Abadeen Group Pty Limited & Anor v Bluestone Property Services Pty Limited & Ors [2011] HCATrans 99 (8 April 2011)

Last Updated: 14 April 2011

[2011] HCATrans 099

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S5 of 2010

B e t w e e n -

ABADEEN GROUP PTY LIMITED

First Applicant

BROOKE BROWN

Second Applicant

and

BLUESTONE PROPERTY SERVICES PTY LIMITED

First Respondent

NAMSAUH HOLDINGS PTY LIMITED

Second Respondent

ST KILDA RD DEVELOPMENTS PTY LIMITED (IN LIQ)

Third Respondent

Office of the Registry
Sydney No S6 of 2010

B e t w e e n -

JUSTIN BROWN

First Applicant

SHARLOTTE PTY LIMITED

Second Applicant

ABADEEN GROUP PTY LIMITED

Third Applicant

LIGHTER QUAY INVESTMENTS PTY LIMITED

Fourth Applicant

GREENBERG INVESTMENT DEVELOPMENTS LTD

Fifth Applicant

and

LANCE HODGKINSON

First Respondent

BLUESTONE PROPERTY SERVICES PTY LIMITED

Second Respondent

230 PALMER STREET PTY LIMITED

Third Respondent

DANIEL HAUSMAN

Fourth Respondent

CROWN STREET DEVELOPMENTS PTY LIMITED

Fifth Respondent

ST KILDA RD DEVELOPMENTS PTY LIMITED (IN LIQ)

Sixth Respondent

GORCHA PTY LIMITED

Seventh Respondent

Applications for special leave to appeal

FRENCH CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 8 APRIL 2011, AT 12.18 PM

Copyright in the High Court of Australia

__________________

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MR D.E. BARAN, for the applicants in each of these cases. (instructed by Avondale Lawyers)

MR J.P.A. DURACK, SC: Your Honours, I appear with MS R.S. FRANCOIS for the first respondent in proceedings number S5 of 2010, and for the first, second, third and fifth respondents in proceedings number S6 of 2010. (instructed by ERA Legal)

MR G.J. WILLIAMS: If the Court pleases, I am the solicitor on the record for the fourth respondent in proceedings S6 of 2010. (instructed by Clayton Utz)

FRENCH CJ: You have a summons, I think.

MR WILLIAMS: That is correct. I appear for the purposes of seeking leave to be removed from the record.

FRENCH CJ: All right. There is a submitting appearance, I think, for the sixth respondent and no appearance for the seventh. Mr Williams, perhaps I can deal with you first. Is there any objection to Mr Williams’ summons?

MR DURACK: No, your Honour.

FRENCH CJ: Mr Williams, there will be an order in terms of the summons that you cease to act as solicitor.

MR WILLIAMS: Thank you very much, your Honour. May I be excused?

FRENCH CJ: Yes, you may. Yes, who is still standing?

MR DURACK: Mr Walker is, and I am, your Honour.

FRENCH CJ: I am just wondering what the position is with the other respondents who have been either wound up or are bankrupt.

MR WALKER: Your Honours, the position is that against the respondents in liquidation or bankruptcy, except Namsauh – which is Hausman backwards, obviously – the second respondent in S5.

FRENCH CJ: That has been deregistered, has it not?

MR WALKER: Yes, except against if there have been orders made granting leave nunc pro tunc. They were made yesterday.

FRENCH CJ: Yes, very well.

MR WALKER: I am sorry it was done so late. Your Honours, this is a case where that which might be fit for special leave to appeal can be stated comparatively simply by going to page 141 of the application book, and I hope your Honours will take my assurance that the scribbles at the foot of that page were shown on the evidence, and according to the findings of fact made concurrently – I fear the only concurrent facts I can rely upon as having been found in my favour – as being the signatures of all the natural persons who controlled by means either obvious or mysterious, but nonetheless established, all of the relevant corporate entities involved in the various real estate dealings which were sought to be unravelled by my client – that is Mr Brown – being, in effect, bought out. That of course is a gross simplification, as has been found particularly in the reasons of Justice Sackville in the Court of Appeal, of the situation concerning corporate ownership, the situation concerning the purchase subject to or not subject to encumbrances to outside financiers and the like.

GUMMOW J: You sought specific performance, did you not?

MR WALKER: We did indeed. We sought in the claim – I will call it the claim and the cross-claim in deference to the expressions used below – we sought in the claim specific performance of this, and we sought it on behalf of what I will call all entities which, on our side, would be involved as benefiting from performance. One of the points made against us, of course, is that there is an incomplete reference to all of them on this sheet of paper, the Lord Dudley memorandum. In the other proceedings, what should be seen, we suppose, as a claim, was made successfully as a result of the failure of our suit. A successful claim was then made by way of the so-called cross-claim for money had and received by way of the payments that we had characterised as being on account of the concluded agreement – informal in nature, but binding – and which against us successfully was contended below, should not be seen as payments on account of anything other than my client Mr Brown’s skill at importuning by pressure, performance in advance of a contract yet to be made binding. That was the difference of characterisation between the parties.

Your Honours, in our submission, whatever else is to be said about this document, it is not a document that bespeaks a desire to await, whether stately saraband or otherwise, dealings in solicitor’s office concerning fully worked up terms. The very first line of operative obligation on page 141 – that is the second circled dot item 1 – by reference to “next week” bespeaks that this was a document intended, with whatever risk may be attended by that intention - - -

GUMMOW J: ...can say about this, Mr Walker, is it is a unique document.

MR WALKER: It is unique, your Honour, in the sense that all cases specific to claims about a - - -

GUMMOW J: We do not usually try contractual disputes about unique documents in a final - - -

MR WALKER: Your Honour, all contract claims will have their own unique facts. What I want to try and persuade your Honours is that this presents something which is a paradigm for consideration by this Court, and decisions by courts daily seized of factual decisions, in relation to the way business is actually done.

GUMMOW J: What would the decree for specific performance say?

MR WALKER: Your Honour, one thing to be noted is that one does not find much reference to that – indeed, any reference to that in terms in the application book. In my submission, the decision would need to have been made – it was not made – as to who were the parties bound by this contract. There are two possibilities. It is read as the natural persons who signed, signing only on their own behalf and the promises being promises to procure, in which case the decree for specific performance in its first general form, subject to later applications to work it out – in particular, circumstances, would have been to take all such steps as are necessary to procure corporations under the control of the various parties to do the things set out in the numbered items on the page.

That is the first part of the answer. The second part of the answer is, alternatively, on the case that is apparently the one put in the court below, the parties who, by the title questions – they are indicated as necessary parties to an obligation to convey, for example. All the parties who are the appropriate parties to be paid out for the receipt of title are parties for whom one or other of the natural persons were, beyond any possibility of doubt, acting as agents, and thereby they were bound as principles, and the decree for specific performance would be made accordingly against those several corporations.

Your Honours, the paradigm that we say this obviously unique document – obviously because it is true of every contract case that the facts are their own and will never be replicated – that which is a paradigm characteristic is that - - -

GUMMOW J: That is not true in a whole lot of vendor and purchase occasions. There are standard forms widely used in conveyancing matters throughout the country.

MR WALKER: Your Honour, it would be a rare case - - -

GUMMOW J: No doubt the parties change, and there are special conditions.

MR WALKER: Yes. That is my point, it would be a rare case where nothing but printed forms were used. In any event, when they are litigated, it would be a rare case when there was nothing other than what the standard terms meant. In our submission, the question that arises on the face of this document is when business people - - -

GUMMOW J: Business people in need of lawyers, I think, and business people with access to lawyers, too.

MR WALKER: With access to lawyers, but prepared to sign a document calling for $800,000 to be paid “next week” notwithstanding that there is talk also of the matter going off to lawyers. Lawyers will be necessary for conveyance. The question is whether this case does not throw up the question. Why then should it be regarded as necessary for contract? If the parties by the evidence objective intention shown by a document that talks about payment next week, but also talking about papers going off to a solicitor, if parties sign with all the usual though factual and judicially expected aura of solemnity that a signature attracts, if they do that, why should there not be a treatment of such a case which will recur over and over in business, big and small, why should it not be treated as parties indicating that they wish to be bound.

They perceive the risk of being bound in what I will call “artless terms”, but artless terms do not mean, of course, that they are unenforceable terms. It may mean there is more expense of time and trouble involved in enforcing, if they ever fall out of their present state of agreement. In our submission, what some commentators perhaps unnecessarily have called the fourth class – the class not mentioned in Masters v Cameron - is obviously raised here. Parties intend to be bound here and now, but contemplate as is obvious on the face of this document becomes even more obvious when one looks at the surrounding circumstances, that they would be better off having far more elaborate written terms settled and binding them upon their future agreement to those further expressions guided by professional assistance, but that the importance of doing the business so as to permit, for example, one person to know that people receive $800,000 and another person to know that he has to pay $800,000 as soon as next week, that in our submission, like the very important ceremony of a handshake which is even less formal than a document made at a hotel, in our submission there is great significance in this Court considering whether or not those matters which in ordinary social dealings are regarded as binding, and importantly so, will, because of the prospective greater elaboration in lawyer assisted negotiations for a possible future contract, be regarded as not binding at all.

In our submission, that is, if there be error in the courts below, that is the error namely to treat the obvious expectation raised on the face of this document that there should be, in the interests of the parties, a more elaborate spelling out of what needs to be done, that that defeats the immediately binding purpose. After all, the parties were not looking forward to a situation where they would fail to agree on what the solicitors would suggest in due course, ought to be signed by them to supersede this agreement. In our submission, it will be to defeat commercial expectations in a way that the Court would not lightly undertake.

For it to be said that when parties appear to be bound by signature to a payment as large as $800,000 next week, and contemplate that there will be professional assistance to elaborate that – perhaps including or varying terms as the solicitor advises ought to be the case – that one should suppose that what the parties do not look forward to, namely a collapse of their consensus – a reversal or reneging of their consensus. When that happens the party that reneges benefits by whatever has been achieved by the - - -

GUMMOW J: One of the things that has happened is that a number of parties on the other side are in financial straits.

MR WALKER: Yes. Your Honour, it is not an indication against binding that one may not have the capacity to perform.

GUMMOW J: No, but it is an indication of difficulty of getting an order of specific performance against these insolvent, wound-up bankrupt entities.

MR WALKER: Yes, but if there is no difficulty in reversing the order for money being paid back to them and that is the real point of the case obviously, and it is the orders, the relief granted at page 29 of the application book, which is obviously the only point of litigation continuing. We presently are bound to pay money back. In our submission, that is a situation that arises only because of the erroneous treating of a document – I stress, signed - asking for $800,000 next week, agreeing to that, being treated as of no contractual force at all, not even a provisional or preliminary agreement, no binding effect at all simply because, without any particular timetable, a solicitor was going to be asked to elaborate the matter and did not. It is for those reasons, in our submission, that this case does - notwithstanding the self-evident specialness of its facts, like any contract cases’ facts - does present a paradigm case in the same way as Masters v Cameron itself did. May it please the Court.

FRENCH CJ: Incidentally, Mr Walker, I think the applications required an extension of time, did they not?

MR WALKER: It does and there is - - -

FRENCH CJ: Yes. That is not objected to? No.

MR WALKER: May it please the Court.

FRENCH CJ: We will not need to call on you, Mr Durack.

The question whether the parties in these applications had concluded an enforceable agreement turned on the particular facts of the case. In our opinion, no error of principle warranting the grant of special leave has been shown. Special leave will be refused with costs in favour of the first to the third, and fifth respondents.

MR DURACK: May it please the Court.

FRENCH CJ: Yes, thank you.

MR DURACK: Your Honours, it is the first, second, third and fifth respondents.

FRENCH CJ: I said the first to the third, yes. All right, we will adjourn briefly to reconstitute.

AT 12.34 PM THE MATTERS WERE CONCLUDED