GARDENISLE PTY LTD -v- JOHNSON [2019] WASC 271 (6 August 2019)

1. Mr Johnson and Mr Few were long term employees of Turfmaster.
2. In 2010, Mr Johnson and Mr Few had discussions with Mr Evans about purchasing the Turfmaster business. The negotiations led them to conclude a unit sale agreement on 1 July 2010 (2010 Agreement) for the sale by Gardenisle of all of the units in the Turfmaster Unit Trust for $10 million. The purchasers in the 2010 Agreement were the first, second and third defendants.
3. The purchasers were unable to get the necessary finance to complete the deal, and it fell through.

1. In April 2011,[2] Mr Evans, Mr Johnson and Mr Few again discussed the purchase of the business. The negotiations led them to conclude the Sale Agreement on 16 May 2011 for the purchase of all of the units in the Turfmaster Unit Trust. The purchasers in the Sale Agreement were again the first, second and third defendants.
2. The consideration for the Sale Agreement was an amount of $8 million.[3]
3. The purchasers agreed to obtain a loan of $4 million from the Australian and New Zealand Banking Group (ANZ) which would be used to pay out Gardenisle's loan account in the balance sheet of the Turfmaster Unit Trust. The purchasers agreed that the ANZ loan would be repaid to the ANZ within a period of no more than six years (Schedule 3, Special Condition 10). This period was defined as the 'ANZ Loan Repayment Period'. I will refer to the last date by which the ANZ loan had to be repaid as the 'ANZ Deadline'.
4. Gardenisle agreed to provide the purchasers with an interest free vendor finance loan (vendor loan) in the sum of $4 million (Schedule 3, Special Condition 9). Special Condition 11 of Schedule 3 provided that the purchasers would commence repaying the vendor loan immediately upon repayment of the ANZ loan, and that it was to be repaid fully within a period of six years from the ANZ Deadline.
5. The Sale Agreement contained a term (cl 11.1) to the effect that it could only be amended or supplemented in writing, signed by the parties.
6. The ANZ loan was obtained on or about 27 June 2011. It was common ground that the six year ANZ Loan Repayment Period began on that date.[4] The ANZ Deadline was therefore 27 June 2017.
7. The Sale Agreement did not specify the manner in which the vendor loan would be repaid, beyond stipulating that the purchasers would commence repaying the vendor loan immediately upon repayment of the ANZ loan (a date that could be no later than the ANZ Deadline), and that it was to be repaid fully within a period of six years.
8. Mr Evans gave evidence that, when the Sale Agreement was entered into, the parties intended to discuss how the vendor loan would be repaid closer to the time at which the ANZ loan would be paid off, at which point the obligation to commence repayments of the vendor loan would be triggered. Mr Johnson agreed that was the intention of the parties.[5] I accept this evidence.[6]

1. In 2014, Mr Evans began proposing various ways in which the vendor loan could be repaid. On 3 July 2014, Mr Evans wrote in an email to Mr Few and Mr Johnson:[7]

From discussions I have had with JASON WOLFE it appears that ANZ are unlikely to lend you the 2.5 million which would have extinguished the entire 4 million owing.

The figure of 1 million has been suggested by Jason Wolfe as doable subject to approval etc.

In return for advancing me $1 million, I would take 1.25 million off the 4 million owing and

1. MY REPAYMENTS CAN BE STRETCHED OUT TO COMMENCE 24 months later, ie July 2019 not July 2017 as is currently planned.

2. notwithstanding that BRETT [Johnson] is away I would appreciate your interest in this ASAP.

1. Mr Evans said that he made this proposal simply as a commercial offer to get a lesser amount earlier.[8] It will be recalled that the vendor loan was interest free.

2014 exchanges - the defendants want to change to Westpac

1. Around this time,[9] Mr Evans was asked to attend a meeting with Mr Few, Mr Johnson and Mr Flavel (Turfmaster's accountant). Mr Few and Mr Johnson explained that they were having some cash flow issues.
2. Mr Evans gave evidence that Mr Flavel told him that they were thinking of changing banks (to Westpac), and needed Mr Evans' permission to do this.[10]
3. In his evidence, Mr Few denied that they had approached Mr Evans to get his consent for that transfer. He was asked then, if that was so, what was the point of telling Mr Evans about it. He answered:[11]

The point of telling him was a result of David Gruen's comment, David being from the - from Westpac, that once David had read the unit sale agreement, that it was David's consideration that we should advise Mr Evans that we were seeking to change banks.

1. Mr Johnson gave evidence that they did not feel they needed Mr Evans' permission to change banks. He said that the person at Westpac had not told them that, and had merely said 'it would probably be best to run the change of banks over with [Mr Evans] because the ANZ was listed in the unit sale agreement as the financier, I suppose, of the four million and we were actually changing that'. Mr Johnson admitted, however, that changing banks would have had the effect of changing the terms of the vendor loan repayment under the Sale Agreement.[12]
2. As I will later explain, I prefer Mr Evans' evidence to the evidence of Mr Few and Mr Johnson.[13] Further, as will be seen, his evidence on this point is supported by the subsequent correspondence between the parties.
3. Later in the year, Mr Evans sent two emails and instructed his solicitor to write a letter, making clear his position as to the proposed change to Westpac.[14] In those documents, Mr Evans (and his solicitor) indicated that he would only agree to the change on conditions relating to the manner in which the vendor loan would be discharged.
4. The first email was sent to Mr Few and Mr Johnson on 1 October 2014:[15]

Should we all agree as to the terms moving forward with WESTPAC, it is most important that the insurance policies covering my vendor loan are maintained, please confirm your understanding of this. My agreeance to your requests and WESTPAC demands are conditional upon the following. I am willing to negotiate my 4 m as follows.

Pay me 1 m upon transferring to WESTPAC, before 31 October 2014

Pay me 2 m on or before [December] 31, 2019

If both payments are met on time, I will forfeit the remaining 1 m

1. Two days later, Mr Evans sent the second email, again to Mr Few and Mr Johnson:[16]

Guys ,,,, all the talk about my 4 m being addressed by WESTPAC etc, is worthless at this stage. You want my permission to change the agreement, and you need this so I want this WESTPAC deal to be an instant winner for all of us,

You say they can't do 1 m now for me (ANZ SAID THEY COULD!), so I will take $500 k now, and give you an extra 12 months before my remaining balance needs to be commenced (AUGUST 2018).

This represents an act of good faith by all concerned.

If this is too hard for WESTPAC, then they are not assisting your predicament.

1. On 17 October 2014, Mr Duncan (a solicitor acting for Gardenisle) wrote to Mr Johnson and Mr Few (underlining added):[17]

1. Background - ANZ Loan repayments

I have been instructed to act for Gardenisle in its capacity as Vendor under the Agreement.

I am instructed that the Purchasers have been experiencing financial difficulty in meeting their commitments to the ANZ Bank and have apparently been in discussions with third parties to pay out the ANZ Loan. Also, Evans has made some offers to the Turf Master directors to enter into commercial arrangements to improve their financial position (and thereby assist them with their ability to repay the ANZ Loan), but to date those offers have not been accepted.

If the Purchasers intend to pay out the ANZ Loan (whether by refinance through ANZ or another party), then the repayment requirements outlined in this letter will apply.

In these circumstances, I am instructed to write to you regarding Gardenisle's position under the Agreement, so that we can discuss the options available to the Vendor and the Purchasers for repayment of the Vendor Finance, or modification of the terms of the Agreement. In the last part of this letter I outline the conditions under which Gardenisle is prepared to allow the Purchasers to maintain the present timing for repayment of the Vendor Loan despite any modified arrangements the Purchaser may make with the ANZ Bank or other financiers.

2. Repayment of the Vendor Finance by the Purchasers

[The letter discussed the terms of the Sale Agreement, including the requirement that the ANZ loan be repaid within 6 years.]

Gardenisle's view is that the parties reasonably intended that the Vendor Finance repayments should be regular and determined by the period over which the loan is to be repaid. These repayments are an alternative to the entire sum being due and payable immediately.

The 6-year period in Special Condition 11 is only a maximum period and other shorter periods can be agreed. If the Purchasers wish to take advantage of the full 6‑year term provided under the Agreement for the payment of the Vendor Finance, then the minimum amounts required by the Agreement would be monthly instalments of $55,555.56 per month, equal to one‑sixth of $4 million per annum ($666,666.67). If the Purchasers wish to pay off the Vendor Finance loan in a shorter period, or at longer intervals, then higher regular payments may be acceptable, with Gardenisle's prior agreement.

3. Your discussions with the ANZ Bank and other parties

Gardenisle refers to clause 11.10 of the Agreement, which requires that the parties keep the existence and terms of the Agreement confidential.

Please let me know if the existence or terms of the Agreement (inclusive of the Vendor Finance) has been notified to the ANZ Bank or to any other third parties and if it has, what has been disclosed and for what purpose.

If you are in discussions with banks or financiers and wish to take into account the Agreement and its terms, please provide details of those discussions so that written consent can be considered by Gardenisle and Evans.

4. Variation of the Agreement

Although it is under no obligation to do so, Gardenisle has also instructed me to write to you offering to consent to either:

(a) the Purchaser extending the ANZ Loan repayment period beyond the 6 year maximum; or

(b) the Purchaser agreeing to payout of the ANZ Loan in the near future by another financier

on the following conditions:

1. Annual repayments of the Vendor Finance of at least $666,666.67 are to be made, over no more than 6 years, with the first to be made on 1 August 2017.

...

Any legal variation of the Agreement would need to be effected by a written variation to the Agreement, signed by all parties.

1. Not long afterwards, Mr Evans had what he described as 'a very honest and frank discussion' with Mr Johnson. Mr Evans said that Mr Johnson 'was pleading his position, which was a - was a diabolical position. He was in all sorts of trouble'. Mr Evans said Mr Johnson was under significant financial pressure.[18]
2. Mr Evans said he did not want Mr Johnson 'to endure an impasse. I mean, they - they were friends of mine. I - I wanted it to be an amicable situation, one with a - -'. (He was then interrupted by counsel for the defendants.)[19]
3. Mr Evans said he spoke to a 'Brent' at Kennedy Needham, who he had done business with in the past. Brent was interested in purchasing the Turfmaster business. Mr Evans said that he and Mr Johnson had numerous discussions about that on the phone and had looked at the figures.[20]
4. Following on from this, on 29 October 2014, Mr Evans sent an email to Mr Johnson:[21]

Please ring this guy (BRENT) first thing in the morning,,,,you and I today had the most realistic discussion,,,I want you both out of this, free of stress and debt,,,hopefully with 250 k plus each and me with 75%. Whilst you both have control of the business,,if the bank gets control they will only want their 4 m back, and then a massive problem would exist with the 3 of us,,,and I don't want this to eventuate,,,,call me once you have spoken to BRENT please!!!

Thanks,,,timing is critical.

1. It appears nothing came of this.
2. Mr Evans and Mr Johnson continued to have discussions about the proposed change to Westpac. Mr Johnson told Mr Evans that ANZ had appointed McGrath Nicholl to review the Turfmaster business and that ANZ was 'comfortable' with the report.
3. On 26 November 2014, Mr Evans sent an email to Mr Johnson and Mr Flavel, referring to that conversation. He wrote (underlining added):[22]

BRETT,,, further to our phone chat yesterday I am pleased that ANZ are comfortable with the recent findings in the MCGRATH NICHOLL report, and that they (ANZ) are now prepared to discuss some refinancing options for your business.

As pointed out in previous correspondence prepared by CRAIG DUNCAN, any shift in the current repayment strategy with ANZ, and or my vendor loan would constitute a breach in our agreement.

The contents of CRAIGS letter to you needs to be fully ADDRESSED by all parties (ANZ, KE, BJ, SF) prior to any deviation being undertaken from our current agreement.

1. Mr Johnson responded the same day (underlining added):[23]

As we are all aware, the August 2017 date is the trigger for the Unit Sale Agreement in relation to your second $4 million repayment

Until that time, we are not in breach of anything.

Leading up to that time, we will discuss with you where we are at in relation to the Unit Sale Agreement and the plan going forward.

That plan can include a number of scenarios as follows;

1. Going interest only on the outstanding debt and commencing your repayments
2. Selling the business and paying you out completely
3. Acting on preliminary talks with my brother to buy a share of the business to pay down debt
4. Putting in more cash ourselves
5. Winning Lotto

This is a very interesting time for the business. There is a lot of work we are currently tendering on which may well change dramatically in the near future. If we are successful in winning some of this work, whilst reducing our HP payments quite significantly from now to August 2017 when the initial $4M has to have been repaid,

we may well be in a position to increase repayments and therefore not be in breach at all.

As discussed previously, we will remain focussed on paying down debt as soon as possible with your $4M repayment firmly in our minds when it becomes due.

1. Mr Johnson admitted that he wrote this intending to assure Mr Evans that, consistently with what they had agreed when they 'were all friends in 2011', satisfactory arrangements would be put in place closer to the ANZ Deadline.[24]
2. Having received that email, Mr Evans instructed his solicitor, Mr Duncan, to respond.[25] On 27 November 2014, Mr Duncan wrote to Mr Johnson:[26]

... In summary, it is Gardenisle and Kim's view that any agreement involving you to vary the terms with the ANZ Bank in your favour will be a breach of SC10 [Special Condition 10]. There is still the possibility that this could be avoided by prior action to obtain the agreement of all parties to vary SC10.

...

2. New arrangements with ANZ Bank may be [sic] involve a breach of Condition 10

Whilst the Unit Sale Agreement remains operative and you have not repaid the ANZ Bank, you cannot enter into [a] new financing arrangement with ANZ Bank to substitute a different loan, or to extend the 6‑year period. If you do, you will be in breach of SC10, or the more general terms of the Unit Sale Agreement, even before any repayment to Kim is required by the terms of SC11. In that event, Gardenisle and Kim would not need to wait until August 2017 for you to fail to make a repayment to be in breach of SC11 as well. SC10 is a separate independent obligation that has arisen.

SC10 is a fundamental condition of the Unit Sale Agreement, on which SC11 depends. A breach of such a term also gives the party or parties not in breach the right to elect to terminate the agreement and to seek a remedy for loss of bargain. The damages that may be claimed for loss of bargain could include the amount of the debt/s due, or such other amount as will fully compensate for the value exchanged for the loan debt at Completion.

3. What are your intentions and how should you proceed

If you wish to honour your original agreement, then you need to retain the existing agreements with ANZ Bank, or ensure that any new arrangements do not involve non-compliance with SC10. This may require you to reach a commercial resolution with Gardenisle and Kim to vary SC10 on terms acceptable to all parties as a matter of urgency.

1. In cross‑examination, Mr Few agreed that the letter made the point on Mr Evans' behalf that, if the defendants did not perform the repayment obligation to the ANZ, that would be a fundamental breach of the Sale Agreement, and that that could lead to termination of the agreement and the purchasers being sued for loss of bargain damages. Mr Few admitted that he understood that that could be a consequence if the ANZ loan was not repaid within six years. He admitted that Mr Evans' position on the ANZ loan never changed after that time.[27]
2. Mr Johnson similarly admitted that the letter made it clear that, if the defendants did not perform the repayment obligation to the ANZ, that would be a breach of the Sale Agreement, which could have serious consequences.[28] Mr Johnson also admitted that the earlier letter of 17 October 2014 put the defendants on notice, from a legal perspective, that they needed to be conscious of Mr Evans' rights under the Sale Agreement if they were going to make any changes to the financing arrangements. He admitted that he knew from that letter, and Mr Evans' email of 27 November 2014, that Mr Evans' position was he 'certainly wasn't going to be relaxed about changes to the arrangements for the repayment of the ANZ loan without making sure that his position was protected and any agreement or consents that he needed to give were obtained' by the defendants. He admitted Mr Evans never retracted that position and indeed became more insistent as time went on.[29]

2016 exchanges - monthly repayments are discussed and costed

1. In May 2016, Mr Evans met with Mr Johnson and Mr Few. Mr Evans had requested the meeting to discuss, among other things, '[t]he looming vendor loan and how [the defendants] intend to commence payments'.[30]
2. On 25 May 2016, Mr Evans sent an email to Mr Johnson and Mr Few outlining what had been discussed in that meeting (underlining added):[31]

Further to our discussion we agreed that the trigger point for payments commencing was June 28, 2017

I confirm the following offer made to you during our discussions

1. I will accept a lump sum of $3M if paid by 31 Dec 2016
2. I will accept a lump sum of $3.2M if paid between Jan 1 and JUNE 30 2017

Should you not activate either of the above I will be seeking monthly instalments of not less than $53 k commencing with an initial payment on July 1, 2017 and to be followed by 71 further identical instalments to be paid on the first day of each month.

During the meeting Brett suggested a monthly repayment plan of $40k approx, followed by a lump sum after 5 years (60 payments) of $1.6 million. I will agree to this on the basis that it is formalised and recognised as a binding agreement, in fact replacing the current agreement.

I believe the above represent attractive options which you need to consider and activate in accordance with your business plans.

1. On 9 June 2016, Mr Johnson sent an email to Mr Flavel:[32]

I think the $40K per month and then $1.6M after the fifth year may be cheaper than the proposal from Drewe.

Can you cost that scenario as well?

1. On 13 June 2016, Mr Flavel sent an email to a Rory Byrne, forwarding Mr Johnson's email of 9 June 2016:[33]

Kim Evans has offered the guys at turfmaster a few options in relation to paying him out.

We are trying to work out what is going to be the most beneficial.

Can we get some top line numbers together to see how each scenario fits together.

....

We will then run a number of scenarios in relation to the repayment of Kim which are as follows and we will incorporate the cashflow and p&l impact into the numbers above.

Scenarios

...

3. Pay Kim $40k per month for 6 years starting in June 2017. Then on the last payment (month 72) borrow $1.12m to pay the final amount to Kim.

1. Attached to these two emails was a 'Cash Forecast' document showing vendor loan repayments of $480,000 per year for five years.
2. On 11 August 2016, Mr Flavel sent an email to Mr Johnson and Mr Byrne, with a subject of 'KE Payment':[34]

Have a look at the below then we can go through the spreadsheets around expected cash flow effect of each.

It looks as though the lump sum payment of the $3m on 31 December is the most effective option.

It shows that we pay close to the $4m in total but once you take in tax effect of the interest at say 30%, the overall cost would reduce by $300k.

...

1. Pay Kim $40k per month for 6 years starting in June 2017. Then on the last payment (month 72) borrow $1.12m in ad [sic]
2. ...
3. On 4 October 2016, Mr Evans sent an email to Mr Johnson and Mr Few requesting, among other things, an update as to their intentions for the vendor loan. Mr Few responded that they were still working through the options.[35]
4. The evidence establishes that the parties had discussed various options for the repayment of the vendor loan, that the defendants were costing those options to determine which would be the most favourable, and that the defendants had indicated to Mr Evans that they were engaged in working through the options.

1. Mr Evans and Mr Johnson continued to have regular contact. It was very important to Mr Evans that the defendants were on target with the ANZ loan repayments.[36]
2. In December 2016, Mr Johnson told Mr Evans that there were 'no problems' and that they were on target to repay the ANZ loan by the ANZ Deadline.[37] Mr Johnson told Mr Evans he was making a payment at the end of December which would then leave two more quarterly payments to make (March and June) to pay off the ANZ loan, and the vendor loan repayments would then commence.[38]

1. During the first half of 2017, Mr Evans and Mr Johnson had approximately 12 telephone discussions about financing and the repayment of the vendor loan.[39]
2. In early 2017, Mr Johnson advised Mr Evans that, contrary to what he had previously told him, there were significant shortfalls in their repayments to the ANZ and the defendants were about $800,000 short of where they should be with the ANZ loan. Understandably, Mr Evans felt this was a sudden and complete 'turn around' from what Mr Johnson had told him in December 2016.[40]
3. Mr Evans, not surprisingly, was greatly concerned. He said it needed to be addressed. He pressed the defendants for a meeting. He told Mr Johnson that he wanted to meet to obtain a firm commitment from the defendants about how they would be dealing with the vendor loan repayments and the ANZ loan.[41]
4. It appears that there was a meeting to discuss the vendor loan around 16 March 2017. However, no agreement was reached at that meeting.[42]

1. Mr Johnson also told Mr Evans in early 2017 that Turfmaster was seeking to refinance the ANZ loan with the National Australia Bank (NAB). He told Mr Evans that the purpose of the refinance with the NAB was to make it easier to repay the vendor loan.[43]

1. On 20 March 2017, Mr Evans, Mr Few and Mr Johnson discussed a proposed arrangement whereby Gardenisle would be able to tender for a Brookfield contract in competition with the fourth defendant. The proposed tender would otherwise be in breach of the restraint provisions of the Sale Agreement.
2. Mr Evans summarised the outcome of those discussions in an email to Mr Johnson and Mr Few of the same date, including that the arrangement 'needs to be formalised and agreed to' by a particular date.[44]
3. Subsequently, a heads of agreement was executed. The parties were the same as the parties in these proceedings, with the addition of Mr Evans personally. Gardenisle was ultimately unsuccessful in its tender and the heads of agreement did not take effect.

1. On or around 13 June 2017, at Mr Evans' request, Mr Evans, Mr Johnson and Mr Few met to discuss the repayment of the vendor loan (June Meeting).[45]

What did the defendants know at the time of the June Meeting?

1. At the time of the June Meeting, Mr Johnson and Mr Few knew they were going to be in breach of the Sale Agreement unless it was varied by consent, because they knew that the ANZ loan was not going to be paid off by the ANZ Deadline of 27 June 2017.[46]
2. Mr Johnson admitted that the June Meeting was 'pretty critical' because they were very close to the 'critical date' of the ANZ Deadline, the defendants were going to be in breach of the Sale Agreement on that date, and they had not yet made a commitment to Mr Evans as to how his vendor loan would be repaid. Mr Johnson admitted that that was the context of the June Meeting.[47]
3. There is a dispute as to whether Mr Johnson and Mr Few knew there was a risk that Mr Evans would take legal action if the Sale Agreement was breached without an agreement being reached as to the repayment of the vendor loan.
4. It will be recalled that, in 2014, Mr Evans and Gardenisle's solicitor had written to the defendants pointing out that the defendants needed Mr Evans' permission to change banks and that they would breach the Sale Agreement if they failed to repay the ANZ loan by the ANZ Deadline unless some agreement was reached. Mr Evans (and his solicitor) indicated that he would only agree to the change on conditions relating to the manner in which the vendor loan would be discharged. However, counsel for the defendants submitted that the defendants did not consider there was a realistic prospect that Gardenisle would actually take legal action against them if they breached the Sale Agreement by failing to repay the ANZ loan by the ANZ Deadline.[48]
5. In support of this proposition, counsel for the defendants said that the defendants told Mr Evans in the 26 November 2014 email[49] that they would not be in breach until the ANZ Deadline, and may be able to increase their repayments to the ANZ and meet the deadline.[50] It was submitted this was inconsistent with the defendants believing there was a realistic risk of litigation.
6. In my view, the 26 November 2014 email supports only the proposition that the defendants were asserting they may not actually breach the Sale Agreement. They may have actually believed that in 2014. However, by the time of the June Meeting in 2017, the defendants knew they were going to breach the Sale Agreement unless Mr Evans agreed to vary it. They also knew that this could have serious consequences.
7. Both Mr Johnson and Mr Few admitted that Mr Evans' position on the ANZ loan did not change after 2014. As noted earlier, Mr Johnson admitted that Mr Evans had never retracted his position that he 'certainly wasn't going to be relaxed about changes to the arrangements for the repayment of the ANZ loan without making sure that his position was protected and any agreement or consents that he needed to give were obtained' by the defendants. Indeed, Mr Johnson admitted Mr Evans became more insistent as time went on. Mr Few admitted that Mr Evans had never changed from his position that, if the defendants did not perform the repayment obligation to the ANZ, this would be a fundamental breach of the Sale Agreement, and that that could lead to termination of the agreement and the defendants being sued for loss of bargain damages.
8. Despite having admitted he knew this, Mr Few asserted that he did not have in his mind during the June Meeting that Mr Evans might take legal action for the breach if they did not commit to monthly repayments. Mr Few said this was because Mr Evans had never said it verbally, and did not say it during the June Meeting.[51]
9. As will be seen, Mr Few wrote an email to Mr Evans on 20 March 2018, long after the June Meeting, in which he asserted that the defendants were under no obligation to make repayments on the vendor loan at any particular time, and that any payments they would make would be at their election. Mr Few was asked in cross‑examination whether he would agree that, if he had said to Mr Evans in the June Meeting, 'Well, we will only pay you at our election,' Mr Evans might have taken a very dark view of that. Mr Few replied 'Certainly would have, yes'.[52] I have no doubt that Mr Johnson and Mr Few knew that Mr Evans required that a concrete commitment be made in the June Meeting as to how the vendor loan would be repaid.
10. Counsel for the defendants also referred to exchanges in 2016[53] in which Mr Evans was proposing options for repayments and seeking a meeting to discuss this.[54] Counsel for the defendants submitted that Mr Evans' conduct in making repeated offers and proposals should cause me to find that there was not a real risk of litigation.[55]
11. It was common ground that Mr Johnson told Mr Evans in late 2016 that the defendants were 'on track' to meet the ANZ Deadline, and did not correct this statement until early 2017. In those circumstances, it is not suprising that Mr Evans was not continually threatening legal action prior to 2017. Further, Mr Evans' offers as to how the parties might agree that the vendor loan be repaid were not inconsistent with a decision to take legal action if no agreement was reached prior to the ANZ Deadline. Nor do I accept that there is any inconsistency between making offers in the hopes of achieving a mutually satisfactory outcome and threatening legal action if the Sale Agreement was breached without an agreement being made.
12. Further, it is relevant to remember the way in which the June Meeting came about.
13. Mr Evans found out in early 2017 that, contrary to what he had been told in December 2016, the defendants were about $800,000 short of where they should be with the ANZ loan. Mr Johnson admitted that, on hearing this, Mr Evans had said he was concerned about his vendor loan and wanted to meet with Mr Johnson to get a firm commitment about how Mr Johnson would be dealing with the vendor loan repayments and how he would be dealing with the ANZ loan position.[56] Mr Johnson admitted that the June Meeting was 'pretty critical' because they were very close to the ANZ Deadline.
14. Mr Johnson admitted that he told Mr Evans that part of the reason they were seeking to change banks was to make it easier to deal with his vendor loan repayments.[57]
15. In all of the circumstances, I am satisfied that Mr Johnson and Mr Few knew, as at the June Meeting, that there was a real risk that Mr Evans would take legal action if they did not reach an agreement about the vendor loan repayments prior to the ANZ Deadline.
16. There is also an issue as to whether Mr Johnson and Mr Few believed that the Sale Agreement required them to start making payments on the vendor loan after the ANZ Deadline. While this is not relevant to the proper construction of the Sale Agreement, it is relevant to the state of mind of Mr Johnson and Mr Few as at the June Meeting.
17. Mr Few asserted that he believed, and had always believed, that, under the Sale Agreement, the defendants could pay $1 immediately after the ANZ loan was repaid and $3,999,999 six years later.[58] He said that it had always been his view, since the execution of the Sale Agreement, that it was at the defendants' election to repay Gardenisle as they saw fit.[59]
18. Mr Few's evidence is entirely inconsistent with the defendants' costings of various options of repaying the vendor loan in 2016. As I later explain, I do not accept that the defendants would have wanted to make monthly payments to reduce the lump sum due at the end of the repayment period unless they were obliged to do so.[60]
19. Mr Few's evidence is also inconsistent with Mr Johnson's evidence. Mr Johnson's evidence was that he believed that the Sale Agreement did require them to start making payments (plural) on the vendor loan after the ANZ Deadline. His evidence was that this is what both he and Mr Few believed and that they had discussed that prior to the June Meeting.[61]
20. I accept Mr Johnson's evidence as to his own belief and the discussions he and Mr Few had had about it. I reject Mr Few's evidence. I find both Mr Johnson and Mr Few believed that they were required to start making payments on the vendor loan after the ANZ Deadline.

1. The following matters are common ground.
2. In the June Meeting, Mr Evans said that he wanted $55,000 per month starting in July, which was roughly the $4 million divided over 72 monthly payments. Mr Johnson said that they would struggle to pay $55,000 and mentioned the sum of $40,000.
3. The meeting was short, about 15 minutes. Mr Evans did not express any unhappiness as to the meeting's outcome. The three men shook hands at the end of the meeting, and Mr Evans went to lunch.
4. At some point, either during the meeting, or shortly afterwards, Mr Johnson asked for a couple of weeks grace in making the first payment, rather than paying it on 1 July 2017. Mr Evans said that Mr Johnson said they were still in negotiations with the NAB to change banks and it was taking longer than they had thought.[62] Mr Evans agreed to the extension.
5. This much is common ground. The parties disagree, however, as to what was said about the $40,000 and the conversation that followed.

1. Mr Evans gave evidence that Mr Johnson asked if he would accept $40,000 a month over the 72 months (which is $2.88 million) with a lump sum of $1.12 million on or before 30 June 2023. The payments were to be made on the first day of each month. Mr Evans said that he said he would accept that offer and they shook hands on the deal.[63]
2. Mr Johnson and Mr Few gave evidence that Mr Johnson offered to make a single payment of $40,000 in July 2017 and that from that point on they would pay whatever they were able to pay consistent with the cash flow of the business. Both Mr Johnson and Mr Few emphatically denied ever committing to making a monthly payment of the vendor loan in the sum of $40,000 or indeed in any sum at all.

1. After the June Meeting, Mr Evans sent a number of emails which referred to an agreement having been struck in that meeting. In cross‑examination, Mr Johnson admitted that Mr Evans clearly believed that such an agreement had been made.[64] As will be seen, the defendants made no effort to correct Mr Evans' belief until 11 October 2017. Mr Johnson denied this was because the alleged agreement had been reached, but said he did not have an explanation for failing to correct Mr Evans' understanding.[65]

1. After Mr Evans and Mr Johnson had spoken about the grace period for the first payment,[66] Mr Evans sent an email to Mr Johnson and Mr Few, on 26 June 2017 (underlining added):[67]

Thanks for the update on your banking facilities change over.

I will get Sparky to forward you the account I would like the payments to go in.

Whilst I am flexible with the initial $40k to be received by mid July, I don't want that to be a precedent for future instalments.

I am happy with DONNA direct crediting the account provided by SPARKY on the first business day of each month as you suggested.

If at any stage this can't occur, please call me to discuss prior to the due date. The last thing I want is to be chasing the money 24‑48 hrs after the due date.

As long as the communication is open and transparent I am sure the fulfilment of this loan will occur to our mutual satisfactions.

1. Counsel for the defendants submitted that what the email lacks is more significant than what it included. He said:[68]

What one would have expected, your Honour, somebody as astute as Mr Evans, is to write at the first opportunity after the meeting and say, 'I'm confirming our arrangement that you will pay $40,000 each and every month. And at the end of the period, you will pay the balance of 1.6 million', I think it was. No reference to that in this letter. No reference to an express oral agreement having been reached. So we say this letter goes both ways, your Honour. Yes, in some way assists you in formulating a view about a discussion of 40 per month. But by the same analysis, we say what it lacks is more significant than what it says.

1. I do not accept this.
2. If Mr Evans' account of the June Meeting is correct, his email on 26 June 2017 is entirely understandable. He had gone to a meeting with two men with whom he had had a long relationship. Since making the Sale Agreement, all of them understood that, at some point, they would be agreeing how the vendor loan would be repaid. Mr Evans made a proposal, they counter‑offered, and he accepted. Everyone shook hands and he went to lunch. He would have had no reason to think they would not act in accordance with the agreement. His email on 26 June 2017 was, self‑evidently, designed to ensure that, if the defendants found themselves in difficulty in respect of any particular monthly payment, they discuss that with him before the due date.
3. The email is not equivocal. It refers to 'repayments' in the plural. It says Mr Evans does not want the flexible date for the first payment to be a precedent for future instalments. It says that Mr Evans agreed with Mr Johnson's suggestion that the money could be directly credited to a particular account on the first business day of each month.
4. The defendants did not respond to this email to advise Mr Evans that his understanding that this agreement had been reached was wrong. If their account of the June Meeting is correct, this failure would be difficult to fathom. Mr Johnson said he did not have an explanation.

1. On 13 July 2017, Turfmaster paid $40,000 into Mr Evans' nominated account.[69] Mr Evans sent an email to Mr Johnson and Mr Few the next day, acknowledging the receipt of 'the initial' $40,000 and saying:[70]

As discussed the monthly instalments of $40k are now scheduled for the 1st (FIRST) day of each month.

If this date can't be met, please advise me so we can agree on a suitable course of action.

1. Again, this reflected Mr Evans' belief that the alleged oral agreement had been reached at the June Meeting. Again, the defendants did not respond to this email to advise Mr Evans that his understanding that this agreement had been reached was wrong.

1. Mr Evans said that he and Mr Johnson continued to talk regularly. He said that Mr Johnson told him that there were some looming cash flow problems, but that the August payment would be made. He said that Mr Johnson told him that the business had lost a contract at a golf course and they would have to make some redundancy payments.[71]
2. On 28 July 2017, Mr Evans referred to this conversation in an email to Mr Johnson:[72]

As discussed on the phone today, you will be making the August payment of $40k by the due date of 1/8/2017.

Can you please advise me by return email what your intentions are for Sept in keeping with your concerns about cash flow owing to redundancies looming.

As you know I am out of the country on the 2/8 until 21/8, so if you can respond with your payment plan, I can give it due consideration.

1. Mr Evans explained in his evidence that he was willing to allow a short grace period in relation to the due date for the September payment because he had been friends with Mr Johnson and Mr Few for years and he would not have a difficulty with 'a few days here or there' provided they 'talk[ed] it through'. He said they had a long‑term association and, if Mr Johnson had a problem for a week or so, 'all he has got to do is talk to me'.[73]
2. This time, Mr Johnson responded.[74] He wrote:

I will send you an email when things are a little clearer. Both Steve and I are still committed to paying you as much as possible at all times.

1. Counsel for the defendants submitted that this was consistent with the defendants' account of the June Meeting. He submitted that the phrase 'still committed' should be taken to be a reference to what the defendants allege was said in the June Meeting, as there was no evidence that they had said they would pay Mr Evans as much as they could on any other occasion.[75]
2. I do not accept this. It is evident from the emails that Mr Evans and Mr Johnson were having oral conversations. It is also clear that Mr Evans understood that Mr Johnson might have trouble meeting the September payment, and was willing to discuss that with him. It was in that context that Mr Johnson responded. Mr Johnson did not deny in his email that he had told Mr Evans that he would be making 'the August payment' by 'the due date'. Indeed, a payment of $40,000 was made on 1 August 2017.[76] Mr Johnson was, it seems, responding to Mr Evans' request that he provide a payment plan for the September payment.
3. Further, Mr Johnson, while denying the alleged oral agreement had been made, admitted that Mr Evans believed that it had been.[77]
4. On 29 July 2017, Mr Evans replied to Mr Johnson's email without addressing its contents, instead asking Mr Johnson to call him about a business opportunity they had been discussing.[78] Mr Evans explained that Mr Johnson had said he would be making the August payment in a few days and in this email he was focussing on the business opportunity.[79]
5. As noted, on 1 August 2017, Turfmaster paid $40,000 into Mr Evans' nominated account.

Mr Johnson refers to 'Monthly Payment' - 30 August 2017

1. In cross‑examination, Mr Johnson confirmed that his position was that there was never a commitment to make monthly payments. He confirmed that it would be incorrect to describe any commitment that he made in June as a monthly payment commitment. He said that Mr Evans had misunderstood what had been agreed in the June Meeting. Mr Johnson agreed that references to monthly payments would be wrong if the alleged oral agreement had not been made.[80]
2. Mr Johnson was then taken to an email he wrote to Mr Evans on 30 August 2017, with a subject heading of 'Monthly Payment' (underlining added).[81]

Subject: Monthly Payment

Just to give you an update on where we are at with the changeover of banks and how that affects your payments at the moment.

Given the bank changeover period is still progressing and therefore Turfmaster is still effectively banking with ANZ, they will continue to take the monthly periodical payment for the Commercial Bill.

This has resulted in $78K coming out in payments since July 1 on top of the payments of $80K given to you in July and August (essentially double payments). Under the new banking arrangements that loan will be interest free only so as to free up cash to service your debt.

When considering that, and the last couple of months being one of our more quieter periods in the year (as you are well aware) we are short on for cash to run the business.

We will therefore be unable to transfer any cash at the moment until this bank changeover scenario plays out. I understand from Drewe (our Broker) that that will occur in late September.

..

We apologise for the inconvenience but it is unavoidable during this process. Effectively the change of bank was to assist us in meeting your debt from July 1 which ANZ couldn't accommodate.

1. Mr Johnson conceded that this email suggested he had in mind at that point that there was a commitment for a monthly payment.[82]
2. It was put to him that he used the words 'Monthly Payment' because there had been a commitment made to Mr Evans in June to make a monthly payment. He replied:[83]

Yes, well, I don't remember that. I mean, I've used those words, yes.

1. For the following reasons, the only plausible explanation for this email is that Mr Johnson knew the alleged oral agreement had been made in the June Meeting.
2. First, the subject heading was 'Monthly Payment'.
3. Second, Mr Johnson wrote the email to give Mr Evans an update in relation to the change from the ANZ to the NAB and 'how that affects your payments [plural] at the moment'.
4. Third, Mr Johnson said that the loan with NAB would be interest free only 'so as to free up cash to service your debt'. He apologised for their inability to make any repayments at that time, but said it was unavoidable during the process of changing banks, and that the change of bank was to assist them 'in meeting your debt from July 1'.
5. In my view, this email is consistent with an oral agreement having been reached for monthly payments, and inconsistent with the defendants' evidence of the June Meeting.

1. Mr Evans responded the same day (underlining added):[84]

Thanks for the explanation, I am concerned that this banking changeover has taken so long. When you requested the $40k per month payment (feb 17) the changeover was imminent then and certainly by 30/6/17.

I hope everything is smooth sailing for a SEPTEMBER bank changeover.

As we discussed today i will be looking for you to rebalance the payments (catch up) ASAP as an act of good faith. So if the SEPT payment is 25 days late (which is likely) I would want the OCT payment and the NOV payment by OCT 1 to make up for the previous late payments (JULY was 15 days late).

By doing this it is clear your intent is not to under value the payment regime we agreed on and gives me comfort to assist you in the future if late payments are requested by you.

1. The defendants submitted that Mr Evans' response was inconsistent with his evidence of an oral agreement in June, for the following reasons.

1. Counsel for the defendants first pointed to Mr Evans' reference to Mr Johnson requesting, in February 2017, that the repayment arrangement be $40,000 per month. The defendants submitted that this was inconsistent with Mr Evans' evidence that the agreement was reached in June.
2. Mr Evans gave evidence that there had been previous discussions about repayments of $40,000 per month, and that they must have had a discussion about that in February 2017. However, he said it was not until June 2017 that the discussions 'got firmed up'.[85]
3. In my view, the reference to February 2017 in Mr Evans' email of 30 August 2017 is not inconsistent with Mr Evans' evidence.
4. First, it was one of many emails written by Mr Evans and must be considered in the overall context of what he wrote over time. As a whole, his emails do not appear to have been the subject of legal advice. Rather, viewed as a whole, his emails primarily set out matters that had been requested, suggested or agreed upon, updates he had been given, concerns he had, and options he proposed.
5. Second, it was not Mr Evans' case that repayments of $40,000 per month were raised for the first time in June 2017. Rather, his case was that it was agreed in June 2017. The evidence shows that repayments of $40,000 per month had been the subject of consideration as early as May 2016.[86]
6. As noted earlier, Mr Evans' email of 25 May 2016 referred to Mr Johnson having suggested repayments of $40,000 per month over five years (60 payments) and then a lump sum of $1.6 million.[87] Subsequent emails in May and August 2016 showed that the defendants were costing various options, including $40,000 per month for six years starting in June 2017 and then a final payment of $1.12 million.[88]
7. Third, in early 2017, Mr Johnson had told Mr Evans, contrary to what Mr Evans had previously been told, that the defendants were about $800,000 short of where they should be with the ANZ loan and that the defendants intended to change banks. Mr Johnson told Mr Evans that the purpose of the refinance with the NAB was to make it easier to make repayments of the vendor loan. It would be entirely unremarkable if, at the same time as providing this information, Mr Johnson requested a particular payment regime, to be implemented after the bank changeover.
8. Fourth, from the context of Mr Evans' 30 August 2017 email as a whole, it is clear that Mr Evans was comparing the situation in February 2017 with the situation in August. In February, it appears that it was thought that the change of banks was imminent, and would certainly occur before the end of June 2017. By 30 August 2017, it was obviously known that it had not occurred by that date.
9. Fifth, Mr Evans' email referred to a request made by Mr Johnson at a time when it was thought that the change of banks was imminent. It later referred to the payment regime that 'we agreed on'.[89]

1. The defendants next pointed to Mr Evans' statement that he was 'looking for you to rebalance the payments (catch up) ASAP as an act of good faith'. The defendants submitted that this was inconsistent with Mr Evans' evidence that there was an agreement in June.
2. I do not accept this.
3. Mr Evans' 30 August 2017 email referred to the possibility that the September payment would be late and, if it was, Mr Evans wanted the October and November payments to be made by 1 October (being one month early for the November payment on Gardenisle's case) to make up for the 'late' payments in July and September. This is entirely consistent with Mr Evans' evidence that there had been an agreement for monthly payments of $40,000, to be paid on the first day of each month.
4. On Mr Evans' evidence, he had already given a grace period in relation to the July payment, and allowed it to be paid late. On the face of the email, Mr Evans was noting that the bank changeover would not happen before the September payment was due, and acknowledging that this may affect that payment. He was, in effect, indicating his willingness for the September payment to be made late, but asking that the defendants show their commitment to the agreement by making the November payment early.[90]
5. Further, Mr Evans set out in his 30 August 2017 email why he sought the early payment:

By doing this it is clear your intent is not to under value the payment regime we agreed on and gives me comfort to assist you in the future if late payments are requested by you.

1. Finally, as that extract shows, Mr Evans expressly referred to 'the payment regime we agreed on'.
2. In my view, this email is not at all inconsistent with Mr Evans' evidence that an agreement had been reached. On the contrary, it supports it.

1. On 1 September 2017 Mr Johnson replied to Mr Evans, still with the subject heading of 'Monthly Payment':[91]

I think you can appreciate that the payment regime you propose is not possible.

Both Steve and I have never undervalued payments to you, hence the reason for switching banks. It [is] in our best interest to pay you as much as we possibly can throughout the next six years.

We will continue to use our best endeavours to pay you all monies available whilst maintaining the operations of the business, whether that be $40 K per month or not.

1. Counsel for the defendants submitted that this email advised Mr Evans that the defendants did not agree that an oral agreement had been reached in the June Meeting.
2. In my view, the reference in the first paragraph to 'the payment regime you propose' is likely to have been a reference to the dates upon which Mr Evans had sought the October and November payments to be made.
3. Further, the final paragraph does not necessarily indicate that the defendants were asserting that an agreement had not been made. I accept that it may have been a statement that the defendants had not committed to making monthly repayments (and had, therefore, not made the alleged oral agreement). However, it may instead have been a statement that they had not been able to pay the agreed $40,000 by the due dates up to that point, but had tried to pay whatever money was available and would continue to do so.
4. On reflection, the latter interpretation is more likely, for these reasons.
5. First, this email was a response to Mr Evans' email, which itself was a response to Mr Johnson's email of 30 August 2017. It will be recalled that, among other things, the subject heading of Mr Johnson's email of 30 August 2017 was 'Monthly Payment' and Mr Johnson wrote to give Mr Evans an update in relation to the change from the ANZ to the NAB and 'how that affects your payments [plural] at the moment'. I have already set out Mr Johnson's evidence about this.
6. Second, the email chain was dealing with what the defendants were asserting was a short term cash flow problem that would affect their ability to make the September payment, but that the situation would be different once the bank changeover had occurred.
7. Third, Mr Johnson himself admitted that he had not expressly denied in this reply that there had been an agreement reached in the June Meeting.[92]
8. However, even if I am wrong about that and this was a rejection of the alleged oral agreement having been made, it was still a long time after the June Meeting. It also came after numerous emails from Mr Evans which made plain his belief that the agreement had been made, and which the defendants did not correct. Further, it followed the first email in this 'Monthly Payment' chain, sent on 30 August 2017 by Mr Johnson. Accordingly, if I am wrong about Mr Johnson's email of 1 September 2017 not being a rejection of Mr Evans' belief, it would make no difference to my findings.

1. On 19 September 2017, Mr Evans sent an email to Mr Johnson, after he had returned to Melbourne, with a subject heading 'Vendor Payments Update':[93]

Any closer to releasing the SEPT $40K?

How is the bank change over going?

1. Later the same day, Mr Evans sent another email to Mr Johnson and Mr Few, with a subject heading 'Finance Considerations':[94]

Further to our discussions today ...

As your biggest creditor (3.92m) I am being left behind under the circumstances outlined to me today despite your best intentions.

By noon tomorrow I am hopeful that I can offer you a $2 m cash injection to effectively become your financier and to pay out all your banking and ATO obligations.

Naturally this offer would be presented with very strict payment and security obligations but would give you the ability to make serious repayments to myself.

In the event that I present this and you decline my offer I will immediately arrange for a caveat to be placed on your houses and the business. I will also take this action if no offer is presented by me as the situation has become very serious.

Brett, I thank you for your honesty and hope that we can find a way forward that enables you and Steve to meet all your obligations within a suitable timeframe.

1. The defendants submitted that this second email was a response to Mr Johnson's email of 1 September 2017.[95] It was not.
2. First, the emails of 30 August 2017 and the email of 1 September 2017 were part of a chain that had a subject heading 'Monthly Payment'. Mr Evans' second email on 19 September 2017 was not part of that chain.
3. Second, the second email had a subject heading 'Finance Considerations' and began by stating:

1. On 21 September 2017, Mr Evans emailed Mr Johnson and Mr Few:[96]

...

I urge you to have serious discussions with Steven and your accountant in the next fortnight before I arrive. I am available for a phone hook up most times at short notice to further advance my lending offer.

I will no longer accept delays or stalling tactics in resolving our agreement.

In the absence of no further payments being received between now and 4/10 and/or a suitable outcome formalised during my visit to Perth NOT being agreed upon, as a consequence I will commence proceedings to have this matter dealt with by the courts.

1. On 24 September 2017, Mr Evans emailed another proposal, offering a $2.5 million cash injection on strict security.[97]
2. In these emails, and in subsequent emails,[98] Mr Evans made a number of proposals in relation to assisting with cash injections (on terms) and the repayment of the vendor loan. The defendants submitted that these emails were inconsistent with an agreement having been struck.[99] I do not accept this.
3. Mr Evans gave evidence that he made this offer, and other similar offers in other emails, to assist with the defendants' business. He said:[100]

I was doing it because the business is a very good business and it probably just needed a bit of assistance. That's all. I had a long history with the business. And - yes. It - it was - it was going to be a win-win for everybody.

1. He explained that he made offers to assist the people with whom he had had a long association and to provide possible ways forward.[101]
2. I accept this evidence. I have previously referred to Mr Evans' evidence that he was willing to negotiate delayed payments because he had been friends with Mr Johnson and Mr Few for years and he did not want them to endure an impossible situation.[102] The history of the dealings between the parties and the documentary evidence indicates that Mr Evans was motivated to assist the defendants, so far as that was possible without compromising his own interests. A 'win‑win' was what he was continually seeking.

Unequivocal rejection of obligation - October 2017

1. The first time the defendants unambiguously asserted that they were not under any obligation to make monthly repayments was Mr Flavel's email of 11 October 2017.[103] Mr Flavel wrote that the defendants had taken legal advice in relation to the Sale Agreement (and Mr Evans' proposals) and, as a consequence, 'have decided to reject your offer and revert to the contents of the [Sale Agreement] for the repayment of the vendor finance loan'.
2. It is significant that this email followed legal advice.

1. In response to this email, Gardenisle's solicitors wrote:[104]

In May 2017, Mr Evans met with both Mr Johnson and Steven Few to discuss the repayment of the Vendor Loan. It was agreed that the Purchasers would commence repayments in the amount of $40,000.00 per month commencing 1 July 2017 (the Instalment Agreement). Consistent with this position, the loan repayments commenced in the sum of $40,000.00 on 14 July 2017 and 1 August 2017. No further instalments have been received. The Purchasers are in breach of the Instalment Agreement.

The Vendor now requires the immediate repayment of the Vendor Loan in full. ...

1. In cross‑examination, Mr Evans was asked if what his solicitors wrote was what he wanted, namely, that the vendor loan be immediately repaid in full. He replied:[105]

I just - I wanted it all to be put back on an even keel and the payments continue. That's what I wanted. That's all I've ever wanted.

1. The defendants submitted that the solicitors' letter, in referring to an agreement in May, is inconsistent with Mr Evans' assertion that the agreement was reached in June 2017.
2. In my view, the reference to May was clearly an error. It was common ground that:

(a) Mr Evans, Mr Johnson and Mr Few met in June to discuss the vendor loan repayments; and

(i) Mr Evans said that he wanted $55,000 per month starting in July, which was roughly the $4 million divided over 72 monthly payments; and

(ii) Mr Johnson said that they would struggle to pay $55,000 and mentioned the sum of $40,000.

1. The parties disagree as to what was said about the $40,000 and the conversation that followed. However, they agreed about the meeting being in June and agreed that something had been agreed - whether it was a single payment or a monthly payment regime with a lump sum at the end.
2. The defendants further submitted that this letter is inconsistent with Mr Evans' assertion that the agreement included a lump sum payment at the end of the monthly instalments.
3. In my view, the failure to mention the lump sum payment at the end is not significant. Each of the various proposals to pay $40,000 included some form of lump sum payment at the end, depending on the duration of time over which the monthly payments were made.

1. On 17 October 2017, the defendants' partial refinance from ANZ to NAB was completed. ANZ received $1,745,806.09 from the NAB.[106]
2. On 27 October 2017, the defendants' solicitors wrote to Gardenisle's solicitors, in response to their letter of 11 October 2017.[107] The defendants' solicitors asserted that there was no obligation under the Sale Agreement to repay the vendor loan, other than it be repaid within six years of the ANZ Deadline. The letter also said that there was no variation to the Sale Agreement, as there was nothing in writing.
3. On 1 November 2017, Mr Evans emailed Mr Johnson and Mr Few:[108]

WITHOUT PREJUDICE AND STRICTLY CONFIDENTIAL FOR THE EMAIL RECIPIENTS ONLY

You continue to assure me that my $4 m will be paid in full by 30/6/2023, but we all agreed that any affordable weekly or monthly payments until this date would still leave a considerable amount owing to clear up the $4m.

...

I asked you for an immediate GOOD FAITH payment of $20 k, you couldn't commit to this but in previous correspondence you assured me that payments would resume once the bank change over occurred as this was the mechanism to service my debt. This has occurred, no payments to date.

All of the above [does] nothing to instil confidence in me that you have a worthwhile strategy. Throw in your continued belief that I am not entitled to any payments until 30/6/2023 and you may now understand why I am resorting to the courts for a decision (NOT AN OPINION).

I get zero satisfaction in seeing letters of demands being sent to you and your wives, I have made that very clear to both of you and indeed your accountant.

So our conversation concluded with you coming back to me by Friday with a strategy.

My final offer to you is as follows.

1. MAKE AN IMMEDIATE PAYMENT OF $20k by Friday 3/11/2017
2. ...
3. Mr Evans said there had not been an actual agreement that 'affordable' payments would be made, but rather that the defendants had said that they had cash flow issues, and that even the agreed repayment plan would leave a considerable amount owing at the end (leaving $1.2 million to be repaid at the end of the period). Mr Evans said that he wrote this email purely in an attempt to move the matter forward, by making another offer.[109]
4. Mr Evans said that his reference to the defendants' 'continued belief' was a reference to the position the defendants had taken since he was told that that was their position sometime in October 2017.[110]
5. On 3 November 2017, Turfmaster paid $20,000 into Mr Evans' nominated account. Turfmaster paid four further amounts of $20,000 on 30 November 2017, 29 December 2017, 1 February 2018 and 2 March 2018.[111]

1. On 14 March 2018, Mr Evans emailed Mr Johnson and Mr Few (underlining added):[112]

I am appreciative of the payments thus (10/3/18) far which is a total of $180 k, albeit well shy of your requested 40 k per month ($140 k shy).

You were paying on the first day of each month, now after missing a couple you reverted to end of month (or later).

I am seeking a very structured repayment system as we agreed to.

I shouldn't have to ring you every month and listen to your reasoning behind reduced or late payments. If there are any problems you should be ringing me and very early.

When we agreed on your requested $40 k per month, I trusted you to honour this I didn't believe you would dishonour our agreement, written or not.

[Mr Evans then wrote about the effect on the reduction of the debt if only $20,000 was paid monthly and offers he had made]

Every offer I have made, you have rejected within your own reasoning.

...

So I am keen to understand your strategy to address the current shortfall and deliver an outcome which meets your debt being finalised by 2023.

I am raising this with you guys and Justin only at this stage hopeful of a suitable strategy being agreed upon and adhered to.

1. The defendants submitted that this email, sent by Mr Evans on 14 March 2018, five months after his solicitors' letter, was inconsistent with an agreement having been struck.[113]
2. Counsel for the defendants submitted Gardenisle's solicitors said in October 2017 that they would require immediate repayment of the vendor loan, yet in March 2018 Mr Evans was writing to Mr Johnson and Mr Few about them rejecting every offer he had made and saying 'I'm raising this with you guys and Justin only at this stage, hopeful of a suitable strategy being agreed upon and adhered to'. Counsel said this was inconsistent with an agreement having been struck: Gardenisle's solicitors had said they were going to call up the vendor loan immediately, and Mr Evans was still talking about reaching an agreement.
3. I do not accept this. Mr Evans expressly wrote in this email: 'When we agreed on your requested $40 k per month, I trusted you to honour this I didn't believe you would dishonour our agreement, written or not'. From the overall content of this email, and the context of all of the emails between the parties, it is clear that Mr Evans had concluded that the defendants were not going to honour the agreement that had been made, and was proposing alternatives in an effort to reach a new agreement that the defendants might honour.
4. Further, although Gardenisle's solicitors' letter had said the vendor loan was going to be called up, Mr Evans' preferred outcome was that a structured repayment program be implemented and honoured.[114]

1. Mr Few replied to this email on 20 March 2018:[115]

At no time was it agreed that a structured repayment system would be entered in to. In our discussions, we have always been very clear that payments would be made on the basis of funds available.

Special Condition 11 of Schedule 3 of the Unit Sale Agreement requires that the Vendor Finance is repaid by 25 June 2023. The Unit Sale Agreement does not require us to make repayments by monthly instalments. Your repeated assertions to the contrary do not change the unambiguous wording in the Unit Sale Agreement. Despite this, we will make further payments against the Vendor Loan before 25 June 2023 subject to available funds, at our election only. The $20,000 payment made on 2 March 2018 was made at our election and not in response to any assertion or representation by you or your legal team. In light of this, there is not a shortfall in repayments as you assert.

At the time of the Unit Sale Agreement, we were happy with the deal struck and remain so today. We are disappointed that after 6 years of reflection, you are not happy with the deal, but your recent dissatisfaction does not motivate us to vary the terms of the Unit Sale Agreement. We continue to meet our obligations to repay the Vendor Loan as required by the Unit Sale Agreement. Your past threats of commencing legal proceedings and putting caveats on our houses doesn't change our position and going forward we will ignore any communications of that nature.

We will let you know in advance when we are going to make further repayments in reduction of the Vendor Loan, but otherwise there seems little need for further communication on the matter.

1. In cross‑examination, Mr Few was asked about the phrase 'at our election'. He admitted that the words had been written for him by a lawyer.[116] Mr Few said they took legal advice 'from the standing of' the Sale Agreement.[117]

1. On 29 March 2018, Turfmaster paid $5,000 into Mr Evans' nominated account.[118] This was the last payment made.

1. As noted earlier, the defendants denied ever agreeing to pay off the vendor loan by monthly instalments. However, during the trial, a Turfmaster document emerged which recorded a projected liability of $40,000 per month for 'Vendor Loan Repayment'.
2. In the course of seeking to refinance the ANZ loan, Turfmaster had provided financial documents to the NAB including cash flow projections for 2018/2019 (Cash Flow Projection).[119] The documents were provided after the June Meeting.[120]
3. The Cash Flow Projection recorded under 'Other Assets/Liabilities' $40,000 per month for 'Vendor Loan Repayment'. The document was prepared by Mr Flavel on Turfmaster's instructions.[121] During the trial, both Mr Johnson and Mr Few admitted signing documents declaring that the information they provided to the NAB was not misleading.[122]
4. The way in which the Cash Flow Projection was obtained is notable. So too is Mr Few's initial response to questions about it.

1. On 16 November 2018, Gardenisle's solicitors wrote to the defendants' solicitors[123] requesting

copies of all documents recording monthly cash flow forecasts of Turfmaster Pty Ltd from 25 May 2016 to date.

1. The defendants' solicitors wrote to Gardenisle's solicitors asking to what issue in dispute were the requested documents relevant.
2. On 5 December 2018, Gardenisle's solicitors wrote to the defendants' solicitors[124] stating:

... cash flow forecasts of your client's business may include the payments which are subject of the alleged agreement. They are therefore relevant and should be discovered. We now request discovery of those forecasts for the period commencing 1 April 2017 (being approximately two months before the alleged agreement) to the present date.

1. On 12 December 2018, the defendants' solicitors wrote to Gardenisle's solicitors[125] stating:

Our clients know their discovery obligations. If your forecasted forecasts exist or existed they would have been discovered.

1. Gardenisle's solicitors subpoenaed the NAB. The NAB produced financial documents that it had received in relation to the Turfmaster Unit Trust, including the Cash Flow Projection.

1. In cross‑examination, Mr Few was asked whether there were cash flow documents which forecast vendor loan payments. He said no. He was asked if he was absolutely certain of that. He said yes. He was asked how he knew that and he said '[b]ecause we had never considered that we were required to, if you like, allow for a set monthly repayment schedule'.[126]
2. Subsequently, the Cash Flow Projection was put to Mr Few. He was asked if it suggested that the defendants were telling the bank that the vendor loan repayments would be $40,000. He said '[i]t was more of an - I suppose an allowance in - in the sense of if - if the monthly repayment schedule of $40,000 was, I suppose, included in the cash flow arrangement, that would be the effect on the businesses [sic] cash flow. Yes'.[127]
3. I do not accept that the monthly repayment schedule of $40,000 was included as some sort of allowance to show the effect on cash flow if those payments were to be made. The defendants were seeking a loan from the NAB. It would not make sense to include payments that they were not obliged to make. Further, in view of Mr Few's emphatic denial that there were cash flow documents which forecast vendor loan payments, and his stated reason for his certainty, I would not rely on his evidence on this topic unless it was against his interest.
4. On being pressed, Mr Few agreed that the idea of a cash flow is to provide the bank with an accurate statement of, among other things, anticipated expenses. It was put to him that 'you thought and you gave instructions, or somebody on behalf of [Turfmaster] gave instructions, that there would be vendor loan repayments of 40,000 per month. Surely you would agree with me on that logic?' And he said 'Well, yes, based on the cash flows. Yes'.[128]
5. When Mr Johnson was shown the Cash Flow Projection in cross‑examination, he agreed it indicated that 'you were telling the bank that you had a commitment to make a $40,000 payment per month for the vendor loan repayment'.[129]

1. Counsel for the defendants sought to downplay the significance of the Cash Flow Projection in three ways.
2. First, he submitted that the Cash Flow Projection was not significant because it was not known when it was prepared.[130]
3. However, it was purely within the knowledge of the defendants as to when it was prepared. The defendants did not seek to adduce evidence as to when it was prepared. They were not re‑examined on this topic at all. Nor did the defendants give evidence that they had, at any time other than the June Meeting, decided to repay the vendor loan by $40,000 per month, to explain why the Cash Flow Projection recorded this figure. On the contrary, their evidence was that they had never agreed, at any time, to repay the vendor loan by monthly amounts. It was also their evidence that they did not have the capacity to make monthly repayments of $40,000.
4. There was evidence, as set out in the summary of the facts, that in May 2016 Mr Johnson had suggested that the vendor loan could be repaid by monthly instalments of $40,000 with a lump sum of $1.6 million after five years.[131] There was evidence that in August 2016 the defendants were considering a number of repayment options, one of which was monthly instalments of $40,000 with a lump sum of $1.12 million after six years.[132] However, the defendants did not adduce any evidence that the Cash Flow Projection had been prepared on the basis of the May suggestion or on the basis of that particular option of the August options. In any event, even had they done so, it would leave unexplained why they would provide the Cash Flow Projection to the NAB if they had not, in fact, agreed to pay $40,000 per month. They were seeking a loan from the NAB. It would not make sense to tell the NAB that they were obliged to make payments that they did not believe they were obliged to make.
5. Second, counsel for the defendants submitted that it was in their interests to pay off the vendor loan as quickly as possible, so they did not have a large commitment at the end of the period.[133]
6. With respect, I do not accept this. The vendor loan was interest free. If the defendants genuinely believed they were not obliged to make monthly payments, there are many ways in which they could have ensured that they were not left with a large payment at the end of the period, while having the benefit of the money that would otherwise be paid by instalments in the interim. An interest‑bearing term deposit is just one example.
7. Third, counsel submitted that the defendants may have agreed to pay off the vendor loan as soon as possible to close off the loan and bring an end to Mr Evans' repeated suggestions of repayment options.[134] This would not explain why they would tell the NAB they had a repayment commitment of $40,000 per month. Nor is there any reason to suppose it would stop Mr Evans from suggesting options. The email exchanges show that Mr Evans was open to various ways of the defendants meeting the vendor loan, including sacrificing part of the total in exchange for repayments well prior to the end of the six‑year period.

1. The defendants' solicitors told Gardenisle's solicitors that the defendants knew their discovery obligations and that, if there were cash flow forecasts showing vendor loan repayments, they would have been discovered.
2. Mr Few denied, in cross‑examination, that there had been any cash flows prepared that showed projections of ongoing monthly payments to Mr Evans.
3. The Cash Flow Projection is entirely inconsistent with the evidence of Mr Johnson and Mr Few that they never agreed to make monthly repayments of $40,000. In my view, the document is of significant weight in evaluating the credibility and reliability of Mr Johnson and Mr Few.

1. Counsel for the defendants expressly stated that it was not his submission that Mr Evans was lying, but rather that Mr Evans misunderstood or misapprehended what was discussed at the June Meeting.[135] Counsel submitted that Mr Evans' misunderstanding

could have been fashioned and arisen by reason of what we say was his unrealistic position or expectations what might occur that he would do a deal, because he has been trying now to get a deal done of sorts of sort this position out for many years, and it's possible, if there was as mention of a 40,000 initial payment and cash flow that he had understood that to mean, 'Well, I had a firm arrangement here'. And that's the way we categorise the evidence. Not that he has come to tell you porky pies about that.

1. In support of this, counsel for the defendants referred to several aspects of Mr Evans' evidence that he submitted were unreliable.
2. I have already dealt with some of those aspects in setting out the facts. It will be recalled that I do not accept that any of the emails after the June Meeting were inconsistent with Mr Evans' evidence that there was an oral agreement. On the contrary, I consider that the emails provide strong support for his evidence. Three further points made by counsel for the defendants remain to be dealt with.

1. Counsel for the defendants submitted that:[136]

[W]hen [Mr Evans] was giving his evidence about the June '17 agreement, surely his recollection was - it's difficult to remember everything with certainty, given there had been 12, on his own version, discussions about it in '17 already, and he was quite adamant, no, he remembers, and he wasn't prepared to accept at all that he would - there may be some difficulties in accepting exactly what was said at the time and who said what.

1. I invited the defendants to provide transcript references in support of this assertion. Extracts from pages 124 ‑ 125 (11/3/19) were provided, including:

When you have given your evidence about this alleged oral agreement in June, it's your best recollection, isn't it simply that. It's not exactly how it may have unfolded there, but rather it's your best recollection, doing the best you can to remember?‑‑‑No, I'm very comfortable and very clear about what was said and what was agreed on. Very much so.[137]

1. An extract was also provided from page 130 (11/3/19), which included Mr Evans' evidence that, while Mr Johnson had asked for a few weeks leniency in relation to the first payment, Mr Evans could not remember if Mr Johnson had asked that during the June Meeting or after the meeting (but before the end of June).
2. Not included in the extracts was Mr Evans' evidence that preceded his evidence on pages 124 ‑ 125. At page 123, this exchange occurred:

... Now, it's nearly two years ago since that meeting occurred, so not quite, but it's - we're getting on. It's 18 months or 20 months since that meeting occurred. You would accept, wouldn't you, that it's difficult to remember with any precision and detail exactly what was said by whom and the words they used?‑‑‑I've got a very clear understanding of what happened (indistinct)

So you're not suggesting that you remember each and every word that was said by everybody, are you?‑‑‑I remember the crux of the meeting, what [was the] result.

But it is a long time ago, so it's hard to be clear, is it not, exactly what words were used when you haven't got a recording of that or anything like that so long down the track? Isn't that fair to say?‑‑‑I'm very aware of what was discussed in terms of the payments moving forward.

1. In this context, it is clear that Mr Evans was not claiming to remember the content of any greetings or small talk or everything that was discussed. What he remembered was 'the crux' of the meeting - what had been agreed about the repayments.
2. It is to be recalled that it was common ground that, in the June Meeting, Mr Evans said that he wanted $55,000 per month starting in July, which was roughly the $4 million divided over 72 monthly payments. Mr Johnson said that they would struggle to pay $55,000 and mentioned the sum of $40,000.
3. What is in dispute is what was said about the $40,000 and the conversation that followed.
4. Having regard to the whole of the exchanges on this topic, Mr Evans did not purport to remember exactly what was said at the time and by whom. Rather, he claimed to recall the offer he made, the defendants' counter‑offer and his acceptance of that.
5. I do not accept that Mr Evans' evidence as to what he remembered casts any doubt on his reliability.

1. Mr Evans was cross‑examined about stating in his witness statement that it was only when he signed the Sale Agreement that he became aware that Ms Johnson and Ms Few were parties to the agreement.
2. It was put to Mr Evans that he must have known they were going to be the purchasers because they had been the proposed purchasers in the 2010 Agreement. Mr Evans said that the 2010 Agreement had nothing to do with the Sale Agreement.[138] He said that he did not know what Mr Johnson was going to do in terms of the Sale Agreement. He said '[t]he whole landscape had changed'.[139] Mr Evans said it did not concern him how the purchasers were to be structured and he was not surprised by the structure chosen.[140]
3. In my view, there is nothing troubling about Mr Evans' evidence on this point. It was common ground that Ms Johnson and Ms Few had had nothing to do with the negotiations at any time. There is no reason to doubt that the first time Mr Evans knew how the purchasers were to be structured was when he saw the Sale Agreement. If he had been asked to guess, he may well have guessed that the structure might be the same as in the 2010 Agreement. However, it was of no importance to him, so he had not turned his mind to it.

1. It will be recalled that, on 25 May 2016, Mr Evans emailed Mr Johnson and Mr Few to confirm offers he had made in a meeting and a suggestion that had been made by Mr Johnson. He also wrote (underlining added):[141]

Further to our discussion we agreed that the trigger point for payments commencing was June 28, 2017

I confirm the following offer made to you during our discussions

1. I will accept a lump sum of $3M if paid by 31 Dec 2016
2. I will accept a lump sum of $3.2M if paid between Jan 1 and JUNE 30 2017

Should you not activate either of the above I will be seeking monthly instalments of not less than $53 k commencing with an initial payment on July 1, 2017 and to be followed by 71 further identical instalments to be paid on the first day of each month

During the meeting Brett suggested a monthly repayment plan of $40k approx, followed by a lump sum after 5 years (60 payments) of $1.6 million. I will agree to this on the basis that it is formalised and recognised as a binding agreement, in fact replacing the current agreement.

I believe the above represent attractive options which you need to consider and activate in accordance with your business plans.

1. In cross‑examination, it was put to Mr Evans that, by 'formalised', he meant that it would need to be in writing. Mr Evans did not agree. He said that none of the proposals were concrete at that stage. He said that, by 'formalised', he meant that both parties would agree that it was going to happen.[142] He said he was not saying in the email that it needed to be in writing, and pointed out that he had written that it was to be 'formalised and recognised as a binding agreement'. He said by 'formalised' he meant agreeable to both parties. He said:[143]

... at this - at that stage we're - certainly got a long history together. I've come up with a couple of lump sum proposals, come up with a monthly instalment proposal. Brett has come up with another proposal, and I said at the time, 'If we can agree on it, we formalise it, then I will run with it.' It's nothing ‑ ‑ ‑ [the witness was then interrupted].

1. He did not accept that agreeing and formalising meant two different things and said 'there was nothing concrete about it at that time - nothing - the same as my lump sums'.[144]
2. The defendants submitted that Mr Evans' evidence about this phrase was evasive.[145] I agree that Mr Evans' answers on this issue were not entirely clear. However, having regard to the email evidence as a whole, and his manner of expression when giving oral evidence, this is insufficient to cause me to have doubts about his reliability both of itself and in combination with the other matters raised by the defendants. He was being asked to explain a word he had used in an email three years earlier. In the email, Mr Evans first set out his lump sum offers and then set out the monthly repayment plan he would seek if the defendants did not accept either lump sum offer. He then referred to a monthly repayment plan that had apparently been suggested by Mr Johnson. In saying he would agree to it on the basis that it was formalised and recognised as a binding agreement, I infer he was asking them to state whether they would in fact commit to what had been suggested by Mr Johnson.

1. Mr Evans was a credible and reliable witness. His evidence was supported by the documents. He was not substantially damaged in cross‑examination. I accept his evidence.

1. I have a number of concerns about Mr Johnson's evidence.
2. First, as noted earlier, after the June Meeting, Mr Evans sent a number of emails which referred to an agreement having been struck in that meeting. In cross‑examination, Mr Johnson admitted that Mr Evans clearly believed that such an agreement had been struck. The defendants made no effort to correct Mr Evans' belief until 11 October 2017. Mr Johnson denied this was because the alleged agreement had been reached, but said he did not have an explanation for failing to correct Mr Evans' understanding.[146]
3. In my view, if the alleged oral agreement had not been made, it is highly improbable that Mr Johnson would not have corrected Mr Evans' obvious belief that it had been.
4. Second, Mr Johnson's evidence sat uncomfortably with his own emails, beginning with his email of 30 August 2017. It will be recalled that Mr Johnson confirmed in his evidence that his position was that the defendants had never made a commitment to make monthly payments and it would be incorrect to describe any commitment that he made in June as a monthly payment commitment. After being taken to his email with the subject heading 'Monthly Payment', he conceded that it suggested that he had in mind at that point that there was a commitment for a monthly payment. It was put to him that he used the words 'Monthly Payment' because there had been a commitment made to Mr Evans in June to make a monthly payment. His reply was 'Yes, well, I don't remember that. I mean, I've used those words, yes.'[147]
5. For these reasons, I prefer Mr Evans' evidence to Mr Johnson's evidence. I do not accept Mr Johnson's evidence unless it was corroborated by documentary evidence, Mr Evans' evidence, or against his interests.

1. I have already discussed Mr Few's evidence in relation to the Cash Flow Projection. Of particular concern was his emphatic denial that there were cash flow documents which forecast vendor loan payments.
2. I have also explained why I do not accept Mr Few's assertion that he believed, and had always believed, that, under the Sale Agreement, the defendants could pay $1 immediately after the ANZ loan was repaid and $3,999,999 six years later.[148]
3. Like Mr Johnson, Mr Few made no effort to correct Mr Evans' belief that the alleged oral agreement had been made in the June Meeting.
4. Where there is a conflict between the evidence of Mr Few and Mr Evans, I prefer the evidence of Mr Evans. Similarly where there is a conflict between Mr Few and Mr Johnson, I prefer the evidence of Mr Johnson. I do not accept Mr Few's evidence unless it was corroborated by documentary evidence, Mr Evans' evidence, or against his interests.

1. The defendants failed to discover the Cash Flow Projection, and their solicitors told Gardenisle's solicitors that there were no cash flow documents which forecast vendor loan repayments. Gardenisle submitted that the inescapable inference is that the defendants were concealing damaging evidence.[149]
2. Mr Johnson denied being asked by their solicitors to provide cash flows.[150] Mr Few said that he had not told their solicitors that there were no cash flow projections and that Mr Johnson was dealing with their solicitors in relation to matters of finance.[151] While I prefer Mr Johnson's evidence to Mr Few's overall, Mr Johnson was the person who was primarily responsible for matters of finance.[152]
3. It was not suggested on behalf of the defendants that they had not told their solicitors that there were no such documents.[153] It was not suggested that anyone other than Mr Johnson and Mr Few were providing instructions to the solicitors.[154] Nor was it suggested that Mr Johnson or Mr Few told their solicitors that there were no such documents by mistake. It seems, therefore, that one of Mr Johnson or Mr Few told their solicitors that there were no such documents despite being aware of the Cash Flow Projection. However, taking into account the seriousness of finding that either man deliberately concealed evidence, I am unable to find on the balance of probabilities that it was one or the other. As I am unable to say which of them it was, I have not taken the defendants' failure to disclose the Cash Flow Projection into account in assessing their individual credibility.

1. In this case, there was no dispute as to the appropriate approach to ascertaining if a binding agreement had been reached. There was no dispute that, in deciding whether an oral agreement was made, the conduct of the parties, including conduct after the alleged date of agreement, may be considered.[155] There was no dispute as to the essential requirements of such an agreement.
2. Mr Evans alleges that, in the June Meeting, the parties orally agreed that the defendants would pay the vendor loan by making payments of $40,000 per month for 72 months and then a lump sum payment of $1,120,000 on or before 30 June 2023.
3. The defendants did not contend that, while there was a conversation to that effect in the June Meeting, the parties did not intend it to be a legally binding agreement. Rather, the defendants contend they never said they would repay the vendor loan in this way. Accordingly, the real issue is whether Gardenisle has proved that they did.

1. Before concluding that there was an oral agreement, it is necessary that I feel an actual persuasion that such an agreement was reached.[156]
2. In a frequently quoted passage, Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd[157] said:

Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved.

1. Clause 11.1 of the Sale Agreement was to the effect that the Sale Agreement could only be amended or supplemented in writing signed by the parties. Such clauses are described as 'no oral modification clauses'.
2. Gardenisle did not seek to argue that cl 11.1 did not apply to the alleged oral agreement. Its case was, in effect, that Gardenisle agreed to a variation to the Sale Agreement to permit the defendants to refinance the ANZ loan with the NAB (so that the defendants would not breach the Sale Agreement when the ANZ Deadline occurred) in exchange for the defendants agreeing to repay the vendor loan on the terms of the alleged oral agreement. Accordingly, it is necessary to consider the impact of cl 11.1.
3. The weight of authority in Australia is that no oral modification clauses do not prevent a contract from being varied by the oral agreement of the parties.[158] The defendants did not seek to argue to the contrary.[159] However, the party asserting the oral agreement must prove it. The fact that there was a no oral modification clause can have significant evidentiary effect.[160]
4. By including cl 11.1 in the Sale Agreement, the parties demonstrated that their shared intention as at that time, 2011, was that they would be bound only by a written variation. This is a relevant fact to be taken into account in interpreting the subsequent conduct of the parties and, in particular, evaluating Mr Evans' evidence that the parties made an oral agreement in June 2017.

1. The defendants submitted that several objective facts lessened the likelihood that the parties had made the oral agreement.

1. First, the defendants pointed out that Mr Evans had, in the course of running the business, entered into contracts on other occasions.
2. Second, the defendants pointed out that Mr Evans was aware of cl 11.1 of the Sale Agreement and aware that any variation to the Sale Agreement would need to be in writing. In his letter of 17 October 2014, Mr Duncan wrote that any variation would need to be in writing.[161]
3. Mr Evans said that he had entered into contracts on dozens of occasions. These included numerous contracts with councils. Those agreements were prepared by the councils. Mr Evans said he did not ask a solicitor to review those contracts.[162]
4. In relation to other types of contracts, Mr Evans said he rarely asked a solicitor to draft contracts or to comment on contracts prepared by others. He said he was 'not saying never', but it would have been no more than once or twice.[163]
5. In relation to more major contracts, Mr Evans said that, throughout his working life, he had only sold one business, the Turfmaster business (in relation to which there was the Sale Agreement and the previous 2010 Agreement). He had bought out the previous owner of Turfmaster and had only purchased one or two small businesses. He said that he would have involved solicitors on those occasions.[164] Mr Evans agreed that the reason he involved solicitors in these contracts was so that 'there was no comeback afterwards or uncertainty'.[165]
6. Mr Evans also involved solicitors in the heads of agreement for the Brookfield tender and the parties had executed a formal document.[166] Mr Evans said he instructed his solicitors to draft the agreement to allow him to tender for the Brookfield contract, otherwise he would have been in breach of the restraint clause in the Sale Agreement.[167]
7. In my view, the Brookfield agreement is of little weight. Mr Evans' insistence on that agreement being in writing was understandable. Mr Evans wanted to tender for a job without breaching the restraint provisions of the Sale Agreement. It is very different to an agreement as to how an undisputed debt was to be repaid. This was conceded by counsel for the defendants.[168]
8. Mr Evans explained why he did not seek to have the alleged oral agreement recorded in writing. He said it did not need to be, as they shook hands on it and they did business like that. He saw the alleged oral agreement as just confirmation of how the payments were to be structured. He appeared to be genuinely perplexed when it was put to him that it changed the basis of the Sale Agreement, saying 'How - how did it change it by me accepting 72 [monthly payments]', before he was interrupted by counsel for the defendants.[169]
9. Despite Mr Evans' obvious awareness of cl 11.1, I accept his evidence as to why he did not seek to have the oral agreement recorded in writing. He had known Mr Johnson and Mr Few for a long time and had a good relationship with them, at least at that time. The parties deliberately did not include in the Sale Agreement how the vendor loan was to be repaid. The parties decided that they would work that out closer to the ANZ Deadline.[170] Understandably, Mr Evans did not see it as a variation to the Sale Agreement. He simply saw it as the agreement they had always intended to make. It was of a different quality to the Brookfield agreement or an agreement to purchase a business.
10. As noted earlier, the defendants did not assert that, while they had made the alleged oral agreement, they did not intend to be bound by it. Clause 11.1 was relied upon by the defendants in support of their submission that it was unlikely the alleged agreement was made, not to show that, while made, it was not intended to be enforceable. In any event, I am satisfied that the parties did intend the oral agreement to be enforceable, despite the shared intention they had had in 2011 that they would be bound only by a written variation.
11. Determining whether the parties intended to create legal relations requires an objective assessment. The 'intention' in this context is what would be objectively conveyed by what the parties said and did, having regard to the circumstances.[171] The parties had always intended to make a repayment agreement prior to the ANZ Deadline, and the ANZ Deadline was looming. The defendants were going to breach the Sale Agreement and were at risk of being sued if they did not reach a repayment agreement with Mr Evans before the ANZ Deadline.[172] To avoid being sued, the defendants made the oral agreement with Mr Evans.
12. I feel an actual persuasion that what the parties said and did, in the circumstances, objectively conveyed that the parties intended the oral agreement to be legally enforceable.

1. Next, the defendants referred to Mr Evans' emails in 2014 and 2016, in which he had made various proposals in relation to assisting with cash injections (on terms) and the repayment of the vendor loan.[173]
2. Counsel for the defendants submitted that:[174]

[B]y 2014 it's clear to him he's getting concerned about the second tranche because it's under the - under the agreement they are telling him there's problems with the vendor finance or the ANZ loan.

There's other issues he has alluded to, problems with the ANZ, cash flow difficulties. The most likely thing that was going on - and your Honour can make a finding - is that from 2014 he was doing all that he could to get a more secure position. He was making offers through 2014, '16, '17, even '18 discounting his entitlements at huge figures, giving away a million dollars here and there.

1. I accept that Mr Evans did want to secure his position. The parties had decided to agree on the terms of the repayment of the vendor loan closer to the expiration of the ANZ Deadline. Mr Evans wanted to lock the agreement down. He was also willing to exchange part of the total he was owed for early lump sum payments. This was not 'giving away a million dollars here and there'. It was giving up part of the total of the interest free loan in exchange for getting early lump sum payments.
2. Mr Evans was also seeking to encourage the defendants to lock down an agreement by pointing out that they needed his consent to shift banks, and that they would be in breach of the Sale Agreement if they did not pay off the ANZ loan by the ANZ Deadline.[175] Mr Johnson pointed out, in 2014, that the defendants would not be in breach until that period expired and, depending on the business, the defendants may be able to pay off the ANZ loan in time.[176]
3. On 2 May 2016, Mr Evans pressed for a discussion about the 'looming' vendor loan.[177] By the time of his email of 25 May 2016,[178] it appears that discussions had taken place. Mr Evans remained willing to exchange part of the total he was owed for early lump sum payments, but said he was also willing to accept a suggestion made by Mr Johnson of monthly instalments of $40,000 with a lump sum of $1.6 million after five years. As can be seen from the documents that followed,[179] the defendants then costed the early lump sum options and Mr Johnson's suggested option.
4. Further, Mr Johnson told Mr Evans in late 2016 that the defendants were on track to meet their obligations to the ANZ.[180] It was only in early 2017 that Mr Johnson advised Mr Evans that in fact there were significant shortfalls, and that the defendants were about $800,000 short of where they should be with the ANZ loan.[181]
5. Prior to being advised of the true position in early 2017, Mr Evans wanted to lock down the agreement for the vendor loan repayments, and was willing to offer alternatives. However, it was when he was told the true position that he became concerned, said it needed to be addressed, and pressed the defendants for a meeting. His ever‑present desire to lock down the agreement became particularly acute.
6. In my view, none of the exchanges in 2014 or 2016 are inconsistent with Mr Evans' evidence of the alleged oral agreement in the June Meeting. On the contrary, this history supports a conclusion that he had been pressing for an agreement for some time, offering multiple options to try to achieve an agreement, and was very keen to ensure that an agreement was in place before the ANZ Deadline. His desire to secure an agreement was particularly acute after being told the true position in early 2017 that the defendants were not on track to pay off the ANZ loan by the ANZ Deadline.
7. The defendants' evidence of the June Meeting is entirely inconsistent with this. It is simply not credible, in the light of this history and the ANZ Deadline being a mere fortnight away, that Mr Evans would have been satisfied by a proposal that the defendants would make a one‑off payment of $40,000, followed by payments of whatever they could whenever they could, without seeking to further negotiate. It is not credible that the meeting would simply end, having taken only a short period of time, with handshakes and Mr Evans going to lunch.

1. Counsel for the defendants asserted that some of the exchanges after the June Meeting were inconsistent with the alleged oral agreement having been made. In my discussion of the facts, I dealt with that assertion and explained why I found to the contrary.

The financial position of the business in June 2017

1. The defendants submitted that they would not have entered into the alleged oral agreement because they knew that the business could not afford to pay $40,000 per month. They were behind in their loan repayments to the ANZ and had not yet refinanced the loan. They had lost some significant contracts. They had existing commitments relating to the business, such as salaries and lease payments.
2. Counsel for the defendants asked, rhetorically, why would they commit to monthly repayments when they did not have to? Counsel said it would have been commercially suicidal.[182]
3. I do not accept this.
4. First, I do not accept Mr Few's evidence that he did not think he was obliged to pay more than $1 until six years had elapsed after the ANZ loan had been repaid. The evidence of Mr Evans and Mr Johnson was that the parties had agreed to work out the vendor repayments closer to the ANZ Deadline and Mr Johnson believed they were obliged to start making repayments when the ANZ Deadline expired.
5. Second, Mr Johnson and Mr Few knew, given they were changing banks and refinancing the ANZ loan, that they would be in breach of the Sale Agreement if they did not reach an agreement with Mr Evans.
6. Third, if it would have been commercially suicidal to agree to make a commitment of paying $40,000 a month (that is, if indeed they did not have the capacity to make that payment) how did they anticipate they would get refinancing from a bank when they included that obligation as one of their ongoing obligations?
7. Fourth, the alleged proposal made by Mr Johnson at the June Meeting, which Mr Evans said he accepted, had not come out of thin air. Mr Johnson had raised a similar possibility back in 2016 (of $40,000 per month for five years with a lump sum of $1.6 million).[183] Mr Flavel had given Mr Johnson advice about the cost of various options, including the precise option Mr Evans alleges was agreed in the June Meeting (of $40,000 per month for six years with a lump sum of $1.12 million).[184]
8. Fifth, the financial position of the business suffered a serious set‑back after the June Meeting.
9. When the defendants first took over the business, it was 'going very well', it was 'making good money' and it was 'high with revenues'. For the first couple of years after the defendants took over the business, it performed as it had been performing prior to them taking it over.[185]
10. It appears that, in around 2016, the business was experiencing some cash flow issues. However, Mr Johnson told Mr Evans in December 2016 they were on track with the ANZ repayments.
11. In around July 2017, the business lost a significant tender, worth around $1 million in revenue.[186] This was going to cause significant redundancies.
12. It will be recalled that Mr Johnson was asked why, if he did not accept the alleged oral agreement had been made in the June Meeting, he did not tell Mr Evans that after receiving Mr Evans' email of 26 June 2017. It will be remembered that Mr Johnson could not explain it. The following exchange then occurred:[187]

Isn't it the case that come later on in the July period there had been an event that occurred in the business that did, in fact, make it difficult to make the monthly payments?‑‑‑Yes. We had - if I recall around that period, that's when we got notification that we had lost the golf course tender with the City of Wanneroo.

...

And suddenly the money that you thought would be available for Kim [Evans] was no longer available; correct?‑‑‑Yes.

And that's when you told him you will be making the payment in August, but because of the looming redundancies, you may have difficulties in September; correct?‑‑‑Yes. We - yes. We mentioned it.

And it was from that point on that you then set about denying that there had been an agreement made in June; correct?‑‑‑As I said to you before, I don't remember making that agreement.

1. These answers were telling.
2. It is clear that, at least at some point, the defendants considered they could afford to pay $40,000 per month in vendor loan repayments. It had been one of the options Mr Flavel was asked to analyse, and it was the amount they told the NAB, in the Cash Flow Projection, that they were committed to pay.
3. In giving evidence that they were not in a position to commit to $40,000 per month, neither Mr Johnson nor Mr Few referred to any expenses out of the ordinary.
4. Mr Few said they were not in a position to commit to $40,000 per month because:[188]

[W] e were still ‑ albeit at a reduced rate, we were still paying the ANZ loan. So we had a formal loan agreement with the ANZ. We had weekly salary ‑ or we still have weekly salaries and wages to pay. We had BAS instalments ‑ business activity statement instalments, superannuation payments to make ... general insurance ‑ insurance policy instalments to make as well.

1. Mr Johnson's evidence was to similar effect, adding payroll tax and phone payments.[189]
2. I find that the defendants knew that they needed to reach an agreement with Mr Evans about the vendor loan repayments before the ANZ Deadline. They knew they would otherwise be in breach of the Sale Agreement, and Mr Evans was insisting that an agreement be made.
3. I find that, at the time of the June Meeting, the defendants believed they could afford to pay $40,000 per month in vendor loan repayments, provided a period of grace was given in relation to the first payment. It was only when they lost the City of Wanneroo contract that their capacity changed. Initially, the defendants sought further indulgences from Mr Evans, offering various explanations, and promising that things would improve once the bank changeover had been completed. The defendants' emails, sometimes expressly, sometimes implicitly, acknowledged the terms of the oral agreement. This behaviour reflected the defendants' understanding of the oral agreement. It was only much later, and only after the defendants obtained legal advice, that they denied they were obliged to make monthly repayments, saying they intended to 'revert to the contents of the [Sale Agreement]'.

1. The Cash Flow Projection is entirely inconsistent with the evidence of Mr Johnson and Mr Few that they never agreed to make monthly repayments of $40,000. In my view, the document significantly damages the credibility and reliability of Mr Johnson and Mr Few.

1. Two payments of $40,000 were made after the June Meeting. The first was paid on 14 July 2017 (and it was common ground that this was after Mr Evans had agreed to a grace period in relation to the date of that payment).
2. The second was paid on 1 August 2017.
3. These payments support Mr Evans' evidence that there was an oral agreement for monthly repayments of $40,000 to be paid on the first of each month.

1. The evidence compels a finding that the alleged oral agreement was made in the June Meeting. My reasons for this finding are given in the earlier sections. In summary, my reasons are as follows.
2. There is a contest between Mr Evans' evidence and the evidence of Mr Johnson and Mr Few. Mr Evans' evidence is supported by the events leading up to the June Meeting, what the parties knew at that date, and the subsequent communications between the parties. The evidence of Mr Johnson and Mr Few, in particular their denial that they had ever committed to paying $40,000 per month, is not consistent with the documentary evidence.
3. At the time of executing the Sale Agreement, the parties had agreed to agree the manner in which the vendor loan would be repaid closer to the ANZ Deadline. The parties believed the defendants would have to start making repayments on the vendor loan after the ANZ Deadline.
4. After Mr Johnson told Mr Evans the true position in early 2017, that the defendants were not on track to pay off the ANZ loan, Mr Evans was concerned about his vendor loan. Mr Evans wanted to meet with the defendants to get a firm commitment about how they would be dealing with the vendor loan repayments and the ANZ loan position.
5. At the time of the June Meeting, Mr Johnson and Mr Few knew they were going to be in breach of the Sale Agreement unless it was varied by consent, because they knew that the ANZ loan was not going to be paid off by the ANZ Deadline. They also knew that there was a real risk that Mr Evans would take legal action for that breach if they did not reach an agreement about the vendor repayments prior to the ANZ Deadline.
6. As at the June Meeting, the defendants believed they had the capacity to pay $40,000 per month.
7. The June Meeting was short, and ended with handshakes.
8. After the June Meeting, Mr Evans' emails made it clear that he believed the oral agreement had been made. The defendants did not correct his understanding until October 2017. The defendants were unable to explain why they did not, and there is no plausible explanation other than that they knew the agreement had been made.
9. Mr Johnson wrote the email on 31 August 2017 because he knew the oral agreement had been made in the June Meeting.
10. The Cash Flow Projection recorded a liability of $40,000 per month.
11. The fact that the Sale Agreement contained the no oral modification clause (cl 11.1) is a significant evidentiary fact against a conclusion that an oral agreement was made. However, having regard to all of the evidence, I feel an actual persuasion that the oral conversation occurred in the terms alleged by Mr Evans and that it was intended by the parties to be a legally binding agreement. The documents, and the inferences to be drawn from them, compel this conclusion. They support Mr Evans' evidence, and I found him to be a reliable and honest witness. They are inconsistent with the evidence of Mr Johnson and Mr Few, and I do not accept their evidence.

1. Gardenisle submitted that the consideration for the oral agreement was that it took no action on the defendants' anticipated breach of the Sale Agreement and permitted the defendants to refinance the outstanding ANZ loan with the NAB.

1. Gardenisle did not assert that the parties expressly discussed the consideration for the oral agreement. Rather, Gardenisle asserted that the consideration was implied.
2. The defendants asserted that Gardenisle did not plead implied consideration. I accept that Gardenisle's pleading could have been clearer. However, by the time Gardenisle filed its witness statement on 3 September 2018, the defendants must have known that Gardenisle's case was that the consideration had not been expressly stated in the June Meeting. Further, Gardenisle's reply submissions filed on 8 March 2019 made that plain. The defendants did not assert they had been taken by surprise or assert any prejudice.[190] If it had been necessary to amend the pleading, I would have granted leave.
3. It was not in dispute that consideration may, as a matter of law, be implicit.[191] It was not necessary for Mr Evans to say in the June Meeting that, unless the defendants agreed to a repayment arrangement, he would sue them.[192]

1. The defendants submitted that there was no real risk that Mr Evans would take action against the defendants for breaching the Sale Agreement by failing to pay the ANZ loan by the ANZ Deadline and by refinancing the ANZ loan. They pointed out that it is 'no consideration to refrain from something that you were never going to do'.[193]
2. The defendants did not give evidence that they had made the oral agreement for a reason other than the risk of litigation. Rather, they simply denied any agreement was made. I have rejected the defendants' account of the June Meeting. I have found that they did make the agreement. I am left to infer whether they made the agreement so that they could refinance the ANZ loan without being sued for breaching the Sale Agreement.
3. As at the June Meeting, Mr Johnson and Mr Few knew they were not going to be able to repay the ANZ loan by the ANZ Deadline of 27 June 2017. They knew that the failure to repay the ANZ loan by that date would constitute a breach of the Sale Agreement unless it was varied by consent. I previously explained why I am satisfied that Mr Johnson and Mr Few knew, as at the June Meeting, that there was a real risk that Mr Evans would take legal action if they did not reach an agreement about the vendor repayments prior to the ANZ Deadline.[194] They knew that Mr Evans would not be satisfied by anything other than a concrete commitment.
4. The defendants believed, at that time, that they could afford to pay $40,000 per month in vendor loan repayments.
5. I infer that the defendants made the agreement so that they could refinance the ANZ loan without being sued for breaching the Sale Agreement.
6. I further infer that Mr Evans would have taken legal action if a repayment agreement had not been struck. It is true that he repeatedly made offers in an effort to reach a mutually satisfactory resolution. I accept that, for him, legal action was not his first choice at any time. However, the June Meeting came at a critical time.
7. As at the June Meeting, Mr Evans was aware that the defendants were going to breach the Sale Agreement by failing to repay the ANZ loan by the ANZ Deadline. He was aware that the defendants were seeking to switch banks to refinance the ANZ loan, which would breach the Sale Agreement unless the parties agreed to vary it.
8. The ANZ Deadline was fast approaching. When executing the Sale Agreement, the parties intended to agree the manner of repayment of the vendor loan closer to the ANZ Deadline, and obviously before that date.
9. Mr Evans had been told in December 2016 that the defendants were on track to repay the ANZ loan. He found out in early 2017 that they were not. The June Meeting occurred because Mr Evans wanted to get a firm commitment about how the defendants would be dealing with the vendor loan repayments and how they would be dealing with the ANZ loan position.
10. In those circumstances, by accepting the defendants' repayment proposal, Mr Evans implicitly agreed that he would not take action against the defendants for failing to pay off the ANZ loan by the ANZ Deadline and agreed to the defendants refinancing the ANZ loan through another bank.
11. Accordingly, Mr Evans gave consideration for the agreement that was made.

Did Mr Johnson and Mr Few have the authority to act for and on behalf of Ms Johnson and Ms Few?

1. Gardenisle pleaded that, at all material times, Mr Johnson and Mr Few had express actual authority, implied actual authority and/or ostensible authority to act for and on behalf of the first and third defendants in respect to the making of agreements, including those relating to the repayment of the vendor loan.[195] Ultimately, Gardenisle relied upon an allegation of implied actual authority, which I will refer to as 'implied authority'.
2. Implied authority, as the description suggests, may arise notwithstanding the absence of an express agreement between the principal and the agent. The parties may conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent.[196]
3. The evidence was overwhelming that Mr Johnson and Mr Few had implied authority to act on behalf of the first and third defendants in relation to all matters connected to the running of the business, including the repayments of the vendor loan, from the time that they took over the business to the present day.
4. Ms Johnson gave evidence that she trusted her husband and Mr Few to act honestly and fairly and in her best interests. She did not seek to impose any restrictions on the way in which they dealt with the business because she knew that her husband would make the decisions 'for the family and myself'. She confirmed that she left all of the matters in relation to the business to Mr Johnson and Mr Few.[197]
5. Ms Johnson said she did not seek to place any restrictions on Mr Johnson or Mr Few as to the way they dealt with Mr Evans. She said she did not contact Mr Evans to tell him he should deal with her on any matter, including the vendor loan, or that she wanted notices sent to her. Ms Johnson said that she left the amounts to be paid to Mr Evans by way of repayments of the vendor loan to the discretion of Mr Johnson and Mr Few, for the best of the company. She would trust them to make the right decision. She said she was happy for them to make those decisions based on how the business was going and was sure that they would do the right thing by the business and everybody else. She said she did not place any restrictions on what would be paid on the vendor loan.[198]
6. Ms Few gave evidence that she was happy to leave the decision‑making to Mr Few in relation to all matters concerning the trust, and was quite happy for him to make those decisions.[199]
7. Mr Johnson said that his wife and Ms Few were not involved in the repayments of the vendor loan or the day‑to‑day running of the business. He said that Ms Johnson and Ms Few were happy to leave the decision‑making to him and Mr Few.[200]
8. Counsel for the defendants accepted that the evidence supported implied authority arising in May 2011. However, he submitted that it could not have meant that they had an ongoing authority for all time in relation to anything to do with the Sale Agreement, even changing its terms.[201]
9. I do not accept this submission. The overwhelming evidence was that Ms Johnson and Ms Few gave their husbands the authority to act on their behalf in relation to all matters connected to the running of the business, including the repayments of the vendor loan, from the time that they took over the business to the present day.

1. I have found that Gardenisle and the defendants entered into an enforceable agreement that the defendants would repay the vendor loan by making payments of $40,000 per month for 72 months and then a lump sum payment of $1,120,000 on or before 30 June 2023.
2. I will hear from the parties as to the appropriate orders.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Fazio v Fazio [2012] WASCA 72 [193] ‑ [195] (Murphy JA, with whom Newnes JA agreed). See also Pullin JA [10], [13].

[2] Agreed Chronology filed 14 March 2019.

[3] Mr Evans' unchallenged evidence was that the Sale Agreement did not include his business in the Eastern States, unlike the 2010 Agreement - see ts 53, 55 (11/3/19).

[4] See the Amended Writ of Summons filed 25 February 2019 [9(b)] and the Amended Defence filed 26 February 2019 [10.2]. See also the Sale Agreement cl 3.1 and 3.2.

[5] ts 56 (11/3/19) and ts 243 (12/3/19). It is necessary to include the dates for the transcript references because the pagination for the hearing commences at page 35 and goes up to page 276, then 'continues' from page 152.

[6] To the extent that Mr Few gave a different answer, I do not accept it. As explained later, I found his evidence to be unsatisfactory - see under the heading 'Assessment of witnesses'. See also ts 171 (13/3/19).

[9] Mr Evans thought the meeting was after his email of 3 July 2014: see ts 102 (11/3/19). Mr Johnson and Mr Few did not give evidence as to when the meeting was. The Agreed Chronology puts the meeting in June 2014.

[13] See under the heading 'Assessment of witnesses'.

[27] ts 203 ‑ 204 (13/3/19). See also ts 208 (13/3/19).

[36] ts 66 (11/3/19). See also Agreed Chronology entry for December 2016.

[37] ts 66 (11/3/19) and Agreed Chronology. At ts 251 ‑ 252 (12/3/19), Mr Johnson admitted telling Mr Evans that they were on target to repay the ANZ loan by the ANZ Deadline but could not recall when he had told him that. Mr Evans said it was in December 2016 and it was not suggested he was wrong about that, and the Agreed Chronology confirms it was in December 2016.

[39] Agreed Chronology and ts 123 (11/3/19).

[40] ts 66 (11/3/19), ts 252 (12/3/19).

[41] ts 66 ‑ 67 (11/3/19), ts 251 ‑ 253 (12/3/19).

[43] ts 69 (11/3/19), ts 253 (12/3/19). See also ts 209 (12/3/19).

[45] ts 67 (11/3/19), ts 229 (12/3/19). See also ts 253 (12/3/19).

[46] ts 203 ‑ 204, 208, 229, 253 (12/3/19).

[53] Counsel referred (at ts 172 ‑ 173 (13/3/19)) to exhibits 1.23, 1.29 and 1.35 and (at ts 192 (13/3/19)) to exhibits 1.15, 1.18, and 1.21.

[60] See under the heading 'The Cash Flow Projection'.

[61] See ts 239 ‑ 240, 247, 254, 256 (12/3/19). The difference in the evidence of Mr Few and Mr Johnson was conceded by counsel for the defendants at ts 185 (13/3/19).

[77] ts 262 (12/3/19). See also ts 259, 266 (12/3/19).

[89] See also Mr Johnson's evidence at ts 265 ‑ 266 (12/3/19).

[90] See also his oral evidence at ts 134 ‑ 136 (11/3/19).

[98] Counsel referred at ts 192 (13/3/19) to exhibits 1.54, 1.60, 1.67 and 1.75.

[102] See ts 107, 131 ‑ 132 (11/3/19).

[108] Exhibit 1.67. This email was admitted on the basis that it was it was written by Mr Evans on a without prejudice basis - see ts 158 (12/3/19).

[119] Exhibit 1.82. See also ts 269 ‑ 270 (12/3/19).

[120] ts 210 (12/3/19). See also ts 270 (12/3/19).

[122] ts 211 ‑ 212 (Few) (12/3/19) and ts 268 ‑ 269 (Johnson) (12/3/19).

[131] Exhibit 1.29. See also exhibit 1.31.

[148] See under the heading 'What did the defendants know at the time of the June Meeting?'

[149] Plaintiff's Summary of Key Findings of Facts & Law [45(f)].

[153] See ts 225 ‑ 226 and 231 (13/3/19).

[155] Fazio v Fazio [193] ‑ [195] (Murphy JA, with whom Newnes JA agreed). See also Pullin JA [10], [13].

[156] John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 [94]; Chou v Awap Sgt 26 Investment Ltd [No 3] [2018] WASC 383 [133].

[158] GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1 [214] ‑ [222]; GB Energy Ltd v Protean Power Pty Ltd [2009] WASC 333 [71]; Ryder v Aphrodite Gold Ltd [2017] WASC 377 [228].

[160] GEC Marconi Systems [217], [221]; GB Energy Ltd [72].

[170] ts 56 (11/3/19), ts 243 (12/3/19).

[171] Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [25].

[172] This is discussed further under the heading 'Was there consideration for the agreement?'

[173] As set out under the heading 'Facts'.

[175] See exhibits 1.16, 1.18, 1.22, 1.24.

[180] See under the heading 'Late 2016 - Mr Evans is told there is no problem'.

[181] See under the heading 'Early 2017 - Mr Evans is told there is a problem'.

[184] Exhibit 1.34. See also exhibit 1.31

[186] ts 262 ‑ 263 (12/3/19). See also ts 189, 231 ‑ 232 (12/3/19).

[192] Boothey v Boothey (Unreported, WASCA, Library No 970092, 13 March 1997) 18 ‑ 19. And see, for example, Wigan v Edwards (1973) 47 ALJR 586; (1973) 1 ALR 497, 513 and Pitts v Jones [2007] All ER (D) 93 (Dec); [2007] EWCA Civ 1301 [18].

[193] ts 200 ‑ 201 (13/3/19), citing Boothey v Boothey.

[194] See under the heading 'What did the defendants know at the time of the June Meeting?'

[195] The defendants raised an issue in relation to what precisely was being pleaded, but this was clarified in the plaintiff's opening and counsel for the defendants properly conceded that he was not taken by surprise - see ts 42 ‑ 44, 47 ‑ 49 (11/3/19).

[196] Tiao v Lai [No 2] [2010] WASCA 189 [104].