Prominence Apartments Pty Limited v Edgar Yan Kai Hung

[2020] NSWDC 478

District Court

New South Wales

Medium Neutral Citation:

Prominence Apartments Pty Limited v Edgar Yan Kai Hung [2020] NSWDC 478

Hearing dates:

20 July 2020
21 July 2020
22 July 2020
23 July 2020

Date of orders:

23 July 2020

Decision date:

23 July 2020

Jurisdiction:

Civil

Before:

Montgomery DCJ

Decision:

1 The principal proceedings be dismissed.

2 Plaintiffs/Respondents to pay the Applicants’/Defendants’ costs of Notice of Motion filed 5 July 2020.

Catchwords:

Mercantile Law – Contracts – General Contractual Principles – Civil Procedure Act 2005 (NSW) s 73 – Corporations Act 2001 (Cth) s 129 – Principles of Masters v Cameron (1954) 91 CLR 353 – Agreements contemplating execution of formal document

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 73

Corporations Act 2001 (Cth) ss 128, 129

Cases Cited:

Masters v Cameron (1954) 91 CLR 353

Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd (2015) NSWCA 1

Category:

Principal judgment

Parties:

Prominence Apartments Pty Limited (First Plaintiff)

Austcorp Development Fund No.1 Pty Limited (Second Plaintiff)

Edgar Yan Kai Hung (First Defendant)

Austcorp Group Pty Limited (Second Defendant)

Representation:

Counsel:

Mr Lachlan Currie (First and Second Plaintiffs)

Mr Ted Tzorvaras (First and Second Defendants)

Solicitors:

Aptum Legal (First and Second Plaintiffs)

Tzorvaras Legal (First and Second Defendants)

File Number(s):

2019/00126097

Publication restriction:

N/A

Judgment (EX TEMPORE)

MOTION FILED BY THE DEFENDANTS ON 5 JULY 2020

1. These proceedings were listed for hearing commencing Monday, 20 July of this week. The estimate was four days. At the commencement of the hearing, the defendant (and when I say defendant or plaintiff in these reasons, I am not overlooking that in each case, they are in the plural) moved on a Notice of Motion filed on 5 July 2020, prayer 2 of which sought an order that the proceedings be dismissed. The defendants moved on the basis of s 73 of the Civil Procedure Act 2005 (NSW).

2. The defendant’s application was based on the claim that the dispute between the parties to the proceedings was settled on 8 May 2020. Given the importance not only to the parties, but also to the Court, of the determination of this application in the circumstances of the principal proceedings being listed for final hearing, these reasons and this judgment are delivered ex tempore. It is important for the Court to know whether the principal proceedings will proceed by hearing or whether there has been resolution. In the event that the proceedings are to continue for a full hearing of the principal dispute, it would be before another judge.

3. I am not aware that it would not be available for the parties to commence that hearing before a judge even tomorrow, but certainly there have been judges on the reserve list this week. The question in dispute is, as I have said, whether or not a settlement was reached on 8 May. It will be important to refer in these reasons to communications between the parties and in particular, an email by Mr McRobert who is the sole director of each of the plaintiffs, and Chief Executive Officer of an entity of some importance in the determination of these issues, dated 28 April 2020 headed “Terms for Settlement” and directed to Mr Hung, who is the first defendant and was a director of the second defendant.

4. The defendants point to that email of 28 April as an offer, and to Mr Hung's email of 8 May 2020 which they say amounted to acceptance on 8 May 2020. The answer to the question of whether or not the parties reached agreement is to be found by application of the principles stated in Masters v Cameron (1954) 91 CLR 353. The parties referred to the joint judgment of Dixon CJ, McTiernan and Kitto JJ at pp 360 to 364. The parties delivered written submissions at the commencement of the hearing of the Notice of Motion, arguing on the basis of application of those principles. The plaintiff also referred to Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd (2015) NSWCA 1, per Sackville AJA at 59 to 63, with whom Macfarlan and Gleeson JJA agreed.

5. The Statement of Claim was filed on 23 April 2019. Defences were filed on 31 May 2019. Replies were filed on 24 June 2019. However, a detailed description of the principal dispute is not required, given Mr Currie of Counsel for the plaintiffs provided a considered and helpful description of the dispute as background at the opening of the hearing of the Notice of Motion. Mr Tzovaras, Solicitor for the defendants, effectively agreed that Mr Currie's summary was adequate.

6. The plaintiffs bring two claims. The first being by Prominence Apartments Pty Limited, to which I will refer as Prominence against Mr Hung. The second by Austcorp Development Fund No 1 Pty Limited, which I will refer to as ADF, against Austcorp Group Pty Limited, which I will refer to as Austcorp.

7. As to the first claim, Prominence was a corporate vehicle for the purposes of a joint venture between ADF and Austcorp, in the development of 200 apartments. Prominence was owned in almost equal shares by ADF and Austcorp. Pursuant to a power of attorney provided by Prominence to Mr Hung, he was to sell the apartments. He achieved this, but for his failing to achieve settlement of the sale of unit number 2601. In 2009, sale of apartment 2601 was contracted in the sum of $738,500, but that sale did not complete. The purchaser may be referred to for present purposes as TL. Even after an extension of time to complete, TL was unable to raise the funds to complete the purchase. Six years later in 2015 Mr Hung exercised the power of attorney to enter a new contract for sale of land with TL on the same terms and for the same price as the original. The plaintiff asserts that the market value of apartment 2601, for which Mr Hung should have marketed it was, in 2015, $1 million.

8. As to the second claim, ADF asserts that it received an unequal distribution to that received by Austcorp, in the sum of $97,000.

9. In the hearing of the Notice of Motion, affidavits of Mr Hung dated 5 July 2020 and 16 July 2020 were read without objection. The later affidavit was said to be in reply to an affidavit of Mr McRobert dated 13 July 2020, which was read after several rulings on objections limiting it’s admissibility. Mr McRobert was cross‑examined.

10. The positions held by Mr Hung and by Mr McRobert, for the purposes of consideration of the dispute in the Notice of Motion, deserve repeating in more detail. They were that Mr Hung was a director of ADF, Mr McRobert was the sole director of each of the plaintiff companies, and Chief Executive Officer of the Meat Industry Employees' Superannuation Fund. I will refer to that Fund as MIESF. MIESF was the sole shareholder in the second plaintiff, ADF.

11. On 6 February 2020, Mr Hung emailed to Mr McRobert and others a notice of meeting of members of Prominence, proposing a special resolution that Prominence be wound up voluntarily. The meeting was appointed to be held on 6 March 2020, but was adjourned because of the unavailability of some members.

12. In early March 2020, Mr McRobert and Mr Hung discussed by telephone the prospects of agreed terms of settlement of the disputes which are the subject of the principal proceedings. On 6 March, Mr Hung emailed Mr McRobert, and the content of that email presents, in a summary form, an outline of Mr Hung’s communication with Mr McRobert on the telephone. That is, a purported basis for agreement reached by them to resolve the principal proceedings. That email is exhibited EH2‑006 to the affidavit of Mr Hung.

13. The email read as follows:

“Dear Bill,

Follow our productive discussions this week, I would like to summarise our agreement this morning to settle the proceeding (subject to confirmation by your Investment committee on 28 March 2020 together with signing of required documentation) on the following bases:

(1) Prominence Apartments Pty Ltd:

Austcorp Group Pty Ltd agrees to sell all shares in    Prominence apartments Pty Ltd to MIESF for consideration of $1;

(2) Spare Room Holdings Pty Ltd:

Austcorp would assume back the Company, as a Director and then deregister it in future.

Please confirm that it is our agreement and instruct your lawyer to prepare necessary documentation for review.

On top of the above, Austcorp agreed to provide a right for MIESF until 30 April 2020 to request Austcorp to relinquish any right of first and last refusal to [the “Nike Property”] for a consideration of $50,000 + GST.”

14. [It is convenient to refer to the Abbotsford real estate as the “Nike Property”.]

15. Of significance for present consideration is Mr Hung’s reference to terms of discussion of an agreement to settle the proceedings. Also of great significance for consideration of the plaintiff’s argument in the Notice of Motion were the words expressing Mr Hung’s awareness on 6 March at 11.47 that agreement to settle was subject to confirmation, to be obtained by Mr McRobert from the Investment Committee of MIESF. Next, it is significant that Mr Hung’s understanding communicated to Mr McRobert was that the meeting was to be held on 28 March. Finally, of significance are the words, “signing of required documentation.”

16. Naturally, the email is to be read as a whole, and I have identified those passages as of significance in my consideration. Those passages have been most referred to as central to the parties’ arguments regarding the application of the principles of Masters v Cameron.

17. On 13 March, Mr McRobert emailed Mr Hung seeking his confirmation of terms set out therein as “our agreement” as further developed between Mr Hung and Mr McRobert in discussions on 11 March. That email by Mr McRobert is at EH2-009. It is important that I describe the email as if it were set out in this judgment and I will therefore quote the whole of it. As I do so, I make particular reference for attention to the words “I think we agreed to settle”, and to the description of acts yet to occur and documents contemplated including execution of share transfers being completed on signing the agreement, and also to related release documents. I also draw attention to the closing words which request Mr Hung’s confirmation that it is their agreement and, on that confirmation, Mr McRobert’s promise to instruct the defendants’ lawyer to prepare the necessary documentation for Mr Hung’s review.

18. At this point, I interpose, before coming to the document in full length; that throughout the course of the correspondence and right up until a document delivered by the defendants on about 10 June under email at 17.31, being the documents appearing at EH2‑076 to 083, it was expressly and consistently stated in correspondence that it would be Mr McRobert who caused documentation to be provided to Mr Hung.

19. I now quote from the email of 13 March from Mr McRobert to Mr Hung. The email is headed:

“Terms for Settlement ‑ Prominence Apartments Pty Ltd & Anor v Edgar Yan Kai Hung Anor Proceeding No: 2019/126097”

20. The latter number is the number of these proceedings. The email below that heading reads:

“Dear Edgar.

Further to our telephone discussion on Wednesday 11 March 2020, I think we agreed to settle the proceedings, subject to execution of share transfers being completed on signing the agreement and any related release documents to achieve the following:

1. Prominence Apartments Pty Ltd (‘Prominence’)

Austcorp Group Pty Ltd (“Austcorp”) agrees to sell of its shares in Prominence Apartments Pty Ltd to Austcorp Development Fund No.1 Pty Ltd (‘ADF’) for the net asset value of those shares totalling an amount of $5,948,555.00 and that the proceeds from the sale of the shares to be received by Austcorp are applied to the repayment of the loan due from Austcorp to Prominence amounting to $6,039,988.24.00 as at 30/6/2019. In consideration for receiving the amount of $5,948,555.00 from Austcorp, Prominence would agree to forgive the balance of the debt from Austcorp in the amount of $91,433.24.

1. Spare Room Holding Co Pty Ltd

Meat Industry Employees’ Superannuation Fund Pty Ltd (‘MIESF’) agrees to sell all of its shares in Spare Room Holding Co Pty Ltd to Austcorp Group Pty Ltd for $3. Austcorp will indemnify MIESF and William McRobert against any claims that may emerge relating to Spare Room Holding Co Pty Ltd. In conjunction with this agreement MIESF would agree to sell all of its units in the Spare Room Property Unit Trust to Austcorp Group Pty Ltd for $1 and Austcorp would indemnify MIESF and William McRobert against any claims that may emerge relating to the Spare Room Property Unit Trust.

1. Austcorp agrees to assign its Right of First and Last Refusal to [the Nike property] for a consideration of $30,000 plus GST payable by MIESF to Austcorp.

Please confirm that it is our agreement and I will instruct our lawyer to prepare the necessary documentation for you to review.

I have attached draft financial statements for Prominence for the year ended 30 June 2019 for your information.”

21. I also draw attention to the requirement for an indemnity between Austcorp and MIESF and William McRobert stipulated in the term or provision number 2 relating to the Spare Room Holding Company Pty Ltd.

22. I observe that the terms of agreement recorded in Mr McRobert’s email of 13 March were far more developed than those in Mr Hung’s email of 6 March, including in regard to both the provision for Austcorp to divest, by sale, shares in Prominence, and that the sale be to ADF (the wholly-owned MIESF entity), rather than as in the earlier proposal for sale directly to MIESF. There is also adjustment of consideration.

23. The second proposal or term concerning Spare Room Holding is far more developed, and as I have identified, refers to the provision of an indemnity.

24. The third term or provision concerning the Nike property right of refusal requires it to be assigned to MIESF rather than as earlier proposed that Austcorp would relinquish that right. The consideration has also been varied from $50,000 to $30,000.

25. On 16 March, Mr Hung sought clarification from Mr McRobert of points made in his email of 13 March, to which I’ve just referred. This query concerned tax consequences of the proposed transaction and the opportunity to benefit from a franked dividend. He queried the Spare Room Holdings term, questioning how Austcorp would provide an indemnity whilst MIESF had control of the company.

26. Mr Hung’s email concluded with the words, “Please make sure your lawyer will incorporate above on the settlement deed.” This statement is the most specific in all of the correspondence between the parties of the contemplation of something more than what might be generally considered everyday transactional documentation. The significance of that observation is that the plaintiffs submit that these communications by email could not have made a final agreement pursuant to which the parties intended to be bound under the first two of the three categories of principle in Masters v Cameron, because there was yet to be substantial documentation from lawyers. In other words, that so much as was communicated, did not express a contract to be bound, but rather contemplated further agreement.

27. This is why I emphasised both in the 13 March email from Mr McRobert to Mr Hung, and in Mr Hung’s email of 16 March reference to the requirement of indemnity. In the all-important, in the sense of being the document of greatest focus of the parties in this dispute under the Notice of Motion, email from Mr McRobert to Mr Hung of 28 April 2020; the requirement for the provision of an indemnity disappeared. It was no longer part of what Mr McRobert referred to in his oral evidence as the “package” for settlement under consideration. The removal of that requirement would assumedly remove the activity of drawing a document of indemnity, being a task which worldly experience would acknowledge is usually sensibly undertaken by lawyers.

28. By email of 17 March, Mr McRobert informed Mr Hung that, on the basis of accounting advice received by him, the matters raised by Mr Hung’s email of 16 March would provide “no value” for MIESF. Mr McRobert stated bluntly “We do not have a deal unless it is in accordance with my email to you”: EH2017. The email to which Mr McRobert referred was, of course, his email for 13 March, to which I have above referred. The parties continued to negotiate in contemplation of resolution of these proceedings. Mr McRobert wrote, “if there is no deal, then you need to get your evidence together and we shall meet in Court on 20th July. I pay the setting down today.”

29. In my opinion, the relevance of Mr Hung’s email to Mr McRobert of 16 March 2020 and Mr McRobert’s email of 17 March to Mr Hung is that they show that each of those individuals continued to negotiate with reference to settlement, including on the understanding that eventual documents would be drawn by lawyers instructed by Mr McRobert.

30. By email of 8 April at 13:02, EH2026, Mr McRobert emailed Mr Fisher, copying in Mr Hung. Mr Fisher is understood, from the evidence, to have been an accountant with whom each of Messrs Hung and McRobert communicated as to the tax and other financial consequences surrounding their negotiations. The email stated that it included Prominence draft accounts for 30 June, Prominence 2018 tax return, and Prominence accounts for 30 June 2018. In addition, at a paragraph commencing with the numeral 4, stated, “Email string that shows the offer I have made to settle the dispute – see my email dated 13 March 2020 at 2.48pm.”

31. That email, being an email communicated directly with Mr Hung, obviously post‑dates 28 March, being the date when, on the evidence, it was contemplated by the parties that Mr McRobert would meet with the Investment Committee, or on his own evidence, the Board or the Committee of MIESF. There is no evidence of communication to Mr Hung that that meeting did not take place, that Mr McRobert did not seek and obtain that confirmation for his dealings, or not obtain authority to deal.

32. The proposition that Mr Hung was expected to continue under the presumption or understanding that things put to him by Mr McRobert in these strong terms, clearly stating agreement and settlement after 28 March, were only made on a silent assumption that he had to obtain confirmation is, with respect, beyond and less than speculation. Indeed, this clear expression on the evidence, when viewed chronologically in the emails, is evidence that such a presumption was plainly rebutted by Mr McRobert’s own expressed language.

33. On 19 March, Mr Hung emailed Mr McRobert, confirming that he had spoken with Mr Fisher, and asking him to contact Mr McRobert. The purpose being to “work out any common ground to get this matter sort out”. The email refers to delays which might be caused to the hearing in this court, by the COVID situation. Between 19 March 2020 and Mr McRobert’s significant email of 28 April 2020 at 14.38, both Mr McRobert and Mr Hung contacted Mr Fisher regarding accounting and tax issues concerning the entities and they did so openly to each other.

34. I will continue delivery of judgment at 10.30 tomorrow morning. Before I leave the bench, the result of the Notice of Motion will be that agreement was reached and the order consequent of that will be: proceedings dismissed. I say this now in the same spirit as that upon which I have embarked upon an ex‑tempore judgment; that being for the efficiency of the conduct of litigation in the court. I will go to the List Judge and inform him of that fact and therefore, this matter will not be allocated a judge for hearing tomorrow.

ADJOURNED TO THURSDAY 23 JULY 2020 AT 10.30AM

35. Mr McRobert’s email to Mr Hung copied to Mr Fisher and dated 28 April 2020 was sent at 14.38. This judgment attempts to describe the document as if it were set out here and contemplates the document as it appears at EH2-031. The document read in its heading in bold lettering, “Terms for Settlement - Prominence Apartments Pty Ltd and Anor v Edgar Yan Kai Hung and Anor Proceedings Number 2019/126097”; that number being the number of the proceedings in this Court. Below the heading, it read;

“Dear Edgar.

Further to my telephone discussion with David Fisher earlier today, he advised me that you will now agree to settle the proceedings, subject to the execution of share transfers being completed on signing the agreement and any related release documents to achieve the following;

1. Prominence Apartments Pty Ltd (“Prominence”)

Austcorp Group Pty Ltd (“Austcorp”) agrees to sell all of its shares in Prominence Apartments Pty Ltd to Austcorp Development Fund No.1 Pty Ltd (“ADF”) for the net asset value of those shares totalling an amount of $5,948,555.00 and that the proceeds from the sale of the shares to be received by Austcorp are applied to the repayment of the loan due from Austcorp to Prominence amounting to $6,039,988.24 as at 30/6/2019. In consideration for receiving the amount of $5,948,555.00 from Austcorp, Prominence would agree to forgive the balance of the debt from Austcorp in the amount of $91,433.24.

2. Spare Room Holding Co Pty Ltd

David Fisher will prepare and lodge tax returns for 2015, 2016, 2017, 2018 and 2019 (signed by me) for the Spare Room Property Unit Trust and then wind up and deregister Spare Room Holding Co Pty Ltd. Meat Industry Employees’ Superannuation Fund Pty Ltd (“MIESF”) will pay David Fisher fees of $2,000 plus GST to complete these tasks. Austcorp agrees to sign all paperwork required to have this completed.

3. Austcorp agrees to assign its Right of First and Last Refusal to [the Nike property] to MIESF for a consideration of $30,000 plus GST payable by MIESF to Austcorp.

Please confirm that it is our agreement and I will instruct our lawyer to prepare the necessary documentation for you to review. Please note that this offer is conditional on the above matters being completed by 1 June 2020.

I have attached draft financial statements for Prominence for the year ended 30 June 2019 for your information.”

36. Before returning to the provisions numbered 1, 2 and 3, it is relevant for present consideration to observe that;

1. The email acknowledged and communicated to Mr Hung that the provisions 1, 2 and 3 were to achieve a commercial result for settlement of these proceedings previously described by Mr Fisher as agreeable to Mr Hung;

2. The documentation, referred to and completion of which the agreement was “subject” to, included execution of transfers being completed on signing the agreement, plus any release documents related to achieving settlement on those three provisions;

3. The email asked for Mr Hung to confirm that the terms of the email were “our agreement” and promised that on receipt of that confirmation, Mr McRobert would instruct the defendant lawyer to prepare the necessary documentation for Mr Hung to review.

37. Again, Mr McRobert’s communication was in unqualified terms of agreement and of settlement. In oral evidence, he conceded that he drew the document carefully. No mention was made of him having to obtain confirmation from MIESF’s Investment Committee or Board.

38. It is convenient to now immediately deal with one argument advanced by the plaintiffs. It was put that the last sentence of the penultimate paragraph which provided that the offer was conditional on all matters being completed by 1 June 2020 was a condition making time of the essence of the contract. In these reasons, I will come to the email dated 8 May which the defendants rely on as communicating acceptance of the offer made in Mr McRobert’s 28 April email. But before doing so, I will address Mr McRobert’s email dated 6 May 2020. That is, an email from Mr McRobert dated just two days before Mr Hung’s acceptance which was sent to both Mr Hung and copied to Mr Fisher. EH02-35 varied that provision of the offer by stating that, “These terms will be amended if they cannot be implemented by 1 June because MIESF will incur extra costs for accounting and legal fees.”

39. Therefore, Mr Hung’s email of 8 May could only have accepted an agreement, a term of which was that if provision 1, 2 and 3 were not completed by 1 June, some minor adjustment would be made only for the additional cost of accounting and legal fees incurred by the delay. It was submitted for the defendants, the applicants in the Motion, and I accept, that the evidence does not disclose anything about those three steps which would be expected to cause these commercial parties to require more than that period to achieve those steps.

40. One minute after forwarding to Mr Hung his email of 28 April (which hereafter I refer to as the “Terms for Settlement” email), Mr McRobert emailed Mr Fisher, copying Mr Hung, exhibit EH 33. By this second email of 28 April, Mr McRobert instructed the carrying out of the preparation of tax returns for the Spare Room Property Unit Trust, and that:

“Once these returns have been finalised and lodged, then you will make an application to have the Trustee Company – Spare Room Holding Company Pty Limited, deregistered with ASIC.”

41. The email promised that MIESF would pay Mr Fisher’s fee of $2,000 plus GST for this work. That much of the email was an instruction from Mr McRobert to Mr Fisher for the fulfilment at provision 2 in Mr McRobert’s 28 April Terms for Settlement email. The provision 2 did not require performance by the defendants. In his evidence, Mr McRobert referred to it in this way. Given the email was sent to Mr Fisher and copied to Mr Hung only one minute after that Terms for Settlement email, which described itself as setting out terms agreeable to Mr Hung as informed by Mr Fisher, it is not surprising that the concluding paragraph stated:

“I am agreeing to this process on the understanding that Edgar will agree to the settlement terms for Prominence, and [the Nike property] that I said to him on 13 March 2020 and have just sent to him to confirm his agreement.”

42. The provisions 1 and 3 in Mr McRobert’s 13 March email which I have set out above, and the provisions number 1 and 3 in his 28 April Terms of Settlement email which I have also set out above, or identical. Accordingly, in that last paragraph, Mr McRobert informed Mr Hung that he was instructing the deregistration of The Spare Room Holding Company in fulfilment of the provision 2 of his earlier email of 28 April in consequence of his understanding that Mr Hung would agree to those terms 1 and 3.

43. Again, the plaintiff’s argument that Mr Hung ought to have suspected that Mr McRobert’s offer in the “Terms for Settlement” email on 28 April was subject to Mr McRobert receiving authority from MIESF Investment Committee or Board is not to be accepted against the clear communication by Mr McRobert to Mr Hung that in fact he had instructed the carrying out of the process to deregister that company on his understanding that Mr Hung would agree to those terms. In short, on his understanding that settlement would be confirmed, he had instructed commencement of performance of the deal.

44. Mr McRobert’s email to Mr Hung of 6 May, EH 2‑35, enquired why Mr Hung had not replied to Mr McRobert’s Terms for Settlement email of 28 April and stated:

“Am I to assume that you are no longer interested in settling this matter on the terms described below.”

45. The ”terms described below” was a reference to his 28 April Terms of Settlement email which appeared below in the email trail.

46. On 8 May 2020, at 15.17, Mr Hung emailed Mr McRobert. This is the email by which, on the applicant’s/defendant’s submission, they accepted the plaintiff’s offer conveyed in Mr McRobert’s Terms of Settlement email of 28 April with the variation for time of performance in his email of 6 May. I read Mr Hung’s email in full, considered as it has been in this judgment in the form it appears at EH‑251. The email is on Austcorp heading and is titled “Terms for Settlement-Prominence Apartments Proprietary Limited and Another v Edgar Yan Kai Hung, proceeding number 2019/126097.”

"Dear Bill,

Got some feedback from David Fisher:

“In our original discussions you asked as to what benefit MIESF would receive if they maintained the Company and took advantage of the total Franking Account. Thus. In formulating my response I assumed that Prominence would be continue to be operated by MIESF and potentially derive further income. I now note that this is not the case and as such the methodology and calculations are different…”

I believe that to pin down everyone to get the real picture will cost more time and money which may not worth.

I am older since yesterday (my birthday), may be just get this matter wrap up and move on.

Please prepare the documents for signing.”

47. Signed by Mr Hung as Chief Executive Officer of Austcorp, the email is to be read as a whole. Despite use of the words “may be”, in my opinion it conveys a clear expression of acceptance of those terms. Indeed, the colloquial expression “wrap up” written by Mr Hung is similar to the colloquial expression “package” spoken by Mr McRobert during oral evidence when referring to the intended effect of those terms.

48. As with Mr McRobert’s email statements referring to the provision of documentation, Mr Hung invites Mr McRobert to prepare “the documents for signing” and there is no reference to any issue or further term requiring further negotiation before agreement. On the same afternoon, Mr McRobert responded to Mr Hung and the correspondence continued under the letterhead including “Terms for Settlement” of these proceedings, simply stating:

"Thanks for that.

Not just older but you seem to be wiser!!

I will get the release document prepared.”

49. It is significant for the application of Masters v Cameron principles that the only document the subject of comment about being “prepared” was a document of release. In respondent plaintiff written submissions, MFI 2, at paras 11 to 14, it was submitted that references to “signing of required documentation” and to Mr Hung having an opportunity to “review documentation in the above referred to correspondence,” were words to be considered as if “subject to contract” or to be construed as making agreement in the terms described in Mr McRobert’s Terms for Settlement” email dated 28 April, conditional upon the execution of formal documentation of contract.

50. I have already observed that the transfer of shares between the parties identified, for the prices identified in provision 1, without evidence otherwise, would be understood to be reference to fairly standard form documents for the conveyance of shares and without complexity inferring something further to be agreed and expressed in a formal document of contract, or inferring that the parties agreed not to be bound until executing a formal contract.

51. In my opinion, the words in Mr McRobert’s 28 April Terms for Settlement email, “subject to execution of share transfers being completed on signing the agreement”, are to be construed as providing the timing for the wrap-up. Likewise, in the absence of evidence to the contrary, documentation effecting transfer of the proceeds from the sale of shares to ADF, in the specified sum, with forgiveness of balance to expunge the debt owed by Austcorp to Prominence, would be uncomplicated, straight-forward and might even be produced by Prominence and ADF, of which companies Mr McRobert was sole director.

52. The proposition submitted by the Respondent Plaintiffs was that the substance of the proposed documents of release was such that; either matters must be taken to have been still in the train of negotiation, or that either party reserved to themselves the right to retire from the contract. The argument is put in the absence of other evidence as to what might have been contained in those releases, other than the extrinsic evidence of formal documents of settlement which each party subsequently delivered to the other.

53. Likewise, term 3 in Mr McRobert’s Terms for Settlement email of 28 April, in the absence of evidence to the contrary, contemplated only a fairly everyday document of conveyance of an interest of a right in land between named parties for a specified price.

54. Mr McRobert’s later email to Mr Fisher, copied to Mr Hung, also of 8 May, EH2‑057, is not inconsistent with a contract having been made. This is because Mr McRobert wrote, “Edgar has agreed to the settlement terms, so please go ‘full steam ahead’ on the Spare Room job”, and referred to his email to Mr Fisher, also copied to Mr Hung and sent one minute after his 28 April Terms for Settlement email to Mr Hung, which I referred to earlier.

55. Mr McRobert did not send, as his earlier emails promised to do, the documentation and so on 21 May, EH2-061, Mr Hung wrote asking when the plaintiffs might receive, “the first draft of the documents? I thought you want to get it done on 31 May 2020!”. Mr McRobert’s response to Mr Hung in relation to both Mr Hung’s emails of 8 and of 21 May was his email of 28 May, which forwarded a Deed of Settlement and Release, EH2‑068 to 074.

56. There is no dispute that this document was not in identical terms to those contained in Mr McRobert’s Terms for Settlement email of 28 April. In particular, at cl 2, it required Austcorp to make a cash payment to ADF of $100,000 and for Mr Hung to make a cash payment to Prominence of $60,000.

57. Otherwise, on the question of documentation to follow Mr McRobert’s Terms of Settlement email of 28 April and Mr Hung’s email of 8 May, the content and style of these documents infers nothing of complexity requiring further negotiation or for them to reserve pending the important expression of their resolution. The document described the agreement between the parties, including the party not named in the proceedings, MIESF, to settle the claims in these proceedings without admission.

58. The document annexed something identified as the “Abbotsford Deed” which is not included in the exhibits before the Court, but provision 2.1.5 infers that provision 3 of the 28 April Terms of Settlement email required not more than Austcorp forfeiting its rights in the Nike property.

59. Most importantly, the releases set out in cl 3 are in stock standard form for parties resolving a commercial litigation. This is my view even though the document includes at cl 4, provisions for the event of default including for default judgment against Austcorp and against Mr Hung for the above stated amounts. In my opinion, that clause is of little moment here because it is an additional and a policing provision but not something necessary or inherent in the transaction described in Mr McRobert’s 28 April Terms for Settlement email.

60. That the document made place for signature by director and secretary of MIESF is not, in my opinion, a matter of substance but rather of mere formality. It is not evidence that Mr McRobert was not authorised and did not have power to bind MIESF on 28 April. He was already listed as a signatory for Prominence and for Austcorp in the document, and it may have been thought tidy or a matter of commercial courtesy that a director and secretary of MIESF sign for that entity.

61. Likewise, the content and style of the document of agreement forwarded by the applicant defendants annexed to the plaintiff’s email of 10 June 2020, EH2-076 to 083, displays no such complexity.

62. The plaintiffs submitted that cl 3(2) expresses different terms for the sale of shares and for forgiveness of the debt described in provision 1 of Mr McRobert’s 28 April Terms for Settlement email. In his affidavit of 5 July 2020 at para 10, Mr Hung said that the document was drawn by his lawyer. On the basis of my above described understanding of what was required for performance of provision 1 and now noting that cl 3(2) describes the transfer of shares and price of that sale in identical terms but thereafter without specific reference to repayment of debt and instead of extinguishment of all claims between Austcorp and Prominence, I am satisfied that there is no substantial difference or indeed complexity of relevance.

63. Both the plaintiffs’ proposed document of 28 May and the defendants’ proposed document of 10 June are expressions made after the event and I repeat, extrinsic evidence admissible on the question of whether or not a contract was made at that earlier time. My conclusion is that the content and style of each of the documents further satisfies me that the whole of the transaction was negotiated and agreed on Mr Hung’s 8 May acceptance of Mr McRobert’s 28 April Terms for Settlement email, and that the “necessary documentation” referred to in Mr McRobert’s Terms of Settlement email was not a reference to an intention to agree at a later time when formal documentation of agreement was available.

64. For the reasons I have given to this point during my analysis of the communications and of the affidavit evidence, I find that on 8 May 2020, the parties made a contract, the substance of which contained the whole of the terms of their agreement in contemplation that documents of regular formal legalese would follow, but that they did not intend to reserve the point of being bound by contract to that later event.

SHORT ADJOURNMENT

65. In my opinion, the parties’ agreement falls into the second category described by the Masters v Cameron principle. I find that the parties completely agreed upon all the terms of their bargain and intended no departure from or addition to that which their agreement terms expressed or implied, but nevertheless, made performance conditional upon execution of the transfers of shares and of rights and forgiveness of debts, which documents were a formal legalese only including releases, as I have reasoned.

66. I want to say more, because of the attention the parties gave two issues, about credit of Mr McRobert, and also the question of his authority.

67. Mr McRobert displayed during the answers which he gave not just an understanding of the issue being whether or not settlement was reached under the terms of his 28 April Terms for Settlement email, but also a willingness to argue rather than to provide the most accurate answers he could to questions asked. An example of this appears at transcript pp 66 to 67. In that passage, the cross-examiner had put that the proposed Terms For Settlement forwarded by him to Mr Hung on 28 May, being his first response to Mr Hung’s requests after 8 May for documentation of the settlement, was a renege. Mr McRobert described his 28 April Terms for Settlement email as “the previously considered package”.

68. When the cross-examiner merely asked Mr McRobert to confirm that the “package” to which he was referring was that described in his 28 April 2020 email, Mr McRobert at transcript p 66, line 20 spoke the following argument which went beyond the required response:

"Q.   By “the previously considered package” you are referring to the terms of settlement set out in your email to Mr Hung on 28 April 2020. Is that what you’re referring to?”

69. I interposed, “Plainly the question deserved a yes or no answer,” but instead received the following:

"You keep on saying ‘settlement’, of course, I don’t accept that. But you’re referring to the correct email.”

70. Indeed, the deliberateness of the argumentative answer is revealed by the fact that Mr McRobert headed in bold type his 28 April email “Terms for Settlement - Prominence Apartments Proprietary Limited” and reference to these proceedings as I have earlier described by my reading of it onto the transcript.

71. Even after I addressed this fact to Mr McRobert, mistakenly referring to the heading as “Terms of Settlement,” and asked him to refrain from argument, but to provide an accurate answer, he gave the following evidence of correct reference to his email, but did so in the course of his argumentative purpose of promoting that it was not a settlement in fact. His evidence at transcript 67 line 20 was:

"Q.   They are the terms of settlement, aren’t they?

A.   Terms for settlement, yes.”

72. This was not the only point in the oral evidence where I thought it was required, or on objection of the cross-examiner, was required to direct Mr McRobert to stop arguing this case and to answer the question, giving the best and most accurate answer that he could.

72. In my consideration of the evidence, I have had the opportunity of what has been a course of communication by email. Some caution is required in acceptance of Mr McRobert’s evidence orally and by his affidavit, but because the communication has been by email, this consideration has not been determinative. It should be noted that this judgment has not been achieved only on a basis of consideration of the credit of Mr McRobert. The emails, as I have explained, are consistent with his having control, but more importantly, they objectively speak to the reader standing in position of the parties, that he intended the plaintiff companies and MIESF, to be bound.

73. I have noted particularly the significant fact that his 28 April Terms for Settlement email followed a course of he and Mr Hung dealing with Mr Fisher and developing the terms of the settlement during a period in which, according to the evidence, Mr Hung understood on 28 March that the Investment Committee meeting of MIESF had occurred. This means that, to the objective reader of the communications, the 28 April Terms for Settlement email was an expression of the terms after the event of that meeting.

74. That brings me to the question specifically of Mr McRobert’s authority to enter a binding settlement on behalf of the plaintiffs and MIESF. But most particularly, this was pressed by the respondent plaintiffs in relation to his authority to bind MIESF. In his affidavit at paragraph 14, Mr McRobert stated that he did not have authority to bind MIESF to an agreement to settle the proceedings. Following objection, that paragraph was read only as evidence of his state of mind. There is no direct evidence of the fact of Mr McRobert’s authority to bind MIESF such as might normally be found in the documents constituting MIESF or otherwise the documents of MIESF regulating Mr McRobert’s authority.

75. The plaintiffs rely on Mr Hung’s email of 6 March, which acknowledged Mr Hung’s understanding at that time that the proposal for resolution discussed between himself and Mr McRobert, as referred to in his email, was subject to confirmation of the Investment Committee of MIESF, for which entity Mr McRobert was CEO. With reference to Masters v Cameron, the plaintiffs put that, from that point and throughout the communications between Mr Hung and Mr McRobert, the presumption continued that the propositions for settlement put by Mr McRobert were not binding until Mr McRobert had obtained authority from the Investment Committee or Board of MIESF to bind it. Mr McRobert gave evidence that he would not take to the Board a proposal which was not already the subject of accounting and legal advice.

76. With reference to the provisions of ss 128 and 129 of the Corporations Act, the plaintiffs put that having been informed that Mr McRobert required that confirmation, Mr Hung was not entitled to make the assumption that simply because Mr McRobert was CEO he could bind MIESF. The plaintiffs put that at no point in his evidence did Mr McRobert directly concede that his offers of settlement or communications acknowledged settlement binding on MIESF. It was put that this was reflected in passages of his emails, such as his email 28 April 2020, when he carefully used words to communicate with Mr Hung, such as:

“Please confirm that this is our agreement, and I will instruct our lawyers to prepare the necessary documentation for you to review.”

78. This issue is also to be considered in the context of the roles Mr McRobert had which he described as “wearing lots of hats” (transcript page 71, line 23). Those roles included him being CEO of MIESF as well as sole director of Prominence, ADF, and the Spare Room Holding Company Propriety Limited (i.e. all the entities on the plaintiff’s side of the ledger of the transactions subject to negotiation).

79. I do not accept the plaintiffs’ argument for the following shortly stated reasons:

1. For the reasons given, I weigh the affidavit and oral evidence on the point given by Mr McRobert with caution;

2. The evidence to which the plaintiff points as the basis for the presumption, that is, Mr Hung’s email of 6 March, contemplated as I have said that the Investment Committee of MIESF from which Mr McRobert required confirmation was to meet on 28 March and, therefore, it is consistent with the very presumption that his email of 28 April headed, as it was, “Terms for Settlement”, and asking for Mr Hung’s confirmation of their “agreement”, was communicated with that authority because it post-dated that meeting;

3. More importantly, to the objective bystander in the position of Mr Hung, there is nothing in the evidence of Mr McRobert or the emails which would have communicated to Mr Hung that Mr McRobert had not taken the terms set out in his 28 April Terms for Settlement email to the Investment Committee or Board of MIESF.

80. In his affidavit at para 16, Mr McRobert stated that he had never asked the MIESF Investment Committee or Board for approval to enter an agreement with the defendants. However, the evidence does not establish that Mr Hung was to know that. When challenged repeatedly during cross-examination that the terms of his 28 April Terms for Settlement email were terms of settlement, Mr McRobert did not answer that he informed Mr Hung that it was a proposal only and that he was not authorised to bind MIESF until he had received approval to do so from the Committee or Board. The general nature of his evidence was as given at transcript page 67, lines 44 to page 68, line 11, and at transcript page 64, line 45 to page 65, line 2. His evidence there was:

"Q.   Mr McRobert, please ignore my earlier question which I withdraw. I’m putting to you this. That is email, at p 31 of the exhibit, this email from you to Mr Hung of 28 April 2020 comprises the terms of settlement that you and he agreed upon for the settlement of these proceedings that would then result in the dismissal or [dis]continuance (sic) of these proceedings. That was your understanding when you prepared this email, wasn’t it?

A.   Subject to legal advice.”

Q.   You then conclude in this email that a request to Mr Hung to confirm that it is ‘our agreement’, that is yours and his agreement, that is set out above that paragraph that is set out in the email, that’s what you did, that’s what you do there. You asked him to confirm your and his agreement to those terms of settlement.

A.   Yeah. He - if he - it says, ‘Please confirm’..

Q.   No. Please answer the question. The words, I’ll read them, ‘Please confirm that it is our agreement.’ Pausing there.

A.   That’s what the words say.”

81. Immediately after this evidence, Mr McRobert gave non-responsive answers and then at transcript page 68, line 30, agreed that when he wrote his 28 April Terms for Settlement email, he exercised care to ensure that it was accurate in what he intended to say.

82. At the referred to passage at transcript page 64, the following evidence was given by Mr McRobert:

"Q.   So the terms had been agreed, not considered, but agreed upon between you and Mr Hung. That was the position, wasn’t it?

A.   Terms have been agreed subject to documentation and legal advice.

Q.   Documentation that you did not instruct your lawyers to prepare.

A.   Yes, I did. I’m sorry I misled the court earlier when you were asking me about had I instructed lawyers. I did seek to instruct lawyers and they gave me advice that it was not sound..”

83. That parties might obtain private advice from lawyers or accountants which might cause them to rethink the worth of the terms of agreement already made is not a basis for setting aside an intention at the time the contract was made to be bound. The passages I have just quoted are examples of that which I referred to earlier as my observation that despite numerous opportunities to do so, Mr McRobert did not identify, and nor does the evidence before me otherwise identify any documents of complexity or sophistication in support of the respondent plaintiffs’ argument that the communications of 24 April and 8 May to the objective reader in the position of the parties do not evidence an intention to have binding effect.

84. The evidence does not identify other matters or regulatory provisions required to be introduced into some subsequent formal document. Simply put, the evidence on the balance of probabilities is against the proposition that the parties, or either of them, reserved to themselves a right to withdraw at any time until the final document was signed.

85. Mr Hung was entitled to make the assumptions in s 129 of the Corporations Act at the time of those dealings post‑dating 28 March; because unlike at the earlier time of 6 March, the objective reader of these communications would not know or suspect that the assumptions were incorrect.

86. That brings me to the orders which I make. I make an order, in accordance with Prayer 2 of the Notice of Motion; that the proceedings be dismissed. The consequence of this order is that I acknowledge that the fixture for hearing of the principal proceedings, commencing on 20 July 2020, be vacated.

87. On the question of costs, the defendants sought, as applicants of the motion, costs following the event of their success. The plaintiffs responded with arguments, the first of which referred to the content of the applicant defendants’ email of 17 June 2020, proffering a form of resolution which the plaintiffs could not expect to meet. In my view, nothing turns on that email. The plaintiffs then submitted that the defendants had wasted time on various objections to Mr McRobert’s affidavit, and caused the expense of extending the hearing, in that it was extended to three days. The plaintiff argued that it might have been properly prosecuted in one day, had that prosecution been efficient.

88. In my view, the parties joined in all issues. The plaintiffs, in response to the Notice of Motion, put the defendants, as applicants in the Notice of Motion, to proof of all issues. The appropriate order for costs is that the costs of the Notice of Motion follow the event on the ordinary basis.

ORDERS

89. The final orders I therefore make are:

1. The principal proceedings be dismissed.

2. Respondents/plaintiffs pay the applicants’/defendants’ costs of the Notice of Motion filed 5 July 2020.

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Decision last updated: 25 August 2020