Ipex Software Services Pty Ltd & Ors v Hosking [2000] VSCA 239

2. These reasons, which are reasons for a dissenting judgment, should be read in conjunction with the reasons for judgment below[1].

5. It would, therefore, be a work of supererogation to repeat the facts leading up to the institution of proceedings but, as each member of the Court is likely to refer to provisions of the document signed on 29th and 30th August, but back-dated to 29th and 30th April, 1994, it will be convenient to set that document out again[2]:

"The parties agree that the following is an accurate outline of agreement reached between J Schwalb, 'Ipex Group', D Cohen (or nominated entity) 'DC', J Sheiman (or nominated entity), 'JS' and M Hosking (or nominated entity) 'MH'. 1. The Ipex Group, 'the group' is defined as all current and future Australian trading entities consisting of:

a) Takapana Investments Pty Ltd ATF The Schwalb Family Trust No 1.

e) Ipex Software Services Pty Ltd ATF Ipex Software Services Unit Trust.

f) Melton Gully Pty Ltd ATF The Schwalb Family Trust No 2

2. The parties hereby agree that the following agreement is to be effective from 1 July 1994 ('The effective date'). 3. The fundamental basis of the agreement is that David Cohen and J Sheiman and M Hosking are to become entitled to the following % of the equity in the group:

4. The above entitlements are unconditional and effective immediately except that in the case of JS the following vesting arrangement is to apply:

b) Balance of entitlement to be 'vested' over 2 years commencing 1 July 1994 in equal proportions for each completed year.

c) In the event of a formal group restructure or listing prior to the expiry of the 2 year period the balance of the entitlement % will automatically vest in JS.

d) Once the full entitlement position is reached any debts and obligations not currently recorded in the accounting records will be extinguished and JS entitlement will vest fully without any encumbrance. Thus any such unrecorded debts and obligations are reduced in proportion to the vesting period completed.

e) In the event of resignation/termination prior to the expiry of the full vesting period, the balance of any unrecorded debt will be taken into account in any settlement payments.

5. Due to commercial constraints the parties agree that a formal restructure of the group is not currently feasible but that the agreement is intended to be as legally and commercially binding as if a restructure had been completed. 6. The group referred to in 1. above consists of companies and trusts and thus have different taxation treatments applying to profits generated in the respective entities. 7. Notwithstanding the above, it is agreed that all future profit generated in trust structures will be distributed to companies in the defined group, such that the value of the group will be increased each year by the increase in the group's net profit after tax. (i.e. not assets.) 8. Furthermore, if dividends are paid from companies in the group then a proportionate distribution of profits will be made from trust structures to entities associated with DC or JS or MH. (It is noted however that dividends and distributions are in any case restricted by conditions imposed by the group bankers, Hong Kong Bank.) 9. The entitlement referred to in 3 above is to be formally restructured and given effect to in the following circumstances:

a) A proposed sale of the group or part thereof prior to or in the course of a formal restructure or listing of the group, or

10. In the event of the death, or total & Permanent Disability of DC, JS or MH prior to a formal restructure, the Ipex Proprietors (Schwalb family) will be required to make a termination payment to DC, JS or MH in a manner mutually agreed between the parties.

11. The termination payment shall, in the absence of an agreed amount[3] be determined by reference to the following formula:

G = Goodwill of the group calculated as being the average group net profit after tax for the prior 3 completed financial years multiplied by a price/earnings multiple of 10.

NA = Consolidated net tangible assets as at 30 June of the last completed financial year.

IA = Insurance amount payable referred to in 14 and 15 below (if any).

12. By way of indication based on the group consolidated results for the 3 years ended 30 June 1993, the goodwill valuation would be approximately $10M and net tangible assets were approximately $1.8M at that date.

13. Any loan account balances owing at the time of death, will also need to be paid out or deducted as the case may be.

14. In order to facilitate the payments referred to in 11 above Ipex agrees to fund death/TPD Cover for DC, JS and MH of the following amounts in the most appropriate manner from time to time:

The owners and beneficiaries of the policies are to be DC, JS, MH or their dependants.

15 Any amounts due under 11 above shall be paid to DC, JS or MH or their beneficiaries as soon as possible but at least at the rate of equal monthly instalments over 3 years with interest accruing at bank overdraft rates from time to time on the outstanding balances.

16. Any loan account balance referred to in 13 above is to be payable over 12 months with interest accruing at bank overdraft rates, from time to time on the outstanding balances.

17. In the event of resignation or termination the following procedures are to apply:

a) The departing party is to remain entitled to the equity percentage referred to in 3 above and will be entitled to a formal shareholding consequent on the events specified in 9 above.

b) The departing party will be free to dispose of his entitlement or shareholding in any manner and to any party, subject to a first right of refusal being held by the remaining parties.

c) The value of the entitlement or shareholding and terms of sale is not hereby fixed but will be subject to negotiations between the parties at that time.

d) Any loan accounts owing at the time of resignation or termination will be payable over 12 months with interest accruing at bank overdraft rates from time to time on the outstanding balances.

18. Consolidated group financial accounts at 30 June 1994 are to be prepared and presented to the parties by 31 December 1994, setting out the net assets of the group at 30 June 1994.

52. Although I may sometimes refer to that document as "the agreement", the agreement on which the respondent sued was alleged to be partly written, partly oral and partly to be implied. The document set out above was the written component. I shall refer to the oral component later. The facts from which the agreement was said to be implied are the facts leading to, and including, the transfer of the computer software services business of the Ipex Software Services Unit Trust, the respondent's work for the Ipex Group thereafter and his acceptance of a salary sacrifice in the interests of wealth generation through growth.

55. Four of the six companies listed in clause 1 of the agreement contracted, through Mr Schwalb as their representative, as trustees for unit trusts. I attach a copy of a descriptive chart prepared by counsel for the appellants. Its detail is not important. What is important is the complexity of the notion of equity in a case like this[4] and the latitude of choice involved in giving effect to the proposed restructure. The equity is a mixture of interests in companies and trust property.

58. A share itself is a congeries of rights and liabilities dependent, or formerly dependent, on the terms of the memorandum and articles.[5] Over 90% of the value is in the assets of The Schwalb Family Trust No. 1. Article 31(a) of the articles of association of the trustee, Takapana Investments Pty. Ltd., reads:

"31. WHENEVER in respect of or in connection with any shares registered in the name of a member (whether solely or jointly with others) or with any dividends or bonus thereon and whether in consequence of his death or for any reason any law for the time being of the Commonwealth of Australia or of any Australian State or Territory or of any other country or place imposes or purports to impose any immediate or future or possible liability upon the Company to make any payments to any Government or taxing authority - (a) The Company shall in respect of any such liability be fully indemnified by the member and his executors or administrators wheresoever constituted or situated."

The remainder of the article confers rights of recovery and deduction and a lien.

63. Clause 15 of the trust deed of The Schwalb Family Trust No. 1 purports to exclude the Hardoon v. Belilios[6] indemnity except in respect of any duty or tax which the trustee is entitled by law to recover from a beneficiary. Provisions such as article 31 and clause 15 show that, even if the respondent could not be required to provide further consideration for his interest, the interest itself might import contingent liabilities. Perhaps even more importantly, the trust deed confers wide discretions on the trustee. I do not stay to consider the constituent documents of the other five entities.

66. The relevant pleading is the fourth further amended statement of claim dated 19th December 1997, to which I shall refer simply as "the statement of claim". The agreement was pleaded in paragraph 9. Paragraph 10 alleged that there were terms of the agreement, among others, that the respondent was entitled to 5% of the equity in, and profits of, the Ipex Group from 1st July 1994; that all future net profits of the group generated in trust structures would be distributed to companies within the group, so that the value of the group would be increased each year by the increase in its net profit after tax; that, if dividends were paid by companies within the group, a 5% distribution of profits would be made from trust structures to entities associated with the respondent; and that his entitlement to 5% of the equity in the group was to be given effect by the formal restructuring of the group, the sale of part of the group or in any event by 1st July 1996.

69. The breach assigned, in paragraph 12 of the statement of claim, was that the appellants [7] had failed to transfer to the respondent "shares and/or units" equivalent to 5% of the equity in the Ipex Group by 1st July 1996 or at all and that they had failed to account to him for 5% of the profits of the group from 1st July 1994. Little was said about the profits at the hearing of the appeal. Mr Scerri informed us that the judgment given below is intended to cover profits, but neither side submitted that they raised a separate issue for us to decide. Accordingly, when I speak of the promise on which the respondent sued, I shall be referring primarily to the promise to transfer to the respondent, by 1st July 1996, shares or units, or a combination of shares and units, equivalent to 5% of the equity in the group. That promise derives primarily from clauses 3 to 5 and 9(b) of the agreement.

72. The judgment given on 25th March 1999 took the following form:

"THE COURT DECLARES THAT: 1. On 30 August 1994 the plaintiff and each of the first to sixthnamed defendants (collectively 'the Ipex Group') entered into a binding agreement ('the agreement') which was effective from 1 July 1994 and pursuant to which: (a) the plaintiff acquired the right to 5% of the equity in the Ipex Group; (b) the Ipex Group agreed to give effect to that entitlement on or before 1 July 1999. 2. The first to sixthnamed defendants breached the agreement in that they each refused and failed and continue to refuse and fail, to give effect to the plaintiff's entitlement to 5% equity in the Ipex Group. 3. The first to sixthnamed defendants are liable to the plaintiff for breach of the agreement, with damages to be assessed by a master under order 51 of the Supreme Court Rules. THE COURT ORDERS THAT: 4. The proceeding against the seventhnamed defendant is dismissed. 5. The costs of the proceeding, including the costs of today are reserved."

The plaintiff is the respondent; the first to sixthnamed defendants are the appellants and the seventhnamed defendant is Mr Joel Schwalb.

77. It will be observed that "the Ipex Group" appears to be used in two different senses in the judgment, sometimes to refer to the appellants and sometimes to refer to the Ipex Group in the extended sense defined in clause 1 of the agreement, namely "all current and future Australian trading entities consisting of" the appellants in various capacities, and that "1999" in paragraph 1(b) should be "1996". It is unnecessary to decide whether both those matters could be corrected by the trial judge under the slip rule, because the parties are agreed that, if the appeal is unsuccessful in other respects, paragraph 3 of the judgment should nevertheless be varied to provide for damages to be assessed by a judge. The Court would correct the references to the Ipex Group, if necessary[8], and the date at the same time.

80. The reasons for the assessment to be conducted by a judge became apparent in the course of the hearing of the appeal. It is likely that questions will have to be decided of at least the same difficulty as those which had to be decided at the trial. In my view, it is not impossible that the assessment of damages will prove more difficult than the determination of liability. So to vary the judgment does not in any way reflect on the steps that have been taken so far in the assessment, but it will render redundant the appeal that has been brought to Mandie, J. from orders made by one of the masters on 12th April 2000.

83. It is arguable that the judgment given on 25th March 1999 was a judgment in an interlocutory application within the meaning of s.17A(4)(b) of the Supreme Court Act 1986, as interpreted in Border Auto Wreckers (Wodonga) Pty. Ltd. v. Strathdee[9]. The causes of action pleaded included misleading and deceptive conduct and estoppel[10], but the judgment given was entirely in contract. It may, therefore, be a final judgment on the authority of Hall v. Busst[11] and J.J. Savage & Sons Pty. Ltd. v. Blakney[12] but, for the reasons I gave in National Australia Bank Ltd. v. Maher (No.2)[13], that is not clear. It is plain that leave would be appropriate if the judgment is interlocutory. Accordingly, when the appeal was called on for hearing, the Court ordered that the appellants have leave to appeal if leave be needed. That was not opposed by the respondent.

86. The appeal, as it was argued, presents two main issues for decision. The first is whether the promise for breach of which the respondent seeks damages was supported by valuable consideration. (It may be convenient hereafter to speak of "consideration for the agreement", but strictly speaking it is consideration for that promise.) The second is whether the promise was sufficiently certain to be enforced.

89. It was also argued that the parties did not have an intention to enter into legal relations, but I think there is nothing in that point except as an adjunct to the certainty issue. Although the agreement is described as an outline, it speaks of unconditional and immediately effective entitlements[14] and it is expressly stated that the agreement is intended to be as legally and commercially binding as if a restructure had been completed[15]. Such language is consistent also with an intention to enter into legal relations when the first element of the consideration was provided as discussed below.

92. Three elements of consideration were pleaded in paragraph 9 of the statement of claim and Mr Scerri confirmed that they were still the only consideration on which the respondent relied[16]. The first is the respondent's agreeing, or not objecting, to the acquisition of the computer software services business of the Ipex Software Services Unit Trust by Ipex ITG Pty. Ltd.[17] on 1st July 1994. The second element is his agreeing to continue to be employed by the group to write computer programs, advise the group as to computer software and participate in marketing of computer equipment, software and maintenance services by the group. The third element is his agreeing to continue to accept a salary calculated in accordance with the practice of the group, which is in turn alleged to have been that directors of companies within the group accepted reduced salaries in return for increased growth in the value of their shares and units.

95. The learned trial judge dealt with the question of consideration as follows[18]:

"The context in which the agreement was signed is ... a context of a continuing and developing relationship with discussion of Hosking acquiring an interest in 'Ipex', the thing controlled by Joel Schwalb. It was in that context and on that basis of understanding of receipt of an interest that Hosking agreed to, and facilitated, the movement of Ipex S S's accounts and customers to Ipex I T G from 1 July 1994. So, too, was it implicit, indeed so obvious as to go without saying, that Hosking would continue to be engaged in the provision of his services. And so too did it continue to be an aspect of the situation that he was paid somewhat less. These features were a part of the ongoing context which included discussions as to Hosking acquiring an interest, the agreement signed on 30 August and the conversation between Joel Schwalb and Hosking not long before that. While these matters were not specifically mentioned in the written agreement they underlay it and were part of the context in which it was entered into. Further, in relation to the matter of consideration, while Hosking was to receive the 5% he was to give up his interest in the Ipex Software Services Unit Trust. What Hosking was to end up with was a 5% equity interest in the Group. He also was agreeable to [continue] to work on the lower salary basis mentioned and to have the Ipex S S business in Ipex I T G. For these reasons in my view there was consideration for the agreement."

99. I shall begin with the first element, not only because it is the first pleaded in paragraph 9 of the statement of claim but also because it is the most likely of the three to accord with any bargain that the parties in fact struck. The respondent recognized as much in the following passage, taken from his cross-examination:

"Mr Hosking, do you understand yourself to have any obligations to perform under this August 1994 agreement, to render to the Ipex group or some other part of it, something you have got to do, make a payment or do anything like that?---No. And that was your understanding in August 1994 too, wasn't it, that - - - ?---I understood - - - You were to have this 5 per cent on the restructuring but there was nothing that you were obliged to do?---Apart from transfer Ipex Software Services business. That wasn't a matter which was discussed with Mr Joel Schwalb, that is the meeting or the two meetings you had with him, was it? ---Yes, it was. It is not referred to in your witness statement, is it?---Yes, it is. I believe it is. Have a look at paragraph 39 of your witness statement?---Yes. Tell me where it is that it refers to you having to do anything?---I said as the companies were being merged into one company, you will get your shareholding as agreed. My company was being merged into the one company. And is that the only passage you rely upon?---From Joel, from Joel directly, yes. That I can remember, of course." (Emphasis added.)

Practical realism suggests that, if there was a bargain, that is what it was about.

104. Paragraph 39 of the respondent's witness statement, referred to in that passage of cross-examination, is worth setting out in full:

"In mid 1994 I heard from Cohen that the document to be prepared by Kahn was well under way, and was nearly ready. I approached Joel in his office and asked him how the Ipex Group was to be structured, how much I was getting and when I was getting it. Cohen told me at some stage that the agreement was ready and that Joel had it. I went to Joel's office and spoke to him. He told me to come back later that afternoon to meet with him. I did so. He was in a good mood. He gave me a copy of the agreement to read. He told me I could read it but it was not the one to sign. The final version will come shortly. I read the document. While I did so he was talking about the Ipex Group. He was buoyant. Joel said 'as the companies were being merged into one company you will be getting your shareholding as agreed'. Joel then told me about the document as proposed and how in addition to the directors Cohen, Jonathan Sheiman and myself would receive shares as agreed. I finished reading the agreement and gave it back to him. He mentioned how he appreciated how much everyone had contributed to the company including myself. He said that now we had the agreement, we were coming together and things were going well. Further he told me that a number of key Ipex employees namely, Arie Benezra, Sayit Hassan, Tony Laporta and Kalmus were to receive shares in recognition of their key importance to the company. Joel told me that I was going to get 5%. Joel said that this was final. It was to be my shareholding in the merged group. I told him that I was happy with the 5% shareholding. I was not told how much the others were getting. I didn't care what the others were getting. That was between Joel and them. I was told by Joel during the meeting that the agreements were being prepared and would be ready in a couple of weeks. At no stage did Joel say or intimate that I would have to pay tax or have a tax liability by reason of my shareholding."

108. That meeting is important for a number of reasons. First, although the respondent said in evidence that he had many informal meetings with Mr Joel Schwalb in 1994, perhaps as often as every couple of weeks, this was the only one that he could clearly distinguish in relation to the document that he came to sign in August[19] or even regarding the merger[20].

111. Secondly, the evidence does not show that the meeting occurred on or about or before 1st July 1994. Paragraph 9 of the statement of claim alleges that the agreement on which the respondent sued was entered into in or about mid-1994, alternatively August 1994. In so far as the agreement was oral, it was said to consist of a conversation in mid-1994. Mid-1994 is the time when the respondent heard from Mr Cohen that the document to be prepared by Mr Kahn was nearly ready. He was told by Mr Schwalb that the agreement would be ready "in a couple of weeks". In cross-examination he said that the interval between the meeting and the signing of the agreement was "a matter of weeks" but he did not know how many.[21] The judge regarded the respondent as having said that the meeting occurred "a couple of weeks" before the agreement was signed. His Honour accepted that there was such a meeting and that the subject matter[22] may have been, and probably was, mentioned in the course of conversation at other times. Whether the meeting occurred a couple of weeks before the signing of the document was unclear but, in his Honour's view, the result of the case did not turn on the accuracy of that recollection, which he found was honestly given. Although he said that the draft that Mr Schwalb showed the respondent may have been a draft of 23rd June, it cannot be said on the balance of probabilities that the meeting took place before, or at or about the same time as, the acquisition of the computer software services business. It appears to have taken place afterwards, perhaps in the second half of July or the first half of August.

114. Thirdly, the meeting was the first occasion on which it is alleged that the respondent was told that he would receive a 5% interest.[23] Indeed so much may be inferred from the tenor of paragraph 39 itself: "Joel told me I was going to get 5%. Joel said that this was final. It was to be my shareholding in the merged group. I told him that I was happy with the 5% shareholding."[24]

117. The evidence establishes, and I take his Honour to have found, that the respondent permitted the computer software services business to be acquired by Ipex ITG Pty. Ltd. on or about 1st July 1994, and that he actively assisted in the transfer of the business, in the belief that, in return, he would receive shares or units in the restructured group[25]. That belief resulted from conversations with Mr Yoav Schwalb and Mr Cohen, but they were not acting independently from Mr Joel Schwalb. Such an hypothesis would be entirely inconsistent with the way in which the affairs of the group were conducted. In early 1994 the respondent was told by Mr Cohen that the latter had spoken with Mr Joel Schwalb, who had agreed that the merging of the companies should begin. Mr Cohen said that he had been meeting with Mr Schwalb regularly and that it was "his project" to merge the accounts of Toren as the first step in the physical merging of all the companies[26].

120. The three reasons I have assigned in [19] to [21] for the importance of the meeting give rise to an argument that the first element of the consideration pleaded was past consideration. It is not necessary for the respondent to rely on forbearance, for the evidence establishes that he actively participated in the transfer of the business, but the argument remains, and was advanced by Mr Whelan, that the transfer occurred prior to the making of the agreement. The transfer was not, however, intended to be gratuitous, nor was it an example solely of detrimental reliance. It was more like the performance of a service on the basis that it would be paid for, followed by a promise which fixed the amount of the payment.[27] As Bowen, L.J. said in Re Casey's Patents[28]:

"Even if it were true, as some scientific students of law believe, that a past service cannot support a future promise, you must look at the document and see if the promise cannot receive a proper effect in some other way. Now, the fact of a past service raises an implication that at the time it was rendered it was to be paid for, and, if it was a service which was to be paid for, when you get in the subsequent document a promise to pay, that promise may be treated either as an admission which evidences or as a positive bargain which fixes the amount of that reasonable remuneration on the faith of which the service was originally rendered. So that here for past services there is ample justification for the promise to give the third share."

In my opinion, the transfer of the business was not past, but executed, consideration and it was capable of supporting the promise on which the respondent sued.

125. I do not accept that the evidence establishes the second or third element of the consideration pleaded. The second element is inconsistent with clause 17 of the agreement, under which it would have been permissible for the respondent to resign at once and carry his entitlement to "a formal shareholding" consequent on the events specified in clause 9. More fundamentally, his continuing to work for the Ipex Group, and to do so for compensation less than he would have received elsewhere, was at best a form of detrimental reliance. This was not like a case where, after a promise of a specific benefit is made, an employee continues to work for an employer. It was more like a case of a person repairing a cottage in the expectation of a proprietary interest.

128. The uncertainty issue breaks down into a number of distinct questions, for uncertainty may take the form of incompleteness or irremediable obscurity or the illusory character either of the promise sought to be enforced or of the counter-promise said to afford valuable consideration.

131. Putting the question of illusoriness to one side, the respondent can succeed only by an application of the well-known statement of principle in Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd.[29], in relation to obscurity of expression, combined with the proposition, of which Thorby v. Goldberg[30] is perhaps the best known example, that an agreement is not void because it gives one party a latitude of choice as to the manner in which agreed stipulations shall be carried into effect[31], in relation to alleged incompleteness. There may be no great difficulty about the former, although one's confidence even in that begins to waver when one contemplates the difficulty that has been encountered in the assessment of damages and that will continue to be encountered if the assessment proceeds. The more important point, for present purposes, is that Mr Scerri was driven to concede that the bargain entailed that the respondent would accept his 5% of the equity in the group in whatever form the appellants decided.

134. It was conceded that that was unwise, but counsel reminded us that the learned trial judge made findings (which are not challenged) to the effect that the respondent was not commercially experienced and was dealing with others who were. Moreover, he pointed out, there would be some limits on the appellants' freedom of choice. They would have to act honestly. They might have to act reasonably, or at least not purport to perform the contract in a way that no reasonable person would adopt, and there might be an obligation not to discriminate between Mr Cohen, Mr Sheiman and the respondent. In any event, Mr Scerri insisted, latitude of choice did not show that there was no enforceable promise but only that the damages would be less than they might otherwise have been.[32] The damages would not be nominal, as it was suggested they might have been on the facts proved in the Biotechnology Case [33].

137. I can well imagine an agreement of the form, "I shall pay $50,000 for a 5% interest in your business, leaving it to you how the 5% interest is structured." Such a statement might be made by a young person buying into a family business and such a bargain could, I think, be enforced even if it did leave considerable latitude to the vendor of the 5% interest. But is this agreement truly analogous? An affirmative answer would mean that the respondent agreed to accept any of a very wide range of possible packages, with a range of values and almost certainly entailing some potential obligations on his part. [34] Had he been tendered[35]

something he did not like, would he then have acknowledged that it had all been left to the appellants to decide, with no right on his part to have an effective say in the form that his interest would take? As a matter of common sense, I doubt that an affirmative answer is possible to either of those questions.

142. Moreover, the promise contained in clauses 3 to 5 and 9(b) of the agreement does not fix the quid pro quo for the transfer of the computer software services business on 1st July 1994. It may be capable of doing so in principle, but it does not do so in fact. The evidence reveals parties in the course of negotiation. One of them promises an equity interest in return for the transfer of a business. The business is transferred, but the nature of the equity interest is not agreed. The parties proceed towards agreement, not least that the interest will be 5%, but there is no decision as to the relevant entity or entities, present or future, or the form that the interest will take [36]. It was conceded that, notwithstanding the references to a "shareholding" in clause 17, it was not even settled that it would take the form of shares as opposed to units.

145. If that analysis is correct, the promise is uncertain because it is insufficiently complete to fix the return for the executed consideration. The case is, in principle, no different from any other where a person performs while a contract is still being negotiated and the contract is ultimately not concluded. The remedy, if any, lies in restitution, not contract.[37] Alternatively, and I think that this will emerge if the

assessment of damages proceeds, the promise is either too obscure to be enforced at law[38] or the latitude of choice left to the appellants is so great as to make either the promise illusory or the damages nominal.[39]

149. For these reasons I would allow the appeal, set aside paragraphs 1 to 3 and 5 of the judgment given on 25th March 1999, in lieu of the first three paragraphs order that the proceeding against the appellants be dismissed and hear counsel on the subject of costs.

154. I have had the advantage of reading in draft the judgments of the other members of the Court. With one qualification, not material to the outcome of the appeal, I find myself in agreement with Eames, A.J.A. The qualification is that I express no opinion on the question whether specific performance of the agreement could have been obtained. I am, I would add, in substantial agreement with the primary judge on the matters argued on appeal.

159. This appeal is brought against a judgment of Hansen J delivered on 25 March 1999. In the proceeding before his Honour the plaintiff, Mark Hosking (the respondent to the present appeal), sought relief against seven defendants by way of specific performance of an agreement made partly in writing, partly orally, and partly to be implied. Insofar as the agreement was in writing it was constituted by a document (hereinafter referred to as "the agreement") signed by the plaintiff on

30 August 1994, and by the other signatories on 29 August 1994, but which was backdated to 30 April 1994. In the alternative, the plaintiff sought common law damages for breach of the agreement, and in the further alternative, damages for misrepresentation, pursuant to s. 52 of the Trade Practices Act 1974 and s. 11 of the Fair Trading Act 1985.

163. Of the seven defendants the first to sixth comprise trustees of discretionary trusts, trustees of unit trusts and companies, all of which entities were controlled by the seventh defendant, Joel Schwalb. The plaintiff's claim against the seventh defendant was dismissed and the appeal is brought by the first to sixth defendants. The first six defendants were Ipex Software Services Pty Ltd ("Ipex SS"), Takapana Investments Pty Ltd ("Takapana"), Ipex Research and Development Pty Ltd ("Ipex R and D"), Toren Pty Ltd ("Toren"), Melton Gully Pty Ltd ("Melton"), Ipex ITG Pty Ltd ("Ipex ITG").

166. After a trial occupying three days his Honour, on 24 February 1999, delivered reasons for decision and on 25 March 1999 made declaratory orders, the terms of which are set out in the judgment of Callaway JA and which I will not repeat. The hearing before Hansen J was confined to the question whether the agreement was legally binding, the question of relief being left for later determination, should the plaintiff succeed as to the first issue. Hansen J held that the agreement was legally binding as against the first to sixth defendants. His Honour did not find it necessary to determine the question of liability advanced on the separate bases of misrepresentation under the Trade Practices Act and Fair Trading Act. The plaintiff abandoned the claim for specific performance during the hearing. Having found in favour of the plaintiff as to liability his Honour referred the assessment of common law damages to a Master.

169. The circumstances which led to the signing of the agreement are set out in detail in the judgment of the learned trial judge and it is not necessary that I provide other than a broad summary of the facts. The respondent, Hosking, established a company, Ideal Systems Pty Ltd ("Ideal Systems"), with two other persons, Fausto and Lorenzo Morasco, to conduct a business which provided software development and consulting services. The three men owned Ideal Systems as to one third each. In early 1989, having been approached by Joel and Yoav Schwalb on behalf of what I will call, variously, "the Ipex Group", "the Group" or "Ipex", they entered a joint venture whereby Ipex would provide computer hardware and Ideal Systems would provide software development. A new software, known as DART, was developed by Hosking. In mid 1989 Joel and Yoav Schwalb suggested to Hosking that Ideal Systems should become part of the Ipex Group, as it then was. A new corporation was established for this purpose, Binary Amber Pty Ltd ("Binary Amber"). Subsequently that company's name was changed to Ipex Research and Development Pty Ltd. Binary Amber traded as Ipex Software Services.

172. Pursuant to an agreement with Joel and Yoav Schwalb the business of Ideal Systems was transferred to Binary Amber for no payment to Ideal Systems or its shareholders. In February 1990 an agreement was entered between Binary Amber, Melton, Ideal Systems, Yoav and Joel Schwalb, Hosking and the Morascos whereby the Ipex Software Services Unit Trust was settled, and Binary Amber became the trustee of that trust. The units of the trust were held as to 51% by Melton as trustee for the Schwalb Family Trust No.2. Forty-nine percent of the units were held by Ideal Systems (ie by Hosking and the Morascos as to one third each). As part of that merger Ideal Systems transferred all of its customers to Binary Amber.

175. In March 1992 the Morascos severed their involvement with Ipex, but at the request of Joel Schwalb Hosking agreed to remain, and to continue running Ipex Software Services. Having agreed to remain with Ipex, Hosking continued the development of the software. In 1992 Joel Schwalb obtained legal and accounting advice with respect to changing the structure of the then Ipex enterprise so as to minimise taxation liability. A series of changes in corporate structures and in the identity of the trustee of Ipex Software Services Unit Trust thereafter occurred and Hosking (or his company) obtained a 17% interest which had originally been held in Binary Amber and was then reflected in a shareholding in Ipex SS, when it was appointed trustee of the Ipex Software Services Unit Trust, and a unitholding in the trust.

178. In late 1992 Yoav Schwalb told Hosking that the companies comprising the Ipex Group were to be merged and that Hosking would receive shares in a new consolidated company. Hosking was to be one of several persons who were to receive shares in the consolidated company. Other persons who were to be similarly benefited were David Cohen and Jonathan Sheiman (both of whom later were signatories to the agreement which was the subject of these proceedings). Cohen then approached Joel Schwalb seeking a document reflecting the agreement reached as to the merging of the Group and the gaining of an interest in the Group.

181. Discussions and negotiations continued for some time and the solicitors for the Group were aiming to achieve a restructuring to take effect from 1 July 1994. At a meeting with Joel Schwalb in or about August 1994 Hosking was shown a draft of a proposed agreement and Joel Schwalb told Hosking that he would be receiving a 5% shareholding in the company which arose out of the merger of the Group. On 30 August 1994 Hosking was then asked to sign what was the final form of the agreement. He signed it in the office of the company accountant but received no explanation from the accountant prior to signing the document. The document is titled "Agreement" on its title page and on its first page, before any terms are set out, a note appears. The note states that: "The parties agree that the following is an accurate outline of agreement reached . ." and it then named the individuals who had reached the agreement and whom they represented. The full terms of the agreement are set out in the judgment of Callaway JA, and I will not repeat them here. The first six defendants, ie, the present appellants, were identified in clause 1 of the agreement as constituting the then current composition of "The Ipex Group".

184. It was the plaintiff's case that pursuant to the terms of the agreement he was entitled to a 5% equity in the Ipex Group either as it was currently constituted or as it was to be constituted after a restructuring of the Group, but, in any event, by 1 July 1996, and that in addition he was entitled to a share in the profits of the Group as from 1 July 1994.

187. The agreement having been signed, considerable time passed without the merged company being formed, any shares or units in the Group being provided, or any payments being made to Hosking pursuant to the agreement. Hosking kept pressing Schwalb for advice as to what was occurring. On 1 November 1996 Hosking met Schwalb who then for the first time expressed his disagreement with the terms of the agreement which had been signed. I will discuss these dealings between Joel Schwalb and Hosking in more detail later.

190. The defendants did not meet their obligations to Hosking pursuant to the agreement. In due course, the plaintiff issued proceedings by a writ on 27 March 1997.

193. The Defence raised a wide range of contentions. The Summary of Proceedings and Issues filed before the Court of Appeal identifies eleven substantive defences which were raised therein. When the action came on for trial a considerable number of those defences were pursued, many of them having no merit whatsoever. Some of the pleaded defences were abandoned at trial. Having pressed Hosking in cross-examination, no evidence was then called on behalf of the defendants.

196. Hansen J identified the issues with which, finally, he was primarily concerned as being whether the parties had intended to enter into a legally binding agreement, alternatively, whether the agreement was void by virtue of its terms being incomplete and/or uncertain, and as a further alternative, whether the agreement was subject to conditions subsequent which had not been met.

199. The learned trial judge found that Joel Schwalb, who executed the agreement, had the authority of the first to sixth defendants to execute the agreement, and held that the agreement did manifest an intention to enter into legal relations. The learned trial judge further found that the agreement, and, in particular, the term "5% equity in the Group" was not void for incompleteness or uncertainty, as it meant shares or units in the current or future manifestation of "the Ipex Group", as defined in the agreement. His Honour rejected the contention that the agreement was subject to conditions subsequent. The learned trial judge accordingly found that there was a binding agreement under which the plaintiff acquired a right to a 5% equity interest in the Ipex Group which should have been given effect to by 1 July 1996 but had not been. The first to sixth defendants were therefore in breach of the agreement.

202. The learned trial judge did not deal with the misrepresentations aspect of the case, given his findings as to liability in contract. The misrepresentation claim does not form part of this appeal. A claim based on estoppel was abandoned in final addresses by counsel for the plaintiff.

205. On the appeal, the first of the issues raised, and pursued, was whether the parties intended to enter into legal relations, or else, whether they intended that the document would merely be a document setting a common target for later agreement, it being a document which omitted essential terms which had to be agreed before any agreement could be concluded. It was submitted that it was incomplete and its language was so obscure and incapable of precise meaning as to be incapable of evidencing an agreement to contract and, thus, an enforceable agreement. Secondly, it was submitted that the learned trial judge erred in fact and law in finding that there was consideration given in support of the agreement. Thirdly, it was submitted that the reference to 5% of the equity in the Ipex Group was incapable of bearing a precise and definite meaning, having regard to the fact that the first defendant acted solely as the trustee of a unit trust, the second defendant acted solely as the trustee of a discretionary trust, the third defendant was a company wholly owned by the fifth defendant in its capacity as a trustee, the fourth defendant acted solely as the trustee of a unit trust, the fifth defendant acted solely as the trustee of a discretionary trust and the sixth defendant was wholly owned by the second defendant in its capacity as trustee.

208. An argument which was addressed in the appellant's written Outline, but was not pursued in oral argument, was that the term which was said to grant a right to 5% equity in the Ipex Group was incapable of conferring such an interest because there was a failure to comply with the provisions of s. 53(1)(c) of the Property Law Act 1958, because a reconstitution of the discretionary trusts was necessary before the plaintiff could take a fixed interest and because there were obligations which had first to be met pursuant to clauses of the Toren Unit Trust. Since none of those issues was pursued on appeal I will say no more as to them. I will adopt a similar approach to the contention, identified in the Outline, that the expression "5% of the equity in the Ipex Group" was incapable of granting any interest in shares in the capital of any of the defendants because the particular disponor of the shares was not identified or identifiable, or the disponors were not parties to the outline agreement, and because the consent of shareholders who were not parties to the outline - waiving their pre-emptive rights under the articles of association - was required.

211. I have had the advantage of reading the draft reasons of Callaway JA and I respectfully agree with his Honour's conclusion, and adopt his Honour's reasons in so concluding, that there is no merit in the appellants' contention that the parties did not intend to enter into legal relations.

214. I turn then to the contention of counsel for the appellants that there was an absence of consideration for the agreement. Hansen J identified three categories of consideration which he held had existed. First, there was the respondent's acceptance of the acquisition of his own software business (formerly being conducted by Ideal Systems Pty Ltd and thereafter as conducted by Ipex Software Services Unit Trust), by Ipex ITG Pty Ltd. The respondent permitted, indeed assisted, the latter company to acquire all of the customers who had previously dealt with his own business. On behalf of the appellant it was contended that that constituted merely past consideration. I respectfully agree with Callaway JA, and for the reasons advanced by him, that the transfer of the business was not past consideration but executed consideration, and was properly held by the learned trial judge to have constituted valuable consideration for the agreement.

217. The second category of consideration, held by Hansen J to have applied, was constituted by the willingness of Hosking to continue to work for and provide his services to the Group. The third category, upheld by Hansen J, was Hosking's willingness to work for a salary which was substantially less than that which he would have been paid on the open market. Unlike Callaway JA, who would reject both of those categories as constituting consideration, I would regard them, also, as constituting valuable consideration.

220. Clause 9 of the agreement provided that if Hosking resigned, or his services were terminated, he would still be entitled to the share in the equity of the Group provided for by the agreement. Whilst it may be argued, as Callaway JA has concluded, that such a clause was inconsistent with the contention that agreeing to continue employment with the Group constituted consideration, in my opinion that is not necessarily so. The whole point of there being an agreement was to ensure that the Group obtained and maintained the services of Hosking (and others) with the Group. His skill was in software development, an essential element for the further expansion of the Group. Thus, although his entitlement to equity in the Group was preserved even if (having commenced or continued to provide services) he then resigned or had his services terminated, his willingness to commence or to continue to provide services, at all, was capable of constituting consideration, in my opinion, even if the association as employee might have proved short lived. His commitment, of itself, was a significant one - even though it might have proved not to have been a long term commitment - having regard to the fact that his two partners were not willing to make such a commitment to the Group, at all. The fact that Hosking was offered a comfortable escape clause by virtue of clause 9, does not mean that his commitment was any less tangible and valuable. I agree with Hansen J that this category of consideration was also made out.

223. I am persuaded, too, that the third category of consideration was correctly found to exist by Hansen J. In my opinion, even if the agreement to be employed was offset by the fact that the entitlement to a share in equity, as identified in the agreement, applied notwithstanding that employment had ceased, the willingness to work at a reduced salary would constitute consideration, however brief the period of employment might prove to be.

226. The primary issue on appeal, to which I now turn, concerns the contention that the agreement is unenforceable because it is too uncertain as to its terms, or is incomplete, in that the parties have left unresolved some essential terms without which the agreement cannot constitute a binding contract.

229. As I have held, Hansen J was correct to conclude there was an intention to enter a binding agreement. Where there is such an intention between parties to an agreement the court will, if possible, give effect to that intention by overcoming difficulties said to arise from uncertainty or incompleteness[40]. Where businesspeople have reached agreement between themselves the courts should be slow to conclude that the words they have used, "considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act"[41]. The mere fact that the person seeking to enforce the agreement may have been improvident in the terms in which he permitted the agreement to be couched, and that the form of words adopted may allow the other party a latitude of choice as to the manner in which the stipulation will be carried into effect does not render the agreement void[42]. Nor does the fact that there may be more than one interpretation of what was meant render the agreement void for uncertainty; so long as the relevant term is capable of being assigned a meaning then the meaning is that which the court so assigns it[43]. The task of the court is to ascertain the intention of the parties and in so doing "no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements"[44].

232. The facts as found by the learned trial judge emphasise why this court, having regard to the commercial context out of which the agreement arose in the present case, should be particularly slow to conclude that the terms used are so uncertain as to make the agreement unenforceable against the appellants. To so conclude would constitute a real injustice to the respondent, in my opinion.

235. In this case, the respondent, as one of three proprietors, conducted his own business as a computer programmer. He was approached by Joel Schwalb who, as Hansen J found (and it was not contended otherwise before us), was the effective controller of a group of companies and trusts which was engaged in the computer hardware and computer networking businesses. The profits of the Group were likely to have been substantially enhanced if the Group successfully created computer software programmes which it could then market. The essential skill which the respondent had to offer was the ability to create the relevant software. Eventually, two of the three owners of the respondent's business declined to become part of the Ipex Group; only the respondent agreed to do so.

238. In return for not only giving up his own business and facilitating the transfer of all of the clients of his own business to companies in the Group, but also agreeing to continue to work for wages at a rate lower than he could otherwise have received in the industry, the respondent was promised 5% of the equity in the Group. The written agreement, both in its draft and its final version, was both prepared and delivered by him to the respondent at the behest of Joel Schwalb. It was his document, and his offer. He was an experienced business person who had access to legal and accounting advice prior to making the offer. The respondent, as Joel Schwalb must have known, had received neither legal nor accounting advice. The respondent was not experienced in business affairs. He left the mechanics of achieving his 5% interest to Joel Schwalb. Although, as Hansen J found, Hosking had been involved with the day to day management of Binary Amber, all important management decisions had to be made with Joel Schwalb in attendance, and Joel Schwalb had the final say on management issues. It is plain that the complexities of the Group structure were not understood by Hosking whereas they were by Joel Schwalb.

241. The agreement anticipated that the equity was to be in the proposed restructured company, which would replace the existing entities which comprised the Group, but the agreement also expressly provided that its terms were immediately binding with respect to the Group as it then existed. Thus, by clauses 3 and 9, Hosking was entitled to 5% of the equity in the Group as it then existed, and, upon restructuring, that would become 5% of the equity in the restructured company. Hansen J found that the entitlement to equity would be in the form of shares or units, and also that the respondent was entitled to a share in the profits in the Group. The respondent in fact received neither shareholding, nor units, nor did he receive any profits.

244. Having signed the agreement Joel Schwalb did not, at first, suggest that the agreement was in any way uncertain, but proceeded in a manner which suggested that the terms of the agreement were abundantly plain. He placed the matter in the hands of his accountant and solicitor whose task it was to devise the best means of re-structuring the Group. Counsel for the appellant submitted that the incompleteness of the agreement is apparent when reference is made to matters raised by the solicitors and accountant for the Group in correspondence which arose after the agreement was signed, at a time when the solicitors and accountant were endeavouring to restructure the Group so as to provide the equity which had been promised.

247. In my view, none of the post-agreement matters which were addressed, or to which we were referred, demonstrates either that the parties had not reached agreement or that the matters on which they had agreed were too incomplete to constitute an enforceable contract[45]. What was apparent from the post-contractual conduct was, as observed by Hansen J, that Joel Schwalb "regarded himself as being free to re-negotiate or even disregard the agreement as he might choose". Thus, as found by Hansen J, Joel Schwalb sought unilaterally to change the effect of the agreement by suggesting, on 1 November 1996, that whilst he acknowledged that Hosking was entitled to 5% of the Group profits (which share he valued at $500,000, with respect to the profits of the Group between 1994 to 1996 of about $10M) the only entitlement as to equity would be to purchase shares with the profits, which would give him a right to 0.6% equity in the Group. A week later Joel Schwalb assessed the Group profits between 1994-1996 at $8-10M, and Hosking's profit entitlement as being $400,000-450,000. He said that "as the total worth of Ipex was $33M, Hosking's retained earnings would convert to a shareholding of between 1.2% to 1.5% of the equity in the Group". Joel Schwalb announced that the agreement was wrong in its reference to 5% equity and that Hosking was only entitled to a percentage of the profits, but he could then purchase equity with the profits. On 18 November 1996 Joel Schwalb made a new proposal, as Hansen J found, that "he was prepared to issue Hosking 5% of the shares in the Ipex Group, immediately, if Hosking accepted the capital gains tax liability of $750,000". On 20 November, upon receiving Hosking's protest that none of these proposals accorded with what had been agreed, Joel Schwalb advised Hosking by e mail that, "What you have in hand is 1% share in the Big Company" and he added that if Hosking was to increase that share to 5% then he would have to "buy" the additional percentage.

250. What emerges from this conduct is that, whilst Schwalb was intent on reneging on an agreement which no longer suited him, he was also capable of calculating both the profits due to Hosking and the value of 5% equity in the Group as at that time. It was not until after Joel Schwalb had terminated the employment of Hosking in February 1997, which was only a month before these proceedings were commenced, that Joel Schwalb adopted the position that there was no enforceable agreement, at all, because the terms were too uncertain or vague to constitute a contract between the parties.

253. The basis for the uncertainty, then and now, primarily relates to the corporate and trust structure of the Group. Had Joel Schwalb, on behalf of the Group entities which he controlled, permitted the re-structure to occur on or before 1 July 1996, as was required by clause 9(b) - and it is plain that he prevented or delayed that restructure occurring - there would be little difficulty determining how 5% of the equity in the new company was to be structured, even if Hosking were placed in a position of some disadvantage by virtue of his failure to insist that additional clauses were inserted in the contract which better protected his rights as to the manner in which the equity was allocated. The complications of the existing structure of the Group, as highlighted in the chart annexed to the judgment of Callaway JA, and upon which counsel for the appellants now rely so as to produce uncertainty and incompleteness, were the product of Joel Schwalb's determination to avoid or at least minimise taxation liability for the Group. The corporate structure underwent many changes, from time to time, as Schwalb identified new taxation avoidance opportunities. In these circumstances it is particularly opportunistic that Schwalb should now seek to rely on the artificiality of the corporate structure of the Group as the means of defeating the agreement. He now identifies an uncertainty which was not apparent to him when the 5% equity in the Group was offered by him (and was accepted by Hosking), nor for a substantial time thereafter.

256. It is to be kept in mind that the respondent no longer seeks specific performance of the agreement. The relief that was sought, and by virtue of Hansen J's decision is now to be assessed, was common law damages. Uncertainties in the language used, which may have made the court hesitant about ordering specific performance, "may well be no bar to an award of damages, especially as damages may be awarded on the footing of resolving uncertainties in favour of the innocent party and against the wrongdoer"[46].

259. In the event that the court was concerned with specific performance it might have been a laborious and complex task to achieve the result of the respondent being allocated shares or equity in the entities which comprised the Group at the time of the agreement. Nonetheless, having regard to the principles discussed above as to the courts' willingness to enforce commercial agreements, the result could have been achieved, in my view. The court might well have identified an implied term that the appellants would use their best endeavours to facilitate the acquisition of 5% equity, as shares or units. That, in turn, would require that the person who controlled all of the entities, Joel Schwalb, should use his best endeavours to achieve that result. Even with the benefit of those implied terms of the agreement there might still have been difficulty in resolving the basis on which specific performance was to be ordered. But the task was by no means impossible, even though the court might have had a number of options as to the approach which it took.

262. Much was made by counsel for the appellants of the difficulty which was inherent in the phrase "equity in the group" when regard was had to the fact that the Group comprised companies and unit trusts. Thus, it was said, since the entities included companies limited by shares, unit trusts, discretionary trusts and "future Australian trading entities" it was impossible to know how the 5% equity was to be assessed and allocated. Insofar as the equity was to be represented by shares or units a problem was identified in that there was no agreement as to the nature of the shares which should be received, or the terms on which any units were to be granted. These difficulties were not insurmountable, in my view, had specific performance been the remedy which was sought, and they are certainly not insurmountable when the relief sought is by way of damages.

265. In my opinion, given that the companies and trusts which then comprised the Group were identified, a net asset value of each of them was capable of being calculated, and a means of determining how a 5% equity might thereupon be provided to Hosking was achievable. Given, too, that it was a 5% equity in the Group as a whole which was to be provided, and that all of the entities were controlled by Joel Schwalb, it did not follow that a 5% equity must necessarily have been provided in each company or trust, so long as overall such an interest was achieved. The concept of "future Australian trading entities" stated in paragraph 1 of the agreement, causes no trouble in this regard: if such entities were formed by an existing group entity then they would be included. In any event, we know that there were no new entities as at 1 July 1996.

268. As was held by the High Court in Thorby v Goldberg, and as earlier noted, an agreement is not void for uncertainty, nor incomplete, because it leaves to one party a latitude of choice as to the manner in which the agreed terms will be complied with[47]. As noted by Kirby P in Biotechnology Australia Pty Ltd v Pace: "Where a contract provides a term containing a specified range of possibilities, a court, rather than avoiding the contract will hold the party to providing at least the minimum provision in the range, that is to say the one which is the most favourable to it"[48]. Counsel for the appellants submitted, however, that this was not an instance of what Menzies J described as being "an obligation to do a specified thing of a general description"[49], but was an instance of the alternative situation recognised in Thorby, namely, where there could be no concluded contract because to be effective there had to be a future agreement between the parties. In this case, so it was submitted, there was a need for agreement as to a range of essential questions concerning the 5% equity. Counsel for the appellants submitted that among the matters which remained unresolved were the nature of the proposed restructured company, the rights and obligations of the prospective equity holders (whether they be holders of shares or units), and the question of which person or entity had the obligation to ensure that the equity was transferred from the various entities which comprised the Ipex Group to Hosking. As to the last mentioned factor, the answer is clear. The obligation to ensure the transfer of the interest fell upon all of the appellants, but it was upon Joel Schwalb that the particular obligation fell to procure that result.

271. To adopt the test posed by Kirby P in the Biotechnology case, was this an instance where the term "5% of the equity in the group" contained "too many elements which are uncertain"[50]? In the Biotechnology case the court was concerned with an offer of a salary package which included the term "the option to participate in the company's senior staff equity sharing scheme." Such a scheme did not exist when the offer was made, nor when employment was terminated. Kirby P held that too many elements of the term were uncertain. Thus, it was not known how many shares in the company were to be devoted to the scheme, or what class of shares, or what options were to accompany the shares, or on what terms they were to be acquired or might be disposed of. Kirby P added[51]: "Indeed, the whole complex provisions of an equity participation scheme in company shares provide the definition of the problem which the promise, in the terms in which it was made, presents for the respondent."

274. Although counsel for the appellants naturally relied on the observations of Kirby P in the Biotechnology case, they do not , in my opinion, lead to a conclusion in the present case that the agreement is too uncertain to be enforced. As Kirby P pointed out, every case must turn on its own facts. In the Biotechnology case the share scheme did not exist, and may never have existed, and were the court to determine for itself what the scheme should be deemed to have been, it would have had to choose "by reference to an international market in such equity participation schemes for scientists". In the present case, as I have earlier observed, the Group existed, and in my opinion whilst there may have been a range of options as to how the equity would have been provided, it was possible to provide 5% equity in the Group. Whilst there were matters which were not known, they were not, in my opinion, so essential as to render impossible the task of applying the agreement.

277. Although there were gaps in the matters agreed there were some indicators which would have assisted in the task of applying the agreement. Hansen J, with whose reasons as to the issue of uncertainty I am in substantial agreement, held that the phrase "equity in the group" meant shares or units in the entities which at present or in future would comprise the Group. Furthermore, Hansen J was entitled to find, as he did, that "the agreement itself contained no suggestion of differential rights among the holders of the equity in the Group". Hansen J held, appropriately in my view, that one interpretation which was open was that the meaning to be given to the phrase, insofar as shares were involved, was that ordinary shares would be involved, not preference shares. He was not called upon to resolve that issue, because specific performance was not required. There were alternative interpretations which were open, but that did not mean that the term was uncertain. Hansen J observed, too, that the use of the words "net assets" in clause 7 and "net tangible assets" in clauses 11 and 12 would support a conclusion that by "equity" the parties intended to adopt what his Honour said was the common parlance whereby "an owner's equity is represented by net asset value". All of those findings were open to his Honour, and helped give meaning to the phrase "5% of the equity in the group".

280. But whatever the difficulties which might have arisen with respect to specific performance (unless those difficulties were to lead to the conclusion that no enforceable agreement was reached, at all), the complexities which the imagination of counsel for the appellants postulated are of little significance when one is concerned with the assessment of damages. The judge assessing damages must do the best he or she can, making an assessment as to which of the claimed complexities are truly relevant to the task of assessment, and which are no more than smokescreens behind which the appellants would seek to shelter.

283. The plaintiff agreed to terms which place him at something of a disadvantage in determining how his loss may be assessed. The damages will be assessed on the basis, so far as applicable, that the appellants would have performed the contract in the way most favourable to themselves[52]. That fact, and the fact that the assessment of an award of damages must inevitably be an inexact science, may mean that the damages awarded to the respondent will prove to be less than what might have been awarded had he better protected himself by requiring additional terms of the agreement. That is the respondent's misfortune, but it is a factor relating to quantum, not to the availability of relief, by an award of damages, with respect to the agreement.

286. His Honour held, in his penultimate sentence of par [128], that the respondent was entitled under the agreement not only to the receipt of an interest by way of 5% equity in the Group, but also to profits in the Group from 1 July 1994. Little was said before us on the appeal, by counsel on either side, with respect to the claim for profits. By paragraph 10 of the Fourth Further Amended Statement of Claim the respondent claimed to be entitled under the agreement to "5% of the equity in and profits of the Ipex Group from 1 July 1994".

289. His Honour held, at par [128] that there was a binding agreement whereby Hosking acquired the right to a 5% equity interest in the Group, to which effect was to be given by 1 July 1996 at the latest, but that Hosking also acquired an entitlement to 5% of the Group profits as from 1 July 1994. His Honour discussed the entitlement to profits at pars [101] - [104] of his reasons. He held that the effect of clauses 2 and 3, when read with subsequent clauses, meant that there was an entitlement to share in profits as from 1 July 1994. That finding was not the subject of a ground of appeal, but the grounds of appeal contested the finding that there was a binding agreement, at all. Since the finding that the plaintiff was entitled to a share in profits depended for its efficacy on there being a binding contract it must be taken that the entitlement to profits was also in dispute.

292. It is apparent that Hansen J considered that an immediate entitlement to 5% equity, which was to be effective as from 1 July 1994 (as provided by clauses 2, 3, 4), translated, at least, to an entitlement to profits, in the period between 1 July 1994 and 1 July 1996 (the date stipulated in clause 9(b) as the last date by which the entitlement to be provided by equity in the restructured company had to be delivered). Thus 5% of the equity carried an entitlement to 5% of the profits. Given that the breach occurred at 1 July 1996 that is the date at which the 5% equity in the Group must then be determined for the purpose of calculating damages. The entitlement of the respondent to 5% of the profits from 1 July 1994 was not challenged before us. Subject to hearing counsel, I consider that it would be appropriate that the order of the court should reflect the fact that Hansen J held that there was such an entitlement[53].

295. Had the relevant phrase been "5% of the profits of the Group" there could have been no contention of uncertainty or incompleteness. But the respondent sought to rely on the broader term, i.e "5% of the equity", as incorporating a claim in damages for lost share of profit. As a result, were the phrase "5% of the equity" to be struck down as too incomplete or uncertain, then any discrete claim or component of the claim which was identified with respect to profit must also fail. That approach is also apparent in the reasons of Hansen J, who observed, at par [124], that: "The damages claimed for breach are 5% of the equity in the Ipex Group and profits in respect thereof from 1 July 1994. As the trial was on liability this aspect of the case has not been tried, and Hosking's counsel said that work remained to be done on it before it could be presented". Conversely, once the agreement is deemed not incomplete or uncertain by reference to that phrase, the entitlement to profits must also be taken into account when calculating damages.

298. I conclude, therefore, that the terms of the agreement were not uncertain or incomplete, and the appeal should be dismissed. I agree with the observations of Callaway JA that it is appropriate that if the matter is to proceed as an assessment of damages - as I consider it should - then, given the likely complexity of the issues that will arise, the assessment should be conducted by a judge.

[1] Hosking v. Ipex Software Services Pty. Ltd. [1999] VSC 28.

[2] The front page describes it as an "Agreement between Joel Schwalb (representing Ipex Group entities), David Cohen, Jonathan Sheiman [and] Mark Hosking" and bears the date "August 1994".

[3] The underlining is in the original exhibit.

[4] The value of "proprietors' equity" in a balance sheet might be capable of calculation or estimation, but it is the value of something. The problem is to say what that something is and, on an assessment of damages, to value a minority share in it.

[5] Compare Archibald Howie Pty. Ltd. v. Commissioner of Stamp Duties (N.S.W.) [1948] HCA 28; (1948) 77 C.L.R. 143 at 152-154.

[6] [1901] A.C. 118, especially at 124-126.

[7] The statement of claim refers to "the Ipex Group", which is defined in paragraph 7 to mean the appellants, namely the six companies on whose behalf Mr Joel Schwalb signed the agreement. "The Ipex Group" is more widely defined in clause 1 of the agreement. The claim, as I understand it and have endeavoured to express it, is that the Ipex Group in the former, narrow sense, breached a contract to give the respondent a 5% interest in the equity of the Ipex Group in the latter, wider sense. See also the discussion below of the terms of the judgment given on 25th March 1999.

[8] The view may have been taken that, either in the events that had happened or by 1st July 1996, the possibility of future entities could be ignored or had not materialized.

[9] [1996] VSC 55; [1997] 2 V.R. 49.

[10] This claim was abandoned in final address below.

[11] [1960] HCA 84; (1960) 104 C.L.R. 206.

[12] [1970] HCA 6; (1970) 119 C.L.R. 435.

[13] [1999] VSCA 189; [1999] 3 V.R. 589 at [13]- [19] and [26]-[30].

[16] He added that the first element was intended to encompass the integration of the three businesses over a period of time, including the transfer or acquisition specifically pleaded.

[17] Formerly Ipex Information Technology Group Pty. Ltd.

[18] The passage I am about to quote is part of [82]. The earlier part of the paragraph, which I have omitted, refers to the particulars of the agreement.

[22] At [51]. It is not clear, with respect, whether his Honour means the document or the merger.

[23] I pass over, here and elsewhere, the common understanding that it would be his family company as trustee of a unit trust that would receive the interest.

[25] See especially witness statement, paras 28-30, 32-33, 43.

[26] Witness statement, para. 31. The rest of the paragraph shows that "his project" means Mr Cohen's project, but pursuant to Mr Schwalb's decision that the merger should begin. The expression "the companies" at the end of the second sentence of that paragraph clearly means all the relevant companies.

[27] Compare Pau On v. Lau Yiu Long [1979] UKPC 2; [1980] A.C. 614 at 629-630.

[28] [1892] 1 Ch. 104 at 115-116.

[29] [1968] HCA 8; (1968) 118 C.L.R. 429 at 436-437.

[30] [1964] HCA 41; (1964) 112 C.L.R. 597.

[31] That was the ratio decidendi as stated by McHugh, J.A. in Biotechnology Australia Pty. Ltd. v. Pace (1988) 15 N.S.W.L.R. 130 at 154G. See also Anaconda Nickel Ltd. v. Tarmoola Australia Pty. Ltd.[2000] WASCA 27; (2000) 22 W.A.R. 101 at [1].

[32] See the Biotechnology Case at 136F and 156D-F; cf. Tito v. Waddell (No. 2) [1977] Ch. 106 at 322-323.

[33] At 156A-B. The value of a 5% minority interest in a trading entity is not ordinarily one-twentieth of the net value of the assets. One looks at market value or the capitalized value of a stream of annuities or values the interest in some other way, but it might be relevant here to take into account that the parties had fallen out, especially if the proposition could be sustained that the Ipex Group resembled a quasi-partnership.

[35] I say "tendered", not "offered", because the entitlement purported to be immediate and the alleged breach was not a failure to offer, but a failure to transfer: see [[] above.

36] Although the document is an "outline of agreement reached", it is incomplete. Clause 5 evidences an intention to be bound, but it simultaneously discloses an essential step that has yet to be completed. I do not think it follows that none of the provisions of the agreement is enforceable, but we are concerned only with the promise on which the respondent sued and the remedy he claims, namely damages at law.

[37] I put aside collateral or incidental remedies such as misrepresentation, estoppel or a lesser contract that is to have effect if the negotiations break down. Such a contract may, of course, be implied.

[38] If it matters, the damages to be assessed are not damages in lieu of specific performance under s.38 of the Supreme Court Act 1986 but damages at common law for breach of contract.

[39] The last possibility, nominal damages, would mean that the appeal should be dismissed and the assessment proceed; but it is not the basis on which I decide the case. It is simply another possibility to which I advert. If my preferred analysis is correct, or if the promise was irremediably obscure or illusory, there was a total failure of consideration. At all events that is the traditional language of English and Australian law: the German lawyer's causa data causa non secuta is more in point.

[40] Toyota Motor Corp v Ken Morgan Motors [1994] VicRp 55; [1994] 2 V.R. 106, at 130, per Brooking J.; see too York Air Conditioning and Refrigeration (A/Asia) Pty Ltd v The Commonwealth [1949] HCA 23; (1949) 80 C.L.R. 11, at 26, per Williams J.

[41] Scammell And Nephew Ltd v Ouston [1941] A.C. 251, at 268, per Lord Wright.

[42] Thorby v Goldberg [1964] HCA 41; [1964] 112 C.L.R. 597, at 605, per Kitto J

[43] Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 C.L.R. 429, at 436, per Barwick CJ

[44] Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd, at 436-437, per Barwick CJ; see too, at 441, per Menzies J

[45] As to the use of such post contractual communications for the purpose of determining whether there had been an intention to contract, see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1998) 18 NSWLR 540, at 547-8, per Gleeson C.J.

[46] Tito v Waddell (No 2) [1977] Ch.D 106, at 322 per Megarry V.-C.

[47] Thorby v Goldberg [1964] HCA 41; (1964) 112 C.L.R. 597, at 605, per Kitto J.; at 613, per Menzies J.

[48] Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 1309, at 136.

[49] Thorby v Goldberg, supra, at 613, per Menzies J.

[50] Biotechnology Australia Pty Ltd v Pace, supra, at 137.

[52] Biotechnology Australia Pty Ltd v Pace, supra, at 156, per McHugh JA.

[53] The power of the Court of Appeal to make such an order, notwithstanding that no notice of appeal or notice of cross appeal has been given with respect to the matter, derives from R.64.22(7) of the Supreme Court (General Civil Procedure) Rules 1996.