Syd Mirror Pty Ltd v The Humble Fishmonger Pty Ltd

Supreme Court of NSW|2004-07-02|Before: Barrett J, Mr J, Mr P

Background 1 These proceedings were commenced by summons filed on 4 June 2004. In accordance with a direction made by me on 9 June 2004, the plaintiff filed a statement of claim on 11 June 2004. The plaintiff's case is that a contract was formed between the plaintiff and the defendant on 21 May 2004. It seeks a declaration to that effect and a declaration as to the terms of the contract, as well as ancillary relief. There is also a claim based on estoppel. The proceedings were heard on 15 and 16 June 2004. There was insufficient time for counsel for the defendant to address and I directed that written submissions be filed. These were received on 17 June 2004. I then reserved judgment. 2 The plaintiff is subject to administration under Part 5.3A of the Corporations Act 2001 (Cth). Its administrator is Mr Godfrey. Central to the plaintiff's contentions is a meeting attended on 21 May 2004 by Mr Godfrey and an employee of his firm, Mr Wiles. Also present were Mr Manettas and Mr Misan. The meeting took place at a restaurant at King Street Wharf with which Mr Manettas is associated. The subject of the meeting was a nearby restaurant, "Coco Roco", owned by the plaintiff which was for sale. The plaintiff says that, at the meeting, a contract was concluded between the plaintiff (through Mr Godfrey) and the defendant (through one or both of Mr Manettas and Mr Misan) under which the plaintiff agreed to sell the leasehold of Coco Roco and certain assets of the Coco Roco restaurant business and the defendant agreed to buy these items. Events before the 21 May 2004 meeting 3 Mr Godfrey first met Mr Manettas on 30 March 2004 when they were introduced by a third party with whom Mr Godfrey was lunching at one of Mr Manettas' restaurants. Mr Manettas knew (or was told) that Mr Godfrey was selling Coco Roco. A contract for sale to another party was then in place but was later terminated. Mr Manettas made certain favourable comments about Coco Roco but said he had not been interested in buying it. 4 After that sale contract was terminated, Mr Godfrey took steps to advertise Coco Roco for sale. Mr Godfrey also telephoned Mr Misan who, he had been told, was a contact for Mr Manettas. In fact, Mr Misan is regularly retained by Mr Manettas as a business consultant. On 23 April 2004, Mr Godfrey met with Mr Manettas and Mr Misan at the latter's office. Mr Manettas' interest in purchasing Coco Roco was expressed. Mr Godfrey said he would send a copy of an information memorandum to Mr Misan. This was sent on 27 April 2004. A copy of the information memorandum is in evidence. It describes the subject matter as follows: "Offered for sale is the following: 1. Opportunity to negotiate an assignment of the lease of the premises. 2. Business name 'Coco Roco'. 3. Plant and equipment. 4. Liquor on-licence." 5 The information memorandum also set out features to be included in "offers". Among these were payment of a "refundable deposit" of $50,000 with the offer and completion of an application to Multiplex, the lessor of the Coco Roco premises. The information memorandum also said: "The terms of the sale are as follows: · 7 May 2004 - Expressions of interest close. · 8 May 2004 to 21 May 2004 - Multiplex to approve parties. · 21 May 2004 - Acceptance of offer. Deposit becomes non-refundable. · 25 May 2004 - Balance of 10% non-refundable deposit due. · 14 June 2004 - Completion date for sale." 6 On 7 May 2004, Mr Misan contacted Mr Godfrey saying that "Nick [Manettas] wants to put in an offer for the restaurant". Mr Misan and Mr Godfrey met on 10 May 2004. The meeting involved, for the most part, discussion about price. Mr Misan says that Mr Godfrey, in discussing the procedure he would follow, referred to submitting all "qualifying applicants" to Multiplex for approval and then putting the "approved applicants" to a creditors meeting with a recommendation. Mr Misan says that Mr Godfrey also said: "On acceptance of an offer the $50,000 payment will become non-refundable and on exchange of contracts the balance of the deposit will become due."

It is also Mr Misan's evidence that Mr Godfrey had made a substantially identical statement in the course of the 23 April 2004 meeting. 7 Mr Misan delivered to Mr Godfrey on 11 May 2004 a letter reading as follows: "In line with our discussion please find the following

Refundable Deposit Cheque for $50,000 made out to the specified Trust Account 2. Completed Application to Multiplex 3. Our confirmation of our ability to provide a bank guarantee in favour of Multiplex on executing of the assignment of the lease. We look forward to a successful outcome in this matter."

This letter was signed by Mr Misan as "Authorised Representative for The Humble Fishmonger and Nick Manettas". 8 The enclosed "Application to Multiplex" was a document which set out particulars of the existing lease and of "purchaser" - stated to be "Humble Fish Monger Pty Ltd (or one of its subsidiaries)" - including information about the "purchaser's" experience, business plans and financial substance. The document concluded with a "declaration" signed by "Paul Misan, Authorised Representative for The humble [sic] Fishmonger and Nick Manettas" in the space for "Signed by Lessee/s". The declaration was as follows: "I/We The Humble Fishmonger Pty Ltd represented by our appointee Paul Misan Managing Director PM Group hereby request the Lessor to approve our request for the assignment of the current lease on the above mentioned premises to the Humble Fishmonger Pty Limited as at 14 June 2004. We Acknowledge that any stamp duty or other costs incurred by the Lessor or me/us in relation to the approval of, or any documentation require [sic] for this assignment of lease will be paid by me/us."

Under the heading "Purchase details", the Application for Lease Assignment contained the following: "A total price of Nine Hundred and Fifty Thousand Dollars ($950,000 AUD) Paid via 10% deposit on approval 20% at date of transfer of lease Settlement 90 Day [sic] after transfer Price is for all item [sic] listed include [sic] all FF&E, Goods Chattels and Stock." 9 On 19 May 2004, Mr Misan, as "Authorised Representative for The Humble Fishmonger and Nick Manettas", wrote to Mr Godfrey as follows: "In line with our discussion yesterday I have spoken to Nick Manettas and have received instructions to inform you as follows: 1. Our offer of 12 May 2004 is reduced from Nine Hundred and Fifty Thousand Dollars AUD ($950,000) to Seven Hundred and Fifty Thousand Dollars ($750,000) AUD. 2. If the reduction of our offer is not acceptable, then our offer is withdrawn in its entirety. We require confirmation of acceptance of our revised offer. 3. We receive notification from yourselves that our revised offer has been accepted by close of business on 24 May 2004 or our office will expire and we will seek return of our deposit. We look forward to a successful outcome in this matter."

(It is agreed that the reference to "Our offer of 12 May 2004" is a reference to the letter delivered by Mr Misan on 11 May 2004.) 10 On 21 May 2004, Multiplex informed Mr Godfrey that it was prepared to accept "the Humble Fish Monger Pty Ltd" as an assignee of the lease and asked for confirmation of the assignment.

The meeting on 21 May 2004 11 Later on 21 May 2004, the meeting to which brief reference has already been made took place. This was after Mr Godfrey had contacted Mr Misan to say that Multiplex had approved the application and that he "would like to accept the offer" but had some issues to discuss. Mr Misan then arranged a meeting at one of Mr Manettas' restaurants at which Mr Manettas was working at that time of the day. Mr Misan, Mr Godfrey and Mr Wiles went to the restaurant, arriving shortly before the lunch crowd had begun to accumulate. 12 I set out in full Mr Godfrey's account of the meeting as given in his affidavit: "On 21 May 2004 at approximately 12.15pm, I and Benjamin Wiles (' Wiles '), my assistant, met with Misan and Manettas at Nick's Seafood Restaurant at Cockle Bay to discuss the offer from Humble Fishmonger. We were seated at a table inside the restaurant. Prior to the conversation set out below we had a general discussion concerning the details of the offer form Humble Fishmonger. The meeting lasted approximately 45 minutes. During the course of that meeting we had a conversation in words to the following effect: I said: Multiplex has consented to the assignment of the lease to Humble Fishmonger. I would like to accept your offer but the delay in completion for 90 days is a risk that I do not want to take unless it is supported by way of a guarantee from a person or party of substance. Manettas said: We cannot give a guarantee because of the manner of the trusts involved. I said: Can we bring the completion forward then? Misan said: 70% of the proceeds will be owing after the 90 days that is $525,000. If we are to settle earlier then we will want the interest that would have been earned on $525,000 for that period. I said: What rate of interest? Is 5 per cent a reasonable figure. Misan said: 5 per cent is reasonable. I said: The interest will amount to approximately $5,900.00. Misan said: OK on that basis we will complete the sale for $740,000.00 but with settlement on 15 June 2004. I said: OK but I need to clarify some other issues including the coffee machines. I will disclaim the Esanda leases and arrange for the collection of all unwanted third party items. Misan said: Our offer includes the coffee machines. I said: I thought you had a supplier who would give you machines for free. Manettas said: Yes, but I am looking to reduce the reliance on the one supplier. This will give me the opportunity to shop around for a coffee supplier. I said: Paying out the lease will cost me $21,000 and the machines are only worth about $5,000. You're killing me. Manettas said: OK then I will agree to exclude the coffee machines but the price will go to $730,000. I said: We have already reduced the price by $10,000, for an interest charge with an after tax value of only $3,000.00 I won't give up another $10,000 for two coffee machines. Manettas said: OK then I will agree to exclude the coffee machines but the price will go to $735,000. I said: I also want to ensure you acknowledge the third party items on page 20 of the plant and equipment listing. These items include things such as the beer lines with Tooheys and the coke lines. Manettas said: Yes I understand they are not being sold and are subject to the rights of those parties. I said: OK to confirm - the terms of the offer are amended to include $735,000, settlement on 14 June 2004, it doesn't include the coffee machines which I will disclaim, you acknowledge all third party clams as per page 20 of the valuation and stock on a walk in walk out basis, sale as a going concern. We then reviewed the updated Asset Listing specifically page 20 of that document. Following on from that the conversation with Manettas continued with words to the following effect: Manettas said: Agreed. Misan said: OK, our lawyers are Lorraine at Lans Legal, Telephone number 8281 6600. Misan said: I want you to change the locks and close and give me a key for access. I said: Multiplex will need to agree to closing. Misan said: I will call Alison Reid and arrange it. I said: OK with Multiplex's agreement I will lock down the premises on Tuesday so that there can be no dispute about the stock and assets. The sale will be a sale as a going concern for GST purposes. Do we have a deal? Manettas said: Yes we have a deal. Misan said: Yes we have a deal. I then shook hands with both Misan and Manettas and had a further conversation in words to the following effect: I said: You are not going to stuff me around are you? Manettas said: No, my word is my bond." 13 The account in Mr Wiles' affidavit corresponds substantially with Mr Godfrey's account. Mr Manettas, in his affidavit, said that he heard no reference at the meeting to the defendant (The Humble Fishmonger Pty Ltd) as prospective purchaser of the restaurant; that had he heard any such reference he would have corrected it; that he heard no reference to a trust (there are no trusts in his corporate structure); that he did say that he would not give any personal guarantee; that the words "Do we have a deal?" and "You're not going to stuff me around?" (or words to that effect) were not spoken; that neither he nor Mr Misan said words to the effect of "Yes we have a deal" or "My word is my bond"; and that all persons shook hands at the end of the meeting. Mr Misan says in his affidavit that he believed that the words "Do we have a deal?" were spoken and denies that either he or Mr Manettas said "Yes, we have a deal". Mr Misan denies that Mr Manettas said "My word is my bond" or anything to that effect and does not recall Mr Godfrey saying "You're not going to stuff me around are you?". Mr Misan also says that the following exchange occurred before the participants shook hands at the end of the meeting: Misan: "Well, the price is agreed. When can we expect to receive a contract?" Godfrey: "Monday." 14 Mr Godfrey gave evidence about this part of Mr Misan's affidavit as follows: "Q. Mr Misan, in his affidavit, in reference to the meeting of 21 May (paragraph 24 of), says at that meeting he said: 'Well, the price is agreed. When can we expect to receive a contract?' and you said 'Monday'? A. Yes.

Q. Was there any discussion at that meeting about a contract? A. There was some limited discussion in terms of an agreement being in the form of a contract being drawn up, to draw in all the bits and pieces of the sale, for the purposes of substantiating the sales as a going concern.

Q. Do you recall, during the meeting, when that discussion or those references to a contract took place? A. In the order of three quarters of the way through the meeting.

Q. You also gave evidence in your affidavit of what was said with Mr Manettas and the words used: 'Yes, we have a deal?' A. Yes.

Q. Were the references to the contract said before or after those words? A. Before." 15 Notes made by both Mr Godfrey and Mr Wiles at the meeting are in evidence. These do not throw any light on the disputed aspects of the meeting, in the sense that there is no reference to them and the notes therefore do not corroborate any of the evidence of Mr Godfrey and Mr Wiles as to the making of statements and the asking of questions denied by Mr Manettas and Mr Misan. Events after the 21 May 2000 meting 16 Later on 21 May 2004, Mr Godfrey wrote to Multiplex confirming that "I have sold the above business to The Humble Fishmonger Pty Limited ('The Humble Fishmonger') with the exchange of contracts scheduled for 25 May 2004."

The letter went on to refer to closure of the premises (a matter covered at the meeting) and matters of signage. 17 Mr Godfrey wrote to Mr Misan on 21 May 2004 as follows: "I refer to our meeting with Mr Nick Manettas and Mr Benjamin Miles on 21 May 2004 regarding the sale of the Coco Roco Restaurant at 17 Lime Street, King Street Wharf. I confirm acceptance of the revised offer of $735,000.00 by The Humble Fishmonger Pty Limited in accordance with the following terms and condition:

The business is sold as a going concern and includes the business named 'Coco Roco'. 2. The deposit currently held of $50,000.00 becomes non-refundable. 3. Payment of the balance of the non-refundable 10 percent deposit, being $23,500.00, is to be made upon exchange of the sale contract scheduled for 15 May 1004. 4. Payment of the balance, being $661,5000, is to be made upon completion scheduled for 14 June 2004. 5. You acknowledge all third party agreements listed on page 20 of the attached asset listing and take those assets subject to those agreements. 6. I will as administrator disclaim the lease on the two (2) coffee machines held in the name of the Company and provide your details to Esanda as an interested purchaser. 7. All property to and rights to the plant and equipment listed in the attached asset listing form part of the sale agreement with the exception of the following: · Items subject to a third party agreement. · Two (2) coffee machines subject to lease listed on page 19 of the attached asset listing. 8. The locks on the premises are to be changed and the purchaser given access to the premises after exchange of the sale contract for the purposes of arranging the re-fit of the premises subject to the approval of Multiplex. 9. Stock as of 21 May 2004 is sold on a walk in walk out basis. 10. You are to place signage on the premises regarding the impending opening of I'm Angus no later than Monday 24 May 2004. Should you have any queries please contact Mr Benjamin Wiles of my office." 18 On 24 May 2004, Mr Godfrey's solicitors sent to Mr Misan "the proposed sale and purchase agreement attached". The attachment was a form of agreement running to thirteen pages. 19 On the same day, Multiplex sought certain assurances from both Mr Godfrey and Mr Misan about covering of the windows and posting of notices referring to impending opening of the new restaurant "I'm Angus". Mr Misan gave these assurances by email. In relation to rent, he said: "As for rent we have in the sale contract that we take assignment on 14 June. Until then we have only and [sic] contract of sales which I am expecting to execute today." 20 Between 21 and 27 May 2004, Mr Godfrey took steps to close the premises, disclaim leases of equipment to deal with third party owned items on the premises and to inform other persons interested in purchasing that he had accepted an alternative offer. On 24 May 2004, representatives of the parties undertook a joint stocktake at the premises. 21 On 27 May 2004, Mr Godfrey's solicitors submitted a revised form of agreement. This was sent to Ms Straman Lands Legal (the "Lorraine" referred to at the 21 May meeting). It obviously followed discussion between the respective solicitors. Lands Legal wrote to Mr Godfrey's solicitors on the same day saying "We are instructed that our client is not proceeding with this offer." 22 Mr Godfrey's solicitors replied on 28 May 2004 saying: "In a meeting on 21 May 2004, your client tendered its offer of $735,000 to acquire the Coco Roco restaurant, which our client accepted and subsequently confirmed its acceptance in writing (see attached letter). Humble Fishmonger Pty Ltd cannot now unilaterally withdraw its offer. If you do not confirm before 5 pm today that your client will proceed with the purchase, our client will seek the appropriate court orders to require your client to complete the acquisition." 23 Lands Legal, by letters of 28 and 31 May 2004, contended that no concluded agreement existed. These proceedings followed.

Other elements of the evidence 24 Mr Godfrey accepted in cross-examination that he had always had a three-stage process in mind regarding payment: step one was the payment of a $50,000 deposit; step two was the payment of a further deposit being 10% of the price, less $50,000; and step three was payment of the balance. Mr Godfrey said that, at the time he discussed that sequence with Mr Misan, he did not have it in mind to have a formal sale contract of the kind that would be involved in an exchange of contracts. He was, he said, working on the basis that interested parties would have the information memorandum, complete the application for transfer of lease and that the successful party would then receive a letter of acceptance from him. 25 There are three difficulties with this version. First, it does nothing to identify the timing of the second step in the three stage payment process. Second, it does not sit happily with the reality that the application concerning lease assignment was an application by the prospective buyer addressed to Multiplex and, according to its terms, capable of being operative only as between that prospective buyer and Multiplex. It was in no sense an offer or invitation operative between the prospective buyer and the plaintiff. Third, it leaves no room for a step Mr Godfrey took on 13 May 2004 - described by him as instructing Dibbs Barker Gosling "to act on behalf of Syd Mirror and Coro in relation to the sale of the business". Mr Godfrey eventually conceded that, by 13 May 2004 at the latest, he had decided to have a contract for sale prepared. Indeed, he could not do otherwise since the letter enclosed the information memorandum plus two offers received and said: "I request that you prepare a sale contract based on the terms set out in the information memorandum and the above offers." 26 In the course of cross-examination, Mr Godfrey was taken back to his evidence about what had been said at the 21 May 2004 meeting as to the preparation of a contract: "Q. Before there was any conversation about having a deal, what had occurred was that you had said the contract would be prepared and submitted? A. Yes.

Q. You asked to which solicitors the contract should be submitted? A. I don't know if I asked that or whether it was proffered.

Q. But certainly the context of the discussion was a solicitor's name was given? A. Yes.

Q. As the solicitors acting for the Humble Fishmonger? A. Yes.

Q. And either before or after that solicitors' name was given, there was a statement to the effect that a contract would be submitted to them? A. That I was drawing up a contract - whether the contract would be submitted to their solicitors or not, I guess you could infer.

Q. Because the communication in a meeting like this sometimes is part inference and part what is expressly said, isn't it? A. Yes.

Q. And the context that you observed, as a person participating in it, was one in which the contract was being prepared and would be submitted to the purchaser's solicitor? A. For the purposes of completeness, yes.

Q. And for the purpose of there being, on Tuesday 25 May, an exchange of contracts? A. Yes, an exchange of contracts." 27 Mr Wiles was also cross-examined about references to contract preparation at the 21 May 2004 meeting. After Mr Wiles had confirmed having written down the name of the solicitors mentioned by Mr Misan, the cross-examination continued: "Q. Mr Godfrey did say the formal agreement was being prepared, didn't he? A. Yes.

Q. Because you knew that Dibbs Barker Gosling had been instructed some time before this meeting to prepare contracts? A. To prepare an agreement, yes.

Q. Prepare an agreement, a formal contract? A. Yes.

Q. Had you been instructing by anybody from Dibbs Barker about what was going on with the contract? A. I had not, no.

Q. Had you seen any draft of the contract prior this meeting? A. No, I hadn't.

Q. But you knew it was being prepared? A. That's correct.

Q. Mr Godfrey said that a contract would be submitted? A. He said that a draft would be given to the purchaser's solicitor, yes.

Q. It was in that context that there was discussion about the Lands Legal's name was given and Lorraine's name was given as a contact? A. Yes.

Q. This occurred towards the end of the conversation? A. Relatively.

Q. If we look at page 5 of your affidavit, you see in the middle of the page is the dialogue you attribute to Mr Misan, 'Okay, our lawyers or Lorraine Lands Legal'? A. Yes.

Q. It was at this point of the conversation Mr Godfrey said something to the effect 'We'll submit a draft contract to you.'? A. Yes, I believe so." The plaintiff's contract case 28 The case the plaintiff seeks to make is that a contract was concluded when, on 21 May 2004, Mr Godfrey, on its behalf, accepted orally an oral offer made by the defendant at the meeting on that day; and that the contract was confirmed by Mr Godfrey's letter of 21 May 2004 to Mr Misan (paragraphs 13 and 14 of the statement of claim). The plaintiff thus seeks to bring the matter within the first of the classes (Class 1) described in Masters v Cameron (1954) 91 CLR 353. The classes there discussed (as supplemented by observations of McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd [1986] ANZ Conv Rep 381 based on Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310) are:

Class 1: Where 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.

Class 2: Where the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document.

Class 3: Where the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

Class 4: Where the parties are content to be bound immediately and exclusively by the terms which they have agreed upon whilst expecting to make a further contract in substitution for the first contract containing, by consent, additional terms. 29 There are, to my mind, several factors which, in combination, tell conclusively against any finding that this case is within Class 1. The first is that there was explicit reference at the meeting to the preparation and submission of a formal contract, which contract was in the course of preparation by the plaintiff's solicitors in accordance with instructions given by Mr Godfrey before the meeting took place. Mr Godfrey said at the meeting on 21 May 2004 (a Friday) that the contract would be submitted on the next business day, Monday 24 May 2004. The meeting was thus the occasion of a consensus to move immediately towards incorporation of the agreed terms on central issues into a detailed contract which would also include other matters. The content of Mr Godfrey's letter written on the same day also made it clear that there was to be an "exchange of contracts" which is, in ordinary parlance related to conveyancing and similar transactions, a well recognized and understood means of contract formation, as all of Mr Godfrey, Mr Manettas and Mr Misan well knew. In commercial circles, the "acceptance" of an "offer" (particularly when it is expressed as an offer principally as to price) and the making of a "deal" (a word which, in this case, may or may not have been spoken at the crucial meeting) very often do not connote contractual conduct. This is especially so where exchange of contracts is expressly contemplated. 30 The second factor concerns the subject matter of the sale. The predominant element was the lease. According to the application for lease assignment, the unexpired residue of the term was nine years and there were two five year options. The leasehold estate was an interest in land an agreement for the sale of which could not be enforced by one party against the other unless the agreement was in writing (or a memorandum of it existed) and that other had signed: Conveyancing Act 1919, s.54A. The manifestation of this legal principle in ordinary commercial practice where sales of interests in land are involved would indicate a strong likelihood that parties in the position of these parties would, on 21 May 2004, have seen the formal contract then in the course of preparation as the vehicle by which their general consensus was to be made binding. 31 Third, no purchaser was ever adequately identified to the vendor. The letters Mr Misan wrote to Mr Godfrey were signed by him as "Authorised Representative for The Humble Fishmonger and Nick Manettas". The application for lease assignment addressed to Multiplex was signed by Mr Misan in the same way and identified the purchaser as "Humble Fish Monger Pty Ltd (or one of its subsidiaries)". Any "deal" that Mr Godfrey may have thought resulted from the 21 May 2004 meeting by reason of the handshake on which he placed such store (see below) was a "deal" to which he would have perceived Mr Manettas to be assenting but without any means for Mr Godfrey to know for which entity Mr Manettas was then speaking. Mr Manettas testified that he heard no reference at the meeting to the defendant (The Humble Fishmonger Pty Ltd) as the purchaser. He also testified that, had he heard such a reference, he would have corrected it because he would not have used that company as the purchasing vehicle. I accept this evidence, taking the view that Mr Godfrey did not, during the meeting, refer explicitly to that company. It is much more likely that his references were to an undefined "you", in a general sense, even though Mr Godfrey may have had The Humble Fishmonger Pty Ltd in his own mind. On this basis, the defendant was never explicitly identified at or before the 21 May 2004 meeting as the actual purchaser. 32 The fourth point is one tellingly made by Mr Manettas in the course of cross-examination: "No one would do this" - that is, no businessman acting responsibly would accept an unequivocal and binding contractual commitment involving an outlay of $735,000 through a conversation and a handshake at a meeting arranged at short notice at a busy restaurant. Mr Manettas regards himself as a successful businessman and the evidence he gave supports this. He also referred, in his evidence, to reliance on advisers in fields where he does not himself possess technical skills. He mentioned, in this connection, to Mr Misan as an adviser in matters of negotiation, to his financial controller and to his solicitors. As he said in cross-examination, referring to the conclusion of the 21 May 2004 meeting, "There was more to be resolved". I am satisfied that it would have been quite out of character for him - or any other astute businessman acting responsibly - to commit to a $735,000 contract by a handshake at a busy restaurant following a meeting at which there was explicit reference to submission of a contract on the next business day and the name of his solicitor was given to the prospective vendor. 33 I refer finally to the attempts of Mr Godfrey to characterise the handshake that occurred at or near the end of the 21 May 2004 meeting: "Q. It was a farewell handshake? A. It was a "we have a deal" handshake.

Q. And that sticks in your mind, does it? A. Absolutely.

Q. As something very important? A. Yes.

Q. It wasn't just a handshake to indicate-- A. It wasn't a friendly parting handshake, no. Q. So it was quite important, in your recollection, that this was an extraordinary handshake? A. Yes."

Mr Manettas' put the handshake into quite a different context: "Q. Could I just tell you that Mr Godfrey, it was important to him at that meeting there was a deal concluded and that he said, 'Do we have a deal?' or words to that effect? A. No. I did shake the man's hand when he arrived. He introduced me to Mr Wiles. Introductions were done, we shook hands when he came into the restaurant, we sat ourselves down almost in the middle of the front of the restaurant. When it got to a point where we had arranged a price which was 735,000 and there was still some uncertainties about my side, about it being a going concern and GST, because the last thing I wanted was problems after the event, I figured my legals would sort all that out. Then the restaurant was filling up, I got myself up which is how I normally exit a situation, I put my hand out, I shook both their hands, I thanked them very much. With that, the fact that I rose and put my hand out, they in turn shook my hand. Then I went immediately back to doing what I normally do in the restaurant and that was walking through and speaking to the customers and that was the end of the meeting."

I do not accept that the handshake can, in any realistic objective sense, be seen as a clear manifestation of unequivocally contractual conduct. 34 I am satisfied that all these factors point very clearly to the conclusion that the present case is within Class 3 of Masters v Cameron. I therefore conclude that no binding contract for sale came into existence between the plaintiff as vendor and the defendant as purchaser. The plaintiff's estoppel case 35 The plaintiff says under this heading that it did certain things in reliance upon the existence of a contract as from 21 May 2001. In particular, the plaintiff stopped marketing the property, ceased negotiating with other parties and returned their deposits, closed the premises and ceased to trade from them, disclaimed various leases and returned third party property. 36 There is an issue as to one of these matters that should be addressed immediately. The plaintiff says that, after 21 May 2004, it closed the Coco Roco premises and ceased trading from them. The evidence makes it clear that, even before that time, the premises were open in a purely token sense only, in that the doors were open but nothing was happening inside. Mr Manettas and Mr Misan went there on one occasion and found the kitchen inoperative. 37 In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 406-7, Mason CJ and Wilson J said of a situation in some ways analogous with the present: "But the crucial question remains: was the appellant entitled to stand by in silence when it must have known that the respondents were proceeding on the assumption that they had an agreement and that completion of the exchange was a formality?"

Their Honours went on to say that the mere exercise of the legal right not to exchange contracts could not be said to amount to unconscionable conduct, but that two other relevant factors were at work. The first was an element of urgency that pervaded the negotiation of the terms of the proposed lease. The second was that the party seeking to raise the estoppel had already executed the formal contractual document in question and forwarded it to the other side, having been led to believe that the other party accepted the terms of the document. In the present case, the plaintiff might say that there was a degree of urgency of the kind contemplated by the first of these factors but the defendant certainly would not. As to the second factor, this case is clearly distinguishable. In Waltons Stores , the landowner's solicitors had forwarded to the prospective lessee's solicitors an executed and formal lease document "by way of exchange". This followed receipt of a letter from the prospective lessee's solicitors saying that they had not received their client's approval to each amendment proposed but "we believe that approval will be forthcoming" and "shall let you know tomorrow if any amendments are not agreed to". Nothing more having been heard in the following four days, the landowners sent the executed document "by way of exchange". 38 In this case, by contrast, there was never any indication by the defendant or by Mr Manettas or any other entity associated with him of acceptance of or adherence to any form of contractual document. The most that existed was a general consensus on price and some terms to be incorporated into a contract envisaged to become the subject of a later exchange of contracts. There was, in this case, no unconscionability of the kind contemplated by Mason CJ and Wilson J. 39 The plaintiff also relies on the following passage in the judgment of Brennan J in Waltons Stores: "In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs." 40 In the defendant's submission, the plaintiff fails at step (1), (with that part of Brennan J's formulation referring to existence, as distinct from expectation, being relevant, that being the way in which the estoppel claim is pleaded in the statement of claim). This, the defendant says, is shown by Mr Godfrey's letter of 21 May 2004. The defendant points to the following features of that letter: 1. It refers to the meeting of the same day as merely one "regarding the sale". 2. The letter did no more than confirm "acceptance of the revised offer of $735,000". 3. The letter noted that the acceptance was "in accordance with" certain "terms and conditions" that were then set out, including (a) payment of an additional deposit "upon exchange of the sale contract"; (b) exclusion of certain items from "the sale agreement"; (c) provision of access "after exchange of the sale agreement". 4. The letter did not have attached to it the list of plant and equipment referred to in its paragraph 7 and no such list was provided by the plaintiff until after an inventory was completed on 24 May 2004. 41 That inventory was taken by representative of the parties, by means of an inspection they made together (see paragraph 20 above). Such an inspection by the buyer was specifically recognised by the draft contract for sale presented by the plaintiff as something preceding the formation of that contract. 42 I am satisfied that, despite the plaintiff's present protestations to the contrary, it did not, at the time of taking the actions in question, assume that the particular legal relationship of vendor and purchaser existed between itself and the defendant by reason of the words spoken at the 21 May 2004 meeting. As has been seen, there was, at that meeting, explicit reference to a contract then not in existence but in the course of preparation by solicitors on Mr Godfrey's instructions. It was said that the form of contract would be submitted the following Monday and, as the 21 May 2004 letter showed, the plaintiff intended that there should be "exchange of contracts" in the sense well understood by Mr Godfrey, Mr Manettas and Mr Misan as a means of bringing a legal relationship into being. 43 As I have said, the plaintiff fails at step (1) in this latter aspect of its estoppel case. That being so, there is no need to canvass the other submissions made by the defendant in relation to that matter. The reality is that the plaintiff took a calculated risk in embarking on the steps it took following the 21 May 2004 meeting. Disposition 44 The claims in the statement of claim are dismissed with costs. Addendum 45 Late on the afternoon of 30 June 2004 - at a time when I had formulated my decision and was well advanced with the drafting of these reasons - the plaintiff's solicitor telephoned my Associate to ask when judgment would be delivered. Upon being told that it was inappropriate for the solicitor to ask that question and for the Associate to make any reply, the solicitor said that he wondered whether he should pursue the question through the Chief Judge in Equity as the matter had come to me "on an urgent basis". The day on which this telephone call was received was the thirteenth day after I had reserved judgment, the seventh after I had received the first day's transcript from Court Reporting and the fifth after I had received the second day's transcript. 46 These proceedings were heard in a somewhat disjointed way over parts of two days in the course of a busy Duty List. They were not proceedings in respect of which an order for expedited hearing was either sought or made. They achieved priority because the plaintiff was successful, as a practical matter, in pushing to have them dealt with by way of final hearing in the Duty List rather than allowing them to take their place in the ordinary course of the General List or causing them to become the subject of a formal and reasoned application to the Expedition List Judge. 47 The fact that a matter is heard promptly says little about when judgment will be delivered. Judges are not magicians or machines. Nor are they afforded the luxury of whatever time is needed to complete each reserved judgment before being required to continue with the hearing of the ongoing succession of subsequent cases. In this Division, preordained "writing days" for judges are very rare indeed and the availability of time during the day for consideration, reflection and writing depends on listed cases settling and the judge thus freed not being needed to assist in the Duty List. These are simple facts of life with which all must live. 48 A message from a party's solicitor, through the Associate, to a judge by whom judgment has been reserved that the question of the time at which judgment will be delivered may be taken up by the solicitor with the judge's Head of Division bespeaks either ignorance of or disregard for the obvious intent behind the carefully constructed protocol published at page 13 of the Law Society Journal of June 1993 and repeated for the information of all solicitors in the April 2002 issue ((2002) 40(3) LSJ 38): "If the legal representative of a party to proceedings in which there has been a reserved judgment desires to complain about delays over delivery of the judgment, the complaint should be made by letter, and should be addressed to the President of the Court of Appeal (in the case of appeals to the Court of Appeal) and the relevant Head of Division in other cases. Complaints in relation to criminal appeals should be addressed to the Chief Justice. In every such case, the matter will be taken up with the Judge or Judges involved in the reserved decision, but this will be done without disclosing the identity of the party making the complaint. If complaints are not satisfactorily resolved, the matter should be taken up with the Chief Justice." **********

Last Modified: 07/05/2004 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.

CITATION : Syd Mirror Pty Ltd v The Humble Fishmonger Pty Ltd [2004] NSWSC 584 HEARING DATE(S) : 15/06/04, 16/6/04 and written submissions 17/6/04 JUDGMENT DATE : 2 July 2004 JURISDICTION: Equity Division JUDGMENT OF : Barrett J DECISION : Claims in statement of claim dismissed with costs

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