A W Ellis Engineering Pty Limited and Ors v Malago Pty Limited and Ors

The Contentions of the Parties 85The Plaintiffs submit that as a result of the handwritten document prepared at the mediation and signed by the relevant persons it was expressly agreed that there would be a legally binding arrangement whether or not a formal document was executed. Further the Plaintiffs argue that the court should order in these circumstances the parties to specifically perform the obligations imposed by the contract by requiring the parties to enter into and perform (and cause SSM and SSM T'ee to enter into and perform) the obligations contained in the proposed Deed of Settlement and Release. The Plaintiffs also submit that the proposed Deed represents those matters the parties had agreed as at 18 August 2011 together with some additional items not agreed, but which the Plaintiffs submit the Defendants should be obliged to accept. Alternatively the Plaintiffs seek specific performance of the promises in the Heads of Agreement. 86The Plaintiffs submit damages are an inadequate remedy in the circumstances. I did not detect any submission to the contrary from the Defendants on this point were I otherwise to find a binding contract as alleged. 87The Defendants contend that the Heads of Agreement could not as a matter of law be a binding and legally enforceable agreement. It is submitted that the document on its proper construction is incomplete and uncertain in its terms. 88It was also submitted by the Defendants that the post contractual conduct establishes no concluded agreement because the parties engaged in detailed negotiations and failed to reach agreement as to the terms of the Deed of Settlement and Release. 89The Defendants point to clause 1(g) of the Heads of Agreement and to the fact that the parties intended their respective solicitors to agree to a "more formal document or documents" to carry out and express in more formal terms and additional terms which is of itself they submit a clear indication the Heads of Agreement are necessarily incomplete. 90Another issue concerns the payment of the $1.75m, and the notion of "upfront payment" which, it is asserted by the Defendants, adds to the uncertainty. 91Uncertainty according to the Defendants also intrudes into the so-called agreement because of the term "Gross Marina Berth Income", referred to in the Heads of Agreement. This they submit was not agreed or defined and is uncertain. 92Confusion and uncertainty is also said to arise because the Heads of Agreement did not include SSM and SSM T'ee as parties. The Defendants also contend NSWM should have been a party to the Deed. 93Complaint is also made by the Defendants about the lack of definition of "Rozelle Marina", and further that 1(f) could not be complied with because the NSWM were not willing to entertain a sub licence. It is also submitted that NSWM should have been a party to the Heads of Agreement. 94There is also resistance to being compelled to execute the Deed of Settlement the Plaintiffs have proffered to the court. It is put the Defendants have simply not agreed to all of its terms. No specific submission was however put as to the drafting of any of the proposed clauses in the draft deed proffered by the Plaintiffs. 95In conclusion the Defendants submit that the Plaintiffs knew the Defendants could not afford to acquire the Plaintiffs interest in the project or meet the upfront payment of $1.75m. As a result the Heads of Agreement must have been subject to an implied term that the Defendants would acquire "subject to third party finance".

The Legal Principles 96Whether or not the parties here intended the agreement to be immediately binding is to be determined objectively having regard to the language contained in the Heads of Agreement. The High Court has repeatedly affirmed this proposition. Allen v Carbone (1975) 132 CLR 528 ; Taylor v Johnson (1983) 151 CLR 422 ; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 ; Byrnes & Anor v Kendle (2011) 243 CLR 253 . 97The Heads of Agreement must of course be read in the light of the surrounding circumstances. 98The High Court in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 said at 462: The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean (26). That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP, and the purpose and object of the transaction (27). In Codelfa Constructions Pty Ltd v State Rail Authority of NSW (28), Mason J set out with evident approval the statement of Lord Wilberforce in Reardon Smith Line Ltd v Hansen-Tangen (29): "In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating." 99In International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151, the High Court remarked at 160: In giving a commercial contract a businesslike interpretation, it is necessary to consider the language used by the parties, the circumstances addressed by the contract, and the objects which it is intended to secure (18). An appreciation of the commercial purpose of a contract calls for a understanding of the genesis of the transaction, the background, and the market (19). This is a case in which the Court's general understanding of background and purpose is supplemented by specific information as to the genesis of the transaction. The Agreement has a history; and that history is part of the context in which the contract takes its meaning (20). 100As the authors point out in Lewison and Hughes , The Interpretation of Contracts in Australia (2012) at p118: ...the relevant background consists of facts that were actually known to both (or all) parties to the contract, or that are sufficiently notorious that it can be presumed they were so known. Facts which were known to only one of them will not be relevant. Nor is it sufficient to prove that facts were reasonably available, without demonstrating that their availability should lead to an inference being drawn that they were in fact known by both parties. It is, of course, the case that facts which were not known to either party at the date of the contract are not relevant to the construction of the contract, for if the facts were unknown they cannot have played any part in forming the presumed intention which is embodied in the contract. However, where a fact is known to one party and not to the other, in theory it may well have played a part in forming the intention of the party who knew that fact. However, unless a fact is known to both parties, it will not be admitted in evidence, because the court is seeking not the actual intention of one party to the contract, but the presumed mutual intention of both of them. 101Story puts it as follows in A Treatise on the Law of Contracts Not Under Seal , at page 148: In as much as every contract derives its force from the mutual assent of the parties thereto, to certain terms, it becomes necessary, not only to interpret those terms, in order to ascertain the intention of the parties in entering into the agreement, but also, so to construe them, as to give a legal operation to such intention. The collection of such intention, by inferences from stated terms, or from actual circumstances, or both, is the office of interpretation. The adjustment of such intention to paramount law, is the office of construction. 102If the terms of such a document indicate that the parties intended to be bound immediately, effect must be given to it. Construction of a document may make it sufficiently clear that the parties were content to be bound immediately by the terms to which they had agreed, notwithstanding they contemplated further documentation. Masters v Cameron (1954) 91 CLR 353 at 360; Anaconda Nickel Ltd v Tarmoola Pty Ltd (2000) 22 WAR 101 (per Ipp J at 110). 103As McHugh JA (as he then was) said in G R Securities Pty Limited v Baulkham Hills Private Hospital Pty Limited (1986) 40 NSWLR 631 at 634: However, the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-334, 337. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction. Even when a document recording the terms of the parties' agreement specifically refers to the execution of a formal contract, the parties may be immediately bound. Upon the proper construction of the document, it may sufficiently appear that "the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms": Sinclair, Scott & Co Ltd v Naughton (at 317). 104McHugh J A also said at 635-636: Under the agreement each party was obliged to do all that was necessary on his part to enable the other party to have the benefit of the agreement concluded by the correspondence: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607. This included doing everything necessary to enable contracts to be exchanged by 18 April 1986: Godecke v Kirwan (at 641). If the parties agreed on additional terms, they would be added to the formal contract. If they did not, the formal contract would give effect only to the agreed terms and conditions of the correspondence. The case, therefore, is one where the parties were bound by the informal agreement but expected to make a further contract which by consent might contain additional terms: Sinclair, Scott & Co Ltd v Naughton (at 317). 105As Walsh J (with whom Mason J agreed) had earlier pointed out in Godecke v Kirwan (1973) 129 CLR 629 at 639, an agreement which obliges a subsequent agreement to be entered into may contain covenants for example in the new agreement not included in the original contract. In expressing his agreement with the South Australian decision of Bray CJ in Powell v Jones [1968] S.A.S.R. 394, Walsh J accepted that there was no reason in principle for holding that there cannot be a binding contract even if some matter is left to be determined by one of the contracting parties. His Honour took the view that because he was there looking at a clause which permitted the insertion of covenants and conditions (not inconsistent with those contained in the offer), he thought any new terms should also be limited by reference to the reasonableness of requiring the inclusion of those covenants and conditions. He thought that the clause meant that what was required must be reasonable in an objective sense and in the event that there was a dispute it was always a matter for a court to decide. 106The relevant clause the court was concerned with in Godecke was in the following terms: 6. If required by the Vendor/s, I/we shall execute a further agreement to be prepared at my costs by his appointed Solicitors containing the foregoing and such other covenants and conditions as they may reasonably require. 107Gibbs J in Godecke was also of the view the parties may leave terms, even essential terms, to be determined by a third person. In such a case His Honour was of the view that a contract would not be bad for uncertainty because if the third person settled the terms of the contract it would be rendered certain. His Honour said (at page 645): It is no objection that the power to determine the terms and conditions to be incorporated in the contract is left to the solicitors for one of the parties. 108Gibbs J also referred to the decision of the High Court in Axelsen v O'Brien (1949) 80 CLR 219 in which Latham CJ had found that there had been a concluded contract notwithstanding further terms of the bill of mortgage remained to be arranged or determined by a solicitor. Indeed in that case Latham CJ was of the view that if the solicitor failed to settle the terms not only was that no bar to specific performance but the court in granting specific performance was well able to settle the terms if the solicitor had not done so. Gibbs J did however draw a distinction between an agreement which left further terms to be settled by "one of the parties rather than by his solicitors"(at 646). Gibbs J thought that if one of the parties to a contract was left a discretion as to whether or not he or she would carry the contract out as allegedly agreed then it could not be said that there was a concluded bargain. To delegate however to third parties especially solicitors to implement the agreement is an entirely different matter. 109Where of course the performance of a contract cannot take place without co-operation of both parties it is implied that co-operation will occur. Neither party to a contract is permitted to prevent the other party from performing the contract: Mackay v Dick (1881) 6 App Cas 251. 110Here the Defendants appear to assert that the Heads of Agreement falls within the third category of Masters v Cameron , namely a case in which the intention of the parties was not to make a concluded bargain at all unless and until they executed a formal contract in due course. 111Once a court has however determined that the requisite intention is present it is necessary then to go on to consider whether the contract is so incomplete or uncertain as to be void. It is clear that there can be no binding and enforceable obligation unless the terms of a bargain, or at least its essential terms, have been agreed on. If an essential or critical term is expressly left to be settled by the future agreement of the parties there will be no binding contract. Obscure or ambiguous language incapable of any precise or definite meaning may also be an impediment to finding the parties intended binding contractual relations. 112What is or is not an essential term is sometimes difficult to ascertain. It has been said that a term which is essential is one without which the contract cannot be enforced. Pagnan Spa v Feed Products Ltd [1987] 2 Lloyds Rep 601 per Lloyd LJ at 619. 113Barwick CJ in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 (at 436 - 437) said: But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. Lord Tomlin's words in this connexion in Hillas & Co. Ltd. v Arcos Ltd. (1) ought to be kept in mind. So long as the language employed by the parties, to use Lord Wright's words in Scammell (G.) & Nephew Ltd. v Ouston (2) is not "so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention", the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.

Discussion 114In my opinion the terms of the Heads of Agreement indicate in plain and unequivocal language that the parties intended to bind themselves immediately upon signing the document. I am also of the view that the Heads of Agreement contain all the relevant and essential terms required for a legally binding and enforceable contract. 115I am simply unable to accept any of the arguments advanced by the Defendants in opposition to such a conclusion. I am entirely unpersuaded that the language chosen by the parties could objectively be viewed as anything other than evincing an intention to be immediately bound, subject to more formal documentation including the potential for additional terms to be settled by the parties' respective solicitors. 116There are a number of pointers in the language in the Heads of Agreement which clearly indicate that the parties were intending immediately to conclude an agreement. First the description "Heads of Agreement" is a very clear indicator in and of itself. Mr James signed the document it seems to me on behalf of himself, his son and the companies they represented. Mr Ellis signed it it seems to me on behalf of himself and Mr Mitchell and the companies they represented. The words indicating that the Ellis' interests "agreed to sell" their shares and units in SSM Pty Limited and SSM Trustee Pty Limited (the only relevant entities) to the James' interests is another clear indication of what the parties were intending to achieve. 117The reference to the price of $2.125 m in clause 1(b) of the Heads of Agreement with the "upfront payment" of $1.75 m and the six annual instalments is in my mind clear in its import. The notion of "upfront" is obviously an indication that the monies were to be paid within 28 days of the execution of the formal agreement referred to in paragraph 1(i) and before (i.e. in advance) the instalments were to begin. The six annual instalments are to commence on 1 July 2012. The language does not sensibly permit of any other interpretation. 118The reference in clause 1(b) "Gross Marina Berth Income" is a phrase that is not expressly defined in the Heads of Agreement nor does one find that phrase as such defined in any of the agreements between the relevant entities and NSWM. But the phrase cannot be understood devoid of context. The relevant parties to this litigation via SSM and SSM T'ee were parties to the various commercial agreements referred to earlier in this judgment. 119The adjective "Berth" as the Plaintiffs rightly contend is very important. The Marina business distinguishes between "Berth Income" and income from services provided to berthed vessels. Users of the marina were provided with a schedule of charges which identified what are described as Berthing and Service Tariffs. The accounts of the business to 30 June 2011 also separately recorded under "Income", "Berth Rental" and "Marina Services" as sources of revenue. 120At the date of the Heads of Agreement, vessels using the Marina were charged a Berthing Rate, and additional charges for services, not included in the Berthing Rate. The Berthing Rate did however include services such as rubbish removal, the services of marina attendants, provision of water, and sewerage pump out. Other services however, such as the supply of electricity, telephones, fuel, internet and data communications were charged additionally and not treated as part of the Berthing Revenue. 121In calculating the licence fee payable by the SSM T'ee pursuant to the Access Deed revenue from the rental of the berths and all relevant services are aggregated as explained above. The revenue described in clause 1(b) of the Heads of Agreement was clearly intended to be a subset only of the revenue otherwise taken into account in fixing licence fees. 122Therefore the expression "Gross Marina Berth Income" must in my opinion be construed against the background of how the parties clearly knew the business operated. That expression is obviously intended to relate only to income derived from renting the berths although that rate does include services for rubbish removal etc. All other revenue from other services was not intended to be included in that expression. Given the surrounding circumstances known to the parties I regard the term as not suffering from any uncertainty. 123Clause 1(b) also refers to the Ellis interests receiving 21.6% of the "Gross Marina Berth Income of the Rozelle Marina", and are in turn responsible for payment of 19% of that amount to NSWM. That notion is in my view abundantly clear and for that matter certain. 124The Defendants however say that the phrase "Rozelle Marina" in clause 1(b) of the Heads of Agreement is uncertain. I regard that submission as untenable. The Access Deed provides the Licensee with access to the "Rozelle Bay Superyacht Marina Precinct". This is one of the deeds signed by Mr James. It has a plan attached described as the Licensed Site. That plan, attachment A, shows the area and depicts Rozelle Bay and also clearly identifies the Rozelle Marina for relevant purposes. In addition of course Mr James was a signatory to the February 2009 proposal submitted to NSWM which identifies the Rozelle Marina as the site in respect of which he along with others tendered. The evidence in my opinion permits of only one conclusion namely that there is only one Rozelle Marina. I reject the submission that that term is uncertain. 125Clause 1(c) of the Heads of Agreement provides the transfer to the Ellis interests of 21.6% of the surface water area of the Marina. It is clearly intended that this would cover the appropriate number of berths which would make up this area. There is in my mind no uncertainty about what is meant by these words. It would have required some calculations to be performed but that is a mechanical task. Its meaning is however clear. 126However, Mr Ellis in his affidavit sets out the process by which the 21.6% of the surface water area of the berths of the Marina has in fact in my view been determined subsequent to the mediation. 127On 26 July Mr Ellis prepared a calculation of what he believed would comprise the 21.6% of the surface area. He provided it to a Mr John Ferres of Scott Carver Pty Limited, the architect retained by SSM who in turn performed some calculations. Mr Ferres' calculation and plan as shown in his email of 27 July shows a hatched area described as "Tony and Sam, Lease and Licence" with a length of 71.7 metres. "Tony and Sam" are Mr Ellis and Mr Mitchell respectively. 128Mr Ferres subsequently redid his calculations showing the hatched area this time at a length of 64.5 metres. As a result Mr Ellis had a conversation with Mr Justin James. Mr James however refused to supply any calculations he had done. 129Mr Ellis spoke to a Mr Alan Doyle of Rygate surveyors who had previously undertaken surveys for NSWM including those of the surface water area of the Marina. 130As a result of his conversation with Mr Doyle, Mr Ellis sent an email to Mr Ferres on 3 August. In that email Mr Ellis informed Mr Ferres the appropriate length was 65.5 metres. 131Mr Ferres again redid the calculations and on 3 August he informed Mr Ellis that the whole area comprising the 21.6% was 3,791 sq m (57.93 x 65.45). Mr Ferres amended the plan accordingly, Mr Ellis sent that amended plan to Mr Conolly and Mr Benson. 132On 5 August Mr Benson forwarded amongst other things the plan showing the hatched area with the dimensions 57.93m and 65.45m respectively to Mr Pappas. 133The Defendants and their then solicitor Mr Pappas never challenged the calculation. Further there was no cross examination of Mr Ellis on this issue and Mr James gave no evidence at the hearing on this issue so as to challenge it. In my view obviously the Defendants accept that calculation, however in any event there appears to be no dispute about it. 134Clause 1(d) of the Heads of Agreement provides for mutual releases to "cover all outstanding claims" as therein described. That term is in my mind clear and certain and entirely conventional as part of resolving the disputation. It cannot be suggested that competent solicitors would have any difficulty understanding and implementing such a term. 135Clause 1(e) is again perfectly clear in its terms. As part of the Ellis interests handing over control of the Marina (which is the consequence of the agreement) to the James interests such a term whereby an indemnity is sought and agreed, is in my opinion wholly unexceptionable. Again I regard it as a conventional term and a matter about which there is no uncertainty. Competent solicitors are well able to implement such a term. 136Clause 1(f) of the Heads of Agreement is again in my view clear and certain. The notion of best endeavours is well understood in commercial contracts. It would certainly be regarded as implicit in commercial agreements where documents of various sorts need to be brought into existence as part of the implementation of such an agreement. Here it is explicit. Either the best endeavours will be successful or not, that is a different issue. I do not see any uncertainty. 137Clause 1(g) is a very important clause. The words "Without affecting the binding nature of the Heads of Agreement" are in my mind the clearest indication the parties intended immediately to be bound. These words do not in my opinion reasonably permit of a different interpretation. 138It was also intended within 7 days the respective solicitors would prepare to execute a document to "carry out and express in more formal terms and additional terms as these Heads of Agreement". Again the reference to "more" formal terms is a clear indication in my view the parties intended to be immediately bound. The word "more" is reflective merely of degree. Also that the formal document was to "carry out" the Heads of Agreement which again indicates to me the implementation of an already binding agreement. 139Further there is an explicit reference that the formal agreement was to contain a provision for the monthly payments of 21.6% of the "Gross Marina Berth Income" to be based on a reasonable estimate of the income for the year. There is nothing uncertain about this notion in my view. 140Clause 1(h) provides that Mr James agreed to personally guarantee the annual payments (meaning the $62,500 referred to in clause 1(g)). This is plainly clear enough. 141Clause 1(i) also in my view is clear in its terms. It provides for settlement, namely the payment of the $1.75 m is to be paid within 28 days of the execution of the document in clause 1(g). 142The respective interests represented at the mediation and those who signed the Heads of Agreement were doing so in circumstances where they were representing, as clearly was the fact, that each as directors and shareholders of SSM and SSM T'ee were about to make the agreement contained in the Heads of Agreement. Pursuant to the Heads of Agreement the Defendants will be the sole directors, shareholders and unit holders in these companies and the related unit trust and will control the business. Those present at the mediation were well able to understand, agree and implement that outcome. To suggest SSM and SSM T'ee should have been parties to the Heads of Agreement ignores the commercial and legal realities. 143The proposition that NSWM should have been a party to the Heads of Agreement has no substance to it at all. There is no reason why they should have been nor did anyone suggest it at the mediation. Their role in due course would be their level of engagement pursuant to clause 1(f) 144The Defendants have also asserted that the agreement was one which was to be "subject to finance". This submission I should say is one which I regard again as untenable. 145It is said that the court should find that the Plaintiffs were aware for example that the Defendants did not have the financial resources to agree to be immediately bound by the Heads of Agreement. 146There is no doubt that as at 4 February 2011 Mr Conolly (solicitor for the Plaintiffs) in an email to Mr Nicholas Pappas (the then solicitor for the Defendants) stated bluntly that his clients did not at that point believe the Defendants could buy the Plaintiffs out. It would also appear that Mr Conolly may have held that view immediately prior to the mediation. That of course makes all the more credible Mr Conolly's evidence that he expressly raised the question of whether the Defendants could afford to buy his client out at the start of the mediation to which, he was assured by Mr Pappas that the Defendants (and in their presence) were able to acquire the Plaintiffs' interest. I am satisfied that Mr Conolly asked the very question as he asserted in his evidence. 147A number of the persons who accompanied Mr Conolly to the mediation gave evidence before me to similar effect, which clearly corroborated him. That included Messrs Benson, Ellis and Mitchell. 148Thirdly, neither Mr Brian James, his son Justin nor for that matter their solicitor Mr Pappas or Ms Panos (who assisted Mr Pappas) was called to contradict that evidence. 149Although it was put to Mr Ellis that such a conversation did not take place he rejected that notion and I accept his rejection. Such a suggestion was not put to either of Messrs Conolly, Benson or Mitchell. I accept their evidence. 150My finding that such an express assurance was forthcoming on 22 July 2011 from Mr Pappas in his clients presence makes the attempt by the Defendants to support such an implication as here untenable. 151Further I can see no basis in any event for otherwise finding such an implication. Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 ; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61. Such an implication in all of the circumstances is neither reasonable, necessary, nor obvious, and it directly conflicts with the very assurance given by Mr Pappas on the day of the mediation. It is simply inconceivable that if it had been an issue it would not have been raised and if agreed so easily incorporated into the Heads of Agreement. 152From the above as I have already said I am of the view that as a result of the mediation on 22 July 2011 a binding agreement was reached. It was to be the subject of a more formal agreement which might (or might not) include additional terms. What is clear is that by 18 August 2011 agreement was reached as to a large number of the terms of the proposed Deed of Settlement and Release but clearly not all.

Relief 153In the circumstances I consider that this is an appropriate case for the grant of specific performance. The bargain should be upheld and implemented. There is no discretionary defence pleaded. Although there is evidence that in August of 2011 the Defendants lacked the funds then to implement their bargain and that is when they asserted their bargain was not legally enforceable. However there is no evidence they are insolvent or unable as opposed to unwilling to complete the contract. 154The question is should the court grant specific performance of the proffered Deed or simply the promises? The Plaintiffs submit, correctly in my opinion that the Heads of Agreement contain seven operative promises. (See Plaintiff's submissions [93] to [99], 30 January 2012). 155The fact the parties had delegated the formalising of their agreement to their respective solicitors whose task remains unfulfilled is no bar to a grant of specific performance. The Court can complete the task. In doing so it does not, so to speak fill any gaps, it completes the agreement the defaulting party has failed to implement. Godecke v Kirwan per Walsh J at 643, Gibbs J at 645-646. Turner v Bladin (1951) 82 CLR 463 per Williams, Fullager and Kitto JJ at 473; Axelsen v O'Brien per Latham CJ at 225. 156A contract for the sale of shares and units in a unit trust where those shares and units are not available on the market, is one susceptible of specific performance. Meagher, Gummow & Lehane 'Equity Doctrines & Remedies 4 th Ed (2002) [20 - 040]; ANZ Executors & Trustees Ltd v Humes Ltd [1990] VR 615 per Brooking J at 625. 157Also where a contract is of a kind where the purchaser could sue for specific performance the vendor can also sue. Turner v Bladin at 473, where Williams, Fullager and Kitto JJ said: We are of opinion that where the contract is of such a kind that the purchaser can sue for specific performance, the vendor can also sue for specific performance, although the claim is merely to recover a sum of money and that he can do so although at the date of the writ the contract has been fully performed except for the payment of the purchase money or some part thereof. 158If I am to order specific performance of the proffered Deed I need to be satisfied in my opinion its terms are both consistent with the Heads of Agreement and not unreasonable in its various requirements: Godecke v Kirwan per Walsh J at 642 - 643. 159I articulate the issue in this way for a number of reasons. In Godecke , Walsh J construed the clause under consideration as only permitting the court to insert as a term one that would not be inconsistent with the original agreement. That would, it seems to me, follow a matter of course in any situation where the court completes the contractual obligations of the parties. To do otherwise would change the fabric of the agreement. After all what the solicitors in Godecke, as indeed here, were obliged to do was to implement the already existing agreement. That would mean simply using more formal language or adding additional terms. 160Walsh J also thought the clause under consideration in Godecke limited the additional terms to those that could be described as objectively reasonable. The clause in that case expressly provided that the vendor's solicitor may "reasonably require" an additional term. Walsh J was of the opinion that those words should be construed as requiring a purchaser only to accept those terms which were objectively reasonable. In my mind although in Godecke the relevant term was express, I consider a court generally would not impose upon a party by way of an order for specific performance in circumstances such as these something which was objectively unreasonable.

Submissions on Proposed Deed 161The Plaintiffs identified during submissions by reference to the proposed Deed where disagreement lay. The Defendants made no submissions on the drafting proposed as such, in respect of those clauses not agreed. They contented themselves with a submission that no binding agreement was reached. 162The provisions in the proposed Deed which were not the subject of agreement are proposed clauses 1.1.9, 1.1.20, 7.7, 7.8, 8.4.4, 8.4.36, 8.5.22, 8.5.30 and 17.1. The Plaintiffs seek specific performance of the Deed which includes these provisions. The Defendants did not challenge the proposition that these were the clauses in dispute. 163The solicitors for the Defendants were obliged to co-operate with their counterparts to consummate the Deed so as to implement the agreement reached. Insofar as the Defendants failed to instruct their solicitors to do just that they were in breach of the agreement and they simply are not permitted to assert there is no agreement when they are the reasons the agreement has not been formalised. Sutton v Gundowda Pty Ltd (1950) 81 CLR 418. The Defendants belatedly have described the process undertaken by the Plaintiffs as in effect a suit for rectification. I regard that submission in the light of my findings as misconceived. 164The definition of "Gross Marina Berth Income" of the Rozelle Marina is the expression used in clause 1(b) of the Heads of Agreement. It was not defined in Heads of Agreement. However the agreement reached at the mediation was to be implemented in the context in which the parties were then doing business. 165The term "Gross Marina Berth Income" is defined in the proposed clause 1.1.9 of the Deed as follows: 1.1.9 "Gross Marina Berth Income" means all the income from income generating activities, associated with the use of the Wetland Site only, by any entity, but not including revenue from Service Charges. If any part of the Wetland Site is under the effective control of an entity other than SSM T'ee, or one of the Non-James parties, then the income from that part of the Wetland Site will be deemed to be the higher of the actual income generated from all income generating activities, and the amount that would be the Wetland Imputed Revenue for that part of the Wetland Site if that entity were the lessee under the Draft Long Term Wetland Lease, but excluding, in either case, any revenue actually derived from Service Charges in respect of that part of the Wetland Site. 166The first sentence of the proposed clause above is a precise reflection of what was occurring within the business namely that berthing revenue and service charges were separately treated. The emphasis on the adjective "Berth" is a clear pointer as to the source of the agreed revenue for the purposes of the Heads of Agreement. The parties as I have found distinguished in the running of the business revenue derived from berths (which included certain services included in the rate for the berth) and other services which persons were separately charged for. The agreement only relates to the revenue derived from berths and the parties knew only too well what that meant. 167The balance of the proposed clause contains a number of terms the parties which on any view were at least familiar with. First the reference to the Wetland Site is a reference to the Marina. The next term is Wetland Imputed Revenue. This term is one defined in the Access Deed under which the parties have been doing business since mid 2010. It is defined in clause 1.1, Schedule 2 of the Access Deed to mean revenue imputed or assigned to berths calculated in the manner therein described. There is no definition of this term in the proposed Deed which is an obvious oversight. 168The balance of the clause is said by the Plaintiffs to do no more than introduce against the backdrop of existing commercial contracts provisions and concepts similar to those in the Access Deed or indeed the proposed Long Term Lease. 169The Plaintiffs further submitted as I understood it that as a possibility with a Long Term Lease in place the parties controlling the Marina (the Defendants) could conceivably enter into arrangements whereby they might sell an asset which might be part of the land development and/or sell a berth or berths for a capital sum which would not in effect include any berthing income. If that were to happen the balance of the proposed clause is to ensure that the definition will include such an amount. 170There is an obvious similarity between terms in the proposed provision and those for example contained in the Access Deed. The proposed clause 1.1.9 however has a deeming mechanism. It also requires consideration of the rights and obligations of a lessee under the Draft Long Term Wetland Lease. The definition of Wetland Imputed Revenue in the Draft Long Term Lease is identical to the way the term is defined in the Access Deed. 171I must confess to having reservations however that the balance of the proposed clause (after the first sentence) is consistent with the Heads of Agreement and reasonable in its scope. 172The provisions in the Access Deed and/or Draft Long Term Lease which employed the mechanism of comparing imputed and actual revenues, was for the purpose and objective as I apprehend it of optimising revenue to NSWM by way of Licence fees or rent payable. Clause 1.1.9, at least the balance of the clause I would apprehend is to optimise the Plaintiffs commercial interests. Of course that is of no consequence if such a provision had been agreed. As I have said I have serious reservations, given the distinct promises made, to determine such a provision is consistent with the Heads of Agreement and reasonable. I am not disposed to grant specific performance of that portion of clause 1.1.9. 173I would however order specific performance of what is proposed as the first sentence of clause 1.1.9. 174"Service Charges" is defined as follows in proposed clause 1.1.20: 1.1.20 "Service Charges" means any changes levied to Marina tenants, from time to time, that constitute genuine and reasonable charges for services actually provided to those tenants. However, it does not include charges for the following four classes of services: the provision of work by Marina employees, the provision of fresh water, sewerage pump out, and rubbish removal. 175This is merely a reflection of the way the business operated and should have been agreed. It also is necessary to make clause 1.1.9 abundantly clear. It is consistent with the Heads of Agreement and reasonable. 176Clause 7.7 was not agreed. It is in the following terms: Subject to clauses 8.2, 8.3 and 8.9 of this Deed, to the extent the Non-James Parties receive any Gross Marina Berth income Payment, they will, upon receipt of a valid tax invoice, pay NSW Maritime 19% of the amount of that Gross Marina Berth Income Payment 177Clauses 8.2, 8.3 and 8.9 (which have been agreed) deal with the situation in which for example NSWM grant a lease or licence of the relevant area directly to the Plaintiffs. The Defendants would no longer pay the Plaintiffs the agreed 21.6% of revenue because the Plaintiffs would charge persons occupying the berths directly and receive the relevant revenue. The Plaintiffs would then be directly responsible to NSWM for the agreed 19% of that amount. The proposed clause 7.7 is simply to make that clear that if the Plaintiffs receive revenue directly they will upon the receipt of a tax invoice pay NSWM directly. The provision should have been agreed and is a reasonable request, consistent with the Heads of Agreement. 178Clause 7.8 (that is the limited portions underlined) was not agreed but it is simply a method of getting documents to identify what the Marina Income is. It provides for the Plaintiffs at their expense to receive audited statements if they wish. I consider that a reasonable term and consistent with the regime agreed. 179Clauses 8.4.4, 8.4.36, 8.5.22 and 8.5.30 are new and were not agreed. These are mechanical matters which would flow once the definition of Gross Marina Berth Income has been determined. They are reasonable and should have been agreed. 180Clause 17.1 was not strictly agreed in those terms but is a perfectly reasonable requirement given the conduct of the parties. Mr Ellis gave evidence of a conversation he says took place between Mr Brian James and himself prior to 4 August in which Mr James told Mr Ellis that the Plaintiffs should have the same access as the public Marina clients or subcontractors. This conversation is referred to in the email from Mr Conolly on 4 August to Mr Pappas. No evidence was called from either Mr James or Mr Pappas to deny the conversation. Mr Ellis deposed to having had such a conversation with Mr James about access in his affidavit of 11 November 2011. He was not challenged in cross examination. I accept such a representation was made to Mr Ellis and thereby agreement was reached. In those circumstances clause 17.1 is perfectly appropriate. 181Therefore the clauses which were not agreed (subject to my comments on clause 1.1.9) should be, along with the balance of the Deed as agreed, the subject of an order for specific performance.

Conclusion 182In accordance with my reasons, I propose to make the following declaration and order: (a) A declaration that there is a binding and enforceable contract between the Plaintiffs and the Defendants for the sale of the Plaintiffs interests in Sydney Superyacht Marina Pty Limited (ACN 127 177 904) (SSM) and SSM T'ee Pty Limited (ACN 141 712 610) (SSM T'ee). (b) An order that the contract be specifically performed and carried into execution. 183In making the above orders I appreciate further and additional orders will need to be made to reflect my reasons, and in particular to provide for the implementation of the order for specific performance. 184I note that the Plaintiffs submitted a suggested form of short minutes which included orders additional to the above dealing with a number of mechanical issues. I should indicate that I would be disposed to make orders in accordance with paragraphs 3(a) (with an appropriate date inserted), 3(b) (with the appropriate Deed attached to reflect my reasons), 3(c) and paragraphs 4 - 10 inclusive. 185I would invite the parties to prepare the Short Minutes and Deed and approach my Associate so that the matter can be listed before me for the making of the further orders.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 February 2012