The Narrative up to 23 December 1993
80 From 1985 Owston acquired various contiguous parcels of land, being pastoral leases and freehold land which collectively became known as Tipperary. The aggregate area was approximately 10,000 square kilometres (J[1]).
81 Between 1985 and 1989 Owston spent in the order of $50m developing the property (J[2]). This development included the construction, stocking and operation of the Sanctuary (J[3] to J[6]).
82 In about March 1989 Mr Anderson spoke to a Mr Japto Soerjosoemarno (who was referred to by the parties and by the primary judge as Japto, which name I will use), an Indonesian businessman to whom Mr Anderson had been introduced by an acquaintance in connection with selling an interest in Tipperary (J[8]).
83 From this introduction there arose the idea of a jointly owned feedlot in Indonesia to take cattle from Tipperary (J[8]).
84 In mid 1989 Mr Bakrie was introduced to Mr Anderson as someone who was interested in investing in Tipperary with Japto. Mr Bakrie visited Tipperary. This was the beginning of a close business and personal relationship between Mr Anderson and Mr Bakrie.
85 During the visit in mid 1989 Mr Anderson showed Mr Bakrie the Sanctuary and had a conversation concerning the possibility of Mr Bakrie purchasing a half interest in Tipperary with Japto. While Mr Anderson was showing Mr Bakrie the Sanctuary they had the following conversation (Ichal was a term by which Mr Anderson referred to Mr Bakrie) (J[53]):
WA: If I do a deal with you Ichal, this is not part of it. The licences for the Sanctuary have been issued to me personally and it is my personal responsibility.
AB: That's no problem Warren. We could take it off as your own. How big is the area?
WA: Over time I will need at least 20,000 acres.
AB: What if I want to build a house here for myself? If you've got 20,000 acres can I have 20,000 acres to build a house for myself as a personal asset?
WA: Fine.
86 The primary judge made the following further findings about this conversation (J[54]):
In cross-examination Anderson stated that he and Bakrie had had this conversation as they drove away from Tipperary, inspecting the Sanctuary, along the road which leads to the main highway. Anderson recalled that as they drove, he said words to the effect: "I will have 20,000 acres this way" pointing to the left of the road. He then pointed to the right side of the road and said "You can have 20,000 acres that way." They then came to a point in the road where there was a cattle grid and Anderson said words to the effect: "This is about as far as we will go and then we will go west as far as [necessary to] take in … 8,000 hectares or 20,000 acres".
87 This conversation was the genesis of the Sanctuary Agreement. The primary judge explained his use of this evidence as follows (J[57]):
This evidence has very little material value in determining whether a binding agreement existed in respect of the Sanctuary some four and a half years later. It is significant, however, in three respects. Firstly, it reveals that from the very commencement of Bakrie's involvement in Tipperary in 1989, there was an understanding between himself and Anderson that 20,000 acres would be used by each for his own purposes and that Anderson's 20,000 acres would include and abut the Sanctuary. Secondly, it illustrates that there was, at this early stage, at least some delineation of the boundaries of the prospective 20,000 acres, to which Bakrie agreed or at least did not object. … Thirdly, the admitted part of these conversations between Bakrie and Anderson illustrated, as happened several times in this case, that the applicants' evidence, initially treated derisorily by the respondents, ultimately turned out to be to a large extent undisputed, and in my view did much to lend credibility to the applicants' claims.
88 In August 1989 Mr Anderson, Japto and Mr Bakrie executed a document entitled "Co-operation Agreement". It is to be noted that clause 1 of the document was a provision expressly stating that no legal relationship arose until execution of further formal legal documentation. No other document relevant to the case contained such a clause.
89 On 16 September 1989 a "Co-Ownership Agreement" and a "Venture Agreement" were executed by Tovehead and Owston. The Co-Ownership Agreement contained a clause the final form of which had been the subject of some consideration and discussion. This clause, clause 4, was entitled "Licence Agreement". It dealt with the use of the Sanctuary in a manner which foreshadowed the Sanctuary Agreement. It provided as follows:
4.1 Owston shall be entitled to use such part of the property as it selects, not exceeding 20,000 acres for its own purposes, including construction of a private residence and zoo.
4.2 Tovehead shall be entitled to use such other part of the property as it selects, not exceeding 20,000 acres for its own purposes, including construction of a private residence.
4.3 Neither party can use any of the currently developed land or commercial plantation.
4.4. Neither party can carry out any other business other than the business carried out for the joint benefit of both the parties.
4.5 The allocated land shall not be utilised for any other commercial use other than personal residence and recreation including zoo.
90 November 1989 saw the drafting and execution of the following further legal documents:
a) a sale and purchase agreement between Owston as vendor and Tovehead as purchaser under which Tovehead bought a 50% interest in Tipperary for US $80m;
b) a further "Co-ownership Agreement" between Tovehead and Owston which contained what was described as a "Licence Agreement" in substantially the same terms clause 4.1 to 4.5 referred to in [89] above;
c) a Venture Agreement (Australian Operations) between Owston and Tovehead setting up the joint venture;
d) a Feedlot Joint Venture Agreement between P.T. Bakrie Nusantara Corp, Japto and Owston. Under this agreement the company to be formed to run the feedlot (which was referred to and to which I will refer either as PTT or Tippindo) was expressed to be owned 36% and 15% by the Indonesian interests of Mr Bakrie and Japto, respectively and 49% by Owston;
e) a Feedlot Joint Venture Subsidiary Agreement between the same parties which provided that the Bakrie entity had agreed to hold 1% for the benefit of Owston and to deal with it only at the direction of Owston;
f) a Loan Agreement between a Bakrie company to which I will refer as Cross Hatch and Owston, whereby Owston lent US$24m to Cross Hatch, the parent of Tovehead, to lend to Tovehead so that Tovehead could complete the purchase of the 50% interest in Tipperary;
g) an Acknowledgment of the Loan Advance between Cross Hatch and Owson by which the loan sum was varied to US$23,450,000.00;
h) an Acknowledgment of Loan Advance and Guarantee between Cross Hatch, Owston and Tovehead;
i) a Loan Repayment Agreement between Tovehead and Owston providing for all cash generated (as defined) from the joint venture activities to be paid to Tovehead's lender;
j) a Statement of Joint Understanding between Tovehead and Owston which also dealt with the question of the disposal of cash generated by the joint venture activities.
91 Meanwhile on 14 November 1989 Blake Dawson Waldron (BDW) was retained by the Bakrie interests. The primary judge said the following (J[61] and J[62]):
[61] On about 14 November 1989, BDW was retained to advise the Bakrie group of companies on the proposed purchase of the half interest in Tipperary. AdrianAhern, a solicitor with BDW, reviewed the proposed documentation and drafted a detailed critique. As part of that critique, he commented on clause 4 of the Co-Ownership Agreement and pointed out the following possible breaches of the Crown Lands legislation:
(a) that the clause relating to the zoo might constitute a sub-lease made without ministerial consent; and
(b) that a change of land use from pastoral activities or grazing to that of a zoo might be a change for which there had been no ministerial consent.
[62] Under Northern Territory legislation ministerial consent was then and is still needed for changes to pastoral leases. Ahern therefore suggested that the clause be removed and placed in a separate document. This and other evidence supports the conclusion that the parties' representatives agreed on the clause being removed on or about 16 January 1990 while Somerville was apparently on holidays and the matter was being dealt with by another solicitor in his office. Somerville's evidence that the clause had been removed at the suggestion of BBD [Bank Bumi Daya] or its solicitors, Baker & Mackenzie, does not appear to be correct.
92 In February 1990 another body of documents was executed dealing with the purchase by Tovehead of the interest in Tipperary as follows:
(a) another "Co-Ownership Deed" between Tovehead and Owston which had the "licence" in cl 4 removed;
(b) the JSU between Tovehead and Owston containing what was cl 4 in the November "Co-Ownership Agreement";
(c) a Put Option Variation Agreement between Tovehead and Owston varying the terms of the put option;
(d) a Loan Agreement between Cross Hatch and Owston rescinding and replacing the Loan Agreement of November 1989;
(e) a Loan Repayment Agreement between Tovehead and Owston which replaced the November 1989 Loan Repayment Agreement;
(f) two letters of undertaking by Owston and Tovehead and Owston to Tovehead's lender, Bank Bumi Daya of Indonesia (to which I will refer as BBD);
(g) a $1,750,000 Loan Agreement between Mr Bakrie, Tovehead and Owston dealing with a settlement shortfall of $1.75m, to be paid within 6 months. This agreement had the following clause handwritten:
5. Amendment to Bank Documents
5.1 Bakrie shall use his best endeavours to cause Bank Bumi Daya ("the bank") to agree in writing to the following:-
5.1.1 to limit its rights under the undertaking from Owston to the bank, to receive half of the interest under the loan referred to in the undertaking and
5.1.2 to exercise any of its rights under the option contained in the co-ownership agreement between Tovehead and Owston dated January 1990, only after 15th May 1997,
5.2 If the bank shall not agree in writing to the matters referred to in 5.1 Bakrie shall indemnify Owston in respect of any monies payable by Owston which would not have then been payable if the bank had so agreed …
The rights of the lender (BBD) against Owston were those contained in letters of undertaking executed by Tovehead and Owston collateral to the loan agreement between Tovehead and BBD for US$70,350,000.00 referred to in (f) above; and
(h) a deed between Tovehead, Owston and Mr and Mrs Anderson, warranting matters arising from Owston being a trustee.
93 The primary judge dealt with the creation of the JSU as follows (J[63]):
There was copious evidence on the production of this document, adduced primarily by the respondents, who sought at length to establish that the removal of the licence clause from the Co-ownership Agreement and its embodiment in a separate document framed as set out in the JSUconstituted a "demotion" in its legal stature. The respondents devoted much of their written submissions relating to the Sanctuary to establishing the precise nature of this document and the rights it conferred on Owston. They said that it was merely an exchange of negative covenants between two co-owners, which established that each party would not interfere with the other's use of certain parts of the land. It was not, on their argument, an agreement for a lease or even a licence, as a licence would have been unnecessary and a legal absurdity as between two co-owners of the land said to be subject to it. In some contradistinction with their cross claim, the respondents also contended that in any event the JSU necessarily came to an end when Tovehead and Owston ceased to be co-owners in 1993, and Owston's interest devolved to Branir which was not bound by it. Having regard to the applicants' argument that it was agreed in late 1993 that the terms of the JSU would govern the parties' relationship with respect to the Sanctuary pending a formal lease document, it will be seen that whichever of the competing arguments were accepted, the precise legal nature of the JSU at the time of its execution is not a question that needs to be determined, although it is valuable in identifying the intent of the parties.
94 The primary judge dealt with events after the February 1990 settlement and up to 1992 as follows (J[16], J[17] and J[18]):
[16] After settlement, Tipperary continued to be operated by Owston for the benefit of the joint venture and the station manager, Frank Gardner, reported to Anderson. The development of the feedlot in Indonesia began in, and was completed by the end of, 1991 but for some reason it was not until the end of 1992 that Tovehead took over the running of the Tipperary properties. Owston continued to operate the Sanctuary under the day to day management of Kevin Langham who had been appointed by Anderson in late 1989.
[17] During 1990 Anderson acquired the pastoral leases for a group of properties about 450 kilometres south east of Tipperary through a company called Moonhill Pty Limited (Moonhill). Although Anderson was the sole shareholder of Moonhill, the properties were acquired for the joint venture through loans of $7.5 million each by Owston and Tovehead to Moonhill of the working capital of $US15 million provided, whereby Tovehead acquired at least a beneficial interest in the properties which was, or the parties seem to have treated as, a 50% interest.
[18] In 1992 Owston entered an agreement with Cross Hatch, Tovehead and Nusantara to forgive the loan of $US24 million from Owston to Cross Hatch which formed part of Tovehead's financing for the purchase of 50% of Tipperary. The consideration for this agreement was to be the payment to Owston through Tippindo of $US3 million in 12 monthly instalments of $US250,000 although it appears that the $US3 million was never fully paid. I shall return to this quite extraordinary arrangement later.
95 The forgiveness in 1992 of a large part of the USD24m was in a document styled an agreement, not a deed. This fact became important in 1993 when the receiver to Owston appointed by BNY indicated an intention to pursue this loan (that is pursue Cross Hatch a company owned by Bakrie interests as to 70%) on the basis that its release lacked consideration.
96 From early 1993 Mr Anderson was in dispute with the BNY in respect of a claimed sum of about USD40m. The primary judge dealt with this and related matters as follows (J[19], J[20] and J[21]):
[19] In early 1993 Anderson became involved in a dispute with the Bank of New York (BNY) which was seeking payment of $US40 million pursuant to a guarantee given by Owston, Anderson and his wife for a loan arising out of a different commercial venture altogether. Through its Australian subsidiary Bank of New York Australia Ltd (BNYA), BNY was threatening to enforce its mortgages and charges over various assets owned by Anderson and Owston, including Owston's remaining 50% share of Tipperary and its share in Tippindo. Such a happening would have spelt financial disaster for Anderson and a potentially significant loss to Bakrie. This possibility led to Bakrie becoming involved in the discussions with BNY, in consequence of which the Anderson and Bakrie interests had discussions with a view to Owston obtaining funding from or with the help of Bakrie to resolve its dispute with BNY.
[20] By around September 1993 the negotiations had culminated in a proposed transaction under which the Bakrie interests, through the intermediation of Macquarie Bank, were to acquire Owston's half interest in Tipperary and its shareholding in Tippindo for $A20 million (the Macquarie Bank deal). The mechanics of the Macquarie Bank deal involved the joint venture assets, Tipperary and the feedlot, being transferred to Tippindo in which a Bakrie nominee company would acquire a 49% interest. Owston was to retain an effective 20% interest in these assets through an issue of 40.815% of the shares in the Bakrie nominee company. The intended result of that proposal is summarised in the schematic labelled "September 1993 Deal" in Exhibit A11, appended to this judgment (3).
[21] These negotiations were being conducted for the Anderson interests principally by Anderson himself and an adviser, Arthur Dew, who was a non-practising barrister. The Bakrie interests were represented by Bakrie himself, Nalin Rathod, an Indonesian national based in Jakarta who was the Chief Financial Officer for Bakrie's group of companies, and Charles Graham, an Australian company manager who had worked for Bakrie on a project in Indonesia in the late 1980s and whom Bakrie engaged to manage his Australian business dealings and operations from the time of the 1990 deal. Blake Dawson Waldron (BDW), a firm of solicitors, was also engaged by Bakrie to represent his interests and acted from approximately 14 November 1989 through to the present litigation. At the relevant time in 1993, Chris Greiner, a partner, and Justin Richmond, a junior solicitor, had carriage of the matter in BDW.
97 Mr Anderson's evidence was that during the early part of 1993, and until a point in the negotiation of the Macquarie deal referred to by the primary judge in J[20] quoted above, he thought that Mr Bakrie was to provide him with a commercial loan, initially of $40m and later of $20m. It began to become apparent to Mr Dew in negotiations in about September 1993, in particular in connection with the drafting of the documentation, that the Bakrie interests intended there to be a sale of the property owned by the Anderson interests. On or about 5 September 1993, Mr Dew drafted a deed attempting to embody the arrangement as he saw it.
98 After Mr Bakrie's lawyers had examined this draft, Mr Graham spoke to Mr Dew and Mr Dew spoke to Mr Anderson. The primary judge summed the matter up as follows (J[186]):
Dew forwarded his draft deed to Graham who submitted it to Greiner. On 6 September 1993 Greiner sent Dew his comments on the draft deed. The crucial observation by Greiner was that the transaction would not only involve a transfer of Owston's interest in Tipperary to Tippindo but also a transfer of Owston's interest in Tippindo to a Bakrie nominee company, thus depriving Owston of any interest in the joint venture assets. In a fax to Anderson, Dew passed on Greiner's comments with the additional comment from Graham that "any deal for Warren to come back into it is a private deal between Ichal [Bakrie] and Warren". Anderson claimed that it was only at this point that he realised that what was proposed was in fact a sale rather than a loan from Bakrie. Anderson stated in his affidavit that:
"That's not right Arthur you know that."
To which Dew replied:
"Well that's what the draft agreement says. I will go back to Charlie and Greiner and try and straighten it out."
99 With this occurrence of an apparently important change in the proposed structure (at least as seen by Mr Anderson) in early September, Mr Anderson travelled to Jakarta to see Mr Bakrie and Mr Rathod. Mr Anderson's evidence was that he had been informed by Mr Dew that the Bakrie interests would purchase Owston's interest in Tipperary and in the feedlot for $20m with him being given a 40% shareholding in the Bakrie nominee company which would acquire those interests, for $8m, to be paid for out of dividends of the company issuing the shares.
100 At this point it is appropriate to refer to findings made by the primary judge about the roles of Mr Anderson and Mr Bakrie and their relationship. His Honour said (at J[34]):
On the other hand, Anderson and Bakrie were indisputably the principal figures on the respective sides of this litigation. Anderson made all relevant decisions on behalf of his interests, whether they be for Owston or for a member of his family. Bakrie was similarly in control of his affairs. Although each delegated responsibility to advisers to deal with minutiae, it was clear that the central agreements were made between Anderson and Bakrie and that they expected and believed that the results of their negotiations would be implemented and be binding upon their interests. Judging from the evidence and the formal documents which passed between the parties, I believe that there was also an understanding between Anderson and Bakrie as to the moral obligations each owed to the other which transcended their formal business arrangements. These arrangements included the repayment of a debt to BBD where, unbeknowns to the bank, an agreement existed that part of the income stream from the joint venture (which on the face of the agreements was to be entirely directed to BBD) was to be diverted to Owston. The agreements set out in the Sanctuary and Share letters also fall into this category.
101 Three matters should be noted about this paragraph. First, the finding in the second sentence was the subject of direct challenge by the appellants. I will deal with this later. Secondly, the appellants seek to gain comfort from the use of the phrase "moral obligations" in connection with the Sanctuary letter and the Share letter. However, in the context of the balance of his reasons, the primary judge was plainly not making a finding that the Sanctuary and Share letters were binding in moral obligation only. Thirdly, on the assumption of the lack of success in the attack on the second sentence, the paragraph reveals the clear ability and intention of these two men, Mr Anderson and Mr Bakrie to resolve all commercial essentials by direct dealing. That is what they sought to do, and apparently did, in September and again in December 1993.
102 Mr Anderson's evidence was that he travelled to Jakarta in September and saw Mr Rathod, Mr Bakrie being unavailable. (Though, it should be noted that Mr Dew's evidence was that Mr Anderson spoke to him at the time and said that he had spoken to Mr Bakrie.) Mr Anderson said that he complained about the change from a loan to a purchase. The evidence of Mr Anderson and Mr Dew was that while Mr Anderson was in Jakarta they spoke and the following was said:
(about the change from a loan to a purchase):
Anderson:"I have spoken to Bakrie and he said he needs to show it as a purchase because he is unable to borrow the $20 million unless the Bakrie companies buy Tipperary or, at least, it appears that they buy it. Bakrie's told me he morally still regards the transaction as a loan but because its got to be written up as a sale, he's agreed that we can write it up that I'll have a percentage of the new company and we can agree on the percentage later."
(about the shareholding arrangement)
Anderson:"Regarding the issue of the percentage shareholding, it's going to be 40%. Morally, they still regard it as a loan but for legal documentation purposes, I can buy-back 20% of the station or 40% of the new company for the same price as Bakrie paid for it on paper. Bakrie will fund me and I will pay him back from dividends of the company or from other sources if I wish."
(about the Sanctuary)
Anderson:"I have spoken to Bakrie and Rathod. They agree that I will have the rights to exclusive use of the Sanctuary and we have agreed to extend the area. The term will be the same as the perpetual leases and I will have complete rights of access. It will be a purely nominal rent. Ichal's rights for his house block are to continue and be the same. Can you get the agreement done with Charlie?"
Dew: "I will speak to Graham."
103 Mr Dew then immediately spoke with Mr Graham a number of times about both the arrangements including the shareholding and the Sanctuary. The following was said:
Dew: "Warren is in Jakarta and has seen Nalin. He has phoned me and tells me they have agreed that Warren will have 20% of the Station or 40% of the new company and that Bakrie will lend him the money for this now and it is to be paid back out of dividends or earlier if Warren wants to."
Graham: "I will check and let you know."
104 Mr Graham reverted to Mr Dew and said:
Graham: "I understand from Nalin Rathod that the agreement you refer to has been reached. You should discuss this with Chris Greiner and work out a way of implementing the arrangement."
Dew: "I will do that."
105 Mr Graham and Mr Dew had conversations about the Sanctuary also at this time as follows:
Dew: "I understand that, as the deal is to be structured as a purchase and not a loan, Warren has spoken to Bakrie about the Sanctuary. I understand that Warren has agreed with Bakrie that the current arrangements are to stay in place and he will have a continuing license to operate the Sanctuary. Warren tells me he is to have the exclusive use of the Sanctuary and Bakrie is to have his house block. The period will be the same as the perpetual leases and there will need to be provision for continuing rights of access. Warren will pay all costs for operating the sanctuary and the surrounding land. Can you speak to Bakrie because we need to get an agreement documented."
Graham: "I will speak to Bakrie"
….
Graham: "I have spoken to Bakrie and he agrees that Warren can continue to operate the sanctuary."
Dew: "Can you get a draft agreement done?"
Graham:"I will speak to Greiner."
106 This last conversation of Mr Dew and Mr Graham, though denied by Mr Graham, was corroborated by Mr Langham (a station manager) who said Mr Graham had said to him in late 1993:
"There is an agreement between Anderson and Bakrie that Anderson can build on one side of the road on 20,000 acres and that Bakrie has the same amount of land on the other side of the road. That arrangement is to continue."
107 Mr Dew then spoke to the partner at BDW handling the matter, Mr Greiner and possibly his more junior assistant, Mr Richmond. The conversations were as follows:
Dew: "I have spoken with Anderson and Graham. Anderson advises me that he has agreed with Bakrie to the purchase arrangement provided that Anderson will have the right to buy back 20% of the station or 40% of the new company for $8 million which Bakrie will lend him and that it can be paid back out of dividends or earlier if Warren wishes."
Greiner/Richmond: "I will get instructions."
…
Graham/Greiner/Richmond
"It will not be feasible for Anderson to have an interest in 20% of the property but we can agree to him having 40% of the new company which will hold the 50% interest in the station which is the same thing. Bakrie will lend the $8 million to him for his 40% and it can be paid back out of dividends or earlier if he wishes."
108 On 11 September 1993, in Jakarta, Mr Rathod handed a signed handwritten document to Mr Anderson. It summarised the sale and shareholding arrangements. It was in the following form:
1. Owston to transfer its 50% holding in Tipperary Station to PT Tipperary Indonesia.
2. Tovehead to transfer its 50% holding in Tipperary Station to PT Tipperary Indonesia.
3. Owston to transfer its share holding of 49% in PT Tipperary Indonesia to a nominated Bakrie company for A$20 million.
4. Bakrie will give 40.815% in the nominated Bakrie company to WPA which will own 49% of PT Tipperary Indonesia. This will effectively give WPA 20% share holding in PT Tipperary Indonesia. For this WPA will pay A$8 million to Bakrie. The A$8 million is to be paid from Dividends of PT Tipperary Indonesia.
Dear Warren
Above is the structure approved by Mr Aburizal Bakrie
Rathod
11/9/93
109 As can be seen, this note contemplated 100% of Tipperary being transferred to Tippindo (Owston's half share and Tovehead's half share) and Owston's 49% ownership of Tippindo would be transferred to another company of which "WPA" would be granted a 40.815% interest. The "effective 20% shareholding in [Tippindo]" would give "WPA" a 20% economic interest in the feedlot and Tipperary itself.
110 The transfer of the two half interests in Tipperary had obvious stamp duty consequences. After Mr Dew received the Rathod note from Mr Anderson he spoke to Mr Greiner and had the following conversation:
Dew: "We had better check to see if Bakrie is going to make the transfer of Tovehead's half share to Tippindo as this will affect the arrangements."
Greiner: "We cannot proceed that way because it will cost too much stamp duty. Also, FIRB [Foreign Investment Review Board] approval may not be possible and there is also the question of the Northern Territory Government consent. It's all too hard. We'll leave the Tovehead half of Tipperary in Tovehead and use another Australian company to buy the Owston share."
Dew: "That's fine. But if you leave it in Tovehead, you will need to advise Bakrie and get his approval."
111 By about 15 September a deed which had been bound by BDW was executed by various parties which contained, as clauses 1 to 4, the following (noting that "Bakrie" referred to an entity of Mr Bakrie, and Mr Bakrie was defined as "ARB"):
1. Subject to and in accordance with the Macquarie Agreement Bakrie will pay to Macquarie A$20M in order to settle the Macquarie Bakrie Transaction.
2. The payment by Bakrie pursuant to clause 1 of this Deed shall be accepted by Owston, the directors, the Shareholders and the Beneficiaries as the total consideration for the transfer of Tipperary and the Stock and Plant to PTT and each of the directors, Shareholders and the Beneficiaries confirms and acknowledges to PTT and Bakrie respectively that each of them consents to such transfer and that Owston will at the time of such transfer be fully authorised and entitled to effect such transfer.
3. Immediately upon the later of settlement of the Macquarie Bakrie Transaction and the withdrawal of the Receiver by BNYA from the assets of Owston each of the Directors, the shareholders and the Beneficiaries covenant that they will subject to PTT obtaining all necessary consents and authorities, cause Owston to, and Owston agrees that it will, subject to such consents and authorities, transfer to PTT all of Owston's interest in Tipperary and the Stock and Plant in consideration of the payment by Bakrie to Macquarie pursuant to clause 1 of this Deed.
4. (a) Immediately upon the later of settlement of the Macquarie Bakrie Transaction and the withdrawal of the Receiver by BNYA from the assets of Owston each of the Directors, the Shareholders and the Beneficiaries covenant that they will cause Owston to, and Owston agrees that it will, transfer the PTT Shares to a company nominated by Bakrie (the "Nominee Company") and each of the Directors, Shareholders and the Beneficiaries confirms and acknowledges to Bakrie that each of them consents to such transfer and that Owston will at the time of such transfer be fully authorised and entitled to effect such transfer.
(b) ARB agrees with Warren Perry Anderson ("Anderson") that he will procure that the Nominee Company issues to Anderson or as Anderson may direct forty point eight one five per centum (40.815%) of its issued share capital (the Anderson Shares").
(c) In consideration of the agreement by ARB mentioned in paragraph (b) of this clause 4, Anderson agrees with ARB that:
(i) Anderson will pay to ARB the sum of A$8m together with interest on that amount from the date of issue of the Anderson Shares until payment, calculated on a daily basis at the current Indonesian market deposit rate from time to time (together called the "Issue Price") by applying the dividends paid in respect of the Anderson Shares for that purpose and Anderson shall not be obliged to pay the Issue Price other than by so applying such dividends;
(ii) Anderson will procure that the holder of the Anderson Shares will:
(A) irrevocably direct the Nominee Company to pay all dividends to be paid in respect of the Anderson Shares directly to ARB or as he may direct in writing in partial satisfaction of the obligation to pay the Issue Price until such time as the whole of the Issue Price has been paid; and
(B) deposit the share certificates in respect of the Anderson Shares with ARB as security for the payment of the whole of the Issue Price so that ARB shall not be obliged to release any of such share certificates until such time as the whole of the Issue Price has been paid.
112 As can be seen from clause 4, BDW was able promptly to draft provisions dealing with the then consensus regarding the share issue.
113 By some time in October the 1993 Macquarie deal had fallen over.
114 Before moving on, it is important to appreciate what, to this point, had been agreed between the parties, but not settled by exchange of formal documentation. First, though not incorporated into any of the Macquarie documentation, Mr Bakrie and Mr Anderson had agreed upon the exclusive use of the land on which the Sanctuary operated and a surrounding area totalling 20,000 acres in early conversations and documentation in 1989, in the February 1990 JSU and in conversations in September 1993 between Mr Anderson and Mr Rathod and/or Mr Bakrie, Mr Dew and Mr Graham. The discussions and consensus in September 1993 though expressed in terms of "Anderson" or "I" (see [102] to [110] above) dealt with exclusivity of possession, the term to be perpetual, nominal rent and access.
115 The lack of incorporation of the Sanctuary matter into the Macquarie documentation was partly explained by Mr Dew who said that from September to December 1993 he had various discussions with Greiner about the Sanctuary as follows:
Dew: "We want to get an agreement regarding the continuing operation of the sanctuary by Anderson setting out all the details. I have discussed with Graham. Can you prepare it?
Greiner: "I know Bakrie has some agreement with Anderson about the sanctuary but I have not got the time to chase up instructions. You go and talk to Graham and when he gives me instructions, I'll draft something."…
116 It should be noted that in the structure of proposed ownership of the various assets Tippindo was to be the transferee of Owston's share in Tipperary, but after appreciation of the stamp duty consequences not Tovehead's share. This being the case, for Anderson to obtain a 20% economic interest in Tipperary, Tippindo had to acquire the other half of Tipperary in some fashion other than a transfer of Tovehead's half share in the land. Rather than Tovehead transfer the land (at ad valorem stamp duty rates), by clause 15 of the Macquarie deed, which was signed by the various parties (see [111] above), another Bakrie company called Timeswitch would cause to be transferred to Tippindo all of its shares in Cross Hatch, which wholly owned Tovehead, which owned the other half of Tipperary. However, it was wrongly assumed that Timeswitch had 100% of Cross Hatch. In fact, Japto at this point owned 30% of Cross Hatch and Timeswitch only had 70%. When this was realised by 15 September 1993, alterations were proposed to clause 15 so as to provide for Timeswitch to endeavour to procure the transfer of the balance of the shares in Cross Hatch to Tippindo.
117 As part of this contemplated deed certain elements of the legal arrangement intended to give the 20% economic interest to Mr Anderson's interests were clear (see clause 4(b) and (c) in [111] above):
a) Mr Bakrie agreed to procure the nominee company (holding 49% of Tippindo which owned the feedlot and, by Owston's half interest transferred to it and by its intended taking up of 100% ownership of Cross Hatch and so, indirectly, ownership of Tovehead, the whole of Tipperary) to issue 40.815 of its shares to Mr Anderson or his nominee.
b) In consideration of that promise by Mr Bakrie, Mr Anderson promised:
i) to pay Mr Bakrie $8m (with interest at the Indonesian deposit market rate) repayable only out of dividends on those shares;
ii) to procure the holder of the shares to so direct the dividends; and
iii) to deposit the share scrip with Mr Bakrie until the repayment of the $8 m plus interest.
118 These elements are conformable with the Share Agreement as pleaded in sub-paras 24(i), (ii), (iii), (iv) and (v) of the 2nd FASC ([60] above). The only matter of substance pleaded in para 24 not dealt with by the September Macquarie deed was the debt free status of the nominee company and the precise identity of Mr Anderson's nominee, Owston.
119 The parties, with the assistance of their advisers, had had no difficulty in reducing into an acceptable and formal document the elements of the shareholding arrangement agreed to at that point by Mr Anderson, Mr Rathod and Mr Bakrie and as modified by Mr Greiner and Mr Dew: that is, to give Mr Anderson or his nominee a 20% economic interest in Tipperary and the feedlot for $8m to be lent by, and repaid to, Mr Bakrie, repaid out of dividend stream only.
120 Before leaving the Macquarie deal one matter said to be of significance by the appellants should be noted. The documentation had provision for the beneficiaries of the trust of which Owston was trustee to be parties. The Macquarie deed also had provision for warranties that, inter alios, the beneficiaries had received independent legal advice about entry. Mr Dew explained in his evidence that this was because there were court actions on foot brought by the beneficiaries. The appellants prayed this in aid of the proposition that Mr Anderson did not speak for Owston (a matter contrary to a finding of the primary judge which was challenged, see [101] above and [307] below) and that one could conclude that there was no consensus or intention to be bound concerning these necessary parties just because Mr Anderson said or did something. These matters are discussed more fully below, but it suffices to say here that one can easily understand such law suits having been taken in order to stifle or affect BNY and its interests. I do not think they necessarily disclose or display an inability or unwillingness of Mr Anderson to speak for Owston.
121 After the Macquarie deal fell over, the parties continued working in order to put together a deal to see BNY paid out. The primary judge dealt with these steps into early November 1993 as follows (J[193] and [194]):
[193]On 22 October 1993 BDW produced a further draft of the deed, modified to reflect the fact that Macquarie Bank was no longer involved. This deed did not contain the term that had previously been clause 4, relating to the issue to Anderson of shares in the Bakrie nominee company. The applicants submitted that the reason for the removal of clause 4 related to an understanding of Graham's that Anderson would accept the Moonhill properties free of Tovehead's interest in lieu of any holding in the nominee company which was to hold the joint venture assets. This result was apparently never Anderson's intention. Nevertheless, clause 4 was removed from the draft deed and was not reinserted in any subsequent draft.
[194]A further change in the structure of the deal occurred at about this time. The drafts of the deed now being prepared by BDW provided for the transfer of all Owston's interests in the joint venture assets to a nominee company which would hold the Owston interests directly, rather than the transfer of the Owston interests to Tippindo and the transfer of Owston's interest in Tippindo to a nominee company. It was also proposed that any interest that Anderson was to be granted in the nominee company should be dealt with in a separate agreement. A further draft deed was prepared by BDW on 4 November 1993.
122 It is necessary to take up events again in early November which develop and explain what the primary judge found in those paragraphs.
123 In early November 1993, Mr Dew and Mr Graham spoke about the change to the mechanism or structure concerning the interposed nominee company. They had the following conversation:
Graham: "I have spoken to Bakrie and he has told me what he wants from Anderson. Owston is to transfer all its interests in Tipperary, Moonhill and the Coconut Farm properties and Owston's half share in Tippindo to a new nominee company. The Moonhill debt to Owston is to be released. Bakrie will lend Owston the $8 million for 40% of the shares in the nominee company. Bakrie will hold the shares as security until the debt is paid."
Dew: "The nominee company will need to be clean and have no debts."
Graham "It will have its share of Tippindo's debt."
Dew: "This is OK. Can you send me a fax on it."
124 There could be no doubt from this conversation that Owston (by this time the identity of Mr Anderson's nominee being clear) was to be issued with 40% of the shares in the nominee company the price for which, $8m, was to be lent by Mr Bakrie to Owston and repaid to Mr Bakrie and that the shares were to be held by Mr Bakrie as security. Also, importantly, the company was to be debt free, though "with its share of Tippindo's debt".
125 This last phrase was understood by the parties in a way described by Mr Graham in his evidence. The nominee company was to have 49% of the capital of Tippindo. Tippindo had a large debt to BBD (as did Tovehead). Mr Graham explained that this phrase was not intended to reflect any legal obligation on the nominee company to pay Tippindo's lenders but a "moral" or "accounting" one arising out of its proportional ownership of the debtor, Tippindo.
126 So, by early November, with Owston now clearly identified as the nominee of Mr Anderson (at least in this conversation), all elements of the Share Agreement pleaded in para 24 of the 2nd FASC (that is including the debt free status and the identity of the party, Owston) appear to have been agreed on or, at least, addressed by the parties and their commercial advisers.
127 At about this time, on about 12 November 1993 Mr Dew spoke to Mr Graham about the Sanctuary:
Graham: "I understand Anderson might want to resign as the beneficiary of the sanctuary. If he does, Ichal would take over the position."
Dew: "I don't know send me a fax."
128 As can be seen below Mr Anderson scotched this suggestion upon first hearing of it.
129 Further correspondence now occurred. This correspondence is important because Mr Campbell QC sought to identify from it a clear and fundamental change in the negotiations. This was an important plank in the appellants' submissions that the ebb and flow of negotiations, which, it was said, could be seen in the months and weeks leading up to 23 December, had not ceased on 23 December.
130 While the phrase "its share of Tippindo's debt" was understood to have the meaning referred to above, at about this time (in early to mid November) Mr Bakrie did in fact attempt to move into the discussions the question of the debt of Tippindo and Tovehead to BBD. To this extent there was an element of negotiations introduced by Mr Bakrie in this regard. The primary judge said the following about this (J[195]):
On about 12 November 1993, Bakrie instructed Graham to insist on the inclusion in the agreement with Anderson that the shares in the nominee company would not be issued to Owston until the debts of Tovehead and Tippindo to BBD were repaid. These debts totalled in excess of $130 million and Graham appreciated that a deal whereby Anderson would not receive his shares until they had been repaid was not likely to be accepted; indeed Graham considered it "a pretty hopeless sort of request".
131 The correspondence to which I have just referred ([129] above) commenced with letters sent by Mr Graham to Mr Dew on 12 November 1993. The two letters were sent on Toveheadletterhead. Their contents were as follows:
(First letter)
This is to confirm our telephone conversation of this morning.
I have been able to get hold of Aburizal Bakrie and have obtained from him the arrangements he wished to have on settlement with BNYA and Owston on payment by Bakrie to Owston of A$20 million. The following is subject to the satisfaction of the Bakrie Group to the final arrangements with BNYA.
That Owston will transfer to Votraint 788 Pty.. Ltd.. (a company wholly owned by P.T. Bakrie Investindo) all the shares of Moonhill Pty.. Ltd.. and further that any debt owned by Moonhill to Owston is released; the property known as Coconut Farm; Owston's half share in the Tipperary Group of Stations property and all the shares owned by Owston in P.T. Tipperary Indonesia.
Aburizal Bakrie is fully aware of the promise made to Warren that Bakrie will allocate to Warren 40% of shares in a Bakrie nominated company which in turn will own 50% of P. T. Tippindo Indonesia. However such shares will be held as collateral to Bank Bumi Daya until the debt is fully paid This promise will be given effect at the conclusion of the above transfer.
The above is my understanding of my telephone conversation with Aburizal Bakrie. I am faxing a copy of this letter to him to ensure that my understanding of our conversation is correct. Further you will understand that this letter has no legal effect until we have received legal advice and the Deed between Owston and related parties with Bakrie has been concluded.
(Second letter)
Confirming my advice of this morning regarding the position of the Zoo in Tipperary.
Aburizal Bakrie in a recent telephone conversation I had with him agreed that he would be happy to take over the position as Beneficiary of the Zoo (correctly as it is known as Tipperary Sanctuary) in the event that Warren is to resign from this position. It is my understanding that Warren wishes this to happen.
There are some procedures to go through to give effect and I am seeking information on the formalities needed.
When you are able to confirm that Warren is happy with the proposed arrangement please let me know.
132 A careful reading of the first letter would reveal that Owston was transferring its real property, including its half share in Tipperary and its 49% interest in Tippindo, to a company not previously mentioned, Votraint, for $20m; and that the "Bakrie nominated company" which would own half of Tippindo would issue 40% of its shares to Anderson. If that company were not Votraint, as the letter seemed to indicate, all the 40% ownership in the "Bakrie nominated company" would give Mr Anderson would be a 20% economic interest in the feedlot, and not Tipperary, while Votraint, "a company wholly owned by P.T. Bakrie Investindo", and, on this hypothesis, a company in which Anderson had no interest, would take all Owston's real property interests. Such a reading would also reveal that the shares in the "Bakrie nominated company" were to be held by Mr Bakrie as collateral until all BBD debt (of Tippindo and Tovehead or, at least, Tippindo) was repaid.
133 Not only did these matters not go unnoticed by Mr Dew, but also they were discussed between Mr Anderson and Mr Dew as follows:
Anderson: "What's this about me giving the Sanctuary to Aburizal Bakrie. That's rubbish. As for the other letter, at least it's better than Nalin Rathod's letter provided the nominee company is Australian, but what does Charlie Graham mean that the shares have to be held pending the Bank Bumi Daya debt? The Bank Bumi Daya debt is Tovehead's, not mine. You'd better clarify that with Charlie."
…
Dew: "The letter is not clear and needs redrafting to cover the new nominee company owning Tippindo as well as the Tipperary part and stock. The way it is shown does not work as Tippindo will be in Votraint. The other two main areas of difficulty appear to be that it does not set out that the company must be debt free nor is it clear that the shares must be given to you after the $8 million is to be repaid. All these things must be made clear."
Anderson: "That is the basis of the understanding I have with Rathod and Bakrie. Can you talk to Charlie about it?"
Dew: "Yes I will."
134 Mr Dew then spoke with Mr Graham about the contents of these letters:
Dew: "Your fax is not very clear and appears to confuse the old idea of putting all Owston's interests in Tippindo with the idea of the new nominee company. As you are now putting the Owston Tipperary Station assets together with Owston's 50% of Tippindo into Votraint, Anderson will get 40% of Votraint and there will not be a nominee company just owning 50% of Tippindo. As the Tippindo shares owned by Owston go to Votraint, Tippindo will remain as it stands. Bakrie will hold Anderson's shares in Votraint until the $8 million is paid and Tippindo's debts will not be affected. Also Votraint must be debt free."
Graham: "Yes, that's right. I have not set it out correctly. Everything is to go into Votraint. I will speak to Bakrie and clarify it."
135 Mr Graham's contribution to this last conversation might indicate that this confusion about nominee companies was accidental. However, as will be seen, in later correspondence early in December he repeated this proposed structure. Further, it would appear that this confusion may well have been deliberately caused by him. In dealing with Mr Graham's bad faith (to which I will come in more detail later) the primary judge said this (J[228]):
Fourthly, there was also evidence that Graham was prepared to deal in bad faith with the applicants. In his fax to Bakrie of 2 December 1993, he stated:
Although my letter to Dew specifically states that the new Nominee company will own 50% of PT Tipperary Indonesia [Tippindo], I suspect that Warren expects that the Nominee company will own 50% of Tippindo plus 50% of the Tipperary Group of cattleStations [sic].
136 In any event, in the conversation concerning the 12 November correspondence Mr Graham agreed, or did not cavil with the propositions, in relation to the share arrangement, that everything was to go into Votraint, that the 40% issue was in or from Votraint, that the 40% share scrip would be held by Mr Bakrie on deposit until the $8m (and not the indebtedness of Tippindo or Tovehead to BBD) was paid and that Votraint was to be debt free. The discussion was in terms of "Anderson" receiving the shares; but this can be set against the background of the Macquarie deed referring to "Anderson or as Anderson may direct" and of the conversation a few days earlier in November between the same men in which it was clear that Owston was to take the shares of the nominee company ([111] and [123] above).
137 Later in November, Mr Greiner sent a new draft of the intended arrangements to Mr Dew. Mr Dew could perhaps have been forgiven at this time for expecting that this document would have within it at least a reworked version of clause 4 of the Macquarie documentation (see para [111] above) redrafted in the light of the conversations of November, shorn of the confusion raised by Mr Graham in his letter of 12 November 1993 and apparently satisfactorily dealt with in conversation with him. He might also have expected something to do with the Sanctuary land, although the conversations with Greiner of the kind referred to in para [115] above may have dampened such expectations.
138 On 24 November Mr Dew spoke to Mr Greiner after receiving the new draft deed which did not contain the equivalent of clause 4 in the Macquarie deed. (Nor did it contain anything to do with the Sanctuary land.) The conversation was as follows:
Dew: "There is no provision like the old clause 4 regarding the arrangement for Anderson to get his 40%."
Greiner: "You should speak to Graham. He is getting a separate deed done in Jakarta regarding this."
139 We now meet the next instance of Mr Graham's conduct designed to prevent documentation of the parties' apparent consensus. It is plain that Mr Graham had told Mr Greiner that the provision dealing with the shareholding arrangement (clause 4 in the Macquarie deed) was now to be placed as a separate deed being drafted in Jakarta. At no stage did this occur and at no stage was it intended to occur. Mr Graham, as shall be seen below, not only told Mr Greiner this, but also Mr Dew. It was false. The primary judge found these statements to be deliberate lies by Mr Graham (J[229]). There is no suggestion anywhere in the evidence or the findings that this, or this kind of conduct, was done with the knowledge or authority of Mr Bakrie. Indeed, the primary judge approached the matter on the basis that it was without instructions (J[45]).
140 On 30 November 1993, notwithstanding their poisonous relationship, Mr Anderson had a meeting with Mr Graham at the Regent Hotel in Sydney. The conversation was deposed to by Mr Anderson in the following terms:
WA "Will the nominee company have any debt when I get my shares?"
CG "I don't think so, but I will check with Jakarta."
WA "You had better. The nominee company must be debt free. Also Charlie, the Sanctuary must continue as it is and have security of tenure in accordance with the original agreement."
CG "That is right, I will also confirm this with Nalin."
WA "Coconut Farm is not included in this deal. I have promised it to Kevin Langham as a bonus for his hard work on the Sanctuary since 1989."
141 Thus, once again there appears little doubt between the parties about the elements of the arrangement, when they speak.
142 Meanwhile, Mr Graham pressed his personal views on Mr Bakrie and Mr Rathod that the proposed share arrangement was unwise. In a facsimile to them of 2 December 1993 he said:
Dear Ichal
I have drafted a form of the private agreement between you and Warren which can only be concluded at some time after the settlement of the Bakrie/BNYA deal.
Before sending you the document itself, I must make very clear the danger to you entering into this agreement.
If you feel obligated to honour a promise by making the gift of shares to Warren then the only safe way to do this would be have the agreement drawn up properly in Australia, to formally disclose the contents to Owston and to the Beneficiaries and to seek Court Approval.
Kind Regards
Charles
143 The facsimile contained a document entitled "Share Allocation Agreement" drafted by Mr Graham in Sydney. The terms of that agreement, which was to be between Mr Bakrie and Mr Anderson personally, were as follows:
This Agreement dated of 1994 is between Aburizal Bakrie (ARB) and Warren Perry Anderson (WPA).
WHEREAS
The Bakrie Group has entered into and has completed a transaction with Owston Nominees No2 Pty., Ltd Receiver Appointed (Owston) and BNY Australia Limited (BNYA) known as the Bakrie/BNYA transaction, whereby the Bakrie Group has purchased the whole of Owston's interests in the Tipperary Group of Station Properties in the Northern Territory of Australia and all the shares held by Owston in P.T. Tipperary Indonesia (PTT) a company incorporated in Indonesia whose address is Level Four, Setia Budi Atrium, Jin H.R. Rasuna Said, Jakarta, Indonesia.
NOW THIS AGREEMENT WITNESSES
Clause 1.
ARB hereby agrees with WPA that upon full and final settlement of the Bakrie/BNYA transaction a Nominee company will be formed by ARB which will hold fifty percent (50%) of the shareholding in PTT. The Nominee company on formation will be free of debt.
Clause 2.
ARB agrees with WPA that upon the formation of the Nominee company that he will procure that the Nominee company issues to WPA fourty point eight one five (40.815) percent of the issued share capital (the Anderson shares).
Clause 3.
In consideration of the agreement by ARB mentioned in Clause 2., WPA agrees with ARB that:
(i) WPA will deposit the share certificates in respect to the Anderson shares with ARB until all debts owing to PTT and Tovehead Pty. Ltd., (a company incorporated in Australia) are fully satisfied.
(ii) WPA will irrevocably direct the Nominee company to pay to ARB any and all dividends payable until the issue price of A$8 million together with interest at the then applying Indonesian deposit rate and until all debts by PTT and Tovehead as mentioned in this Clause 1 (i) are satisfied.
(iii) WPA will receive similar considerations as other shareholders in business operations of the Nominee company.
(iv) WPA agrees that prior to this agreement having any effect that all obligations WPA or Owston may have with Kevin Langham and any other employee(s) in companies or operations associated with the Bakrie/BNYA transaction have been fully satisfied. Any stamp duty or charges of any nature arising from the satisfaction of these obligations are to thaccount [sic] of WPA.
144 As can be seen from its terms, this draft agreement once again possibly only gave Mr Anderson a 20% economic interest in the feedlot by the newly formed nominee company which was to own 50% of Tippindo. It is not clear from the document how that 40.815% interest in the nominee would link up with ownership of Tipperary. Also, the deposit of the shares with Bakrie and the direction of dividends to him was once again until all debts owed by Tippindo and Tovehead to BBD were repaid. But the nominee company was to be debt free on formation and the shares were to be issued immediately upon settlement with BNY. Also, once again, the Indonesian deposit rate is used.
145 The primary judge found that this draft was faxed by Mr Graham to Mr Dew (J[197]). This may not be accurate as the next communication in writing from Mr Graham to Mr Dew appears to be Mr Graham's letter of 3 December.
146 By about 3 December Mr Dew also seems to have received another draft deed from Mr Greiner, which had no equivalent to clause 4 of the Macquarie deed. Mr Dew spoke to Mr Greiner again about this, who told him that Mr Graham was handling this with Jakarta and to speak to him.
147 Mr Dew then spoke to Graham and had the following conversation:
Dew: "I have received a draft deed from Blakes but it does not include the old clause 4 provision for Anderson to get his 40%. Greiner tells me you are getting a separate deed done in Jakarta regarding this aspect. Is this the case?"
Graham: "We prefer not to include the arrangements regarding Warren's right to take up 40% in the overall deed and would like to have a separate agreement regarding that."
Dew: "Why do you want to proceed in this way."
Graham: "We think that as it is really an agreement between Mr Bakrie and Mr Anderson we would prefer that it be drawn up in Jakarta."
Dew: "The arrangements should be the same as set out in the previous agreements and Nalin's memo to Warren. The details as set out in your fax of 12 November do not agree with those earlier arrangements."
Graham: "I will send you a fax on it today."
148 Thereafter, Mr Graham sent a letter by facsimile to Mr Dew dated 3 December 1993. This letter was largely a recapitulation of the letter of 12 November 1993 (see [131] above) with the same confusion (deliberate or accidental) of the nominee companies. It was in the following form:
This is to confirm our telephone conversation of this morning.
I have been able to get hold of Aburizal Bakrie and have obtained from him the arrangements he wished to have on settlement with BNYA and Owston on payment by Bakrie to Owston of A$20 million. The following is subject to the satisfaction of the Bakrie Group to the final arrangements with BNYA.
That Owston will transfer to Votraint 788 Pty.. Ltd.. (a company wholly owned by P. T. Bakrie Investindo) all the shares of Moonhill Pty. Ltd., and further that any debt owned by Moonhill to Owston is released; the property known as Coconut Farm; Owston's half share in the Tipperary Group of Stations property and all the shares owned by Owston in P.T.Tipperary Indonesia.
Aburizal Bakrie is fully aware of the promise made to Warren that Bakrie will allocate to Warren 40% of shares in a Bakrie nominated company which in turn will own 50% of P.T.Tippindo Indonesia. However such shares will be held as collateral to Bank Bumi Daya until the debt is fully paid. This promise will be given effect at the conclusion of the above transfer.
The above is my understanding of my telephone conversation with Aburizal Bakrie. I am faxing a copy of this letter to him to ensure that my understanding of our conversation is correct. Further you will understand that this letter has no legal effect until we have received legal advice and the Deed between Owston and related parties with Bakrie has been concluded.
149 Mr Dew sent this letter on to Mr Anderson under cover of a handwritten note which read as follows:
Dear Warren
Here is Charles fax re the 20%. I need to go back to him with a note to clarify that the debts are not included and that the share allocation is to be paid for out of dividends. Can you confirm how you see the deal working.
Regards
Arthur
150 Mr Anderson then spoke to Mr Dew and said:
"The nominee company that is to hold my 20% of Tipperary and the feed lot is to be debt free and the $8 million I have to pay Aburizal Bakrie for my equity is to come out of dividends."
151 It would appear from this that Mr Anderson was not reading the letter as restricting his 20% economic interest to the feedlot.
152 After Mr Dew received this facsimile from Mr Graham (and either before or after he spoke to Mr Anderson about it) he had the following conversation with Mr Graham about the first letter of 3 December which reflected that he had (again) picked up the confusion about the nominee companies:
Dew: "The provisions of your letter of 3 December, regarding the 40% do not agree with the earlier arrangements. We need to get the agreement so we can make sure that it is correct."
Graham: "I understand that agreement is being drafted in Jakarta and will be sent down as soon as possible."
Dew: "Can you confirm that Aburizal agrees that Warren is to repay him for the purchase of the shares out of the earnings of the nominee company. Also it is essential that the nominee company will be free of debt other than its share of the debt of PT Tipperary Indonesia."
Graham: "As far as I know this is OK but I will check and let you know."
Dew: "Can you send me a fax on it."
Graham: "Yes."
153 Thereafter, a second letter of 3 December was sent by Mr Graham to Mr Dew. This second letter of 3 December was in the following terms:
This is to confirm my letter of the 12th November and our telephone conversation of today.
It is my understanding that the proposed arrangement between Aburizal and Warren will be similar to the terms contained in my advice of the 12th. Further that the payment of shares to be allocated will be paid for out of earnings of the Nominee company to be formed.
It is further to my understanding the nominee company will itself be free of debt on the formation but that the nominee company will share the debt of P.T.Tipperary Indonesia only.
154 This letter was sent by Mr Dew to Mr Anderson. Mr Dew recalls speaking to Mr Anderson about it as follows:
Dew: "You need to clarify the situation with Bakrie. I suggest you chase up the separate deed from him as I don't think it matters if it's a separate deed."
Anderson: "I will talk to Ichal.".
155 A number of matters should be noted at this point. First, it appears that it was recognised by 3 December (and probably before that) that the shares to be issued would cost $8m. Secondly, Mr Anderson believed that the structure of the proposal was that he would get a 20% economic interest in Tipperary and in the feedlot (through a 40% interest in a company owning 50% of a company which, effectively, owned each). Thirdly, Mr Anderson required that the nominee company be debt free, and Mr Graham had understood this and said that he thought it to be so. Fourthly, Mr Anderson believed the $8m which he (or a nominee of him) had to pay for the shares would be lent by, and be repayable to, Mr Bakrie. Fifthly, Mr Anderson required, Mr Dew understood and Mr Graham and Mr Bakrie appeared to agree, that repayment of that $8m was to come out of dividends, and only out of dividends. Sixthly, it appeared understood (at least between Mr Graham, Mr Dew and Mr Anderson) that the BBD debt was not included, the erstwhile expressed requirement for the dividends on the shares to be paid to Bakrie until all BBD was repaid, evident in the first letter of 3 December, (as it had been evident in the first letter of 12 November) had, once again, been withdrawn in conversation and by the last paragraph of the second letter of 3 December. Seventhly, notwithstanding the above, a literal interpretation of the first of the letters of 12 November and 3 December could support the conclusion that Mr Anderson was only in fact getting a 20% interest in the feedlot (through a 40% interest in the nominee company to be formed which would own 50% of Tippindo which owned the feedlot), the half interest in Tipperary being transferred to Votraint which could be seen to be quite separate from the nominee company in which Mr Anderson would be issued 40% of the capital. If this were so (and leaving aside the Sanctuary arrangement) there had been a major structural change from the Macquarie deal and a major structural change from the Rathod note (in which Owston was to have a 40.815% interest in a nominee company which had 49% of Tippindo which in turn was to directly and indirectly own 100% of Tipperary and 100% of the feedlot). However, in the light of the clearest of conversations between Mr Dew and Mr Anderson and Mr Dew and Mr Graham about the errors in the letter of 12 November, any proposition that there was such a change is in the teeth of that evidence. Further, as was noted above, the confusion was probably planted deliberately in bad faith by Mr Graham (J[228] and J[230]). Eighthly, as has already been noted, the phrase in the last sentence of the second letter of 3 December "the nominee company will share the debt of PT Tipperary Indonesia only" was explained by Mr Graham in his evidence as not a legal liability, but referable to a "moral" or accounting sense, as the holding company. This is reflected in his Honour's findings (J[200]).
156 In November and early December Mr Dew spoke to Mr Graham several times, requesting a draft agreement regarding the Sanctuary. These conversations were to the following effect:
Dew: "If we cannot get a formal agreement, can we get a heads of agreement letter or letter of agreement. Something simple in letter form would suffice."
Graham: "Bakrie has said it's OK but I will have to speak to Greiner and get something done."
157 This conversation reflects a clear desire or recognition of the parties to have a document at the coming settlement. The appellants say that what was intended at all times was a comprehensive formal document. They put that to the primary judge. What is clear is that the parties did, when it was seen as possible, discuss documentation in a way consistent with it being full and complete. However, when it became apparent that time and circumstances would not permit that (for reasons known only to Mr Graham) they discussed getting some documentation. It is clear that this change exhibited a desire to have a document or some documents at the settlement to work out or manifest the coming into existence of legal relations. The narrative as it develops reveals this.
158 After 3 December Dew says he had several conversations with Mr Graham, Mr Greiner and Mr Richmond to the following effect:
Dew: "Where is the draft agreement regarding Anderson's shares in the nominee company?"
Graham/Greiner/Richmond
"We have not received a copy from Jakarta.".
159 This inability to extract a document about the Share arrangement and about the Sanctuary appears to be what prompts Mr Anderson to go to Jakarta between 12 and 14 December. Just before Mr Anderson goes to Jakarta between 12 and 14 December, Mr Dew has a conversation with him as follows:
Dew: "Can you get Nalin to sign something on the sanctuary while you are there? I can't get Graham to give me anything."
Anderson:"Can you talk to Gianotti and see if he can help get something prepared."
160 Mr Anderson went to Jakarta and saw Mr Bakrie and Mr Rathod between 12 and 14 December. Mr Anderson's evidence about the meetings is important. The context of his going appears to be plain: While there was apparent consensus in discussion on all important commercial integers in a way satisfactory to Mr Anderson and Mr Dew, from time to time documents such as the letters of 12 November and 3 December emanated from the other side which were wrong. Further, there were no draft deeds yet available for consideration. There had been previously a satisfactory draft provision (clause 4 in the Macquarie deed) concerning the shareholding, but it had been removed on the expressed pretext of a separate document (said variously to be a deed and an agreement) to be drawn in Jakarta. There had, as yet, been no satisfactory deed or document presented regarding the Sanctuary land, to re-embody or reflect the consensus hitherto discussed and previously reflected in the JSU. Mr Anderson went to Jakarta to sort these things out, once and for all.
161 The first meeting which he had was with Mr Rathod. Mr Anderson said that at this meeting they discussed a draft document being a draft deed which he took with him and which had been drafted by his solicitor in Perth, Mr Gianotti. This draft deed dealt with the subject matter of the Sanctuary. The draft was set out as being between Mr Anderson, Mr Bakrie, Owston, Tovehead and Votraint. The draft contained the following in typescript:
WHEREAS:
A. By Statement of Understanding dated 31 January 1990 Tovehead and Owston covenanted that each of Tovehead and Owston shall select any parts of "Tipperary Station" situate in the Northern Territory and described as all that land comprised in Volumes 201 Folios 43, 44, 45, 47 and Volume 198 folio 32 ("Tipperary") for its own exclusive use as a private zoo including a private residence and recreation but excluding any other commercial use.
NOW THIS DEED WITNESSES THAT: