The arguments on appeal for Mr Baloglow: my views .
72 Mr Baloglow's defences (a) to (d) in this case are set out in par 9 above. I will deal with (b) first, then with (a) and (c) together and last with (d).
73 Mr Baloglow's defence (b): Persons named as parties had not been party to the meeting. I have set out in pars 49 to 58 above what happened at the trial about both parties and authority. In my view, at least as from the second morning of the trial, any issues about parties and authority had fallen by the wayside. It was accepted by both sides that Mr Konstantinidis and Mr Baloglow were the only persons with any beneficial interest in partnership property and that partnership property included the shares in the four companies that were agreed to be partnership companies.
74 Thus, for example, the parties were agreed that the shares held by Mrs Baloglow and the four Baloglow children in Balkan and the share held by Mrs Baloglow in Carlisle were held on trust by those registered shareholders for the partnership; that is, although it was not spelt out in this fashion at the hearing, Mr Konstantinidis and Mr Baloglow held those shares in the companies beneficially as their partnership property. For the purposes of the dispute between them, it does not matter if they were wrong, upon full legal analysis (I am not suggesting one way or the other whether they were) in taking up that position; that was the basis upon which the litigation was fought and also it was the basis upon which Mr Roth and Mr Xenos had come to the accord reached on 28 July 1999. If an agreement was reached between them at that meeting, otherwise enforceable at law, its enforceability would not be affected if they had not dealt with all the machinery necessary to carry the agreement to completion. (In any event it seems highly likely to me that they were quite right in their view that not only the property held by the companies but the shares in the companies themselves were, beneficially, partnership assets.)
75 It is also my opinion that what Mr Baloglow's counsel agreed, at the beginning of the second day of the trial, was the position concerning Mr Xenos's authority, for the purposes of the hearing, meant that, if an agreement, enforceable subject only to the question of authority, was arrived at at the meeting, Mr Xenos had quite sufficient authority to have entered into it on Mr Baloglow's behalf.
76 The points raised for Mr Baloglow concerning parties all seemed to have as their premise the idea that some beneficial interest was outstanding in Mrs Baloglow or the children. Once it is recognised that at the trial both Mr Konstantinidis and Mr Baloglow were litigating on the basis that there were no such outstanding beneficial interests and that they as partners at least until the partnership was dissolved held the full beneficial interest in all assets including the shares of the companies, and that after dissolution they alone were interested in the proceeds of the winding up of the partnership, it becomes clear that there is nothing in the points relied on. It would have been convenient, but it was not a necessity, for the parties later nominated by Mr Roth in the draft deed in addition to Messrs Konstantinidis and Baloglow as the parties to that deed to have taken part in the agreement reached at the meeting of 28 July 1999.
77 In my opinion, the position acquiesced in by Mr Baloglow at the trial precludes him from any chance of success on his parties and authority points. In my opinion, the fundamental question in the appeal is whether Mr Xenos, who must be taken as having acted with full authority on Mr Baloglow's behalf, entered into an agreement with Mr Roth acting on behalf of Mr Konstantinidis, which was enforceable at law.
78 This brings me to Mr Baloglow's defences (a) and (c).
79 Mr Baloglow's defences (a) and (c): (a) Was an immediately binding contract creating legal relations made at the meeting on 28 July 1999; (c) was the alleged agreement incomplete and too uncertain to be a legally binding contract. In dealing with these issues Bergin J made it clear she was to some extent influenced by what happened after the morning meeting of 28 July 1999. There is undoubtedly strong authority to the effect that what is said and done by parties after the alleged making of an agreement can be taken into account in deciding whether an agreement was made: see for example in this court ABC v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 and Bergin J was quite correct in recognising the authority of this decision. However, what is said and done by parties after the date of the alleged making of the agreement must be weighed in light of the circumstances obtaining at the time when the later things are said and done. For the reasons I have earlier attempted to explain I do not think that what happened after the telephone conversation between Mr Roth and Mr Xenos on 29 July 1999 can have much weight at all in deciding what it was that happened on 28 July 1999 at the meeting. The position is different in regard to the three letters of Mr Roth faxed to Mr Xenos in the afternoon of 28 July 1999, but for the reasons earlier given, those letters seem to me to be equivocal on the question whether what had been done in the morning of that day was consciously regarded by the negotiating solicitors as resulting in an enforceable agreement. It seems to me that in this case the question of enforceability must be decided by looking at what happened, what was said and what was written on the morning of 28 July 1999.
80 One fact that has influenced me, in addition to those already mentioned, in making my earlier observation that I doubt whether Mr Roth was explicitly turning his mind to the question of enforceability of what they were agreeing on in the meeting is that although he had Mr Xenos in effect looking over his shoulder as he wrote upon his six sheets and got his agreement with what was written on them, he did not ask Mr Xenos to sign them on his client's behalf. Had he been at all concerned about the possibility of later argument about the matter I think he would have asked for some such written acknowledgement even if he doubted whether it were necessary.
81 All this does not necessarily lead to a conclusion that an enforceable agreement was not made by the time Mr Xenos said, as Bergin J found, "That seems to cover it all. It's a sensible conclusion" and then made no demur when Mr Roth said he would "have the written agreement typed up in a more comprehensive form" but rather said "Yes that's a good idea". (See par 29above.)
82 The question for the court is whether in the context of the position between the parties at the start of the meeting, the authority of the two solicitors, what they agreed on and what was written, what I have called the accord undoubtedly reached was an enforceable agreement.
83 There was argument both before Bergin J and in this court revolving around the question whether the circumstances fell into the second or third class of case discussed by the High Court in Masters v Cameron (1954) 91 CLR 353. However, an element basic to the discussion in that decision is not present in the instant case. The written document which was the alleged agreement in Masters ended by saying that the agreement in it was subject to two conditions, one of which was that it should "be acceptable to my solicitors on the above terms and conditions" (at 359). The subsequent discussion by the court of different categories of situation was a discussion entirely of situations "[w]here parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract" (at 360, my underlining). In the present case the writing which Mr Xenos checked and in respect of which he acquiesced in Mr Roth's description of it as "the written agreement" contained no such condition. Mr Roth's statement that he would have the written agreement typed up in a more comprehensive form was, quite clearly in the context, not an indication that he was going to prepare a formal contract, but that he was going to spell out the abbreviations which he had used in his handwritten version. This is shown by the fact that when, later in the day, he faxed a typed version to Mr Xenos that is precisely what he did, although with the addition of pars P and Q.
84 However, although this case is not exactly in the general category of cases classified in Masters, much of the discussion in that case is useful for present purposes.
85 In Masters, the High Court (Dixon CJ, McTiernan and Kitto JJ, writing jointly) had led into their discussion of the various situations which may arise when the parties have agreed that the matter of their negotiations shall be dealt with by a formal contract, as follows:
"The first question in the appeal is whether, as Wolff J considered, this document on its true construction constitutes a binding contract between the respondent and the appellants, or only a record of terms upon which the signatories were agreed as a basis for the negotiation of a contract. Plainly enough they were agreed that there should be a sale and purchase, and the parties, the property, the price, and the date for possession were all clearly settled between them. All the essentials of a contract are there; but whether there is a contract depends entirely upon the meaning and effect of the final sentence in that portion of the document which the appellant signed." (at 360)
86 In the present case Bergin J concluded that all the essentials of a contract were present in what was written by Mr Roth at the end of the meeting. In terms of the above paragraph from Masters it was plain that Mr Konstantinidis and Mr Baloglow were agreed that there should be a sale by Mr Baloglow of all his partnership interest to Mr Konstantinidis, those two were clearly the parties to the agreement, there was no doubt about what it was that Mr Baloglow was selling to Mr Konstantinidis and the price was agreed. The date for completion of the agreement (the equivalent of "the date for possession" in the Masters formulation) was not agreed and this was one of the matters relied upon by Mr Konstantinidis in his appeal. Subject to that however, there is to my mind little doubt that what Mr Roth wrote down at the end of the meeting contained all the necessary ingredients of an enforceable contract.
87 It is necessary therefore at this stage to consider the matters upon which Mr Konstantinidis relied in the appeal as showing that Mr Roth's handwritten document was incomplete and/or uncertain in a contractual sense to such an extent as to show that no contract had been completed between the two partners. In support of this argument, seven matters were relied on in the written submissions for Mr Konstantinidis as having been left at large. These were as follows:
"(a) the fate of Mrs Baloglow's and the Baloglow children's shares in the partnership companies [cf draft deed, clauses 2-3 (Blue AB 208 S-V, 209 C-L)];
(b) who was to receive/discharge the income/obligations relating to the partnership properties pending completion [cf draft deed, clauses 29-30 (Blue AB 216 N-S)];
(c) the date of payment/completion [cf fax 28/7/99 (Blue AB 203), draft deed clause 34 (Blue AB 217 O-R)];
(d) arrangements for the sale of 342A Marrickville Road [cf draft deed, clauses 15-17 (Blue AB 212 R-U, 213 C-U)];
(e) what was to happen if Larripalm had insufficient funds to discharge the partnership liabilities [cf draft deed, clause 23 (Blue AB 215 K-M)];
(f) the fate of Larripalm thereafter [cf draft deed, clause 25 (Blue AB 215 Q-U)];
(g) the release of guarantees given by Mr Baloglow and his wife."
88 Matter (a). As explained previously, the shares referred to were held by the registered holders on trust as partnership property for the partners Messrs Konstantinidis and Baloglow. (I will refer to them as partners although it seems clear that as from 2 June 1999 the partnership had been dissolved.) The partners were able to deal between themselves with what would happen to their partnership interests without reference to the registered holders of the shares. Even if the registered holders had some beneficial interest in the shares it would still be perfectly competent for the two partners to make an agreement which did not deal with such interests. The fact that such an agreement might involve difficulty in its working out would not in itself detract from its enforceability.
89 Matter (b). There was no need for there to be any agreement about what is contained in cll 29 and 30 of the draft deed; these clauses state what the position would be in the absence of specific agreement. It would only be if the parties wanted to vary what the partnership law would otherwise require that they would need to make any agreement about how partnership receipts and outgoings should be treated.
90 Matter (c). In Mr Konstantinidis's written submissions in the appeal this argument was answered very tersely, thus: "The law will always imply a reasonable time". Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 seems to show that the terse answer combines the merit of correctness with that of brevity. In oral argument in the appeal counsel for Mr Baloglow sought to distinguish the situation in the present case from the type of situation dealt with in Perri. His submission was based upon what was said to be the complexity of the partnership affairs and the consequent need for agreement on a date for payment. I do not think considerations of this kind affect the operation of the very familiar rule stated in Perri, nor, for that matter, do I think the partnership situation was particularly complex. It became common ground in the litigation between the partners that all relevant assets were partnership assets; they agreed at the meeting that Mr Konstantinidis would acquire Mr Baloglow's interest in the partnership for the figure agreed on, arrived at in the light of an agreed method of dealing with an asset of one of the companies. In my opinion there was nothing involved in the carrying out of the agreement which made it necessary or essential to agree on a date for payment. The ordinary law would supply the date by the reasonable time implication if the parties did not agree upon a date.
91 Matter (d). Paragraphs G, H and I of Mr Roth's handwritten document in my opinion dealt with this matter quite sufficiently so far as certainty of contract is concerned.
92 Matter (e). It seems to me that the answer to this question can only be that if Larripalm had insufficient funds then the law would take its course. The fact that partners bringing their relationship to an end did not provide for this eventuality does not seem to me to be an argument against their having reached an agreement that one would buy out the partnership interest of the other. Further, I think it is clear that in the event that Larripalm had insufficient funds to meet the various liabilities referred to in par L, a term would be implied that such shortfall be met equally by the partners.
93 Matter (f). I do not think the absence of any explicit term about the winding-up or other disposition of Larripalm affects the question whether what was explicitly agreed upon between the parties amounted to an enforceable contract. Again, a further answer also seems to me to be correct, that a term would very readily be implied.
94 Matter (g). Very little attention appears to have been paid to this aspect of the case at the trial. So far as I am aware, none of the evidence at the trial discloses whether it is a point of any practical importance. For all I know, it may have been a matter of such triviality in the financial circumstances of the parties and any debts guaranteed that it was not worth anyone's while to talk about it at the meeting. On the other hand it could be by possibility a matter which might have some significance for the guarantors as events unfold. Whatever the position may be, I do not think that the fact that no provision was made to deal with possible consequences of the existence of the guarantees has any bearing on the question whether an enforceable agreement was made on 28 July 1999. The purpose of the meeting was to enable the putting of an offer by Mr Xenos on behalf of Mr Baloglow to accept a sum of money in return for transferring his partnership interest to Mr Konstantinidis. This was done and figures agreed. If the matter of the guarantees was of any significance I would expect Mr Baloglow, a businessman, to have instructed Mr Xenos to do something about it in the negotiations. It seems to me to be reasonable to infer from the silence about the matter at the meeting that Mr Baloglow did not think it was of any importance. If this inference is not open to me, I still do not think, as already indicated, it has any bearing on the question whether an agreement was reached.
95 Opinion on matters (a) to (g). I do not think that any of the matters relied upon supports Mr Baloglow's argument about incompleteness and/or uncertainty.
96 General argument concerning incompleteness. It was submitted for Mr Baloglow that the purpose of the meeting was to try to arrive at an agreement which would cover all matters necessary to be dealt with in the bringing to an end of the partnership relationship between Mr Konstantinidis and Mr Baloglow. It was then submitted that a comparison of the handwritten terms of the agreement of 28 July 1999 and the much fuller terms of the draft deed of 5 August 1999 showed that what was dealt with in the handwritten document of 28 July 1999 was quite insufficient to deal with all matters that might arise in the course of bringing the partnership to an end. It was then said that this showed that a contractual intent was lacking in what was agreed on at the meeting.
97 I do not agree with this argument. The purpose of the meeting was to agree if possible on a figure which Mr Baloglow would accept from Mr Konstantinidis in return for Mr Baloglow's partnership interest. A figure and a mechanism were agreed on. On Bergin J's factual findings, (and as was conceded at the trial) Mr Xenos had authority from Mr Baloglow to agree on these matters with Mr Konstantinidis. In my opinion, it is quite clear, on the basis of the facts found by Bergin J, that this is what he did. It would have been possible to include many more terms in the agreement reached at the end of the meeting, but it was not necessary to do so. An agreement was reached on principal terms upon which Mr Konstantinidis was buying Mr Baloglow's partnership interest from him. There is no question of any mistake having been made at the meeting. In my opinion an enforceable agreement had been made at the conclusion of the meeting, subject to the question of the Statute of Frauds.
98 Mr Baloglow's defence (d): Non-compliance with ss 23C and 54A of the Conveyancing Act (the Statute of Frauds point). Bergin J found in favour of Mr Konstantinidis in regard to the Statute of Frauds point on the grounds mentioned in pars 68 and 69 above. That in par 69 seems to me to be the clearer, at least as concerns s 54A. This court's decision in Tonitto v Bassal (1992) 28 NSWLR 564 seems to me to justify that approach.
99 In Tonitto Sheller JA (with whom Handley JA and Hope AJA agreed) authoritatively demonstrated the soundness of the propositions that the memorandum or note required to satisfy the provisions of s 54A of the Conveyancing Act need not be contained in one piece of paper; and that, if words used in a document are capable of referring to another document, parole evidence can be led to connect the two documents.
100 In the present case, although I did not think I should make any significant use of what was said and done after 28 July 1999 in deciding whether or not a concluded agreement had been made on that day, upon coming to the conclusion that such an agreement was then made, the after events must be looked at in that light and then have greater significance. For example, when Mr Roth's faxed letter of 4 August 1999 (see par 46 above) is read together with Mr Xenos's letter of 5 August 1999 to the receiver, which referred to "an agreement in principle" and "heads of agreement", and the two letters are read against the fact as now found that a concluded agreement was made on 28 July 1999, it is easy to see that the abovementioned references in Mr Xenos's letter to the receiver can only have been to that agreement. When it is remembered that at the time Mr Xenos wrote this letter there is no evidence to suggest that his authority from Mr Baloglow was any less than the authority which he had to make the agreement on 28 July 1999, then it seems to me that the document written on the morning of 28 July 1999 and the letter of 5 August 1999, understood in all the circumstances of the case, fulfil the requirements of s 54A.
101 However, the position is more complex in regard to s 23C. Some things about s 23C are regarded as mysterious, both as to its relationship with s 54A and to the relationship between pars (a), (b) and (c) of s 23C(1) itself: see in particular the 3rd edn (1992) of Meagher, Gummow & Lehane: Equity Doctrines and Remedies, at pars 704-754 (and for present purposes especially pars 709, 710).
102 Before discussing the sections I will set them out. Section 23C appears in Part 2 Division 3 of the Act. Part 2 is headed "General rules affecting property" and Division 3 "Assurances of land". The section is as follows:
" 23C Instruments required to be in writing
(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person's agent thereunto lawfully authorised in writing, or by will, or by operation of law,
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person's will,
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person's will, or by the person's agent thereunto lawfully authorised in writing.
(2) this section does not affect the creation or operation of resulting, implied, or constructive trusts."
103 Section 54A is in Part 4 Division 1. Part 4 is headed "Sales and other transactions" and Division 1 "General Provisions". The section is as follows:
"54A Contracts for sale of land to be in writing
(1) No action of proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or not thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.
(2) this section applies to contracts whether made before or after the commencement of the Conveyancing (amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.
(3) this section applies and shall be deemed to have applied from the commencement of the conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900."
104 One simple point of distinction between the two sections is that both paragraphs (a) and (c) of s 23C(1) require an agent acting in the circumstances of the paragraph to be "thereunto lawfully authorised in writing", a requirement that does not appear in s 54A. Bergin J does not appear to have dealt with this requirement of s 23C in her reasons, or perhaps considered that the doctrine of the "perfect agreement", which she held operated in favour of Mr Konstantinidis so far as s 54A was concerned, applied also to the s 23C point. However, in my opinion it does not. A "perfect agreement" may be made as much by an agent as by a principal, but if that occurs in circumstances to which either par (a) or (c) of s 23C(1) applies, then that agent must have been authorised in writing
105 There is no sign in Bergin J's reasons that this point was raised with her, but it was recognised as a difficulty (if par (c) applied) by counsel for Mr Konstantinidis in their written submissions in the appeal. (Orange AB 37, par 19.) It was common ground in the appeal that there was no evidence that Mr Xenos had been authorised in writing, although as already mentioned, in my opinion it was established by a combination of the concession made on Mr Baloglow's behalf and the circumstances proved in evidence, that Mr Xenos was authorised to make the agreement which Bergin J found had been made.
106 The submission put in the appeal for Mr Konstantinidis in answer to the s 23C point was that the section did not apply to the transaction. The written submissions for Mr Baloglow did not deal with this but said the matter would be developed in oral submission. In the oral submissions Mr Douglas QC, senior counsel for Mr Baloglow, referred the court to (and handed up to the court) an article by Mr R.P. Austin in (1974) 48 ALJ 322 and also a further article by Mr N. Seddon in (1987) 61 ALJ 406 dealing with the operation of s 23C. Mr Douglas referred principally to par (a) of s 23C(1) and in doing so recognised the possibility that s 23C(2) might apply to the agreement made at the meeting in which case subs (1) would have no application to the case (transcript of argument p 49). Subsection (2) if applicable, would have this effect also upon the agreement made at the meeting, if it fell within par (c) of subs (1).
107 When Mr Oslington came to deal with this aspect of the case he in turn handed up some written material to the court being pages from New South Wales Conveyancing Law and Practice dealing with s 23C.
108 All the materials which were handed up discussed Adamson v Hayes (1973) 130 CLR 236 in detail and both Mr Seddon's article and the pages from the New South Wales Conveyancing Law and Practice made frequent reference to the extensive discussion of the same subject matter in Meagher, Gummow & Lehane, Equity Doctrines & Remedies. The parties did not develop what was to be drawn from these materials to any extent, but rather left them at large with the court to consider, within the general outlines of the arguments.
109 The greater attention given to s 23C in the appeal (because of the requirement that the agent be authorised in writing) than appears to have been given to it at the trial makes it necessary to consider more closely than Bergin J did, both the nature of the agreement made on 28 July 1999 and the applicability or otherwise of s 23C to that agreement.
110 In considering the nature of the agreement, I bear in mind that at the time it was made the partnership had been dissolved by the notice given by Mr Konstantinidis on 2 June 1999 and the court had by consent made orders on 4 June 1999 for the winding up of the partnership and pursuant to those orders a receiver had been appointed. In these circumstances, ss 39 and 44 of the Partnership Act were applicable. They were as follows:
" Rights of partners to application of partnership property
39. On the dissolution of a partnership every partner is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after such payment applied in payment of what may be due to the partners respectively after deducting what may be due from them as partners to the firm; and for that purpose any partner or the partner's representatives may, on the termination of the partnership, apply to the Court to wind up the business and affairs of the firm."
" Rule for distribution of assets on final settlement of accounts
44. In settling accounts between the partners after a dissolution of partnership, the following rules shall, subject to any agreement, be observed:
(a) Losses, including losses and deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits.
(b) The assets of the firm, including the sums, if any, contributed by the partners to make up losses or deficiencies of capital, shall be applied in the following manner and order:
1. In paying the debts and liabilities of the firm to persons who are not partners therein.
2. In paying to each partner ratably what is due by the firm to the partner for advances as distinguished from capital.
3. In paying to each partner ratably what is due from the firm to the partner in respect of capital.
4. The ultimate residue, if any, shall be divided among the partners in the proportion in which profits are divisible."
111 Thus, the rights of the two partners in regard to the partnership assets at the time the agreement was made on 28 July 1999 were to receive the "ultimate residue" after settlement of the accounts pursuant to s 44. The purpose of the meeting was quite explicit between the parties: it was to see if agreement could be reached on a figure by which Mr Konstantinidis would buy from Mr Baloglow his interest in the partnership. At that time the interest to be sold was the "ultimate residue" just mentioned. The agreement that was reached was an agreement for the sale of that "ultimate residue", spelt out in terms of how it would be accomplished.
112 Quite clearly, if the agreement reached had been only to sell this "ultimate residue" to Mr Konstanidis, then it would not have created or disposed of an interest in land and would not have been within par (a) of s 23C(1). However, the spelling out in the writing of the promises of Mr Baloglow to transfer to Mr Konstantinidis Mr Baloglow's interest in the specific assets of the partnership, including partnership land makes the situation more complicated. In my opinion the position was as follows. On 28 July 1999 the only relevant land registered in the names of individuals was 58 Whistler Street, Manly. It was common ground that this belonged to the partnership, that is, to Mr Konstantinidis and Mr Baloglow jointly. The legal owners, Mr Baloglow and three of his children, held the land on trust for Mr. Konstantinidis and Mr Baloglow. When Mr Baloglow agreed as part of the agreement to sell his partnership interest to Mr Konstantinidis, to transfer to Mr Konstantinidis "All his interest in … 58 Whistler Street", was he creating or disposing of an interest in land within the requirements of s 23C(1)(a)? I do not think so. I think the proper analysis in law is that he was promising to hold on trust for Mr Konstantinidis whatever his interest then was in 58 Whistler Street (which was the same as whatever interest Mr Konstantinidis then held in it) until such time as he received what he was to get under the agreement when he would complete whatever conveyancing steps were necessary to put the legal title to 58 Whistler Street into whatever name Mr Konstantinidis directed. At that point there would be a disposition within the meaning of s 23C(1)(a) which would need to comply with the requirements of par (a).
113 It is however unnecessary to base myself on the opinion expressed in the preceding paragraph because there is an argument logically anterior to it which I prefer to rely on. The anterior argument is as follows: the trust which in my view came into existence in regard to 58 Whistler Street on 28 July 1999 must have been a resulting, implied or constructive trust within the meaning of s 23C(2) and was thus not affected by (or subject to) s 23C(1). (For this classification of non express trusts, see pars 308-310 of Meagher & Gummow's "Jacobs Law of Trusts in Australia" 6th edn, 1997.) That is, the agreement between Mr Konstantinidis and Mr Baloglow, for consideration, created Mr Baloglow a trustee for Mr Konstantinidis of Mr Baloglow's whole interest in the land, so that subs (2) prevented the application of subs (1).
114 Turning next to par (c) of the subsection and considering its possible application to the facts of this case, it is necessary to do so on three bases, that it may apply to all the partnership assets mentioned in the written agreement of 28 July 1999, or to those assets excluding 58 Whistler Street, or to the "ultimate residue". However, as I think the same arguments apply in each case, there is no need in what follows to distinguish between them for present purposes. In each case, for the agreement to sell (or transfer) to be a "disposition" within par (c) the agreement would need to be classified as, inter alia, effecting the "disposition of an equitable interest or trust subsisting at the time of the disposition". From here on I will merely refer to all three descriptions of Mr Baloglow's interest as his interest.
115 Without the burden of authority, I would have thought that each of pars (a), (b) and (c) of s 23C(1) was dealing with a different kind of assurance or disposition of some kind of interest in land. This is clearly suggested by the heading of Division 3 and the opening words of s 23C(1). Those opening words would indicate to the ordinary reader that what followed them would deal in one way or another with interests in land. However, decisions in the House of Lords on statutory provisions very similar to ss 23C and 54A and observations by Gibbs J in Adamson v Hayes (1973) 130 CLR 276, not forming part of the ratio decidendi, have led commentators on the New South Wales sections to conclude that s 23C(1)(c) applies to personalty as well as realty. The arguments and relevant materials are discussed in Meagher, Gummow & Lehane, op cit, par 710 where the conclusion I have mentioned is reached, "though with some hesitation". (This view is carried into the 6th edition (1997) of Meagher & Gummow's "Jacobs Law of Trusts in Australia", pars 621 and 703.)
116 Accepting, with some hesitation in my turn, Meagher, Gummow & Lehane's conclusion, the question becomes whether Mr Baloglow's agreement to sell his interest, by the machinery then agreed on, involved "a disposition of an equitable interest or trust subsisting at the time of the disposition" (my underlining). I do not think it was, for reasons similar to those explained in the following paragraphs from Meagher, Gummow & Lehane (op cit):
"[711] Assuming that s 23C(1)(c) extends (as its equivalents elsewhere plainly do) to equitable interests in personalty, it is clear that a direct assignment of such an interest (within the first category referred to by Romer LJ in Timpson's Executors v Yerbury, [1936] 1 KB 645 …) must be writing complying with the section and is ineffective if it is not.
[712] If A, being beneficially entitled to personalty, is also the owner of it at law, he may, subject to the principles discussed in Chapter 6, assign the personalty in equity to B while retaining the legal title. It could be argued that such an assignment whether voluntary (where writing would usually be required in any event: see [614] et seq) or for consideration requires writing under s 23C(1)(c). Whereas in equity A was formerly entitled to the personalty, B now is: that is, A has disposed of his subsisting equitable interest to B.
[713] Although there seems to be no authority directly in point, it seems unlikely that that argument would find much favour. Where A owns property legally and beneficially, it appears to be wrong to say that he has two estates in the property, one legal and the other equitable and that, when he equitably assigns the property to B while retaining the legal title, he disposes of one of those estates. The correct analysis seems to be that A creates in B an equitable estate distinct from the estate held by A before he entered into the transaction. That is, A has not disposed of an equitable interest subsisting at the time of the disposition: he has created (out of, but distinct from his legal and beneficial ownership) an equitable interest which did not previously subsist. Section 23C(1)(c) therefore does not apply.
[714] If that reasoning is accepted, it applies equally to equitable dealings, falling within categories (3) and (4) described by Romer LJ in Timpson's Executors v Yerbury , supra, with legal property and that leads to the conclusion that s 23C(1)(c) does not apply to equitable dispositions of legal interests in personalty.
117 I think similar reasoning properly applies to the circumstances of the present case, involving an equitable disposition of an equitable interest in personalty. Although the High Court in the Canny Gabriel case thought the interest there (either identical or very closely analogous to that in the present case) was sui generis they were nevertheless quite clear that it was an equitable interest (at (1974) 131 CLR 321 at 328).
118 In the present case, whatever Mr Baloglow's interest was in the partnership assets, at the moment of concluded agreement on 28 July 1999, that interest changed from one which belonged to him alone to one which from that moment he held on trust for Mr Konstantinidis and what passed to Mr Konstantinidis were equitable rights not in existence until then. On this approach s 23C(1)(c) had no application to the agreement of 28 July 1999.
119 A further reason for the same conclusion, or perhaps merely a simpler expression of it, is that I doubt whether what Mr Baloglow had to sell on the day of the meeting was then disposed of. There was an agreement to dispose of it, in the manner then agreed. The disposal would take place when the agreement was carried into effect.
120 The conclusion stated in par 118 has two separate bases: that there was no relevant disposition within the meaning of par (c) and that in any event the operation of subs (2) prevented any operation of subs (1). This second basis stems from what was said by Lord Radcliffe in Oughtred v Inland Revenue Commissioners [1960] AC 206. Lord Radcliffe there expressed the view that a specifically enforceable agreement to assign an interest in property creates an equitable interest in the assignee constituting the assignor an implied or constructive trustee for the assignee.
121 On Lord Radcliffe's approach, subs (1) of s 23C would not apply to the agreement in the present case because of subs (2). In the materials the parties in the present case handed up to the court, and in the further materials mentioned in what was handed up, there was considerable discussion about the correctness or otherwise of Lord Radcliffe's approach. (Many commentators, including Meagher, Gummow & Lehane, op cit, par 739, thought Lord Radcliffe was right.) Then in Neville v Wilson [1997] Ch 144, Nourse LJ delivered the judgment of the English Court of Appeal (the other two judges being Rose and Aldous LJJ). In the reasons the various opinions in Oughtred were analysed; oversimplified, the facts were that an agreement (not in writing) was made between persons with equitable interests in particular shares assigning those interests to other persons; it was held that s 53(2) of the Law of Property Act 1925 (which was in the same terms as s 23C(2) applied to dispense with the requirement of s 53(1) of that Act. The Court's reasons, after consideration of Oughtred, contained this passage:
"We do not think that there is anything in the speeches in the House of Lords which prevents us from holding that the effect of each individual agreement was to constitute the shareholder an implied or constructive trustee for the other shareholders. In this respect we are of the opinion that the analysis of Lord Radcliffe, based on the proposition that a specifically enforceable agreement to assign an interest in property creates an equitable interest in the assignee, was unquestionably correct:" (at 157)
122 A little later it was said:
"So far as it is material to the present case what subsection (2) says is that subsection (1)(c) does not affect the creation or operation of implied or constructive trusts." (at 158)
123 This would seem to settle the controversy, so far as England is concerned at any rate, about the correctness of Lord Radcliffe's approach. With respect, it seems to me to be supportable, and should be adopted here.
124 In Underhill and Hayton "Law Relating to Trusts and Trustees" 15th ed, 1995, (and thus published before Neville v Wilson was decided), Oughtred was analysed and the view expressed:
"… where A contracts to sell his equitable interest to B the nature of his 'interested' constructive trusteeship, vitally dependent upon the contractual obligations being carried out (particularly payment of the purchase price) means that A is not at the outset a simple bare trustee, so there is a true sub-trust and not a full assignment of A's equitable interest to B so that s 53(1)(c) is inapplicable." (at 207)
125 This seems to me to be an analysis applicable to the circumstances in the present case and which I think should be adopted. It fortifies me in the view I had earlier reached about the agreement in the present case not falling within s 23C. So too does the discussion in Meagher, Gummow & Lehane (op cit) in pars 739-743, notwithstanding the authors' caveat in par 743, the need for which, although not done away with, must at least be to some extent diminished, by Neville v Wilson.
126 Notice of Contention. Counsel for Mr Konstantinidis also sought to support the judgment of Bergin J by reliance on the doctrines of part performance and estoppel, if that became necessary. Because of the conclusions I have reached, I do not think it necessary to decide those matters. However, I am inclined to the view that the facts referred to in par 83 of Bergin J's reasons (see par 71 above) are sufficient to make out a case for estoppel.
127 Orders. A submission briefly made for Mr Baloglow was that even if none of his defences succeeded, there was still something wrong with Bergin J's orders. The specific point was that amongst the orders were the orders that Mr Baloglow transfer to Mr Konstantinidis "all" Mr Baloglow's "shareholding" in Carlisle and Balkon; Mrs Baloglow was a shareholder in Carlisle; Mrs Baloglow and some of Mr and Mrs Baloglow's children were shareholders in Balkon; and no order was made concerning their shareholdings. However, as discussed earlier in these reasons, it was common ground at the trial that Mrs Baloglow and the children held their shares on trust for the partnership. Accordingly, I would read the order that Mr Baloglow "transfer … all … his shareholding in …" as meaning "transfer … all … his interest in shares held in …". If thought necessary I would amend the orders accordingly. No other challenge was made to the form of the orders.