them.
On 3 December 1993, after receiving a copy of Graham’s fax at 9:46am, Dew sent a copy to Anderson with a note stating, inter alia: “I need to go back to him with a note to clarify that … the share allocation is to be paid out of dividends.” Dew then spoke to Graham and asked for confirmation that the purchase of the shares would be repaid out of the earnings of the nominee company. Later that day, Graham sent a fax to Dew which stated that it was to confirm their discussion of that morning. It said, inter alia:
It is my understanding…that the payment of shares to be allocated will be paid for out of the earnings of the Nominee company to be formed.
On 13 or 14 December 1993, Anderson met with Bakrie in Jakarta. As part of the discussion between them, Anderson claimed that he asked Bakrie:
Just clarify this $8 million.
and that Bakrie replied:
Don’t worry about that. I will lend you the money and you can pay me back out of dividends.
Manifestly, Bakrie knew Anderson’s difficult financial situation and appreciated that he did not have and was unlikely in the near future to acquire a spare $A8 million to pay for the shares. I do not believe that Bakrie had in mind that Anderson would only be given the shares in some purely nominal sense but would never in fact receive them or acquire the rights that went with them because he could not pay their issue price.
The applicants were also able to point to twelve occasions when, both before and after 23 December 1993, the respondents referred in documents to the share arrangement as constituting a “gift” to Anderson or which used words to that effect. The respondents sought to explain these references as either “wrong” (Bakrie), “sarcasm” (Rathod), or “hyperbole” (Graham). These answers were simply not credible. The overwhelming inference from the evidence is that the issue of 40% of the shares in Branir was to be gift in the sense that the shares were to be “self-funding”. Although the respondents sought to suggest that such an arrangement constituted a change from what might have been contemplated at one stage as being a gift to a position where the shares were offered on terms, in my view the substance of the transaction was a gift from Bakrie to Anderson reflecting their cordial personal relationship and a “payback” or reward for the $US24 million debt Anderson had forgiven in 1992. The gift may be expressed also as an additional consideration for the transfer of the remaining half of Tipperary, and its terms and structure may have been chosen so as to make it compatible with both or either party’s business arrangements. Nevertheless it remained a gift in the sense that Anderson was not going to have to hand over any cash for it. Bakrie’s knowledge that at the time Anderson had no present or likely capacity to pay for the shares other than out of dividends is also influential in this conclusion.
The explanations by the respondents’ witnesses of their respective understandings of this aspect of the transaction were also very difficult to reconcile. Bakrie maintained that he never intended the $A8 million to be repaid solely out of dividends but that it was to be repaid within some undefined “reasonable period”. He maintained that all references to payment solely by dividends were “wrong” or “incorrect” and were contrary to “very clear” instructions he had given. Graham contradicted Bakrie by firstly stating that it was his understanding that the shares were to be self-funding; that is, they were to be paid for out of the dividends and Owston could not be required to pay for them otherwise. Graham then tried to avoid the implications of this statement by saying that he believed that the shares would not issue until the $A8 million was paid. He admitted that, as no dividends could be declared until the shares were issued, this structure would have caused a “Catch-22” situation and meant that the whole transaction was disingenuous and artificial. The statement also conflicted with Graham’s letter to Anderson of 29 July 1994, previously quoted, which outlined his understanding of the limited rights of minority shareholders. As on so many other matters, Graham’s evidence was patently false and I do not accept it. Rathod’s evidence was also unsatisfactory, as he sought to maintain, in the face of documents created by him which stated the opposite, that he had always understood that Owston would be required to pay for the shares within some reasonable period. No one was even able to guess at what the period might have been or what would happen to the shares and the rights they bestowed in the meantime.
It is my view that there was an agreement between the parties that the $A8 million was to be payable only from dividends. It could, but could not be required to, be paid earlier or in any other way. Not only do the facts reveal this term as being the agreement between the parties, the Share letter itself, while not unambiguously stating it, certainly does not contradict the proposition despite its drafts and accompanying conversations showing that the applicants were asserting it. Given the circumstances surrounding its production and the factual matrix against which it falls to be construed, the Share letter should be so understood.
It follows that it is a necessary term of the agreement that the shares were issuable immediately. For if not, there would obviously be no dividends payable and the transaction would be aborted. While that result may have been Graham’s intention, it was not the agreement between the parties. Graham said as much in his 29 July 1994 letter to Anderson earlier quoted. The true understanding between the parties was in any event made clear in Graham’s draft agreement of 2 December 1993 which provided for the nominee company to issue the shares to Owston immediately upon formation. Further, the share scrip was to be lodged with Bakrie as security for the $A8 million, which certainly could not have happened had the shares not been issued.
Branir must be debt free on the issue of shares to Owston
Again it should be noted that the terms of the Share letter do not contain any express provision to contradict this proposition of the applicants, although it is agreed that the Anderson interests had wanted its inclusion. In the first draft of the agreement, there was no reference to this issue at all. One of Dew’s annotations on that first draft read: “V. [Votraint] to be debt free on settlement and must not incur debts other than in normal course of business.” Dew said that he also conveyed this requirement orally to Richmond. The final draft contains the clause:
If Owston accepts this offer, Votraint agrees that Votraint will not incur any additional debts other than in the ordinary course of the business of operating its assets.
In fact neither the evidence nor the submissions reveal the significance of the absence of any debt in Branir at or after formation. The applicants claimed that the failure to refer to this matter in the Share letter was a result of either the adverse circumstances under which the Share letter was drafted or the intent of those responsible for its creation wishing to render the proposed share issue and its consequences as avoidable as possible, or both. If the company could be formed with substantial debt, even in an inter-company sense, Anderson would never be able to pay for the shares from his share of company earnings because the earnings would be committed elsewhere for a substantial time. In this event, he might never actually receive the shares at all.
The applicants also pointed to the communications between the parties in the lead up to settlement. Dew claimed that on 12 November 1993 he had a conversation with Graham in which Dew said: “The nominee company will need to be clean and have no debts.” Graham agreed that this conversation had taken place and that he had said: “It will have its share of Tippindo’s debt.” He explained that he meant “share” in an “accounting” sense. I understood this qualification to mean, as would be the logical reason for the debt free requirement in the first place, that it would be noted in the accounts as an inter-company debt but that repayment would not be required from the ordinary earnings of the company such as would reduce the amount of profits available for distribution at least to the minority shareholder. Specifically this arrangement would not impede the scheme for Anderson to repay Bakrie the $A8 million borrowed to pay for his share from those earnings.
The fax which Graham sent to Dew following this conversation did not accord with their conversation as it included a provision that the shares be held as collateral until the Tovehead debt to BBD was fully repaid. Dew claimed to have clarified this matter with Graham in a further conversation in which he insisted, and Graham agreed, that Votraint be debt free.
On 30 November Anderson met with Graham at the Regent Hotel, Sydney and asked for confirmation that the nominee company would not have any debt when Owston was issued its shares. Graham subsequently sought confirmation from Jakarta on this point and his draft agreement of 2 December, which he stated reflected his understanding of what Bakrie wanted and what had been agreed with Anderson, provided in its first clause provided that the “Nominee company on formation will be free of debt.” Bakrie agreed in cross-examination that this provision accorded both with his instructions to Graham and with his understanding of how the transaction was to be constructed.
On 3 December, during the exchange of communications between Dew and Graham, this issue was raised. After receiving Graham’s fax attaching a copy of his letter of 12 November (which referred to the debts to BBD), Dew sent it on to Anderson with a note saying: “I need to go back to him with a note to clarify that … the debts are not included”. Dew and Graham then had a conversation which resulted in Graham sending a confirmatory fax to Dew later in the afternoon. In part it read: “It is my understanding … the nominee company will itself be free of debt on formation but that the nominee company will share the debt of PT Tipperary Indonesia only.” Anderson also stated that during his conversation with Bakrie in mid-December in Jakarta, he confirmed that the nominee company would not share in Tovehead’s debt to BBD.
The applicants further submitted that there was commercial logic to the calculation of the $A8 million which is consistent with Branir being debt free on formation. The respondents were purchasing Owston’s joint venture assets for $A20 million. In return Owston was to receive a 40% interest in those assets through its shareholding in Branir, for which it was to be required to “pay” $A8 million, which is 40% of the notional asset value of $A20 million. The applicants submitted that this commercial rationale would be defeated if Branir shared in Tovehead’s debt to BBD as Owston’s 40% stake in the company would be worth not the $A8 million it was required to pay, but 40% of $A20 million less the amount of the debt which was substantially more.
The books of Branir in evidence show that the company does in fact owe Nusantara, another Bakrie company, $A20 million plus interest for its loan or advance to Votraint/Branir, described as a subordinated loan, to pay Owston for its half share by assisting Owston and Anderson to pay out BNY. Part of the relief sought by the applicants in these proceedings relates to the removal or satisfaction by the respondents of this debt but the parties agreed in their submissions that this matter did not need to be determined at this time and could await discussion after publication of these reasons for judgment.
In light of the events and communications leading up to the drafting of the Share letter, and Graham’s subsequent admissions, I accept the applicants’ contention that there was a clear understanding that Branir was to be in substance debt free on the issue of the shares to the applicants, presumably so as not to interfere with or impede Owston’s repayment of the $A8 million.
The $A8 million is payable to Bakrie not Branir
Although the Share letter specifically states that the $A8 million is to be repaid to Votraint, the applicants submitted that this direction did not reflect the agreement between the parties. They pointed firstly to clause 4 of the September draft deed, the final agreement between the parties before Macquarie Bank departed the scene. In that clause it was spelt out very clearly that it was “Aburizal Bakrie” who agreed to procure the issue of shares to Anderson, to whom Anderson was to pay their $A8 million price tag, to whom the dividends on the shares were to be paid until $A8 million plus interest had been earned, and with whom the share certificates were to be lodged as security for the debt. Graham agreed that this was his understanding of the agreement that had been reached. Bakrie, however, claimed that this clause was “wrong”, although the provision for the dividends to be paid to him “or as he may direct” was “fine”.
Apart from the attempt to incorporate into the deal the repayment of the BBD Tovehead debt, which they rejected, the applicants submitted that from that point there was no substantial change to the deal at all, including the term that the $A8 million was to be supplied by and repaid to Bakrie. When Graham came to draft the agreement in early December, he used clause 4 of the September deed as a basis for his draft, changing it only to incorporate the BBD debt requirement. Significantly, this agreement speaks of “ARB” (Bakrie) procuring the issue of the shares to Anderson, and Anderson directing payment of dividends to “ARB”. Thus Graham clearly understood at this stage that the money was to be paid directly to Bakrie. As his evidence was that he received no further instructions on this matter, I conclude that this understanding continued up to the time he came to draft the Share letter on 23 December.
Dew obviously believed on 23 December 1993 that the money was to be paid to Bakrie rather than to Branir, as when he marked up the first draft of the letter he crossed out Votraint where it appeared as recipient of the $A8 million and wrote in “Bakrie”. He subsequently wrote in “B” in those terms of the letter which provided for repayment through dividends to “Votraint”. His marginal note, earlier quoted, “Could be anor Bakrie nominee. Depends who is providing the money. Check??”, earlier quoted, also supports this view.
Dew also claimed, as noted earlier in another connection, that in his conversation with Richmond he stated:
I am not particularly happy with the letter. I would like to … make it clear that the funds are being provided by Mr Bakrie and that Warren will have the obligation to repay him and not the company. The funds should be provided by Bakrie as was previously set out in clause 4 of the draft deed…
To which Richmond is said to have replied:
I think it is fairly clear that Bakrie is providing the money and he will hold the shares as security. However I will talk to Chris Greiner and see whether we can make some amendments to satisfy you. However we will not have time to go into much detail before the settlement.
However, when the final draft was presented to Dew, the changes from “Votraint” to “Bakrie” had not been made. The respondents submitted that the terms were subject to negotiation and that this change had not been agreed to. However, Dew’s evidence was that he said to Richmond that:
…it is still not clear that the funds are being provided by Bakrie and that Warren will have the obligation to repay him, not the company.
Dew also related a conversation with Graham on this matter at the time:
Dew:This letter isn’t really adequate as it does not make clear that Mr Bakrie is providing the money,
Graham:I think we all know the money is coming from Mr Bakrie and that Warren will have to pay him back. We can’t do anything about the letter at this stage. In any event the comprehensive agreement is being drafted in Jakarta and we can make it clear in that document.
I accept this evidence not least because of its consistency with so much else. The applicants also relied on numerous references in the communications that passed in the months leading up to and after settlement, which described the share issue agreement as being between Anderson and Bakrie. The respondents rightly retorted that “Bakrie” was often used synonymously with the Bakrie Group of companies and loosely to describe any entity controlled by Bakrie, which in this case could have included the nominee company to be formed. It is therefore difficult to place much weight on these references as indicating anything other than the general nature of the transaction.
More convincing, however, is the fact that if the deal were to be structured so that the nominee company was in effect to lend the $A8 million to Owston for the shares, there would almost certainly be a breach of the provisions of the Corporations Law prohibiting a company financing the acquisition of its own shares. Greiner admitted that he thought it was a “possibility” that the Share letter breached the Corporations Law in this way and Graham said in his evidence that he had received advice that the letter did breach the law.
The evidence supports the conclusion that there was an understanding between the parties throughout the period leading up to settlement that the money would be provided by Bakrie and that the dividends on the shares would be used to repay Bakrie. I accept, on the balance of probabilities, that there was an awareness that to provide for the repayment of money to Branir might have constituted a breach of the Corporations Law, which in my view makes it extremely unlikely to have been the intention or agreement of the parties. I am therefore constrained to find that, although the required amendment was not made to the Share letter, the true agreement between the parties in place by 23 December 1993 was that the $A8 million was to be provided by Bakrie and was to be repaid to Bakrie or his nominee.
Security for the debt
The Share letter was prepared and submitted by the respondents and they must stand or fall by any looseness or incompleteness of its terms and the arrangements put in place for its enforcement. In their final submissions though not in or by evidence, they sought to establish some requirement that, in addition to the share scrip, the applicants supply as security for the $A8 million “such other realisable property as would give the appropriate level of comfort in Branir”. No such interpretation of the Share letter was sought in the cross claim, there was no cross examination or even examination in chief on the matter, and in any event I believe that the contention is unsustainable. So was the companion argument, also raised nowhere but in the respondents’ final submissions, that the deposit of the share scrip constituted some type of equitable mortgage which meant that Owston could only vote its shares as the company directed. As Bakrie well knew that following the December 1993 settlement the applicants had little to offer by way of external or additional security for the debt, and that he himself would be continually or significantly influencing the cash flow into Branir which was to fund the repayment of Owston’s debt, security supplemental to the lodgment of the share scrip effectively had no meaning. It is clear enough that this term of the Share letter was simply allowed to wither. Moreover, a number of pieces of evidence, including the deed drafted by BDW (Greiner) in September 1993, the subsequent document of Rathod given to Anderson in Jakarta and approved by Bakrie, and the exchanges of paper and words between Dew and Bakrie’s representatives on the day of settlement, make clear that the lodgment of the share scrip had been accepted as the only security. As is obvious, it also evidences an intention that the share scrip actually issue.
In summary

In my view, the differences between the agreement alleged and the Share letter raised by the respondents are largely pedantic, discovered in an effort to justify their position. To a large extent, and certainly on the major issues, the respondents do not seriously take issue with the evidence, except in some minor ways. In the main, they did not advocate their witnesses’ evidence, in particular Graham’s and parts of Bakrie’s, as more believable than the applicants, when it might have been expected that a party who was presenting the truth would argue more than simply that the other side had not sufficiently proved its case. Despite some inconsistencies and anomalies, which are hardly surprising given that these events occurred up to 10 years ago, the evidence, including many contemporaneous documents, reveals quite clearly that there was an agreement between the parties which embodied the terms set out in the Branir Shareholding Agreement. I hold that the agreement was binding and enforceable in those terms as from 23 December 1993, and that the Share letter represented a failed attempt to embody that agreement in writing.
CONCLUSIONS
In view of the complexity of this matter, it is not appropriate for me to attempt to frame final orders without hearing submissions following the publication of these reasons for judgment. To assist this process, I propose for discussion a series of draft declarations and orders in Appendix 7. These proposals are not the Court’s final views on the matters concerned. Nor are they intended to be complete. A number of issues remain including specific remedies, the subordinated loan involving Nusatara, the question of ministerial consent for the Sanctuary sub-lease or other exclusive grant, the term of the occupancy of the Sanctuary, and several other matters including costs.
I direct the parties to seek to achieve consent orders and declarations to achieve the results arising from these reasons for judgment. If agreement is not possible, the matter may be mediated by a Registrar or another agreed mediator or may be listed for argument before me on a date to be arranged with the Associate. Whether a mediated or court resolution is sought, the parties are to submit their separate proposed forms of relief five days prior to the resolution proceedings.
I express my appreciation to counsel and their instructing solicitors and clerks for their assistance in this difficult case, and to the parties and their staffs for their many courtesies especially at the hearings in Bali and at Tipperary Station, and in the Court’s inspection of the Sanctuary and Tipperary itself. The applicants' submissions provided a useful description and summary of the development of the Sanctuary which, together with the evidence and my observations at the on-site inspection, I have largely used. I thank those responsible for this contribution to this judgment. Indeed, the submissions of both parties were of a particularly high quality without which, in view of the complexity and detail of the case, these reasons for judgment would not have been achievable in any reasonable time frame or with the same degree of consideration of the issues. I acknowledge the work of those responsible for their excellence.

I certify that the preceding two hundred and seventy-one (271) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marcus Einfeld.

Associate:
Dated: 25 February 2000

Counsel for the Applicant:

Mr J. N. West QC and Mr M. J. Steele

Solicitor for the Applicant:

Deacons Graham & James

Counsel for the Respondent:

Mr B. W. Rayment QC and Mr J. B. Whittle

Solicitor for the Respondent:

Blake Dawson Waldron

Date of Hearing:

31 August 1998

1, 2, 7 and 9 September 1998

28 and 30 November, 1998

1, 3 and 4 December 1998

18, 19, 20 21 and 22 January 1999

20, 21, 22 and 23 April 1999

Written Submissions completed:

30 April 1999

Date of Judgment:

25 February 2000

OWSTON NOMINEES NO 2 PTY LIMITED & ORS v BRANIR PTY
LIMITED & ORS
NG 3184 of 1995
APPENDIX 1
Referred to in the Reasons for Judgment
at paragraph 4
OWSTON NOMINEES NO 2 PTY LIMITED & ORS v BRANIR PTY
LIMITED & ORS
NG 3184 of 1995
APPENDIX 2
Referred to in the Reasons for Judgment
at paragraph 15
OWSTON NOMINEES NO 2 PTY LIMITED & ORS v BRANIR PTY
LIMITED & ORS
NG 3184 of 1995
APPENDIX 3
Referred to in the Reasons for Judgment
at paragraph 20
OWSTON NOMINEES NO 2 PTY LIMITED & ORS v BRANIR PTY
LIMITED & ORS
NG 3184 of 1995
APPENDIX 4
Referred to in the Reasons for Judgment
at paragraph 24
OWSTON NOMINEES NO 2 PTY LIMITED & ORS v BRANIR PTY
LIMITED & ORS
NG 3184 of 1995
APPENDIX 5
Referred to in the Reasons for Judgment
at paragraph 36
OWSTON NOMINEES NO 2 PTY LIMITED & ORS v BRANIR PTY
LIMITED & ORS
NG 3184 of 1995
APPENDIX 6
Referred to in the Reasons for Judgment
at paragraph 55
OWSTON NOMINEES NO 2 PTY LIMITED & ORS v BRANIR PTY
LIMITED & ORS
NG 3184 of 1995
APPENDIX 7
Referred to in the Reasons for Judgment
at paragraph 265
DRAFT ORDERS & DECLARATIONS FOR DISCUSSION
The Sanctuary
The Court declares that there was as at 23 December 1993, and still subsists, an agreement between the parties that subject to ministerial consent being obtained, a lease or other substantial exclusive grant be given to the first applicant over the area of Tipperary Station known as the Tipperary Wildlife Sanctuary plus an additional 20,000 acres adjacent to the Sanctuary (the Sanctuary area) for the purposes of expanding and operating the Sanctuary and building a residence and other necessary buildings, without rental being payable to the first and second respondents. The 20,000 acres are not to include any part of the existing homestead area or mango plantation but is to cover, as closely as possible given the constraints of an appropriate professional survey, the land adjacent to the present Sanctuary (generally known as Stages I, II, III and IV) up to approximately the northern boundary of the paddock known as “Campbell’s” and west of the road as far as necessary to encompass 20,000 acres of the paddocks known as Turkey Flat, Little Gardner, Jumbo, Electric Fence and Boords.
The Court orders that:
1.the parties select a mutually acceptable qualified chartered surveyor to undertake a survey of Tipperary Station, at the cost of the applicants, with a view to delineating an area of 20,000 acres in accordance with this declaration
2.in consultation with the applicants, the first and second respondents take all necessary steps to obtain ministerial consent for the lease or other exclusive grant to the applicants or either of them of the Sanctuary and the additional 20,000 acres delineated by the survey
3.if consent is obtained, the first and second respondents are to take all necessary steps to give effect to the consent including, but not limited to, the preparation and execution of the necessary formal documents in registrable form providing for:
(i)free and uninterrupted access to the Sanctuary area for the applicants and others authorised by the applicants to enter the Sanctuary area; and
(ii)access to water, electricity and other necessary services from Tipperary Station, to be paid for by the applicants at cost

The Shares
The Court declares that there was, as at 23 December 1993, and still subsists, a binding agreement between the applicants and the respondents embodying the following terms:
·     The third respondent will procure the first respondent to issue, and the first respondent will issue, to the first applicant, and register the first applicant as the holder of, such number of shares in the first respondent as will result in the first applicant becoming the holder of 40.815% of the first respondent’s issued share capital (the Shares)
·     The first respondent is to be debt free on issue of the shares
·     The first respondent will not thereafter incur any debt other than in the ordinary course of business of operating its assets
·     In consideration for the third respondent procuring the issue of the Shares and the first respondent issuing the Shares, the first applicant will owe the third respondent the sum of $8 million
·     The $8 million will bear interest at the Indonesian market deposit rate for whichever is the greater of Australian dollars or the equivalent number of rupiahs from time to time averaged quarterly
·     The $8 million plus interest so calculated will be required by the third respondent to be repaid by the first applicant from, and only from, such dividends as may be declared and paid on the Shares from time to time
·     The first applicant will irrevocably direct the first respondent to pay all dividends declared and paid on the Shares from time to time to the third respondent until such time as the $8 million plus interest is repaid
·     Until such time as the $8 million plus interest is repaid, the third respondent is to hold the certificate evidencing the Shares as security for the repayment of the $8 million
·     The first applicant will pay all stamp duty resulting from the issue of the Shares

INTRODUCTION	1
Tipperary	1
The Sanctuary	2
THE DISPUTE	4
THE NEGOTIATIONS IN SUMMARY	4
The 1990 deal	4
After the 1990 deal	7
The Macquarie Bank deal	7
The December 1993 deal	9
After the Settlement	11
PERSONAL RELATIONSHIPS	12
THE CLAIM	20
THE CROSS CLAIM	22
THE SANCTUARY	22
Overview	22
The Facts	23
The 1989 events	23
The Joint Statement of Understanding	27
February 1990 to late 1993	27
September – mid-December 1993	27
Anderson’s meetings in Jakarta	29
14 December – 23 December 1993	34

Before Settlement on 23 December	38
After the Settlement	39
THE CAUSES OF ACTION	44
Threshold Arguments	44
The Crown Lands legislation	44
Private perpetual sub-leases	51
The Statute of Frauds	52
The 1993 settlement documents preclude this action	55
Contract	58
Intention to contract	59
An enforceable agreement	60
The content of the agreement	63
The term of the agreement	65
Estoppel	67
Misleading and deceptive conduct	69
THE SHARES	70
Overview	70
The Facts	72
The Share letter	80
Intention to create a legally binding agreement	84
Was the Share letter an accurate and complete record of the agreement?	84
The Branir Shareholding Agreement	92
$A8 million payable only out of dividends	93
Branir must be debt free on the issue of shares to Owston	97
The $A8 million is payable to Bakrie not Branir	100
Security for the debt	102
In summary	103
CONCLUSIONS	103

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 3184 OF 1995

JUDGE:	EINFELD J
DATE:	25 FEBRUARY 2000
PLACE:	SYDNEY

Counsel for the Applicant:	Mr J. N. West QC and Mr M. J. Steele
Solicitor for the Applicant:	Deacons Graham & James
Counsel for the Respondent:	Mr B. W. Rayment QC and Mr J. B. Whittle
Solicitor for the Respondent:	Blake Dawson Waldron
Date of Hearing:	31 August 1998 1, 2, 7 and 9 September 1998 28 and 30 November, 1998 1, 3 and 4 December 1998 18, 19, 20 21 and 22 January 1999 20, 21, 22 and 23 April 1999
Written Submissions completed:	30 April 1999
Date of Judgment:	25 February 2000