LIQUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, HANDLEY and POWELL JJA 16 September 1994, 28 October 1994 [1994] NSWCA 361 CONTRACT — informal contract — whether concluded agreement reached — bidding war for sale of liquor business — parties shake hands on deal — held: (by maj): No concluded agreement — if so purchaser subsequently accepted repudiation — no specific performance. EQUITY — specific performance — availability of — requirements of pleading — unconscientious conduct. LIQUOR — sale of off-licence (retail) license and liquor business — whether concluded agreement reached — held: (by maj): It was not. CONTRACT — oral agreement — sale of liquor business in shopping mall — competing bids between owner of mall keen to preserve liquor business and owner of a chain of liquor stores — shopping mall owner offers increased bid which vendor accepts — vendor shakes hands on bargain, telephones solicitor and notifies liquor chain that business sold — subsequently vendor signs agreement with liquor chain for sale of business to it at higher price — primary judge (Brownie J) holds that a concluded bargain was made between the vendor and the shopping mall — orders vendor to give specific performance of sale of business to shopping mall — on appeal — held: (Powell JA, Handley JA concurring; Kirby P dissenting): (1) The proper interpretation of the negotiations between the parties was that no concluded agreement had been reached between the vendor and the shopping mall. Masters and Anor v Cameron (1954) 91 CLR 353 applied; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 97023 (SC), 9251 discussed; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 (CA) applied; (2) Even if a concluded agreement was reached, the purchaser had lost any right it otherwise had to obtain an order for specific performance of its agreement with the vendor. Summers and Anor v The Commonwealth (1918) 25 CLR 144; DTR Nominees Pty Ltd v Mona Homes Pty Ltd and Anor (1978) 13 8 CLR 423; (3) The proper interpretation of the events following the alleged first contract was that the shopping mall accepted the repudiation of the vendor of the contract. Sargent v ASL Developments Ltd (1974) 131 CLR 634 applied. LIQUOR - off-licence (retail) - sale of liquor shop business - competing bids by prospective purchasers - whether concluded agreement reached in bidding war - whether, if so, agreement should be enforced having regard to conduct of alleged purchaser after agreement - whether initial purchaser accepted repudiation of agreement by vendor - held: (Powell JA, Handley JA concurring; Kirby P dissenting): There was no concluded agreement for the sale of the business and liquor licence; but if there was it was not such as should be specifically enforced inter alia because the purchaser had accepted the repudiation of the agreement by the vendor. EQUITY - specific performance - availability of the remedy - availability of remedies to stranger to proceedings - observations by Powell JA on the availability of specific performance. Ferguson v Wilson (1866) LR 2 Ch 77 considered. 2 UNREPORTED JUDGMENTS Conveyancing Act 1919, s52A, s54A. Liquor Act 1982, s42. ORDERS 1. Appeal upheld; 2. Declaration and orders of Brownie J of 28 April 1994 set aside; 3. In lieu thereof: (a) make declarations in terms of terms of prayers 3 and 5 of the amended summons; (b) make orders in terms of prayers 1 and 2 in the amended summons; (c) order that the cross-claim be dismissed; (d) order that, except to the extent that the same are the subject of any prior inconsistent order as to costs, the first respondent pay the appellant's costs of the appeal; (e) order that the first respondent pay the appellant's costs of the proceedings; (f) order that the first respondent pay the costs of the second and third respondent to the proceedings and of the cross-claim; (g) reserve liberty to any party to apply to a Judge in the Equity Division for such order, or orders, consequent upon the setting aside of the declaration and orders made by Brownie J, as may seem necessary or desirable; and 4. Order that, if qualified, the first respondent have a certificate under the provisions of the Suitors Fund Act 1951. Kirby P These proceedings illustrate the problems which arise when bidding fora valuable asset is thought to be concluded in agreement between two parties but then negotiations continue with a third party leading to a different agreement, more advantageous to the vendor. In the sale of real property, the practice became so common that it acquired its own rather ugly word ("gazumping'"'). It resulted in remedial legislation. See Conveyancing Act 1919, s52A and Nguyen and Anor v Taylor (1992) 27 NSWLR 48 (CA). The present appeal must be determined without benefit of legislation, within established principles of the common law of contract, as elaborated by rules governing the provision of equitable relief. INFORMAL CONTRACTS AND THE ISSUES IN THIS CASE The facts of the case are set out in the reasons of Powell JA, which I have read in draft. The English law of contract, which we have followed in Australia, rejected the formal requirement of writing, except in very limited cases. In this respect, our law differs significantly from that of most civil law countries. However, the flexibility and informality of the common law of contract has, in this respect, contributed significantly to the economic development of common law countries and to the attractiveness of their contract law to other jurisdictions. Together with the invention of the corporation, it represents an important feature of the English laws contribution to economic progress and well-being. See Lord Wilberforce, "Law and Economics", 1966, Holdsworth Lecture in BW Harvey (ed), The Law And Justice, Sweet and Maxwell, London, 1978, 76f. The price paid for the flexibility of the common law, including in the law governing the formation of contracts, is an occasional uncertainty as to whether the parties to an asserted contract had indeed made a concluded bargain. This uncertainty has produced various legal categories in an attempt to classify the available interpretations of the conduct of the parties. See eg Masters v Cameron (1954) 91 CLR 353, 360; Gissing v Gissing [1971] AC 886, 906; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 (CA), 549. It has produced countless cases in which the courts have been obliged to explore the facts surrounding the asserted agreement to determine whether communications between the parties and their other conduct, properly interpreted, amount to a legally enforceable contract or not. See eg IRC WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Kirby PB v Raphael and Others [1935] AC 96 (HL); Ashington Piggeries Ltd and Anor v Christopher Hill Ltd [1972] AC 441 (HL), 502; Allen v Carbone (1975) 132 CLR 528, 533. The critical questions which Brownie J had to decide in this case were: 1. Did GYG Holdings Pty Ltd (GYG) have a concluded agreement with Mr and Mrs Brian Britt (the Britts) on 1 February 1994; 2. If so, did that agreement continue or was reliance on it by GYG lost by: (a) acceptance by GYG of the Britts' repudiation of the agreement; (b) waiver by GYG of its legal rights against the Britts; or (c) estoppel against GYG by reason of its conduct after the alleged contract occasioning detriment to Liquorland (Australia) Pty Ltd (Liquorland), the subsequent "purchaser" of the business from the Britts; and 3. If there was a concluded agreement on | February 1994 which was not repudiated, waived or unenforceable by reason of the considerations in (2), was GYG entitled, in the circumstances, to an order for specific performance of the agreement against the Britts or was it denied equitable relief and confined to damages? Brownie J determined issue (1) in favour of GYG. He concluded that none of the suggested disentitling grounds in issue (2) deprived GYG of its rights either against the Britts or Liquorland. He rejected the contention that GYG was disentitled to the equitable relief of specific performance. As the proceedings before him were formally a summons initiated by Liquorland, Brownie J's final orders were that the summons be dismissed with costs. He declared that there was a binding and enforceable agreement between GYG and the Britts for the purchase and sale of the Britts' liquor business. He ordered the Britts to perform that agreement. He reserved liberty to apply and made appropriate orders for costs. It is from those declarations and orders of Brownie J that Liquorland has appealed to this Court. Powell JA in his reasons has explained the original difficulties which were presented by the non-participation of the Britts in the appeal. Although this problem was cured, the course of the proceedings between the remaining parties presents continuing difficulties. But not, in my view, such as to prevent the consideration of the substantial issues presented for our determination. In the appeal the issues remain, essentially, the three issues which were debated, effectively between GYG and Liquorland, before Brownie J and determined in favour of GYG. But the first issue is whether the appellant has shown that Brownie J was wrong. Although the proceedings involve a re-hearing, they remain an appeal. This Court is not a tribunal of first instance. It must proceed within its own proper function as an appellate court. The issues before us are not atypical of a case of this kind. Where there has been a bidding war it is not at all unusual for the successful purchaser to assert that the unsuccessful purchaser failed to secure a concluded agreement; if it did, that it subsequently accepted the repudiation of that agreement; if it did not, that it waived its legal rights under the agreement or was estopped from enforcing it. And if all else failed, that it should be denied equitable relief and confined to its right to damages against the vendor at common law. In that sense, there is nothing unusual in the present case. Cf Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 97023 (NSWSC), 9251. THE PRIMARY JUDGE'S CONCLUSIONS 4 UNREPORTED JUDGMENTS Powell JA has set out the reasons which Brownie J advanced for concluding that the parties had on | February 1994 reached a concluded agreement by which the Britts would sell, and GYG would purchase, the liquor business previously conducted by the Britts in GYG's premises, including the liquor licence necessary for the conduct of that business. Brownie J correctly applied the "general test of objectivity" required by the law of this State. See Air Great Lakes Pty Ltd and Ors v KS Easier (Holdings) Pty Ltd (1985) 2 NSWLR 309 (CA), 318, 330; Commonwealth Games Case (above) at 349. He identified five objective factors which supported the interpretation of a concluded agreement when the conduct of the parties was viewed against the background of the evidence admitted to establish the course of the negotiations between them: 1. The formal words of acceptance by Mr Britt (on behalf of his partnership) "T accept your offer"; 2. The formal action which accompanied those words of acceptance when Mr Britt shook hands with Mrs Sweet (for GYG) signifying "the deal"; 3. The immediate communication by Mr Britt, at the request of Mrs Sweet, to his solicitor, Mr Longman, advising him of the "sale" and asking him to "draw up the contract". Mr Britt agreed to do as Mrs Sweet requested. He proceeded to do so in her presence. He announced that he had sold the business at the Centre for $230,000. In Mrs Sweet's presence he asked Mr Longman to draw up the contract; 4. Furthermore, Mr Britt, at Mrs Sweet's request, also agreed to telephone the competing purchaser, Liquorland, to announce the conclusion of the sale to GYG. It is obvious that Mrs Sweet asked Mr Britt to do this in order to terminate the price war and to make it clear to Liquorland that a concluded agreement had been reached between the Britts and GYG. Mr Britt thereupon telephoned the relevant officer of Liquorland and in the presence of Mrs Sweet announced that he had "sold my business at the Centre"; and 5. Mrs Sweet then took the telephone because "it appeared that Mr Britt could not get a word into the conversations and with Mr Britt's concurrence confirmed to Liquorland "we have just purchased his business". In cases of this kind, because of the inherent uncertainty and disputability of the question for resolution, it is important that this Court should pay particular respect to the impressions and conclusion of the trial judge. This is not simply the application of the principles required by Australian law concerning the assessment of the creditability of witnesses at trial. Nor is it simply the discouragement of litigation over issues which are inherently uncertain and insusceptible to completely objective resolution. It is out of respect for the nuances of evidence which are more likely to be picked up by the primary judge in deriving a conclusion on the legal question at stake than by an appellate court confined to appeal books and counsel's urgent advocacy. Brownie J made it clear that he accepted as truthful the evidence of Mrs Sweet and Dr Gangemi of GYG. He preferred their evidence to that of Mr Britt. It does not go far enough for this Court simply to accept their evidence in the appeal book. It is necessary to breathe life into that evidence and to understand that, from it Brownie J derived his opinion that a concluded bargain had been reached. There is a further consideration which Brownie J did not mention; but probably because it was self-evident. It is one to which I have referred in a number of cases where disputes have arisen concerning the formation of a contract. It is that courts should be the upholders of bargains and not their WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Kirby PB destroyers. Coal Cliff Collieries Pty Ltd and Anor v Sijehama Pty Ltd and Anor (1991) 24 NSWLR | (CA); Hillas and Co Ltd v Arcos Ltd [1932] All ER Rep 494; 147 LT 503; 38 Com Cas 23 (HL) at 505f, 515f, 39f. In Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 (CA) at 133, I pointed out that: "Well meaning, paternalistic interference by courts in the marketplace, unless authorised by statute or clear authority, transfers to the courts the economic decisions which our law, properly in my view, normally reserves to parties themselves." With respect to those of a different conclusion, it is my opinion that the decision of Brownie J that GYG and the Britts had a concluded agreement on 1 February 1994 has not been shown to have been wrong. Indeed, it was more than justified by the evidence. It is insusceptible to correction in this appeal. The evidence clearly showed that negotiations had occurred between GYG and the Britts between 25 January 1994 and | February 1994. The negotiations had identified the property to be purchased, the identity of the purchaser, the names of the solicitors for both parties, the deposit of 5% to be paid, the manner of apportionment of the value of stock in hand in the liquor business, the identity of the then current and proposed licensee, the adjustment of the licence which was required, and the steps necessary for the transfer of the licence to GYG's nominee. On | February 1994, in the conversation which Brownie J took objectively to indicate a concluded bargain, the final price for the business was agreed. The conclusion of the arrangement was signalled by the symbolic shaking of hands and the precautionary telephone calls to the solicitors and to the competing would-be purchaser, Liquorland. The Britts offered no contradiction to the essential evidence of Mrs Sweet on this question. In any case, Brownie J accepted Mrs Sweet's testimony. There was no relevant evidence which Liquorland could provide to contradict the "deal" which Mrs Sweet asserted. As Brownie J pointed out, Liquorland withheld from the witness box its officer Mr Djukic, who with the solicitor, Mr Hatzis, hastened to Orange with a pre-prepared written contract, immediately following the conversation with Mr Britt in which he had announced the concluded deal with GYG. It also failed to call Mr Longland who was the officer of Liquorland who was told that the business was "sold". In such circumstances, it is unsurprising that Brownie J should have concluded that a firm agreement had been reached between GYG and the Britts. Indeed, to have held otherwise would, in effect, have involved adding to the list of agreements which required the formality of writing a new and additional class, not provided by statute and not hitherto required by the common law. Not even Liquorland argued that writing was required by law and I would resist Handley JA's suggestion that it might be. It is true that various details of the written agreement remained to be clarified and agreed upon. That is why the parties had solicitors. It is possible, although unlikely, that the debate about those terms would have led to a breakdown of the agreement between the parties. It is notable that no such breakdown occurred in or after the midnight discussions between the representatives of Liquorland, the Britts and their solicitor. It is unnecessary to speculate about that possibility. Its unlikelihood arises from the fact that the Britts' liquor store had for some time been operating within GYG's premises. It is not as if the parties did not have a substantial knowledge of each other's businesses and their ordinary requirements. To suggest that the theoretical possibility of a breakdown over the detail of the contract for the sale of the business warrants the conclusion that such 6 UNREPORTED JUDGMENTS sale could only be effected in writing negates the flexible principle of oral agreements which is such an important feature of the common law of contract. The Court can take notice of the practice in New South Wales that real property contracts are invariably reduced to writing. See Allen v Carbone (1975) 132 CLR 528, 532; Smith v Lush (1952) 52 SR (NSW) 207, 212; Lezabar v Hogan (1989) 4 BPR 97292 (CA) 9498. However, without evidence, I would not draw the same conclusion in respect of the surrender of a tenancy to achieve the sale of a liquor outlet with an attached off-licence (retail) license. The list of matters upon which agreement had been achieved, set out above, is sufficient to indicate that the agreement was precise and detailed enough to sustain the primary judge's decision that a concluded bargain had been struck. If courts are over-formal in such matters and decline to uphold the agreements of business people who shake hands upon their bargains, courts will truly become the destroyers of such bargains. They will present themselves as a serious impediment to the economic arrangements between business-people. If two business people consider that they have a concluded bargain - and shake hands and otherwise act upon it - and if retrospective examination reveals that such bargain is adequately precise and its essential terms agreed - it would be mischievous and contrary to principle for courts to say, in effect: "We know better. You thought you had a bargain. But we say you did not." I would not take that stand. I would hold the Britts to their bargain with GYG. I consider that this is what the common law requires. Because the common law reflects commonsense, I consider that it is what ordinary business-people in the Australian community would take to be the legal rule applicable to such dealings. We should uphold that expectation in the law. SUBSEQUENT CONDUCT BY THE SUCCESSFUL PURCHASER However, as Powell JA has pointed out, this conclusion by no means disposes of the present appeal. After the midnight meeting and the execution of the written contract with Liquorland, there followed a series of steps on the part of GYG which are arguably inconsistent with, or not assertive of, the concluded agreement which Brownie J found. Care must be taken in the use that is made of the subsequent conduct of parties, after a concluded agreement has been arrived at, where such subsequent conduct is put forward either to cast doubt on the conclusion of the agreement or to suggest (by varying formulae) that such agreement should not be enforced. In Film Bars (above) at 9255, McLelland J described, in my view correctly, the proper approach: "Where a question arises as to whether communications between parties have given rise to a binding contract at a particular point in time, subsequent communications may be legitimately referred to and taken into consideration (see B Seppelt and Sons Ltd v Commissioner of Main Roads (1975) 1 BPR 9147 [97011], Court of Appeal per Glass JA at 9149 and per Mahoney JA at 9154-9156. However, consistent with what has already been said, the probative value of such subsequent communications must be found in the light they throw on the proper interpretation of the earlier communications alleged to constitute the contract. They may, for example, show that at the time of the allegedly contractual communications there were other, uncompleted, negotiations between the parties concerning matters omitted from the allegedly contractual communications, in the light of which the allegedly contractual dealings could not properly be interpreted as mutual assents to be bound. Hussey v Horne-Payne (1879) 4 App Cas 311 (in which the rule that subsequent communications might WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Kirby PY be taken into account appears to have first found expression) appears to have been such a case (and see Bellamby v Debenham (1890) 45 Ch D 481 at 493 and Perry v Suffields Ltd [1916] 2 Ch 187). More commonly, perhaps, such subsequent communications may be legitimately used against a party as an admission by conduct of the existence or non-existence, as the case may be, of a subsisting contract. In my view Barrier Wharfs Ltd v W Scott Fell and Co Ltd (1908) 5 CLR 647 should be regarded as such a case, albeit complicated by the fact that each party sought to rely upon the subsequent communications as against the other... It is hardly necessary to add that if allegedly contractual communications, properly interpreted, do amount to a contract, that contract cannot be destroyed by subsequent communications not amounting to a rescission thereof (Lennon v Scarlett and Co (1921) 29 CLR 499 at 509; Perry v Suffields Ltd [1916] 2 Ch 187." Nothing in the actions of the parties after 1 February 1994 amounts, in my view, to a rescission of the contract between GYG and the Britts on that day. On the contrary, given that the relief sought in the cross-claim against the Britts was the equitable relief of specific performance of their contract with GYG, it is vital to characterise the subsequent conduct of the parties by reference to the starting point of the concluded contract between GYG and the Britts which Liquorland well knew to have been effected. THE UNCONSCIENTIOUS CONDUCT OF THE NEW "PURCHASER" There cannot be any real doubt that Liquorland actually knew of the agreement. Its in-house solicitor received the telephone call from Mrs Sweet which his Honour accepted had occurred. There was ample opportunity for Liquorland to deny the asserted telephone call. An unsworn copy of Mrs Sweet's affidavit was provided to Mr Hatzis of Liquorland on 8 April 1994. Mr Hatzis could not recall whether he had, or had not brought knowledge of the allegation to the attention of Mr Djukic. Liquorland did not expressly deny that it knew that an agreement had been reached between GYG and the Britts. Mr Djukic was present in court during the hearing. He did not give evidence. The case for Liquorland was re-opened on the third day of the hearing, by which time the case for GYG had closed. This notwithstanding, Mr Djukic was not called as a witness. Later still, a further application to re-open the case for Liquorland was made, canvassed and withdrawn. Had there been any evidence to rebut the allegation of knowledge of the concluded "deal" between GYG and the Britts it is reasonable to conclude that Liquorland would have called it. It did not. Brownie J's findings of knowledge of the concluded agreement were therefore not contradicted. In these circumstances his Honour's conclusion can scarcely be doubted as correct. It was that Liquorland had: "... deliberately set out to try to have Mr Britt repudiate that contract [ie with GYG] and then it asserted that it had succeeded in this unconscientious enterprise." It was upon this footing that Brownie J refused Liquorland the relief which it claimed. His Honour was perfectly right to do so. Brownie J's interpretation of the events which followed the "agreement" between Liquorland and the Britts - after Liquorland was aware of the earlier concluded agreement between the Britts and GYG - was that Liquorland set out to have the Britts breach their contract with GYG. To this extent, Liquorland intentionally procured a breach of that agreement. Doing so would give rise to a 8 UNREPORTED JUDGMENTS right in GYG to damages against Liquorland. But such damages would not be an adequate remedy. This is because of the unconscientious conduct of Liquorland in the circumstances and the importance to GYG of maintaining a liquor business into its retail licence in its shopping centre. If sold to Liquorland, the latter could, in the future, remove the business from the shopping centre at considerable potential loss to GYG. The proper interpretation of the conduct of GYG on 2 February 1994, and thereafter, is that such conduct was the direct result of Liquorland's procuring the breach of the agreement between GYG and the Britts. Once the concluded agreement of | February 1994 is established (as alike with Brownie J I think it was) the later conduct of the parties is only to be understood as following the "unconscientious enterprise", viz Liquorland's insistence upon its own agreement secured in knowing breach of the concluded agreement between GYG and the Britts. The events which followed: the lock-out of the Britts and the other conduct mentioned, would not have occurred if Liquorland had not proceeded to accomplish its knowing inducement to the Britts to breach their agreement with GYG. Liquorland should not be permitted to take advantage of its reliance upon conduct procured only and directly by its own wrongful and unconscientious actions. Yet that is what it sought to do in this appeal. Once it is determined that the unconscientious conduct of Liquorland, found by the primary judge, prevents its relying on the post-agreement conduct by GYG, the only remaining questions are whether it could be said that GYG elected, as between itself and the Britts, to accept their repudiation of the agreement of I February 1994 or to waive its rights under the agreement. Or whether, for any other reasons, equitable relief such as specific performance, would be denied to GYG. At the trial, no case was mounted by the Britts against GYG that GYG had accepted the repudiation by the Britts. Nor did the Britts ever allege that GYG had acted in breach of its agreement with them. In this respect, the judgment of Brownie J simply reflects the issues which were litigated at the primary hearing. Liquorland should not, in this appeal, be permitted to raise an argument of election. It should be denied that entitlement both because of the course which was taken at the trial by the Britts and because such an argument involves Liquorland in relying upon its own unconscientious conduct, in knowing breach of the contractual obligations which had been entered between the Britts and GYG. So far as equitable relief is concerned, in the cross-claim by GYG against the Britts, the question whether GYG was ready, willing and able to fulfil its part of the agreement was raised only in the context of questions addressed (tspt 317) to the funds available to GYG for the completion of the purchase of the liquor licence and the nominated holder of the licence. No other ground for refusing relief was raised. At the trial, counsel for the Britts referred, without criticism, to the evidence of Dr Gangemi for GYG on this issue. He raised no issue in regard to it. He made it plain that the Britts did not allege that GYG had done any wrong to them. In the way in which these proceedings were conducted at trial, there is no principle controlling the grant of equitable relief which would deny the provision of the relief afforded by Brownie J to GYG against the Britts. On the other hand, there are sound reasons of equitable principle which control the reliance which Liquorland seeks to place upon conduct which occurred after the concluded WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Handleg JA) agreement between the Britts and GYG where such conduct only occurred because of Liquorland's attempt to procure from the Britts a repudiation of the agreement which they had made with GYG. CONCLUSION: UPHOLD THE BARGAINS BETWEEN BUSINESS PEOPLE I do not say that this case is insusceptible to differing interpretations. Of course it is. Most such cases are. But in my view this Court must be extremely cautious in substituting its own opinion for that of the primary judge where he determined that a concluded agreement was reached in the circumstances described. Once that conclusion was made, as I think rightly, that a bargain had been struck with all of its essential terms settled, this Court should hold the parties to their agreement. The Court. should be specially loath to undermine the agreement at the behest of the very party which, fully knowing of it set its officers on a late-night journey from Sydney to Orange, written contract at the ready, with a new offer designed to inveigle from their contractual obligations the parties who had announced that very day that their business had been "sold" to another. If the law upholds such conduct it undermines the respect for business bargains. As Dr Gangemi observed in his evidence (noted by Powell JA) what is involved is not simply a moral obligation - but something more. That something more is a legal commitment which Brownie J, exercising the equitable jurisdiction of the Supreme Court, considered should be upheld and specifically enforced. I agree with him. ORDERS A late motion was filed by GYG for leave to adduce fresh evidence. As that motion is unnecessary, in the conclusion which I have reached, I do not consider that it should delay the delivery of my judgment. The appeal should be dismissed with costs. Handley JA In this appeal I have had the benefit of reading in draft form thereasons for judgment of Kirby P and Powell JA. In view of their reasons I have no need to recite the facts, the history of the litigation, the reasons given by Brownie J or the submissions of the parties on the appeal. With respect to those who have reached the other view, I have Concluded, in agreement with Powell JA, that the relevant conversation between Mrs Sweet and Mr Britt on I February 1994 did not result in the formation of a binding contract. My conclusion that there was no binding contract is based on the following matters 1. The parties contemplated that a written contract for sale would be prepared by their solicitors, executed and exchanged. Prima facie there is no contract in such a case until exchange. Allen v Carbone (1975) 132 CLR 528. 2. The agreement involved the surrender of a monthly tenancy held by the vendors under the purchaser, the delivery of vacant possession, and adjustments to outgoings. Although neither party contended that a contract for the surrender of a tenancy is within s54A of the Conveyancing Act in my opinion this is distinctly arguable. 3. Terms remained to be agreed between the parties in relation to the deposit, the date for completion, the timing and mechanics of valuing the stock, the basis for such valuation, and the date or dates for payment for the stock. 4. The respondent did not submit that the Court had or should recognise and enforce an informal or "open" contract for the sale in New South Wales of a business conducted in licensed premises on tenanted property in which law and 10 UNREPORTED JUDGMENTS equity would provide by way of implication for any unstated terms necessary for contractual certainty. Compare Cavallari v Premier Refrigeration Pty Ltd (1952) 85 CLR 20 at 25. 5. Agreement as to price in a case such as this is not normally sufficient to establish a binding contract for sale. Compare Harvey v Facey [1893] AC 552 and Clifton v Palumbo [1944] 2 All ER 497 (CA). In my opinion this is especially the case where, as here, the transaction is wholly oral. 6. The Britts purchased the business and lease pursuant to a detailed written contract which provided for matters which had not been discussed or agreed between Mrs Sweet and Mr Britt on 1 February. When the Britts later purported to sell the business to the appellant they did so pursuant to a written contract containing similar provisions. T also agree with Powell JA that the conduct of the respondent and the Britts from 2 February With 12 April was inconsistent with the existence or continued existence of any binding contract between them. Such conduct evidenced either an acknowledgment that there never was such a contract, a mutual abandonment of any contract that was made, or an election by the respondent to terminate any such contract for breach by the Britts. I would prefer not to express any view on whether the respondent in any event was precluded by its conduct during this period from obtaining specific performance because of its lack of readiness and willingness. I agree with the orders proposed by Powell JA. Powell JA This is an appeal from a Judgment delivered, and Orders made, by Brownie J on 28 April 1994 in proceedings which had been brought by the Appellant ("Liquorland") against GYG Holdings Pty Ltd ("GYG") and Brian Francis Thomas Britt and Patricia Jean Britt ("Mr and Mrs Britt"), the object of which proceedings was, in substance, to obtain a declaration that it was Liquorland, rather than either GYG or Mr and Mrs Britt, which was beneficially entitled to Off Licence (Retail) Serial No 301821, issued pursuant to the Liquor Act 1982, pursuant to which licence Mr and Mrs Britt had formerly carried on the business of a liquor store wider the style of "Britt's Liquor Shop" in premises forming part of the Summer Centre Shopping Mall, at Summer Street, Orange, of which premises GYG was the landlord. For the reasons which he gave 'in his Judgment, Brownie J dismissed the proceedings which had been brought by Liquorland, and, on the Cross Claim which had been filed by GYG - to which Cross-Claim Mr and Mrs Britt were, but Liquorland was not, joined - declared that there was a binding and enforceable agreement between GYG and Mr and Mrs Britt for the purchase and sale of the business conducted by Mr and Mrs Britt, and (inter alia) ordered that Mr and Mrs Britt "specifically perform the agreement for sale". Prior to November 1991, when GYG became registered as the proprietor of the land comprised in Certificate of Title Registered Volume 8624 Folio 171 - upon which land the Summer Centre Shopping Mall was erected - Floridon Pty Ltd ("Floridon") had been the registered proprietor of the subject land. Although the evidence is not entirely clear, it would seem probable, that, at some time prior to April 1988, Floridon had fitted out shops 17 and 18 within the Shopping Mall as a liquor shop and, having done so, and having obtained, in respect of the shops, an Off-Licence (Retail), had thereafter carried on the business of a liquor store in the shops. WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JA)I It would further seem that, in April 1988, Mr and Mrs Britt entered into an agreement to purchase the business of a liquor shop from Floridon for $150,000.00 plus stock at valuation, it being a term of the agreement inter alia) that completion was to be conditional upon, and interdependent with, the granting by Floridon of a lease of the two shops for a term commencing on the date of completion of the agreement until 31 December 1992. Although it is not the subject of express evidence, it seems clear enough that, at some time prior to 14th June 1988, the Licensing Court had approved of the transfer of the Off-Licence (Retail) from Floridon to Mr and Mrs Britt, for, on 14th June 1988, by lease subsequently given Dealing No Y141220, Floridon granted to Mr and Mrs Britt a lease of the two shops for a term of 4 years 6 months mid 17 days terminating on 31st December 1992 subject to an option for renewal for a further term of 5 years. It Would further seem that the purchase by Mr and Mrs Britt of the liquor shop business was financed substantially by way of a loan obtained by them from Mercantile Credits Ltd ("Mercantile") since, on 14th June 1988, Mr and Mrs Britt executed 'in favour of Mercantile a Traders' Bill of Sale - later registered in the office of the Registrar General - pursuant to which Traders' Bill of Sale Mr and Mrs Britt charged 'in favour of Mercantile (inter alia) the goodwill of the business, certain enumerated items of plant mid tenant's fixtures, and the stock 'in trade of the business. Since the holding of the Off-Licence (Retail) in respect of the two shops was essential for the conduct of the liquor store business, the charging of goodwill of the business would have operated to charge the benefit of the Off-Licence (Retail) in favour of Mercantile as part of its security for the repayment of its loan. (see, for example, Gaye v Johnston!; Duncan v Ridd?; Bogeta Pty Ltd v Wales) As I have previously recorded, GYG became registered as the proprietor of the land upon which the Shopping Mall is erected in November 1991. GYG is a company the shares in which are held by a Dr Gangemi, his wife and their adult children, Dr Gangemi and his wife being directors, but most, if not all, decisions of any significance affecting GYG's property and business interests being taken by Dr Gangemi, commonly - but not inevitably so - after some form of informal discussion with members of his family. Decisions of a minor, or routine, nature relating to the Shopping Mall were, for the most part, left in the hands of a Mrs Sweet, the Centre manager who lived and worked in Orange. Notwithstanding that the evidence would indicate that - despite his being a medical practitioner by profession - Dr Gangemi and his company had been involved with the ownership and management of commercial property for a significant period of time, the evidence (see Appeal Book at 338-339) would indicate that the events which gave rise to these proceedings represented the first occasion upon which - except as the owner of premises upon which such a business was conducted - GYG or Dr Gangemi was concerned with a liquor store business. Mr and Mrs Britt did not exercise the option of renewal contained in the lease, but continued in possession of the two shops after 31st December 1992, so that, as provided for in the lease, thereafter they held as monthly tenants in accordance with the terms provided for in the lease. 1. (1936) 37 SR 454 2. [1976] 2 NSWLR 105 3. [1977] 1 NSWLR 105. 12 UNREPORTED JUDGMENTS Whether or not the fact be that, when they acquired the liquor shop business from Floridon, they had over-extended themselves, or, that, after they acquired the liquor shop business, Mr and Mrs Britt were affected the competition of other liquor shop businesses - including that which, as it would seem, had been established "just around the comer" by Liquorland - it would seem to be the fact that, by no later than the middle of 1993, the business of "Britt's Liquor Store" had fallen upon hard times and Mr and Mrs Britt were endeavouring to sell their business. Although it would seem that, prior to that time, there had been inconclusive discussions between Mr Britt - who for this purpose - represented both himself and his wife - Liquorland, GYG and other prospective purchasers, nothing of any present relevance appears to have occurred until shortly prior to 24th January 1994, at which time, so it would seem, Liquorland offered to purchase the business from Mr and Mrs Britt for $195,000.00. Although the evidence is not entirely clear, it would seem probable that that offer came to the attention of Dr Gangemi who - because he considered that the retention of a liquor store within the Shopping Mall was desirable - then gave instructions to Mrs Sweet to endeavour to negotiate the purchase by GYG of the liquor store business. Before continuing with the narrative, it is convenient, here, to record that, in the course of his Judgment, Brownie J said (inter alia) (Appeal Book at 385): "T prefer the evidence of each of Mrs Sweet and Dr Gangemi to the evidence of Mr Britt whenever there is any conflict..... His recollection of the events of 1 and 2 February is very poor and I do not think his evidence is reliable. In particular, I do not accept his evidence of his belief as at 1 February: I do not think it can be reconciled with his conduct that day." However, to revert to the narrative: according to Mrs Sweet, she called on Mr Britt on 25 January 1994, and, when she did so, said to him: "I understand that Liquorland have made you an offer of $195,000.00. Dr Gamgeni has instructed me to advise you that his company will match that offer." to which Mr Britt replied: "Would you be prepared to wipe off my arrears of rent and outgoings?" - which arrears then amounted to approximately $26,000.00. Mrs Sweet further says that she then said: "We will wipe off the whole of the arrears of outgoings and half the arrears of rent." to which Mr Britt replied: "That sounds alright to me, thanks. Will you put it in writing so I can take it home to show Pat what I got for the business." and, - at the conclusion of their meeting "T will ring Colin Longman and ask him to draw up the contract." - Mr Longman being the solicitor to Mr and Mrs Britt. At some time during the course of 25th January 1994, Mrs Sweet prepared a letter which, omitting formal parts, was as follows: "Re: PURCHASE OF BUSINESS KNOWN AS 'BRITT'S LIQUOR STORE' I confirm our offer to purchase your business as follows: Agreed purchase price $195,000.00 Less agreed amount to cover all rent and outgoings until settlement $11,640.00 AMENDED PURCHASE PRICE $183,360.00 Plus stock Plus pro rata licence fee (paid in advance). I will contact your solicitor and confirm the purchaser's details." which letter she subsequently handed to Mr Britt. WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JAB Mrs Sweet also says that, shortly after her meeting with Mr Britt, she telephoned Mr Longman and introduced herself as the manager of the Shopping Mall, and that, when she did so, Mr Longman replied "I have been expecting your call". In her Affidavit sworn in these proceedings, Mrs Sweet deposed (inter alia): "I gave Mr Longman the details he would require for the contract regarding the name of the purchaser, its registered office address, its company number, and the name and address of its Solicitors. I then said: 'I expect that you will require ten percent deposit." Mr Longman said: "Ten percent isn't necessary. Five percent will be fine." Mr Longman then said words to the effect: 'Can we set a settlement date of Monday 21/2/94 to allow for a stock take on either the Sunday night or the Monday morning? This will also fit with the next hearing of the Licensing Court in Orange. Who do you have in mind for the stock take and who will be the licensee?' I said: "I will obtain instructions and let you know.' Mr Longman said: 'I will DX the contract to your solicitors. They should have it by Friday morning (28/1/94)." Despite what Mr Longman had said to Mrs Sweet in his telephone conversation, no form of contract had been received by GYG's solicitors by Ist February 1994. That being so, Mrs Sweet telephoned Mr Longman to enquire what was happening, and, when she did so, was told by Mr Longman "My client has not yet given me final instructions to draw (the contract) up". Thereafter, Mrs Sweet went to see Mr Britt and, when she did so, said "Brian, what's going on with the sale" to which Mr Britt replied "Liquorland have made me an increased offer'. Having regard to the issues which were debated before Brownie J and on the hearing of this appeal, it is convenient to pause here to record that, during the course of her cross-examination on the hearing before Brownie J, Mrs Sweet gave the following (inter alia) evidence: "Q. You didn't think at that point, did you, that there was an enforceable agreement between the centre and the Britts? A. No I didn't. Q. And you did not say to Mr or Mrs Britt, "Look, you have a binding agreement to seel us your business at $195,000.00'? A. No, I didn't. Q. And you didn't say that to Longman? A. No. Q. And you didn't say that to the centre's solicitors? A. No I didn't. Q. In fact you didn't say it to anyone I suggest? A. I accept that. Q. Because it was clear in your mind, wasn't it, at that point that all bets were off, Liquorland had made a higher bid and there was nothing the centre could do, as you understood it, to require the Britts to sell the centre (sic) at $195,000.? A. Yes, as I understood it. Q. And did you talk to Mr Gangemi at that point about what was going on? A. Yes, I did. Q. And I assume you told Dr Gangemi that Liquorland made a higher offer and the Britts were not going to go and settle with you at $195,000.00? A. I didn't tell him that. I just said Liquorland had made a higher offer. Q. And what did he say to you? A. My instructions were to purchase the business if I had to meet that offer, meet it, or increase it to endeavour to purchase the business. 14 UNREPORTED JUDGMENTS Q. So Dr Gangemi didn't say to your, 'Look Janene', I assume he called you Janene, 'We have a binding agreement at $195,000.00. Go tell the Britts that'? A. No he didn't. " In her Affidavit, Mrs Sweet further deposed: 16. I telephoned Dr Gangemi to obtain instructions in relation to the matter. 17. I then called on Mr Britt again on 1/2/94 and made an offer which I knew was greater than Liquorland's increased offer. During the afternoon of that day I called on Mr Britt, for a third time, and he said: 'Liquorland have increased their offer again.' I then made Mr Britt an offer of $230,000.00 for the purchase of his business and licence, less a full write-off of his rent and outgoings arrears. At approximately 4 pm and in the presence of Mr Britt's two sons, Mr Britt said: 'I accept your offer.' Mr Britt and I shook hands on the deal. I then said to Mr Britt: "Would you now phone Colin Longman, advise him of the sale, and ask him to draw up the contract.' Mr Britt said: 'Yes, I will.' Mr Britt immediately phoned Mr Longman in my presence and I heard him say 'I have sold my business to the Centre for $230,000.00. Would you please draw up the contract.' I then said to Mr Britt: "You had better phone Liquorland and tell them that you have sold to us.' Mr Britt agreed and immediately phoned Mr Djukic of Liquorland. I heard Mr Britt say: 'Hello Dushan. I have sold my business to the Centre.' it appeared that Mr Britt couldn't get a further word into the conversation and I said to him: 'Do you want me to speak to him'. Mr Britt handed me the phone and I said: 'I am the manager of the Centre. I confirm what Mr Britt has told you. We have just purchased his business.' Mr Djukic said: "What was the purchase price?' I said: 'I can't disclose that.' Mr Djukic then said: "Brian was ringing me. I would like to speak to him'. I handed the phone to Mr Britt and left the premises." Again, in the light of the issues that were debated before Brownie J and on the hearing of the appeal, it is convenient to record, here, that, in the course of her cross-examination, Mrs Sweet gave the following (inter alia) further evidence: - "Q. So in your view, when you had the conversation that you have just told us about, you were in the same position as you were on 25 January, it was 25 January all over again in the sense that Mr Britt had agreed, as you understood it, to sell the business to the centre, the business and the licence to the centre? A. With the exception that he had given his solicitor instructions to draw a contract. He said 'Will you please draw the contract' and he confirmed with his solicitor that he had sold and he had agreed with me that he would accept our offer of $230,000. Q. Did he do that on 25 January, you told us? A. I didn't hear him speak to Mr Longman. Q. But as you understood him, he had accepted your office on 25 January. A. Yes. Q. And agreed to sell the business? A. Yes. Q. At $195,000? A. Yes. Q. And he had rung is solicitor on 25 January and asked him to draw up a contract? A. Yes. Q. So it was just the same on | February from your point of view? A. Yes. Q. You don't know as you told us what Mr Britt said to his solicitor on 25 January because you weren't privy to that conversation? WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JAB A. That is correct. Q. You happened to be there when he rang his solicitor on I February you told us? A. Yes. Q. But there wasn't any other difficulty (sic) as you saw it on that day, between that day on (sic) 25 January was there? A. No. Q. And as you told us the only discussion you had with Mr Britt since, and it was a short one, was the price of the business and licence and how the arrears of rent and outgoings were to be dealt with? A. Yes. Q. Is that right, it was a very short discussion? A. Yes. Q. So is it fair to say that you did not discuss when the agreement would be completed? A. No we didn't. Q. And is it fair to say no agreement was reached on when the agreement would be completed? A. Yes. Q. And there was no agreement on I February about a deposit, was there? A. No there wasn't. Q. And you knew from your previous dealings that a deposit was almost always paid in a transaction like this? A. Yes, we would expect to pay a deposit. Q. And there was no agreement reached on I February about when and how stock would be valued? OBJECTION (LAWRY): REJECTED Q. You didn't agree with Mr Britt on 1 February about when the stock would be valued? OBJECTION (LAWRY): REJECTED. Q. Did you talk about it on I February how the stock would be valued? A. No we didn't. The only, the only issue that was different to our original conversations on 25 January was this increased purchase price. Q. So as you understood it on 1 February when Mr Britt said 'I accept your offer' you were back to 25 January in necessarily the same posture except the price had gone up? A. No. Q. Let me finish the question. You were back to 25 January in necessarily the same posture except the price had changed? A. Yes, with regards to the conditions of the sale, that is true. " It should further be noted that, at the conclusion of her evidence, Mrs Sweet gave the following evidence in answer to questions from Brownie J: - "Q. As at I February what was your belief as to whether or not the contract, to be binding, had to be in writing? A. I believed that a contract should be formalised in writing. While negotiations took place, an agreement was reached then it was formalised in writing. Q. As you understood it back on 1 February what happened if it was not formalised in writing? A. We did not have a contract." 16 UNREPORTED JUDGMENTS Despite what had occurred when Mrs Sweet was with Mr Britt on Ist February 1994, it would appear that Mr Britt spoke to Mr Djukic later during the day, at which time it was arranged that Mr Djukic would go to Orange that evening with a view to discussing with Mr Britt the purchase of the liquor store business by Liquorland. Before he left for Orange, Mr Djukic had discussed the prospective purchase of the business with Liquorland's "in house" solicitor, Mr Hatzis, who, before he and Mr Djukic left for Orange, had prepared a form of contract for the sale by Mr and Mrs Britt to Liquorland of the liquor shop business. As did the form of contract for the sale by Floridon to Mr and Mrs Britt, the form of contract prepared by Mr Hatzis dealt with a variety of matters such as the basis upon which stock in trade was to be sold and paid for, the time at which, and the circumstances in which, completion of the contract, and the taking of possession, should take place, the steps to be taken in relation to the transfer of the Off-Licence (Retail), warranties to be given by Mr and Mrs Britt and the like. The form of contract also contained a provision - later deleted as the result of the negotiations which were to take place - making completion of the contract subject to and conditional upon the grant of a lease of the shops to Liquorland. Mr Djukic, accompanied by Mr Hatzis, set off for Orange at about 6 pm on the evening of | February 1994, arriving at the home of Mr and Mrs Britt some hours later. At first, the discussions involved only Messrs. Djukic and Hatzis, on the one hand, and Mr Britt, on the other, although, during the Course of those discussions which led ultimately to a purchase price of $240,000.00 plus stock at valuation being agreed upon, Mr Britt spoke on the telephone on a number of occasions with his accountant. After a purchase price had been agreed upon, Messrs. Djukic and Hatzis, accompanied by Mr Britt went to the home of Mr Longman, so that the terms of the proposed contract might be discussed with him and so that, if the terms of the proposed contract could be agreed upon, the contract, as settled, could be executed by Mr and Mrs Britt prior to the return of Messrs. Djukic and Hatzis to Sydney on the following morning. As the result of the discussions which took place at Mr Longman's home, a number of amendments were made to the form of contract which Mr Hatzis had earlier had prepared, such amendments including, not only the addition of matters which were then discussed, but also - as I have earlier recorded - the deletion of the clause which had dealt with the grant of a lease of the shops to Liquorland. When the terms of the contract had been settled, it was executed by Mr Djukic, on behalf of Liquorland, and by Mr Britt, whose signature was witnessed by Mr Longman. That having been done, Mr Longman then telephoned Mrs Britt to advise her in relation to the form of the contract, and, after Mr Longman had done so, Mrs Britt agreed to execute the contract. Thereafter, the Messrs. Djukic and Hatzis, together with Mr Britt, returned to Mr and Mrs Britt's home, where Mrs Britt executed the form of contract. In the Affidavit which she swore in these proceedings Mrs Sweet gave the following (inter alia) further evidence: "18. At about 9.30 am the following morning (2/2/94) I called on Mr Britt at his liquor store as a show of good faith. Mr Britt said to me: 'You are going to kill me.' I said: 'Brian, I don't want to know.' I then left Mr Britt's shop and phoned Dr. Gangemi and said to him: 'There is something wrong.' Dr. Gangemi said: I will phone Mr Britt immediately. You go back around to his shop.' When I arrived back at Mr Britt's WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JAY shop he was speaking on the phone. He handed the phone to me and I had a brief conversation with Dr. Gangemi who advised me that Mr Britt had signed a contract with Liquorland late the previous night." In the Affidavit which he swore in these proceedings Dr. Gangemi deposed (inter alia): - "11. On the 2nd February, 1994 I learn't (sic) that Mr Britt had negotiated a further agreement with Liquorland at 10 pm the previous night. Having heard this I telephoned Mr Britt immediately and we had the following conversation: I said: Hello Brian, this is Dr. Gangemi, whats (sic) going on. Britt said: I sold to Liquorland at 10 pm last night. I said: Thats (sic) not very business like, you have a contract with us. As far as Iam concerned, you have done a dis service (sic) to the people of Orange. The manner in which you have carried out these negotiations is disgraceful. Britt said: Well, thats (sic) the way it is. I then hung up." Having regard to Dr. Gangemi's statement that, in the course of his conversation with Mr Britt, he had said "You have a contract with us", it is convenient to record, here, that, in the course of his cross-examination, Dr Gangemi gave the following (inter alia) evidence: - "Q. You didn't believe when you said that, that you could force him to sell to you, did you? A. I didn't, I wasn't aware of that at that point, I am not a legal man. Q. It was always your understanding that whatever was said between Mr Britt and Mrs Sweet there was going to have to be an exchange of written agreement? A. Eventually, but it was also my understanding when you have reached that far in negotiations it should only be a matter of time before the matter is resolved. Q. But you knew that unless written agreements were exchange (sic) you could not force the matter to be resolved your way - OBJECTION (LAWRY); REJECTED Q. You believed that unless written agreements were exchanged - A. At that point my mind did not consider it. At that point I was concerned about what he had done. Q. You were offended to what you saw as a breach of a moral obligation? A. Breach of an obligation. Q. Breach of a moral obligation? A. I think it went further than - Q. You didn't say that? A. I didn't think I had to say it, it was obvious. Q. You didn't say, 'Look Brian, you have got to sell to us, we had an agreement?' A. I said, "We have an agreement.' Q. You didn't say to him, 'You have got to sell to us because of that agreement?' A. No, I didn't say that. Q. You didn't believe at the time you had an enforceable agreement? A. I didn't' believe - at that time I didn't consider that matter." In her Affidavit sworn in these proceedings Mrs Sweet further deposed (inter alia): - 19. Shortly after my return to my office Mr Patrick O'Sullivan from Liquorland phoned me. He referred to the lease proposal put to Mr Britt dated 21/1/94 and said words to the effect: 'The proposal you have put to Mr Britt is basically fair enough. Someone has done their homework. The 4% turnover rent cuts in at about $764,000.00 on a base rent of $31,000.00. Mr O'Sullivan then said: 'We will forward a proposal to you." 18 UNREPORTED JUDGMENTS On 3rd February 1994, Mrs Sweet wrote to Mr mid Mrs Britt a letter which, omitting formal parts was as follows: - "Re: Tenancy of Shop 17, Summer Centre in accordance with the hold over provision of your expired (sic) lease, I have to advise that G.Y.G. Holdings Pty Ltd require you to deliver up possession of Shop 5 17, Summer Centre by 3rd March, 1994. Due regard should be given to Special Condition 20 of the lease. Ihave prepared a statement of all rent and outgoings due to that date and I have to advise that the amount due and payable is $29,282.74. I also attach a Irrevocable Authority Form for signature. 10 Would you please ensure that this form is returned to me by noon on Monday, 7th February, 1994. Non return will result in further action being taken immediately." The form of irrevocable authority referred to in that letter, which irrevocable authority was addressed to Mr Longman, omitting formal parts was as follows- 15 - "TRREVOCABLE AUTHORITY We, Brian Francis Thomas BRITT and Patricia Jean BRITT of 13 Banksia Street, Orange in the State of New South Wales HEREBY IRREVOCABLY AUTHORISE AND DIRECT you to pay G.Y.G. Holdings Pty Ltd of 88-102 Summer Street, Orange in the State aforesaid, 20 the sum of Twenty Nine thousand two hundred and eighty two dollars seventy four cents ($29,282.74) as at 3rd March, 1994 from the proceeds following the sale of our business known as Britts Liquor Shop, carried out at Shop 17, Summer Centre Shopping Mall, 88-102 Summer Street, Orange being arrears of rent and outgoings." 25 One pauses, here, to note that the demand for payment of all outstanding rent and outgoings, which rent and outgoings were to be paid out of the purchase price to be paid by Liquorland, was inconsistent with there then being a present obligation on Mr and Mrs Britt to sell the business to GYG at the price, and on the conditions, which Mrs Sweet said had been agreed upon. 30 In light of this, and, also, of what was later to occur, it might also be noted, here, that where the subject matter of a contract for sale is that of a business as a going concern, time is usually regarded as being of the essence (see, for example, Tadcaster Tower Brewing Company v Wilson+, Boyns v Lackey> On 4th February 1994, following a telephone conversation with a Mr Hesse of 35 Liquorland, Mrs Sweet wrote to Liquorland a letter which omitting formal parts was as follows: - "Re: Proposed Lease - Shop 17, Summer Centre, Orange I refer to our telephone conversation this morning, and now confirm our offer of lease to you. 40 | TERM: 6 years DATE OF COMMENCEMENT: Ist March, 1994 AREA: 168 sq. m. BASE RENT: $31,000.00 p.a. 45 REVIEW DATES: Ist June, 1995 - thence annual, C.P.I. % ACTUAL OUTGOINGS: 3.87% - budget period ended 30.4.94 $265,000 TURNOVER RENT: 4% of annual audited sales, or base rent whichever is the greater. 4. [1897] 1 Ch 705, 711 5. (1958) 58 SR and cases there cited WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JAD OPTION: To be exercised with not more than 12 months notice and not less than 9 months notice. Rent to be determined at average of rental paid in the preceding two years. 5 | USE: Liquor shop. OPTION TERM: 5 years. EXTENDED TERM: 5 years." Tile form of irrevocable authority which had been forwarded to Mr and Mrs 10 Britt not having been received by her, Mrs Sweet, in the early hours of 9th February 1994, had the locks on the shops changed and the premises secured. Although it is not clear that this was so, the probability is that, thereafter, there were negotiations between Mr Longman and the solicitors for GYG as to the terms upon which Mr and Mrs Britt might be permitted re-entry to the premises, 15 and that, as part of the conditions agreed upon, Mr and Mrs Britt agreed to execute an amended form of irrevocable authority. Whether that be so or not, it is the fact that, on 11 February 1994, Mr and Mrs Britt executed a form of irrevocable authority and direction, addressed to Mr Longman, which form of authority and direction, omitted formal parts was as follows: - "We hereby 20 irrevocably authorise and direct: 1. That immediately the sale of our liquor store (Britts Liquor Shop, Shop 17, Summer Centre Shopping Mail) and or the licence relating thereto has completed, you will pay, in first priority, G.Y.G. Holdings Pty Ltd of 88-102 Summer Street, Orange the sum of: $29282.74. 25 2. In the event that the sale referred to in item 1. herein does not take place on or before the 3rd March, 1994 we agree to make application for bridging finance and direct you apply any bridging finance obtained, in first priority, towards the costs as detailed in item 1. herein. 3. That this authority and direction shall apply to any Solicitor and or firm of 30 Solicitors instructed by us in relation to this matter. We further undertake: 1. Not to cause any disturbance in the centre whatsoever. 2. Not to assault, molest, harass or otherwise interfere with any person (either owner, tenant, administrator, invitee or other person whatsoever) or threaten to do any such act or thing to any person. 35 3. Not to do any thing which may or may be likely to bring into disrepute the Summer Centre, its owners, occupiers or administrators. 4. To remove all signs displaying the words 'Britts Liquor Shop' and 'Liquor'. 5. To remove all fixtures owned by us prior to our vacating the premises." and that, thereafter, Mr and Mrs Britt were permitted re-entry to the shop premises. 40 One pauses, here, to note that the apparent demand for, and acceptance of this form of authority was also inconsistent with any obligation on the part of Mr and Mrs Britt to sell to GYG. Meantime, on 7th February 1994, Liquorland had applied to the Licensing Court to have the Off-Licence (Retail) transferred to it provisionally pursuant to 45 the provisions of s61(3) of the Liquor Act 1982 which application was acceded to. It is to be noted, that, before any provisional grant of such an application might be made, the application must be consented to in writing by the relevant transferrer of the subject licence. Following the letter which Mrs Sweet had written to Liquorland on 4th 50 February 1994, negotiations as to the grant to Liquorland of a lease of the shops continued for a period in excess of 2 months. The position in this regard is 20 UNREPORTED JUDGMENTS sufficiently recorded by Brownie J, in his Judgment, in the following terms, - "Thereafter, (GYG) and (Liquorland) negotiated, from 2 February to about 10 April, as to the possibility of Liquorland leasing Shop 17 from (GYG), for use as a liquor outlet, using what had been the Britts' liquor licence. The negotiations involve a rich variety of details concerning the proposed lease. I think it is sufficient to say that throughout the negotiations the parties proceeded on the basis or assumption that the (Liquorland's) written contract for the Britts was effective, and that if the Britts had agreed to sell the business to (GYG) on 1 February, a topic which was not mentioned at any stage, that contract had been obliterated by the written contract of 2 February. There is ample material, not contradicted or challenged, capable of being regarded as conduct by (GYG) consistent with this position, or admitting this position, or as representing to (Liquorland) that this was the position." Meantime, on 28th February 1994, Mr and Mrs Britt wrote to Mrs Sweet a letter which omitting formal parts was as follows: - "EXTENSION OF OCCUPANCY - SHOPS 17 and 18 TRADING AS BRITTS LIQUOR STORE I refer to the Irrevocable Authority and Direction executed by us on 11 February, 1994 and request an extension of the occupation of the above mentioned shops on a weekly basis. The occupation would be able to be terminated by providing one (1) week's notice by either party, and would continue under the current terms and conditions. We also request that the date provided in CL2 of the Authority and direction be extended to 17 March, 1994 by which time it would be hope that Liquorland will be in a position to settle the purchase of my (sic) business." to which letter Mrs Sweet replied on Ist March 1994 in a letter which Omitting formal parts, was as follows: - "Re: Extension of occupancy - Shops 17 and 18 Summer Centre I refer to your letter dated 28th February, 1994, in which you request: - (a) an extension of occupancy of shops 17 and 18 on a weekly basis beyond Thursday, 3rd March, with such extended occupancy to be subject to termination by either party giving one (1) week's notice: and (b) an extension to 17th March of your undertaking to obtain bridging finance for the purpose of settling the rent and arrears to 3rd March, 1994, due by you, in the event that the settlement of the sale of your business to Liquorland is not completed by that latter date. I advise that, despite several weeks of negotiations, we have been unable to reach agreement with Liquorland regarding a lease to them. This leaves a position of uncertainty at this point as to their intentions, bringing with it the distinct possibility that their settlement with you may not occur until a date, unacceptable to us, beyond your requested extended date for obtaining bridging finance. Given this uncertainty, I advise than (sic) an extension of tenancy will be granted only if payment of all rent and arrears is made by bank cheque by no later than 9 a.m. on Thursday, 3rd March, 1994. Any further enquiries should be directed to our solicitor, Mr Peter Cornock, phone 02 634 2878." Again, one pauses to note that the demand for payment of arrears was inconsistent with any obligation on the part of Mr and Mrs Britt to sell to GYG. Although it is not clear that this was so, the probability is that, by this time, Dr. Gangemi had attended at the offices of the Liquor Administration Board with a view to ascertaining what, if any, steps GYG might take in order to obtain a transfer to itself of the Off-Licence (Retail), and that, at the time of his so doing, his attention was directed to the provisions of s42 of the Liquor Act 1982, WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell J&)I following which, he instructed GYG's solicitors to file with the Licensing Court an application for the transfer to GYG of the Off-Licence (Retail). In the morning of 3rd March 1994, Mrs Sweet went to the shop premises and demanded possession of them from Mr and Mrs Britt. At the same time, so it would seem, Mrs Sweet handed to Mr Britt, who, as it would seem, was the holder of the Off-Licence (Retail), a letter from GYG's solicitors which letter omitting formal parts was as follows: - "Re: Application to Transfer Off-Licence (Retail) Premises: Britt's Liquor Store, Orange Shops 17 and 18 Summer Centre, Orange Application has been made as owner in possession to transfer the above licence from your name. As required by the Liquor Act we hereby give you notice that the Application is listed for hearing at the Licensing Court of New South Wales, Level 10, 323 Castlereagh Street, Sydney at 10.00 a.m. on Monday the 7th March 1994." the assertion, in such application, as to the character in which GYG claimed to lodge that application, clearly having been false. On the same day, Mr Hatzis wrote to GYG's solicitors a letter which, omitting formal parts, was as follows: - "Re: Purchase of Off Licence Retail Serial No. 301821 from BF and PJ Britt Liquorland (Australia) Pty Ltd has entered into an agreement, dated February 2, 1994 to purchase this licence, together with plant and equipment and goodwill of the licensed premises. The licence was subsequently provisionally transferred to our Company's nominee. We have become aware that your client GYG Holdings Pty Ltd and/or its directors have made an application to the Licensing Court of New South Wales for transfer of the licence to the lessor (or its nominee) as owner in possession Pursuant to $42 of the Liquor Act. Although our Company's nominee has not seen served with the notice required pursuant to that section of the Act, we understand that the matter is listed for hearing before the Licensing Court of New South Wales on March 7,1994. Your client's application is entirely inconsistent with our Company's equitable rights in the licence, which our company has agreed to acquire for valuable consideration. We seek your undertaking in writing by 2 pm tomorrow, Friday March 4, 1994, that our client lessor will not proceed with the application before the Licensing Court. In the absence of receiving your undertaking by that time, we shall take such action as we consider necessary without further notice to you (including proceedings before the Equity Division of the Supreme Court) to protect our Company's proprietorial interests in the licence." No such undertaking as had been sought having been given, on 4th March 1994 application was made ex parte on behalf of Liquorland to the Duty Judge in the Equity Division for (inter alia) the grant of an injunction restraining GYG from prosecuting its application pursuant to s42 of the Liquor Act 1982 and for leave to give short notice of a Summons to Continue any such injunction which might be granted. As I understand it, the bases upon which that application was made were, first, that - so it was submitted - notwithstanding the terms of s42 of the Liquor Act 1982, the mere fact of ownership of the premises to which the Off-Licence (Retail) related did not give GYG standing to make the application (a submission based upon Esanda Ltd v Rossides® and, second, that, in any event, the beneficial interest in the Off-Licence (Retail) belonged to Liquorland. 6. Waddell J Sth December 1985 (unreported) 22 UNREPORTED JUDGMENTS Notwithstanding that, in the circumstances, he might, in the exercise of his discretion, properly have refused to do so (see Dalgety Wine Estates Proprietary Ltd v Rizzon7) the Duty Judge appears to have acceded to that application, injunctions of the type sought being granted up to and including 9th March 1994 - on which latter day they were continued until 23rd March 1994 - which date was made the return day for the Summons which Liquorland had sought leave to file. When the proceedings came before McLelland CJ in Eq - he seemingly then being the Duty Judge in the Equity Division - on 23rd March 1994, His Honour, so it seems, granted Liquorland leave to amend the proceedings by joining Mr and Mrs Britt as additional parties - Defendants and to file an Amended Summons in which was sought the following (inter alia) relief - "1. An order that the first defendant be restrained from lodging or prosecuting an application to the Licensing Court of New South Wales pursuant to s42 of the Liquor Act 1982 with respect to off-licence (retail) Serial No. 301821 issued under the Liquor Act 1982, until the Licensing Court of New South Wales has confirmed or otherwise dealt with the provisional grant of transfer by it to the plaintiffs nominee under s41 of the Liquor Act 1982 of off-licence (retail) Serial No. 301821, or until the Licensing Court of New South Wales has determined an application to it by the plaintiff for the removal of off-licence (retail) Serial No. 301821, whichever occurs later. 2. An order that the first defendant be restrained from exercising off-licence (retail) Serial No. 301821 issued under the Liquor Act 1982, until the Licensing Court of New South Wales has confirmed or otherwise dealt with the provisional grant of transfer by it to the plaintiffs nominee under s41 of the Liquor At 1982 of off-licence (retail) Serial No. 301821, or until the Licensing Court of New South Wales has determined an application to it by the plaintiff for removal of off-licence (retail) Serial No. 301821, whichever occurs later. 3. A declaration that the first defendant is not entitled to make application to the Licensing Court of New South Wales under s42 of the Liquor At 1982 with respect to off-licence (retail) Serial No. 301821. 4. An order restraining the first defendant from lodging an objection with the Licensing Court of New South Wales to the provisional grant of application for the transfer to the plaintiffs nominee of off-licence (retail) Serial No. 301821. 5. A declaration that the plaintiff has the beneficial interest off-licence (retail) Serial No. 301821 issued under the Liquor Act 1982. " At the same time, McLelland CJ in Eq ordered that the proceedings stand adjourned until 12 April 1994 before the Duty Judge. On 12th April 1994, the proceedings were listed before Brownie J, then the Duty Judge in the Equity Division, at which time Mr RS Angyal appeared for Liquorland, Mr I Lawry appeared for GYG and Mr Wilson appeared for Mr and Mrs Britt. It should be noted, however, that, although Mr and Mrs Britt had been Joined as parties-Defendants to the proceedings, the Affidavits upon which Liquorland relied in the hearing before Brownie J included one which had been sworn by Mr Britt in support of Liquorland. Although applications listed before the Duty Judge in the Equity Division in such circumstances are most commonly dealt with as interlocutory applications, either, for the grant, or, for the continuation, of injunctions pending the final determination of the proceedings, and although the hearing before Brownie J 7. (1979) 141 CLR 552 WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JAB appears to have commenced upon the basis that the hearing was one for interlocutory relief only, that situation appears not to have continued. After Mr Angyal had read Mr Britt's Affidavit and a further Affidavit sworn on behalf of Liquorland by Mr Farley - the National Real Estate Manager of Liquorland - Mr Lawry sought, and was granted, on behalf of GYG, leave to file the Cross-Claim to which I have earlier referred, to which Cross-Claim only Mr and Mrs Britt were joined as Cross-Defendants, and by which Cross-Claim, as amended during the course of the hearing, GYG sought the following relief - "1. A declaration that there is a binding and enforceable agreement between the cross-claimant as purchaser and the cross defendants as vendors for the purchase and sale of the business including the off-licence (retail) conducted at premises known as shops 17-18 The Summer Centre, 100 Summer Street, Orange and bearing licence number 301821 ('the agreement for sale'). 2. An order that the cross defendants specifically perform the agreement for sale. 3. Such further or other order as the nature of the case may require. 4. Costs." Later - at some time after the morning adjournment - it appears to have been agreed between the parties that "the matter is to be heard as a final hearing". Thereafter - as is commonly the case with matters heard before the Duty Judge in the Equity Division - the hearing proceeded at such times on 12th April 1994 and on the two following days as Brownie J was able to make available to the parties. At the conclusion of the hearing, Brownie J reserved his decision, the existing injunctions being continued until the disposition of the proceedings. In the light of the fact that there were no pleadings, and in the light of the difficulties which were thought to arise when the appeal from the Declaration and Orders made by Brownie J was first listed for hearing, it is convenient, here, to record that it has since been agreed between Liquorland, GYG and Mr and Mrs Britt, that the issues debated at the hearing before Brownie J were as follows: - "1. the plaintiff/appellant Liquorland (Australia) Pty Ltd commenced these proceedings seeking injunctive relief against an application made by the first defendant/first respondent GYG Holdings Pty Ltd under s42 of the Liquor Act 1982. GYG's application sought transfer to it, as owner in possession, of a liquor licence in the name of the second defendants/second respondents, the Britts. 2. Liquorland also sought a declaration against both GYG and the Britts that it had the beneficial interest in the licence. Liquorland based its claim on a written agreement with the Britts made on 2 February 1993 to purchase their licence and liquor shop business in Orange. 3. At the hearing of the matter, GYG riled a cross claim seeking a decree of specific performance of an oral agreement with the Britts made on | February 1994 to purchase their licence and business. GYG contended that its entitlement to proceed under s42 of the Liquor Act 1982 arose out of the agreement to purchase and not otherwise. 4. The main debate before the primary judge thus was whether GYG had an enforceable oral agreement to buy the Britt's business and licence. 5. GYG submitted that, on the evidence, it and the Britts intended to and did enter into binding legal relations on the afternoon of 1 February and that the subsequent conduct of Liquorland precluded it from any entitlement to relief. 6. Liquorland submitted that no contract came into existence then. Liquorland further submitted that, if a contract then came into existence, GYG had elected against it; abandoned it; agreed to its discharge; or was estopped as against 24 UNREPORTED JUDGMENTS Liquorland from asserting its existence. It also submitted that the cross claim was a nullity because there was no evidence that stamp duty had been paid on the alleged agreement. 7. In addition, it was submitted that specific performance should not be ordered because of GYG's laches and unclean hands or because GYG was not ready, willing and able to perform the contract. 8. GYG also submitted that until the written approval of Liquorland's parent company was obtained, no contract was formed or in existence; AB 80X." and that the issues to be debated on the appeal were those debated before Brownie J except for the issue referred to in para8. When, in the course of his Judgment, Brownie J came to deal with those issues, he dealt, first, with the issue whether what had occurred in the conversation between Mrs Sweet mid Mr Britt on Ist February 1994 constituted a binding contract immediately binding Mr and Mrs Britt to sell and GYG to buy the liquor store business. When he did so his Honour said. - "The plaintiff submitted that what happened on 1 February was in no way different to what had happened on 25 January,and pointed to some answers given in cross-examination to that effect, but neither the cross-examination nor the submission dealt with the differences established by the evidence: the formal words of acceptance, accompanied by the shaking of hands; the immediate communication to Mr Longman of the facts of the decision to sell to the first defendant; and the immediate communication to the plaintiff of that fact. What is left is an argument of law, as to what follows from the words and conduct of Mrs Sweet and Mr Britt on I February. On the plaintiffs primary case, no binding contract was formed. As I have said, the words and the conduct described seem to me to have demonstrated an objective intention to enter into a binding contract, but the parties expected a written contract to be prepared by their respective solicitors. The proposed sale from the Britts to Liquorland involved a question of vesting in Liquorland a right to occupy Shop 17, and it is understandable that those acting for both the Britts and Liquorland thought in terms of the legal need for a written contract, but the proposed sale from the Britts to the first defendant was in a different position, involving no need for a written contract: the Britts were lessees holding over as monthly tenants, and all that was proposed was the consensual surrender of that tenancy to the first defendant, the lessor. No doubt, the ordinary response of a solicitor would be that any contract for the sale of a business for $195,000, or $230,000 should be reduced to writing, but so far as the evidence extends, no lawyer actually thought, or advised, that the contract needed to be written, as distinct from it being desirable that it be written. However, the evidence did not deal with any advice given, but with the subjective views of the actors, and their words and conduct. The question must be judged objectively, and the subjective views of Mrs Sweet and Mr Britt are insignificant, compared to the answer to the question: what did their words and conduct convey? In my judgment, the answer is that they intended to conclude a contract, binding immediately, and acted as though they had achieved that aim, but they also intended that there be a written contract produced. The plaintiffs second submission was that the contract was one failing within the third of the categories discussed in Masters i,. Cameron (1954) 91 CLR 353 at 360-364: that is, the parties did not intend to be bound unless and until they executed a formal contract. I do not accept this. It seems to me to be plain that WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JAB this was not Mrs Sweet's intention, either subjectively or objectively. She, like Dr. Gangemi, wanted the Britts bound, and she set out to do what she could to make it seem to Mr Britt that he and his wife were bound. Her knowledge of the law left her uncertain that she had achieved this result, and the later conduct of the plaintiff persuaded her (temporarily) that she had not, but that is a different question, and I conclude that her words and conduct demonstrated an intention to create a binding agreement, if and to the extent that this could be achieved. Further, the words and conduct of Mr Britt seem to me to demonstrate a willingness on his part to bind himself and his wife. In particular, the evidence of Mrs Sweet, largely corroborated by Mr Britt, and uncontradicted by either Mr Longman or Mr Djukic, as to what Mr Britt and Mrs Sweet told them, is telling.' Next, his Honour dealt with the question whether or not - assuming that what had been agreed upon between Mrs Sweet on Mr Britt on Ist February 1994 would otherwise have constituted a binding contract - the apparent contract was so uncertain as to be unenforceable. In this regard his Honour said: - "Then it was argued that the contract was so uncertain as to be unenforceable. I do not accept this submission, either. In my judgment the better view is that it was a contract of the type discussed in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) Conv R 55-299; the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting a further written contract, containing terms dealing with incidental matters, in substitution for the first oral contract. See to Pagnan SpA v Feed Products (1987) 2 Lloyds Rep 601, and Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd 18 NSWLR 540. Those matters of detail were not regarded by the parties as significant, as at | February, and they were content to leave them to be worked out later, as they had been similarly content on 25 February; and indeed, some of the matters of detail had been worked out by Mrs Sweet and Mr Longman in the meantime, without difficulty or delay." That having been done, his Honour then turned to consider the question whether, even if what had occurred between Mr Sweet and Mr Britt on Ist February 1994 amounted to a binding and enforceable contract, GYG, by its conduct after 2nd February 1994, had "waived any right to rely on the contract". In this regard, his Honour said: - "The plaintiff then submitted that by its conduct after 2 February the first defendant had waived any right it had to rely on the contract formed on the afternoon of February 1. Nothing occurred to cause the first defendant to have to make any election between inconsistent rights. What is relied upon is a course of conduct in which the plaintiff asserted the existence of a written contract made early on 2 February, and the first defendant assumed that this was effective, so as to obliterate its contract of February 1, and acted accordingly. But waiver is a deliberate act, made with knowledge, and the evidence of Mrs Sweet and Dr. Gangemi establishes that they had assumed the truth, as a matter of law, of the plaintiffs implied assertion that its contract, and not the first defendant's contract, was effective. Although, in the various passages from his Judgment which I have set out above, Brownie J ascribed the various submissions with which he there dealt to Liquorland, we were informed on the hearing of the appeal that those submissions were, on the hearing before Brownie J, adopted by Mr and Mrs Britt as providing answers to the claim made against them in GYG's Cross-Claim. 26 UNREPORTED JUDGMENTS After lie had dealt with the three issues to which I have earlier referred, Brownie J then turned to consider Liquorland's submission that, by reason of its conduct, GYG was estopped from denying that any binding contract had been made between it and Mr and Mrs Britt on Ist February 1994. In this regard his Honour said: - "Finally, the plaintiff asserted that the first defendant was estopped by its conduct from denying that its contract of I February was effective. Apart from the fact that there is no evidence at all that the plaintiff relied upon the supposed representation of the first defendant, as distinct from the plaintiff having made the representation itself, the notion that it would be unconscientious for the first defendant to retreat from its position seems to me to offend common sense: on the evidence, what happened was that the plaintiff, through Mr Djukic, knew on the afternoon of 1 February of the first defendant's contract, but deliberately set out to try to have Mr Britt repudiate that contract; and then it asserted that it had succeeded in this unconscientious enterprise. On the basis of the conclusions which he had earlier recorded, his Honour continued: - "The foundation for (Liquorland's) claim therefore fails, and the claim should be dismissed, with costs so far as (GYG) is concerned." Having done so, Brownie J then dealt with the Cross-Claim and the Issues arising In it, which issues, if I may be forgiven for saying so, he dealt with in a singularly perfunctory way. Thus, his Honour said: - "The first defendant brought a cross-claim against the Britts, claiming a declaration that there is a binding and enforceable agreement between it and them for the sale of the business, including the liquor licence, and an order that the contract be specifically enforced. In defence to the cross-claim, some additional arguments were advanced. First, it was said that the first defendant was guilty of delay. The period of delay does not seem to me to be significant in the circumstances, but in any event it was brought about by the misconduct of Mr Britt and Liquorland. Secondly, it was said that the first defendant did not have clean hands, a submission which merged into a submission that the first defendant had to 'do equity'. In brief, it was contended that it would be unfair to the Britts to compel them to sell to the first defendant. The contrary seems to me to have been established. Then, it was said that the first defendant had not proved that it was ready or willing to perform its contractual obligations. The evidence of Dr. Gangemi shows that it is. Finally, it was said, by the plaintiff, that the specific performance of the contract would be unfair to it, but what I have said as to the estoppel point answers this submission too." Having recorded those findings, Brownie J then concluded: - "On these findings, I need not go on to examine the further arguments raised, for it follows that, as between the parties, (GYG) is entitled to have the liquor licence transferred to it." His Honour then proceeded to make the formal Orders and Declaration to give effect to his Judgment. Being dissatisfied with that result, Liquorland, within the time allowed by the rules of Court, duly filed a Notice of Appeal, by which Notice of Appeal it sought, first, that the Declaration and Orders made by Brownie J be set aside, and, second, that, in lieu thereof, there be made (inter alia) the Declarations and Orders sought by it in Prayers I to 3 and 5 in its Amended Summons. WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JAY Despite the Declaration and Orders made by Brownie J on the Cross-Claim, Mr and Mrs Britt did not file a Notice of Appeal. - The hearing of the appeal having been expedited, the appeal was first listed for hearing before the Court - differently constituted - on 16th August 1994, at which time Mr AG Whealy QC appeared with Mr Angyal for Liquorland while. Mr Lawry appeared, as before, for GYG; not surprisingly, in the circumstances, there was no appearance on behalf of Mr and Mrs Britt. When the appeal was called on for hearing, the Court was obliged to Point Out to the parties that, having regard to the Declaration and Orders made by Brownie J on the Cross-Claim - to which Cross-Claim, as I have previously recorded, only Mr and Mrs Britt had been joined as parties-Cross-Defendants - from which Declaration and Orders no Notice of Appeal had been filed by Mr and Mrs Britt, it would not be possible, even if the Court were to uphold the various grounds of appeal taken by Liquorland in its Notice of Appeal, to make any Declaration and Order which would have the effect of Mr and Mrs Britt being required to join in any application to the Licensing Court for the grant of Liquorland's application to transfer the Off-Licence (Retail). That this was so was due to the fact that, unless, and until, the Declarations and Orders made by Brownie J on the Cross-Claim were set aside Mr and Mrs Britt were bound, by order of the Court, to perform a contract which was anterior in point of time to that relied upon by Liquorland, and the performance of which contract would involve Mr and Mrs Britt in joining with GYG in an application to have the Off-Licence (Retail) transferred to GYG. The position, in this respect, is sufficiently stated by Sir Hugh Cairns LJ (as he then was) in Ferguson v Wilson8. as follows: - "I suppose that there can be no controversy but that, before (Act 21 and 22 Vict. c 27) a Bill filed in the Court of Chancery stating a contract and alleging that the subject matter of the contract no longer existed or could no longer be made over to the plaintiff, or a suit in which those facts appeared, must, as a matter of course, have been dismissed; a Court of Chancery could have no jurisdiction in such a case.(see also per Turner LJ Craney v Bugg!®) In the event supposed, therefore, the only remedy which might be granted to Liquorland was an inquiry as to damages. This being so, the Court directed that the hearing of the appeal might stand adjourned so that Liquorland, after informing Mr and Mrs Britt - whose rights and obligations in the matter might thereby be affected - of their intention to do so, might apply to be joined nunc pro tunc as an _ additional party-Cross-Defendant to the Cross-Claim, and, if that application be acceded to, might then seek leave to appeal, out of time, from the Declaration and Orders made by Brownie J on the Cross-Claim. On 26th August 1994, the proceedings in the Equity Division and in the Appeal were listed before me so that I might then make such Orders, and give such Directions, as, in all the circumstances, appeared to be necessary or desirable. When the proceedings were so listed Mr Whealy and Mr Angyal appeared, as before, for Liquorland, Mr Lawry, as before, for GYG and Mr M.A. Robinson appeared for Mr and Mrs Britt. 8. [1866] LR 2 Ch 77, 91 9. (1866) LR Ch. at 87 10. [1971] 1 NSWLR 13 28 UNREPORTED JUDGMENTS At the time, I granted leave to Liquorland to file a Notice of Motion seeking the making of the appropriate procedural, and other, Orders, such Notice of Motion to be, and be deemed to have been, made returnable instanter, and, having done so, ordered, by consent, first, that the proceedings in the Equity Division be, and be deemed to have been, amended as, on and from 12th April 1994 by adding Liquorland as an additional party-Cross-Defendant to the Cross-Claim, and second, that so much of the Notice of Motion as sought an Order that Liquorland be granted leave to appeal, out of time, against the Declaration and Orders made by Brownie J on the Cross-Claim stand adjourned until the hearing of the appeal. That having been done, and after I had been given certain directions intended to crystallise the issues which had been debated before Brownie J, and which were to be debated on the hearing of the appeal, I ordered that, unless - which I was informed was improbable - Mr and Mrs Britt wished to take an active part in the hearing of the appeal, Mr Robinson be released from further attendance. When the Appeal was called on for hearing before the Court, as presently Constituted, on 16th September 1994, Mr Whealy and Mr Angyal appeared, as before, for Liquorland and Mr Lawry appeared, as before, for GYG, but, as had been foreshadowed, there was no appearance by, or on behalf of, Mr and Mrs Britt. A consideration of the issues to be debated which I have recorded above will make it clear that the first question to be determined on this appeal is whether: - (a) as GYG would have it, the matters which were agreed upon between Mrs Sweet and Mr Britt on Ist February 1994 constituted a concluded contract for the purchase and sale of the liquor store business, albeit that it was clearly contemplated that a formal agreement later be executed between GYG, on the one hand, and Mr and Mrs Britt, on the other - or (b) as Liquorland would have it, the matters which were agreed upon between Mrs Sweet and Mr Britt represented no more than a limited consensus, not binding either party to purchase or to sell the liquor business, which limited consensus would not fructify into a concluded contract unless, and until, the formal agreement, which it was clearly contemplated would later be executed, be executed by GYG and Mr and Mrs Britt and exchanged in accordance with what was submitted to be the usual practice. As is apparent from what I have just recorded, it is common ground between Liquorland and GYG that what was agreed upon between Mrs Sweet and Mr Britt on I st February 1994 did amount to at least a limited consensus, the area of dispute between the parties being whether what then occurred amounted to a concluded contract. In such cases - but particularly so where the parties have not reduced even the limited consensus into writing - it is clear that it is legitimate for a court which is called upon to resolve the dispute to ascertain what was the parties' intention by drawing inferences from their words and conduct, not only in relation to the making of the limited consensus, but also their words and conduct both before, and after, the reaching of that limited consensus (see, for example, Barrier Wharfs Ltd v W Scott Fell and Co Ltd!! Howard Smith and Co Ltd v Varawa!2 B. Seppelt and Sons Ltd v Commissioner for Main Roads!3 Allen v Carbone!4 Australian Broadcasting Corporation v XIVth Commonwealth 11. (1908) 5 CLR 647, 669 per Griffith CJ 12. (1907) 5 CLR 68 13. (1975) 1 BPR 9147 14. (1975) 132 CLR 528, 531-533 WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JAD Games Ltd!5) It seems also to be well enough established that, in carrying out the task of determining, in such a case as this was, what was the relevant intention of the parties, a court may have regard, not only to the matters upon which the parties have reached a consensus, but also to the areas in respect of which they have failed to reach any consensus; and, further, that the court may have regard to what appears to be the established, or at least common, practice in relation to agreements of the type in question. Notwithstanding the various matters upon which Brownie J relied to support his conclusion that the matters agreed upon between Mrs Sweet and Mr Britt on I February 1994 brought into being a concluded contract for the purchase by GYG, and the sale by Mr and Mrs Britt, of the liquor store business, which concluded contract - although it was later to be reduced into a more regular form - was not conditional upon the execution and exchange of that more formal agreement, I am of the view that, in so concluding,his Honour fell into error. The reasons which lead me to that view are as follows: - 1. even if one is to set to one side the apparent differences between Mrs Sweet and Dr Gangemi as to what was to be the purchase price to be paid for the business and the manner of its payment, the only matter which was expressly agreed upon between Mrs Sweet and Mr Britt on Ist February 1994 was the purchase price to be paid for the liquor store business; 2. even if it were permissible to have regard to what had earlier been discussed between Mrs Sweet and Mr Longman, and to regard those matters as being necessarily included in any agreement for the purchase and sale of the business, the form of the several agreements for the purchase of the business from Floridon and for the sale of the business to Liquorland would indicate that there was a significant number of matters which were customarily the subject of agreements for the sale and purchase of such a business which had not been agreed upon either prior to or on Ist February 1994; 3. further, the fact that such an agreement had been executed when Mr and Mrs Britt bought the business from Floridon and the fact that they were to execute such an agreement when they sold the business for Liquorland would tend to indicate that the customary commercial practice in relation to the sale and purchase of such businesses was one in which no concluded contract came into being unless, and until, a formal agreement embodying the terms of the contract had been executed and exchanged in the conventional way; 4. despite the fact that, when he spoke to Mr Britt on 2 February 1994, Dr Gangemi claimed that GYG then had a concluded contract, every action which was taken by, either, Mrs Sweet, or, by GYG, thereafter and prior to 2nd March 1994 was, in my view, inconsistent with any belief on the part of either Mrs Sweet or Dr Gangemi that GYG then had a concluded contract, and consistent only with a belief on the part of each of them that GYG had no enforceable rights against Mr and Mrs Britt; 5. further, the fact that, despite GYG's having filed an application seeking, in purported reliance upon the provisions of s42 of the Liquor Act 1982, a transfer of the Off-Licence (Retail) to it, GYG through its solicitors continued to negotiate with Liquorland in respect of a proposed lease of the shops to Liquorland is, in my view, inconsistent with any belief on the part of those representing GYG that GYG had ally enforceable rights against Mr and Mrs Britt. 15. (1988) NSWLR 540, 547-548, 550 30 UNREPORTED JUDGMENTS In the light of the various matters to which I have referred, I conclude that what was agreed upon between Mrs Sweet and Mr Britt on Ist February 1994 was, at best, a limited consensus - that consensus being limited to the price to be paid by GYG for the business if the contemplated purchase and sale were to proceed - and that it was not the intention of the parties that any concluded agreement for the purchase, and sale, of the business should come into being unless, and until, the detailed terms of that proposed agreement had in fact been agreed upon, been reduced into writing, executed by the parties and exchanged in the conventional way. It would follow from this conclusion that the Declaration and Orders made on the Cross-Claim by Brownie J ought to be set aside and, no ground for denying efficacy to the agreement made on 2nd February 1994 between Mr and Mrs Britt and Liquorland having been raised by either Mr or Mrs Britt or GYG, the several Declarations and Orders sought by Liquorland in its Amended Summons should be made. But even if my view that no concluded contract for the purchase and sale of the liquor business came into being be in error, it seems to me that by reason of the events which occurred on, and after, 2nd February 1994 and before 12th April 1994, GYG had lost any right which it might otherwise have had to seek, and obtain, an order that any agreement for the purchase and sale of the liquor store business which had been made between itself and Mr and Mrs Britt be specifically enforced. I say this since it seems to me that those events would evidence one or other of three Situations, any one of which would, by 12th April 1994, have denied to GYG any right to claim an order for specific performance. Those situations are: - 1. that, by reason of the facts that neither GYG nor Mr and Mrs Britt after Ist February 1994 took any steps to perform the contract, but, on the contrary, proceeded upon the basis that there was no contract between them, they had so conducted themselves as, and, thus, ought to be held to have agreed between themselves, to abandon or abrogate the contract (see, for example, Summers v the Commonwealth!© DTR Nominees Pty Ltd v Mona Homes Pty Ltd!7. 2. alternatively, by reason of the events occurring after Ist February 1994, GYG was to be regarded as having accepted the repudiation by Mr and Mrs Britt of the contract and, thus, to have terminated the contract, its sole rights thereafter as against Mr and Mrs Britt being a right - which it did not seek to enforce in its Cross-Claim - to claim damages for breach of contract. In this regard, it is to be noted - since, on the hearing of the appeal, Mr Lawry argued that the contrary was the case - that, even if those representing GYG did not appreciate that GYG had a binding contract, their actions on behalf of GYG, being totally inconsistent with the existence or continued existence of any contract, constituted an election to accept the repudiation by Mr and Mrs Britt (see, for example, Sargent v ASL Developments Ltd!8; 3. further alternatively, so it seems to me, even if one is to put to one side GYG?'s action in locking Mr and Mrs Britt out of the premises in February 1994, the later actions of GYG in lodging with the Licensing Court an application for the transfer of the Off-Licence (Retail) to Itself pursuant to the provisions of s42 of the Liquor Act 1982, together with its actions, on the following day, in 16. (1918) 25 CLR 144 17. (1977-1978) 138 CLR 423 18. (1974) 131 CLR 634, 644 et seq per Stephen J (as he then was) WRJUORLAND (AUSTRALIA) PTY LTD v GYG HOLDINGS PTY LTD and ORS (Powell JA)I dispossessing Mr and Mrs Britt of the shops in which the liquor store business, the subject of the contract for purchase and sale, was being conducted, could hardly be characterised as other than being a repudiation of GYG's obligations wider the contract; it following - since, in general, the plaintiff in a suit for specific performance must establish that he has performed the obligations on his part to be performed before the commencement of the proceedings and that he is ready and willing to perform his future obligations under that contract - that, at the time of its Cross-Claim being filed, GYG was not in a position to establish a fact which was critical to its claim, and, that for this reason as well, its Cross-Claim should have been dismissed (see, for example, Measures Bros. Ltd v Measures! Australian Hardwoods Pty Ltd v Commissioner for Railways2° For these reasons I would propose that the following Declarations and Orders be made: - 1. ORDER that the Appeal be upheld. 2. ORDER that the Declaration and Orders made by Brownie J on 28th April 1994 be set aside. 3. In lieu thereof - (a) MAKE DECLARATIONS in terms of Prayers 3 and 5 in the Amended Summons; (b) MAKE ORDERS in terms of Prayers | and 2 in the Amended Summons; (c) ORDER that the Cross-Claim be dismissed; (d) ORDER that, except to the extent to which the same are the subject of any prior inconsistent Order as to costs, the First Respondent pay the Appellant's costs of the Appeal; (e) ORDER that the First Respondent pay the Appellant's costs of the proceedings; (f) ORDER that the First Respondent pay the costs of the Second and Third Respondents of the proceedings and of the Cross-Claim. (g) RESERVE liberty to any party to apply to a Judge in the Equity Division for such Order, or Orders, consequent upon the setting aside of the Declaration and Orders made by Brownie J, as may seem necessary or desirable. 4. ORDER that, if qualified, the First Respondent have a Certificate under the provisions of the Suitors' Fund Act 1951. 1. Appeal upheld; 2. Declaration and orders of Brownie J of 28 April 1994 set aside; 3. In lieu thereof: (a) make declarations in terms of terms of prayers 3 and 5 of the amended summons; (b) make orders in terms of prayers 1 and 2. in the amended summons; (c) order that the cross-claim be dismissed; (d) order that, except to the extent that the same are the subject of any prior inconsistent order as to costs, the first respondent pay the appellant's costs of the appeal; (e) order that the first respondent pay the appellant's costs of the proceedings; (f) order that the first respondent pay the costs of the second and third respondent to the proceedings and of the cross-claim; 19. [1910] 1 Ch 336; [1910] 2 Ch 248 (CA) 20. [1961] 1 WLR 425 32 UNREPORTED JUDGMENTS (g) reserve liberty to any party to apply to a Judge in the Equity Division for such order, or orders, consequent upon the setting aside of the declaration and orders made by Brownie J, as may seem necessary or desirable; and 5 4. Order that, if qualified, the first respondent have a certificate under the provisions of the Suitors Fund Act 1951. Representation: 10 Counsel for the Appellant: AG Whealy QC/ RS Angyal Solicitors for the Appellant: A Hatzis Counsel for Respondent (GYG): IAN Lawry 15 Solicitors for the Respondent (GYG): Collins Cornock and Co Counsel for the Respondent (Britts): No appearance (submitting) Instructed by: CJ Longman