65 Mr O'Loughlin, counsel for the plaintiff, submitted that this was not a case in which the parties agreed that the subject of the agreement set out in the document signed by both parties was to be dealt with by a formal contract. He submitted that the "paperwork" referred to in the fourth paragraph of the document was the form of share transfer. He submitted that each of the items referred to in the five arrow points did not require, and was not to be the subject of, formal documentation. Alternatively, he submitted that if the fourth paragraph did contemplate the preparation of a formal contract by the "acting solicitor", this was a case in which the parties had reached finality in arranging all of the terms of their bargain and intended to be immediately bound to the performance of those terms, even though (on this assumption) they proposed to have the terms re-stated in a form which would be fuller or more precise, but not different in effect (the first category in Masters v Cameron (1954) 91 CLR 353 at 360). Alternatively it was a "fourth category" case where the parties intended to be bound immediately by the terms to which they had agreed whilst expecting to make a further contract in substitution for the first containing additional terms as might be agreed (Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628).
66 The strongest indication that the parties intended to be immediately bound by the terms of the document is contained in the last sentence where it was said that not only were the "above terms and conditions" accepted by both entities and agreed but that "the matter is now finalized". However there are contrary indications within the document itself that the parties did not intend to be immediately bound. The most significant of the contrary indications is in the fourth paragraph which provides for the $500,000 to be released only on "all paperwork" having been finalised by the acting solicitor, and only then "if Agreed". I do not accept that the "paperwork" referred to would be confined to the preparation of the share transfer. If that were all the paperwork required, then there would be no need for it to be "finalized", nor even prepared by a solicitor. Even if it were proposed that the solicitor prepare the form of share transfer, the reference to "finalizing" the paperwork indicates that more than a form of share transfer was to be prepared.
67 Given that the "acting solicitor" was not to be an independent third party, it is not objectively likely that the parties would have intended to be bound by whatever further terms the solicitor might prepare. Further, there were two significant disputes between the parties which were not dealt with by the terms of the document. The first concerns the shareholder loans. On the plaintiff's case, the agreement did not deal with shareholder loans because that was not an intended subject matter of the agreement. The agreement related to the transfer of shares and of units, if there were any units in the unit trust. On the plaintiff's case, Elliston was not to be released from its obligation to repay loans made to it by the plaintiff or Mr Valentino. The plaintiff contended that this was a commercially sensible outcome, even though Balaclava Station had been purchased two years before for only $700,000 and had a market value in September 2007 of about $800,000. This was because the property had a special value to Mr Guerinoni. By 21 September 2007 Mr Guerinoni had purchased two of three lots of the adjoining farm and had in contemplation that he would purchase the remaining lot of the adjoining farm. Therefore, it was submitted, it was reasonable to expect that he would pay a premium to Mr Valentino to acquire his share.
68 Whilst that may have been Mr Valentino's thinking, it is not objectively likely that the parties would intend to enter into a binding agreement which dealt with only part of the matters in dispute. It is not objectively likely that they would intend to be bound by an agreement which was silent on the question whether the loan from the plaintiff or Mr Valentino to Elliston was to be released. The parties had also been in dispute about the terms of the loan. If the debt or debts owed by Elliston for loans made to it by the plaintiff or Mr Valentino were not to be released, it is objectively likely that a settlement would spell out the terms of the loan. Otherwise the matters between the parties would not be finalised.
69 The same applies to the agistment fees held in Mr Maatouk's trust account. The document did not deal with those. If those were partnership moneys, there was no mechanism for distributing the moneys to the partners. If the agreement were immediately binding, neither partner could take any legal action to recover the moneys. There was no provision for the moneys to be paid to Elliston. There was no provision for making the adjustment to which Mr Maatouk had previously referred.
70 A further indication that the parties did not intend to be immediately bound by the document is that it is obvious on its face that it had been prepared by Mr Guerinoni without legal advice, and was neither precise nor full in its expression of the intended agreement. In the first sentence the subject matter of the sale was described as "shares and units of Elliston Co-operative Pty Ltd held by QLD Holdings/1 Pty Ltd - John Valentino". One share (not shares) in Elliston was held by the plaintiff, not by Mr Valentino. There were no shares or units "of" Elliston. Nor were there any units of a unit trust of which Elliston was the trustee. No shares or units were held by Mr Valentino.
71 The second sentence provided for the shares and units to be transferred to Collingwood Holdings Pty Ltd - Eddie Guerinoni. The identity of the transferee was not made clear. Was it to be the defendant and Mr Guerinoni jointly, or one or other of them?
72 The third paragraph is curiously expressed, but evidently means that the sum of $500,000 deposited in Mr Castino's trust account would only be available to be released to the plaintiff or Mr Valentino for seven working days.
73 The fourth paragraph suggests that further agreement would be required before the money was released. This would be inconsistent with the document being immediately binding unless the matters to be covered by the paperwork were defined or the parties agreed to accept whatever paperwork was prepared by the acting solicitor. In my view, the fourth sentence was to the same effect as Mr Guerinoni's previous stipulations that the offers he made were "subject to legals".
74 The fifth sentence, stating "this is to include", prima facie suggests that the paperwork to be finalised by the acting solicitor was to include provisions dealing with each of the following five arrow points. That would not confine the topics to be dealt with by the "paperwork" to the topics identified in the five arrow points. Prima facie, those five arrow points provided a non-exclusive list of matters to be addressed by the paperwork. However, it was the plaintiff's case that the matters in the five arrow points did not require documentation.
75 The details of the "walk in/walk out arrangement" were not identified. Did this refer only to the physical removal of chattels from the property, and if so, what chattels were to be removed? Did it refer to closure on all issues so that on Mr Valentino and the plaintiff "walking out" they would have nothing further to do with Mr Guerinoni, the defendant and Elliston?
76 The third arrow point is at least poorly expressed. There were no "bank and credit card accounts between the both [sic] entities". The plaintiff and the defendant had a joint bank account and operated a credit card account, but they were not accounts "between" those entities.
77 The fifth arrow point did not identify what was the partnership dispute that was resolved. Nor did it make clear the extent of the release proposed by the words "and no further legal action shall be taken". No legal action had been taken at the date of the agreement, although litigation had been threatened to wind up Elliston and to set aside the statutory demand served by the defendant. As the threatened legal action included action against the company, did the reference to no "further" legal action being taken extend to the parties releasing any claims they might have, not only against each other, but against the company?
78 Finally, it is not clear from the face of the document who were the parties to it. The agreement provided for the signatures of Mr Valentino and Mr Guerinoni immediately above the names of the companies they controlled. The reference to the acceptance of the terms and conditions by "both entities" and the other references to "both entities" and "each entity" suggest that only the companies were parties to the agreement. Yet the author of the document was evidently uncertain as to whether the shares and units (which did not in fact exist) were held by the companies or the individuals. Mr Toda had previously asserted that Mr Valentino was the shareholder of Elliston.
79 These infelicities in the document do not necessarily mean that the terms are so uncertain or incomplete as to be incapable of giving rise to a binding agreement. But they are such as to indicate that, objectively considered, the parties are not likely to have intended to be bound by a document so evidently drawn by a layman and poorly expressed. Particularly is that so when on the previous occasion the parties had entered into a negotiation as to the terms on which one would acquire the shares or interest of the other, they had stipulated through their solicitors that there would be no binding agreement until formal documents were signed.
80 The last sentence of the document is prima facie a strong indicator that the parties did intend to be bound by the document they signed (although, as discussed below, that has to be qualified in the case of Mr Guerinoni by the circumstances in which the communication of his signature to the document was conveyed). But as Giles JA explained in Sagacious Procurement Pty Ltd v Symbion Health Ltd, the search for the objective intention of the parties is not confined to the terms of the document. In that case there was an express agreement between the parties who signed a letter that they were bound by the terms and conditions contained in the letter, which were described as terms and conditions that had been finalised and accepted. But that indication was not conclusive as to the parties' contractual intention. Nor is it so in this case.
81 There is a further consideration that the document provided for the signatures of both parties. When Mr Guerinoni sent the document to Mr Castino on 19 September, it was unsigned. It would be inferred from the fact that the document provided for its being signed by both parties that even if it were intended that the document be contractually binding, that would not be so unless and until the document was signed by both parties and the signed acceptance communicated to each party. That is to say, even if the document was capable of giving rise to an immediately binding contract, that contract did not come into existence upon the provision of Mr Valentino's signed copy of the document to Mr Guerinino. At that point, Mr Guerinoni would not be bound because he had not signed the document, although the document provided for his signature. When the document signed by Mr Guerinoni was sent to Mr Stanton, it was sent under cover of the letter from Mr Barraket that showed that Mr Guerinoni did not intend that he would be required to purchase the plaintiff's shares by releasing the $500,000 in Mr Castino's trust account unless the matters referred to in Mr Barraket's letter of 24 September 2007 (quoted at para [54] above) were attended to. As Mr Valentino did not agree to all of those matters, there never was a point at which both parties expressed their intention to be bound by the terms of the document headed "Transfer of Shares & Units".
82 For these reasons I conclude that this is a "third category" Masters v Cameron case where the intention of the parties was not to make a concluded bargain unless and until they executed the formal documents to be prepared by the solicitor.
83 If that conclusion be wrong, then this would be a "second category" case where the parties had made performance of the terms conditional upon the execution of the "paperwork" to be prepared by the solicitor. For the reasons I have given I do not accept that the reference to "paperwork" was confined to a share transfer.
84 Further, because no definition was given to the terms to be included in the paperwork to be finalised by the acting solicitor, the agreement would be void for uncertainty unless the parties were to be taken to have left all such terms to be settled by the solicitor (see Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 136). As the "acting solicitor" was Mr Guerinoni's solicitor, it is not a reasonable construction of the clause that Mr Valentino was to be taken to have accepted any term that the solicitor might choose to incorporate in the paperwork. I consider that once it is determined that "all paperwork" is not confined to the share transfer and is not limited to the five subject matters in the arrow points, the agreement is too uncertain to be enforced. It amounts to an agreement to agree on terms to be included in the document to be prepared by the solicitor. Accordingly, if there were an objective intention of the parties to be bound by the document, the agreement would be void for uncertainty.
85 For these reasons, I conclude that the parties have not settled their dispute. I order that the claims for relief in the statement of claim and cross-claim be dismissed.
86 I direct that the moneys paid into court by Mr Castino and interest accrued thereon be paid to the defendant, or as Mr Guerinoni may direct.
87 The exhibits may be returned after 28 days.
88 I will hear the parties on costs and on the orders to be made in related proceedings for the winding-up of Elliston and in proceedings brought by Mr Guerinoni against Mr Castino.