John Frederick Hillam v Ivan Peter Lewis

The Contentions of the Parties 92The plaintiff alleges in broad terms that at all relevant times he had binding oral agreements with the defendants to the effect that he was entitled to consulting fees agreed at $20,000 per month and in addition, effectively for all of the work he had undertaken in relation to the various tenements, he was entitled to 10% equity in each of the three corporate defendants. 93In broad terms the first defendant agrees that there was a binding agreement between the plaintiff and the defendant. Further he agrees the agreement was oral and it is accepted that the plaintiff was entitled to be paid consulting fees at $20,000 a month. Any agreement which entailed the provision of equity however in any of the corporate entities was contingent upon the plaintiff arranging the requisite finance as agreed and was in effect to be a success fee for having done so.

The Legal Principles 94Both the plaintiff and the defendants assert here that whatever contract was in existence at any relevant point in time, it was an oral contract. 95Whether or not parties intend to enter a contract and, if so its terms, is to be determined objectively having regard to the language used by the parties and which is said to constitute the contract. The High Court has repeatedly affirmed this proposition: Allen v Carbone (1975) 132 CLR 528; Taylor v Johnson (1983) 151 CLR 422; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd [1988] 18 NSWLR 540; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165. 96As Campbell JA said in Ryledar Pty Ltd v Euphoric Pty Ltd [2007] 69 NSWLR 603 at 655: 262. For the purpose of deciding whether a contract has been entered, or what construction it bears, the common intention that the court seeks to ascertain is what is sometimes called the "objective intention" of the parties. That is the intention that a reasonable person, with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, would conclude that the parties had, concerning the subject matter of the alleged contract: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461 [22]; Toll (FGCT) Pty Ltd vAlphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]; Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 8961 All ER 98; Taylor v Johnson (1983) 151 CLR 422 at 429; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549-550. 263. There is also authoritative recognition that a factor to be taken into account in deciding whether a contract has been entered and if so what are its terms is "the purpose and object of the transaction": Pacific Carriers Ltd v BNP Paribas (at 462 [22]); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (at 179 [40]). In Pacific Carriers Ltd v BNP Paribas (at 462 [22]), the joint judgment of Gleeson CJ, Gummow J, Hayne J, Callinan J and Heydon J recognised the appropriateness of taking into account the purpose and object of the transaction, and continued (at 462 [22]): [22] ... In Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 350, Mason J set out with evident approval the statement by Lord Wilberforce in Reardon Smith Line Ltd v Hansen-Tangen [1976] 1WLR 989[1976] 3 All ER 570: "In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.'?" 264. But the purpose and object of the transaction is itself ascertained objectively - it is ascertained by considering what a reasonable observer, in the situation of the parties, would conclude was the purpose and object of the transaction. In Prenn v Simmonds [1971] 1 WLR 1381[1971] 3 All ER 237, Lord Wilberforce noted that Lord Blackburn's judgment in River Wear Com­missioners v Adamson (1877) 2 App Cas 743 at 763 had said that the task involved in construction required one to "... inquire beyond the language and see what the circumstances were with reference to which the words were used, and the object, appearing from those circumstances, which the person using them had in view". (Emphasis added). 97One of the important factors to be taken into account in deciding whether a contract has been entered (and if so what are its terms) is obviously the purpose and object of the transaction. But that purpose and object is itself ascertained objectively - it is ascertained by considering what a reasonable observer in the situation of the parties would conclude was the purpose and object of the transaction. 98As the Court of Appeal (Gleeson CJ, Hope and Mahoney JJA) said in Australian Broadcasting Corporation at 550: The case involves the objective determination of the intention of the parties from a consideration of a series of communications exchanged by them in the context of their dealings over a period of time. In those circumstances it is both appropriate and necessary to have regard to the commercial circumstances surrounding the exchange of communications and, in particular to the subject matter of those communications: Allen v Carbone (1975) 132 CLR 528 at 531-532. Furthermore, as was noted earlier, it is proper to have regard to communications between the parties subsequent to the date of the alleged contract to the extent to which those communications throw light upon the meaning of the language which is being considered for the purpose of determining whether it expresses an intention one way or the other upon the critical matter. At the least, such subsequent communications will often form part of the context in which the particular exchanges in question are to be evaluated. 99In Prenn v Simmonds [1971] 1 WLR 1381 at 1385 Lord Wilberforce said: ...The commercial or business object of the transaction objectively ascertained may be a surrounding fact,...evidence of the negotiations or of the parties intentions ....ought not be received and evidence should be restricted to evidence of the factual background known to the parties at or before the date of the contract including evidence of the genesis and objectively the aim of the transaction. 100In this case both the plaintiff and the first defendant, for the particular contracts they contend existed at relevant points in time, rely as the source of those contracts upon conversations which took place between them allegedly at various times. 101In Watson v Foxman (1995) 49 NSWLR 315, McLelland CJ in Equity said, in the context of discussing amongst other things allegations of breach of contract at 318: Where the conduct is the speaking of words in the course of a conversation it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore human memory of what was said in a conversation is fallible for a variety of reasons and ordinarily the degree of fallibility increases with the passage of time particularly where disputes or litigation intervene and the processes of memory are overlaid often subconsciously by perceptions of self interest as well as conscious consideration of what should have been said or what could have said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court which means that the court "must feel an actual persuasion of its occurrence or existence. 102Such satisfaction is "not...attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description or the gravity of the consequences flowing from a particular finding". Watson at 319, citing Helton v Allen (1940) 63 CLR 691 at 712. 103In the present case there is no contemporaneous document evidencing what the plaintiff or the first defendant said in terms of the alleged conversations which are put forward as constituting the various contracts. There are, as is obvious from above, a number of emails passing between the parties which clearly provide the context in which their respective allegations must necessarily be viewed and which are relied upon by the plaintiff, in particular, relevantly as admissions. 104In a case of a contract which is partly or wholly oral, admissions of a party are admissible for the purposes of ascertaining what terms were orally agreed. In Lym International Pty Limited v Marcolongo (2011) NSWSCA 303 Campbell JA said at [139] - [143]: 139. Third, where a contract is oral, post-contractual conduct may be used to ascertain the subject matter of the contract. Such use of subsequent conduct is justified when it is "relevant, on an objective basis, to the identification of the subject matter of the contract or the determination of the necessary terms, as distinct from deciding the meaning of words". Such subsequent conduct is relevant in that way when "what was done later [is] a basis for inferring what was agreed when the contract was made, or as establishing later additions or variations", citing Browne LJ in Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 at 1229. 140. I respectfully agree with Spigelman CJ's analysis. Other authority that where a contract is partly written and partly oral, the terms of the contract are to be ascertained from the whole of the circumstances as a matter of fact is collected in Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 at [90]. 141. There is a vast difference between the task that is involved in interpreting a wholly written contract, and the task involved in finding what has been agreed in a contract that is not wholly in writing. The difference between those tasks in itself makes a vast difference between the circumstances in which post-contractual conduct can be relevant for the respective tasks. 142. Where there is a contract that is wholly in writing, there is no doubt what the contract is - it is the writing. The task of interpretation is ascertaining the meaning that the bystander who knows all the relevant surrounding circumstances would understand from the parties using the words in that writing. The admissibility of evidence for interpreting a wholly written contract is decided by reference to whether it is able to assist in ascertaining the meaning that the bystander who knows all the relevant surrounding circumstances would understand from the parties using those words. Save in the case of post-contractual events providing retrospectant evidence of a surrounding circumstance that was known to the parties at the time of contracting, the view favoured in this court is that post-contractual conduct cannot assist in that task, and thus is not admissible, or if admitted cannot legitimately be used in that task: the cases cited by McColl JA in County at [161] ([118] above). 143. By contrast, the task in ascertaining what are the terms of a contract that is not wholly in writing is quite different - the task is finding as a fact what the parties have agreed. A range of post-contractual conduct could be relevant to ascertaining what the parties have agreed. For example, their conduct in carrying out the contract could itself be objective evidence of what they had agreed, an admission of one of the parties could assist in ascertaining what they have agreed, and business records created to record or report on the contract rather than carry it out could also assist in that task. 105A little earlier in the same judgment Campbell JA said at [122]: 122. However Tomko v Palasty [2007] NSWCA 258 deals, though not exhaustively, with that topic. Basten JA at [13]-[14] (with whom Mason P agreed) held that post-contractual conduct can be used for that purpose when that conduct is an admission. Einstein J at [68] (with whom Mason P also agreed) similarly held that: " ... subsequent communications may legitimately be used against a party as an admission by conduct of the existence or non-existence, as the case may be, of a subsisting contract, where an issue concerns whether a particular person was a party to that contract." 106Young JA in Pegela Pty Ltd v Oates [2010] NSWCA 186 said at [78] - [80]: 78. However, it is admissible to show that there is in fact and in law a contract (see eg Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251) identifying the subject matter of the contract (and, at least to some extent), the terms of the contract. 79. Perhaps the starkest example of the latter situation is the American case of Wrigley v Cornelius 44 NE 406 (1896) (162 Ill 92 SC) where the fact that the purchaser of art prints ordered 10,000 frames to fit them from another source showed that his contract with the seller of the prints was indeed for 10,000 as claimed rather than for 5,000 pleaded by the defence. 80. Further, post contractual utterances may be admissible because they admit facts from which a conclusion of law may be drawn, Dovuro Pty Ltd v Wilkins [2003] HCA 51; 215 CLR 317, 340 [69] -[71] approving a passage from the decision of the Full Federal Court in Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 35 FCR 43, 68 that: "an informal admission as to a matter of fact, by words or conduct which is made by a party or a privy, is admissible evidence against that party of the truth of its contents." 107It will become important in this case to identify precisely what admissions are of true relevance and significance on the part on the plaintiff and/or the first defendant. In Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 Gummow J stated at [70]: Different questions arise where, as here, the suggested admission includes a conclusion which depends upon the application of a legal standard. In Grey, Glass JA considered an admission sought from a witness to the effect that he assigned certain choses in action at law or in equity. His Honour said: "By extorting from a party an admission that he was negligent or that he was not provoked or that his grandfather possessed testamentary capacity there is added to the record something which is not merely of dubious value but by definition valueless owing to the witnesses unfamiliarity with the standard governing his answer". 108This statement of law had the support of the majority in Dovuro. McHugh J at [40] and Heydon J at [177] expressly agreed with Gummow J in this respect. Gleeson CJ at [25] said: I agree with what is said by Gummow J as to the care that needs to be taken in identifying the precise significance of admissions, especially when made by someone who has a private or commercial reason to seek to retain goodwill of the person or persons to whom the admissions are made. Common sense may dictate that they be used with caution by a fact finder. And it is always necessary for the fact finder to consider precisely what it is that is being admitted. If the driver of a motor vehicle says to an injured passenger; "I am sorry I let you down" that may not mean much, or anything. If the driver says "I am sorry, I was going too fast" that may be very different. The statement that the appellant ["failed"] in its duty of care to inform growers as to the presence of these weed seeds cannot be an admission of law and it is not useful as an admission of failure to comply with a legal standard of conduct. There is no evidence that the author of the statement knew the legal standard. 109Where the credibility of witnesses is, as here, a central issue for the Court, it is as well to recall what Gleeson CJ, Gummow and Kirby JJ said in Fox v Percy (2003) 214 CLR 118 at 128 - 129, [30] - [31]: 30. It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Société d'Avances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana"): " ... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour." 31. Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical. 110However as O'Loughlin J explained in Cubillo v Commonwealth (No 2) [2000] 174 ALR 99 at 147 - 149, [118] - [123]: 118. Before commencing a detailed analysis of the evidence in this case, I desire, in the first instance, to make clear the approach that I have taken to the evidence of a witness where I have found some, but not all, aspects of the evidence of that witness to be unreliable. Simply because I find against a party or a witness on one issue and reject some part of the evidence of that person, it does not mean that what remains is tainted, or otherwise lacks probative force, with the consequence that I should dismiss all the evidence of that person. The principles enunciated in the cases indicate that the trial judge is entitled to believe part of the evidence given by a witness and to reject the rest. After making an assessment of the evidence, after utilising the advantage of having seen and heard all the witnesses, and after forming an impression of each, the confidence that the judge reposes in a particular witness is assessed accordingly. Where evidence has a logical probative value, a judge will rely on it; where it contains discrepancies, displays inadequacies, is tainted or otherwise lacks probative force, the judge will, in all probability reject it or, at least, not rely on it. I mention some authorities that support those propositions. 119. In Dublin, Wicklow & Wexford Railway Co v Slattery (1878) 3 App Cas 1155, the observations of Lord Blackburn, who dissented on the main question on appeal, support the view that a judge may believe part of a witness' evidence and disbelieve another part. He observed (at 1201): "The jurors are not bound to believe the evidence of any witness; and they are not bound to believe the whole of the evidence of any witness. They may believe that part of a witness' evidence which makes for the party who calls him, and disbelieve that part of his evidence which makes against the party who calls him ... " 120. In Australia the same principle applies. In Christmas v Nicol Bros Pty Ltd (1941) 41 SR (NSW) 317, the Court considered a motion to set aside a jury verdict for the defendant in an action for negligence against a company and its employee arising out of the employee's negligent driving. Jordan CJ, who delivered the judgment of the Court, observed (at 322): " ... it would be for the jury who saw and heard the witnesses to decide whether they accepted their evidence. They were perfectly at liberty to reject the whole of their evidence, or to accept some and reject the rest, however intimately it might be associated with what they accepted, unless there is something to show that reasonable men could not take up such an attitude: Ward v Roy W Sandford Ltd (1919) 19 SR (NSW) 172 at 185; Hammer v S Hoffnung & Co Ltd (1928) 28 SR (NSW) 280 at 282-283." 121. A trial judge is not restricted in his or her assessment of a witness. By this I mean that if, on peripheral issues, the trial judge reaches conclusions adverse to the credibility of a party, it does not necessarily follow, consistently with such conclusions, that these must be findings adverse to that party on the issues that are central to the determination of the matter. There is no rule of law or practice that states that an adverse finding on any aspect in the evidence of a witness means that the whole of that witness' evidence must be rejected. 122. In S v M (1984) 36 SASR 316, a case that concerned a contest between a mother and a father for the custody of their ex-nuptial child, Walters J made observations about the extent to which a trial judge is at liberty to believe part of the evidence given by a witness and to reject the rest. Walters J, noting that the case was a custody contest, remarked (at 319-320): " ... it would not be right to say that in determining the weight and credibility to be given to the evidence of a witness, one should reject his or her entire testimony if parts of it are found to be untrustworthy, or even false and mendacious. Because part of his or her evidence is unreliable, it does not follow that other parts of it are unreliable and that the whole of his or her evidence should be disbelieved. So often, in a case of this kind, the interests or bias of one party and his supporting witnesses may exercise on their minds an influence of which they are unconscious and which leads them to give distorted, but yet not deliberately false, accounts of the matters to which they depose in evidence. It seems to me that in making his findings of fact, a trial judge is not bound to believe the whole of the evidence of any witness; he is at liberty to believe part of the witness's evidence and to reject the rest ... I think I am free to accept or to reject the whole of the testimony of the applicant or the respondent, as the case may be, or to accept some part of it and to reject the rest, however intimately it might be associated with what I have accepted." 123. A similar conclusion has been reached by this Court. In Flint v Lowe (unreported, Federal Court, Full Court, No 488 of 1995, 23 June 1995) Nicholson J (with whom von Doussa J agreed) said (at pp 11-12): "It is always the case that the jury or judicial officer charged with the duty of finding whether a charge is established beyond a reasonable doubt may accept whole or part or none of the evidence of any witness. Once the complainant's credibility on that issue was accepted, the evidence would not be tainted by the rejection of other evidence".

Discussion 111The plaintiff specifically pleads that in late August and/or early September 2008 he and the first defendant agreed (the first defendant orally representing matters to him) that if the plaintiff was able to secure a replacement joint venturer on the same terms as the Sojitz proposal then the plaintiff and parties associated with him would acquire 10% interest in the joint venture. 112The plaintiff also asserts that he had an initial consulting agreement with the first defendant to provide geological services from about 10 November 2008. The plaintiff accepts that he and the first defendant agreed that the plaintiff would not be paid those fees until one of the corporate entities of the first defendant obtained funding. 113The plaintiff also asserts that on 18 January 2009 and 24 February 2009 the first defendant acknowledged he had an enforceable agreement with the plaintiff. 114On 1 May 2009 the plaintiff asserts that he agreed to a further consulting fee arrangement whereby he would be paid $20,000 a month from August 2008 for at least one year for providing geological and other consulting services. He relies upon the letter from the first defendant of that date. 115Importantly however the plaintiff alleges that between 24 April and 2 May 2009 a further equity participation agreement was entered into. It was simply that the first defendant would transfer 10% shareholding in each of Mintech, Goldus and Mawson Gold to the plaintiff (or the equivalent interest in any corporate entity that acquired any of those companies or mining interests). The plaintiff asserts that prior to the transfer of those shares the first defendant was to treat the plaintiff as having a 10% beneficial interest in those corporate entities. It is also asserted by the plaintiff that he and the first defendant would have a 50% interest in a proposed mining exploration company. The plaintiff asserts the consideration for this arrangement was the plaintiff's past and continuing provision of geological services. The plaintiff also alleges the oral agreement contained an implied term to the effect that the first defendant would not take any steps to frustrate or thwart the plaintiff from obtaining those interests. In the alternative between the same dates the plaintiff alleges that the first defendant promised to transfer to the plaintiff 10% shareholding in each of the corporate entities and a 50% interest in a proposed mining exploration company. 116The plaintiff of course bears the onus of persuading me that the oral arrangements referred to above were indeed made. 117Apart from the emails which have passed between the parties from time to time as I have already observed there is no contemporaneous corroboration for the plaintiff (except for alleged admissions of the first defendant). 118So far as the consulting arrangement is concerned, there is no doubt there was such an arrangement. Both the plaintiff and the first defendant agree on this. The only question that appears to be outstanding is the precise quantum that the first defendant currently owes the plaintiff. I will return to this matter separately. 119In relation to the allegation by the plaintiff that he had an oral agreement in relation to his equity participation in one or more of the first defendant's corporate entities I have to say I not only have grave reservations about the plaintiff's credit in a number of respects, and I am unable to accept that such an arrangement existed in an unqualified sense. I am firmly of the view that at all relevant times whatever negotiations were taking place and/or for that matter whatever arrangement might ultimately have been arrived at, each was predicated upon the plaintiff introducing some form of capital injection into one or more of the corporate entities. I am therefore firmly of the view that his agreed equity participation was always discussed in the context of it being a success fee and/or as an incentive for him bringing an investor or investors to the table. He never did so. 120To begin, the email of 23 November 2008 which the plaintiff sent to the first defendant clearly indicates that as at that date discussions which had taken place had been predicated upon the 10% equity being available to the plaintiff on the basis that he "brought a major company into the project". There is no doubt that he was purporting in that email to set out the detail of his understanding and stating unequivocally that he wished to remain the geologist on the project and play a long term active role. He clearly had a sense that he could make a considerable sum of money if he remained associated with the first defendant particularly given the quality no doubt as he had assessed of the Razorback tenement and the potential return if he was able to forge an arrangement. 121It is noteworthy that the arrangements or proposed arrangements which the first defendant was attempting to enter into with other persons, with whom he hoped might raise capital, also involved success fee arrangements. The first defendant of course asserts (which the plaintiff denies) a detailed conversation with the plaintiff on 28 December 2008. The first defendant asserts that it was made clear during the conversation that any arrangement made with the plaintiff in relation to a 10% shareholding was always on the basis that it would be paid as a success fee upon the raising of funds. Although I have reservations myself about the credit of the first defendant in a number of respects I am inclined to accept his version of these events and that such a conversation took place and I so find. I do so because the surrounding circumstances, in particular the arrangements the plaintiff discussed in his earlier email of 23 November 2008 and the kind of arrangement or arrangements the first defendant was seeking to enter with other third parties, supports the fact that what he was discussing with the plaintiff and indeed others was a capital raising, in turn for which there would be some success fee offered. It should be observed the plaintiff and the first defendant were total strangers before July 2008. The first defendant was going to pay the plaintiff for his geological services. It seems to me much more probable at all relevant times that the first defendant would have linked equity to success. 122The plaintiff's email to the first defendant of 23 February 2009 does nothing whatsoever to support the plaintiff's case. In that email of course he expresses the view that he was becoming worried about the fact that he had no agreement with the first defendant "at all". Although this gives rise to an inconsistency given the first defendants assertion about the discussion he had with the plaintiff on 28 December 2008 this would not be the only inconsistency in the narrative. Although there was nothing in writing, there was an agreement (at a minimum) in place, it does seem to me, namely that the plaintiff would be paid for his geological and/or consulting services although he may not have even regarded that as a binding arrangement at the time. As I have found the first defendant did make it clear on what terms he was prepared to deal with the plaintiff. 123The defendant's response on 24 February 2009: "You do have an agreement with me", is entirely consistent with the first defendant's version of events. It of course does beg the question. 124On 18 March 2009 in his discussion paper the plaintiff is at pains to say again that "at this time no formal agreement is yet recorded between the parties". I am of the view and so find that that was not only a reference to third parties but the position between the plaintiff and the first defendant. It is also clear from the balance of that email that the plaintiff indeed wanted the first defendant to consider a 5 year agreement with an incentive package. What is important again about this email is that at least as at 18 March, so far as equity participation was concerned, the plaintiff considered that that was a matter for negotiation however in the context of an incentive regime upon successful capital raising. 125It is clear in my mind from the first defendant's email of 1 April 2009 that the 50/50 deal in relation to the exploration company was again entirely dependent upon the raising of capital. The first defendant asserts that during April when he was staying with the plaintiff he made clear to the plaintiff that, so far as the gold trading deal was concerned, upon completion of a deal the plaintiff would get 50% commission of total profits. Again by reason of the surrounding materials and in particular the first defendants email of 1 April I am inclined to accept the defendants version of those events, and his denials of the plaintiff's assertions to the contrary. 126Insofar as the plaintiff asserts that during this period when the first defendant was staying at his home and the first defendant acknowledged an agreement of 10% equity in "all" of the first defendants companies, even on the plaintiff's version of that conversation ([110], the plaintiff's affidavit 23 April 2010) the better view in all the circumstances is that the equity participation was contingent upon getting a deal done: We have an agreement. You have 10% in all my companies. As soon as we get a deal we can document it properly. 127The first defendant denies that any such conversation took place and that equity was always discussed as part of a success fee. I am inclined to accept the first defendant and I reject the plaintiff's assertion to the contrary. 128The plaintiff asserts that on 16 March 2009 he discussed his remuneration for consulting and geological services with the first defendant. It is plain and obvious that both parties had numerous conversations about that matter. Further although the plaintiff does assert that reference was made during that conversation to his "10%", again, even on the plaintiff's version of that conversation, it is at best equivocal. In my view given its context I find that conversation would have been in the context of it being a success fee arrangement tied to a successful capital raising. 129The comfort letter of 1 May from the first defendant again does no more in my view than support yet again that the first defendant had made an arrangement to pay consulting fees to the plaintiff. That letter makes plain that even the actual payment of the consulting fees was going to be contingent upon capital raising through the sale of equity or a sale of assets or both. The reference to the gold trading program again makes it plainly apparent that the arrangement was contingent upon getting the project off the ground. 130The first defendant asserts that on 13 June he sent an email to the plaintiff in the terms referred to above. I do not accept his evidence on that. The plaintiff denies receiving it and I accept the plaintiff's evidence. It is plain from his later communication of 9 July that he had composed the letter of 13 June on or about that date. He may well have thought he sent it, but in fact he had lost it somewhere in his system and decided to send it instead on 9 July 2009. This is however important, because although he did not send it on 13 June, and I so find, it is clearly a reflection of not only events which had occurred prior to that date but the kind of deal that he was then intending to offer the plaintiff. It is not an admission which assists the plaintiff, quite the contrary. 131The plaintiff asserts of course that on 14 June whilst the defendant was staying with him he asked the defendant that his interest be "documented". He asserts that the first defendant said "you have 10% interest in all my companies". Again in my opinion even on the plaintiffs own version of events ([123] of his affidavit of 23 April 2010) it is tolerably clear that the 10% was going to be upon the basis of a successful deal with Geneva Manor. Insofar as the plaintiff asserts that this was an acknowledgement and an admission by the first defendant as to the 10% equity participation, in my view it is more probable than not that any such conversation again took place in the context of a success fee arrangement and I so find. As I have said although I am of the view that the first defendant's email of 13 June was not sent to the plaintiff on that day the contents of it corroborates entirely that at or about that time, the arrangements being discussed between the two in relation to equity participation clearly involved 10% being contingent upon the raising of capital; namely an immediate injection of $250,000 and a $5 million cash injection. I have no reason to consider the email of 13 June was not an accurate reflection of the first defendant's state of mind and of discussions he had with the plaintiff and indeed of the offer he had intended to make at that point. It is entirely inconsistent with any offer of equity participation other than in the context of a successful capital raising. Insofar as the plaintiff's evidence suggests otherwise I reject it. 132The term sheet agreement signed by the plaintiff and the first defendant on 25 June with Bligh Street again, in my mind, does not advance the plaintiffs case in relevant respects. Although it refers to "their controlling shareholder interests in the company" that phrase is in the context of a new corporate entity being brought into existence and a capital raising of approximately $10 million. I find nothing in that document which corroborates a suggestion by the plaintiff that the first defendant had agreed to give him 10% equity participation as alleged, at least in an unqualified sense. 133On the morning of 9 July the first defendant sent an email to the plaintiff at approximately 10.18am. In his affidavit (23 April 2010, [141]) the plaintiff says that when he received the email he read it quickly and said to the first defendant "it is not what we have agreed". He then alleges that the first defendant effectively acknowledged that fact and said that he would instruct his solicitor to issue 10% of the shares in Mintech when he got back to Adelaide. The first defendant of course denies such a conversation. 134The plaintiff goes a step further however and asserts that on 9 July he made a contemporaneous note "following this meeting", ([142]). A copy of his diary for the days 9 - 12 July inclusive was tendered in evidence. All of these days are on one page. 135There is a great deal of handwriting (most of which is that of the plaintiffs) on that page. Importantly the notes for 9 July read as follows: "Thursday evening in our house. Lewis in our house Thursday night/came from Melbourne. We talked about shares in Mintech/Mawson Gold and Goldus. He said "I will instruct Andrew Corletto to issue your 10% share in Mintech upon my return. I said "good". He said "I will instruct Nina to issue 10% share in Goldus and Mawson NL to you because she can do this by herself. I don't need to pay Kelly & Co for this if Nina does it. I said "thanks, what about the exploration company 50/50 between the two of us. He said "We will do this later when it is required" 136The first defendant accepts that he must have had discussions with the plaintiff during this period but denies the conversation that the plaintiff asserts he had with the first defendant about the email not recording what had been agreed, but also the exchange alleged to have been recorded in the plaintiff's handwritten notes. 137There is a note adjacent to the entry for Sunday 12. What is written is "11 July" and then "See Lewis email confirmed". 138When the plaintiff gave evidence on some of these matters he appeared to be somewhat confused. The following exchange took place: His Honour: Q: It is a few pages on from 1237? A: Thursday evening in our house, correct Q: Do you see below the words "Thursday evening in our house" You appear to have written "Lewis in our house Thursday night". Do you see that? A: hmm, hmm Correct Q: If those notes are virtually contemporaneous with the event, doing your best from the note it would appear to indicate that you are suggesting that Mr Lewis was in your house on the evening of 9 July and during the evening when you had dinner or whatever he made the statements you attribute to him in the note? A: Well my recollection is that Mr Lewis left on 9 July Q: But that is not what your note says, is it? A: No it does not Q; Lewis in our house Thursday night A: True Q; And above that "Thursday evening in our house"? A: Ok Q: I am not trying to tell you what it is because you are the person who made the notes. I am trying to understand your evidence. And it would follow if that is correct that you had the email of 9 July which had been received by you at a quarter past ten that morning by the time Mr Lewis was sitting at your table having dinner? A: Well I might be confused. But it is not how I remember it. I remember I received the email after he left. So that would have to be the 10th. 139I cannot accept that the plaintiff's so called contemporaneous note was made on 9 July. I consider the more probable explanation is that the note was recorded at some point later when the plaintiff tried to recall what he thought might have been said in a conversation with the first defendant. If the note was contemporaneous in my mind there would be no reason why the plaintiff would have written adjacent to the words July 9 Thursday, "Thursday evening in our house". Nor would he have written "Lewis in our house Thursday night/came from Melbourne". These remarks, suggestive of the past tense, indicate that they were written (and I so find) at a point sometime subsequent to the 9 July. 140The next thing which is entirely odd about these events is that although the plaintiff asserts in his affidavit that he drew the first defendants attention specifically to the 9 July email not being "what we agreed", there is no reference in his handwritten note for the diary entry 9 July suggesting that it was the email that triggered the conversation, and a need at least on the plaintiffs part to clarify and/or correct what he asserts the arrangement was. The reference in the diary note for 9 July to the email "See Lewis email confirmed" is likely to be a reference to the first defendant's email of 9 July. This does not suggest the plaintiff thought it to be inaccurate. 141Most importantly however in his email to the first defendant of 12 July there is no reference whatsoever to the conversation which the plaintiff asserts took place on 9 July with the first defendant in which the agreement was clarified, and no suggestion that the email of 9 July was inaccurate in some way. What is more important about these events is that this was at a time when the plaintiff was, I believe, starting to be quite wary of what if any arrangements he might have had with the first defendant. His wife had given him this diary encouraging him to keep contemporaneous notes of important things in his commercial interest. This was not a time for a confidential diary note, it was a time for plain speaking. That is not what the plaintiff did. I do not accept that these events as asserted by the plaintiff took place on 9 July. 142I do not regard the note as a contemporaneous reflection of what was discussed. I cannot believe that if the plaintiff who was then on his guard as it were would fritter away the opportunity he had on 12 July, a day or so after this alleged conversation took place, and not record the contents of the conversation whereby arrangements had been clarified, especially having gone to the trouble of making a so called contemporaneous diary note. The fact that he did not take that opportunity speaks volumes, and in my mind makes it improbable that such a conversation did take place as he asserts. To that extent and insofar as the first defendant denies such a conversation took place I am inclined because of the surrounding materials to accept the first defendant's denial. I reject the plaintiff's account. 143I should add that the email of 12 July relates entirely to attempts that the plaintiff was then making to raise capital and his acceptance that time was running out and that both he and the defendant needed to raise a significant amount of money very quickly. 144What is equally important of course is that in the email of 9 July the first defendant does say that he will see Andrew Corletto as soon as he returns to Adelaide and to proceed "with the transfer of equity to you in the Mintech structure as outlined above with further performance-based transfers in Goldus and Mawson, "if and when" we get them into commercial production too". This makes it abundantly clear that equity participation was upon a capital raising, and that any written agreement would be drafted accordingly. 145The first defendants email of 30 July 2009 must clearly be construed again in this context, namely that the first defendant was prepared to place a structure (undoubtedly including documentation in place) in accordance with his email of 9 July. It is plain and obvious from that email that the transfer of any equity was contingent upon the raising of capital and was regarded as performance based. Seen in context the first defendants email of 30 July does not assist the plaintiff. 146Likewise the first defendant's email to the plaintiff of 3 August must be seen in the same context in my opinion. The whole arrangement including the 10% is predicated upon the fact clearly and expressly stated by the defendant "If this deal with AUSMON succeeds by completing through the payment of cleared funds by 4pm tomorrow..." Not only was the plaintiff then to get his 10% upon that event occurring but an additional 2% as an extra reward. Again seen in context I do not regard that as assisting the plaintiff's case. 147The plaintiff was undoubtedly becoming impatient and clearly wanted something in writing. This is evident from his email to the first defendant of 31 August 2009. But again it does not alter my view as to the arrangement which I consider was made between the relevant parties, namely that equity participation was contingent upon capital injection and upon success being achieved and the plaintiff having made a real contribution towards that end. 148The plaintiff's wife gave evidence. Although her affidavit was filed late I granted the plaintiff leave to rely upon it. She said in her affidavit that the first defendant often stayed with she and the plaintiff and during that time she would engage in conversation with the first defendant. On at least four occasions she said (concerned that the defendant was not paying her husband for his work) she asked how things were going. She said she told the defendant a document was needed "between you and John". She said she emphasised how hard her husband had been working. On each occasion the defendant she said assured her that "John has 10% in all my companies". 149There are numerous problems with this evidence. The date and more importantly the context in which each conversation allegedly took place is absent. There is no note or other record which corroborates these alleged conversations. 150Upon my analysis of the contemporaneous materials there is no support for the proposition that the first defendant ever made such an unqualified representation. Indeed in his affidavit of 17 May 2012 the first defendant denied he said such things to the plaintiff's wife. The first defendant did concede that the only matter he disputed in her evidence was the unqualified assertion the plaintiff had 10% of his companies. He consistently denied saying that and, given the materials I have otherwise examined, it seems to me that that is more probably correct. I accept his denials. I do not accept the plaintiff's wife in the sense that the first defendant would have simply said that the plaintiff had 10% of his companies. Indeed in all the circumstances I regard it as glaringly improbable. 151It was the plaintiff's wife who clearly was concerned about keeping a diary, it seems, so important things could be recorded, yet she kept no record herself. I reject her account as asserted.

Consulting Fees 152As I have already said it is clear to me (indeed the whole case was conducted on this basis) that the first defendant owes money to the plaintiff for outstanding consulting fees. The real issue is precisely what that amount should be. The plaintiff claims $282,000. The plaintiff asserts that he commenced work for the first defendant or his interests in about August 2008 and continued until September 2009; a period of 14 months. This calculation is arrived at by reason of a number of invoices sent by the plaintiff to the first defendant after having given credit for amounts the plaintiff acknowledges he has otherwise received. (See para 76 FACLS). 153There seems no doubt that the parties agreed that the plaintiff would be paid $20,000 per month. It also seems to be common ground that the condition precedent for the payment of the outstanding fees by reason of the letter of 1 May 2009 was the sale of equity or sale of assets. It is asserted by the plaintiff that that has been achieved with the agreements with Royal. I accept that that was the arrangement, and that condition precedent has been satisfied. 154The first defendant although he accepted in his evidence that he had offered the plaintiff $240,000 (as I understood him to settle the entire case) asserts that the plaintiff is only entitled (given the amounts already paid) to $130,000. That he had seemingly falsely swore to the contrary on 4 November 2009 in proceedings in South Australia is now not to the point. 155On two occasions and immediately prior (or so it seems) to the plaintiff ceasing work sometime in September, or perhaps early October 2009, the plaintiff sent two emails: one dated 31 August 2009 and another 17 September 2009. In the first the plaintiff asserts expressly that he was then owed $130,000 which he reiterates in his email of 17 September 2009. Doing the best I can on the evidence available I see no reason why the plaintiff should not be taken at his word. The better view of the evidence which I prefer is that the plaintiff was actually doing geological work from about November/December 2008 and ceased in about August/September 2009. He was the one who had been involved in the work of the preparation of reports and matters of the sort and at a time when he wrote those emails he would have made, in my opinion very likely, the maximum claim to which he thought he was legitimately entitled. It happens to accord with the first defendants calculation (10 months approximately X $20,000 less $70,000 equals $130,000). The mere fact that the first defendant was prepared to offer in full settlement of the litigation an amount of $240,000 is in my mind not relevant to the question of precisely what the plaintiff is entitled to under the consulting arrangements. In my opinion in all the circumstances it is fair and reasonable that the plaintiff be awarded the sum of $130,000.

Conclusion 156In accordance with my findings I propose to award the sum of $130,000 in relation to the consulting fee agreement. I otherwise dismiss the plaintiff's claim. 157I would invite the parties to prepare short minutes to reflect my reasons and to have the matter relisted so the question of costs can be determined.

Amendments 13 June 2012 - typographical error Amended paragraphs: paragraph 104 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 June 2012