Wood v West
[2007] WADC 63
•30 APRIL 2007
WOOD -v- WEST [2007] WADC 63
| Link to Appeal : | [2008] WASCA 242 |
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WADC 63 | |
| Case No: | CIV:2912/2001 | 6-9 JUNE 2006 & 22 SEPTEMBER 2006 | |
| Coram: | GROVES DCJ | 30/04/07 | |
| PERTH | |||
| 31 | Judgment Part: | 1 of 1 | |
| Result: | Action dismissed | ||
| PDF Version |
| Parties: | STEVEN JAMES WOOD GEOFFREY KENNETH BENJAMIN WEST |
Catchwords: | Contract Alleged agreement in writing, alternatively partly in writing and partly oral or alternatively oral Purchase of interest in business Alleged agreement in conflict with commercial documentation Turns on own facts |
Legislation: | Nil |
Case References: | Davies v Taylor [1974] AC 207 Nil |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
GEOFFREY KENNETH BENJAMIN WEST
Defendant
Catchwords:
Contract - Alleged agreement in writing, alternatively partly in writing and partly oral or alternatively oral - Purchase of interest in business - Alleged agreement in conflict with commercial documentation - Turns on own facts
Legislation:
Nil
Result:
Action dismissed
(Page 2)
Representation:
Counsel:
Plaintiff : Dr P McMillan
Defendant : Mr P Arns
Solicitors:
Plaintiff : Gibson Lyons
Defendant : Arns & Associates
Case(s) referred to in judgment(s):
Davies v Taylor [1974] AC 207
(Page 3)
1 GROVES DCJ: The plaintiffs claim, so far as is relevant, pleads as follows:
"1. In or about December 1997 the defendant agreed to purchase from the plaintiff certain shares in two companies ('the Agreement').
Particulars
(a) the Agreement was in writing alternatively partly in writing and partly oral or alternatively oral;
(b) insofar as the Agreement was in writing it was set out in a document prepared by the defendant's solicitors in or about December 1997, was signed by the plaintiff and the defendant and after due search the plaintiff does not have a copy of such document;
(c) insofar as the Agreement was oral it is comprised in two conversations, the first between the plaintiff and the defendant, and the second between the plaintiff, the defendant and EN Stamatiou, solicitor;
(d) the first of those conversations:
(i) took place at the defendant's home on or about 22 December 1997;
(ii) the substance of the conversation was that the defendant was to acquire from the plaintiff for the sum of $200,000.00 a 20% share in Fuel-Tech (WA) Australia Pty Ltd and a 5% share in General Applications Australia Pty Ltd;
(e) the second conversation:
(i) took place in the offices of E N Stamatiou, solicitor, Morley;
As to the substance of the conversation the plaintiff repeats paragraph (d)(ii) of these particulars.
(Page 4)
- 2. It was an express term of the Agreement that:
(a) the defendant was to purchase from the plaintiff, alternatively the plaintiff was to provide or transfer or cause to be transferred or issued to the defendant a 20% shareholding in a company called Fuel-Tech (WA) Australia Pty Ltd (ACN 079 681 744) ('Fuel-Tech') and a 5% shareholding in a company called General Technology Applications Australia Pty Ltd (ACN 079 672 594) ('GTAA');
(b) the purchase price of the said shares, alternatively the fee to be paid to the plaintiff by the defendant was in the sum of $200,000.00.
3. It was an implied term of the Agreement that the sum of $200,000.00 was to be paid within a reasonable time of the making of the Agreement alternatively within a reasonable time of the transfer alternatively issue of the said shares to the defendant or his nominee.
4. The term referred to in paragraph 3 hereof is to be implied:
(a) as a matter of law;
(b) by reason that it is reasonable, obvious and necessary to give business efficacy to the Agreement.
5. Pursuant to the Agreement the defendant during or about February 1998 when the plaintiff attended Palermo's offices to execute documents directed the plaintiff that his nominee for the provision alternatively transfer or issue of 20 shares in Fuel-Tech and 5 shares in GTAA was Go Fa Pty Ltd as trustee for the Go Fa Trust."
Historical background
2 In 1997 the plaintiff (Wood) visited the United States of America where he met with Jerry Trippe (Trippe) whose company General Technologies Applications, Inc (GTAUS) had developed certain technology and know-how and held patents in relation to fuel additive products. Wood was desirous of importing, producing, marketing and
(Page 5)
- distributing the GTAUS fuel additive products within Australia (the venture).
3 Upon his return to Perth, Western Australia, Wood consulted with his solicitor Emanuel Stamatiou (Stamatiou). On Stamatiou's evidence Wood did not have funds to set up the venture or to cover professional advice regarding the appropriate corporate structure and documentation to give effect to the venture. Wood asked Stamatiou if he would be interested in taking an interest in the venture. Stamatiou agreed to take five per cent. Stamatiou did not have the commercial expertise to draw the necessary documents and also recognised that because he was to have an interest in the venture he may have a conflict of interest. Accordingly he referred Wood to solicitor, Paul Marinko (Marinko), then of the law firm Marinko Lucas Commercial Lawyers. Stamatiou also proposed the involvement of his accountant, John Palermo (Palermo) of J Palermo & Co, Chartered Accountants to advise regarding an appropriate corporate structure. He advised Wood to negotiate an arrangement with Palermo. That meeting between Wood and Stamatiou was according to Stamatiou's fee account (Exhibit 44) on 4 August 1997. According to that account there followed on 8 August 1997 a conference Stamatiou with Wood and Palermo and on 19 August 1997 a conference Stamatiou with Marinko and Palermo. The account further indicates that later in August and through September 1997 there were further conferences Stamatiou with Wood, perusal of documentation prepared by Marinko and telephone attendances with Wood discussing proposed amendments to documentation, numerous telephone attendances Stamatiou with Palermo and Marinko and perusal of other documentation, namely Bel-Ray agreement for distribution of product.
4 On Stamatiou's referral Wood attended on Palermo at the latter's office and sought advice as to the corporate structuring for the venture. It was Palermo's evidence that what he proposed to Wood was a conventional business structure whereby the profits of the venture would flow into an entity, namely a trust and flow to the owners, ie unit holders in that trust, by direction of the trustee of that trust. He proposed that GTAUS, Wood and Stamatiou form a joint venture company which came to be known as GTA Australia Pty Ltd (GTAA) for the purpose of importing and/or producing the fuel additive products in Australia and New Zealand under licence from GTAUS. GTAUS was to be the controlling entity of GTAA. A second company Fuel Tech (WA) Australia Pty Ltd (FTA) was proposed for the purpose of marketing and distributing the fuel additive products within Australia and New Zealand.
(Page 6)
- FTA in turn would be the trustee of the FTA Trust in which entity the various parties with an interest in the venture would become unit holders.
5 As was the case with Stamatiou, Wood did not have the funds for the likely professional fees and he offered, and Palermo agreed, to take a similar interest in the venture as Stamatiou. This was a five per cent interest in FTA and the Trust and five per cent in GTAA. As to the commercial documentation Palermo deferred to Marinko for that purpose.
6 Palermo, on Wood's instruction, acquired two shelf companies. GTAA was incorporated on 11 August 1997 and Wood became the sole shareholder holding one ordinary share and the sole director of the company. That remained the situation until 23 August 1999. The second company FTA was also incorporated on 11 August 1997 and on that date Wood became the sole shareholder holding one ordinary share and the sole director of the company. Again, that remained the situation until 23 August 1999.
7 In early December 1997 Trippe was pressing Wood for the payment of a $50,000 licence fee. Wood sought to have payment of the licence fee deferred apparently (as Trippe's correspondence indicates) as he needed the funds to cover operating expenses in start up of the business. Trippe proposed an arrangement whereby he was prepared to accommodate Wood but requiring payment of the licence fee in two $25,000 payments. Finally, by facsimile dated 16 December 1997 Trippe set a deadline of 22 December 1997 for payment of funds otherwise the deal was off. (See Exhibit 42). Subsequently a payment of $15,000 was made. Trippe's facsimile dated 3 March 1998 indicates that the remaining $35,000 of the licence fee had not by then been paid. Subsequently, by facsimile dated 6 July 2000 Trippe terminated the licence due to the failure of FTA to meet its contractual obligations (Exhibit 32).
8 On 22 December 1997 Palermo instructed solicitor Agostino Irdi (Irdi) to prepare the deed of settlement for the FTA Trust. Irdi's initial instructions (Exhibit 52) were that there were only two unit holders, namely Wood as trustee for the Wood Family Trust and Stamatiou as trustee of the Stamatiou Investment Trust.
9 In the context of these proceedings none of the foregoing is controversial.
(Page 7)
The defendant becomes involved
10 Wood and the defendant (West) had known each other for a number of years. They shared a common interest in speedway racing. West was engaged in farming at Wagin and also had a contract harvesting business for a number of years. In the latter half of 1997 there was mention by Wood to West of the fuel additive venture and, on Wood's evidence West expressed an interest in the product. West was travelling to South Australia in his 4-WD vehicle and Wood gave to him a sample of the fuel additive to test on the trip. Wood said that West reported having used the product and said that it worked well, that he was interested in the product and expressed interest in the venture as "he didn't want to be a farmer for the rest of his life." On West's evidence he did not use the sample of fuel additive on the South Australian trip as he did not have a base line against which he could compare any test results. However, at some point he did ask Wood if he would like a partner in the business to which Wood responded "No, I don't have friends in business." According to West that is where the matter was then left.
11 According to West the next thing was that about a week before Christmas 1997 he received a telephone call from Wood. Wood indicated to him that he would like West to be involved in the business. West agreed to come to Perth to discuss the matter and arrangements were made for Wood and his wife to have dinner with West and his wife at the latter's home at Kalamunda the next evening. Wood put the date of that meeting at Monday 22 December 1997. West, however, says that the meeting was earlier than that, namely on Thursday 18 December. West said that the discussion which ensued on that evening preceded any contact which he, West, had with his accountant and solicitor and prior to meeting Stamatiou. West's accountant was David Hewitt (Hewitt)of Hewitt Corey & Co, Certified Practising Accounts. By reference to his 1997 work diary Hewitt was able to say that on Monday 22 December 1997 he met with West for one hour and his diary records "meeting re new business". West met with his solicitor Peter Marks also on 22 December 1997. That independent evidence would suggest that Wood is wrong so far as the date of the dinner party is concerned. I conclude that it was earlier than 22 December and accept West's evidence that it was on the evening of Thursday 18 December.
12 Returning to the dinner party, Wood said that he arrived with his wife who brought with her a bottle of champagne. On arrival he and West adjourned to the study. Wood's evidence of this meeting was:
(Page 8)
- "Did you have a discussion with Mr West that evening about the venture?---Yes, we went up into his office shortly after arrival and I put to Mr West that it was going to be 5 per cent of GTAA and 20% of Fueltech for a price of $200,000.
What was his response to that?---He said, 'Yes, that would be great.'
After you had this conversation with Mr West what did you do, you and Mr West?---I went downstairs and opened the bottle of champagne with the girls."
13It is to be noted here that Wood did not say when giving that evidence that the agreement was that West was to pay Wood personally the price of $200,000.
14 On the other hand West gives a different account of that evening. He says that after they had dinner he and Wood discussed various matters pertaining to the venture. Specifically they did not discuss what his, West's interest in the venture would be or what price he would be contributing. He did ask Wood about such matters to which Wood responded that he would give it consideration and telephone West the next day. Wood did telephone him the next day and proposed a 20 per cent interest in FTA and a five per cent interest in GTAA for $200,000. Asked what his response to that was he said:
"I said, 'Okay then. All right then. Well, if that's the case then that sounds okay to me. I'll ring my accountant and tell him what – now that I know what you're offering, what the percentages are, I'll ring my accountant…' From there – then I – as I said I rang Steve and went around to Steve's place there and we talked about this a bit more and then I said, 'Who else is involved in this,' and he said, 'Stamatiou, my lawyer, is involved there and there's an accountant involved called Palermo.' I said, 'Well, when can I meet this Stamatiou guy,' and so he rang up and set up an appointment and we went and saw him on the Monday.
You didn't tell Mr Wood that you accepted that offer?---No, God no."
(Page 9)
Meeting with Stamatiou
15 The meeting which West believed was also on Monday 22 December was so that he could ascertain what the set-up or structure of the business was and then, knowing that, get advice on the proposal from his own accountant and lawyer. Wood attended with West at this meeting with Stamatiou. West ascertained that GTAA was the manufacturing arm of the business and FTA was to be the marketing arm.
16 It was Wood's evidence that it was on Christmas Eve 24 December that he and West attended on Stamatiou. Stamatiou also believed that Wood and West attended on him that day. His recollection was only assisted in that a letter from Stamatiou to Palermo bears that date and wherein it is said that he met with Wood and West on 24 December 1997 (Exhibit 1). It was his recollection that he dictated the letter whilst both were present. That letter advised Palermo –
"We are instructed as follows:
1. To instruct you to change the shareholding structure of FTA to read as follows:
E M Stamatiou & Co 5%
Acepoint Holdings Pty Ltd 5%
Steven James Wood 70%
Geoffrey Kenneth West of 22 Lookout Road, Kalamunda 20%.
2. The FTA Trust will no longer be required as it will create complexities in the future.
3. In relation to the GTA Australia the shareholding structure will change as Steven Wood is giving 5% of his shareholding to Geoffrey Kenneth West. In all other respects the shareholding structure remains the same.
4. The consideration for the purchase of a 5% interest in GTA Australia and 20% interest in FTA by Mr West from Mr Wood, is $200,000.00.
(Page 10)
- 5. Mr Marinko is required to amend Schedule B of the Distribution and Marketing Licence Agreement and any other documentation to reflect:
(a) first payment of US$15,000.00 shall be paid on or before 23 December 1997;
(b) second payment of US$15,000.00 shall be paid on or before 19 January 1998;
(c) third payment of US$20,000.00 shall be paid on or before 19 February 1999;
(d) instalment payment of AUD$30,000.00 on 30 June 1998;
(e) instalment payment of AUD$30,000.00 on 30 June 2000;
(f) final payment, the difference between the amount already paid and the $200,000.00 consideration for the purchase of the 20% shareholding in FTA and 5% shareholding in GTA Australia to be paid on 30 June 2001.
We have instructed Mr Marinko to make the necessary changes to all the documents and the shareholders agreement to reflect the position as it now stands.
Please amend the shareholding structures of both companies and confirm that this has been done."
- Stamatiou's subsequent account to Wood (Exhibit 44) does not include any entry for any conference with Wood and West on 24 December. For 22 December however it has –
"Conference with you (Wood) and Bob Merrilees 15 units
Telephone attendance with John Palermo 2 units
Telephone attendance Paul Marinko 1 unit"
(Page 11)
- On the other hand a conference on 22 December with Wood and West, who Stamatiou may have incorrectly noted as "Bob Merrilees", with Stamatiou would be consistent with West's evidence that he and Wood attended on Stamatiou before he, West, attended on his accountant Hewitt later that day. Be that as it may I draw no conclusion from that information.
18 As to item 2 of his letter it was Stamatiou's evidence that it was Wood who mentioned the unit trust. Wood informed him that he thought that Palermo had suggested that a trust was the appropriate structure for the venture. Stamatiou, however, could not work out why it was required or how it was to work so he wrote to Palermo that the FTA Trust would no longer be required.
19 It was Wood's evidence that the purpose in meeting Stamatiou that day with West was to get Stamatiou:
"…to draw up documents to the fact that Mr West had bought shares in Fueltech and GTAA for $200,000."
20 In cross-examination this discussion was again mentioned as follows:
"Well, tell us how the discussion went, what did you ask Mr Stamatiou to do?---I asked Mr Stamatiou to put into a contract that Mr West was purchasing 5 per cent of GTAA and 20 per cent of Nitrous-Formula for the price of $200.000."
21 In neither instance in giving this evidence did Wood say that the contract/documents were to evidence or record that West was to be buying shares from Wood or that Wood was to receive the price of $200,000.
22 Stamatiou's response was that he could not do it because he had a 5 per cent interest in the company and it would have been a conflict of interest for him. Wood's evidence continued:
"Did you follow that up and do anything more about getting a document drawn as to your agreement with Mr West?---Yes, I had spoken to Mr West about it and we agreed that Mr Marinko's bills had not been paid and Geoff said 'leave it up to me, I'll get the document drawn up.' "
23 On cross-examination on this topic his evidence was:
"What was your understanding in relation to Mr West obtaining that agreement?---We had spoken about. We owed Paul
(Page 12)
- Marinko some money for the existing contracts that were getting drawn up and Geoff said he knew someone that could do it a lot cheaper and I agreed with him because we – I trusted him.
So you left it to Geoff West to organise this through his solicitor, did you?---Correct."
24 The credibility of that evidence is open to question. Marinko's account to Wood (Exhibit 42) is dated 19 February 1998 and appears to encompass the whole of the work done by Marinko on the transaction documents. Thus to that stage there were no Marinko bills not paid as Wood suggested. For this conversation to have taken place (if in fact it did) it would have to have been some time after 19 February 1998 and before 25 February 1998 when it was alleged that the agreement (Wood and West) was signed. Given that as between their respective advisors the transaction documents were being attended to and none knew anything about the alleged agreement a shadow is cast over that evidence.
25 West denied that there had been any such discussion. Wood did not give any evidence as to when or where it was that he said this discussion took place. Stamatiou was not aware of any agreement as between Wood and West whereby West was to pay Wood personally $200,000 for an interest in the venture.
26 This was the first occasion that Stamatiou had met West. Wood introduced him as a "friend and a good buddy". Stamatiou ascertained that West had sold a farm and was cashed up and wanted to invest in the venture. Stamatiou's impression of West was that he was naïve in commercial matters. Stamatiou, even at that early stage had doubts about the product and, as he recounted, "he doubted that something that could save 17 per cent on fuel consumption had not been snapped up by the big fuel companies". It was also his belief that he advised West to seek his own independent legal and accounting advice before committing to it and suggested that he should talk to Palermo who would outline to him the structure of the venture and how it would operate.
27 Following that meeting West met with Hewitt. He advised Hewitt that Palermo was also involved in the business as accountant. Hewitt thought it would be useful for both he and West to meet with Palermo to discuss the corporate structure. An entry in Hewitt's diary for Wednesday 24 December indicates that he and West met with Palermo early that
(Page 13)
- morning and it was Hewitt's recollection that the meeting was at Palermo's office.
Meeting with Palermo
28 It was Palermo's evidence that prior to Christmas 1997 he was advised by Wood that he had another investor to be involved in the venture. Wood was being pressed by Trippe for payment of the licence fee. Wood did not have the required working capital to enhance the venture and so a capital injection was required. Palermo was introduced to West when Wood and West came to his office prior to Christmas. Palermo's evidence was that he was told that West would invest $200,000 on a progressive basis and that he required time to be able to invest the total amount because he had to receive revenues from other interests to be able to inject the balance of funds. Palermo was made aware that West would be consulting his accountant Hewitt to discuss what entity would be taking up the equity in the unit trust. Hewitt subsequently contacted him with that information.
Hewitt's role
29 Subsequently on Christmas Eve West and Hewitt met with Palermo at his office. On 9 January 1998 Hewitt on West's instructions caused to be incorporated Go-Fa Pty Ltd in which West and his wife Sharon Ann West held one ordinary share each and both were named as directors. On the day before viz 8 January 1998 Hewitt had instructed Irdi to prepare a deed of settlement for the Go-Fa Trust. On about the same date Hewitt advised Palermo that West's interest in the venture would be held by Go-Fa Pty Ltd as trustee for the Go-Fa Trust.
The FTA Trust
30 Palermo in turn advised Irdi that additional unit holders in the FTA Trust would be Palermo's company Acepoint Holdings Pty Ltd as trustee for the Ace Trust and Go-Fa Pty Ltd as trustee for the Go-Fa Trust (Exhibit 52). Thus the unit holders and their respective entitlements in the FTA Trust were to be:
Wood atf the Wood Trust 700,000 units – (70 per cent)
Stamatiou atf the
Stamatiou Investment Trust 50,000 units – (5 per cent)
Acepoint Holdings Pty Ltd
atf the Ace Trust 50,000 ordinary units – (5 per cent)
(Page 14)
- Go-Fa Pty Ltd
atf the Go-Fa Trust 200,000 units – (20 per cent)
31 Palermo's instructions to Irdi also detailed the schedule by which Go-Fa Pty Ltd was to pay for its 200,000 ordinary units. The units were issued at one cent each plus a premium of 99 cents, total $1. Payment was to be as follows:
(1) $25,000 on 23/12/97
(2) $25,000 on 19/1/98
(3) $30,000 on 19/2/98
(4) $30,000 on 30/6/98
(5) $30,000 on 30/6/99
(6) $30,000 on 30/6/2000
(7) $30,000 on 30/6/2001
32 In accordance with those instructions Irdi prepared the deed of settlement for the FTA Trust (Exhibit 12). His file indicates that on 27 January 1998 he forwarded three copies of the trust deed to Palermo together with ordinary unit certificates 1, 2, 3 and 4 which reflected the above listed unit holdings. Irdi had no record as to when the deed was returned to him but his file indicated that it was stamped for stamp duty on 8 May 1998.
33 No witness was able to recall when their signature was applied to the FTA Trust Deed. It may not have been on the same occasion as the other commercial documentation
34 The seal of FTA was affixed with Wood signing as sole Director/Secretary. Wood also signed atf the Wood Family Trust. That signature is witnessed by a person whom Palermo said was a secretary in his office at the time. That is consistent with the fact that the common seals of FTA and GTAA were held at Palermo's office. The deed is also signed by Stamatiou and his signature was witnessed by a receptionist employed in his office. The common seal of Acepoint Holdings Pty Ltd was affixed to which Palermo appended his signature. The common seal of Go-Fa Pty Ltd was not affixed but the signatures of West and his wife were appended.
(Page 15)
35 Wood made the frank admission that he had no recollection of signing the document and claims that he did not see the document until it came to light in the discovery of documents process. That simply cannot be the case given that it bears his signature. Given that the document was stamped for stamp duty on 8 May 1998 I conclude that he must have seen and signed the document prior to that date. Wood said that he did not understand what the FTA Trust was about or the need for it insofar as the structuring of the venture was concerned. This goes to highlight the naivety of Wood so far as the commercial structure of the venture is concerned and the fact that he left things to those who were advising him as to those commercial matters.
36 Nor did Stamatiou have any recollection of signing the FTA Trust Deed. He noted that his letter of 24 December 1997 (Exhibit 1) made reference to "the FTA Trust will no longer be required…" It was his belief that he would have discussed the FTA Trust with Wood and West on the first occasion when they came to his office. They wanted to know what role the FTA Trust played in the structure. He noted that the transaction documentation included FTA atf the FTA Trust and acknowledged that the FTA Trust would have been relevant to the set up of the commercial structure for the venture and he simply presumed that Palermo would have explained to Wood and West why it was necessary.
37 On West's evidence there was no mention of the FTA Trust at the meeting at Stamatiou's office. As much as he understood was that GTAA was the manufacturing arm and that FTA was the marketing arm of the business venture. Nor could he recall signing the FTA Trust Deed. He too was naïve as to the commercial structure of the venture and also relied upon those who were advising him.
The transaction documents
38 Marinko prepared the transaction documentation. On Stamatiou and Palermo's evidence drafts of those documents were provided to them which they each reviewed and vetted and at least in the case of Stamatiou recommendations for amendments were made. Those documents ("transaction documents") were:
(i) Distribution and Marketing Licence Agreement – Fuel Additive Licensed Products (Exhibit 8) – parties to the agreement are GTAUS, FTA atf the FTA Trust and Wood atf the Wood Family Trust.
(Page 16)
- (ii) Importation and Production Licence Agreement – Fuel Additive Licensed Products (Exhibit 9) – parties to the agreement are GTAUS, GTAA and Wood atf the Wood Family Trust.
(iii) Umbrella Agreement For The Importation, Production, Distribution and Marketing of Fuel Additive Licensed Products (Exhibit 10) – parties to the agreement are GTAUS, GTAA, FTA atf the FTA Trust, Wood atf the Wood Family Trust, Acepoint Holdings Pty Ltd atf the Ace Trust, Stamatiou atf the Stamatiou Investment Trust and Go-Fa Pty Ltd atf the Go-Fa Trust.
(iv) Shareholders' Agreement (Exhibit 11) – parties to the agreement are GTAUS, GTAA, Wood atf the Wood Family Trust, Acepoint Holdings Pty Ltd atf the Ace Trust, Stamatiou atf the Stamatiou Family Trust and Go-Fa Pty Ltd atf the Go-Fa Trust.
These documents were initially signed at Palermo's office where Wood, West, Sharon Ann West and Palermo were present. The documents were then taken to Stamatiou's office where, on Stamatiou's evidence only Wood, West and he were present. That is consistent with the documents in that Stamatiou witnessed Wood's signature and West witnessed Stamatiou's signature. Stamatiou dated the documents 25 February 1998.
39 It was Wood's evidence that it was at Palermo's office on this occasion that he first became aware of Go-Fa Pty Ltd. Upon enquiry West advised him that Go-Fa Pty Ltd was his company. Similarly, Stamatiou said that this was the first occasion that he became aware that Go-Fa Pty Ltd was West's corporate entity. That is surprising given that he met with West and Wood before Christmas and was aware that West was taking an interest and that he had vetted the documents which, Exhibits 10 and 11, included Go-Fa Pty Ltd atf the Go-Fa Trust. Palermo and Stamatiou were acting on the instructions of Wood. Their knowledge of such matters was Wood's knowledge and in any event no issue was raised about this.
The alleged agreement in writing
40 It was Wood's evidence that West had said to him that he, West, would organise through his solicitor for the agreement to be prepared. There was no evidence as to when it is claimed that was said.
41 Wood's evidence was that when the transition documents were signed at Palermo's office on 25 February 1998 a fifth document was signed by he and West. Asked to describe what happened in relation to that document Wood said:
(Page 17)
- "This particular document was where it was shown that Geoff had bought shares, 20 per cent in Fueltech and 5 per cent in GTA for $200,000. I asked John Palermo to open a page and show me where it was documented…
Can you recall exactly what it said or not?---It said, Geoff Kenneth West for obtaining shares in GTAA of 5 per cent and Fueltech of 20 per cent shares for the value of $200,000."
42 Wood said that this document was only signed by he and West. Again Wood did not say that the document recorded that Wood was to transfer shares to West or that West was to pay $200,000 to Wood personally.
43 After signing all of the documents at Palermo's office Wood said that he took a copy of the fifth document to his car where his wife was waiting for him. He showed her the document "…where Geoff had purchased the shares for the money" and pointed her to that part of the document. Wood described this document as being "a skinny narrow document".
44 Valerie Wood's evidence was that she waited in the car whilst her husband went into Palermo's office to sign the transaction documents. He was away for 30/40 minutes and when he returned he had a document in his hand. He opened the document to a page and showed her a paragraph where it said that West was to pay Wood $200,000 for his shares. Mrs Woods described it as "a very thin document". She saw that it had the names Geoff West and Steve Wood and reference to $200,000. She did not see any signatures on the document. It was her evidence that when they got home they put the document in her husband's briefcase and put it under their bed. It was later retrieved (refer later evidence).
45 West denied that he had ever said that he would get his solicitor to prepare a document reflecting any oral agreement. He saw his solicitor, Peter Marks (Marks) on 22 December about matters relating to the proposed venture. Marks' evidence was that there was no mention or instructions to him from West to prepare any documentation pertaining to any agreement between West and Wood.
46 Palermo's evidence was that only the transaction documents (Exhibits 8-11) were executed at his office. He had no recollection of any fifth document or agreement as between Wood and West being signed on that occasion. Similarly, Stamatiou had no knowledge of any written agreement between Wood and West and had no recollection of any such agreement having been mentioned to him.
(Page 18)
47 The next occasion when the copy of the alleged written agreement came to light was so it was said, some time in 1998 (on Valerie Wood's evidence) or 1999 (Wood's evidence) on an occasion when West had lost his briefcase and was in need of another one preparatory to a trip overseas. On both Wood and his wife's evidence Valerie Wood went home and retrieved the briefcase from under the bed and brought it back to the business premises. According to Valerie Wood when she returned Wood opened the briefcase and took out "the documents, whatever…", meaning the copy of the agreement and put it in the top drawer of a filing cabinet. They both said that West was present when that was done. Neither gave any evidence that there was any comment or discussion about the document at that time or that West was aware as to what the document was. West took the briefcase and never returned it. This was the last occasion when Wood and Valerie Wood saw the alleged document.
48 The only persons who had access to Wood's business premises of WA Racing Supplies, which was in a factory unit adjacent to the unit from which West was conducting the FTA business, who had a key were West and himself. There was an alarm system to which only Wood, his wife and West had the code. The alarm was set each evening. Thus, it was inferentially suggested on Wood's behalf that West had knowledge that the document was in the back of the drawer in the filing cabinet, had access to the premises and, given that the document could not be located therefore it must have been removed by West.
49 Subsequently in about April 2000 Wood and West had a falling out. After a long weekend which may have been either Easter or Anzac Day Wood said that he and his wife became aware that the factory unit occupied by FTA was empty and that all equipment and supplies had been removed. According to Wood and his wife they had no prior knowledge whatsoever that the business was being relocated. It took Wood a couple of days to locate West and the business operating from premises in a nearby street. During the ensuing conversation Wood claims to have said to West that West owed him $200,000 which he said West denied owing him. Wood went back to his business premises to get the document but could not locate it. He then claims to have gone back to the new premises and told West that the document was missing to which West responded that he would get his copy of the document whereupon the door was closed and the conversation ended.
50 On the other hand West did acknowledge that there was an occasion in about August/September 1999 when he lost a briefcase which he did
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- inform Wood about He did not recall that Wood may have loaned him a briefcase. He was aware that there was a filing cabinet and acknowledged that as a one third partner in the business of WA Racing Supplies he could have had access to the filing cabinet. He denied that in 1999 he had occasion to go to the filing cabinet. On West's evidence the business of FTA moved in January 1999 when its lease on the premises expired. The falling out, he said, was over a trailer and nothing to do with the relocation of premises.
51 West's position was that there was no agreement either oral or in writing as alleged by Wood. He did not say to Wood that he would get his solicitor to prepare a written agreement evidencing the alleged agreement. His solicitor, Marks, received no instructions and had no knowledge of such an agreement. He said no such agreement was signed at Palermo's office. West's position is that there was no such fifth document signed on that occasion as alleged by Wood. Palermo says that there was no other document signed at his offices other than the four documents (Exhibits 8-11) prepared by Marinko. He was emphatic that no other document was executed at his office on that day to his recollection. Irdi was not aware of any such agreement and had no files with any other documentation evidencing any agreement between Wood and West. Likewise, Hewitt did not recall any discussion with West involving any agreement between Wood and West and has not seen any document evidencing any such agreement.
52 West denied that when Wood came to the new business premises that there was any discussion about $200,000 and denied that Wood came back a second time after being unable to locate a copy of the agreement. On West's evidence that never happened and was an absolute lie.
Allotment of shares to Go Fa Pty Ltd
53 As to the transaction documents (Exhibits 8-11) signed on 25 February 1998 it is noted that where the common seals of GTAA and FTA have been affixed to those documents both Wood and West have appended their signatures as directors. At the material time Wood was the sole director of both those companies. The corporate records indicate that it was not until 23 August 1999 (some 18 months later) that West consented to and was appointed as a director of both companies. This again perhaps reflects the naivety of both Wood and West when it came to corporate matters. As much as might be drawn from this is that it is indicative that West was to be involved in the management of both companies as well as being a shareholder therein. In fact West personally
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- never became a shareholder of either of the companies. It was only on 23 August 1999 that shares were allotted to Go-Fa Pty Ltd atf the Go-Fa Trust in both GTAA and FTA. This was at the time when Wood proposed that West should become an equal shareholder in the venture because he was doing all the administration and work for the business. On Palermo's evidence he said that Wood told him that the change to the arrangement was a funding issue and that West was doing all the work in the business and that he, Wood, had other business interests which he was attending to. At about that time Stamatiou wanted out and so his shares were transferred to Go-Fa. His fees were paid by West and Stamatiou accepted this in satisfaction for the transfer of his shares to Go-Fa. Palermo said that at that stage he also wanted to get out because the business was not going in the direction which had been intended, he had not recovered his costs involved and was unlikely to do so. The other parties however would not buy him out. Palermo's office maintained the company's files and the secretarial functions and he prepared the minutes and memorandum of resolution and other company records and returns. It was his evidence that the Memorandum of Resolution of GTAA dated 23 August 1999 was prepared on the instructions of both Wood and West. The Memorandum of Resolution of FTA dated 23 August 1999 was prepared on the instructions of Wood as was the Memorandum of Resolution of FTA atf the FTA Trust dated 23 August 1999. At no time did Wood transfer any shares owned by him personally to either West or Go Fa Pty Ltd.
West's inconsistent statements in affidavits
54 From the outset so far as pleadings are concerned West has consistently denied entering into an agreement as alleged by Wood. Specifically the pleadings alleged (until amended on the first morning of trial) that the agreement was in writing and was set out in a document prepared by the defendant's solicitors in or about December 1997.
55 In support of the assertion that there was such an agreement Wood through his counsel in cross-examination directed the attention of West to certain affidavits sworn by him since commencement of the proceedings and subsequent to the denials made by his defence. The first affidavit was in response to an application for specific discovery of the alleged written copy of the agreement pleaded. In response West deposed in his affidavit sworn 22 February 2001 –
"2. I swear this affidavit in response to the applicant's application for discovery pursuant to O 26A, r 4 of the
- Supreme Court Rules for discovery of documents relating to:
- (a) the Agreement between the applicant and the respondent pursuant to which the applicant agreed to sell and the respondent agreed to buy shares in General Technology Applications Australia Pty Ltd and Fuel Tech (WA) Australia Pty Ltd in or about December 1997 ('the Agreement') including the agreement; and
(b) the variation to the Agreement made in or about August 1999.
- 3. I have previously viewed the Documents described in paragraph 2 herein but have not had nor have now those documents in my possession, custody or power.
4. I have no knowledge as to the whereabouts of the documents described in paragraph 2 herein."
56 He was also referred to his affidavits sworn 8 April 2002 and 14 August 2002.
57 In respect to each of the statements deposing that he had viewed such a document enshrining the alleged agreement it was West's response that he didn't understand specifically that a document purporting to reflect the oral agreement was being referred to and always understood that the reference to any agreement was referring to the commercial documentation which reflected the substance of the agreements involving all parties. He assumed that what was being referred to were the agreements that were signed on 25 February 1997. He said that he was called by his then solicitors to attend to sign the documents as a matter of urgency because of deadlines for filing of those affidavits at court, he only quickly scanned the documents before he signed them.
58 West was very excitable in cross-examination when these matters were put to him. He was critical of his lawyers in that these affidavits were presented to him for signing at the last minute and for not having advised him as to what document was being referred to. It was as a consequence of his unhappiness with his then solicitors and the fact that they had allowed a default judgment to be entered against him that he changed solicitors.
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59 Wood's counsel suggests that the admissions made in the affidavits are indicative of West's knowledge that in fact there was a written agreement as alleged prepared by West's solicitor on West's instructions. That is not the interpretation which West gave to the request for specific discovery. He being a layman was dependent upon his professional advisers insofar as explaining to him what the inquiry was directed at just as he was dependent on those advising him regarding the documentation evidencing the involvement and interest he was taking in the venture. Regrettably, on his evidence he was let down by those advising him so far as the requests for specific discovery were concerned. His explanation is plausible given that by reason of his discontent he did change solicitors.
60 In any event in the context of the whole of the evidence I am not able to accept the proposition put on behalf of Wood. Other independent evidence to which I refer later weighs against making a finding that there ever was such a written agreement.
Uncertainty of plaintiff as to what was agreed (if anything)
61 The plaintiff's solicitor's letter before action dated 20 September 2000 (Exhibit 39) advised that:
"He instructs us that in about December 1997 you and he entered into an agreement whereby you would buy a share in the businesses operated by (FTA) and (GTAA). The consideration for the purchase of a 5% interest in GTAA and a 20% interest in (FTA) by you from Mr Wood was $200,000."
62 At all material times Wood was the holder in his own right of one ordinary share in each of GTAA and FTA. To transfer the five per cent and 20 per cent interests in each company would have required each company to allot further shares to Wood and then for Wood to transfer shares to West. This never happened. What ultimately happened on 23 August 1999 was that shares were allotted by each company to Go-Fa Pty Ltd atf the Go-Fa Trust.
63 The allegations in the statement of claim have changed substantially since the proceedings were commenced.
64 When Wood commenced this action by writ on 8 November 2001 it was alleged that West agreed to purchase from Wood 20 shares in FTA and five shares in GTAA. Of course that is not consistent with what was contended in either the letter before action or what the plaintiff has contended at trial. West did not purchase any shares from Wood and
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- Wood did not sell or transfer any of his shares to West or Go Fa. It is pleaded at par 5 that Wood "…at the direction of (West) during or about December 1997…" transferred 20 shares in FTA and five shares in GTAA to Go-Fa Pty Ltd atf the Go-Fa Trust. There was no evidence that West gave any such direction during or about December 1997 and nor did Wood transfer any shares. In fact Go Fa Pty Ltd had not been incorporated at that stage.
65 Paragraph 2(a) of the statement of claim was amended in February 2004 to allege that it was an express term of the agreement that West "…or his nominee…" was to purchase the shares from the plaintiff. That remained the allegation until amendment which I granted by leave on the first morning of trial. The reason for the amendment as deposed to by Wood's solicitor to include the words "…or his nominee…" was that Wood did not initiate the amendment and that it was not necessary or intended and was made in error and did not reflect the terms of the agreement as alleged by Wood.
66 By amendment made 21 February 2006 par 2(a) of the statement of claim was further amended to plead "…the defendant or his nominee was to purchase from the plaintiff, alternatively the plaintiff was to provide or transfer or cause to be transferred or issued to the defendantor his nominee…" shares in the companies.
67 Paragraph 2(b) was amended to plead "…the purchase price of the said shares, alternatively the fee to be paid to the plaintiff by the defendant was in the sum of $200,000." Those amendments still stand as the plaintiff's pleading. There was no evidence of any discussion to the effect that "…the plaintiff was to …cause to be transferred or issued…" shares or that "…alternatively a fee…" was to be paid for any purchase of shares.
68 By further amendment granted by leave on the first morning of trial the plaintiff, whose allegation to that stage was the agreement between he and West was in writing, for the first time raised the allegation that the agreement was ... "alternatively partly in writing and partly oral or alternatively oral." Insofar as the agreement was said to be oral it was alleged to be comprised in two conversations the first being the conversation between Wood and West at the latter's home on 22 December 1997 and the second conversation being at the first meeting which they had with Stamatiou. By this amendment it was alleged for the first time in the pleadings that West was to acquire from Wood a 20 per
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- cent share in FTA and a five per cent share in GTAA whereas previously the pleading referred to 20 shares in FTA and five shares in GTAA.
69 Even so the pleading is still confused. Paragraphs 1(d) and 2(a) refer to 20 per cent in FTA and 5 per cent in GTAA whereas pars 5 and 5A each refer to 20 shares in FTA and 5 shares in GAA.
70 What these amendments, inconsistencies and lack of supportive evidence serve to show I suggest is the uncertainty which Wood has insofar as what was discussed on the relevant occasions and what, on his assertion, was agreed and what the arrangement for West's involvement in the venture was to be. Furthermore, on Wood's evidence, on no occasion was the time for payment of any moneys to him by West discussed. On the other hand it was Palermo's evidence that Wood told him that West would invest $200,000 on a progressive basis. That is consistent with the payment schedule in Stamatiou's letter (Exhibit 1) and Palermo's advice to Irdi as to the schedule for payment of units in the FTA Trust by Go Far Pty Ltd. The uncertainty of the plaintiff as to what in fact the terms of the alleged agreement were lead me to conclude that the evidence of the plaintiff is at best dubious as to what, if anything, that he contends for was agreed as alleged as between he and West. West denies that there was any agreement either in writing or orally. He says the proposal for his buying into the venture was put to him and it was then left for those advising the parties to document what was to be his involvement and where the moneys for his interest in the venture were to be applied. For the reasons to be shortly enunciated I prefer West's account.
71 Commercial common sense dictates that in circumstances where Wood did not have funds to meet certain obligations pertaining to obtaining the licensing rights and where he was inviting West to invest in the venture and take an interest in it that such funds as would be contributed as consideration for taking that interest would be contributed to the capital and for the purposes of the business.
72 In my opinion the transaction documents and the FTA Trust Deed reflect what was the arrangement and relationship insofar as the various parties were concerned. West was investing in the business and he by his corporate entity ultimately received units in the trust and shares in FTA and GTAA. West worked in the business, endeavoured to develop the business, put other funds into the business by way of setting up the business premises, research, travelling overseas to research and further investigate the viability of the product, etc etc. I do not accept that Wood
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- personally was to benefit by receiving a payment or fee from West for his interests in the business.
The plaintiff's "conspiracy theory"
73 Reference has already been made to the inferential suggestion that because West had access to a filing cabinet in WA Racing Supplies' office he took the opportunity to remove the written agreement said to have been put there. West denies that suggestion.
74 There was also evidence that since proceedings were commenced West had inspected documents on a number of occasions at Palermo's office and would have had opportunity to remove any copy of the written agreement. Again, West denied that he did so.
75 Wood also undertook inspection of documents at Palermo's office. There was at the time some $15,000 owing by Wood to Palermo for fees which Palermo understandably wanted to be paid before he would allow Wood to inspect documents. It was agreed that Wood would pay $5000 and he attended Palermo's office with cash and inspected documents. However, there was a small bundle of documents which Palermo put to one side saying they were his and did not allow Wood to inspect those documents. It was Palermo's evidence that on that occasion Wood left without paying the $5000 saying that he didn't find what he was looking for. When it was put to Wood in cross-examination that Palermo would say that he had never seen and had no knowledge of any alleged written agreement Wood suggested that Palermo and West were conspiring together against him.
76 All those matters cause me to describe them as a "conspiracy theory" on the part of Wood. Whilst Wood may be suspicious he may on the other hand be reading into events conclusions to support his own cause which are not capable of being reached. Other than what has been inferentially suggested by reason of Wood's suspicions there is no evidence whatsoever which is capable of supporting any conclusion that there has been a conspiracy at work against Wood. His suspicion does not amount to evidence that in fact copies of the alleged written agreement have been stolen or otherwise withheld from him. On the other hand there is the positive evidence of Wood and Palermo that there was no such written agreement in the first place.
77 Furthermore, I have no reason to question the credibility of either Palermo or Stamatiou (who after all were Wood's own professional advisers) so far as their evidence that to their knowledge there never was
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- any mention of such an agreement as alleged and no document to that effect.
78 Accordingly, I am not able to draw any conclusions favourable to Wood from his "conspiracy theory".
Dealing with credibility of the parties
79 Both Wood and West gave their evidence positively and assertively. I can draw nothing from the demeanour of either of them as to the truthfulness or reliability of their evidence. The passage of time nevertheless does suggest that recollections of witnesses are imperfect. There are significant discrepancies between the respective account of events given by Wood and West. They have already been enumerated in the course of these reasons. Contemporaneous documentation does come to aid in resolving such conflict. Thus I defer to contemporary documentation where testimony is inconsistent or conflicts with such documentation.
Onus of proof
80 It is trite to say that the onus rests upon Wood to prove his case. That is, Wood carries the burden of satisfying the Court on the balance of probabilities that there was an agreement, be it written, partly oral and partly in writing or wholly oral as between he and West as alleged.
81 When speaking of a degree of cogency which evidence must reach in order that it may discharge the legal burden in a civil case Denning J in Davies v Taylor [1974] AC 207 at 219 said:
"That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the Tribunal can say: 'We think it more probable than not', the burden is discharged, but if the probabilities are equal it is not."
Was there an agreement between Wood and West as alleged?
82 Answer: No.
83 Upon an analysis of the evidence I have come to the view that Wood has failed to satisfy me on the balance of probabilities that an agreement as alleged was entered into. I enunciate the following matters which lead me to that view.
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84 First, it must be recognised that implicit in the plaintiff's claim is that Wood contends that he personally was to receive the sum of $200,000 from West for interests in FTA and GAA. That assertion does not withstand scrutiny. First and foremost Wood acknowledges that it was not the deal that the total consideration to be paid by West and Go Fa Pty Ltd for an interest in the venture was $400,000. That is, Go Fa Pty Ltd paying $200,000 for units in the FTA Trust and West paying Wood $200,000 for shares in FTA and GTAA.
85 Wood rejects that proposition but made no attempt to reconcile the obvious inconsistency. The terms of the FTA trust conflict directly with Wood's claim that West also entered into a personal agreement with him for the payment of $200,000. There was no evidence that Wood at any time or with those advising him raised any query when it was apparent from the documentation, viz FTA Trust that the company associated with West was paying the $200,000 by instalments to acquire units in the Trust. If one accepts Wood's evidence that only one amount of $200,000 was to be paid for West's interest in the venture then, given the documentation, it was not payable to Wood. The keystone of the plaintiff's claim is clearly without support even on his own evidence.
86 There was no evidence whatsoever either in writing or oral or from which it might be implied to support the plaintiff's contention, as alleged in par 2(a) of the statement of claim that it was an express term of the agreement that, in the alternative the plaintiff was to provide or transfer or caused to be transferred or issued to West the shareholdings in FTA and GTAA. The plaintiff gave no evidence to this effect. Nor was it put to West. Again, this allegation is without support.
87 Similarly, as to par 2(b) of the statement of claim there was no evidence that it was an express term of the agreement that, in the alternative, a fee (as opposed to the purchase price to acquire the interests in FTA and GTAA) was to be paid by West to Wood.
88 As to par 5 of the statement of claim there was no evidence from any of those present at the signing of the transaction documents at Palermo's office that any direction as alleged or at all was given. On Wood's evidence he ascertained upon enquiry that Go Fa Pty Ltd was the corporate entity which was engaging in the venture. Such discussion does not amount to a clear and unambiguous direction.
89 As to the allegation in par 1(c) and (e) of the statement of claim concerning the alleged oral agreement or partly oral agreement there was
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- no evidence from either party or Stamatiou at that meeting specifically as to what in fact was said. However, Stamatiou's letter (Exhibit 1) does indicate that there must have been some discussion to the effect as outlined in that letter. However that has to be read in the context of the instruction that Marinko was required to amend the Distribution and Marketing Licence Agreement to reflect the instalments for the defendant to acquire the interests in FTA and GTAA. Clearly, Stamatiou did not fully understand what the corporate structure was to be. That is evidenced by the fact that he said the FTA Trust will no longer be required. It was in fact an integral part of the whole corporate structure. In any event Palermo ignored the letter as did Hewitt. Palermo said that it was inconsistent with the previous instruction from Wood. Stamatiou acknowledged that he deferred to Palermo so far as that structure was concerned. In that respect little reliance can be placed on the content of Stamatiou's letter.
90 It is apparent from the evidence that in truth the situation was that Wood did not have the funds to pay Trippe the licence fee payable before the end of 1997. The way that this could be achieved was for capital to be injected into the venture to meet the payment. That is why it was that Wood went to West with a proposition for him to acquire an interest in the venture. Thus, again, it was not money to be received personally by the plaintiff but rather an injection of capital into the fledgling venture without which it would likely have floundered at inception. That the plaintiff personally did not have the financial resources to get the venture up and running is reflected by the fact that both Stamatiou and Palermo were prevailed upon by Wood to take their respective interests in the venture in lieu of their fees for services.
91 It was Wood's evidence that at or around the time of the meeting at West's home there was some discussion about the corporate structure of the venture and West buying shares in the corporate entities. Relevantly, it was not his evidence, as alleged in par 1 of the statement of claim that the defendant agreed to purchase from the plaintiff shares in the two companies. It must be appreciated that the plaintiff personally and the corporate bodies, ie companies, are separate and distinct legal entities. Buying shares from an individual and receiving an allocation of shares in a company or units in a trust are different things. On allocation the payment goes to capital of the company or as capital of the trust. Wood's naivety so far as these matters were concerned, was demonstrated by his admission in cross-examination that he did not appreciate any difference between shares and units. Otherwise the plaintiff's evidence was non-specific so far as any detail as to how the proposed arrangement was
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- to be put into effect. He was reliant on those engaged to advise him as to the corporate structure. It was by their doing that the interest associated with West, namely Go Far Pty Ltd atf Go Fa Trust, was acquired by the allocation of shares and units in the trust.
92 That this is what was proposed is supported by the independent evidence of Palermo in that it was his evidence that what he was told by Wood at the meeting prior to Christmas that he had another investor involved in the venture and "…that West would invest $200,000 on a progressive basis." That evidence went unchallenged. That is something different from saying as Wood claims that he personally was to be paid $200,000. That the payment was to be made on a progressive basis is reflected in the FTA Trust Deed subsequently prepared. That evidence is clearly indicative that Wood was introducing West as an investor in the venture and not that he, Wood, was personally selling a part of his interest to West.
93 Contrary to what is alleged to have been the agreement West did not and has not purchased from Wood the interests in FTA and GTAA. What was acquired so far as interests associated with West are concerned, was that Go Fa Pty Ltd atf Go Far Trust acquired 200,000 units in the FTA Trust for the sum of $200,000. Subsequently in August 1999 as a result of later discussions interests in the companies were allocated to Go Fa Pty Ltd.
94 Each of Stamatiou and Palermo and Marinko (at the instruction of Palermo) were all acting on the instructions of Wood. Their knowledge of the corporate structure and the arrangements as represented by the transaction documents must be taken as the knowledge of Wood also. That is, he must be taken to have been aware (despite his apparent naivety in such matters) as to what the arrangement was. Yet he never mentioned nor raised with any of them that there was another arrangement as between he and West that West was to pay him personally $200,000 for the interests to be acquired by West in the venture.
95 The alleged written agreement as was initially pleaded is said to have been prepared by West's solicitor in or about December 1997. West's solicitor Marks denied any instructions or knowledge concerning such a document. As originally pleaded it would have been a reasonably straight forward agreement to prepare. However, the subsequent pleading amendments, eg introducing alternatives to the express terms, introduced some complexity into such an agreement. There was no evidence however from Wood that the alternatives were the subject of any
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- discussion between he and West or whether or not they were in fact included in the written document. There is nothing from which it might be inferred that they were included as express terms of the alleged agreement. That aspect of the pleading must be rejected.
96 Even if there was an agreement executed by the parties as alleged it was superseded by the express provisions of the transaction documents.
97 It was an express term of the Umbrella Agreement (Exhibit 10) that:
(a) the provisions in the transaction documents comprised the whole of the agreement between the parties; cl 1.2(h),
(b) the parties agree that there are no further agreements; cl 1.2(h)(ii),
(c) the implication of any further agreement between the parties is negatived; cl 1.2(h)(iii),
(d) the transaction documents supersede all prior documents and understandings whether oral or written relating to the subject matter of the transaction documents between the parties.
98 The Distribution and Marketing Agreement (Exhibit 8) provides that the whole agreement is contained in this agreement; cl 1.2(h). Clause 1.2(h)(2) further provides that the implications of further agreements are negatived.
99 Wood's claim that he was to personally receive the sum of $200,000 for the interest in the venture to be acquired by West, namely the allotment of shares, would put Wood in breach of his duties to the beneficiaries being the unit holders in the FTA Trust. That is premised on the basis of Wood's concession that only one amount of $200,000 was to be the investment by West for his interest to be acquired in the venture. At all times prior to August 1999 Wood was the sole director of FTA as trustee of the FTA Trust. In that capacity FTA owed fiduciary duties to the Trust and the beneficiaries of the Trust. If on Wood's account he was to personally receive the $200,000 then FTA would be in breach of its duty so far as allocating units in the Trust to Go Fa Pty Ltd without receiving payment for those units as outlined in the First Schedule to the FTA Trust Deed. In that respect Wood as director of FTA as trustee of the FTA Trust would be in breach of the trustee's duty inter alia to adhere to the terms of the Trust Deed, not to abuse his position by making a
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- means of profit or benefit to himself and to account for benefits obtained in circumstances where there was an actual or significant possibility of contact between personal interest and fiduciary duty (which is the case here).
100 On Wood's evidence there were three copies of the alleged written agreement. After it was signed at Palermo's office he took one copy, one copy was for West and one copy was to remain at Palermo's office that being the registered office of the various companies.
101 Palermo and Stamatiou never saw and were never aware of any such agreement as alleged. Nor was Hewitt and nor was West's solicitor Marks. Putting aside the conflict in evidence as between Wood and West on this issue the evidence of these witnesses is compelling so far as the non-existence of such an agreement is concerned. I accept their evidence on this issue.
102 If the document was signed at Palermo's office when the transaction documents were signed it begs the question why Wood took a copy of the document when he left the meeting and showed it to his wife as contended. There was no evidence of anyone else having taken a copy of any document from that meeting (other than the transaction documents being taken to Stamatiou's office to be signed). The transaction documents were submitted for stamp duty assessment. Such a written agreement as Wood alleges would likewise have to be submitted for stamp duty. There was no evidence of this being done. In my view it would be an unlikely situation that the alleged written agreement (if it existed) was not retained and submitted for stamp duty assessment along with the other documents at the same time. I conclude that it was so unlikely as to be most improbable therefore that Wood took a copy of the document and showed it to his wife. I do not accept Wood's evidence on this issue as credible. It follows from that that I also do not accept Mrs Wood's evidence about having seen a document of the nature which she described. She is wrong in her recollection if indeed it was a true recollection. The weight of credible evidence of independent witnesses weighs against that possibility.
Conclusion
103 The plaintiff has failed to satisfy me on the balance of probabilities that there was any such agreement as alleged. The plaintiff's claim must fail.
104 The action will be dismissed.