Robil Marketing P/L v Crothers

[1997] QSC 165

IN THE SUPREME COURT

OF QUEENSLAND

No 5638 of 1996

Brisbane

Before the Hon. Justice Williams

[Robil Marketing P/L v. Crothers & Anor]

IN THE MATTER OF the Partnership Act 1891-1988

- and -

IN THE MATTER OF a partnership between Robil Marketing Pty Ltd and Kevin Raymond Crothers

- and -

IN THE MATTER OF an application by Robil Marketing Pty Ltd for Orders pursuant to ss.38 and 42 of that Act

- and -

IN THE MATTER OF the Property Law Act 1974 as amended

- and -

IN THE MATTER OF an application by Denis Neil Sheil for an order pursuant to s.38(1) Property Law Act 1974 as amended for sale or division of certain property

REASONS FOR  JUDGMENT - WILLIAMS J

Judgment delivered 12/09/1997

CATCHWORDS:     CONTRACT - order for dissolution of partnership and appointment of receiver as trustees for sale - discussions between former partners as to division of assets including land - held no agreement.

Counsel:BA Laurie (directly instructed) for Robil Marketing Pty Ltd

McMurdo QC and Hackett for KR Crothers

Solicitors:Cleary & Hoare for KR Crothers

Hearing Dates:  25, 26, 27 August 1997

IN THE SUPREME COURT

OF QUEENSLAND

No 5638 of 1996

Brisbane

[Robil Marketing P/L v. Crothers & Anor]

IN THE MATTER OF the Partnership Act 1891-1988

- and -

IN THE MATTER OF a partnership between Robil Marketing Pty Ltd and Kevin Raymond Crothers

- and -

IN THE MATTER OF an application by Robil Marketing Pty Ltd for Orders pursuant to ss.38 and 42 of that Act

- and -

IN THE MATTER OF the Property Law Act 1974 as amended

- and -

IN THE MATTER OF an application by Denis Neil Sheil for an order pursuant to s.38(1) Property Law Act 1974 as amended for sale or division of certain property

REASONS FOR  JUDGMENT - WILLIAMS J

Judgment delivered 12/09/1997

The hearing which gives rise to this judgment was rather unusual, and it is necessary to set out some background which is relevant to the issues for my determination.

In about November 1993 a partnership was formed between Robil Marketing Pty Ltd (“Robil”) and Kevin Raymond Crothers (“Crothers”).  The principal partnership activities were buying and selling land, and buying land for sale after development (including subdivision).  In terms of the partnership agreement the interest held by each partner was 75% Crothers 25% Robil.  Denis Neil Sheil (“Sheil”) was at all material times a director and shareholder of Robil, and its directing mind.

Differences of opinion arose between Crothers and Sheil and those disputes resulted in an order being made by Helman J on 24 July 1996 that the partnership be dissolved and that “the business and affairs of the said partnership be wound up”.  The orders, which were made by consent, included an order that Geroff and Furby be “appointed as receiver and manager of the partnership for the purpose of winding up the business and affairs of the said partnership”.  There was also a direction that certain particularised real property “be sold and the net proceeds of sale after discharge of all mortgages, commissions and cost be held in trust” by Geroff and Furby.  Next there was a direction that such enquiries be made and accounts be taken as may be necessary for ascertaining and adjusting the rights of the former partners.  Finally, Geroff and Furby were appointed trustees of the real property particularised in the order and it was directed that such property “vest in them, subject to encumbrances affecting the entirety but free from encumbrances affecting any undivided shares, to be held by them on the statutory trust for sale.”

It appears from an affidavit of Sheil that shortly before that order was made there was a meeting held in the office of the solicitors acting for Crothers at which Sheil, Crothers, the barrister acting for Sheil, and the solicitor for Crothers were present.  During the discussion mention was made of the high level of costs which would be involved in a winding up of the partnership.  The material suggests that at that meeting “the situation in relation to the appointment of Statutory Trustees was explained namely that all of the property would pass to them and that the company and Kevin Crothers would have an interest only in the proceeds of sale after payment of all the costs.”

After the appointment of the receivers and Statutory Trustees a meeting was held “in order to determine an agreement for the marketing of the properties”.  Probably both Sheil and Crothers were present at that meeting.

There is no doubt that there was a meeting between Sheil and Crothers at the Story Bridge Hotel on 28 November 1996 at which aspects of the winding up of the partnership were discussed.  There is also no doubt that there was a telephone conversation between them dealing with that topic on 2 December 1996.  More will have to be said about the conversations on those dates later.  Suffice it now to say that Sheil asserts that an agreement was reached in terms which would have determined the winding up of the partnership and provided for a division of assets and a division of responsibility for liabilities.  Crothers denies that any such agreement was made.

There were apparently major errors in describing the relevant property in the order of Helman J.  Primarily to correct that Crothers caused the matter to be relisted before Byrne J on 10 January 1997.  The summons asked for orders that the property description in the earlier order be amended, that there be some variations to the order appointing Geroff and Furby statutory trustees for sale, that Crothers and Robil be empowered to purchase partnership property from the receivers and managers either at public auction or by way of private treaty and that the sale and disposition of the partnership land be deferred until the accounts of the partnership had been determined by the receivers and managers.

Sheil placed an affidavit before Byrne J on 10 January which, inter alia, contained the following paragraphs:

“6.Additionally, on or about 28 November 1996, I had a meeting with Mr Crothers in order to settle the accounting between the two of us.  After many hours of discussion and following certain investigations by Mr Crothers, an agreement was reached the following day settling the accounting between us in terms of apportioning blocks to me and the balance to Mr Crothers with certain other provisions in relation to the assumption of debt and other assets.

7.I would seek to set out those terms in detail as it affects the Application in as much as it would supersede any accounting by the accountants.”

That affidavit was primarily relied upon in support of an application for an adjournment; the adjournment was refused.  It is unclear to what extent, if at all, the subsequent order made by Byrne J was affected by the contents of paragraphs 6 and 7.

The order made by Byrne J amended the property descriptions contained in the order of Helman J and permitted each of the parties to purchase partnership property from the receiver and managers.  Then, relevantly for present purposes, it went on:

“6.On or before 4.00pm on Friday 24 January 1997 Robil Marketing Pty Ltd deliver Points of Claim in respect of any matter relating to the former partnership between it and Kevin Raymond Crothers including any issue concerning the proper accounting to be made between those former partners.

7.On or before 4.00pm on Friday 7 February 1997 Kevin Raymond Crothers deliver his Points of Defence and Cross Claim (if any).

8.Any Points of Reply and Answer be delivered on or before 4.00pm on Friday 21 February 1997.”

Documents complying with those directions were exchanged, and subsequently amended documents were exchanged.  The relevant documents before me were Amended Points of Claim of Robil delivered 20 February 1997, Amended Points of Defence delivered 26 March 1997, and Points of Reply delivered 19 February 1997.  In those documents Robil alleged that an agreement had been reached as a result of the discussions between Crothers and Sheil on 28 November and 2 December 1996.  Crothers in his defence denied any such agreement was reached, and also alleged that if otherwise there was an agreement it was not enforceable at law for a number of reasons.

The documents exchanged pursuant to the order of Byrne J did not clearly specify the orders sought from the court.  That is a matter that I raised with counsel at the outset of the hearing.  After hearing submissions the matter proceeded upon the basis that the court was being asked to make declarations:-

(i)as to the existence or otherwise of an agreement between the parties;

(ii)if there was any such agreement, as to its terms;

(iii)as to the defences relied upon by Crothers if there was otherwise some agreement between the parties arising out of their conversations on 28 November and 2 December 1996.

Paragraph 5 of Robil’s Points of Claim (with the date amended in accordance with submissions at the hearing) was in the following terms:

“Thereafter on or about 2 December 1996 at approximately 8.00am Sheil on behalf of Robil telephoned Crothers at his residence at Kangaroo Point and said to him words to the effect, “Have you sorted out the titles on the bottom paddock?”  Crothers responded to the effect, “No, I am not going to split them up, you can’t have 15 acres off the bottom paddock but I will give you two extra  blocks instead.  Sheil on behalf of Robil said words to the effect that he would agree providing he received four blocks from the top of the subdivision and four blocks from the bottom of the subdivision.  Crothers then responded words to the effect, “Yes, that’s fine”.

That paragraph must be read in the light of earlier paragraphs dealing with the conversation at the Story Bridge Hotel on 28 November.  Paragraph 6 then went on to make it clear that Robil was alleging that there was an “agreement between the parties” evidenced by the telephone conversation on 2 December.

Paragraph 10 of the Points of Claim then alleged:  “Alternatively, if the agreement referred to in paragraph 5 hereof was uncertain or incomplete then:

“(a)Subsequent to that agreement, immediately following the conversation referred to, Sheil on behalf of Robil and Crothers identified certain lots to which Robil was to have the benefit as being lots 11, 13, 19 and 20 of the bottom lots and lots 4, 9 and 10 of the top lots;

(b)Thereafter, Sheil nominated a final top lot being lot 24.  However Crothers did not accept the nomination of that lot and the parties thereupon agreed that the final lot was a lot to be agreed between them being one of the “top lots” in the subdivision such lot to be nominated by Crothers and either agreed or not by Sheil.”

Then paragraph 11 alleged that if the agreement referred to in paragraph 5 was uncertain or incomplete then the agreement was made complete and certain by virtue of the matters “just set out”.

Upon reading the Points of Claim I was uncertain as to what were the precise terms of the agreement with respect to which a declaration was sought.  I asked counsel for Robil to articulate with precision the terms of the agreement referred to in paragraphs 5 and 11 of the Points of Claim; a short adjournment was granted to allow that to be done.  Counsel’s response was the document which was marked exhibit 1.  It set out two versions of the agreement alleged in paragraph 5, such versions being designated A and B.  There were also two versions of the agreement alleged in paragraph 11; again they were designated A and B.  It should also be noted that leave was given at the outset of the hearing to further amend the Points of Claim by including an allegation that Robil “expressly waived its entitlement referred to in paragraph 10(b) to “either agree or not” the lot nominated by Crothers, such term being for its exclusive benefit.”  The particulars in exhibit 1 with respect to the agreement pleaded in paragraph 11 of the Points of Claim were provided with respect to the agreement “following waiver”.

At the stage of final addresses counsel for Robil also advanced a further alternative for the terms of the agreement alleged in paragraph 11 following waiver; those terms were designated C and the document became exhibit 1A.

One can make the immediate observation that if the party contending for an agreement puts forward five versions of the terms thereof, that in itself must be a strong indication either that no agreement was reached or that there was some uncertainty as to the terms of the agreement.  Counsel for Robil countered that by submitting that Sheil and Crothers had come to an agreement in layman’s terms which was enforceable, and that the five “versions” were but ways of expressing their agreement in legal terminology.

In setting out in Exhibit 1 the detail of each of the first three of the versions of the agreement the term “Right” is used.  That term is defined at the outset as follows:

“... each party’s right to the net proceeds of sale after payment of costs and expenses, and of the net income until sale after payment of costs, expenses and outgoings and rates, taxes, costs of insurance, repairs properly payable out of income and other outgoings as co-owner as defined in s.37A and 42(b) Property Law Act 1974 as amended (hereinafter referred to as “the Right”).”

That definition is in substance taken from s.37A of the Property Law Act.

In version A of the agreement alleged in paragraph 5 of the Points of Claim it is alleged that “it was agreed between the parties that each party’s Right be as follows”; that Robil was to have “four-tenths of the total Rights with respect to the Top Lots” and “four-fourteenths of the total Rights with respect to the bottom Lots”.  It was then said that it was a further term of the agreement that “Crothers would be entitled to the balance of the Rights to all land vested in the Statutory Trustees for sale.”

The existence of an agreement in those terms can be rejected out of hand. There is one thing of which one can be absolutely certain; during discussions on 28 November and 2 December Sheil and Crothers were talking about parcels of land not about fractions or percentages of a right derived from the Property Law Act. It is clear that when they were talking about the “top” and “bottom” lots there was a dispute between them as to who should have a particular lot. Even if that dispute was ultimately resolved and an agreement reached it cannot be translated into a legal agreement referring to percentages of rights pursuant to s.37A of the Property Law Act. There was no agreement as particularised in that version A of Exhibit 1.

Version B of the agreement alleged in paragraph 5 of the Points of Claim asserts that it contained as a term the following:

“(a)That Robil Marketing Pty Ltd would have 100% of the Right to the following land vested in the Statutory Trustees for sale -

(i)Four of the Top Lots, such four lots to be agreed between Robil Marketing Pty Ltd and Kevin Crothers;

(ii)Four of the Bottom Lots to be agreed between Robil Marketing Pty Ltd and Kevin Crothers;

(iii)The commercial property as Lowood.”

For the reasons given above there was no agreement which by its terms referred to a “right” of the type referred to in s.37A of the Property Law Act. That concept was never in the mind of either Sheil or Crothers when they spoke on 28 November and 2 December. That is a sufficient reason for concluding that there was no such agreement. But the term quoted above also demonstrates, in my view, that there was no agreement; at best there was some agreement to agree. Version B does not set out any machinery for identifying any of the lots which were to pass to Robil.

The term “Right” as defined is also used in version A of the agreement alleged in paragraph 11 of the Amended Points of Claim.  Again for the reasons articulated above I am satisfied there was no agreement in those precise terms.  The parties never discussed the “Right to the commercial property at Lowood”; I am not even sure I understand what that expression means.

As I have already impliedly held, neither party to the conversations on 28 November and 2 December fully appreciated the legal ramifications of the order of Helman J that property vest in the receivers as statutory trustees for sale.  Even allowing for the consequences of the fact that, because of the erroneous description, some of the lots the subject of discussions on 28 November and 2 December may not formally have been subject to that order, it is clear that neither Sheil nor Crothers appreciated that the land they were discussing was vested in the receivers and that it was no longer possible for them simply to agree as to a division of that land between themselves.  The court appointed receivers were under an obligation, for example, to ensure that partnership liabilities were discharged or at least covered before allowing any of the partnership land to revert to one or other of the former partners.  After the order of Helman J the former partners could not of themselves decide on an immediately binding arrangement for the disposition of the partnership property.

There is no reference in versions B and C of the agreement alleged in paragraph 11 of the Points of Claim to the “Right” as previously defined.  However, one of the major problems must still be that the court appointed receivers and managers of the partnership property had vested in them the partnership real estate on the statutory trusts for sale and in those circumstances the former partners did not have the power to make a binding agreement between themselves as to the disposition of the assets of the former partnership.  At the very least the receivers would have to have been  involved before any binding agreement could be made.

As noted above, paragraphs 10 and 11 of the amended Points of Claim make it clear that Robil is relying upon there being some agreement on 2 December which removed any prior uncertainty as to the identity of the lots which were to be taken by Robil.  Critical to those allegations is the assertion in paragraph 10(b) that “the final lot was a lot to be agreed between them being one of the “top lots” in the subdivision such lot to be nominated by Crothers and either agreed or not by Sheil.”

The only evidence as to an agreement on 2 December is that contained in paragraphs 76-78 inclusive of Sheil’s affidavit filed 2 May 1997; those paragraphs are in the following terms:

“76The following morning on or about 2 December 1996 I again telephoned Kevin Crothers at approximately 7.44am and had a short conversation with him.  I asked him if he’d sorted out the titles on the bottom paddock.  He responded with words to the effect “No I’m not going to split them up, you can’t have 15 acres off the bottom paddock but I will give you two extra blocks instead.”  I then responded “That’s alright as long as I get four blocks off the top and four blocks from the bottom” to which he replied “Yes, that’s fine.”

77.I then said “Well, we might as well sort out these blocks now” to which he replied “Which ones do you want?”  I replied “11, 13, 19, and 20 off the bottom and 4, 9, 10, and 24 off the top.”  Crothers then replied to me “No, you can’t have 24 I want that myself.”  I said “Kevin, there were four off the top and four at the bottom.  He said “Well, I want it, I like it and I want to keep it myself.”  He responded “Well you can’t have that one.”  I then said to him “Look Kevin, we’ve sorted out seven.  How are we going to pick this last one.  We could put all the numbers in a hat and you can pick one out.”  He replied “No, you might get 24" to which I replied “Yeah, but I might get a bottom lot too.”  He said “No, I am not happy with that.”

78.I then said to him “Look Kevin, you pick a lot and I’ll either agree it or not.  I’ve got to go to the bank anyway to make sure I can refinance the NAB loan.  I’ll get back to you after I’ve been to the bank.”

It can readily be seen that there is no allegation by Sheil that Crothers verbally accepted, that is agreed to, the proposition that he would nominate a lot which Sheil could either agree to or not.  Sheil made that statement and then immediately went on to say he had to go to the bank “to make sure I can refinance the NAB loan”.  If anything that would tend to suggest that any final agreement was dependent upon Robil (or Sheil) getting a favourable response from the bank.  The matter was left entirely up in the air.

On careful analysis of the conversation as recorded in those paragraphs Crothers at most agreed with the proposition that Robil get four of the top lots and four of the bottom lots.  He never agreed (though Sheil asserted to the contrary) that Robil should get lots 11, 13, 19, 20, 4, 9 and 10; one cannot infer acceptance with respect to those lots because the only specific rejection was with respect to lot 24.  Importantly that segment of the conversation ended with Crothers saying:  “No, I am not happy with that.”

Counsel for Robil submitted that the conduct of the parties established that there was an agreement notwithstanding the absence of any formal words of acceptance.  That cannot be so in the circumstances of this case.  Before Crothers could respond to the proposition that he “pick a lot and I’ll either agree it or not” Sheil closed the conversation by saying:  “I’ll get back to you after I’ve been to the bank”.  He did just that at 11.11am on his account; paragraph 90 of his affidavit.  Whatever the precise words used by Crothers, it is clear that in the course of that conversation Crothers said there was no deal.  Probably he used words to the effect that Sheil was being greedy and that “it’s all off”.  What is important, in my view, is that at the first opportunity Crothers had he made it clear to Sheil that there was no agreement.

On Sheil’s own evidence by about midday on 2 December he knew that Crothers was asserting that there was no deal.  He asserts that he then believed there was a deal which would effectively have put an end to the winding up of the partnership by the court appointed receivers.  Between 2 December 1996 and 10 January 1997 when the matter came on before Byrne J Sheil never informed the receivers that there was an agreement.  The letter of 12 December 1996 (exhibit 5) from Sheil to the receivers is strange, to say the least.  It was in these terms:

“Confirming our discussion earlier today 12/12/96 you informed me that the Solicitors Cleary Hoare acting for KR Crothers had informed your office to put on hold the matter between Robil Marketing P/L and KR Crothers as a settlement had been reached between the parties.  Could you please provide me with details of the settlement your office received that date.”

Sheil said in evidence that he wrote that letter seeking details of the settlement as Cleary and Hoare had put it to the receivers; knowing that Crothers had denied to him the existence of any agreement he wanted to know the terms of the settlement the solicitors for Crothers had put to the receivers.  That could well be a reasonable explanation for the letter.

The response from the receivers on 13 December 1996 (exhibit 6) was in these terms:

“I refer to your facsimile transmission dated 12 December 1996 regarding your telephone discussion with Martin Link of this office.

Mr Link did not inform you that Cleary Hoare had informed him that a settlement had been reached between the parties.  What Mr Link actually said was that Cleary Hoare informed him that a meeting had been arranged between Mr Crothers and yourself for the purpose of attempting to reach a settlement.  Subsequently Cleary Hoare advised Mr Link that the settlement negotiations in question had failed and accordingly they would be continuing with their application to court on behalf of Mr Crothers.

I also confirm Mr Link’s advice that Elders Real Estate Laidley has been instructed to auction the property at Coates Street, Laidley on Saturday 1 February 1997.”

What is very significant in my view is that there was no reply to that from Sheil asserting any agreement between he and Crothers.  Even if he had written exhibit 5 with a view to fishing out information, the logical response to exhibit 6 was an assertion, if it be the fact, that there was an agreement between Robil and Crothers.  Sheil was not diffident about sending exhibit 5, and in consequence it cannot be said that as a layman he was unsure of how to respond to exhibit 6.  That fact remains that he made no assertion to the receivers prior to 10 January 1997 that there was any agreement.

It is also odd that Robil should have consented to the order of Byrne J if there had been an agreement which did away with the necessity of the receivers carrying out the statutory trusts for sale.  It is true that Robil sought an adjournment on that day which was refused and that Sheil’s affidavit placed before Byrne J did refer to some agreement.  It would seem that in all probability Robil’s legal advisers were not fully aware as at 10 January 1997 of the terms of the agreement allegedly reached on 2 December 1996.  That in itself affords another reason for doubting the existence of a binding agreement in the terms now alleged.

The final oddity is that after being present at court on 10 January 1997, and having contact with his legal advisers at least at about that time, Sheil, on behalf of Robil, wrote to the receivers on 14 January 1997 the letter exhibit 7.  I set out those extracts which are pertinent for present purposes:

“I am writing to you in your capacity as statutory trustees for sale of land in which this company holds a one-quarter interest.

The order appointing you as statutory trustees was clear in its terms in that you are sell all the land and hold the proceeds of sale upon trust for the parties pending a determination of the entitlement of each to those moneys.

As the Supreme Court has made clear on repeated occasions it is no part of your function as statutory trustee to decide whether or not to sell or whether or not to hold the land for a period or any other matter, rather your primary obligation is to sell the land.

Please advise me within seven days of all of the efforts you have made to sell all of the properties.
...
Moreover you have also engaged in activities and sought to amass fee entitlements for activities which are entirely beyond the scope of your appointment ...

You are a Court appointed Statutory trustee for sale.  You consented to such appointment and orders have been made which bind you.  It is not open for any individual to fail to comply with a Court order solely upon the basis that someone else has said that at some time they may seek to overturn or vary the order.  There has been no stay of execution.
...
Again the terms of your appointment as receivers and managers to the partnership assets was clear in that the partnership is to be dissolved, its assets sold, its debts paid and a distribution ultimately made in accordance with the determination of the Supreme Court after a trial.
Please advise within seven days whether you will comply with the terms of your court appointment or whether you will persist with your current attitude.
...
This company’s position is perfectly clear and in case of any confusion I will set it out bluntly.  You have been appointed to sell all the assets of the partnership, to liquidate the partnership, to pay its debts.  You have not been appointed to run the partnership business.  You have not been given a discretion as to whether to sell.  You have not been given a discretion as to whether some part of the land should be held to await an improvement in the market.
I look forward to receiving your considered responses within seven days particularly as to matters raised in questions in the course of this letter.  In the absence of receipt of satisfactory responses to this letter within that time an appropriate application will be made to the Court in terms foreshadowed above without further notice to you.”

Critically there is no assertion in that letter that there was some agreement between Robil and Crothers which affected the winding up or the exercise of the power of sale.  Castigating the trustees for not promptly selling the land in accordance with the court order is entirely inconsistent with the existence of an agreement of the type alleged in the Points of Claim.  Sheil agreed during cross-examination with the proposition that the agreement he contemplated would have meant that the receivers would no longer be selling the partnership property.

There is another aspect of the alleged agreement which is of importance in determining whether or not an immediately binding legal agreement was entered into on 2 December 1996.  On all the versions advanced on behalf of Robil that company was to take over the National Australia Bank mortgage on the Lowood commercial property and also to take over liability for partnership debts owed to horse racing trainers.  The latter liabilities were to be assumed by Robil because it was to get the horses and truck.  Such an arrangement effectively amounted to a purported assignment of those liabilities from the partnership to Robil.  Leaving aside the question whether or not such an assignment was possible without the involvement of the receivers, there is no doubt that such an assignment was ineffectual to alter the rights of the creditors without their consent.  That does not appear to have been appreciated by either Sheil or Crothers.  Regardless of any private arrangement between Robil and Crothers the trainers had the legal right to demand satisfaction from the receivers administering the winding up of the partnership.  For example, those trainers had a right to have their debts paid out of the totality of the partnership assets; they were not limited (without their consent) to recovery out of assets of Robil alone.  One does not know, for example, what the asset-liability position of Robil was at the material time.  Creditors such as the trainers would obviously want to know the answer to such questions before agreeing to some assignment of the indebtedness to them.

Sheil appeared to realise that at least the arrangement he had discussed with Crothers was subject to the bank refinancing the loan on the Lowood property.  Under cross-examination Sheil was asked when, on his understanding of the agreement, would he have taken over the liability (including the liability to pay interest) on the commercial property loan.  His answer was:  “From the day the bank gave me approval of the loan.”  No such term was discussed either on 28 November or 2 December.  In four of the five versions of the agreement set out in exhibits 1 and 1A the relevant obligation was expressed in terms that Robil would arrange with the bank for the discharge of the mortgage and/or the liability of Crothers with respect thereto “within a reasonable time”.  At least in theory it could take some months to obtain all necessary valuations necessary before the partnership indebtedness was discharged by the refinancing of the loan with Robil as the sole debtor.  That time lapse could have a significant impact on the return to Crothers  from the winding up of the partnership.  The fact that such important matters were not addressed confirms the conclusion I have otherwise reached that there was no binding agreement between the parties.

I have not found it necessary to refer in any detail to the evidence as to the conversation at the Story Bridge Hotel on 28 November.  According to Sheil the discussion extended over some three hours, whereas Crothers said it was a short meeting lasting about half an hour.  Sheil purported to have a recollection of minute detail of the conversation whereas Crothers had, or at least purported to have, no real recollection of what was said.  Ultimately I have come to the conclusion that Sheil went to the meeting with a number of proposals in mind and that he did most of the talking.  There is no doubt that Crothers rejected out of hand at least most of the proposals advanced by Sheil.  Crothers himself only put forward one proposal, namely that Robil take three lots of the subdivided land and the commercial land at Lowood.  That was rejected by Sheil; Robil wanted more.  In all the circumstances I am prepared to accept the evidence of Crothers that he “lost interest” once that proposition had been rejected.  Counsel for Robil in cross-examining Crothers, in my view, summed up the position perfectly when he put the proposition that Sheil was “trying to sell a settlement”.  That is what Sheil was trying to do on 28 November, but he was unsuccessful.  At the end of that meeting there was no binding agreement.  A reading of Sheil’s account of that meeting from paragraphs 58-69 of his affidavit confirms to large extent the conclusions I have reached.

Under cross-examination about the phone call on 2 December Crothers said that Sheil “was putting words in me mouth”.  Again I find that fairly accurately sums up what happened.  Sheil’s account in paragraphs 76, 77 and 78 of his affidavit quoted above demonstrates that it was he who was putting forward all specific proposals.  Crothers was paying a negative role, generally refusing to accept a proposition which was put.  I have already made the observation that at the very end of that phone conversation the critical passage (“you pick a lot and I’ll either agree it or not”) received no response from Crothers before Sheil terminated the conversation.

Robil also led evidence from Bryant the bank manager of the National Australia Bank at Lowood.  Nothing in his evidence, to my mind, confirmed the existence of an agreement in terms advanced in exhibits 1 and 1A.  If anything the reference to six unencumbered blocks, not identified, would tend to suggest that an agreement in the terms now asserted was not reached.

For all of those reasons I have come to the conclusion that there was no legally binding agreement reached on 28 November or 2 December 1996.

There is no real need to consider any other agreement between the parties.  At best for Robil one could possibly reach the conclusion that the parties to the discussions on 28 November and 2 December reached a consensus as to a framework within which the winding up of the partnership could be simplified and some assets distributed in specie.  But that would essentially have been an “agreement to agree” and would not of itself constitute a legally binding agreement.

It is not necessary to consider whether or not any agreement was enforceable having regard to s.59 of the Property Law Act. In order to determine the relevance of s.59 the precise terms of the agreement must be known. If a term of the agreement involved a disposition of land then writing would be required (subject to questions of past performance). But if the agreement was for the disposal of some broader right in the winding up of the partnership then s.59 would probably not be applicable. If it should transpire that some other court concludes that I am wrong in holding there was no binding agreement then that court would be in a better position to determine the relevance of s.59 because it would, of necessity, have to find the precise terms of the agreement in question.

The same can be said with respect to the other issues raised in Crothers’ points of defence.  Those matters can only really be considered in the light of the terms of an otherwise enforceable agreement.

There will therefore be a declaration that there was no binding legal agreement reached between Robil Marketing Pty Ltd and Kevin Raymond Crothers on 28 November and 2 December 1996 with respect to the disposition of partnership assets or with respect to the basis upon which accounts should be prepared in the winding up of the partnership.

Robil Marketing Pty Ltd should also pay the taxed costs of Kevin Raymond Crothers of and incidental to the hearing before me on 25, 26 and 27 August 1997, including the costs of complying with paragraphs 6, 7, 8 and 9 of the order of Byrne J of 10 January 1997.