Raptis v Wija Investments Development Pty Ltd

[2007] NSWSC 924

CITATION:	Raptis & Ors v Wija Investments Development Pty Ltd [2007] NSWSC 924
HEARING DATE(S):	09/08/07
JUDGMENT DATE :	28 August 2007
JUDGMENT OF:	Gzell J
DECISION:	Declaration that plaintiffs have a caveatable interest in the land being a present equitable charge to secure their entitlements under the deed.
CATCHWORDS:	CONTRACTS - General Contractual Principles - Construction and Interpretation of Contracts - Whether consideration for sale of shares included a choice of two units in a prospective site development in addition to the cash consideration in the share sale agreement - Whether a deed containing the entitlement to the two units was executed on behalf of the defendant - Whether the deed was void for uncertainty - Whether the obligation only arose if the defendant chose to develop the site - Whether the entitlement to lodge a caveat only arose when the defendant was in default - Whether the defendant was in default by contracting to sell the land undeveloped
LEGISLATION CITED:	Real Property Act 1900 Corporations Act 2001 (Cth)
CASES CITED:	Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 Stocks & Holdings (Constructors) Pty Ltd v Arrowsmith (1964) 112 CLR 646 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1981-1982) 149 CLR 337 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Troncone v Aliperti (1994) 6 BPR 97455 Jessica Holdings Pty Ltd v Anglican Property Trust (1992) 27 NSWLR 140 Chan v Cresdon Pty Ltd (1989) 168 CLR 242
PARTIES:	Betty Raptis - First Plaintiff Dimitra Raptis - Second Plaintiff B & D Eastern Pty Ltd - Third Defendant Wija Investments Development Pty Ltd - First Defendant
FILE NUMBER(S):	SC 3750/07
COUNSEL:	Mr I Jackman SC/ Mr I Davidson - Plaintiffs Mr D Fagan SC/ P Bolster - Defendant
SOLICITORS:	McDonell Vertzayia Lawyers Plaintiffs VTS Sydney Lawyers - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

TUESDAY 28 AUGUST 2007

3750/07 BETTY RAPTIS & ORS v WIJA INVESTMENTS DEVELOPMENT PTY LTD

JUDGMENT

The issues

1 The first plaintiff, Betty Raptis, and her sister, Dimitra Raptis, the second plaintiff, were the directors of B & D Eastern Pty Ltd, the third plaintiff. It owned all the issued shares in Joynton Pty Ltd. Joynton held an option to purchase land in Joynton Avenue, Zetland, in New South Wales from and Galran Australia Pty Ltd.

2 On 5 August 2005, B & D sold its shares in Joynton to Wija Investments Development Pty Ltd, the defendant, for a stated consideration of $1 million payable by instalments.

3 A few days later, a deed dated 4 August 2005, already executed by Ms Betty Raptis, Ms Dimitra Raptis and B & D Eastern was, with some deletions, executed by Liang Zhen Lin, a director of Wija, purportedly on its behalf. The deed provided that on completion of the development and construction of apartments and shops on the Zetland land, Wija would grant Ms Betty Raptis and Ms Dimitra Raptis two, two-bedroom apartments of their choice.

4 The Zetland land was acquired by Wija. On 10 April 2007, Ms Betty Raptis, Ms Dimitra Raptis and B & D Eastern lodged a caveat over the Zetland land. On 4 July 2007, Wija entered into a contract to sell the Wija land. It had not constructed any apartments or shops thereon.

5 On 27 July 2007, Palmer J dismissed an application to extend the caveat. On 1 August 2007, Wija gave an undertaking not to sell, transfer, encumber or otherwise dispose of the land without first giving Ms Betty Raptis, Ms Dimitra Raptis and B & D Eastern five days written notice of its intention to do so.

6 The Raptis interests seek a declaration that Ms Betty Raptis and Ms Dimitra Raptis have a caveatable interest in the Zetland land, being a present equitable charge over the land to secure their entitlements under the deed and they seek, pursuant to the Real Property Act 1900, s 74O, leave to lodge a further caveat in a form that seeks to cure the defects identified by Palmer J.

7 In the end, the resolution of the issues in this case depends, in large measure, on my determination of what happened at a meeting of 16 April 2005 and what happened thereafter until the deed was executed. Mr Con Raptis, the father of Ms Betty Raptis and Ms Dimitra Raptis, conducted all negotiations with respect to the sale of the shares in Joynton.

The plaintiffs’ evidence

8 The 16 April 2005 meeting was the third one that took place between William Chan, the other director and equal shareholder with Mr Lin in Wija, Mr Lin and himself concerning the Zetland land. Mr Chan cannot speak English but Mr Lin translated what was said into Mandarin. A document was signed by each of them. It was as follows:

“16/4/05

Purchase price of Joynton P/L	$23,000,000
Con paid	2,150,000
William to pay	1,000,000
Jaly to pay Master Plan DA if necessary
1,000,000
Jaly will pay Con	$150,000
$500,000 within 4 weeks
Shares
Equal sharing 1/3 each
on Joynton P/L
……. 114 Joynton Av Zetland”


“Jaly” was a reference to Mr Lin. On the last line there is a word that is indecipherable. The figure for the amount paid by Mr Raptis could be $2.75 million rather than $2.15 million. It is indistinct. In cross-examination Mr Raptis agreed that he had paid $1.6 million and there was a further payment due under the option of $1.1 million payable in instalments. On the other hand, Mr Raptis stood to benefit from the option in the amount of $2,150,000. He was to be paid $23 million and Galran was to be paid $20.85 million.

9 The document clearly evidenced an agreement to constitute a partnership or joint venture between Mr Raptis, Mr Chan and Mr Lin and that, for their interests, Mr Chan and Mr Lin were to contribute $1 million each.

10 Some time thereafter, Mr Raptis said it was one and a half months, it could have been longer, Mr Chan stated that he did not wish to enter a partnership with Mr Raptis. The negotiations changed to a purchase by Wija of the shares in Joynton. Mr Raptis said he asked for $2.2 million but towards the end of May 2005, Mr Chan, through Mr Lin, said that he could not afford to pay $2.2 million but they would pay $1 million and give Mr Raptis two units by the end of 2007. According to Mr Raptis, Mr Lin told him that Mr Chan wanted two agreements, one for the cash and one for the two units and the agreement for the two units would be signed after the share sale agreement at Mr Chan’s office.

11 Negotiations then occurred between the solicitors for the parties drawing up the share sale agreement for a stated consideration of $1 million.

12 Mr Raptis had his solicitors draw up the deed with respect to the two units. It was in the following terms:

“This deed made the day of 2005 BETWEEN BETTY RAPTIS and DIMITRA RAPTIS of 52 Eastern Ave, Kingsford NSW (hereinafter called “Raptis”) of the first part AND WIJA INVESTMENT DEVELOPMENT PTY LTD ACN 113 841 428 of level 1, 348-352 Parramatta Road, Burwood NSW (hereinafter called “Wija”) of the second part AND B & D EASTERN PTY LIMITED ACN 109 948 745 of Level 1, 500 George Street, Sydney NSW (hereinafter called “Eastern”) of the third part.
WHEREAS
A. Raptis are the trustees of Eastern which is the owner of shares in Joynton Pty Limited ACN 103 126 227 (hereinafter called “Joynton”), such Company being the grantee of a Call Option pursuant to a Deed of Put & Call Option in respect of a property known as 114 Joynton Avenue Zetland (hereinafter called “Zetland”).
B. Raptis and Eastern have agreed to sell their interest in Joynton to Wija.
C. Wija will exercise the Call Option above to purchase and thereafter develop the site at Zetland by constructing residential apartments and shops thereat.
NOW THIS DEED WITNESSES:-
1. On the completion of the development and construction of apartments and shops at Zetland WIJA will grant to Raptis 2 x two bedroom apartments of Raptis’ choice each valued at not less than AUD $500,000.00 each or in the alternative pay Raptis not less than the sum of AUD $1,000,000.00 on or before 31 December 2007.
2. The parties agree that if Wija chooses to make a cash payment in lieu of the apartments referred to in Clause (1) above then the amount payable to Raptis shall be the value of two x two bedroom apartments based on a valuation to be undertaken at that time but in any event shall not be less than $1,000,000.00.
3. Each party hereto agrees that it has legal capacity and authority to enter into this deed and perform the obligations herein and the parties hereto acknowledge and agree that Wija’s failure to perform its obligations hereunder will give rise to Raptis having the benefit of a caveatable interest in Zetland to secure the performance of the terms of this Deed.
4. This Deed is governed by the laws and statutes of the State of New South Wales.”

The document made provision for its execution as a deed by Ms Betty Raptis, Ms Dimitra Raptis, Wija and B & D Eastern.

13 Tony Ng, an architect, prepared a profit analysis for retail office and residential accommodation on the Zetland land. The residential accommodation was to be 315 units, 120 one-bedroom, 184 two-bedroom and 11 three-bedroom units. Mr Ng had the land cost at $26 million and it still showed a $45.5 million profit at 40.8%.

14 Mr Raptis said that Ms Betty Raptis and Ms Dimitra Raptis executed the deed and he witnessed their execution on 4 August 2005. Ms Betty Raptis executed the deed on behalf of B & D Eastern. The deed stated that this execution was pursuant to the Corporations Act 2001 (Cth), s 127, but there was no evidence that Ms Betty Raptis was the sole director and secretary of the company. If she was not, the provision did not apply, as two directors, or a director and a secretary, did not execute the deed. Mr Raptis inserted the date, 4 August, on the deed.

15 In cross-examination, Mr Raptis said $500,000 had been agreed as a minimum value of a unit at the end of the two-year period provided by the deed. He said he had made a calculation that they would then be worth $600,000 each so that his interests would receive his stated consideration of $1.2 million if the units were transferred.

16 Provision was made for the execution of the share sale agreement by Mr Raptis as a guarantor. On 5 August 2005, at Mr Phan’s office, Mr Raptis executed the share sale agreement and executed a share transfer and handed the documents to Mr Phan. Mr Raptis said he raised the issue of the second agreement but Mr Phan said: “If this is another document you sort it out between yourselves”.

17 The parties then went to the office of the solicitors for Galran where a cheque for the extension of the option, written by Wija, was handed over in exchange for the extended option. The parties then returned to Mr Raptis’ house to await the arrival of his daughters to execute the agreement.

18 At no time on 5 August 2005 did Mr Raptis produce the deed and seek its execution. He was taxed with this omission in cross-examination but maintained the answer that Mr Chan had requested that the deed be executed at his office after the execution of the share sale agreement and Mr Raptis had accepted that request.

19 A few days after 5 August 2005 Mr and Mrs Raptis went to the Burwood office of Mr Chan. Mr Raptis said the purpose of the meeting was to have the deed translated to Mr Chan and to obtain Wija’s execution of it. Mr Raptis said that towards the end of the meeting there was discussion about his daughter’s wedding reception to be held at Oatlands House, premises in which Mr Chan had an interest.

20 It was put to Mr Raptis that the purpose of the meeting was to discuss his daughter’s wedding reception and that was why Mrs Raptis was present. Mr Raptis denied this suggestion. He said that his daughter, not his wife, was the interested party and he did not need his wife present to discuss the arrangements. He said his wife drove him to all his business activities. He said he could have spoken to Mr Chan about the reception anywhere as no writing was involved. The reason he needed to go to Mr Chan’s office was to take the deed there so it could be translated to him. It was put that Mr Lin, who usually translated for Mr Chan, was present only at the beginning of the meeting. Mr Raptis said that while Vincent Yue Zheng attended the meeting and translated for Mr Chan, Mr Lin was in and out, but he did sit down and translate the deed to Mr Chan.

21 Mr Raptis said he gave the deed to Mr Zheng to read and Mr Zheng spoke with Mr Chan in Mandarin. He said there were constant exchanges between Mr Chan and Mr Zheng. When Mr Lin came into the room Mr Zheng spoke with him as well in Mandarin and Mr Lin spoke with Mr Chan. Mr Raptis said that Mr Lin said to him that Mr Chan did not like the clause that required a payment of $1 million before 31 December 2007. Mr Raptis said he remonstrated that that was the agreement and he was not happy that they were going back on it. He said Mr Lin spoke with Mr Chan again and said: “Look, you want two apartments, don’t you, not the money and you know how long these things take to finish… We are going to build it, you can be certain of that and you will get your two apartments…please sign and lets finalise the deal”. Mr Raptis said he finally agreed and deleted paragraph 2 and from the words “each valued at” to the end of clause 1. Mr Raptis said that Mr Zheng then translated the deed in detail to Mr Chan who indicated that he was happy and told Mr Lin to sign. Mr Raptis asked Mr Lin to get Mr Chan to sign but Mr Lin said, after speaking with Mr Chan: “I am the managing director. I sign all documents for us”. He said Mr Lin then signed and initialled the changes and Mr Raptis also initialled the changes on the two original copies. He kept one and Mr Lin kept the other. Mr Raptis said the meeting lasted approximately 45 to 50 minutes.

22 Proceedings were commenced in the District Court for the enforcement of the payment by Wija of the $1 million by instalments under the share sale agreement. At a round table conference with Mr Lin and Mr Phan and himself and his solicitor, Dion Vertzayas, Mr Raptis said that Mr Phan said: “I know about the two units, Mr William owes you”. Mr William was a reference to Mr Chan.

23 Mrs Raptis said that at the meeting in Mr Chan’s office, her husband took out a document and gave it to a young man whom she later was told was Mr Chan’s nephew and she observed the young man speaking with Mr Chan in Mandarin about the document. She said Mr Lin had taken them into the room but he left. He came back into the room. The young man then spoke with Mr Lin in Mandarin. She said Mr Chan looked unhappy and she observed him speaking with Mr Lin. Mr Lin then said something to Mr Raptis who was also not happy. There was an exchange. She did not understand what was said. She saw Mr Lin delete parts of the document. She heard Mr Raptis ask that Mr Chan sign, but Mr Chan said in English: “No, Jally is my manager and he will sign for me”. Jally was a reference to Mr Lin. Mrs Raptis observed both Mr Lin and Mr Raptis sign the document and they then spoke with Mr Chan about their daughter’s reception at Oatlands House.

24 Mr Vertzayas wrote a letter to the solicitors for Wija on 24 November 2006 with respect to payments claimed to be owed to the Raptis interests of $318,000. The letter concluded:

“We are further instructed to advise that there is a separate and further agreement pursuant to which your client undertook to grant our client two 2 bedroom apartments.”

25 Mr Vertzayas wrote again on 2 February 2007 noting that he had not had a reply to the quoted passage from his earlier letter. Mr Vertzayas received no reply to the assertion.

26 Mr Lin swore an affidavit on behalf of the Raptis interests. He said he was managing director of Wija. He said at one stage Mr Raptis was to be a one third partner with Mr Chan and him but Mr Chan did not agree. He said that during lengthy negotiations, Mr Raptis said the project would cost $24.5 million plus. He said Mr Chan and he did not want to pay more than $22 million for the whole project. Eventually he said to Mr Raptis on behalf of Mr Chan and himself: “We can pay $1 million and when the project is finished, you can have two units.”

27 Mr Lin said that before the share sale agreement was signed, Mr Raptis said to him that we would need to sign the document to give him the two units when the main agreement was signed. Mr Lin said he responded: “Don’t worry. What William and I promise we’ll deliver. We can sign it after”. Mr Lin said that a few days after the share sale agreement was executed Mr and Mrs Raptis came to the Burwood office. He said he was in and out of the meeting they had with Mr Chan. Also present was their accountant, Mr Zheng, who called Mr Chan “uncle”. Mr Lin said that towards the end of the meeting Mr Chan said to him that he would need to cross out some of the deed since we could not agree to deliver two units if the project was not finished by December 2007. He raised the question what would happen if the tenant would not move out. He said he thought that Mr Chan with Mr Zheng showed him what to cross out. In any event, he said the crossing out was in his writing. Mr Lin said that he told Mr Raptis that Mr Chan wanted to delete the clauses. Mr Raptis did not agree. But he persuaded him. He said: “Whatever William and I promise, we will deliver”. Mr Raptis asked him could he get Mr Chan to sign, but Mr Chan said to him: “Jally you sign, it’s OK”. Mr Lin then said to Mr Raptis: “I’ll sign, managing director. No worries.”

28 In cross-examination Mr Lin said that over some years he had spoken with Mr Raptis at quite frequent intervals. Mr Lin was a gyprocker. Mr Raptis assisted him after 2005 by introducing him to perform gyprocking work at a cinema. It was put to Mr Lin that he introduced Mr Chan to Mr Raptis because he wanted to help Mr Raptis out. Mr Lin replied: “As a businessman I already worked for mutual interests. It is the mutual or common interest that attracts, it does not matter whether I help someone else or not.”

29 It was put to Mr Lin that Mr Chan had told him that not only in relation to banking documents but all documents of the company to be signed on its behalf had to be signed by Mr Chan as well as Mr Lin. Mr Lin denied this proposition saying it was only cheques that required both signatures.

30 Mr Lin said that at the time two potential buyers for the Zetland land fell away, he and Mr Chan knew that they were the only ones interested in the land. Mr Lin said that he and Mr Chan agreed to get rid of Mr Raptis for both of them to develop the project themselves. Mr Lin said that he gave a personal guarantee to Mr Raptis that he would receive the two units. This was said in the presence of Mr Chan.

31 Mr Lin said that there was an argument between the three of them because Mr Raptis also asked for a penthouse and Mr Chan did not agree. He said Mr Raptis also asked for a $1 million to be paid in full if the project was not developed in two years. Mr Chan did not agree with this either. He agreed to pay only $800,000. This was in June and July 2005. Mr Lin also said that at a meeting in Mr Phan’s office, Mr Phan said that the parties should draw up the agreement in relation to the units amongst themselves and that this should be in a separate document.

32 Mr Lin said that in August and September 2006, Mr Chan proposed that they divide up their interests and part ways. In those discussions the only cash liability to the Raptis interests was listed at $220,000. Mr Lin said he was not happy with the separation and did not really care what was going on in the business operations of Wija. He did not want to part and he thought he suffered a financial disadvantage in the terms on which they separated.

33 Both Mr Raptis and Mr Lin said the tenant of the Zetland land was entitled to remain until 2011 but they had arranged for early termination of the lease on 12 months notice and payment of $1.5 million.

The defendant’s evidence

34 Mr Chan said that Mr Lin described Mr Raptis as his godfather. Mr Chan said that in setting up Wija he told Mr Lin that all documents needed to be signed by both of them and this requirement would also apply to the company bank account and any cheques drawn on it. He said Mr Lin agreed. Mr Chan said that in April or May he visited Mr Raptis at his home and, in conversation, Mr Raptis said he was looking for a place for a reception for his daughter’s marriage and Mr Chan said he had a business in Oatlands House and he would make the arrangements.

35 Mr Chan said that in May 2005, Mr Lin told him the Zetland land would be a good purchase and that Mr Raptis wanted about $2.3 million. Mr Chan said he was not interested at that price but was willing to pay $1 million.

36 One reason why Mr Chan was not prepared to go beyond this figure, he said, was that a lessee had a long-term lease until 2011. But early termination of the lease had been arranged. Another reason Mr Chan advanced was that $2.2 million would make the project commercially unviable. Mr Ng’s profit analysis suggests to the contrary.

37 Mr Chan said that in May or June 2005 he visited Mr Raptis at his home on about two or three occasions. He told Mr Raptis he would pay $1 million at the most. In about June 2005 he said Mr Raptis came to his office in Burwood and accepted the offer of $1 million.

38 On 28 September 2006, a meeting took place at Mr Phan’s office to negotiate the financial separation between Mr Chan and Mr Lin. Mr Chan said that at no stage during that conference was any mention made of having to pay or transfer to Raptis interests anything more than the payments required under the share sale agreement.

39 On 15 November 2006, stage one of the development application in relation to the Zetland land was approved by Sydney City Council.

40 Mr Chan said he had no recollection of Mr Lin telling Mr Raptis that they could not afford to pay $2.2 million but would pay $1 million and give him two units by the end of 2007. He said had he heard these words, he would have voiced his disapproval.

41 Of the meeting at his office a few days after the share sale agreement had been executed, Mr Chan said that he was told that Mr and Mrs Raptis were with his receptionist. They had made no appointment to meet him. He asked Mr Zheng to join him. He denied that Mr Raptis had given Mr Zheng any document and he denied the events as sworn by Mr Raptis. Mr Chan said the only matter discussed was the proposal to hold the daughter’s wedding reception at Oatlands House. According to Mr Chan, Mr Raptis said that the matter had been discussed before and Mr Chan had said that they could have the reception for free. Mr Chan said he denied this. A free reception was impossible. He had a business partner. He could offer a good discount and offer the reception at cost. He said Mr and Mrs Raptis then had quite a heated discussion with each other after which the meeting ended. The conversation and reaction of Mr and Mrs Raptis were not put to them in cross-examination.

42 In cross-examination, Mr Chan said that at no time during negotiations were the Raptis interests to receive more than $1 million for their interests in the option over the Zetland land. Mr Chan was shown the document of 16 April 2005. He said he signed the document to indicate that it was an accurate record of what had been discussed that day. While accepting that the meeting of 16 April 2005 was the third meeting, Mr Chan said that the agreement was at the very beginning but was not implemented. He agreed that he said he would pay $1 million for his one-third share and Mr Lin said he would pay $1 million. He accepted that they were saying that they would pay $2 million for a two-thirds interest. Mr Chan accepted that the discussions with Mr Raptis were on the basis that he or his company would receive about $2 million for their interest in the option over the Zetland land. But he would not accept that the document of 16 April 2005 was inconsistent with his evidence that the Raptis interests were never going to receive more than $1 million.

43 Mr Chan denied that there was a second agreement with respect to two units and denied that an agreement to provide two units was ever raised in Mr Phan’s presence.

44 Mr Chan said that in the meeting in April or May 2005 at Mr Raptis’ home there was a conversation about the Zetland land in addition to the conversation about wedding reception. But Mr Chan denied any mention of the Zetland land at the meeting in his office a few days after the signing of the share sale agreement.

45 Mr Zheng said he was employed as the internal accountant by the Wija group of companies. Mr Chan and his wife were friends of his parents who reside in China. He had known Mr Chan since he was a child. He said he addressed Mr Chan as uncle out of respect for him.

46 Of the meeting in the office of Mr Chan shortly after the signing of the share sale agreement, Mr Zheng said that Mr Raptis did not hand him any document to read and translate to Mr Chan. There was no discussion about any units being transferred to Raptis interests and there was no agreement by Mr Chan that Mr Lin should sign any document. According to Mr Zheng, Mr Raptis said that his daughter was being married and they would like to have a wedding reception in Oatlands House. Mr and Mrs Raptis then had a conversation and Mr Raptis said Mr Chan promised him the reception would be free of charge. Mr Chan responded that he could not give the function for free. He did not own 100% of the business. He had to account to his business partner. He was prepared to give a discount of, say, 10% to 15%. Mr Raptis said, according to Mr Zheng, that Mr Chan had agreed and they were not happy. Mr Chan said he did not make such a promise. Mr Zheng said Mr Lin came into the room and said he was very busy and he left. Mr Zheng said that he told Mr and Mrs Raptis that Mr Chan was happy to host the wedding reception at Oatlands House for a discount but he never promised to do it free. There was a further conversation between Mr and Mrs Raptis. They were upset. Finally, Mr Raptis said in that case they would not be going to Oatlands House. They then left.

47 Mr Zheng said he prepared the schedule that Mr Chan used in his separation discussions with Mr Lin from the records of the company and from those records he entered the figure of $220,000.

48 The District Court proceedings in which $318,000 plus interest was claimed were settled upon Wija agreeing to pay B & D Eastern $285,000.

49 In cross-examination, Mr Zheng said he understood from what Mr Raptis first said at the meeting that this was the first time Mr Ratpis had mentioned a wedding reception to Mr Chan. But Mr Raptis then said he had been promised a free reception. If that was so, there must have been an earlier discussion between Mr Raptis and Mr Chan. When the conflict was pointed out to Mr Zheng and he was asked how he reconciled the two statements, he said what he did was to interpret whatever they said. He denied that he had no recollection of what was said at the meeting. He said the meeting lasted five to ten minutes. That was his recollection but he would not say that counsel was wrong in suggesting it lasted approximately 45 minutes.

50 Mr Phan gave evidence that he took instructions on behalf of Wija that it was considering three alternatives for the acquisition of the Zetland land. He was instructed that under each alternative scenario, Wija was to pay $1 million to interests associated with Mr Raptis. Mr Phan said that throughout the period in which the deal was put together, Mr Chan instructed him that Wija would not pay any more than $1 million to acquire the option through the acquisition of Joynton. He said that at no stage did anyone ever suggest to him that there was a side deal entitling Raptis interests to two units in any development on the land.

51 Mr Phan said that following a pre-trial conference with respect to the District Court proceedings he telephoned Mr Chan and said:

“I just attended Court today in respect of Con’s case against you. We cannot reach settlement. But Con’s lawyer said that you also agreed to give two units to him. This has nothing to do with the case, but what is this about?”

According to Mr Phan, Mr Chan replied: “You should not bother about this”. Mr Phan did not pursue the matter any further.

52 In cross-examination, Mr Phan agreed that at no time did Mr Chan deny that there was such an agreement.

Resolution

53 There is no contemporaneous documentation that supports either side’s version of the negotiations and agreements of the parties.

54 I prefer the evidence tendered on behalf of Ms Betty Raptis, Ms Dimitra Raptis and B & D Eastern.

55 The categorical statement by Mr Chan that at no stage during the negotiations was Mr Raptis offered more than $1 million, is disapproved by the document of 16 April 2005. It records payments to be made by Mr Chan and Mr Lin in excess of $2 million for each to obtain with Mr Raptis a one third interest. That document supports the evidence of Mr Raptis that he had an equity in the option of $2.15 million. It also supports the demand of Mr Raptis for $2.2 million when negotiations changed to a purchase of the Joynton shares. It is unlikely that Mr Raptis would have accepted a reduction from $2 million odd to $1 million without protest. And there was no evidence that Mr Raptis protested about an offer of $1 million of shares. It is more likely, in my view, that at the end of April or early May 2005, Mr Raptis said he wanted $2.2 million for the shares and that is approximately what he would get if the deed was executed on behalf of Wija.

56 There was criticism of a variation in figures. If Mr Raptis demanded $2.2 million, why did he have the deed drawn on the basis of a cash payment of $1 million rather than $1.2 million if the two units had not been provided by 31 December 2007? But Mr Raptis had a plausible explanation. He thought the units would be worth $600,000 each by 31 December 2007 and the cash payment, based on a valuation then undertaken, was likely to be $1.2 million. The $1 million was specified as a minimum payment.

57 There was also the evidence of Mr Lin that Mr Raptis wanted a penthouse and Mr Chan was not prepared to pay more than $800,000 which did not accord with the evidence of Mr Raptis. But those aberrations are, in my view, of less significance than the conflicts in the evidence of Mr Chan and Mr Zheng.

58 When Mr Phan asked Mr Chan about an agreement to give two units, one would have expected some reaction from Mr Chan. He swore that he was shocked and surprised and told Mr Phan that there was no agreement. But that evidence was in direct conflict with that given by Mr Phan that Mr Chan did not say there was no agreement. He told Mr Phan not to bother about it. That is not a reaction, in my view, consistent with Mr Chan’s assertion that the entire agreement was for $1 million for the shares in Joynton and there was no agreement for the transfer of two units.

59 The evidence of Mr Raptis was not without other aberrations. It is unlikely that Mr Phan would have said at the pre-trial directions conference for the District Court proceedings that he knew about the two units that Mr Chan owed Mr Raptis if after the meeting Mr Phan telephoned Mr Chan to find out about it. Mr Phan was categorical in his denial of any mention of the deed during the negotiations for the execution of the share sale agreement on 5 August 2005. Had it been mentioned, it is unlikely that Mr Phan would have telephoned Mr Chan after the pre-trail conference to ascertain what the assertion was all about. Again, however, I do not regard these matters as outweighing my assessment of the evidence of Mr Chan and Mr Zheng.

60 I accept the evidence of Mr and Mrs Raptis and Mr Lin as to the happenings a few days after the signing of the share sale agreement. I find that the deed was executed by Mr Lin at the Burwood office. I reject the evidence of Mr Chan and Mr Zheng that all that was discussed was the wedding reception for the daughter of Mr and Mrs Raptis.

61 Mr Zheng could not reconcile the inconsistency in his testimony of what was said by Mr Raptis. The first part of the conversation, as reported by Mr Zheng, indicated that this was the first time the subject had been raised with Mr Chan and yet the subsequent statement of Mr Raptis, according to Mr Zheng, that Mr Chan had agreed to provide the wedding reception free means that the subject must have been raised with Mr Chan on an earlier occasion.

62 Mr Raptis said the meeting lasted approximately 45 minutes to 50 minutes. It is unlikely that Mr Zheng’s estimate of 5 minutes to 10 minutes was accurate. And it could not have been so short if the deed was discussed with Mr Chan and the deletions made before execution. There is some significance in Mr Zheng not denying that the meeting might have lasted approximately 45 minutes. If it did, there must have been more said than the short exchange reported by Mr Zheng.

63 I had no reason to doubt the evidence of Mrs Raptis as to what she observed at the meeting in the Burwood office. I reject the suggestion that the only reason Mrs Raptis was present was if the subject of discussion was to be her daughter’s wedding reception. I accept the statement of Mr Raptis that his daughter was the interested party in the wedding reception, not his wife, and he could have discussed that matter with Mr Chan anywhere since no writing was involved. The reason for attendance at Mr Chan’s office was to present the deed for translation and execution.

64 Mr Lin was a most precise witness and I have no reason to reject his evidence. The aberrations to which I have referred do not cause me to doubt his veracity nor does his financial separation at his cost from the interests of Mr Chan. It was put to Mr Lin that the offer of two units was a sweetener he invented for the benefit of Mr Raptis, hoping to convince Mr Chan to accept the notion at a later stage. Mr Lin’s response to this suggestion was: “I am no idiot, why should I do that?” When it was put to him that he wanted to help Mr Raptis out, Mr Lin replied that he was a businessman who worked for mutual interests. It was the mutual or common interest that attracted him. It did not matter whether he helped someone else or not.

65 Mr Raptis may have been naïve in agreeing to a separate agreement with respect to the units and agreeing to the request of Mr Chan that execution of that agreement should take place after the execution of the share sale agreement. But he was unshaken in his evidence that he agreed to these requests and that explains why he did not insist on the deed being executed on behalf of Wija at the meeting of 5 August 2005 rather than his faulty recollection that he raised the issue during those negotiations.

66 I reject Mr Chan’s evidence that Wija documents were to be signed both by Mr Lin and himself. The document that sets out the duties of Mr Lin as managing director was silent on the question of signatures. Mr Lin was responsible for project management, for property development projects, purchasing raw materials, working out the costs, bidding for external projects and organising implementation and managing expense for the projects, managing trades people, managing builder’s team, supervising and controlling all the projects including building techniques and participating in all the decision making and coordinating external resources. Those areas of responsibility were sufficient, in my view, to enable Mr Lin to execute the deed on behalf of Wija. In any event, I find that Mr Chan instructed Mr Lin to execute the deed and Mr Lin did so on behalf of Wija.

67 If Mr Raptis and Mr Lin conspired to execute the deed to compromise Mr Chan and Wija, there was no point in the deletions. Those deleted provisions strengthened the benefits to the Raptis interests secured by the deed. It is more likely that the provisions were deleted because Mr Chan was concerned that development might not have reached the stage of completed units by 31 December 2007.

Construction of the deed

68 It was argued that if the deed was not executed as such, the document of 4 August 2005 was unenforceable as a bare promise without consideration.

69 If it were necessary for me to deal with that contention, I would reject it. The oral agreement of the parties was that the shares in Joynton be transferred for a cash consideration of $1 million and, by a separate instrument, the transfer of two units. If the consideration for the promise of two units was not, in part, the transfer of the shares then it was in consideration for the reduction in the cash price for their transfer.

70 Mr Fagan SC, who with Mr Bolster appeared for Wija, put the execution question to one side and raised a number of arguments on the basis that the document was a deed.

71 It was submitted that the third recital in the deed was deliberately excluded as an obligation of Wija. It was merely a recital and not part of the operative provisions in the deed. But cl 1 of the deed must be construed in light of the recitals and the development and construction to which reference is made in cl 1, must be the development and construction referred to in the third recital that Wija was to perform.

72 It was submitted that even if Wija had promised to develop the site and construct apartments and shops on it, that promise was void for uncertainty.

73 Reference was made to Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130. That was a case in which a senior research scientist entered into a contract of employment, a term of which was an option to participate in the employer’s senior staff equity sharing scheme. There was no such scheme. The promise was incapable of being valued and was therefore illusory and did not give rise to an enforceable contractual obligation. Alternatively, if the promise was a term of the contract, it was so vague and uncertain as to be unenforceable.

74 It was submitted that the analogy to the present case was apt. There was no definition of the number of two-bedroom units from which the choice was to be made, nor the specification of the standard of the finishes of the units. But it is a far cry to compare the case of a promise with respect to a non-existent fund with the case of a proposed development that was costed by the architect in which 184 two-bedroom units were identified. The development application was approved in November 2006. The evidence is silent as to when the development application was lodged. Even if the development application was not lodged until after the deed was executed there was, in the evidence, sufficient identification of the development and construction to which reference was made in the deed to save it from uncertainty.

75 Reference was also made to Stocks & Holdings (Constructors) Pty Ltd v Arrowsmith (1964) 112 CLR 646 in which a contract for sale of land provided that prior to completion the purchaser should subdivide the land at its own expense in such a way that the allotments should be of a total area of 7,500 square feet and the vendor should have the right to employ an independent surveyor in order to determine that the maximum number of allotments had been obtained and any subdivision should be subject to the approval of the vendor. The purchase moneys were stated as a sum represented by £325 multiplied by the number of allotments approved by the local authority on subdivision of the land. It was held that, there being no obligation upon the vendor to give approval to any plan of subdivision, no price was agreed upon that was either certain or capable of being rendered certain without the future agreement of the parties and the document was not binding as a contract for sale.

76 At 658, Taylor J observed that the preparation of a plan of subdivision required some anticipatory estimate of what provision the local authority would require to be made for roads and reserves and where such provision would be required. How the overall problem was to be resolved might well be susceptible of more than one answer. It was submitted that the same issue arose in the instant circumstances.

77 But in this case, the architect had got past that preliminary stage and was able to identify the dimensions of retail office and residential composition of the proposed construction.

78 This was a commercial transaction and the deed should be construed so as to give it efficacy if that is possible.

79 In my view, the development and construction to which reference is made in the deed is sufficiently identified in the profit analysis of Mr Ng to save the deed from being void on the ground of uncertainty.

80 It was submitted that two of the elements necessary to imply a term in the deed that Wija would develop the site by constructing residential apartments and shops thereat were missing.

81 Reference was made to Codelfa Construction Pty Ltd v State Rail Authority of NSW (1981-1982) 149 CLR 337 at 347 where Mason J referred to the conditions necessary to ground an implication in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 that the term to be implied must be reasonable and equitable, it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it, it must be so obvious that “it goes without saying”, it must be capable of clear expression, and it must not contradict any express term of the contract.

82 It was submitted that the implication of a term to construct residential apartments and shops could not be reasonable and equitable because it was a huge additional contractual burden to impose upon a party. And, it was submitted, such an implication did not go without saying. The deed was open to the construction that the choice of apartments was available if Wija chose to go ahead and develop the site by constructing residential apartments and shops.

83 It is not necessary, in my view, for a term to be implied in the deed. The construction of cl 1 to which I have referred contained a promise by Wija to develop the site by constructing residential apartments and shops thereon.

84 I reject the submission that the deed was open to the construction that the choice of two apartments only arose if Wija chose to develop the site.

85 I have found that there was an oral agreement that the shares in Joynton should be transferred for $1 million in cash and the choice of two two-bedroom apartments in a development on the site. That agreement required Wija to complete the development and construction of the apartments and shops. The agreement of the parties could not have been in the nature of a bonus if Wija chose to carry out the development. The substitution of cash and units for an asking price for the shares of $2.2 million required the physical completion of the development. Otherwise, there was no guarantee that Mr Raptis would obtain anything other than $1 million.

86 Reference was made to what Kirby P said in Biotechnology at 135, that a court will not uphold the validity of an agreement between the parties where, in effect, it is asked to spell out to an unacceptable extent, that to which the parties had themselves failed to agree. Nor will the court clarify that which is irremediably obscure.

87 While those observations are obviously correct, they do not apply to this case.

88 While cl 3 of the deed does not specify the caveatable interest in the Zetland land, it was accepted that this was not fatal.

89 In Troncone v Aliperti (1994) 6 BPR 97455 a loan agreement authorised creditors to protect their interest by lodging a caveat over any property owned by the debtor. Applying the principle that whosoever grants a thing is deemed also to grant that without which the grant itself would be of no effect, it was held that since a caveat cannot be entered against land unless the caveator has a relevant proprietary interest in the land, the grant to the creditors of an authority to lodge a caveat carried with it, by implication, an estate or interest in the land sufficient to support it.

90 It was submitted that the court would not construe the deed as requiring Wija to transfer two units, pending which and subject to which, the whole title to the Zetland land would be held as security for the reasons advanced on behalf of Wija to which reference has already been made. I have rejected those reasons and, in consequence, I reject the submission.

91 Reference was made to Jessica Holdings Pty Ltd v Anglican Property Trust (1992) 27 NSWLR 140 in which it was held, following a line of cases including Chan v Cresdon Pty Ltd (1989) 168 CLR 242, that a purchaser of land under a conditional contract had an equitable and caveatable interest in the land if a court of equity would order specific performance of the contract, or would, by injunction, order the vendor to do what was necessary to enable the purchaser to obtain any necessary consent. It was submitted that the instant circumstances differed because Raptis interests were asking the court to order, not only the lodgement of a plan of subdivision, but also that Wija carry out an unparticularised development. I have already dealt with that argument and rejected it.

92 If a caveatable interest was not grounded under the deed until Wija had failed to perform its obligations, that failure occurred when it entered into the contract for sale of the land in an undeveloped state. Wija clearly was then in breach of its obligation to develop the land by constructing residential apartments and shops thereon.

Conclusion

93 It follows from what I have said that Ms Betty Raptis, Ms Dimitra Raptis and B & D Eastern are entitled to a declaration that Ms Betty Raptis and Ms Dimitra Raptis have a caveatable interest in the Zetland land, being a present equitable charge over the land to secure their entitlements under the deed.

94 It may be that the form of the second caveat that they seek to lodge over the Zetland land is different from the caveat that Palmer J refused to extend and is not a mere colourable variation of the wording of that first caveat. In that case it may be unnecessary for me to make an order under the Real Property Act 1900, s 74O.

95 Mr Fagan asked to be heard as to the protection of Wija should I form the view that a further caveat could be lodged. I accede to that request. I will hear the parties on the appropriate terms of any orders and I will hear the parties on costs. I direct the parties to bring in short minutes of order reflecting these reasons.

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