ANALYSIS
18 The first question is whether there was an agreement reached on 13 August 2013.
19 There are a number of matters to notice about the 13 August letter. First, as the opening paragraph of the letter makes clear, the Liquidators are responding to the EOI lodged by Ms Chan and "emails from Corrs Chambers Westgarth dated 9 August 2013": see paragraph 1 at [15] above. I find that the emails referred to in paragraph 1 of the 13 August letter are the Corrs' emails at [13] and [14] above.
20 Second, the Liquidators confirm that those documents (Ms Chan's EOI and the Corrs' emails) "constitute an offer to purchase [Four C Realty's] business assets". In other words, the matters addressed in those letters constitute an offer capable, or at least at that time treated by the Liquidators, as capable of acceptance. Indeed, the Liquidators stated that acceptance of the offer constituted a "binding and enforceable agreement" but that the terms would be "more fully engrossed in a formal sale agreement". What then were the terms?
21 Third, the Liquidators confirmed they accepted the price offered of $510,000 on certain terms and conditions. Those terms and conditions included:
1. The payment terms including identifying the account name and number into which the immediate payment of $300,000 was to be paid;
2. A list of the assets to be acquired;
3. A list of the liabilities to be assumed and paid;
4. To provide security over an identified property "in respect of [the] payment obligations"; and
5. To indemnify Four C Realty "in respect of any commission which [Four C Realty] is required to refund in respect of development contracts that are yet to settle."
The lack of an essential term will see an agreement fail for a lack of completeness: see Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) Aust Contract Reports 90-059 at 90,328. There is no lack of any essential term in this case.
22 Is there a concluded agreement? The seminal authority is Masters v Cameron (1954) 91 CLR 353. There, the High Court stated (at 360):
Where 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, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common.
23 A determination as to which of the three classes a particular agreement will fall into "depends upon the intention disclosed by the language the parties have employed": Masters v Cameron at 362. That intention must be objectively ascertained from the terms of the relevant document or documents when read in light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638-639. As the High Court stated in Ermogenous v Greek Orthodox Community (2002) 209 CLR 95 at 105-106:
Because the search for the "intention to create contractual relations" requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention"' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.
(Citations omitted.)
24 As the factual and legal analysis makes plain, viewed objectively, the circumstances of this case fall squarely within the first class identified in Masters v Cameron. The parties intended to be immediately bound to the performance of the terms of their bargain but, at the same time, proposed to have the terms restated in a form which would be fuller or more precise but not different in effect. The express terms of the 13 August letter permit of no other conclusion.
25 The Liquidators relied upon two principal matters in contending that there was no binding contract on 13 August 2013. First, Counsel for the Liquidators submitted that the two paragraphs of the 13 August letter set out at [27] below were, in substance, a counter-offer and therefore no binding agreement was reached at all and, in particular, in relation to those two terms. The existence, timing and content of the Corrs' emails and the Liquidators' response (see [12]-[15] above) demonstrate that that submission fails on the facts. The 13 August letter referred to the Corrs' emails and described those documents and the EOI as the "offer", the "offer" which the Liquidators accepted.
26 The second matter relied upon by the Liquidators in contending that there was no binding contract on 13 August 2013 was that correspondence between the parties after 13 August 2013 demonstrated that the parties "continued to explore the breadth of the offer". Contrary to the Liquidators' submissions, there was no subsequent exploration of the offer, or its breadth. That exploration had occurred before 13 August 2013: see [12]-[14] above. The letter of 15 August 2013 does not support the Liquidators' submission. Viewed objectively, Ms Chan's letter of 15 August 2013 did no more than indicate that she remained ready, willing and able to comply with the terms of the "Contract". For the reasons stated above, a binding agreement was reached between Ms Chan and Four C Realty on 13 August 2013.
27 The next question - concerning the precise terms of that agreement - is directed at the following two paragraphs of the 13 August letter:
You have agreed to provide security over your property at 477 Waverley Road, Malvern East in respect of your payment obligations.
Further, you have agreed to indemnify [Four C Realty] in respect of any commission which [Four C Realty] is required to refund in respect of development contracts that are yet to settle.
There is no dispute between the parties that Ms Chan agreed to provide security over the identified property "in respect of [her] payment obligations". The Liquidators submitted that term of the contract also extended to Ms Chan being required to provide security for the indemnity referred to in the second paragraph.
28 I reject the Liquidators' submissions. It is contrary to the express words of the 13 August letter which was the acceptance of the earlier offer recorded in the EOI and the Corrs' emails. The documents must be read together. Viewed objectively, the structure and content of Corrs' emails and the 13 August letter does not connect the two issues in the manner contended for by the Liquidators. Put another way, viewed objectively, the term of the contract by which Ms Chan agreed to provide security was separate, and independent, of the term of the contract by which Ms Chan agreed to provide the indemnity. Standing back, the correspondence records a meeting of the minds. The parties knew what was being offered and what was accepted. There was no misunderstanding.
29 The Liquidators, through Mr Schwarz, filed an affidavit at the hearing which was tendered. That affidavit recorded that the Liquidators ascertained that Four C Realty has received commission payments of approximately $688,303.00 for contracts of sale which have been executed but which are yet to settle with the following commission payments due in respect of those contracts:
1. For contracts due to settle in 2013 - $563,063.00;
2. For contracts due to settle in 2014 - $87,865.00;
3. For contract due to settle in 2015 - $23,125.00; and
4. For contracts due to settle in 2016 - $14,250.00.
A schedule of the identified commission payments due in respect of contracts yet to settle was annexed to Mr Schwarz's affidavit.
30 If any contract fails to settle, the corresponding commission payment received by Four C Realty for that contract will become refundable to the developer. Four C Realty therefore has a contingent liability of $688,303.00. The Liquidators do not know how much of that liability will be realised until the final contract of sale is completed. Accordingly, Ms Chan's obligation to indemnify Four C Realty will continue until the last contract of sale has settled.
31 Mr Schwarz's affidavit also stated, in part:
For the reasons set out later in this affidavit, it was in the best interests of [Four C Realty] that a sale agreement contain terms to the effect that the purchaser would:
(a) pay commissions payable by [Four C Realty] to introducing sales agents or any referral fees following the settlement of development contracts;
(b) indemnify [Four C Realty] is [sic] respect of any commission which [Four C Realty] is required to refund in respect of development contracts that are yet to settle; and
(c) security for the contingent liabilities above.
Evidence of that candour is to be encouraged. The difficulty is that the 13 August 2013 agreement did not expressly, or impliedly, extend the provision of security to the indemnity: see [28] above.
32 For the sake of completeness, it should also be noted that whether the provision of the security by Ms Chan extended to the obligation to be responsible for payment of commissions payable by Four C Realty to introducing sales agents or any referral fees following the settlement of development contracts (the amount referred to in paragraph (a) at [31] above) was not the subject of submissions and is not addressed in these reasons for decision.