Was the Share letter an accurate and complete record of the agreement?
213 The applicants submitted that the Share letter was an attempt to set down in writing the terms of a pre-existing agreement, rather than an instrument stating the possible elements of an agreement for the first time. The first evidence they relied on in order to support this claim was the wording in the first sentence of the letter stating that Votraint "confirms" its offer, which indicates the existence of a pre-existing offer.
214 However, the primary submission of the applicants in this regard was more contentious. They submitted that "from the standpoint of any objective observer of events, the essential terms of the agreement had been confirmed between Graham and Dew in the exchange of communications on 3 December". According to the applicants, there were no further substantive discussions between the parties as to the terms of the agreement; rather all communication was directed toward documenting the agreement which existed from that time at the latest. They pointed to various conversations and comments made in the lead up to the settlement: for example, Dew's statement to Graham two or three days prior to settlement that "the letter should set out the agreed terms as we have discussed that were previously included in the original deed"; similarly Dew's statement to Greiner that "a short letter setting out a summary of the agreed terms similar to those set out in the original clause 4 should suffice for settlement"; and also Anderson's statement to Graham at the settlement: "Would you give me a letter of confirmation?"
215 Two observations ought to be made on this submission. Firstly, it is clear that on the day of settlement when this letter came to be drafted, it was based on previous discussions between the parties. By contrast to the written submissions of the respondents, no witness suggested that the entirety of the understanding between the parties came to be negotiated on 23 December. However, this fact does not lead to the conclusion that the understanding which may have existed in only general terms as to the structure of the transaction is a legally enforceable agreement. Secondly, I am hesitant to rely on the alleged use of precise language recalled over five years later. Such long recollections are inherently unreliable and while words to the effect recalled were in all probability used, it would be dangerous to rely on them as decisively as now sought.
216 More importantly, the applicants submitted that the circumstances of the creation of the Share letter on 23 December indicated that there was no substantive negotiation occurring but rather discussions solely about inconsequential drafting matters. The respondents went to great lengths to dispute this contention. They pointed out that Dew made a number of amendments to the first draft of the Share letter, some of which were included in the final letter and some of which were not. They identified in great detail the process of the amending of the letter, going through each draft and indicating the changes that were made until the final form was arrived at. They relied on this evidence to support the proposition that the terms of the agreement were not concluded, that negotiations were ongoing on the day of settlement, and that the final form of the Share letter was a product of this process with compromise on both sides.
217 As the drafts themselves were in evidence, the amendments made to the various drafts are clear. The applicants said that Dew's evidence that after his amendments to the first draft, he did not see the Share letter again until it was presented to him later in the day signed by Graham - which so far as I have been able to discern was not in substance challenged - should be accepted. If so, the process of negotiation put by the respondents is largely a mirage, created by the amendments and comments of Greiner and Richmond, presumably with some input from Graham, as they incorporated some of Dew's amendments and some of their own. On Dew's evidence the applicants had simply no involvement in this process.
218 The applicants posed several reasons for the fact that the Share letter does not accord with what they said were the terms of the pre-existing agreement. The first was the circumstances under which the letter was drafted. Unlike the other documents executed on settlement day, the Share letter was drafted entirely during the day itself and, according to Greiner, in extreme haste and under pressure. The settlement day was the final day that this deal could be done, so everything simply had to be completed. Secondly, the matter was largely handled by Richmond, a solicitor with very limited experience. Dew's only involvement in the drafting of the letter was his annotations on the first draft which he discussed only with Richmond, who then proceeded to finalise the letter with Greiner and presumably Graham.
219 The letter itself reveals in its terms every sign of having been drafted hurriedly. Despite the deletion of the alternative proposition involving the transfer to Owston by Branir of a 20% interest in the assets which was in the first draft, the heading was not amended to delete the words "Transfer of Interest in Assets". There is a reference in the letter to "the date on which a legally binding agreement is entered into" which appears to relate to a term, appearing in the first draft but deleted at Dew's insistence, that the parties would "use every reasonable endeavour to procure that Votraint and Owston enter into a legally binding agreement as quickly as practicable". Greiner conceded in evidence that the drafting of this paragraph was something "a competent conveyancer or competent lawyer would not be happy with".
220 Nevertheless, the respondents asserted that the letter's terms were clear but that if the applicants did not think so, or if the terms did not accord with their understanding of the agreement, they had an opportunity to amend it. They said that the applicants could have raised an objection but in fact the letter was accepted by the applicants without demur. The applicants submitted that objections were raised and that it was clear that no one from either side was content with its form. When Dew saw the first draft, he wanted to expand it to "set out more detail", to "make it clear that the funds were being provided by Mr Bakrie", and to say that "Votraint must be debt free". When he saw the final version, he was "not content" with it and thought that the drafting was "poor". Graham also conceded in his evidence that "This letter isn't really adequate". In his cross-examination he admitted that Dew had said to him that the letter "wasn't sufficient or something" and that he "had to agree with him on that point". Graham also admitted that he himself regarded the letter as being "inadequate" and "insufficient" and agreed that it was "vague" and "incomplete". Greiner considered that elements of the letter were not of a high drafting standard.
221 Contrary to the respondents' submissions, there was virtually no evidence challenging Dew's account. Greiner was vague and general about the matter. Graham prevaricated and Richmond was not called. Dew was generally a reliable, truthful and straightforward witness. I believe that his account should generally be accepted. As to lack of opportunity to change the letter, I accept that there was considerable pressure at the time which would have effectively prevented any amendments. I also accept that the applicants received the letter on the understanding that its terms were informed by the discussions which had taken place.
222 The most compelling evidence in favour of the applicants' submission that the Share letter should not be held to be an accurate and complete record of the parties' agreement is the evidence of bad faith on the part of Graham in its preparation which culminated in its late production. There was clear evidence that it was deliberately drawn so as to be vague. In a fax to Rathod on 18 February 1995 after relations between the parties had deteriorated significantly, Graham wrote that the letter had been "deliberately made as vague as possible". Although he had no independent recollection of his instructions at the time the letter was drafted, Greiner stated that the proposition that it was drafted to be as vague as possible was "an obvious inference that could be drawn". On the other hand, he also stated, somewhat unconvincingly, even tendentiously, that he would have had no difficulty in accepting instructions to draft a letter in such a manner provided that no breach of the law was involved. What the instructions were in this case, and what professional and ethical obligations arise in circumstances of this kind, were not traversed in the evidence. As a consequence, although disturbing and disconcerting, I can make no finding on those matters.
223 However, how this situation came about bears some scrutiny. Everyone knew that, at least from the applicants' point of view, the Share letter was critical. It involved the transfer of assets worth millions of dollars and was integral to the settlement proceeding. All parties were advised by lawyers and all other documents emanating from the lawyers were carefully prepared in advance. By contrast the agreement for the issue to Owston of shares in the nominee company was not prepared at all and the Share letter as its temporary substitute did not come to be drafted until virtually the last minute when it was done in haste and under pressure, even then, so far as it involved a lawyer at all, largely by a young lawyer with limited experience required to do his best on quite a difficult and complex matter.
224 The applicants postulated that the delay in drafting the Share letter came about, not because of a genuine accident or oversight but, as with the Sanctuary letter, as the result of a deliberate strategy by Graham - in this case to avoid giving Anderson any interest at all in Branir. If he could prevent the terms of the agreement regarding Owston's shareholding in Branir from being set down clearly in writing, he would be given time and opportunity to persuade the Bakrie interests after the settlement to renege on this part of the deal. At the very least, if he could delay the documenting of the deal until after settlement, the applicants would be in a weak bargaining position.
225 The evidence to support this inference was compelling. Firstly, despite his attempt to shift responsibility to Rathod, it was, as Rathod himself said, Graham who had responsibility for documenting the share agreement. It was Graham who gave instructions to BDW to draft the September deeds. It was Graham to whom Bakrie gave his instructions on the deal in November 1993 and whom he asked to prepare the agreement. It was Graham who dealt with Dew in his attempts to get the agreement documented. Richmond and Greiner both referred Dew to Graham on this matter.
226 Secondly, examination of the evidence clearly reveals that Graham, as well as having at least an active dislike for Anderson personally, was strongly opposed to the share arrangement going ahead, despite Bakrie's wishes. In a fax to Rathod on 6 November 1993, Graham stated that "legally or morally Bakrie does not owe Anderson anything". In a fax to Bakrie dated 11 February 1994 after settlement, Graham stated: "I am strongly against giving Warren anything". In a fax later in 1994 he stated to Frank Hunnewell, the American investment adviser, that he had appealed "for a way to be found to avoid meeting our obligations". In 1995 Graham wrote to Rathod that in 1993 he had been "very much against such a gift of shares".
227 Thirdly, Graham gave evidence that he did not believe that Owston was to be issued the shares until the large debt of Tovehead to BBD had been paid and that he believed that this outcome was the intent of the Share letter and his discussions with Anderson. This evidence was false as was his evidence in his 1998 affidavit on the same subject to similar effect. The true position was revealed in the letter he wrote to Anderson on 29 July 1994:
I have very clear written and verbal instructions from the majority shareholders of Branir Pty Ltd, that Owston Nominees Pty Ltd, hold the normal position as an ordinary shareholder in Branir.
As such and in accordance with the Articles of Association of Branir Pty Lt, Owston Nominees Pty Ltd is entitled to attend and vote at the occasion of the Annual General Meeting of Branir and to approve the Annual Accounts.
I have sought legal advice as to any other special provisions which may apply to an ordinary shareholder and find that there are none which are relevant.
228 Fourthly, there was also evidence that Graham was prepared to deal in bad faith with the applicants. In his fax to Bakrie of 2 December 1993, he stated:
Although my letter to Dew specifically states that the new Nominee company will own 50% of PT Tipperary Indonesia [Tippindo], I suspect that Warren expects that the Nominee company will own 50% of Tippindo plus 50% of the Tipperary Group of cattleStations [sic].