91.4 the obligations of each of the parties in respect of that subject matter: GBRA's obligation to supply it and WCPL's obligation to broadcast it in the stipulated manner.
92 It was submitted for GBRA that the use of the words "under which" (i.e., under the Programming Supply Agreement) to introduce the obligations of the parties indicated that the material introduced thereby was not comprehensive. That may be correct; but, of itself, it does not indicate that the obligation to enter a Programming Supply Agreement imposed by para 4 was of itself uncertain. In my opinion, the position is analogous to that described by McHugh JA in GR Securities at 635, where his Honour (speaking in the context of the fourth, or Sinclair Scott & Co, category) said:
"If the parties agreed on additional terms, they would be added to the formal contract. If they did not, the formal contract would give effect only to the agreed terms and conditions of the correspondence".
93 In the present case, it was open to the parties to negotiate a Programming Supply Agreement that went beyond what was specified in para 4 of the 2 April offer. But if they did not, then the Programming Supply Agreement would simply express, in a separate document and perhaps in more formal language, the rights and obligations described in para 4. It could be supplemented by such terms and obligations as the law might imply, or impose.
94 In the present case, GBRA has not pointed to any essential matter (in the sense explained above) that is not to be found within para 4 of the 2 April agreement. Clearly, in negotiating and settling the terms of the Programming Supply Agreement that par 4 contemplated, the parties might, acting honestly and in good faith, have thought it desirable to make provision for a number of things (including, perhaps, more detailed specification of, or warranties as to, the lifestyle programming material that was to be supplied). Further, and obviously, they would no doubt have included what are commonly referred to as "boilerplate" provisions. However, it does not follow that there are essential provisions that are missing. The weight of authority compels a conclusion that the Court should be slow to substitute its own judgment for what is essential, and what is not, for that of the parties.
95 In essence, the case for GBRA must be that if the Programming Supply Agreement contained only the provisions set out in para 4 of the 2 April offer, then it would be uncertain and unenforceable. That cannot be right where, as I have said in para [91] above, the elements of parties, price, property and obligation have been spelled out. It might have been thought that the description of the subject matter as "British lifestyle programming material sourced in the United Kingdom" was insufficiently certain. However, the parties have explicitly eschewed any such argument and, as I have said, I do not think that the Court should substitute its inexpert view for the considered view of parties, who clearly have substantial experience in the relevant field of commerce.
96 In my opinion, an agreement on the terms of para 4, whether or not supplemented by obligations imposed or implied by law, would be binding. There is no material uncertainty as to any of the fundamental matters that are required so that the parties can perform their respective obligations. Adopting the formulation of Kirby P in Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130, 135-136, I do not think that this approach requires the Court "to spell out ... that to which the parties themselves have failed to agree", or that it holds the parties to "that which is irremediably obscure", or that it involves the Court taking on "a discretion which the parties have, by their agreement, reserved to one or other of them". Nor, adopting his Honour's language from Coalcliff Collieries referred to above, does it involve the Court in "judging where the negotiation on particular points would have taken the parties ...".
97 If, therefore, an agreement framed in terms of para 4 of the 2 April offer is not too uncertain to be enforceable, it must in my opinion follow that an agreement to enter into such an agreement is not too uncertain to be enforceable. If the parties cannot agree on additional material then, as McHugh JA said in GR Securities, they will nonetheless be held to that which they have stipulated.
98 Further, the plaintiffs submitted that the parties were bound to act honestly and in good faith to negotiate the Programming Supply Agreement for which para 4 called. In my opinion, this submission is in principle correct. Such an obligation may arise either on the proper construction of the contract, or upon the basis of implication in fact. The former approach is exemplified by the speech of Lord Blackburn in Mackay v Dick (1881) 6 App Cas 251, 263, where his Lordship said that:
"... where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. What is the part of each must depend on [the] circumstances".
99 Thereafter, it could be said that any distinction between construction and implication became somewhat blurred. Thus, in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, Mason J at 607 referred to "an implied obligation on each party to do all that was necessary to secure performance of the contract": basing himself on what Lord Blackburn had said in Mackay, and on the decision of Griffith CJ in Butt v M'Donald (1896) 7 QLJ 68, 70-71, where his Honour referred to "a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract".
100 Mason J drew from those statements principles of the following:
"It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract".
101 In Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215, Dawson and Toohey JJ, at 219, identified what Griffith CJ had said in Butt as a "rule of construction". In the same case, McHugh and Gummow JJ referred to what Mason J had said in Secured Income Real Estate as being "that each party to the contract agreed to do all that was necessary on its part to enable the other party to have the benefit of performance of the contract", as leading to "an implied undertaking".
102 In Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187 the Court of Appeal talked of terms of good faith and reasonableness implied by law. A similar approach was reaffirmed by the High Court in Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126. The High Court, building on what was said in Secured Income Real Estate and in Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359, confirmed the existence of an obligation on a party who contracts to confer a benefit to do those things that are necessary on its part to enable the other party to have that benefit, and at the same time to desist from conduct that hinders or prevents the fulfilment of the purpose of the express promise made.
103 In the end, I do not think it matters whether the theoretical basis for the imposition of a duty to act honestly and in good faith is to be found by a process of construction, by a process of implication, or by some combination of those processes. It is sufficient, in my view, to say that in the present case, where undoubtedly the obligation to enter into a Programming Supply Agreement was of fundamental importance, the parties were bound to act honestly and in good faith to achieve that result. That would involve, at the very least, negotiating honestly and in good faith (and, if it be additional, reasonably) to seek to reach agreement on the terms of a Programming Supply Agreement, and for each party to do such things as were necessary on its part to enable the text of that agreement, conforming in all material respects to para 4 of the 2 April offer, to be settled.
104 This leaves for resolution the classification of the 2 April agreement according to the taxonomy established by Masters (as extended, by reference to Sinclair, Scott & Co, in Baulkham Hills Private Hospital). This is an important question. If the agreement falls into the first of the Masters classes, or into the fourth, Sinclair, Scott & Co class, then para 4 imposes immediately binding obligations on each of WCPL and GBRA, notwithstanding that the more formal agreement that is contemplated has not been brought into existence. If, however, it falls into the second of the Masters classes, then the result is that performance of the para 4 obligations is conditional upon the execution of that more formal agreement.
105 In my opinion, the present case is within the second of the Masters classes. The obligations under para 4 are each expressed in the future tense: the parties "will enter into a Programming Supply Agreement", under that agreement GBRA "will supply" the relevant material and WCL "will arrange for that material to be broadcast" in the specified way. Further, in return, WCPL "will ... pay" the stipulated consideration and IMM "will procure" that WCPL does so.
106 The obligations to supply and broadcast material are expressed, as a matter of language, to be obligations that will arise "under" the Programming Supply Agreement that is to be entered into. They are not expressed to be obligations that arise immediately, or "under" the 2 April agreement.
107 Further, in my opinion, the better construction of the final sub-paragraph of para 4 is that the obligations of WCPL and IMM in that paragraph arise "in return" for the agreement to supply programming material - that is to say, they arise in return for the agreement of GBRA that will come into existence under the Programming Supply Agreement that is to be entered into.
108 I do not see anything inconsistent, or commercially implausible, in the conclusion that, whilst the 2 April agreement was meant to have immediate binding effect, the operation of one of the terms thereof - namely, those imposed by para 4 - should be conditional upon the execution of a more formal agreement.
109 Firstly, it was clearly necessary, and objectively the parties must be taken to have intended, that the 2 April agreement would have immediate effect. That was necessary to enable GBRA properly to withdraw its complaint to ASIC, and to enable ASIC properly to be satisfied that the prospectus was not misleading and did not require to be supplemented. The grant of the leases of the licences, including the call options in relation to the licences, was conditional upon GBRA becoming the registered owner of the licences: see para 3 of the 2 April offer. It could hardly be thought that WCPL intended to take programming material from GBRA, and broadcast it and pay for it, unless GBRA were in a position to meet its obligation under cl 2 (i.e. to grant the leases including the call options). In my opinion, this is so notwithstanding that WCPL was broadcasting under the Sydney licence at the time the 2 April agreement was made: its ability to do so flowed from documentation entered into in early 2002 (to which GBRA was not a party) and did not, until GBRA became the registered owner of the licences, depend on the 2 April agreement. There was therefore no need for the obligations arising under para 4 to commence to operate immediately upon the making of the 2 April agreement.
110 Secondly, as I have sought to explain, the obligation to enter into a Programming Supply Agreement was both enforceable and one that both parties were bound to seek to achieve by acting honestly and in good faith. If GBRA formed the view that WCPL was, in effect, "dragging the chain", there were remedies available. WCPL was not in a position whereby it could unilaterally and indefinitely put off the commencement of the Programming Supply Agreement and performance of its obligations thereunder.
111 One matter that may be thought to be of significance in the present case is the attitude of the parties, as communicated to each other, after 2 April 2002. Subsequent communications and actions may be looked at to consider whether communications up to a particular point in time have given rise to a binding contract at that point of time: see Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251, 9255, where McLelland J reviewed the authorities. Further, such communications may be used as admissions, against the parties making them, as to the existence or non existence of a contract: ibid at 9255-9256. See also the judgment of Gleeson CJ in Australian Broadcasting Corporation v XIVth Commonweaith Games Ltd (1988) 18 NSWLR 540, 550-551.
112 In the present case, the conduct of the parties after 2 April 2002 is consistent only with a belief on each side that a concluded and presently binding contract had been reached on that day. If the present dispute were limited to the question of whether that had occurred, then in my view the subsequent acts of the parties would be conclusive of the proposition that it had. However, where the question is not so much whether that had occurred, but whether what had been agreed was sufficiently certain to be legally binding (or was so uncertain as not to be legally binding), the subsequent conduct of the parties cannot be determinative. It does however give point to the observations of Lord Tomlin in Hillas, and of Mason J in Meehan, to which I have referred.
113 I therefore conclude that, upon acceptance by GBRA of the plaintiffs' offer made in the 2 April letter, there came into existence a legally binding and enforceable contract, notwithstanding that the contract included an obligation to enter into a further contract.
114 I further conclude that the case is within the second of the Masters classes, so that performance of the obligations to which para 4 of the 2 April offer refers was conditional upon entry into a Programming Supply Agreement, as required by that paragraph.
What documents constitute the 2 April agreement?
115 GBRA submitted that, if there were a contract, it was constituted, not just by the 2 April offer and the 2 April acceptance, but also by the 3 April letter. In this context, GBRA's case as pleaded was not that the 3 April letter varied a contract formed on the terms of the two letters dated 2 April 2003, but that the contract that was made on that day was documented in, or by, the three letters in question.
116 The plaintiffs' case on this issue was not entirely easy to discern. In their written opening submissions, counsel for the plaintiffs said (para 28):
"The plaintiffs accept that the letter is properly to be seen as part of the legal arrangements negotiated on [2 April 2002]. The plaintiffs say that on the proper construction of the letter, in the light of the surrounding conversations, (if admissible), it was intended to be a letter of comfort: to give the defendant comfort that the second plaintiff would actually exercise the options to acquire the licences and do so sooner rather than later ...".
117 As I have recorded above, the plaintiffs, or their solicitors, BDW, in correspondence from time to time referred to the 3 April letter as "supplementing" or "amending" the agreement contained in the two letters of 2 April 2002. However, in the letter from BDW to ASX, referred to in para [35.3] above, BDW, writing on behalf of IMM, referred to the three letters as "evidencing the enforceable agreement between [GBRA] and [WCPL]". This usage is reflected in IMM's letter (signed by Mr Solomon) of 20 June 2002 to ASX which noted, relevantly, that "[WCPL] has agreed with [GBRA] that [GBRA] may instruct [WCPL] to exercise the Sydney licence option before 31 December 2002, and the Melbourne licence option before 30 June 2003". Clearly enough, that agreement must be based on the terms of the 3 April letter.
118 In my opinion, on the principles set out in para [111] above, I should regard the subsequent acts of the parties as admissions that the terms of the contract are to be found in the three letters in question or, as BDW put it, that those three letters "evidence" the contract.
119 In my opinion, this conclusion corresponds with the clear intention of the parties: the 3 April letter concludes with a paragraph stating that the letter contained "terms" that are "additional to agreement dated 2 April 2002" and that "are intended to be legally binding".
120 In final submissions, counsel for the plaintiffs acknowledged the various statements that had been made, by or on behalf of the plaintiffs, as to the effect of the 3 April letter, and said that the plaintiffs did not seek to resile from those statements. In particular, it was said, the plaintiffs did not resile from the proposition that the 3 April letter, as understood by them, formed "part of the legal arrangements" that had been negotiated on 2 April 2002. However, as I understood it, the final position taken by the plaintiffs was that they sought specific performance of the agreement made on 2 April 2002, and declarations as to their rights thereunder, on whatever might be found to be the terms and proper construction of that agreement.
121 It was, however, submitted in the alternative (I think, on the basis that the proper construction of the 3 April letter was that for which GBRA contended) that the letter was not binding in contract because: