Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd
[2020] WASCA 8
•17 JANUARY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: WARRINGTON MANAGEMENT PTY LTD -v- KINGSLANE PROPERTY INVESTMENTS PTY LTD [2020] WASCA 8
CORAM: QUINLAN CJ
MURPHY JA
MITCHELL JA
HEARD: 20 NOVEMBER 2019
DELIVERED : 17 JANUARY 2020
FILE NO/S: CACV 31 of 2019
BETWEEN: WARRINGTON MANAGEMENT PTY LTD
First Appellant
CHRISTOPHER WILLIAM WEAVER
Second Appellant
AND
KINGSLANE PROPERTY INVESTMENTS PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: VAUGHAN J
Citation: WARRINGTON MANAGEMENT PTY LTD -v- KINGSLANE PROPERTY INVESTMENTS PTY LTD [2019] WASC 2
File Number : CIV 2908 of 2013
Catchwords:
Restitution - Where appellant company (first appellant) claimed restitution for remuneration in respect of services allegedly provided to respondent at alleged request of respondent - Where appellant company claimed restitution on the basis of an oral agreement to provide services to respondent, or an oral agreement pursuant to which it was nominated to provide services to respondent, in accordance with a remuneration structure subsequently to be agreed, where services subsequently provided by appellant company but the intended agreement did not materialise - Where judge found that services were provided by an individual (second appellant) and not by appellant company - Whether judge erred in addressing the wrong question - Whether judge failed to consider evidence as a whole - Whether judge erred in concluding that appellant company had not established its claim for restitution - Whether judge's findings should in any event have led to judgment for the appellant company
Legislation:
Nil
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
| First Appellant | : | D H Solomon |
| Second Appellant | : | D H Solomon |
| Respondent | : | G D Cobby SC |
Solicitors:
| First Appellant | : | Solomon Brothers |
| Second Appellant | : | Solomon Brothers |
| Respondent | : | Douglas Cheveralls Lawyers |
Case(s) referred to in decision(s):
Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221
Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2015] NSWSC 354
Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635
Mann v Paterson Constructions Pty Ltd [2018] VSCA 231
Nurisvan Investment Ltd v Anyoption Holdings Ltd [2017] VSCA 141
Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221
RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Limited [2009] WASC 203
Smart v Power [2019] WASCA 106
TSW Analytical Pty Ltd v The University of Western Australia [2017] WASCA 67
Vasco Investments Ltd v Morgan Stanley Australia Ltd [2014] VSC 455
Vivian Fraser & Associates Pty Ltd v Shipton [1999] FCA 60
Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd [2019] WASC 2
Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd [2019] WASC 2 (S)
JUDGMENT OF THE COURT:
Summary
This appeal is against the orders of Vaughan J made on 7 February 2019 in the primary proceedings.
The orders were made pursuant to two decisions of the primary judge. The first decision was delivered on 10 January 2019 in Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd[1] (primary decision). The second decision was a supplementary decision delivered on 7 February 2019 in Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd[2] (supplementary decision).
[1] Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd [2019] WASC 2.
[2] Warrington Management Pty Ltd v Kingslane Property Investments Pty Ltd [2019] WASC 2 (S).
The primary proceedings involved, in general terms, disputes in relation to certain corporate entities with which Mr Christopher Weaver,[3] on the one hand, and Mr John Cranston and his son Mr Evan Cranston, on the other, were associated. At all material times, John Cranston controlled a group of companies described as the 'Kingslane Group'.[4]
[3] Mr Weaver is the second appellant in this appeal.
[4] Primary decision [101].
The disputes before the judge included disputes relating to the affairs of the respondent (KPI). KPI was incorporated on 17 August 2010 to establish, promote and manage certain property investments to be acquired by various special purpose trusts and syndicates.[5]
[5] Primary decision [1].
The determination of one of those disputes by the judge is the subject of this appeal. There is no appeal in relation to the other disputes resolved by the primary decision.
The appeal involves a challenge to the judge's decision to dismiss a claim in restitution for (approximately) $1.3 million brought by the first appellant (Warrington - a company associated with Mr Weaver) against KPI in relation to the provision of certain services involving 'asset and project management' services (services) allegedly provided by Warrington to KPI.
In general terms, Warrington's claim for restitution was pleaded along the following lines:[6]
[6] Primary decision [9], [12], [20]; BB 155 - 158.
1.There was an oral agreement between the Cranstons and Mr Weaver to the effect that they would incorporate KPI, promote investments, and appoint KPI to act as asset manager for the investments, and:
(a)Warrington, or alternatively Mr Weaver through a company he would nominate, would provide the services to KPI; and
(b)Warrington, or alternatively Mr Weaver's nominated company, would be remunerated in accordance with a remuneration structure to be agreed at a later date in accordance with the principle of 'reward for effort'.
2.Mr Weaver nominated Warrington for the purposes of its alternative case.
3.Pursuant to the oral agreement, KPI was incorporated on 17 August 2010.
4.KPI became asset manager of various property investments, and Warrington provided, at KPI's request,[7] asset and project management services to KPI between 17 August 2010 and 6 December 2013.
5.A remuneration agreement envisaged by the oral agreement was never agreed.
6.Accordingly, KPI became liable to Warrington in restitution to pay a reasonable remuneration for the services provided by Warrington to KPI.
[7] Warrington's particulars filed 16 April 2014 in the primary proceedings stated that the requests were wholly oral: 'The requests were wholly oral [and] were made during various conversations between [Mr] Weaver and Evan Cranston and [Mr] Weaver and John Cranston. The oral requests were made during both face to face and telephone conversations during the period April 2009 to July 2013 and took place at Suite 23, 513 Hay Street, Subiaco, 47 Forrest Street, Subiaco and 67 Birdwood Parade, Dalkeith'.
The judge noted that on Warrington's pleaded case, the alleged oral agreement was an 'agreement to agree', and that counsel for Warrington described it as an 'intended remuneration agreement'.[8] The judge used the language of 'intended remuneration agreement' at numerous points throughout the primary decision in referring to the nature of the agreement pleaded by Warrington.[9]
[8] Primary decision [10].
[9] Primary decision [5], [10], [36], [86], [94], [110], [115], [130], [139], [141], [180], [186], [201] - [202], [208], [216], [226] - [228], [294], [296] - [298], [301], [304], [313], [318] - [319], [324] ‑ [327], [329], [332] - [334], [336] ‑ [338], [340] ‑ [341], [343], [345] - [347], [350] - [354], [356], [358], [360], [363] ‑ [366], [370] - [371], [373], [433] - [435], [442].
The judge found that on the evidence (1) the discussions between Mr Weaver and the Cranstons prior to the incorporation of KPI were to the effect that Mr Weaver would provide the services to KPI, and that the parties agreed to agree in due course on a remuneration structure for Mr Weaver, and (2) it was Mr Weaver who provided the services to KPI as an officer of KPI. Accordingly, the judge dismissed Warrington's claim for restitution. (There was no claim in the primary proceedings that Mr Weaver, in the alternative to Warrington, was entitled to restitution for the services provided.)
In general terms, Warrington alleged in its appellant's case, in effect, that:
1.The judge erred in failing to address the correct question, being the relevant elements of the claim for restitution, and, correspondingly, in treating evidence of communications after the incorporation of KPI as irrelevant to Warrington's claim for restitution.[10]
2.On the evidence, including evidence after the incorporation of KPI, the judge could not have concluded that:
(a)Mr Weaver (as opposed to Warrington) was a party to the intended remuneration agreement discussions;
(b)Mr Weaver (as opposed to Warrington) provided the services to KPI; and/or
(c)(on Warrington's alternative case) Warrington was not nominated by Mr Weaver to provide the services to KPI.[11]
3.The judge erred in failing to enter judgment for Warrington on the basis of his findings in the primary decision.[12]
[10] Grounds 1 and 2.
[11] Grounds 2 and 3.
[12] Ground 4.
For the reasons which follow, the appeal should be dismissed. The judge did not fail to address the relevant question. He did not treat evidence of communications after the incorporation of KPI as irrelevant. On the contrary, he made detailed findings covering that period and took the events of that period into account in assessing Warrington's claim for restitution. Also, the judge's findings that Warrington (1) was not a party to the intended remuneration agreement discussions, (2) was not (on Warrington's alternative case) nominated by Mr Weaver, and (3) did not provide the services to KPI, were all findings plainly open on the evidence. Fundamentally, Warrington did not demonstrate any proper basis for this court to overturn the judge's finding that it was agreed that Mr Weaver (personally) would provide the services to KPI and be remunerated pursuant to a remuneration agreement to be agreed. That being so, and given both:
(1)the absence, or at least paucity, of any cogent evidence indicating that Warrington had provided the services to KPI; and
(2)the evidence capable of supporting the inference that Mr Weaver personally provided the services,
the judge's conclusion that Warrington had not established its cause of action was plainly open, and indeed correct.
Also, Warrington's contention was that it was entitled to judgment on the basis of the findings in the primary decision lacked any merit. It was accepted by Warrington that this ground could not succeed if the other grounds did not. In any event, the supplementary decision, which dealt with the points raised by this ground, was plainly correct.
The judge's reasons - overview
As outlined later, ground 1 of the appeal, and to an extent ground 2, effectively allege that the judge failed to consider the correct question in his determination of whether Warrington had succeeded in its claim for restitution. The complaint ultimately turns upon the proper construction of the judge's reasons. It is convenient at this point to outline in general terms the way in which the judge structured his reasons for judgment.
In section one of the primary decision,[13] the judge briefly summarised the claims for determination and the outcome of his decision. In section two,[14] the judge outlined the nature of the pleaded cases and the issues for determination. The judge observed that his summary of the issues was not intended to replace the pleadings but was rather intended to be a convenient summary. The judge also observed that the issues as formulated had been raised with counsel before closing, and that neither counsel sought to add to it in closing.[15]
[13] Primary decision [1] ‑ [7].
[14] Primary decision [8] ‑ [34].
[15] Primary decision [34].
In section three,[16] the judge dealt with his approach to the evidence, which involved resolving a substantial contest concerning oral communications over the period between 2009 to 2011. The judge said, amongst other things:[17]
All of the material witnesses had difficulties in terms of specific recollection. That is unsurprising when the central events in dispute took place seven to eight years earlier and were largely concerned with what was said in relatively informal oral exchanges. In cross-examination a response to the effect of 'I don't recall' was a common refrain for Mr Weaver and the Cranstons. That observation is not intended as a criticism. It does, however, emphasise the difficulty that arises in accepting that the various accounts of the witnesses as to what was said on the central issues were reliable. Doubt attends the witnesses' recollection of the events given the passage of time and the common difficulty experienced by Mr Weaver and the Cranstons in recollecting matters that occurred some seven to eight years ago.
This is a case where, more than most, it is necessary to assess the oral testimony in the context of the contemporary materials, objectively established facts and the apparent logic of events. I am also conscious that in determining what, if anything, was agreed, it is necessary to look at the parties' language and conduct in context as a whole rather than viewing each matter in isolation. Thus the context and surrounding circumstances are of importance. That is all the more so as both parties rely on alleged post-contractual conduct as either signifying or being inconsistent with the alleged mutual assent. This will require me to address the objective factual surrounding material before turning to the specific matters in context. (emphasis added) (footnote omitted)
[16] Primary decision [35] ‑ [98].
[17] Primary decision [40] ‑ [41].
In section three, the judge also expressed reservations about the reliability of the witnesses and gave detailed reasons for those reservations. His Honour (relevantly) found Mr Weaver to be an unreliable witness.[18]
[18] Primary decision [63] - [67].
In section four,[19] the judge made comprehensive findings of fact concerning the communications (oral and written) and other events covering the period between early 2000 and 2016. The findings of primary fact in section four are not the subject of challenge in this appeal.[20]
[19] Primary decision [99] ‑ [292].
[20] Appeal ts 25 - 27, 36.
In section five,[21] the judge turned his attention to whether there was an intended remuneration agreement as pleaded by Warrington. The judge concluded that the pleaded intended remuneration agreement, either in its principal or alternative form, had not been established. The judge found, moreover, that the evidence established that the discussions prior to KPI's incorporation established that there was an intended remuneration agreement to the effect that Mr Weaver (personally) would be remunerated for services to be provided to KPI with a remuneration structure to be agreed at a later date.[22]
[21] Primary decision [293] ‑ [367].
[22] Primary decision [353].
In section six,[23] the judge addressed the question of whether Warrington provided the services to KPI. The judge concluded that Warrington did not provide the services to KPI, but rather Mr Weaver performed the services in his personal capacity as managing director of KPI.
[23] Primary decision [368] ‑ [378].
The overall effect of the primary decision was, relevantly, that even though certain defences raised by KPI had not succeeded, Warrington had not established its cause of action.
Background
The judge made the following findings of fact covering the period early 2000 to 2016.
Early 2000 - early 2009
In the early 2000s, Mr Weaver met John and Evan Cranston.[24]
[24] Primary decision [104]; GB 82.
During late 2008 and early 2009, Warrington established two property syndicates.[25]
[25] Primary decision [106]; GB 185.
In the period between late 2008 to early 2009, John Cranston became aware of Mr Weaver's property syndication activities through Warrington.[26]
Mid-2009
[26] Primary decision [106].
Mr Weaver ran Warrington's business from the Kingslane Group's offices after he moved there in mid‑2009.[27]
[27] Primary decision [108] - [109]; 185.
In 2009, John Cranston harboured ambitions to form a company to undertake large scale property investment and development. John Cranston thought that Mr Weaver might be a potential partner in that enterprise, and approached Mr Weaver to discuss the idea in about mid‑2009.[28]
Discussions between Mr Weaver and the Cranstons - 2009 to August 2010
[28] Primary decision [107].
From 2009 to 2010, Mr Weaver on the one hand, and John Cranston and Evan Cranston on the other, had discussions in relation to John Cranston's idea. They reached a broad consensus on a number of matters, including:[29]
1.The venture would involve property investment and development.
2.The need to obtain an Australian Financial Services Licence insofar as it was sought to promote investment in property syndicates.
3.The prospect of John Cranston's company, Kingslane Securities Pty Ltd (Kingslane Securities), obtaining such a licence.
4.Mr Weaver would be the managing director of the entity established to undertake the venture (which was ultimately KPI).
[29] Primary decision [110] - [111]; GB 32 - 33, 85 - 86.
On 27 January 2010, Kingslane Securities obtained an Australian Financial Services Licence. Mr Weaver was one of the responsible officers appointed under that licence.[30]
[30] Primary decision [114]; GB 34.
The proposed arrangements with the Cranstons were 'appealing' to Mr Weaver. That was because, insofar as Warrington was a syndicate manager, various fees generated by Warrington were being split 50:50 with an accounting firm (accepted in the appeal to be Grant Thornton).[31] By the establishment of a new entity (KPI), the parties could keep the majority of the fees. The ability to earn more than 50% of the asset manager fees was one of the drivers for Mr Weaver in establishing business with the Cranstons.[32]
Incorporation of KPI and the 13 Modal Crescent Property Syndicate - August 2010
[31] Appeal ts 52 - 55.
[32] Primary decision [113], [328].
In August 2010, Mr Weaver identified 13 Modal Crescent, Canning Vale as a potential property syndicate opportunity.[33]
[33] Primary decision [117]; GB 186.
On 17 August 2010, KPI was incorporated. Mr Weaver and Evan Cranston were appointed as directors. A total of 90 ordinary shares were issued: 30 to Evan Cranston, 30 to Morara Pty Ltd (a company associated with Mr Weaver) and 30 to Kingslane Pty Ltd (a John Cranston company).[34]
[34] Primary decision [1], [117], [120].
KPI was incorporated to fulfil the role of syndicate manager of the 13 Modal Crescent Property Syndicate.[35]
[35] Primary decision [116] - [117].
Between August 2010 to November 2010, the property at 13 Modal Crescent, Canning Vale, was purchased, and KPI was appointed the manager of the 13 Modal Crescent Property Syndicate.[36]
KPI's property syndicate management activities - August 2010 to November 2012
[36] Primary decision [126(1)].
Primarily through Mr Weaver's efforts, KPI promoted a number of investment opportunities and became the manager or asset manager of a number of property investments in the form of syndicates and trusts. As manager, KPI became entitled to receive, and did receive, fees ultimately in the order of $1.7 million.[37]
[37] Primary decision [125], [128].
The work undertaken by Mr Weaver included establishing and conducting the ongoing syndicate management of various property syndicates of which KPI became the manager or asset manager:[38]
1.13 Modal Crescent Property Syndicate (in the period between August 2010 to November 2010).
2.Blackly Row Unit Trust (in the period between September 2010 to November 2010).
3.Kingslane 432 Murray Street Trust (in the period between March 2011 to June 2011).
4.10 Kings Park Road Syndicate (in about October/November 2011).
5.Kingslane 22 Delhi Street Trust (in the period between November 2011 to November 2012).
Loans and payments to Weaver - February 2011 to mid‑2013
[38] Primary decision [126].
In February 2011, KPI advanced $15,000 to Mr Weaver.[39] In March 2011, KPI advanced $30,000, in two instalments, to Mr Weaver.[40] (These loans formed in total the $45,000 referred to in [55] - [61] below.)
[39] Primary decision [62], [134] - [135]; GB 71, 91.
[40] Primary decision [62]; GB 71.
On 15 April 2011, Mr Weaver sent an email to Evan Cranston and John Cranston concerning his proposal for a share structure for KPI.[41] The email indicated that Mr Weaver was aware that the shareholdings in KPI did not permit a preferential dividend. Mr Weaver must have expected that any franked dividend that might be received by his company (Morara) would also be paid to the other shareholders of KPI.[42]
[41] Primary decision [138] - [142]; GB 101 - 102.
[42] Primary decision [142].
In late June 2011, John Cranston provided, in effect, a short‑term loan to Mr Weaver of $350,000 in connection with Mr Weaver's purchase of a house. (The money was remitted from John Cranston's superannuation fund to Warrington.)[43] In about July 2011, KPI loaned Mr Weaver $350,000. Mr Weaver used this to repay the $350,000 loan from John Cranston.[44]
[43] Primary decision [148].
[44] Primary decision [148]; GB 48 - 49.
In the period between July 2011 to June 2013, monthly payments of $5,833.33 were paid to Mr Weaver and recorded in KPI's books as a loan. Mr Weaver gave instructions to KPI's bookkeeper to begin the monthly payments to him and to record the payments in a loan account. He knew that the payments were recorded as loans to him.[45]
[45] Primary decision [149] - [153], [273] - [274]; GB 103, 147.
The monthly payments reflected, in effect, an annual payment totalling $70,000, based on a gross amount of $100,000 per annum less a company tax component of $30,000 per annum.[46]
The break-up of the business 'partnership' - March 2012 to May 2012
[46] Primary decision [152].
On 27 March 2012, Mr Weaver, John Cranston, Evan Cranston and an employee of Warrington had a meeting. Mr Weaver informed John Cranston and Evan Cranston that he no longer wished to remain in a business partnership with them.[47] Mr Weaver prepared a detailed set of draft minutes of the meeting. The draft minutes recorded Mr Weaver as saying that he 'advised that he had never been successful in discussing an agreed remuneration structure'.[48]
[47] Primary decision [158]; GB 50.
[48] Primary decision [160], [162]; GB 110 - 117.
On 28 March 2012, Mr Weaver sent an email to Evan Cranston referring to the minutes of the meeting, and the next meeting to discuss his loan account of $450,000, and mentioning that he did not want to spend time negotiating a salary position. The email said:[49]
[T]here were some worthwhile points on the financial statements of KPI we noted (eg no Loan Agreements for Loaned Funds …) but we never really concluded much about the Financials. Certainly in my opinion we never concluded the most important component which is how my loan accounts of ˜450K are dealt with. Having said that, on the basis that I think this will be one of the main items of discussion in a splitting of the business strategy this will be something for the next meeting, and I didn't want to spend time negotiating a salary position and then advise you of my preferred outcome - I didn't believe this was a reasonable thing to do. (emphasis added)
[49] Primary decision [165] - [166]; GB 119.
Between 27 March 2012 and 9 August 2012, there were unsuccessful negotiations between Mr Weaver, John Cranston and Evan Cranston on the subject of remuneration and various proposals made by Mr Weaver as to how to bring the business relationship to an end.[50]
[50] Primary decision [177] - [187]; GB 51, 130 - 134, 140, 142 - 143.
Mr Weaver initially sent an email dated 18 April 2012 seeking a time to meet. A meeting occurred on 1 May 2012 at which Mr Weaver tabled a proposal for a split of the business.[51]
[51] Primary decision [178]; GB 51.
Mr Weaver sent an email to Evan Cranston dated 1 May 2012 following this meeting, which stated:[52]
It would seem from our meeting that we share a different line of thinking on what each party should reasonably expect to receive from our business relationship over the last few years. Ultimately I feel we may have been heading towards this for some time which re-iterates my motivation to re-assess the relationship moving forward and re-structure the business accordingly.
We clearly didn't get anywhere, instead going round in circles disagreeing on each and every point. Perhaps rather than put ourselves in that position again, the next step is that you [Evan] and John review the financial statements and the model/proposal that contemplates a split/sale/future fee agreement of the 'asset management' business (eg KPI) and revert with a counter-proposal. (emphasis added)
[52] Primary decision [178]; GB 130.
A detailed proposal accompanied the email.[53] Among other things this assumed Mr Weaver receiving an 'annual salary' of $215,000 - an amount which included superannuation. The proposal suggested that, taking account of the then $465,000 loan account, Mr Weaver was entitled to a further $180,000 in remuneration. Other relevant assumptions were that there would be no bonus payments to Mr Weaver in respect of the 13 Modal Crescent Property Syndicate, the Kingslane 432 Murray Street Trust or the Blackly Row Unit Trust. As to the parties' relative 'entitlements' on a distribution of future success fees, Mr Weaver suggested that each of the 'principals' (ie, himself and John and Evan Cranston) receive 13.5% - these being a 'Deferred Fee for Efforts in Deal' - with the remainder being part of KPI's profit.[54]
[53] Primary decision [179]; GB 131 - 134.
[54] Primary decision [179]; GB 132 - 133.
The materials of 1 May 2012 contained no reference to 'reward for effort'. The reference to remuneration in the form of an annual salary was inconsistent with the intended remuneration agreement alleged by the appellants, in that the email did not contemplate payment to Warrington.[55]
Mr Weaver's email of 9 August 2012
[55] Primary decision [180].
On 9 August 2012, Mr Weaver sent an email to Evan Cranston headed 'KPI consultancy proposal'.[56] The email of 9 August 2012, recorded a proposal that KPI continue, but with a consultancy agreement. Mr Weaver said at the start of the email:[57]
Good to chat to you yesterday, I agree keeping KPI running as a 'standalone' entity in the Kingslane Property Group seems to tick everyones [sic] boxes and I'm glad you are supportive of it 'in principle'. It will save a lot of sorting out, legal fees, differing tax situations and if it gives 'Kingslane Property' a platform of track record and repute over deals done, I'm happy with that outcome, providing I can be paid for the work done to date, and moving forward via a structured Consultancy Agreement. (For the sake of ease, I will put the consultancy through Warrington Management, and just come to an arrangement with Mat). (emphasis added)
[56] Primary decision [181]; GB 142 - 144.
[57] GB 142.
In a summary of the proposal Mr Weaver stated:[58]
[58] Primary decision [184]; GB 142.
•KPI put in place a formal Asset Management Agreement with the Various Trusts & Syndicates, and collect fees as disclosed to investors and outlined in the IM's.
•Warrington Management (WM) enter into a Consultancy Asset Management Agreement between KPI and WM, and WM is paid a % of the KPI Fees for the following:
•Fixed (Upfront) Establishment & Capital Raising Fees
•Undertaking the annual running of the Trusts/Syndicates (including admin)
•Success Fees of each syndicate/trust
•Development Management Fee for 10 Kings Park Road
•Loan Accounts to [Mr] Weaver are reconciled to Consultancy Fees to [Warrington], based on the below structure. (eg become operating 'expenses' to KPI)[.] (emphasis added)
A proposed consultancy fee suggested by Mr Weaver was $550,250, based on 50% of the various fees that had been derived to that date. He suggested that the 50% 'was in keeping with industry parameters for commission paid real estate agents'. Into the future he proposed (1) a 50% consultancy fee as to asset and syndicate management fees, and (2) a consultancy fee of between 40% and 50% as to any success fees.[59]
[59] Primary decision [185]; GB 143.
The proposal in the email of 9 August 2012 proposed a new arrangement. Nothing in it referred to an existing entitlement due to the alleged intended remuneration agreement. Mr Weaver was seeking to negotiate something new rather than have John and Evan Cranston honour a prior arrangement.[60] Also, there was no mention of any agreement as to 'reward for effort' around this time.[61]
Evan Cranston's response to the 9 August 2012 email
[60] Primary decision [186].
[61] Primary decision [182] - [183].
Evan Cranston responded on 10 August 2012 stating that he would 'discuss with the powers that be [ie, his father]' and come back to Mr Weaver.[62] Nothing happened for some time. Around this time there were also discussions and eventual arrangements between Mr Weaver and Evan Cranston as to the loans in February/March 2011 totalling $45,000.[63]
[62] Primary decision [187]; GB 145.
[63] Primary decision [187].
In an email dated 29 August 2012 email, Mr Weaver sought a future response to his proposal.[64]
[64] Primary decision [187].
Evan Cranston's eventual response was by email dated 30 August 2012, in which he stated that, having spoken to John Cranston, they did not want to finalise anything before the Kingslane 22 Delhi Street Trust project had settled.[65] At this time there remained uncertainty about whether the Kingslane 22 Delhi Street Trust would be established.[66]
Emails of 29 - 31 August 2012 - the loans totalling $45,000
[65] Primary decision [187].
[66] Primary decision [187].
On 29 August 2012, Mr Weaver sent an email to Evan Cranston in which he referred to his various loan accounts and to an issue arising under div 7A of the Income Tax Assessment Act 1936 (Cth), and proposed that the parties agree to convert the $45,000 loan to a part payment of the $58,500 consultancy fee proposed in his email of 9 August 2012.[67] The email also stated:[68]
The $45,000 amount relates to activities in 2010/2011 which was primarily the 13 Modal Cr … syndicate … Pending a final outcome on our discussions for moving forward with KPI generally, can we please at least agree to convert the $45,000 loan account to a part payment of the proposed $58,500 consultancy fee. This will convert the loan of $45,000 to an expense to KPI of $45,000 and ensure we don't need to complicate our books with fancy accounting.
[67] Primary decision [190] - [192]; GB 146.
[68] Primary decision [191]; GB 146.
On 30 August 2012, Mr Weaver sent an email to Evan Cranston in which he stated:[69]
The intention was that at some point the loan of $45,000 to me would be converted to a dividend, but payment of a consultancy fee will do the same (eg it will clear the loan by assuming I have paid the loan back to KPI ... and shown as an expense to KPI by [Warrington] charging a consultancy fee for same amount [sic] ... The work done by me for the company associated with the $45,000 was done in 2010/2011. There shouldn't be any argument this constitutes a part remuneration to me for my services to the company. (emphasis added)
[69] Primary decision [193]; GB 151.
Mr Weaver's evidence was to the effect that when the loans were originally made, the intention of KPI's directors and shareholders was to convert the loans into a dividend.[70] In this connection, the judge had already found that Morara (not Warrington) was Mr Weaver's shareholder company in KPI.[71]
[70] Primary decision [194].
[71] Primary decision [120].
On 30 August 2012, Evan Cranston replied by email and stated that he had no problem with what was suggested provided it did not cost KPI any money, and that he was 'happy to put it through as [Mr Weaver's] wages'.[72]
[72] Primary decision [195]; GB 152.
On 30 August 2012, Mr Weaver sent a further email to Evan Cranston and stated that it would be 'a consultancy fee, not wages'.[73]
[73] Primary decision [195]; GB 153.
On 31 August 2012, Evan Cranston sent an email to Mr Weaver and sought clarification that the consultancy fee was for work done on behalf of KPI in relation to the 13 Modal Crescent Property Syndicate.[74]
[74] Primary decision [196]; GB 154.
By email dated 31 August 2012, Mr Weaver accepted this and said that this would be reflected in the invoice.[75] He also said:[76]
$45,000 reflects 38% of the $117,000 earnt by KPI on [the tenants of the 13 Modal Crescent Property] which is below a commercially acceptable payment for the work, but not by much, so let[']s not have the argument over the remuneration split on deals now. For the time being, it just satisfies the tax issues.
After August 2012 - Warrington's invoice for consultancy fees backdated to 30 June 2012
[75] Primary decision [196]; GB 155.
[76] Primary decision [196]; GB 155.
After August 2012, a tax invoice backdated to 30 June 2012 was created by which Warrington invoiced KPI for $46,659.09 plus GST. The description was 'Consultancy Fees (Chris Weaver) 1.7.11 to 30.6.12'.[77]
[77] Primary decision [197]; GB 20 - 21, 137.
The amount of $46,659.09 related to the sum of $45,000 plus some 'gym fees' which KPI had paid on Mr Weaver's behalf.[78] On 4 April 2012, Mr Weaver had sent an email to Evan Cranston stating that although referring to the gym fees as being cleared as a consultancy fee expense, it will be 'reflected in my wages' (emphasis added).[79]
[78] Primary decision [197]; GB 139.
[79] Primary decision [197]; GB 156.
KPI's books recorded general journal entries eliminating the $45,000 loan and debiting a 'consultancy fee', with the entry described as 'Bring Warrington management fee'.[80]
Settlement of the Kingslane 22 Delhi Street Trust - November 2012
[80] Primary decision [197]; GB 138.
In November 2012, the Kingslane 22 Delhi Street Trust project settled.[81]
[81] Primary decision [198]; GB 188.
On 20 November 2012, Mr Weaver asked Evan Cranston to come back to him on the 9 August 2012 proposal.[82]
Monthly payments to Mr Weaver - November/December 2012
[82] Primary decision [198].
On 11 December 2012, Mr Weaver sent an email to Evan Cranston saying that he 'personally' had not been made the monthly advances for November and December, and asked Evan Cranston to 'confirm' that KPI's accounts person 'process this'.[83]
Communications - 20 December 2012
[83] Primary decision [198]; GB 174.
There was a meeting on 20 December 2012 between Evan Cranston and Mr Weaver. Mr Weaver's version of the meeting appeared in an email sent later that day. Mr Weaver's email of 20 December 2012 records there being a difference between the parties as to remuneration. Mr Weaver sought 50% of the revenue to 31 December 2012; Evan Cranston is recorded as putting a position based on the $100,000 per annum. It was said that management fees into the future were agreed in principle at 50:50 (subject to agreement on the other items). There was, however, a significant difference on future success fees. Here the email records:[84]
3.Success fees (Kicker)
(assume total of $2,035,000)
Chris Position - 50 / 40 / 50 (Modal / Murray / Delhi) to Chris (eg $917,000 reward-for-effort bonus) - Balance 1/3 each way to shareholders
Evan Position - 1/3 each way to shareholders
Variance: $917,000[.]
[84] Primary decision [199] - [200]; GB 179.
It was uncontroversial that the parties discussed and agreed at the 20 December 2012 meeting that 50% of future asset and syndicate management fees could go to Mr Weaver or Warrington. This was not, however, a binding agreement and only one aspect of a wider negotiation.[85]
[85] Primary decision [203] - [204]; GB 26.
The 20 December 2012 email was the first time there was a reference to 'reward for effort'.[86] There was no suggestion, however, that there was any prior agreement that Warrington, or another entity nominated by Mr Weaver, would be rewarded for effort in the form of the alleged intended remuneration agreement.[87]
[86] Primary decision [201].
[87] Primary decision [201].
By a further email dated 20 December 2012 from Mr Weaver to Evan Cranston, Mr Weaver referred to 'reward for effort remuneration' of 'me personally'. Again, there was no assertion of any intended remuneration agreement to compensate Warrington by providing a reward for effort.[88]
March 2013 to May 2013
[88] Primary decision [202]; GB 180.
By email dated 11 March 2013 from Mr Weaver to Evan Cranston, Mr Weaver said that he had not heard anything further from Evan Cranston on the pre‑Christmas discussions, and he mentioned a potential offer to pay the Cranstons $1 million for their KPI shareholding. A possible sale was never seriously examined and the offer was formally withdrawn on 20 June 2013.[89]
[89] Primary decision [207]; GB 182.
On 7 May 2013, Mr Weaver sent an email to Evan Cranston suggesting that his loan accounts with KPI also be dealt with by a 'consultancy invoice conversion' (as was done with the $45,000 loan). There was no suggestion that this was a requirement because of the intended remuneration agreement. Rather, the proposal was put in terms of seeking a new agreement.[90]
[90] Primary decision [208]; GB 184.
Evan Cranston did not respond to the email of 7 May 2013, and Mr Weaver sent a follow‑up email on 21 May 2013.[91]
June 2013
[91] Primary decision [209].
Mr Weaver made a series of attempts to obtain a meeting with Evan Cranston in June 2013. Mr Weaver prepared an agenda for the proposed June 2013 meeting and provided it to Evan Cranston. It was clear from this agenda that Mr Weaver was attempting to obtain a conversion of his loan accounts to a consultancy fee and an agreement as to consultancy and success fees as to the future. The agenda noted that KPI would become a 'dysfunctional Asset Manager if [sic] cannot agree on a reasonable split'.[92]
[92] Primary decision [209] - [210]; GB 56 - 57, 191 - 192.
On 24 June 2013, a meeting was held between Evan Cranston and Mr Weaver. In relation to this meeting, the judge observed that Evan Cranston agreed in cross‑examination that there had been an agreement that 50% of the future ongoing asset and syndicate management fees could go to Mr Weaver or Warrington, and that Evan Cranston told Mr Weaver that he (Evan Cranston) was trying to convince John Cranston to agree to a 'reasonable payment'. This tended to confirm that Evan Cranston accepted that the sum of $100,000 was never intended as a total remuneration package.[93] Mr Weaver also suggested, in effect, that if no agreement was reached as to executive remuneration, it would render KPI 'dysfunctional', resulting in the likelihood that KPI would be removed as asset and syndicate manager.[94]
[93] Primary decision [211] - [212]; GB 26.
[94] Primary decision [213].
On 28 June 2013, there was a further meeting between Mr Weaver, Evan Cranston and a Mr Folland, an accountant (with Grant Thornton) associated with Mr Weaver. Mr Folland then sent an email with a suggestion on clearing the loan to Mr Weaver. Amongst other things, the email referred to an agreement to pay $100,000 per annum as a 'consulting fee', the inference being that the remainder of the loan account was not agreed.[95]
[95] Primary decision [214]; GB 195.
On 28 June 2013, Mr Weaver responded to Mr Folland's email by sending an email to Evan Cranston and copied to Mr Folland. Mr Weaver said in this email:[96]
•I disagree that my remuneration for the period to 30 June 13 should be $100,000 pa, but for the purpose of getting on with things I'm happy to adopt it as a retainer consultancy fee and adopt 50% of Asset/Syndicate management fees coming into KPI from 1 July 2013 onwards, invoiced monthly, for the time being.
•On the basis of $100k pa, the consulting fee should be $400,000 (4 years) less $46,000 (last year) = $354,000. On this basis, in order to clear the loan, a franked dividend of ˜$76,000 is paid to ALL shareholders. (Incidentally, I totally agree you and John should get something out of KPI along the way and have never proposed otherwise. With fees owing into KPI now, I estimate this $76K can be paid out to you/John within the next 6 months. My main gripe is that the principle of our agreement to be in business was always reward for effort, and I disagree with the un-equitable proportions of the proposed success fee split)
I'll leave it to you and John to determine if you run with this alternative on the basis that you feel this is a fair reward for effort that was pledged. For now, at least it represents an amicable interim outcome.
[96] Primary decision [215]; GB 196.
By this time, Mr Weaver was making assertions in line with the alleged intended remuneration agreement and the concept of a reward for effort.[97]
[97] Primary decision [216].
Also on 28 June 2013, Evan Cranston responded to Mr Weaver by email almost immediately. He suggested clearing the loans as a consulting fee 'except for the house loan' and entry into a div 7A loan agreement for that amount whilst the salary was resolved. This involved a recognition that Mr Weaver had a potential entitlement greater than $100,000 per annum.[98]
[98] Primary decision [217]; GB 197.
On 9 July 2013, despite lack of agreement, Mr Weaver sent a balance invoice on behalf of Warrington based on $100,000 per annum over four years. The email stated that this was 'proposed to be a base salary for 2009 ‑ 2013'. Mr Weaver otherwise stated:[99]
We just need to get one [sic] with this - the constant battle with you and John to be fairly remunerated is becoming a distraction and annoyance to the task at hand of KPI being a good manager which is regrettable. If the backwards and forwards goes on any further, perhaps the management fees to KPI should be suspended until we reach a resolution.
Mr Weaver takes legal advice - June 2013 to December 2013
[99] Primary decision [219]; GB 198 - 200.
On 5 June 2013, Mr Weaver met and sought advice from a solicitor, Mr Solomon. For that purpose, Mr Weaver prepared a document setting out the background and history of the dispute.[100]
[100] Primary decision [223], [225]; GB 185 - 190.
In Mr Weaver's document, Mr Weaver did not mention the intended remuneration agreement or the notion of 'reward for effort' as now alleged. He did mention the loans totalling $45,000, the $350,000 'house' loan, and the sum of $100,000 explained as an 'agreement [Chris Weaver] should have [as] a regular payment from KPI'. The first time there was mention of a remuneration agreement was under an entry for February 2012 which referred to:[101]
Chris Weaver unsuccessfully attempts to negotiate [a] more structured remuneration agreement with KPI shareholders.
[101] Primary decision [226]; GB 188.
In a follow‑up email dated 5 June 2013, Mr Weaver emailed Mr Solomon after their meeting that day. In the email, Mr Weaver referred to 'a resolution to the pay matter of myself ...' (emphasis added).[102]
[102] Primary decision [230]; GB 193.
In seeking further advice from Mr Solomon on 24 June 2013, Mr Weaver recorded that there was no 'employment agreement'. Again, he made no mention of the intended remuneration agreement.[103]
June 2013 to December 2013
[103] Primary decision [228].
Over the period June 2013 to December 2013, Mr Weaver sought and obtained considerable legal advice broadly in relation to a process by which KPI was removed as manager of the various syndicates and trusts. Mr Weaver received advice to the effect that KPI could be removed as manager on the basis that it was 'dysfunctional'.[104]
KPI's and Warrington's accounting treatment of moneys paid
[104] Primary decision [229] - [230].
The $45,000 advanced in February 2011 and March 2011 was initially recorded as a loan to Mr Weaver. A loan account referred to the loan as Mr Weaver's 2011 drawings.[105]
[105] Primary decision [272]; GB 109, 136.
The $100,000 per annum monthly payments were also accounted for as loans to Mr Weaver. The materials suggested an expectation on Mr Weaver's part that the loans would eventually be off‑set by a franked dividend.[106]
[106] Primary decision [273].
Between August 2011 and mid‑2013, the monthly payments, to Mr Weaver's knowledge, were applied to a loan account in his name. Mr Weaver gave instructions that the payments be recorded as a separate loan account. He referred to the payment as a 'monthly drawing', and said they were made to be the 'equivalent $70,000 pa franked dividend ...'.[107]
[107] Primary decision [274]; GB 23, 103.
In his 29 August 2012 email, Mr Weaver asked that the amounts for 2012/2013 be applied to a new loan account entitled 'Chris - Drawings 2013'. That email followed an earlier 20 August 2012 email, copied to Evan Cranston, which, in effect, referred to the monthly payments to his loan account as payments that would eventually be paid as a franked dividend.[108]
[108] Primary decision [274] - [275]; GB 147, 149 - 150.
KPI's February 2012 balance sheet was consistent with the accounting treatment aforementioned. It showed Mr Weaver as having three different loan accounts:[109]
Loan - C Weaver - House $350,000.00
Loan - C Weaver Drawing 2012 $46,666.64
Loan - C Weaver $45,000.00
[109] Primary decision [278]; GB 108.
An earlier June 2011 balance sheet referred to the $45,000 as 'Loan - C Weaver (Drawing 2011)'.[110]
[110] Primary decision [279]; GB 109.
KPI's special purpose financial statements for the year ended 30 June 2011 were signed by Mr Weaver and Evan Cranston on 18 May 2012. They showed a net operating profit before income tax of $173,947. The $45,000 appeared as a loan to Mr Weaver.[111]
[111] Primary decision [280].
KPI's special purpose financial statements for the year ended 30 June 2012 were signed by Mr Weaver and Evan Cranston. On 15 October 2012, these accounts were signed off on by KPI's external accountant. KPI reported a net operating profit before income tax of $512,892. The balance sheet recorded a $420,000 loan to Mr Weaver - the $350,000 and the $70,000.[112]
[112] Primary decision [281]; GB 167 - 168, 171.
The evidence did not include KPI's financial statements for the year ended 30 June 2013. However, there were special purpose financial statements for the years ended 30 June 2014 and 30 June 2015 in evidence.[113]
[113] Primary decision [282].
The 30 June 2014 financial statements for KPI were verified by the Cranstons. They referred to the loan to Mr Weaver as being a non‑current asset in the amount of $290,000. That was also said to have been the balance as at the end of the 2013 year. A notation appeared:[114]
The balance of the above Loan - C Weaver is currently subject to legal dispute, with the result unknown as at the date of these Financial Statements.
[114] Primary decision [283].
Similar entries appeared for the 30 June 2015 financial statements of KPI, which was also verified by the Cranstons.[115]
[115] Primary decision [284].
The 2014 and 2015 financial statements did not record the $70,000 loans for those years (the $70,000 being the $100,000 net of an amount representing the corporate income tax rate at 30%). This was consistent with KPI's position that these amounts were by way of remuneration. The elimination of any debt in these amounts reflected KPI's acceptance that it had no claim against Mr Weaver for these amounts (a position confirmed by counsel for KPI in opening at the trial).[116]
[116] Primary decision [285].
The 2014 and 2015 financial statements did not record the $350,000 as a loan. Instead the 'house loan' was reduced to an amount of $290,000.[117] The $60,000 difference was the unpaid amount of the two annual $100,000 amounts for July 2011 to June 2013. Consistently with its discharge of the two $70,000 loan amounts, KPI had allowed Mr Weaver $60,000 by way of credit against the $350,000 loan.[118]
[117] Primary decision [286].
[118] Primary decision [287].
In oral submissions, Warrington said that, with respect to the findings in section 4 of the judge's reasons (referred to above) there was no challenge to the primary findings of fact. Warrington was only 'challenging ultimate conclusions'.[119]
[119] Appeal ts 36.
Grounds of appeal
Warrington relied on four grounds of appeal. Ground 1 alleged that the judge erred in law in holding that Warrington was required to establish that there was an intended contract in the precise terms pleaded by Warrington, when he ought to have found that the provision of services following incomplete negotiations toward the formation of a contract, in the expectation that the contract would come to be formed, and KPI's acceptance of such services, entitled Warrington to restitution.[120]
[120] Ground 1 of the appellants' grounds of appeal cites primary decision [298], [358].
Ground 2 alleged that the judge erred in law in failing to have regard to all of the circumstances, including facts subsequent to KPI's incorporation, in determining:
1.whether Warrington was a party to discussions that comprised incomplete negotiations toward the formation of a contract;
2.(further or alternatively) whether Warrington provided services to KPI; or
3.(alternatively to grounds 2.1 and 2.2) whether Warrington was nominated by Mr Weaver as the party to be remunerated for the services provided by Mr Weaver to KPI.
Ground 3 alleged, in effect, that the judge erred in law and in fact in failing to find, when he ought to have found, that: [121]
1.Warrington was a party to discussions that comprised incomplete negotiations toward a contract;
2.(further or alternatively) Warrington provided services to KPI; and/or
3.(further or alternatively) Warrington was nominated by Mr Weaver as the party to be remunerated for providing services by Mr Weaver to KPI.
[121] Ground 3 of the appellants' grounds of appeal cites primary decision [186], [208], [342], [345], [350], [353] ‑ [356].
In that regard, Warrington alleged that the judge failed to have proper regard to, and to the totality of, the following evidence and findings:
1.John Cranston and Evan Cranston knew that Mr Weaver was conducting 'his business' through Warrington prior to KPI's incorporation.
2.KPI was conducted without formality, such that the doctrine of unanimous consent ought to apply.
3.John Cranston controlled KPI's finances and effectively acted as KPI's chairman, despite not being appointed as a director.
4.Mr Weaver (through Morara), John Cranston (through Kingslane Pty Ltd) and Evan Cranston represented the whole of KPI's membership.
5.The contents of the emails dated (1) 15 April 2011, (2) 9 August 2012, (3) 29 August 2012, (4) 30 August 2012, and (5) 7 May 2013.
6.A loan of $45,000 made by KPI to Mr Weaver, which was made by way of advances in February 2011 and March 2011 ($45,000 Loan).
7.The satisfaction by KPI of an invoice to KPI dated 30 June 2012 issued by Warrington for services provided to KPI in 2010 and 2011, by satisfying the $45,000 Loan.
8.The content of discussions between Mr Weaver and Evan Cranston on 8 August 2012 and 24 June 2013.
9.Warrington's treatment of further loans (one $350,000 amount and two $100,000 amounts) as income in its tax return for the year ended 30 June 2013.
10.The issue of a balance invoice by Warrington.
Ground 4 alleged that, in the alternative to grounds 1 to 3, the judge erred in law in dismissing Warrington's claim in circumstances where, to give effect to the judge's findings at [121] - [122], [189] ‑ [197], [301], [345] - [365] and [374] - [375] of the primary decision, Warrington's claim ought to have been upheld in the sum of $683,175.20.
Appellants' submissions
Ground 1
Warrington submitted that Warrington's claim was not based on, and did not depend on, proof of the existence of a contract. It says that, indeed, there was no dispute that there was no binding contract in relation to an agreed remuneration structure.[122] Rather, Warrington's claim against KPI was a restitutionary one, based on unjust enrichment, and not in contract.[123]
[122] Appellants' written submissions, pars 34 - 35; WB 15 citing primary decision [294]; statement of claim, par 9; BB 158.
[123] Appellants' written submissions, par 34; WB 15 citing Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, 227 - 228; Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635 [79], [83], [85].
Warrington submitted, in effect, that the judge failed to appreciate, or at least lost sight of the facts that:[124]
1.Warrington's claim for restitution could succeed if it established that Warrington provided the services to KPI at KPI's express or implied request, and that a request may be implied from all the circumstances including the pleaded intended remuneration agreement (with or involving the nomination of Warrington).
2.The performance of work in the expectation that, in due course, payment would be made for it under an anticipated contract is a basis upon which an obligation to pay reasonable remuneration will be imposed,[125] and that Warrington could succeed if it provided the services to KPI pursuant to the pleaded intended remuneration agreement.
[124] Appellants' written submissions, par 34 ‑ 36, WB 15; appeal ts 13 ‑ 15, 19, 23, 31.
[125] Appellants' written submissions, par 36; WB 15, citing Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221, 259 ‑ 261; Vivian Fraser & Associates Pty Ltd v Shipton [1999] FCA 60 [324] ‑ [328]; Vasco Investments Ltd v Morgan Stanley Australia Ltd [2014] VSC 455 [337] ‑ [358]; TSW Analytical Pty Ltd v The University of Western Australia [2017] WASCA 67 [65], [96] ‑ [105]; Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 [48].
Warrington submitted that, consequently, the judge undertook the wrong inquiry. He confined his consideration to whether 'there had been an agreement which provided that Warrington was paid for the services performed (even if the terms of the remuneration … had not been agreed)'. Thus, instead of addressing the pleaded elements of restitution, the judge incorrectly sought to ascertain the terms of the earlier agreement, which merely comprised steps in negotiations, or an 'agreement to agree', and did not comprise a binding contract.[126]
[126] Appellants' written submissions, pars 37, 39; WB 16.
Warrington further submitted that:
1.The basis for the imposition of an obligation on KPI to pay reasonable remuneration arises from certain of the judge's findings.[127] The 'only' question, Warrington submitted, was which party provided services, and therefore became entitled to remuneration. That question was not to be answered by analysis of what was agreed as part of the discussions as to an intended remuneration agreement providing for reward for effort before KPI's incorporation (Pre‑incorporation Discussions) - which did not result in a binding contract for remuneration.
2.The judge ought to have considered all the circumstances - before and after the Pre‑incorporation Discussions took place, and during the course of the provision of the services.[128] Warrington submitted that 'post‑contractual conduct' can be looked at in order to determine the identity of a 'party to the contract',[129] and that by analogy, conduct after the incorporation of KPI could be looked at in determining the parties to the pleaded intended remuneration agreement. Warrington also submitted that the conduct throughout the provision of services may be relevant to determining a claim for restitution.[130]
Grounds 2 and 3
[127] The findings are set out at pars 4 - 28 of the appellant's submissions, and refer to primary decision [1], [44], [62], [73], [101], [104], [107], [111] ‑ [114], [116] ‑ [117], [120] ‑ [128], [134], [137], [143], [153], [158], [177], [184] ‑ [185], [187] ‑ [193], [195] ‑ [197], [208] ‑ [209], [214] ‑ [215], [217], [219], [273] ‑ [274], [286] ‑ [287], [289], [336], [376].
[128] Appellants' written submissions, pars 38; WB 16.
[129] Appellants' written submissions, par 38; WB 16, where reference is made to Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2015] NSWSC 354 [76] ‑ [86]; Nurisvan Investment Ltd v Anyoption Holdings Ltd [2017] VSCA 141 [74] ‑ [84].
[130] Appellants' written submissions, par 38; WB 16 citing Brenner (259), (261).
Warrington submitted that grounds 2 and 3 are 'distinct, but related' and are 'cumulative to ground 1'.[131]
[131] Appellants' written submissions, par 40; WB 16.
Warrington submitted that the judge erroneously limited the scope of the exercise of determining the identity of the person/entity which was party to the Pre‑incorporation Discussions and the person/entity which thereafter provided the services to KPI, alternatively whether Warrington was nominated to be the recipient of remuneration.[132]
[132] Appellants' written submissions, par 40; WB 16 - 17.
Warrington submitted that the judge (at [358]) erroneously discounted Mr Weaver's evidence of a conversation with John Cranston in November 2010 (set out by the judge at [133]). Warrington submits that the judge erred in treating that conversation as irrelevant on the basis that it post‑dated any Pre‑incorporation Discussions, and in not treating Mr Weaver's evidence on that point as reliable.
Warrington also submitted that being a corporation, it could not physically provide any services itself, but only through an individual.[133]
[133] Appellants' written submissions, par 41; WB 17.
Warrington submitted, in effect, that the judge ought to have concluded that (1) Warrington, not Mr Weaver, was the participant in the Pre‑incorporation Discussions, (2) Warrington provided the services to KPI; alternatively, (3) Warrington was the company nominated by Mr Weaver to be remunerated for services he provided. Warrington relied on the following matters:[134]
[134] Appellants' written submissions, par 42; WB 17 - 23.
1.John Cranston and Evan Cranston knew that (1) prior to KPI's incorporation, Mr Weaver was conducting his business of organising and managing syndicates and trusts through Warrington, and (2) after KPI's incorporation, the Australian Financial Services Licence enabled Mr Weaver to carry on the same work that he had been doing through Warrington (prior to associating with the Cranstons), but on a larger scale through KPI.[135]
[135] Appellants' written submissions, par 42.1; WB 18 citing ts 357 - 358, 421 and primary decision [106].
2.Prior to aligning his business with KPI, Mr Weaver conducted his business through Warrington.[136]
[136] Appellants' written submissions, par 42.2; WB 18 citing primary decision [376].
3.At some stage, John Cranston became aware of Mr Weaver's property syndication activities through Warrington.[137]
[137] Appellants' written submissions, par 42.3; WB 18 citing primary decision [106].
4.Mr Weaver (through Morara), John Cranston (through Kingslane Pty Ltd) and Evan Cranston collectively represented the whole of KPI's membership.[138]
[138] Appellants' written submissions, par 42.4; WB 18 citing primary decision [121] - [122], [300].
5.John Cranston, though not a director of KPI, controlled KPI's finances and effectively acted as its chairman.[139]
[139] Appellants' written submissions, par 42.5; WB 18 citing primary decision [300] - [301].
6.KPI was conducted without formality, and the doctrine of unanimous consent ought to apply.[140]
[140] Appellants' written submissions, par 42.6; WB 18 citing primary decision [301].
7.Warrington was engaged to provide property management services to the syndicates and trusts and executive services to KPI.[141]
[141] Appellants' written submissions, par 42.7; WB 18 citing primary decision [340].
8.The loans being:[142]
[142] Appellants' written submissions, par 42.8; WB 18 - 19 citing primary decision [62], [132] - [137], [149] ‑ [289].
(a)the loans totalling $45,000; and
(b)the two $100,000 loans.
9.The substance and contents of the emails of:
(a)15 April 2011, in which Mr Weaver stated that KPI's profits could be distributed to other companies, for example to Warrington, as 'management fees'. In finding at [139] and [141] of the primary decision that the email was not significant evidence in support of Warrington's case, the judge erred, because (1) the Pre‑incorporation Discussions contemplated the later formation of a contract by which remuneration would be paid for services on a reward for effort basis,[143] and (2) the email 'comprised clear evidence' of Warrington being the entity that was to receive remuneration.[144]
[143] Appellants' written submissions, par 42.9.1; WB 19 citing primary decision [336].
[144] Appellants' written submissions, par 42.9.1; WB 19.
(b)9 August 2012, in which Mr Weaver proposed that KPI continue, but with a consultancy arrangement with Warrington, and that loans made to Mr Weaver be reconciled to consultancy fees to Warrington. The judge erred in finding that nothing in this 'proposed new arrangement' referred to 'some existing entitlement due to the alleged intended remuneration agreement'.[145] The judge should have found that this proposal was evidence in support of the fact that it was common ground that KPI would pay remuneration, and that the parties would agree to the remuneration structure at a later date.[146]
[145] Appellants' written submissions, par 42.9.2; WB 19 - 20 citing primary decision [186], [350].
[146] Appellants' written submissions, par 42.9.2; WB 20.
(c)29 August 2012, in which Mr Weaver proposed that the parties agree to convert the $45,000 Loan to a part payment of the $58,500 consultancy fee proposed in his email of 9 August 2012. The judge erred in finding that this proposal referred to a new arrangement, rather than the implementation of a pre-existing agreement.[147]
[147] Appellants' written submissions, par 42.9.3; WB 20 citing primary decision [350].
(d)30 August 2012, in which Mr Weaver said to Evan Cranston that '[t]he intention was that at some point the [$45,000 Loan] to me would be converted to a dividend, but payment of a consultancy fee will do the same'. In that regard:
(i)The judge erred in finding that the acceptance of this proposal to re‑characterise the $45,000 Loan was not reflective of the intended remuneration agreement involving Warrington.[148] Warrington submitted that 'it is common' for non‑legally qualified directors to refer to companies as being 'one and the same' as themselves.[149]
[148] Appellants' written submissions, par 42.9.4; WB 20 citing primary decision [350].
[149] Appellants' written submissions, par 42.9.4; WB 20.
(ii)The judge erred in finding that the email did not nominate Warrington as the company through which Mr Weaver would provide services to KPI, and that it did not provide for Warrington to be remunerated pursuant to a remuneration structure to be agreed, and that the email only suggested a means of eliminating Mr Weaver's tax issue.[150] The finding was inconsistent with the earlier finding that KPI was conducted without formality.
[150] Appellants' written submissions, par 42.9.4; WB 20 - 21 citing primary decision [363].
(iii)The judge erred by failing to take into account the fact that the $45,000 Loan was discharged by the payment of a consultancy fee to Warrington, thus linking the content of the email of 30 August 2012 with the concept of Warrington being the party which was to receive remuneration.[151]
(e)7 May 2013, in which Mr Weaver made further proposals for his further loan accounts to also be dealt with by a 'consultancy conversion'. For the same reasons as the judge erred in relation to the 9 and 29 August 2012 emails, the judge also erred in finding that this proposal did not suggest that the consultancy conversion was a requirement because of an intended remuneration agreement, but that it sought a new agreement.[152]
10.A meeting on 8 August 2012[153] between Mr Weaver and Evan Cranston, as described by Mr Weaver in par 62 of his affidavit of 18 February 2014.[154] Warrington submitted that the judge effectively only addressed the evidence of this meeting in relation to the question of an oral nomination of Warrington, and the provision of future services. The judge made no findings about the content of the discussions at the meeting.[155] Warrington submitted that on Mr Weaver's evidence, it had always been understood by all parties that it was Warrington that was party to the Pre‑incorporation Discussions and was providing the services to KPI, alternatively was the entity nominated to receive remuneration.[156]
11.The satisfaction of the invoice backdated to 30 June 2012 by KPI, extinguishing the $45,000 Loan.[157]
12.A meeting on 24 June 2013 between Mr Weaver and Evan Cranston. Warrington submitted that Evan Cranston conceded in cross examination that there had been an agreement that 50% of future ongoing asset and syndicate management fees could go to Mr Weaver or Warrington and 'that KPI had already been paying Warrington on a 30% proportionate basis'.[158] Warrington submitted that as with the 8 August 2012 meeting, the fact that there were discussions about payment of remuneration to Warrington (including discussions of previous remuneration paid to Warrington) is evidence that it had always been understood by all parties that it was Warrington that was the party to the Pre‑incorporation Discussions and was providing the services to KPI, alternatively was the entity nominated to receive remuneration.[159]
13.Warrington's treatment of the $350,000 amount and the two $100,000 amounts as income in its tax return for the year ended 30 June 2013.[160]
14.On 9 July 2013, Warrington issued the balance invoice.[161]
[151] Appellants' written submissions, par 42.9.4; WB 21 citing primary decision [189] - [197].
[152] Appellants' written submissions, par 42.9.5; WB 21 citing primary decision [208].
[153] Appellants' written submissions, par 42.10; WB 21.
[154] GB 52. Mr Weaver said: 'On 8 August 2012, I met with [Evan Cranston] and discussed the future of KPI. I made a suggestion that, rather than change the shareholding of KPI, it should continue to provide services to the various syndicates and trusts, and that through Warrington and the payment of an executive service fee it could continue to do that. [Evan Cranston] said words to the effect that he and [John Cranston] were supportive of this approach, and the payment of a reasonable executive service remuneration via consultancy payment to Warrington'.
[155] Appellants' written submissions, par 42.10; WB 21 - 22 citing primary decision [360].
[156] Appellants' written submissions, par 42.10; WB 21 - 22.
[157] Appellants' written submissions, par 42.11; WB 22 citing primary decision [197].
[158] Appellants' written submissions, par 42.12; WB 22 citing primary decision [211] and ts 405.
[159] Appellants' written submissions, par 42.12; WB 22.
[160] Appellants' written submissions, par 42.13; WB 23 citing primary decision [289].
[161] Appellants' written submissions, par 42.14; WB 23 citing primary decision [219].
Warrington submitted that the above matters, and the analysis of each matter in isolation and in totality, resulted in the judge erroneously reaching the conclusions at [342] - [355] of the primary decision, such that the judge failed to have proper regard to all of the evidence by only analysing that evidence for the purpose of determining whether Mr Weaver was enforcing any existing contractual obligations. Rather, the judge should have analysed the evidence to determine whether:[162]
1.Warrington was the party to the Pre‑incorporation Discussions.
2.Warrington provided the services to KPI.
3.(Alternatively) Mr Weaver nominated Warrington as the entity to be remunerated for the services provided to KPI.
Ground 4
[162] Appellants' written submissions, par 43; WB 23.
In oral submissions, Warrington also submitted that the arrangements with the Cranstons involving KPI meant that Warrington could earn fees without having to share them 50:50 with Grant Thornton, as had been the case in respect of Warrington's other property syndicates.[163]
[163] Appeal ts 55.
Warrington submitted that the services provided to KPI were not provided as a gift, but were actually or constructively requested and accepted by KPI for its benefit.[164] The services followed the Pre‑incorporation Discussions 'which were to an intended agreement for reward for effort'.[165] Accordingly:
1.A reasonable person in KPI's position should have known (and in fact KPI knew) that a person in the position of the provider of the services would expect to be paid for those services, where no reasonable opportunity to reject those services was taken.[166]
2.There was an expectation that the services provided to KPI would be paid for; in particular that there was an expectation that there would be a contract in relation to a remuneration structure.[167]
[164] Appellants' written submissions, par 44; WB 23 citing primary decision [323] - [324].
[165] Appellants' written submissions, par 44; WB 23 citing primary decision [336].
[166] Appellants' written submissions, par 44; WB 23 - 24 citing Brenner (260).
[167] Appellants' written submissions, par 44; WB 23 - 24.
Warrington submitted that the restitutionary claim of the type advanced by Warrington has been long recognised.[168]
[168] Appellants' written submissions, par 45; WB 24 citing Pavey (257).
Warrington submitted that the judge found that a request for services was made.[169]
[169] Appellants' written submissions, par 46; WB 24 citing primary decision [296].
Warrington submitted that where there is a claim under a contract, evidence of conduct subsequent to the contract negotiations is admissible to determine whether a contract was made.[170] Here, there was relevant conduct after KPI's incorporation, but that conduct had retrospective effect because it was an agreement for payment by KPI to Warrington made in 2012 for services provided in 2010 and 2011.[171]
[170] Appellants' written submissions, par 47; WB 24 citing TSW [49].
[171] Appellants' written submissions, par 47; WB 24 citing primary decision [193].
Warrington submitted that the judge rejected:
1.KPI's principal defence that there was an agreement between Mr Weaver and the Cranstons that remuneration for Mr Weaver's services would be solely through equal dividends to KPI's shareholders.[172]
2.KPI's defence that a salary of $100,000 was agreed.[173]
[172] Appellants' written submissions, par 48; WB 24 - 25 citing primary decision [318] - [336].
[173] Appellants' written submissions, par 48; WB 24 - 25 citing primary decision [304] - [317].
Warrington submitted that because the claim is in restitution based on an expected contract which was not made, the issue for determination was not whether a preliminary agreement in the exact terms pleaded in pars 4 or 4A of the statement of claim was made (although the judge held the contrary at [298] of the primary decision). Rather, the issue was whether KPI's acceptance of the services (which was not in issue) made it unconscionable for KPI to not remunerate Warrington for provision of those services.[174]
[174] Appellants' written submissions, par 49; WB 25.
Warrington submitted that the possibility of both KPI's defences failing, and Warrington's claim failing, based on the analysis in [298] of the primary decision, was not argued at trial.[175]
[175] Appellants' written submissions, par 49; WB 25.
Warrington submitted that, because both of KPI's defences were rejected, the only remaining issue for the judge was whether Warrington was entitled to restitution.[176] Warrington submitted that 'when, as here, the pleaded claim in restitution was based on an expected contract not having been made, the precise terms of preliminary negotiations which did not give rise to an enforceable contract were not matters on which the claim turns'. Warrington submitted that the claim turned on:
1.The negotiations having taken place and there not having been a concluded agreement.
2.The provision of services to KPI at its request in expectation of an agreement being concluded.
3.Whether the KPI's acceptance of those services made it unconscionable for KPI not to remunerate Warrington for the services.[177]
[176] Appellants' written submissions; par 50; WB 25.
[177] Appellants' written submissions, par 50.4; WB 26.
Warrington submitted that the following matters were material in deciding whether Warrington established that it was the nominated company to be remunerated (without considering if the precise preliminary agreement was proved as pleaded):
1.Through corporate entities, Mr Weaver, John Cranston and Evan Cranston held shares in KPI.[178]
2.KPI was conducted informally. The doctrine of unanimous consent is applicable in considering the issue of whether Warrington is entitled to remuneration for the services if the intended remuneration agreement in the precise terms pleaded were not proved.[179]
3.For Warrington to be entitled to remuneration, the services had to be performed by an individual.[180]
4.The agreement for payment of $45,000 to Warrington was made in 2012 for services provided in 2010 and 2011. The appropriate use of evidence of conduct throughout the time the services were provided, could only lead to one inference. That was that Warrington was nominated by Mr Weaver as his company which was paid by KPI for his services. Warrington was therefore entitled to recover reasonable remuneration.[181]
[178] Appellants' written submissions, par 50.5.1; WB 26 citing primary decision [121] - [122].
[179] Appellants' written submissions, par 50.5.2; WB 26 - 27.
[180] Appellants' written submissions, par 50.5.3; WB 27.
[181] Appellants' written submissions, par 50.5.4; WB 27.
In summary, Warrington submitted that, whilst the judge found that Warrington failed to prove the intended remuneration agreement (either in its principal oral terms or its alternative oral terms), it did not need to. Warrington only needed to prove that an enforceable contract as to remuneration was not made, that it was nominated as the party entitled to remuneration for services provided to KPI by Mr Weaver at KPI's request in expectation of a contract being made, and that it would be unconscionable for it to not be remunerated for those services.[182]
[182] Appellants' written submissions, par 51; WB 27.
In oral submissions, Warrington accepted that if grounds 1 to 3 failed, ground 4 could not succeed.[183]
[183] Appeal ts 4.
Respondent's submissions
It is unnecessary to set out in detail KPI's submissions. In substance, KPI submits, in relation to ground 1, that the judge did address the correct question and did take into account conduct after the incorporation of KPI. In relation to grounds 2 and 3, KPI submits that the judge addressed all the evidence the subject of complaint in these grounds, and that the judge's conclusions were plainly open on the evidence. In relation to ground 4, KPI submits that the ground has no merit for the reasons given by the judge in the supplementary decision.
Disposition
Ground 1
No error has been demonstrated. The judge addressed Warrington's claim as advanced in relation to restitutionary principles in reliance on the High Court's decision in Lumbers. The judge accepted that if Warrington proved that KPI had, expressly or impliedly, requested Warrington to provide the relevant services and Warrington had provided the services, then Warrington would have an action to recover a fair price for the work done.[184]
[184] Primary decision [296].
The judge also accepted, as a general proposition, that if, objectively speaking, services were provided in circumstances where there was an expectation that they would be paid for, restitution would be available.[185]
[185] Primary decision [296]. The judge referred to RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Limited [2009] WASC 203 [153].
The judge did not, in terms, refer to Brenner and the other authorities relied on by Warrington in this appeal to the effect that the performance of work, in the expectation that it will be paid for under an anticipated contract that has not materialised, may provide a basis for a claim in restitution. However, in order to establish a claim on that footing, Warrington was still required to prove at least:
1.An anticipated contract which did not materialise - which on Warrington's pleading involved proof of the intended remuneration agreement in its principal or alternative terms.
2.That Warrington performed the services for KPI.
In other words, on its pleaded case, Warrington needed to prove the same material facts, whether it sought to prove the provision of services by Warrington at KPI's implied request to Warrington, or the provision of services by Warrington pursuant to an anticipated contract with Warrington (either directly or through nomination) which failed to materialise.
Whilst plainly alive to the possibility that Warrington could succeed if it proved that it provided services and did so at the express request of KPI,[186] the judge accepted that an express request was not necessary, and that a request could be implied if Warrington proved the intended remuneration agreement.[187] In this regard, the judge noted KPI's submission to the effect that there was no evidence that KPI had 'requested' Warrington to provide the services. The judge said in that regard:[188]
In closing counsel for KPI submitted that there was no evidence of any 'request'. This was put in two ways: first, that there was no evidence on Mr Weaver's part that he made a request on the part of KPI; and second, that there was no evidence by Mr Weaver on behalf of Warrington that a request was made of him. That submission may be formally correct if one looks for the word 'request' in the evidence. But the case was fought on the basis that the necessary request was inferred from the remuneration agreement. Certainly that is the thrust of the plea at par 6 of the [statement of claim] as particularised. (emphasis added) (footnotes omitted)
[186] This was so even though in its particulars Warrington had alleged that KPI had orally requested Warrington to provide the services: primary decision [17].
[187] Primary decision [296].
[188] Primary decision [297].
The judge then continued:[189]
Insofar as the claim was one of reasonable remuneration by way of restitution for services performed the case turned on whether Warrington proved the intended remuneration agreement. (emphasis added)
[189] Primary decision [298].
In other words, the judge accepted that on Warrington's case, a request could be inferred if services were provided by Warrington to KPI against the pleaded background that the promoters of KPI (the Cranstons and Mr Weaver) had orally agreed that Warrington, or alternatively a company nominated by Mr Weaver which later transpired to be Warrington, would provide such services to KPI following its incorporation on the basis that a binding remuneration agreement would be entered into in due course.
Although Warrington took issue with the finding referred to in [135] above, there is no ground of appeal challenging the finding as to the basis upon which Warrington fought the case, referred to in [133] above.
The judge found, in effect, that there was no oral agreement as pleaded by Warrington, in either of its forms,[190] and that accordingly, the intended remuneration agreement could provide no basis upon which to infer that KPI had requested Warrington to provide the services for which Warrington claimed reasonable remuneration.
[190] Primary decision [293] ‑ [367].
Rather, on the evidence, the discussions between Mr Weaver and the Cranstons prior to the incorporation of KPI were to the effect that Mr Weaver would provide the services to KPI, and that the parties agreed to agree in due course on a remuneration structure for Mr Weaver.[191]
[191] Primary decision [353] ‑ [354].
The judge then went on to consider whether Warrington provided the services to KPI. In substance, his Honour found that Warrington had not established that it provided the services to KPI in circumstances where (1) Mr Weaver personally did the work, (2) there was no intended remuneration agreement with or involving Warrington as pleaded, and (3) Mr Weaver and the Cranstons had agreed that Mr Weaver would himself do the work and be paid for it in accordance with a remuneration package to be agreed. The judge found that on the evidence, it was Mr Weaver who had provided the services to KPI as an officer of KPI.[192]
[192] Primary decision [369] - [372], [378].
Insofar as Warrington submits that the judge erred in mistakenly approaching Warrington's claim on the basis that it was a contractual claim for remuneration, the submission is manifestly inaccurate. The judge was at pains, consistently, to observe and record that Warrington's pleaded case was to the effect that there had been an agreement to agree remuneration in due course (see [8] above).
Insofar as Warrington submits that the judge erred in regarding the pleaded agreement as an essential integer of the claim, his Honour found both that the relevant agreement was for Mr Weaver rather than Warrington to do the work, and that the work was done by Mr Weaver personally rather than by Mr Weaver as Warrington's agent. In doing so, his Honour recognised that the issue of who did the work was informed by the conclusions reached as to the intended remuneration agreement.[193] His Honour did not err in concluding that in all the circumstances, including the discussions that Mr Weaver rather than Warrington would be remunerated for services to be provided to KPI, that Mr Weaver rather than Warrington provided the relevant services.
[193] Primary decision [371].
Insofar as Warrington submits that the judge erred in not taking into account, by analogy, 'post‑contractual conduct', ie, evidence of conduct after the incorporation of KPI, four points may be made. First, the judge said that the parties' language and conduct had to be construed in the context of the evidence as a whole rather than viewing each matter in isolation. In that regard, the judge noted in terms that the parties relied on alleged 'post‑contractual conduct' as relevant to the determination of whether (in effect) Warrington had established the intended remuneration agreement in either of its forms.[194] The judge also said:[195]
It is necessary to spend some time outlining what occurred between Mr Weaver and the Cranstons from August 2010 onwards. Warrington relies on those dealings as they are said to be consistent with, so as to be probative of, the existence of an intended remuneration agreement of the kind on which it relies. (emphasis added)
[194] Primary decision [41].
[195] Primary decision [130].
Secondly, there is no challenge to the finding that if there was an oral intended remuneration agreement (with either its principal or alternative terms) as alleged by Warrington, it must have occurred as a result of discussions in the period between early 2010 to 17 August 2010.[196] Accordingly, whilst subsequent evidence might shed light on the parties to those discussions, the discussions themselves occurred in a relatively confined period of time.
[196] Primary decision [337], [357].
Thirdly, a significant element in Warrington's case on the topic of the intended remuneration agreement was Mr Weaver's evidence‑in‑chief of the discussions prior to 17 August 2010. Mr Weaver's evidence was effectively in terms that he had discussions with the Cranstons in accordance with the pleaded intended remuneration agreement.[197] The judge found Mr Weaver to be an unreliable witness. The judge regarded his evidence as conclusory, and, in material respects, implausible.[198]
[197] Primary decision [48] ‑ [54].
[198] Primary decision [339].
Fourthly, the judge's findings in this regard were confirmed by reference to other material aspects of the oral and written evidence as a whole. In that regard the judge made two observations:[199]
First, Mr Weaver was appointed as managing director; he had an executive function. He did the work. In the absence of reliable evidence from which it can be identified that a particular entity was to be remunerated for the work, it is at least equally logical that Mr Weaver was to be remunerated for the work as it was that an entity associated with him - in the form of Warrington - was to be remunerated for the work. As Mr Weaver put it in cross examination: 'I would be doing the majority of the work and I would be rewarded for effort'.
Second, following on from the previous point, much of Mr Weaver's evidence and the contemporaneous documents are consistent with Mr Weaver being remunerated personally for reward for effort rather than any such intended remuneration agreement with Warrington. (emphasis in original)
[199] Primary decision [342] ‑ [343].
The judge then explained in further detail that both the oral evidence and documentary materials were consistent with Mr Weaver personally providing the asset and project management services for which Warrington was claiming reasonable remuneration. The judge's conspectus of the evidence in this regard included specific reference to numerous matters and events after the incorporation of KPI, including Mr Weaver's email of 29 August 2012 and the $45,000 in loans, and drew on the judge's earlier findings of background fact (referred to in [22] ‑ [99] above).
The judge further considered post‑incorporation conduct by reference to the pleaded topic of nominations. The judge found that there was no post‑incorporation conduct consistent with Warrington's alternative case involving the alleged nomination of Warrington.[200] In addressing this aspect of Warrington's case, the judge dealt in turn with each of the alleged oral nominations particularised by Warrington - all of which were post‑incorporation.[201] The judge also observed that Mr Weaver's evidence‑in‑chief on the topic of the intended remuneration agreement in its alternative form relied on the same passages of evidence‑in‑chief as Warrington had relied on in seeking to prove its principal claim with respect to the intended remuneration agreement. His Honour had found that evidence to be unreliable.[202]
[200] Primary decision [355].
[201] Primary decision [360] ‑ [363].
[202] Primary decision [358], read with primary decision [49] ‑ [50].
The judge also considered a further alleged conversation in November 2010 deposed to by Mr Weaver.[203] The judge observed that this alleged conversation occurred after the incorporation of KPI. In doing so, the judge was identifying that it was not part of Mr Weaver's evidence‑in‑chief directly addressing Warrington's pleaded alternative case concerning the intended remuneration agreement. The judge's statement in that regard cannot fairly be characterised as reflecting a view that all post‑incorporation conduct was irrelevant. That is plainly not so given the general structure of the judge's reasons, his Honour's express advertence to the need for the evidence to be considered as a whole, including 'from August 2010 onwards' the comprehensive findings of fact covering the period after the incorporation of KPI, and the judge's explicit consideration of the post‑incorporation evidence on the question of whether there was an oral intended remuneration agreement as pleaded by Warrington. Warrington's contention to the contrary cannot be accepted.
[203] Primary decision [358].
Further, his Honour went on to say that in any event, for reasons previously given, this aspect of Mr Weaver's evidence was also unreliable.[204] Insofar as Warrington seeks to contend that Mr Weaver's evidence about the alleged conversation in November 2010 should be accepted by this court, the contention is without merit. The judge's finding that the evidence was unreliable was substantially based on the judge's assessment of Mr Weaver's credibility. There is no basis for appellate intervention in that regard.[205]
[204] Primary decision [358], read with primary decision [133] ‑ [137].
[205] Smart v Power [2019] WASCA 106 [100] ‑ [104] and the cases referred to therein.
On a fair reading of the primary decision, the judge plainly had regard to the whole of the course of conduct, including all the conduct after the incorporation of KPI, in his assessment of Warrington's alleged entitlement to restitution. Ground 1 should be dismissed.
Grounds 2 and 3
These grounds have no merit. They contend, in effect, that the judge erred in that he should have made findings to the effect that:
1.Warrington was a party to the oral communications concerning the intended remuneration agreement which preceded the incorporation of KPI.
2.Warrington provided the services to KPI.
3.Warrington was the entity orally nominated by Mr Weaver to be paid remuneration for services provided by Mr Weaver to KPI.
The grounds and arguments in support effectively invite this court to (1) have regard to a few findings by the judge which Warrington regards as favourable to it, (2) focus on a few select pieces of evidence and give them a character and effect different from that found by the judge, and (3) on the basis of that re‑characterisation, conclude that the judge erred in not making the findings referred to in [151] above. That approach does not properly engage with the principles of appellate intervention.
The judge, correctly, said in passages not challenged in this appeal:[206]
The dealings were oral. That alone creates difficulties. The type of conversations referred to in the evidence involved nuance and emphasis and thus might, depending on context, bear more than one meaning. Although stated in relation to a misleading conduct claim, the observations of McLelland CJ in Eq in Watson v Foxman are apposite:
'Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.'
In determining whether there was an agreement - and, if so, its terms - the matters referred to in that passage speak equally as to the difficulties in proof that arise where, in the absence of a reliable contemporaneous record or other corroboration, a party relies on spoken words to found a claim.
[206] Primary decision [37] - [38].
As noted earlier, the judge then continued:[207]
All of the material witnesses had difficulties in terms of specific recollection. That is unsurprising when the central events in dispute took place seven to eight years earlier and were largely concerned with what was said in relatively informal oral exchanges. In cross-examination a response to the effect of 'I don't recall' was a common refrain for Mr Weaver and the Cranstons. That observation is not intended as a criticism. It does, however, emphasise the difficulty that arises in accepting that the various accounts of the witnesses as to what was said on the central issues were reliable. Doubt attends the witnesses' recollection of the events given the passage of time and the common difficulty experienced by Mr Weaver and the Cranstons in recollecting matters that occurred some seven to eight years ago. (footnotes omitted)
This is a case where, more than most, it is necessary to assess the oral testimony in the context of the contemporary materials, objectively established facts and the apparent logic of events. I am also conscious that in determining what, if anything, was agreed, it is necessary to look at the parties' language and conduct in context as a whole rather than viewing each matter in isolation. Thus the context and surrounding circumstances are of importance. That is all the more so as both parties rely on alleged post-contractual conduct as either signifying or being inconsistent with the alleged mutual assent. This will require me to address the objective factual surrounding material before turning to the specific matters in context. (footnotes omitted)
[207] Primary decision [40] - [41].
There is nothing in grounds 2 or 3 which singularly or collectively indicates that the judge did not undertake the task of determining Warrington's claim conformably with the approach outlined in the preceding paragraph. In substance, Warrington seeks impermissibly to raise for consideration afresh by this court various arguments about the evidence which the judge had rejected at trial, without identifying, positively, error by the judge.
Moreover, the judge's rejection of these arguments at trial was informed by his Honour's assessment of the evidence as a whole, including the judge's adverse impression of the credibility of Mr Weaver. The judge's findings of fact contrary to Warrington's assertions in [151] above, and to the effect that it was Mr Weaver who (it was agreed) would perform the services and be remunerated in due course under an agreed remuneration agreement, were dependent to a substantial degree on the judge's assessment of Mr Weaver's credibility. Warrington's arguments in this court paid lip service, at most, to the restrictions applicable to appellate interference in this context.[208]
[208] Smart [100] - [104] and the cases referred to therein.
In relation to the particular matters referred to by Warrington in [114] above, as a general observation, a determination of what a reasonable reader would have understood the selected written communications relied on by Warrington to convey, cannot be divorced from the judge's findings of the broader context in which the communications occurred, including as to what was said, and not said, by Mr Weaver. More particularly in relation to the 14 matters relied on by Warrington, the following observations may be made.
As to the submissions in [114.1], [114.2], [114.3], [114.4] and [114.5] above, whilst it may be accepted that Mr Weaver conducted 'his business' through Warrington in 2008 - 2009, KPI was not 'his business'. KPI was a new venture, established, broadly speaking, as a joint venture with the Cranstons. Mr Weaver effectively saw the opportunity to move from 'his business' model with Warrington (in which he was sharing fees with Grant Thornton) to a new venture. Under this new venture another company, Morara, would have the equity stake, Mr Weaver would be the managing director, and the joint venture vehicle (KPI) would provide him, as he saw it, with an opportunity to earn more than 50% of the fees. As the judge said:[209]
In closing counsel for Warrington submitted - it being accepted that, before aligning his business with that of KPI, Mr Weaver conducted his business through Warrington - it should therefore be inferred that Mr Weaver continued to do so. It was said that Warrington, by Mr Weaver, undertook the work of KPI by continuing the activities it had previously undertaken - all that had changed was the scale of the activities.
The difficulty with that submission is that it assumes that nothing else had changed. Plainly it had. Warrington was no longer establishing and managing property management syndicates on its own account. Rather, Mr Weaver was operating under the auspices of KPI, a company of which he was the executive director but in respect of which other individuals were involved and had an interest. The prior arrangements within Warrington - arrangements that the Cranstons had no part in - do not provide a sound basis to draw any inference for the circumstances that prevailed within KPI. It is necessary instead to consider what was discussed, and what was done, in relation to KPI. (footnotes omitted)
[209] Primary decision [376] ‑ [377].
Also, John Cranston's asserted 'control' of KPI's finances does not logically demonstrate, or contribute to the demonstration of, error by the judge. The question raised by grounds 2 and 3 is not who financially controlled KPI, but, ultimately, whether Warrington had made good its case that Warrington had supplied the services to KPI in circumstances where it had a right to restitution. Moreover the judge found that Mr Weaver was to receive, from KPI, a 'base retainer' at $100,000 per annum.[210] There is no challenge to the finding that it was Mr Weaver who instructed the bookkeeper of KPI to record the payments as loans to him in a separate account, and that Mr Weaver knew that the payments were being recorded as loans to him.[211]
[210] Primary decision [310].
[211] Primary decision [274].
As to the submissions in [114.6], the judge found that if Warrington proved the intended remuneration agreement, then the doctrine of unanimous consent ought to apply, despite any written resolutions of KPI authorising remuneration.[212] But that point does not assist in discerning error by the judge on the issues raised by grounds 2 and 3.
[212] Primary decision [301].
As to the submissions in [114.7], it is common ground that Warrington provided particular 'day‑to‑day' type leasing services to KPI under an agreed engagement.[213] The judge acknowledged that this might, as Warrington contended, provide an arguable basis for an inference that Warrington also provided the asset management services. The judge said in that regard:[214]
I acknowledge that it is common ground that Warrington was engaged to provide property management services to the syndicates and trusts and executive services to KPI (although the latter arises subsequently in the chronology). That might be seen as an objective fact that supports Warrington's pleaded case; Warrington was providing certain services to KPI. But it may equally be seen as essentially neutral. The discussions leading to those arrangements were not the subject of detailed evidence - either as to content or timing. In view of the unreliability and generality of Mr Weaver's recollections I cannot be satisfied that what was said on the subject of property management services has not been attributed to the intended remuneration agreement providing for reward for effort.
[213] Primary decision [11].
[214] Primary decision [340].
There is no error in the judge's reasoning in that paragraph.
In relation to the submission in [114.8(a)], the judge gave considerable attention to and made findings about the loans totalling $45,000.[215] It is unnecessary to set out all of the judge's findings verbatim. It is sufficient to observe as a general proposition that the judge's reasoning and findings disclose no error, and more particularly to note that the judge accepted Mr Weaver's evidence that the original intention of KPI's shareholders and directors was that the loans would be converted into dividends payable (in Mr Weaver's case) to Morara.[216] Further, Mr Weaver's evidence was to the effect that the monies were paid to him because he needed the money.[217] See also [170] below.
[215] Primary decision [62], [78], [132] ‑ [137], [169], [187], [189] ‑ [191], [193], [196] ‑ [197], [206], [208], [226], [272], [278] ‑ [280], [329] ‑ [330], [347], [349] ‑ [351], [354], [362] ‑ [363], [374], [385], [415(2)], [422], [432], [433].
[216] Primary decision [193] ‑ [194].
[217] ts 151 ‑ 154.
In relation to the submission in [114.8(b)], the judge also gave extensive consideration to the evidence and made findings concerning the $100,000 loans.[218] There is no error disclosed by the judge's reasoning and again it is to be noted that Mr Weaver's evidence, accepted by the judge, was to the effect that at some time in the future the loan monies would be paid as a franked dividend (to Morara).[219]
[218] Primary decision [19], [36], [87], [149] ‑ [150], [152] ‑ [153], [155(3)], [200], [212], [214] ‑ [215], [217], [219], [226], [273] ‑ [274], [277], [281], [285], [287], [289], [294], [295(3)], [301] ‑ [302], [304] ‑ [310], [312] ‑ [318], [329], [354], [428], [470], [474].
[219] Primary decision [274].
In relation to the submissions in [114.9], the judge dealt with each of the emails relied on by Warrington in ground 3, and considered them in their immediate and broader context in considerable detail.[220] In doing so, the judge engaged with the submissions advanced by Warrington in the primary proceedings (and repeated in this appeal) without error. Also, the contention (see [114.9(d)(i)] above) that 'it is common' for non‑legally qualified directors to refer to companies as being 'one and the same' as themselves, assumed, without demonstrating, that this was a fact of which judicial notice could properly be taken.[221] In any event, the contention was, in substance, no more than an assertion that the judge should have inferred that Mr Weaver commonly referred to himself when he was intending to refer to his companies. But that was essentially a question for the primary judge, having regard to all the evidence as a whole, including his assessment of Mr Weaver's reliability as a witness. Also, Mr Weaver's companies included both Morara and Warrington. Accordingly, even if the general proposition advanced could be accepted, it is not conclusive of the point sought to be made by the appellants in these grounds of the appeal.
[220] Primary decision [138] ‑ [142], [331] ‑ [333] (email of 15 April 2011); primary decision [181] - [187], [191] ‑ [192], [198], [346] ‑ [350], [415], [423] (email of 9 August 2012); primary decision [187], [191] ‑ [196], [274], [350], [362] ‑ [363] (emails of 29 and 30 August 2012); primary decision [208] - [209] (email 7 May 2013).
[221] See generally Heydon, Cross on Evidence, 11th Aust ed [3015].
In relation to the email of 15 April 2011, the judge observed that both KPI and Warrington sought to rely on the contents of that email in support of their respective cases. The judge analysed the arguments in terms of the email in the following manner:[222]
[222] Primary decision [138] ‑ [142].
KPI placed reliance on a 15 April 2011 email that Mr Weaver sent to Evan Cranston. The email was copied to John Cranston. In the email Mr Weaver referred to a conversation between himself and Evan Cranston and obtaining some advice from Grant Thornton as to the structure for a self-managed super fund. He then proposed that KPI issue additional ordinary shares to the funds for a cash payment. But it was the following part of the email that counsel pointed to:
Special Class Shares
The advice is that we can't then have a special class share to either ourselves or our family trust and use this to siphon dividends away from the company each year. The shareholders (the SMSF's that will own 99.7% of the company eg 30,000/30,090) must get the dividends or the company won't pass the 'arms length' rules under the SMSF guidelines.
Profit Siphon
The profit siphon that can occur before the distributions (if we don't want all the profit distributions going to the SMSF) can be made via either 'bonuses' to directors, or paid to other companies (eg Warrington) as a 'management fee'
In cross-examination Mr Weaver refused to accept that the email appeared to be referring to each of Mr Weaver, Evan Cranston and John Cranston equally. Mr Weaver suggested that the 'profit siphon' involved money to himself - or the directors or associated companies - prior to an equal split of dividends in accordance with shareholdings. However, that explanation is at odds with the comment that the profit siphon is to occur if the parties did not want all the profits going to the self‑managed super funds; they would share equally. In any case the email makes no reference to the intended remuneration agreement.
Counsel for Warrington also relied on the email. Counsel suggested that the email demonstrated that the parties understood that there was a live possibility of an unequal payment with respect to remuneration. In that regard, it was established in cross‑examination that neither Evan Cranston nor John Cranston responded to the email to disabuse Mr Weaver of the possibility of inequality in treatment or the payment of a management fee to Warrington.
I do not see the email as significant evidence in support of either party's case. It may be read, as counsel for Warrington submits, in a way that is not inconsistent with the alleged intended remuneration agreement. But insofar as it represents little more than an idea, I ascribe no importance to the lack of a response on the part of the Cranstons. Similarly, it may be read as supporting equality in profit taking. It should not be overlooked that the reference to Warrington receiving a management fee is preceded by reference to other companies (which might include companies associated with the Cranstons) and bonuses to directors.
The true significance of the 15 April 2011 email is that it demonstrates that Mr Weaver was aware that the shareholdings in KPI did not permit a preferential dividend. That understanding informs some of Mr Weaver's later references to receipt of a franked dividend. Mr Weaver must have expected that to the extent his company was to receive a franked dividend then so too were the other shareholders. (footnotes omitted)
There is no error in that reasoning.
In relation to the email of 9 August 2012, the judge placed this in the context of evidence of earlier proposals by Mr Weaver which referred to remuneration in the form of an annual salary, and found that this earlier evidence was inconsistent with the alleged intended remuneration agreement insofar as it did not contemplate payment to Warrington.[223] That finding is unchallenged. Against that background, the judge referred to the email communications of 9 August 2012, and the discussion on the preceding day (8 August 2012). The judge also considered the email of 9 August 2012 in the context of the parties' communications which followed it. The judge said:[224]
[223] Primary decision [180].
[224] Primary decision [181] - [187].
Email communications refer to telephone conversations between Mr Weaver and Evan Cranston about the proposal. However, there was no immediate response to the proposal. The next substantial email communication was on 9 August 2012 and referred to a discussion between Mr Weaver and Evan Cranston that had occurred the previous day.
Mr Weaver's evidence-in-chief refers to an earlier 2 August 2012 meeting between him and John Cranston. Mr Weaver suggested that John Cranston said that he and Evan Cranston said that they had 'changed their view' on what Mr Weaver should reasonably get from KPI for executive service. Mr Weaver said that he said words to the effect: 'are you prepared to honour the agreement regarding reward for effort?' John Cranston is said to have said that he was not prepared to offer any favours.
I cannot be satisfied that the conversation raised a prior agreement as to 'reward for effort'. First, there is the issue as to the general unreliability of Mr Weaver's recollection. Second, John Cranston was not cross‑examined on this meeting. Third, in the contemporaneous correspondence there is no reference by Mr Weaver to any apparent dishonour of an agreement as to reward for effort. Use of the phrase 'reward for effort' does not come until later in December 2012. What is put in the 9 August 2012 email makes no mention of the concept.
The 9 August 2012 email recorded a proposal that KPI continue but with a consultancy arrangement. Mr Weaver said that he was 'happy' with that outcome provided he was 'paid for the work done to date, and moving forward via a structured Consultancy Agreement' with Warrington. In a summary of the proposal Mr Weaver stated:
•KPI put in place a formal Asset Management Agreement with the Various Trusts & Syndicates, and collect fees as disclosed to investors and outlined in the IM's.
•Warrington Management (WM) enter into a Consultancy Asset Management Agreement between KPI and WM, and WM is paid a % of the KPI Fees for the following:
•Fixed (Upfront) Establishment & Capital Raising Fees
•Undertaking the annual running of the Trusts/Syndicates (including admin)
•Success Fees of each syndicate/trust
•Development Management Fee for 10 Kings Park Road
•Loan Accounts to Chris Weaver are reconciled to Consultancy Fees to WM, based on the below structure. (eg become operating "expenses" to KPI)
Mr Weaver suggested a proposed consultancy fee amount to date of $550,250 based on 50% of the various fees derived to date. He suggested that the 50% 'was in keeping with industry parameters for commission paid real estate agents'. Into the future he proposed a 50% consultancy fee as to asset and syndicate management fees and between 40% to 50% as to any success fees.
The proposal should, I consider, be characterised as a proposed new arrangement. Nothing in it refers to some existing entitlement due to the alleged intended remuneration agreement. Mr Weaver was seeking to negotiate something new rather than have the Cranstons honour a prior arrangement.
Evan Cranston responded stating that he would 'discuss with the powers that be [ie his father]' and come back to Mr Weaver. Nothing happened for some time. Around this time there were also discussions and eventual arrangements between Mr Weaver and Evan Cranston as to the $45,000 loans. I will deal with those shortly. When, however, Mr Weaver followed up on the proposal with a 29 August 2012 email, Evan Cranston's eventual 30 August 2012 response was to state that, having spoken to his father, they did not want to finalise anything before the Kingslane 22 Delhi Street Trust project had settled. At this time there remained uncertainty about whether that Trust would in fact be established (emphasis added) (footnotes omitted)
There is no error in the judge's reasoning in these passages. The finding that the proposal was in the nature of a new arrangement was plainly open on the evidence.
The judge also returned to the topic of Mr Weaver's email on 9 August 2012 in the context of a consideration of the recharacterisation of the $45,000 loans as a consultancy fee. The judge said:[225]
In that regard it is relevant that Mr Weaver's 9 August 2012 email, in discussing a future consultancy to be put through Warrington '[f]or the sake of ease', mentioned that Mr Weaver would 'just come to an arrangement with Mat'. The 'Mat' was Mr Fisher. By this time Mr Fisher had become a director of Warrington. If there was a pre-existing agreement between KPI and Warrington in the form of the intended remuneration agreement as pleaded then that ought to have been already taken into account in any accommodation between Mr Weaver and Mr Fisher as to Warrington. The fact that Mr Weaver mentioned the necessity that he come to an arrangement with Mr Fisher supports the conclusion I have reached that the arrangement Mr Weaver was seeking to negotiate was something new on behalf of Warrington.
Counsel for Warrington stressed that the ultimate resolution of the $45,000 loans was consistent with, and thus corroborative of, the intended remuneration agreement as pleaded by Warrington. Counsel emphasised the speed with which Mr Weaver rebuffed the suggestion that the extinguishment of the loans be treated as part of his wages and required that it be recorded as a consultancy fee.
While, in weighing the evidence as a whole, I have taken that matter into account, I do not accept that this circumstance has the significance as attributed to it by counsel for Warrington.
The re-characterisation of the $45,000 loans to a consultancy fee paid to Warrington is but one piece of evidence. There is, as I have recounted, much evidence going the other way. Moreover, it must also be recognised that the re-characterisation occurs in a particular context.
The immediate context is Mr Weaver's 9 August 2012 email suggesting, among other things, a reconciliation of the loan accounts to consultancy fees to Warrington. I have found that this should be characterised as a new arrangement; it was proposed as something new rather than being an existing arrangement, as earlier agreed, to be implemented. The email refers to Warrington 'enter[ing] into a Consultancy Asset Management Agreement'; it does not reflect that there was already an intended remuneration agreement between Warrington and KPI as alleged in the SOC. The matter then becomes more acute when Mr Folland explains the Div 7A implications of the $45,000 loans to Mr Weaver. Following on from the earlier August 2012 email Mr Weaver seeks, by the 29 August 2012 email, that there be an agreement to convert the $45,000 to a part payment of the proposed consultancy fee. Again, in my view, this is by way of seeking agreement as to a new arrangement rather than implementation of a pre-existing agreement. And to emphasise that the eventual agreement to the re‑characterisation of the $45,000 loans is not reflective of the pleaded intended remuneration agreement involving Warrington the 30 August 2012 email sent by Mr‑Weaver refers to 'part remuneration to me for my services.
In reality, as Mr Weaver's 31 August 2012 email records, the re- characterisation of the $45,000 loans was simply to satisfy the tax issue that was then pressing. Accordingly, while I accept that the eventual treatment of the $45,000 loans is consistent with the existence of an intended remuneration agreement as pleaded by Warrington, I do not accept that it is probative of that fact. (emphasis added) (footnotes omitted)
[225] Primary decision [346] - [351].
There is no error in that reasoning.
It is unnecessary extend the length of these reasons by setting out verbatim the judge's discussion and analysis of the evidence concerning the emails of 29 and 30 August and 7 May 2013.[226] These emails also fell to be considered in the context of all the previous communications both oral and written and in the context of what followed them. This involved the judge taking into account his assessment of the unreliability of Mr Weaver's evidence concerning oral communications going back many years previously. It is sufficient to observe that the judge addressed them in detail in the context of the consideration of the evidence as a whole and no error is disclosed in the judge's reasoning.
[226] The passages of the primary decision are footnoted in par [159] above.
In relation to submissions in [114.10], the judge found that Mr Weaver's evidence could not be approached as if it were a substantially accurate reflection of what the parties stated in their conversations.[227] Moreover, the judge evidently regarded the email of 9 August 2012, which referred to a discussion on 8 August 2012, as the more reliable source of the substance of the communications between the parties at this time.[228] Indeed, Mr Weaver's evidence was that the email of 9 August 2012 'confirmed' the discussions of 8 August 2012.[229]
[227] Primary decision [67].
[228] Primary decision [181] - [187].
[229] Affidavit of Mr Weaver, 18 February 2014, par 63; GB 52.
In relation to the submissions in [114.11], as noted earlier the judge dealt with the extinguishment of the $45,000 loan in considerable detail. There is no error disclosed in any of the judge's reasoning on that topic.
In relation to the submissions in [114.12], the judge addressed in terms what was agreed at the meeting on 24 June 2013.[230] The judge considered that evidence in the context of what had preceded that meeting[231] and what followed the meeting.[232] The judge accepted that Mr Cranston agreed in cross‑examination that 50% of the 'future' ongoing asset and syndicate management fees 'could go to Mr Weaver or Warrington'. The acceptance of that evidence does not indicate that prior to that point in time the services were provided by Warrington or that Warrington was a party to, or was nominated pursuant to, an intended remuneration agreement.
[230] Primary decision [211] - [213].
[231] Primary decision [207] - [210].
[232] Primary decision [214] - [ 221].
In relation to the submission that Evan Cranston accepted that 'KPI had already been paying Warrington on a 30% proportionate basis', the evidence was that in cross‑examination he (1) denied a conversation put to him by counsel for Warrington about Warrington not having funds to 'continue to … provide executive services to KPI', and (2) said that 'KPI was paying the staff of Warrington .. a proportion … 30 per cent'.[233] The context for the contribution of 30% to Warrington's staff costs is not evident in this passage of evidence, and the matter was not explored further by counsel for Warrington at this point in the cross‑examination.[234] The judge was best placed to understand the significance of this evidence in the context of how the evidence unfolded in the context of the trial as a whole. The judge made a finding that KPI paid for 30% of the salary of an administrative assistant and 30% of Warrington's rent, in recognition of the 'executive services' provided by Warrington.[235] This aspect of Evan Cranston's cross‑examination provides no proper basis for this court to conclude that the judge was in error in finding that the evidence, taken as a whole, indicated that Mr Weaver would personally be remunerated for the services the subject of Warrington's claim in the primary proceedings.
[233] ts 405.
[234] Primary decision [213].
[235] Primary decision [154].
In relation to the submission in [114.13], the judge found that the $350,000 loan (together with the $45,000 loans and the $100,000 per annum amounts) were (1) paid to Mr Weaver, (2) recorded as loans to Mr Weaver in KPI's books and, moreover, were (3) referred to as Mr Weaver's drawings.[236] Also, Warrington's subsequent treatment of the loan in its own books is not an admission by KPI and is not cogent evidence of proof of any of the matters referred to in [151] above.
[236] Primary decision [354].
In relation to the submission in [114.14], Warrington's invoice of 9 July 2013 was sent 'despite lack of agreement' with KPI.[237] It is not in the nature of an admission by KPI and it is not cogent evidence of any of the matters referred to in [151] above.
[237] Primary decision [219].
In relation to Warrington's submission that the judge only analysed the evidence 'for the purpose of determining whether Mr Weaver was enforcing any existing contractual obligations', the submission is, again, manifestly unsound, for the reasons given in [140] above.
Insofar as Warrington calls in aid the proposition that a company can only act through its human agents, that proposition is plainly correct. But it only serves to highlight the forensic burden on Warrington to show that Mr Weaver, in his capacity as agent for Warrington (and not in his own capacity), provided the services at KPI's request.[238]
[238] Lumbers [96].
In oral submissions, Warrington also contended that once KPI's defence that Mr Weaver's remuneration was limited to an agreed $100,000 per annum failed, the argument that it was Mr Weaver rather than Warrington who provided the services was 'fatally wounded'.[239] There is no substance to that point. KPI failed to establish that Mr Weaver was not entitled to remuneration as managing director beyond $100,000 per annum. KPI's failure on that account cannot logically be used by Warrington to bootstrap an argument that Warrington provided the services to KPI or was otherwise entitled to restitution.
[239] Appeal ts 7.
Ground 3 should be dismissed.
Ground 4
It is strictly unnecessary to deal with ground 4 separately, given Warrington's acceptance that if grounds 1 to 3 did not succeed, ground 4 could not succeed on its own. As indicated above, grounds 1 to 3 have no merit.
Even without that concession, ground 4 lacks any merit. It effectively seeks to rerun the arguments made by Warrington which led to the judge's supplementary decision in the primary proceedings.
In the supplementary decision, the judge observed:
1.That he had delivered reasons in the primary decision on 10 January 2019 and set out (at [529] of the primary decision) a proposed order dismissing Warrington's action.
2.An advanced copy of the reasons had been made available, and the parties had prepared draft minutes of order providing for the dismissal of Warrington's action.
3.On the day of judgment delivery, however, Warrington's counsel contended that on the judge's findings, Warrington should succeed in the action. The parties were given, and took, the opportunity to make written submissions on that contention.
4.Warrington filed submissions to the effect that judgment should be entered for it in the sum of $683,175 (less $45,000 paid to Warrington in August 2012).
The judge rejected that submission, and said with reference to Warrington's submissions:[240]
Paragraph 1 of [Warrington's] written submissions dated 18 January 2019 set out what [Warrington] says its pleaded claim for restitution was based on. Those matters were identified and addressed in the Reasons. One such matter that is worth highlighting, because of the form [Warrington] now contends judgment should take, is the acknowledgement in par 1.1 of [Warrington's] written submissions dated 18 January 2019 that the pleaded claim is based on (meaning it was necessary to so prove) that services were provided by [Warrington] to KPI at its request pursuant to a preliminary agreement.
[Warrington's] submissions dated 18 January 2019 also record the following:
'8.Warrington only needed to prove that an enforceable contract as to remuneration was not made, that it was nominated as the party entitled to remuneration of services provided to KPI by Mr Weaver at KPIs request in expectation of a contract being made, and that it would be unconscionable for it to not be remunerated for those services.'
[Warrington's] written submissions dated 18 January 2019 also assert, relying on the Reasons at par 296, that a finding was made that there had been a request for services. That, with respect, appears to involve a misreading of par 296 of the Reasons. Otherwise, as best as I understand it, the contention made at par 7 of [Warrington's] submissions is that the only remaining issue on which it did not succeed is whether [Warrington], as opposed to Mr Weaver, is entitled to restitution. [Warrington's] submissions go on in par 7 to suggest that the case was not conducted at trial in a manner consistent with the way in which the matter is addressed in the Reasons and that [Warrington] did establish that it was nominated as the company to be remunerated for the services as performed. (emphasis added)
[240] Supplementary decision [10] - [12].
The judge addressed the submissions and said that there were two fundamental misconceptions with Warrington's contentions. As to the first, the judge said:[241]
[241] Supplementary decision [14] - [21].
First, whether there was an agreement that [Warrington] - either by itself or by nomination - was to be remunerated for services was very much in issue at trial. So too was whether the services were provided by [Warrington] (through Mr Weaver) or by Mr Weaver as a director of KPI.
At ts 39 counsel for [Warrington] stated in opening:
'Mr Weaver did a lot of work for KPI. The material question's really about - are whether he did it in his capacity as managing director or whether he did it in his capacity as director of his company, Warrington Management Proprietary Limited.'
At ts 90 counsel for KPI stated in opening:
'[KPI's] case - there was never any arrangement that Mr Weaver would be remunerated on a reward for effort basis. It was never the case that there was any agreement or arrangement that Mr Weaver's services were to be provided by the plaintiff, Warrington Management Pty Ltd.'
This exchange then occurred:
'Myself: And is that put in those two separate ways: (1) there's no arrangement, and, in the alternate, even if there was, it wasn't with Warrington.
Counsel for [KPI]: Yes.'
So, from the outset, KPI made plain that it was in issue whether [Warrington], as opposed to Mr Weaver, was entitled to restitution.
Finally, at ts 443 to ts 445 I identified, prior to closing, what I understood to be the 10 main issues as pleaded. They included, at ts 443:
'So the first issue that I see is what agreement, if any, is there between Mr Weaver, on the one hand, and the Cranstons or, alternatively, [KPI], on the other, that a plaintiff or a company nominated by Mr Weaver would be remunerated for services either on terms to be agreed or at all. The second issue is whether [Warrington] provided services to [KPI] at [KPI's] request or whether they were provided by Mr Weaver as managing director of [KPI].'
It was not suggested that there were any other material issues as to [Warrington's] pleaded case in restitution. Further, in closing counsel for [Warrington] specifically directed submissions to the two issues as identified. So too did counsel for [KPI].
Accordingly, I do not accept that there has been any misapprehension as to the integers of [Warrington's] restitutionary claim as it was run at trial. The Reasons address the pleaded claim as it was conducted at trial. It was always necessary to determine whether [Warrington], as opposed to Mr Weaver, was entitled to restitution.
As to the second misconception, the judge said:[242]
[242] Supplementary decision [22] - [26].
The second fundamental misconception is the suggestion that it is now open to find that:
(1)in terms of par 1 of [Warrington's] written submissions dated 18 January 2019 - that services were provided by [Warrington] to KPI; and
(2)in terms of par 7 (in particular par 7.5) and par 8 of [Warrington's] written submissions dated 18 January 2019 - that [Warrington] was nominated as the entity entitled to remuneration for the services provided to KPI.
Findings have been made in the Reasons which, if they are to be challenged, ought only to be challenged on appeal. Relevantly they include findings to the following effect:
(1)First, there was not an intended remuneration agreement to the effect that [Warrington] would be remunerated for services to KPI: Reasons at [336], [341], [352], [353], [354], [356] and [371].
(2)Second, it was not established that it was [Warrington] who was to provide the services to KPI: Reasons at [341] and [353].
(3)Third, the discussions were as to Mr Weaver being remunerated for services to be provided to KPI: Reasons at [353], [354], [356] and [371].
(4)Fourth, it was not established that there was an agreement to the effect that a company nominated by Mr Weaver would be remunerated for services to be provided to KPI: Reasons at [356], [364], [365] and [366]. I note here that, in oral reply submissions, counsel for [Warrington] suggested that Mr Weaver had a right to nominate [Warrington] to be the recipient of remuneration for services provided by Mr Weaver. Why that was so was not explained. It is, however, inconsistent with the findings that I have referred to.
(5)Fifth, [Warrington] was not nominated as the entity to be remunerated for the services performed by Mr Weaver: Reasons at [355], [360], [362] to [363], [364] and [371].
(6)Sixth, Mr Weaver provided the relevant services rather than [Warrington]: Reasons at [372], [375] and [378].
The basis on which [Warrington] suggests that it is entitled to judgment in its favour is not open on the findings in the Reasons. It has been found that [Warrington] did not provide the services. It has been found that [Warrington] was not nominated by Mr Weaver as the entity to be remunerated by KPI.
In [Warrington's] written submissions dated 18 January 2019, and in oral submissions made this morning, much has been made of the fact that specific litigated defences failed. That may be accepted, but so too did the pleaded claim by [Warrington]. [Warrington] does not establish its claim by establishing that Mr Weaver might have had a claim.
Based on the findings in the Reasons, judgment should be entered for KPI, as the defendant, dismissing the claim.
There is no error in the judge's reasoning in the supplementary decision.
Ground 4 should be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DM
Associate to the Honourable Justice Murphy17 JANUARY 2020
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