that Mr Lewis warned the directors in his letter of 30 June 2006 that they faced the risk of insolvent trading and may have to consider placing Merrag in liquidation.
56 In the light of these circumstances, it is unlikely that there would have been any room left for the original understanding as to retention of units by the directors to be implemented. It is, therefore, inherently unlikely that in mid-2006, certainly after receipt of Mr Lewis' letter of 30 June 2006, Rodney would have agreed to sell Unit 28 to Michael on terms that included part payment of the purchase price, not by cash but by reduction of Michael's loan account. That would have done nothing to relieve the company's liquidity shortage. It is also inherently unlikely that Rodney would have agreed to set off, in addition, against the purchase price an amount of up to $100,000 which Michael considered to be his share of the profits of the project, when the profitability of the project was already seriously in doubt and Mr Lewis was speaking of a winding up.
57 The third consideration militating against a finding of a concluded oral contract is that, clearly, Mr Lewis was never informed of it, either by Michael or by Rodney, although it was obviously essential that he should know. As I have noted above, by April 2004 Mr Lewis was aware that it was the intention of the directors to retain four units in the project by way of distribution of profits. However, in a spreadsheet "showing the asking prices for all lots which remain unsold at this time" sent to Michael on 23 January 2007, Mr Lewis listed Unit 28 as for sale at the price of $480,000. Mr Lewis had a meeting with Mr and Mrs Khoury a few days after these documents were received and read by them. If Mr and Mrs Khoury had pointed out to Mr Lewis at this time, and he had verified, that Unit 28 had already been sold to Michael for $440,000 pursuant to an agreement between Michael and Rodney made by August 2006, Mr Lewis would surely have ceased to show Unit 28 as "on the market". Yet, in a letter to the ATO dated 8 October 2007 Mr Lewis advised "that [unit] 28 is on the market for $500,000".
58 The sale prices of $480,000 or $500,000 for Unit 28 could have been given to Mr Lewis only by Rodney, as Michael concedes: T54.10-.36. The strong inference is, therefore, that Rodney never regarded Unit 28 as sold to Michael by a concluded agreement made in mid-2006. It is significant in this regard that Michael conceded that he did not tell Rodney at any time in 2007 that he himself, as a director of Merrag, intended to sign a Memorandum of Transfer of Unit 28 to himself and procure its registration: T72.36-T74.12. It is open to infer that Michael believed that Rodney, if forewarned, would have prevented registration of the transfer.
59 The fourth consideration against the finding of a concluded oral contract is that, even on Michael's evidence, there was never agreement as to an essential term of the contract, namely, what was the amount of Michael's loan account which was to be off-set against the purchase price of $440,000. There would have been no difficulty in this regard had there been agreement between Michael and Rodney as to how the amount outstanding to Michael in respect of his loan account was to be calculated, but there was no such agreement so that it was impossible to arrive at a figure to be off-set merely by a mathematical calculation to be carried out by Mr Lewis. Amongst other things, Michael asserted, and Rodney denied, that Michael's loan account carried interest. It is inherently improbable that, in this state of disagreement, Rodney would have agreed to the terms of the proposal put forward by Michael in mid-2006 on the basis that his oral agreement to those terms at that time constituted an agreement for sale binding upon Merrag.
60 In the light of these considerations, the factors relied upon by Michael as supporting the finding of a concluded oral contract are equivocal. It is quite possible that, as a result of pressure exerted by Michael, Rodney agreed to request the Bank to exclude Unit 28 from its security in the, perhaps, shared hope that the Dee Why project would turn out to be profitable, the parties could eventually agree on the amount of Michael's loan account, and Michael could retain his share of the profits in the form of Unit 28. It is possible that the Bank agreed to exclude Unit 28 because it was obtaining other collateral security from Rodney, George and their parents which made up for the absence of Unit 28.
61 It is possible that Rodney agreed to Michael retaining the Discharge of Mortgage and the Folio Identifier for Unit 28 in order to assuage Michael's fears that the unit might later be pledged or sold behind his back, so that he would be deprived of the chance of retaining the unit if the project turned out to be profitable.
62 As to the receipt by Michael of rent from Unit 28, it is possible that Rodney agreed to Michael receiving it as compensation for the further advances which Michael was making to Merrag, or by way of drawings from Merrag. Michael said that all three directors made drawings against the company's profits but he had drawn less than his brothers: paragraph 81 of Michael's affidavit.
63 These possibilities could have been negatived by direct evidence from Rodney, George and, perhaps, from Mr Lewis. It is significant that Michael does not give any evidence at all as to any discussions with Rodney as to how the rent from Unit 28 came to be paid to him.
64 On the other hand, it is possible that Michael may have been telling the truth when he gave evidence that he had had no communication at all with Rodney and George from 2004 onwards (see [23] above). If that evidence is true - I cannot determine whether it is or not - then Michael may have come into possession of the muniments of title to Unit 28 and its rents as from 1 September 2006 by means other than an agreement with Rodney and George.
65 Ultimately, I am left with circumstances strongly contrary to a finding of a concluded oral contract for sale of Unit 28 to Michael, and other circumstances supporting such a finding which are equivocal and could have been explained away by evidence called by Michael. If I had felt able to rely with some confidence on Michael's own evidence, that evidence may well have tipped the balance in his favour. For the reasons I have given, I do not feel able to rely upon it.
66 For these reasons, I am not persuaded that in March, April or August 2006 Michael and Rodney reached a concluded oral agreement for the sale of Unit 28, as Michael alleges.
Enforceability