Robertson v Unique Lifestyle Investments Pty Ltd [2007] VSCA 29

1 The facts of this appeal have been carefully recited by Habersberger, A.J.A.

2 There are essentially three questions raised by the appeal:

Was the investment agreement void for uncertainty or otherwise unenforceable?

Did the parties enter into contractual arrangements as contemplated in Masters v Cameron?[1]

Given the factual matrix found by the trial judge, is it open to the appellant to challenge those facts so found?

3 Turning to the first question, it picks up the issues raised under the multifarious grounds of appeal concerned with certainty and unenforceability. The submissions for the respondent are persuasive. At the outset, it is to be observed that the appellant elected not to call any evidence. Furthermore, there was no cross-examination of the plaintiff's witnesses as to matters sought to be ventilated now on the appeal. The plaintiff's documents were tended without objection, in particular, the investment agreement. No evidence was led to contradict the construction of the agreement the plaintiff purported to put forward based upon the factual matrix found by the judge.

4 Mr Facione gave evidence, as did Mr Sonntag, that the investment arrangement, including the investment agreement was the initial, formal documentation for the purposes of the advance of the disputed sum of $2 million. They were not cross-examined on that factual assertion. Mr Facione gave evidence that he and the appellant entered into a written agreement which they both signed. It is not open to the appellant to now seek to assert that the appellant did not sign the agreement.

5 Relevantly, by clause 3 of the Investment Arrangement providing for the execution of further documents, the parties purported to give effect to the terms of the Investment Agreement as soon as it was signed on 2 July 2001. Monies were raised by Unique and released to Mills Oakley, Mr Facione was appointed a director of the company, Burke & Riversdale Pty Ltd, and Mr Robertson relied on the investment agreement to have Mr Facione sign a guarantee. In addition, the amount of $2 million was raised by way of $1.85 million from investors, whilst Mr Facione had already paid $150,000. There was unequivocal evidence that the monies were not to be paid from the trust account of Mills Oakley without the agreement of Unique. Eventually when they were paid out on 2 July 2001 it occurred upon the investment arrangement being signed. Further on in time the appellant acknowledged his indebtedness in the context of the default of payment of interest due on the $2 million in about October 2001. Furthermore, as observed and found by the trial judge, the form 507 pursuant to the Corporations Act 2001 signed by the appellant was to the effect that Unique was owed the sum of $2.6 million by Burke & Riversdale Pty Ltd. None of these matters were contradicted.

6 At the trial at one juncture the trial judge raised with counsel for the respondent matters relating to the burden of proof that lay with the respondent concerning the agreement and other related matters. As a consequence, it was argued for the appellant on the appeal that these matters were not addressed or remedied by Unique at the trial and therefore, the failure of the respondent to do so led the appellant to determine not to cross-examine Mr Facione. The submission does not assist the appellant. Counsel at the trial made the forensic decision not to cross-examine Mr Facione. The appellant is bound by that decision and cannot on the appeal seek to reopen the facts and rely upon the way in which the plaintiff conducted its case below.

7 I turn then to the Masters v Cameron point. The agreement was one executed in the classic sense of the first category in Masters v Cameron. The judge having findings of fact as to the un-rebutted and, in critical respects, unchallenged evidence of the plaintiff's witnesses, Facione and Sonntag, that led to her Honour finding the intentions and purposes underlying the arrangement, it is not open to the appellant to seek to have this court, in effect, recast the matrix of facts: see Whisprun.[2] Mr Facione gave evidence to the effect that shortly after the execution of the investment arrangement the parties acted on that arrangement and the investment agreement and, in effect, sought to enforce it between themselves. Plainly the parties intended to be bound as contemplated in Masters v Cameron and as held by her Honour.

8 I turn then to the third question concerning the opportunity to challenge the factual matrix as found by the trial judge. It is not open to the appellant to embark on that course: see Whisprun.[3] There was unchallenged and uncontroverted evidence relied upon by the plaintiff and the findings of fact were open to the trial judge on the basis of the evidence of the various witnesses for the plaintiff. So far as the commercial construction of the arrangement is concerned, the judge applied the more modern, pragmatic approach to commercial arrangements between commercial citizens. The approach was consistent with relevant authority: see Vroom B V v Fosters Brewing Group Ltd;[4] also, MLW Technology Pty Ltd v May.[5]

9 Indeed, her Honour the trial judge in all the circumstances of the issues presented by the proceeding construed the contract in "a commonsense, non-technical way."[6]

10 For the reasons stated by Habersberger, A.J.A. together with the aforesaid remarks I would dismiss the appeal.

11 For the reasons given by Warren CJ and Habersberger AJA, I would also dismiss this appeal.

12 This is an appeal from a judgment of the Court in favour of the respondent/plaintiff, Unique Lifestyle Investments Pty Ltd ("Unique"), against the appellant/defendant, Mr Dale Robertson, in the sum of $2 million plus interest of $1,552,476 and costs. Although a greater sum had been claimed in the proceeding, Unique limited its case at the hearing to a claim for $2 million.

13 The proceeding, which was issued in the Commercial List of the Court in July 2003, was heard in July 2005. On the day before the hearing started, the solicitor acting for Mr Robertson was given leave to cease acting as he had not been put in funds. Mr Robertson, having unsuccessfully sought an adjournment, therefore represented himself on the first day of the hearing. However, on the second day counsel appeared for Mr Robertson instructed by his former solicitor.

14 The plaintiff called four witnesses, Mr David Facione and Mr Lionel Sonntag, respectively a director and a former director of Unique, Mr Gaspare Sirianni, Unique's solicitor, and Ms Kerry Hyland, an investor. The learned trial judge held that all of them "presented as consistent and credible witnesses." At the conclusion of Unique's case, counsel for Mr Robertson submitted that he had no case to answer and, on being put to his election, elected not to call any evidence. The "no case" submissions were treated as the final submissions.

15 The factual background is set out in detail in the judgment of the learned trial judge. It is unnecessary to recite it again. In summary, Mr Robertson, a property developer, was seeking to purchase a property at the corner of Burke and Riversdale Roads, Camberwell ("the development property"). He proposed a mixed commercial and residential development of the site, which was then occupied by a Honda car dealership. Mr Robertson needed investors to provide the funds to pay the deposit and to meet other development costs. Mr Robertson was the sole director and shareholder of Radomi Pty Ltd, subsequently called Burke and Riversdale Road Pty Ltd ("B&R"), which was the proposed purchaser of the development property. He was also a director of 635 St. Kilda Road Pty Ltd ("635 St. Kilda Road") and Rumasc Pty Ltd ("Rumasc").

16 Mr Robertson and Mr Facione were put into contact with each other by Mr Laurence Davis of the firm of solicitors, Mills Oakley, in about March or April 2001. (In May 2000 Mr Facione had purchased as an investment a unit in the 65 unit property known as "The Marquise", a development carried out by 635 St. Kilda Road.) At a meeting in early April 2001, Mr Robertson raised with Mr Facione the possibility of him providing the initial deposit and some working capital for this new development. His proposal was that the initial funding be provided until settlement of the purchase in about 18 months, by which time the development property would have increased in value as a result of planning approval being obtained. This would enable sufficient finance to be raised to settle the purchase and to pay out the initial investors. Mr Facione said that he could approach "a few friends" to raise the money. In a subsequent telephone conversation Mr Robertson told Mr Facione that he needed $150,000 immediately so that he could put down a 1% deposit as a show of good faith.

17 Mr Facione and Mr Sonntag were investors residing in Sydney. Mr Sonntag controlled a finance company, 1-Finance Australia Pty Ltd ("1-Finance"). In February 2001, Mr Facione and Mr Sonntag had set up Unique "initially" for the purpose of acquiring some units at a property in Stead Street, South Melbourne but also as a vehicle for "doing deals with property developers." Mr Facione discussed Mr Robertson's proposal with Mr Sonntag, including how they would raise the funds from suitable investors. Mr Facione then met with Mr Robertson in Melbourne on 24 April 2001. Mr Facione had with him Mr Sonntag's handwritten notes setting out his requirements for the structure of any funding transaction. Unique was mentioned in the heading and the body of the document. It was noted that Mr Facione, who was to become a director of the purchasing company, and Unique were "not required to give guarantees." A cash advance of $2 million for a term of 12 months by way of a bank guarantee was initially proposed. That sum was payable "1% today. 3% 60 days-90 days", with the balance "to be paid to consultants as and when required." Interest of 30% per annum was to be paid monthly. The legal costs of "Investor participants" were to be paid "at settlement." It was to be personally guaranteed by Mr Robertson and the "company shareholders" (which in the case of B&R was also Mr Robertson). This was initially resisted by Mr Robertson. After speaking to Mr Sonntag, Mr Facione told Mr Robertson that "the deal was off" if they did not get "security." Mr Robertson then "agreed the deal." The only form of security mentioned in Mr Sonntag's notes were the guarantees by Mr Robertson and the "company's shareholders."

18 Mr Facione and Mr Robertson then met Mr Davis at the office of Mills Oakley. In the course of that meeting Mr Facione agreed to provide the sum of $150,000 personally. Mr Davis dictated a short agreement, which Mr Facione wrote out by hand. It provided that the $150,000 was to be deposited in the trust account of Mills Oakley and was only to be used for the "initial deposit" on the purchase of the development property. The monies were advanced "on the strict condition that a formal agreement is entered into, between ourselves and/or our nominees within fourteen days of this date, which agreement will reflect the matters on the attached note." The handwritten agreement, which was signed by both Mr Robertson and Mr Facione, was attached to Mr Sonntag's notes and Mr Robertson initialled the first page of those notes.

19 Following this meeting, Mr Facione and Mr Sonntag agreed to, and did, instruct The Argyle Partnership to act as Unique's solicitors in relation to the preparation of the formal agreement. They also agreed to have one guarantee (from Suncorp Metway) rather than individual guarantees from all of the investors. Later, however, the vendor insisted that the deposit be provided in cash and not by bank guarantee.

20 Between May and October 2001, a total of $2 million was raised from a number of investors, most of whom were brought in by Mr Facione and the remainder by Mr Sonntag. Some of the investors raised the funds by borrowing from 1-Finance against security provided by them. Mr Sonntag gave evidence that a loan agreement was drawn between Unique and the investor concerned. He identified Ms Hyland's loan agreement for $200,000 as typical of the investor loan agreements. Her Honour accepted the evidence of Ms Hyland and Mr Sonntag that the name "Universal" appearing on Ms Hyland's loan agreement (followed by Unique's ACN) was due to a clerical error and that, in fact, the borrower company was Unique.

21 Mr Facione and Mr Sonntag also gave evidence that the loan funds were not provided as a single amount. Some investors paid between 9 and 11 May 2001, some between 20 and 22 June 2001 and others later. Ms Hyland made her investment in September 2001. Some of the investors made their contributions in more than one tranche.

22 Not all of the investor loan moneys were first paid to Unique. Mr Facione gave evidence that as a result of a request from Mr Robertson, most of the funds were paid directly into a separate trust account in the name of B&R which was established with Mills Oakley, the solicitors acting for that company on the purchase.

23 By a contract of sale dated 11 May 2001, B&R agreed to purchase the development property for the price of $11.33 million plus GST, payable by a deposit of $1,699,500 and the balance of $9,630,500 on 1 November 2002. Part of the deposit, namely $520,150, was payable upon the execution of the contract and the balance of the deposit, $1,179,350, on or before 8 June 2001.

24 By a facsimile letter dated 16 May 2001 addressed to Mr Facione, Mr Davis of Mills Oakley advised in respect of the "Camberwell Development" that the "trust entries" showed receipts of $600,500 and payments of $565,650 leaving a balance in the trust account of $34,850. Included in the payments were the sum of $110,150 on 24 April 2001 and the sum of $410,000 on 11 May 2001, making a total of $520,150, which were paid to the trust account of the solicitors acting for the vendor of the development property.

25 Because of the switch from bank guarantee to cash, payment of the balance of the deposit was not able to be made on the due date. Preparation of the formal agreement contemplated by the handwritten agreement of 24 April 2001 had also not been finalised. On 18 June 2001, a meeting was held at the office of The Argyle Partnership to discuss the drafting of that agreement. Apart from solicitors, the persons present included Messrs. Facione, Sonntag and Robertson.

26 By a letter dated 20 June 2001 addressed to "Mr D. Facione, Unique Lifestyle Investments Pty Ltd, c/- The Argyle Partnership", Mr Davis confirmed that:

"all monies deposited into the Mills Oakley Trust Account in relation to the Camberwell Development, by you or on your behalf, will remain in our trust account until such time as I receive from The Argyle Partnership written authorisation to release the said monies."

27 In a letter also dated 20 June 2001 on the letterhead of 635 St. Kilda Road and addressed to "Director, Unique Lifestyle Investments Pty Ltd, c/- The Argyle Partnership", Mr Robertson referred to:

"the payment of funds by your investors into the trust account of my solicitors, Mills Oakley, for use as the balance of the deposit payable in respect of the purchase of the above property by Burke and Riversdale Road Pty Ltd (B&R)."

28 On or about 25 June 2001, the vendor of the development property served a rescission notice. It required payment of the balance of the deposit by 9 July 2001.

29 On 2 July 2001, a number of parties executed a document entitled "Investment Arrangement". This stated as follows:

"Unique is prepared to invest in the Project on the basis that:

1. Unique holds 50% of the issued shares in Burke and Riversdale Road Pty Limited and 50% of the allotted units in the Unit Trust (acquired for $1.00 each) subject to the terms of the Investment Agreement.

2. The relevant parties agree to the principle [sic] terms of the following arrangements:

(a) Investment Agreement

(b) Robertson agreement

(c) Marquise Contract; and

(d) Deed of Variation to Marquise Contract

which are attached as Schedule 1.

3. The relevant parties agree to and must execute documents prepared by Unique's solicitors which fully and further elaborate on the principle [sic] terms of the arrangements."

30 The Investment Arrangement provided for execution by Unique, B&R, Mr Robertson, 635 St. Kilda Road and Rumasc. It was signed by Mr Sonntag on behalf of Unique, Mr Robertson on behalf of B&R and 635 St. Kilda Road and on his own behalf and by Mr Lewis, an accountant, on behalf of Rumasc. Schedule 1 to the Investment Arrangement contained terms of, or references to, the four agreements or contracts referred to in sub-paragraphs 2(a) to (d) of the Investment Arrangement.

31 The parties to the Investment Agreement were stated to be B&R (referred to as "Burke"), Unique, Mr Robertson and Rumasc. The Investment Agreement then went on to relevantly provide as follows:

A. Burke has entered into a contract (the Contract) to purchase the Property upon which it intends to carry out the Development. The Contract was exchanged on 11 May 2001 and is to complete on 1 November 2002.

B. Burke requires funds to enable it to pay the deposit on the Property and to provide working capital to carry out the initial stages of the Development.

C. Burke has requested Unique to invest in the Property and the Development to the extent of $2,000,000 (Investment Sum) on the terms of the arrangements.

D. Unique has agreed to invest in the Property and the Development on the terms of the arrangements.

1. Investment Sum

1.1 The Investment Sum is $2,000,000.

1.2 The Investment Sum shall be paid as to:

(a) $555,000 on or before the date hereof (receipt of which is acknowledged);

(c) the balance by monthly payments of approximately $40,000 in accord with the Project (being the undertaking of the development) budget.

1.3 Part of the Investment Sum may be paid by bank guarantee, however the working capital component of the Investment Sum may not be paid by bank guarantee.

1.4 The parties acknowledge that Unique's investment in the Property and the Development is for a period expiring on or before 1 July 2002, being to assist in providing the deposit money and some of the costs of the initial stages of the Development. The period of the investment may be extended by mutual agreement between the parties.

2.1 The Investment Sum is to be repaid by the Repayment Date which is the earlier of:

(a) 1 July 2002;

(b) the time of refinancing of the Project;

(c) the time of introducing other investors to the Development; and

(d) of such earlier date as Robertson may require.

2.2 On the Repayment Date Burke must:

(a) pay to Unique the Investment Sum to the extent it was paid as cash (ie not as bank guarantee);

(b) pay to Unique any outstanding interest on the Investment Sum to the extent it was paid as cash (ie not as bank guarantee) in accord with clause 3;

(c) return to Unique any bank guarantees provided as part of the Investment Sum together with any letter or other requirements which may be required by the bank to cancel such guarantee;

(d) pay to Unique interest in accordance with clause 3 on the amount of the Investment Sum paid by way of bank guarantee;

(e) pay to Unique all reasonable costs and expenses which have been incurred prior to the Repayment Date by Unique's investors in raising the bank guarantees or cash required for the Investment Sum, including fees paid and penalty interest incurred in relation to the bank guarantees and any other financing costs incurred or accrued in respect of the Investment Sum, legal costs of obtaining advice from or drafting documentation by The Argyle Partnership, fees paid to I-Finance (Australia) Pty Limited, courier fees and other out of pocket expenses (Investor Costs); and

(f) pay to Unique the reward sum of $2,000,000 (Reward Sum).

3. Consideration

3.1 In consideration of providing the Investment Sum Unique is to receive:

(a) interest on the Investment Sum (Interest)

(i) at 35% per annum for cash [paid as to 25% per annum monthly in arrears (reduced to 20% if paid on time) and at 10% per annum capitalised monthly and paid on the Repayment Date]; and

(ii) 20% per annum (reduced to 15% per annum if paid on time) for bank guarantees (paid on the Repayment Date).

(b) payment of the Investor Costs up to a maximum of $60,000 on the Repayment Date;

(c) payment of the fees of I-Finance (Australia) Pty Limited up to a maximum of $50,000 within 30 days of the date hereof;

(e) the right to purchase (Purchase Rights) all the units in the residential portion of the Development for 90% of the financier's valuation for construction funding purposes or in lieu thereof (at Unique's option) a further reward sum (Residential Reward Sum) payable on the Repayment Date. The parties agree that the Residential Reward Sum is $1,000,000 if no town planning approval has been obtained for the residential portion of the Development the Residential Reward Sum is $3,000,000.

3.2 The Investment Sum, the Interest, the Investor Costs, the i-finance fees, the Reward Sum and the Residential Reward Sum (if applicable) together with any interest payable thereon are referred to as the Unique Moneys.

4.1 Burke must provide the security set out in this clause 4 for the Unique Moneys and the purchase rights.

4.2 A personal guarantee and indemnity by Dale Robertson.

4.3 A registered equitable charge over the assets of Burke.

...

6. Costs

6.1 Robertson agrees to pay Unique's reasonable legal costs and disbursements in connection with its investment structure advice in relation to the Development, the negotiations, preparation and execution of this Agreement. Such costs must be paid within 30 days of the date of this Agreement. Such costs exclude any legal advice provided to Unique's investors.

...

9. Covenants by Burke

9.1 Burke covenants with Unique:

(a) to pay interest in accordance with clause 3.1(a);

(b) to repay the Investment Sum, Investor Costs and unpaid Interest on the Repayment Date;

(c) to pay the Reward Sum or to procure 635 St Kilda Road Pty Limited to accept a reduction in the purchase price for the Marquise Contract by $2,000,000.00; and

(d) to enter into the Concourse Documents contemplated by clause 8.8 or pay the Residential Reward Sum.

11.1 Robertson must supply all further working capital as and when required by the Project Budget and necessary to complete the Project by obtaining the Project Permits and refinancing the Property.

(a) to pay interest in accordance with clause 3.1(a);

(b) to repay the Investment Sum, Investor Costs and unpaid Interest on the Repayment Date;

(c) to pay the Reward Sum or to procure 635 St Kilda Road Pty Limited to accept a reduction in the purchase price for the Marquise Contract by $2,000,000.00; and

(d) to enter into the Concourse Documents contemplated by clause 8.8 or pay the Residential Reward Sum.

...

13. Essential Terms

13.1 The following clauses will be essential terms of the Agreement:

(a) failure by Burke to pay Interest in accordance with the provisions of clause 3.1(a);

(b) failure by Robertson to provide working capital as required (by the Project Budget and as and when required to complete the Project;

(c) failure by Burke to repay the Investment Sum in accordance with the provisions of clause 2.3;

(e) failure of Burke to enter into documentation for sale of Residential Component to Unique or pay the Residential Reward Fee.

14. Default

14.1 If Burke or Robertson default of any of their obligations under this Agreement then Unique reserves the right to cancel or terminate this Agreement and may exercise all powers and remedies nor or hereafter existing in law or in equity available to it, including

(a) requiring that Unique Moneys are immediately due and payable;

(b) the right to transfer, mortgage, charge, sell the Investment or the Project; and

(c) the right to sell its interest in Burke or the Trust or both.

14.4 Termination of this Agreement under clause 14.1 will not prejudice any claim Unique may have against the Burke or the Robertson under this Agreement at the date of the termination.

15.1 Robertson indemnifies and agrees to keep indemnified Unique against all claims, demands, actions, proceedings, costs, expenses and liabilities (including without limitation legal costs and disbursements on a full indemnity basis) suffered or incurred by Unique directly or indirectly as a result of any breach of the obligations of Burke under this Agreement.

32 It will be noted that 635 St. Kilda Road was not stated to be a party to the Investment Agreement. The same situation applied to the Robertson Agreement, or the Junction Unit Trust Agreement as it was also called. On the other hand, 635 St. Kilda Road, Mr Robertson and Unique were stated to be parties to the Deed of Variation to Marquise Contract, but not B&R or Rumasc.

33 Following the execution of the Investment Arrangement, The Argyle Partnership sent Mills Oakley a letter dated 2 July 2001 authorising the release of the funds then held in their trust account on withdrawal of the rescission notice. In addition, Mr Facione was appointed a director of B&R and 50 shares in B&R were transferred to Unique. According to the Mills Oakley trust account history, on 6 July 2001 the sum of $1,201,140 was paid to the vendor of the development property as "Payment of Deposit of Settlement [sic]."

34 Mr Facione gave evidence that in October 2001, B&R and Mr Robertson "failed to make the first of many interest payments to Unique due under the Investment Arrangement." Negotiations between the parties took place in 2002 but they were unsuccessful in that no money was forthcoming. In November 2002, the vendor rescinded B&R's contract to purchase the development property, it having failed to pay the balance of the purchase price.

35 Negotiations between Unique and Mr Robertson continued into 2003. On 8 August 2003, after this proceeding had been commenced, B&R was wound up by order of the Court. The Form 507 Report for B&R, prepared pursuant to the relevant provisions of the Corporations Act 2001 (Cth), signed by Mr Robertson and dated 26 August 2003, stated that debts to unsecured creditors totalled $3,911,142.48. The attached Schedule H: "Unsecured Creditors" listed Unique as a creditor for an amount claimed of $2,693,445.50. The amount admitted as owing was $2,693,445.50. A notation stated "Dispute as to interest amount." The Schedule was apparently initialled by Mr Robertson.

36 The first ground of the Amended Notice of Appeal stated that her Honour had erred in making 28 different findings of fact or law or mixed fact and law. The second and third grounds asserted that her Honour's decision was "not in accordance with", respectively, the law and the facts. In essence, these criticisms came down to the three separate arguments as to why the appeal should succeed.

37 Mr Pirrie of counsel, who appeared on behalf of Mr Robertson, first submitted that her Honour erred in finding that the Investment Arrangement and the Investment Agreement were not vitiated by uncertainty. Her Honour had, instead, held that they constituted an enforceable agreement pursuant to which Mr Robertson had bound himself to pay to Unique the sum of $2 million on 1 July 2002. Mr Pirrie emphasised that by paragraph 2 of the Investment Arrangement in order for Unique to invest in the unidentified "Project", "the relevant parties", who were not identified, were required to agree to the unidentified principal terms of the four specified "arrangements". Mr Pirrie submitted that in the circumstances it was all too uncertain. He pointed out that there was no machinery for identifying what the principal terms were. Therefore, he submitted, it could not be said that Mr Robertson had agreed to be bound by whatever were held to be the principal terms of the four "arrangements" referred to in the Investment Arrangement, and in particular that Mr Robertson had agreed that he would personally be liable to pay to Unique the sum of $2 million on 1 July 2002.

38 I do not agree with this submission. In my opinion, there was no vitiating uncertainty about the Investment Arrangement and the Investment Agreement. The authorities referred to by her Honour[7] clearly supported her statement that:

"... the modern approach to the construction of commercial agreements of business people is, generally, to endeavour to uphold the bargain by eschewing a narrow or pedantic approach in favour of a commercially sensible construction, unless irremediable obscurity or a like fundamental flaw indicates that there is, in fact, no agreement."[8]

Moreover, as her Honour pointed out,[9] it was permissible to have regard to extrinsic evidence of "the factual matrix" or surrounding circumstances in determining the meaning of contractual terms.[10] Although her Honour rejected the contention that the relevant agreements were ambiguous, she concluded that the asserted ambiguity would, in any event, be adequately addressed by the extrinsic evidence of "the factual matrix" given on behalf of Unique.[11]

39 I too reject Mr Pirrie's contention on behalf of Mr Robertson that there was ambiguity. I consider that it is quite clear from a reading of the Investment Agreement that "the Project" in which Unique was prepared to invest was the purchase by B&R of the development property. Further, I consider that the requisite agreement of the "relevant parties" to the terms of the Agreements or Contracts set out in Schedule 1 meant the agreement of all of the respective signatories to the Investment Arrangement who were stated to be parties to that particular Agreement or Contract. Thus, by executing the Investment Arrangement, B&R, Unique, Mr Robertson and Rumasc, but not 635 St. Kilda Road, were agreeing to the principal terms of the Investment Agreement. Likewise, 635 St. Kilda Road, Mr Robertson and Unique, but not B&R or Rumasc, were agreeing to the principal terms of the Deed of Variation to Marquise Contract.

40 The reference to "the principal terms" was also sufficiently clear, in my opinion. I accept the submission by Mr McCormick of counsel, who appeared on behalf of Unique, that all of the terms set out in the document called the Investment Agreement should be regarded as the principal terms of that Agreement. Thus, basic matters such as "Investment Sum" (cl.1), "Repayment of the Investment Sum" (cl.2), "Consideration" (cl.3), "Security" (cl.4), "Covenants by Burke [B&R]" (cl.9), "Covenants by Robertson" (cl.11) and "Default" (cl.14) were all included. What was not included were the peripheral or mechanical provisions normally found in a formal contract such as the addresses at which notices were to be served or the manner of calculating time.

41 Even if this approach is not correct, I consider that her Honour was entitled to find that "as a matter of commercial common sense, any term providing for the repayment by a party of the investment sum would be considered by 'a reasonable commercial person' to be a highly important 'principal term' "[12]. By clause 11.2(b) of the Investment Agreement, Mr Robertson covenanted with Unique to repay, amongst other amounts, "the Investment Sum", that is the sum of $2 million (cl.1.1). By signing the Investment Arrangement, Mr Robertson was indicating that he was agreeing to this principal term of the Investment Agreement.

42 Mr Pirrie drew attention to clause 13 of the Investment Agreement which dealt with the topic "Essential Terms". He submitted that if this was what was meant by the expression "the principal terms" then it did not assist Unique because clause 13 did not contain any promise by Mr Robertson to pay the Investment Sum. As her Honour said, this clause is "poorly drafted."[13] A term of an agreement, let alone an "essential" term, is not normally expressed in terms of a failure to do something. However that may be, it is clear from the different language used, that "essential terms" are not the same as "the principal terms". Thus, this submission does not assist the appellant.

43 Mr Pirrie submitted that it was significant that, according to Mr Facione's evidence, at the meeting on 24 April 2001 Mr Robertson initially refused "to give either a personal guarantee or any security" and that at Mr Facione's insistence he eventually agreed to give "security" in order to save the deal. There was said to be no mention of a personal guarantee at that time. It was also said that Mr Sonntag's handwritten notes required both. As I have previously stated, the only form of security mentioned in Mr Sonntag's notes were guarantees by Mr Robertson and the "company's shareholders." It is therefore difficult to know what security apart from a personal guarantee, Mr Facione and Mr Robertson were talking about. However that may be, what was agreed to by Mr Robertson in April 2001 is simply irrelevant to what he agreed to in July 2001 when faced with the prospect of having B&R's purchase contract rescinded unless he could come up with the $1,179,350 balance of the deposit. There was no uncertainty about the July 2001 agreement. I have concluded earlier that the learned trial judge was not in error in finding that by signing the Investment Arrangement Mr Robertson agreed to be personally liable to pay to Unique the sum of $2 million on 1 July 2002. Given this conclusion it is unnecessary for me to decide whether the additional, and possibly superfluous, indemnity by Mr Robertson contained in clause 15.1 of the Investment Agreement also made him liable for the $2 million claim.

44 Her Honour was therefore correct when she held that the Investment Arrangement and the Investment Agreement were not unenforceable on the ground of uncertainty.

45 Secondly, Mr Pirrie emphasised that paragraph 3 of the Investment Arrangement provided that "the relevant parties" had to agree to and execute documents to be prepared by Unique's solicitors which would "fully and further elaborate on" the principal terms of the "arrangements". Counsel submitted that her Honour was therefore in error when she held[14] that the Investment Arrangement fell into the first category of cases described in Masters v Cameron,[15] namely:

"... one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. ... [It is] a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, ..."[16]

Mr Pirrie submitted that the present case came within the third category identified in Masters v Cameron, namely:

"... one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract."[17]

46 I do not agree with this submission. In my opinion, the language used by the parties showed that they had reached "finality in arranging all the terms of their bargain." The contemplated elaboration in the documents to be prepared by Unique's solicitors could be "fuller or more precise but not different in effect" to what had already been agreed. Clearly, the parties intended to make a concluded bargain on that day and not wait until the formal contract had been drafted and executed before either side agreed to be bound.

47 Any doubt about this conclusion is put to rest, in my opinion, when one considers what followed once the Investment Arrangement was executed.[18] Not only did The Argyle Partnership send the letter dated 2 July 2001 to Mills Oakley authorising the release of the funds then held in their trust account, as a result of which on 6 July 2001 the sum of $1,201,140 was paid to the vendor of the development property as payment of the balance of the deposit, but Mr Robertson arranged for Mr Facione to be appointed as a second director of B&R and for 50 shares in B&R to be transferred to Unique. All of this immediately subsequent conduct is indicative, in my opinion, of the fact that the parties considered that they had entered into a concluded agreement. Further evidence of this intention is to be found in the letter dated 18 July 2001 from Mr Davis of Mills Oakley to The Argyle Partnership complaining of Mr Facione's failure, as a director of B&R, to sign a guarantee of its contract to purchase the development property. In that letter it was said that, until the guarantee was signed and the breach rectified, Mr Robertson "refuses to pay any interest costs on the investment funds."

48 I also accept Mr McCormick's submission that while it may be that Unique was "prepared to invest" on the basis that further documents were to be prepared by it, in which case they must then be executed by all relevant parties, the fact that Unique chose not to have any such documents prepared or executed did not relieve Mr Robertson from liability. The decision by Unique not to insist on or waive a step inserted for its protection did not make the Investment Arrangement and the Investment Agreement unenforceable.[19]

49 Mr Pirrie also relied on the reference in clause 2 of the Investment Arrangement to the four documents in Schedule 1 as "the following arrangements". As I understood the argument, Mr Pirrie submitted that the use of the word "arrangements" was an indication that these other documents did not represent final agreements. This is rather hard to maintain, in my opinion, when each of the specific documents in question is actually called either an "Agreement" or a "Contract". But labels are not of great assistance, as can be seen from the name of the Investment Arrangement itself.

50 I therefore conclude that the learned trial judge was not in error in rejecting the submission that there was no concluded bargain until the parties had executed a formal contract.

51 Thirdly, Mr Pirrie submitted that her Honour was in error in concluding that Unique advanced or lent any funds to B&R. He listed a number of matters which, it was submitted, cast doubt on the correctness of this conclusion. They were:

(a) the evidence of Mr Facione that at the meeting on 24 April 2001 he did not identify Unique to Mr Robertson;

(b) the evidence of Mr Facione that when the vendor ruled out payment of the deposit by bank guarantee he and Mr Sonntag agreed that they would "each have to inform each of our own investors that cash was required";

(c) the fact that Mr Facione personally lent the $150,000 on 24 April 2001;

(d) the fact that some investor funds were paid by the investors directly into the Mills Oakley trust account in the name of B&R and that Mr Sonntag gave evidence that some investors directly instructed Mills Oakley that the funds were not to be released "except for the Honda deal";

(e) the fact that investor funds were paid out, in part, to meet the initial part of the deposit on 24 April and 11 May 2001, well before the signing of the Investment Arrangement on 2 July 2001;

(f) the fact that three letters from Mr Davis of Mills Oakley respectively dated 16 May, 25 June and 13 August 2001 referring to the trust account entries were addressed to Mr Facione personally;

(g) the fact that there was no statement in any of the correspondence from Mills Oakley that any funds had been received from Unique rather than the investors;

(h) the evidence of Mr Facione that "the authority to release did not come directly from me, or from Unique, but rather through our solicitors" and that the letter from The Argyle Partnership dated 2 July 2001 did not identify the client giving the authority;

(i) the failure of Unique to discover or prove in evidence any supporting financial and banking records and statements;

(j) the fact that Unique did not call any evidence from any of its "investors" or prove any loan agreements, other than Ms Hyland and in her case her loan agreement was with "Universal Lifestyle Investments Pty Ltd" not Unique and was not signed until 19 September 2001, over two months after the payment of the balance of the deposit;

(k) the only other loan agreement in evidence, which was tendered by the defendant, was an undated loan agreement between Mr Frank Coppolino and Mr Facione in an amount of $160,000 which was sent by Mr Coppolino's solicitors to The Argyle Partnership on 21 June 2001 ($160,000 was the same amount which Mr Facione had said was contributed by the "investor" Mr Coppolino to the $2 million);

(l) the fact that an agreement drawn up during the settlement negotiations between the parties in November 2002, which Mr Facione but not Mr Robertson signed, made no mention of Unique but instead recited that Mr Facione had "secured investors to invest the sum of $2 million" in the acquisition of the development property and that Mr Facione had "personally guaranteed these loans";

(m) the concerns raised by the learned trial judge in discussion with counsel for Unique about this very issue of whether it was Unique which lent the money to B&R; and

(n) that in respect of the monies paid by investors directly into the Mills Oakley trust account, the scenario relied on by Unique meant that Mills Oakley would have been in breach of s.174(3) of the Legal Practice Act 1996 in withdrawing money from the trust account without the particular investor's direction.

52 In response, Mr McCormick stressed that her Honour's finding on this point had to be considered on the totality of the evidence. He submitted that there was more than sufficient evidence to justify the conclusion reached by her Honour. The matters he referred to were:

(a) Mr Sonntag's handwritten notes which were initialled by Mr Robertson and attached to the signed agreement of 24 April 2001 referred to Unique both in the heading and the body of the document in a way which suggested that it would be the lender;

(b) the evidence of both Mr Facione and Mr Sonntag that all of the $2 million was lent by Unique;

(c) the evidence of Mr Sonntag that some of the funds paid into the Mills Oakley trust account were paid by Unique and that the remainder was paid by the investors directly at the direction of Unique;

(d) the evidence of Mr Sonntag that there were loan agreements drawn between Unique and the individual investor concerned, such as the agreement between Ms Hyland and Unique, about which he was not cross-examined;

(e) the evidence of Ms Hyland that she advanced money to Unique for the purposes of the purchase and development of the "Honda site" pursuant to her loan agreement with Unique and that she had commenced proceedings against Unique to recover her loan;

(f) the fact that the letter from Mr Davis of Mills Oakley dated 20 June 2001 was addressed to Mr Facione of Unique rather than Mr Facione personally and that the chain of correspondence had to be read as a whole;

(g) the fact that the letter from Mr Robertson dated 20 June 2001 was addressed to Unique;

(h) the evidence of Mr Sonntag that The Argyle Partnership was acting for Unique and that it was Unique which controlled the distribution of the funds out of the Mills Oakley trust account, about which he was not cross-examined;

(i) the evidence of Mr Sonntag that the accounts and financial records of Unique were forwarded to Unique's former solicitors, Strongman & Crouch, and the evidence of Mr Sirianni that he had searched the files received from Strongman & Crouch and had not found any such records;

(j) the fact that Mr Facione was not cross-examined at all and that the Coppolino loan agreement was never put to him;

(k) the fact that the Coppolino loan agreement was tendered when Mr Sirianni was being cross-examined, but he simply identified it as on its face being such a document;

(l) the argument that the settlement agreement drawn up in November 2002 did not include Unique, overlooked that, in its terms, it was an agreement with Mr Robertson and companies under his control for security for monies owed by him and it was never executed by Mr Robertson;

(m) the fact that Mr Robertson had signed the Form 507 listing Unique as an unsecured creditor of B&R for the claimed amount of $2,693,445.50, with only a dispute as to the "interest amount", which the learned trial judge described as "compelling evidence in support of the advance of the funds for the specified purposes";[20]

(n) the spreadsheet prepared by Mr Lewis on behalf of Mr Robertson and B&R detailing the drawdown of the $2 million and calculating "the interest due to Unique" as at 1 July 2002, which on 25 July 2002 was forwarded by Clayton Utz, the solicitors then acting for Mr Robertson and B&R, to Schetzer, Brott & Appel, the solicitors acting for Mr Sonntag;

(o) the email from Mr Robertson to Mr Facione on 18 September 2002 in which Mr Robertson stated that he intended "to settle the purchase contract on Camberwell and repay all monies due";

(p) the email from Mr Robertson to someone acting on behalf of Ms Hyland on 16 June 2003 in which Mr Robertson stated that his intentions with respect to the Honda site were "to repay all the funds that were loaned for the project";

(q) the fact that her Honour's concerns about the evidence concerning the claim that Unique had advanced or lent the $2 million to B&R were expressed before Mr Sonntag was called to give evidence and before the Mills Oakley trust account records were admitted into evidence, and that her Honour in her reasons for judgment held that, despite there being "no clear, comprehensive documentary record of the payments out",[21] she was satisfied that Unique advanced the $2 million to B&R, Mr Robertson or to other parties, for the purposes specified in the Investment Agreement;[22] and

(r) there was no breach of s.174(3) of the Legal Practice Act because in the case of the investors who paid their contributions directly into the Mills Oakley trust account "the person for or on behalf of whom the money was received" was Unique and it was that person on whose behalf the direction was given to withdraw the funds and pay them to the vendor of the development property in payment of the balance of the deposit.

53 In all the circumstances, I consider that her Honour's conclusion that Unique lent $2 million to B&R and Mr Robertson was clearly open and, in my opinion, no error has been shown in that conclusion. As the learned Chief Justice pointed out to Mr Pirrie during argument, the outcome of many of these factual issues were affected by forensic decisions taken at the trial, such as not seeking to cross-examine Mr Facione, the limited cross-examination of Mr Sonntag and the election not to call any evidence by, or on behalf of, Mr Robertson.

54 The final argument advanced by Mr Pirrie on behalf of Mr Robertson was contained in ground 4(3) of the Amended Notice of Appeal. It was that her Honour erred in failing to hold that the sum of $550,000 due under the Investment Agreement was unenforceable as it was past consideration. The amount of $550,000 was said in clause 1.2(a) of the Investment Agreement to have been advanced "on or before the date hereof (receipt of which is acknowledged.)" The documentary evidence about this amount is confusing. According to Mr Lewis' spreadsheet of interest due to Unique as at 1 July 2002 the sum of $535,150 had been advanced prior to the execution of the Investment Arrangement on 2 July 2001. Yet according to Mr Davis' letter of 16 May 2001 by that date there had been payments from the trust account of $565,650. Possibly the sum of $20,500 was a repayment of an investor's funds. However that may be, the conflict does not matter because, in my opinion, there is nothing in this point.

55 In my opinion, the simple analysis of this transaction is that the consideration for Mr Robertson's promise to repay the $550,000 or some other amount already advanced was the forbearance to call up that amount forthwith and the agreement to advance the balance of the $2 million. In rejecting this argument by Mr Robertson, her Honour referred to Pao On v Lau Yiu Long where Lord Scarman, delivering judgment on behalf of the Privy Council, said:

"An act done before the giving of a promise to make a payment or confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisor's request: the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance."[23]

Her Honour also referred to a passage to similar effect from the judgment of Callaway JA (dissenting on other grounds) in Ipex Software Services Pty Ltd v Hosking.[24] On either approach, the argument about past consideration must fail.

56 The result is, therefore, that, in my opinion, the appeal by Mr Robertson should be dismissed.

[1] [1954] HCA 72; [1954] 91 CLR 353.

[2] Whisprun Pty Ltd v Dixon [2004] HCA 2; (2004) 78 ALJR 321.

[3] Ibid.

[4] [1994] VicRp 53; [1994] 2 VR 32, 67.

[5] [2005] VSCA 29, [76].

[6] Ibid.

[7] Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; (1932) 147 LT 503 at 512 per Lord Tomlin, with whom Lord Warrington and Lord Macmillan agreed, and at 514 per Lord Wright; Biotechnology Australia Ltd v Pace [1988] 15 NSWLR 130 at 136 per Kirby P; Vroon BV v Fosters Brewing Group Ltd [1994] VicRp 53; [1994] 2 VR 32 at 67 per Ormiston J; Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] UKHL 19; [1997] AC 749 at 770-771 per Lord Steyn; and MLW Technology Pty Ltd v May [2005] VSCA 29 at [76] per Gillard AJA, with whom Winneke P and Buchanan JA agreed.

[8] [2005] VSC 347 at [88].

[9] [2005] VSC 347 at [88].

[10] Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 997 per Lord Wilberforce; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337.

[11] [2005] VSC 347 at [105].

[12] [2005] VSC 347 at [97].

[13] [2005] VSC 347 at [98].

[14] [2005] VSC 347 at [107].

[15] [1954] HCA 72; (1954) 91 CLR 353.

[16] [1954] HCA 72; (1954) 91 CLR 353 at 360 per Dixon CJ, McTiernan and Kitto JJ.

[17] [1954] HCA 72; (1954) 91 CLR 353 at 360 per Dixon CJ, McTiernan and Kitto JJ.

[18] Subsequent conduct of the parties may be relied upon to establish the existence of a contract. See, for example, Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 78 per Griffith CJ, with whom O'Connor J agreed; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 at 669 per Griffith CJ and at 672 per Isaacs J; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 547-548 and 550 per Gleeson CJ, with whom Hope and Mahoney JJA agreed.

[19] See MR Hornibrook (Pty) Ltd v Eric Newham (Wallerawang) Pty Ltd (1971) 45 ALJR 523 at 524 per Menzies, Windeyer and Walsh JJ.

[20] [2005] VSC 347 at [120].

[21] [2005] VSC 347 at [120].

[22] [2005] VSC 347 at [127].

[23] [1979] UKPC 2; [1980] AC 614 at 629.

[24] [2000] VSCA 239 at [29].