New South Wales Supreme Court CITATION : Simon Konstantinidis v Theo Baloglow & Ors [2000] NSWSC 1229 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4656 of 1999 HEARING DATE(S) : 4, 5, 6 and 8 December 2000 JUDGMENT DATE : 21 December 2000 Simon Konstantinidis (Plaintiff) Theo Baloglow (First Defendant) Steven Baloglow (Second Defendant) PARTIES : Christopher Baloglow (Third Defendant) Lynette Baloglow (Fourth Defendant) Carlisle Developments Pty Ltd (Sixth Defendant) Ricvale Holdings Pty Ltd (Seventh Defendant) Balkon Pty Ltd (Eighth Defendant) JUDGMENT OF : Bergin J B Oslington SC/ G Segal (Plaintiff) COUNSEL : TGR Parker (First Defendant) D Oliveri (Solicitor) (Second, Third, Fourth Defendants) Charles G Roth & Co (Plaintiff) SOLICITORS : Gordon & Johnstone (First Defendant) Oliveri Attorneys (Second, Third, Fourth Defendants) CATCHWORDS : CONTRACTS - Whether a concluded agreement was reached at a meeting between solicitors for the parties - Whether solicitors were lawfully authorized to reach agreement - Whether the handwritten document created at the meeting alone or in conjunction with a letter was a sufficient memorandum or note to satisfy s. 54A of the Conveyancing Act 1919 - Whether the plaintiff is entitled to specific performance of the agreement. LEGISLATION CITED : Conveyancing Act 1919 ss 23C and 54A ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Butts v O'Dwyer (1952) 87 CLR 267 Hall v Busst (1960) 104 CLR 206 Hubert v Treharne [1842] 3 Man & G 743 Leeman v Stocks [1951] 1 Ch 941 CASES CITED : Masters v Cameron (1954) CLR 353 Neill v Hewens (1953) 89 CLR 1 Parbury Henty & Co Pty Ltd v General Engineering & Agencies Pty Ltd (1973) 47 ALJR Pirie v Saunders (1960) 104 CLR 149 Thirkell v Cambi [1919] 2 KB 590 Tonitto v Bassal (1992) 28 NSWLR 564 DECISION : Binding and enforceable agreement. Specific performance ordered. THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BERGIN J DATE: THURSDAY 21 DECEMBER 2000 4656/99 - KONSTANTINIDIS v BALOGLOW & ORS JUDGMENT Introduction 1 The plaintiff, Simon Konstantinidis seeks an order for specific performance of a contract he claims was entered into by him and the first defendant, Theo Baloglow on 28 July 1999. 2 The main issues for determination in the proceedings are whether the parties reached a binding agreement on 28 July 1999 and if so whether it is unenforceable by reason of ss 23C and 54A of the Conveyancing Act 1919 (NSW). 3 There are eight defendants. The second, third and fourth defendants are the first defendant's three children in whose name a property at 58 Whistler Street, Manly is registered. The fifth to eighth defendants inclusive are companies utilised by the plaintiff and the first defendant to purchase, develop and sell properties pursuant to the business of a partnership between them (the Partnership). Background 4 The partnership commenced in about early 1995. There was no written partnership agreement and the plaintiff and first defendant used Konstan Lawyers as solicitors for the partnership. That is a firm of which the plaintiff is apparently a principal. 5 One of the properties of the partnership was purchased though Carlisle Developments Pty Ltd (Carlisle) at 65-67 Carlisle Street, Leichhardt (the Leichhardt property). Another of the properties was purchased through Balkon Pty Ltd (Balkon) at 11- 15 Davidson Street Chullora. Other properties were purchased in the name of Larripalm Pty Ltd and Ricvale Holdings Pty Ltd, in the plaintiff's name and also in the first defendant's name. District Court Proceedings 6 By 1998 the partnership was beginning to disintegrate. The first defendant commenced proceedings in the District Court of NSW against the plaintiff (the District Court proceedings) in relation to a dispute about the settlement of 1995 proceedings in this Court (the 1995 proceedings). 7 In the 1995 proceedings the plaintiff acted as solicitor for the defendant. The defendant was the plaintiff in those proceedings brought against three parties referred to as the "Kalls". Those proceedings were settled on 19 December 1995. 8 The first defendant alleged in the District Court proceedings that in acting for him in the 1995 proceedings the plaintiff had breached his contract and was in breach of his duty to him in respect of the settlement moneys. The plaintiff defended those proceedings denying any breach and claimed that part of the settlement moneys were to be applied or used in respect of the Leichhardt property and the Chullora property. 9 Verekers, Solicitors, acted for the first defendant in the District Court proceedings and by the time the Defence was filed in February 1999 Charles G Roth, the principal of Charles G. Roth & Co, acted for the plaintiff. The solicitors for the Kalls in the 1995 proceedings were Dowe Xenos. 10 On 2 October 1998, prior to the commencement of the District Court proceedings, Verekers wrote to Roth & Co in the following terms: We act for Mr. Theo Baloglow of 7 Woodside Avenue Burwood. Our client instructs us that in 1995 you and Mr Baloglow entered into partnership for the purpose of acquiring and developing property with the intention that each of you would contribute equally to the cost of acquisition and holding costs, be remunerated fairly for input out of profits and share equally in any profit. For the purpose of carrying into effect the objects of the partnership certain companies were acquired at various times associated with the purchase of the properties. 11 Verekers' letter went on to state that the first defendant had decided that the business relationship should be terminated and put forward a "commercial resolution" stating that if it was accepted, Supreme Court proceedings would not be commenced. 12 The "commercial resolution" did not eventuate and the District Court proceedings were commenced on 2 November 1998. The plaintiff's solicitor wrote to the first defendant in May 1998 agreeing to the appointment of a Receiver to the "partnership" assets. The plaintiff served a Notice of Dissolution of Partnership on the first defendant on about 2 June 1999. 13 Although the details are not in evidence, there is no issue between the parties that on 5 May 1999 the first defendant made a complaint to the Law Society about the plaintiff's conduct (the Law Society complaint). Supreme Court Proceedings 14 Prior to the commencement of the Supreme Court proceedings for the appointment of a Receiver an attempt was apparently made to settle matters between the plaintiff and the first defendant at Mr Roth's office. Discussions broke down and the plaintiff commenced proceedings on 2 June 1999 in this Court (the Supreme Court proceedings) and on 4 June 1999 Consent Orders were made that the partnership be wound up. A Receiver was appointed to the properties registered in the various names as follows: Property Registered Proprietors 58 Whistler Street Manly Theo, Steven, Christopher and Lynette Baloglow 342A Marrickville Road Larripalm Pty Ltd Marrickville 65-67 Carlisle Street Leichhardt Carlisle Developments Pty Ltd 54 Whistler Street Manly Ricvale Holdings Pty Ltd 200 Liverpool Road Enfield Theo Baloglow 11-15 Davidson Street Chullora Balkon Pty Ltd 4 Denison Street Manly Simon Konstantinidis 15 There have been some hotly contested interlocutory proceedings in which the Receiver has sought judicial advice in respect of the sale of certain properties at Manly during which various claims have been made about ownership and amendments to the pleadings have occurred. 16 By June 1999 the previous good relationship between the plaintiff and the first defendant had been destroyed; the District Court proceedings and the Supreme Court proceedings had been commenced; the Law Society complaint had been made; the Receiver had been appointed to the partnership properties; and previous attempts for a commercial resolution or a settlement had failed. 17 The first defendant changed solicitors on 8 June 1999 when he approached John Xenos, solicitor, consultant to the practice Xenos Jordan, solicitors, to act on his behalf. Mr Xenos received Verekers' file on 24 June 1999. Present Proceedings 18 These proceedings were commenced by Summons on 12 November 1999. The Statement of Claim was filed on 28 February 2000 and an Amended Statement of Claim was filed on 28 April 2000. The first defendant filed a Defence on 5 July 2000 in which he pleaded that: 1(c) It was and is uncertain as to whether, in the case of real estate purchased by the Fifth Defendant ("Larripalm"), the Sixth Defendant ( "Carlisle"), the Seventh Defendant ("Ricvale") and the Eighth Defendant ("Balkon"), the partners held their shares in the company as an asset of the partnership or the company held the property as trustee for the partners. This was amended on 18 August 2000 by the deletion of the words "and is" in the first line of paragraph 1(c). 19 Paragraph 3 of the Defence denies any binding agreement was reached on 28 July 1999. The Defence claims a lack of intention to enter into an immediately binding contract and that any agreement is too uncertain to constitute an effective legal contract. There is also a claim that the agreement was made without the participation of the second to eighth defendants, each of whom, it is claimed are necessary parties to an effective agreement. Finally there is a claim that the agreement is unenforceable by reason of its failure to satisfy ss 23C and 54A of the Conveyancing Act 1919 (NSW). 20 The Baloglow children filed defences on 11 July 2000 claiming the agreement was made without their consent and that they were necessary parties to any effective contract. The children also claimed that at no time did they retain the services of Mr Xenos nor give him any authority to act on their behalf or execute any documents on their behalf. They also plead the Statute of Frauds defence. Communications prior to 28 July 1999 meeting 21 On 14 July 1999 Mr Xenos faxed a letter to Mr Roth in the following terms: We confirm that we now act for Theo Baloglow and we have had the opportunity of considering the Orders made in the Supreme Court on 4 June 1999. It seems to us that the appointment of a receiver to the partnership property will do little to advance the interests of our respective clients, bearing in mind the ultimate costs of the receiver. We are also instructed that there are a number of outstanding issues between the parties which will necessarily not be resolved by the receiver. Might we with respect suggest that it may be to the parties' benefit to attempt to settle this matter between themselves by say, a meeting with the respective legal representatives. It is of course envisaged that the parties should also be present. If you do not concur with the course of action, would you please advise as to whether you would agree with a joint proposal to appoint Sir Laurence Street as mediator, with the costs of the mediation being shared equally between the parties. It is envisaged that if agreement between the parties can be reached either with or without the intervention of a mediator, then the joint application can be made to the Supreme Court to have the receiver removed. Please give this matter your urgent attention and advise at your earliest convenience. 22 Mr Roth responded the same day in the following terms: We refer to your letter…received today in relation to the above matter and advise that we are instructed that the time for mediation and face to face negotiations has long passed. An attempt was made at our offices prior to the appointment of the receiver and unfortunately your client was aggressive, resorted to attacking the integrity of our client, was not negotiable, inflexible and abruptly walked out of the meeting. Our client does not wish to waste further time, effort and funds on an exercise he sees as having no possibility of success. Our client is prepared however to consider a take it or leave it offer from your client to sell his interest and those of his family in the "Partnership" assets to our client provided it is subject to the costs of the receiver to the date of the termination of the receivership being shared equally. In addition our client is prepared to agree to the present receiver conducting an enquiry as to the balance of account between our respective clients arising from the "Partnership" including your client's allegation that he is owed $200,000 with an appropriate adjustment being made at the conclusion of the enquiry by the party in debit and those costs being shared equally. Please advise the amount your client would be prepared to accept bearing in mind our client is not prepared to enter into any negotiations. In relation to your statement that "there are a number of outstanding issues between the parties which will necessarily not be resolved by the receiver" we advise our client is unaware of these and we request you provide details of those issues. 23 On 23 July 1999 a telephone conversation occurred between Mr Xenos and Mr Roth. These two men are at issue on most discussions and it will be necessary for me to decide, particularly in relation to the meeting on 28 July, 1999, which of their two versions I prefer. In respect of the 23 July 1999 conversation Mr Roth gave evidence that he telephoned Mr Xenos and the following conversation took place: Roth: Mr Xenos, I sent a letter to you some time ago but I have yet to receive a response. In particular I am interested to know what was intended by the reference in your letter to "other issues which will not be resolved in litigation". Xenos: I apologise I should have been more specific but it was the complaint to the Law Society which would be withdrawn if the matter settled. Roth: It was part of the issues raised in the pleadings and would be resolved in any event if our client was successful in the proceedings. Xenos: It is easy for the parties to continue with the relationship. I know McDonald and it will cost in excess of $500,000. Roth: It could cost that much irrespective of who the receiver was. Xenos: I understood that there was a lot of animosity at the previous settlement negotiations but since that time both have cooled down. Roth: Simon Konstantinidis has not. He is still furious, wants nothing to do with Mr Baloglow and I believe is after blood. I believe he wants to put Mr Baloglow in the same position that he was in before he met Mr Konstantinidis and cost is not a factor. Xenos: My client believes that Mr Konstantinidis is interested in the Leichhardt property and since my client is interested in the Manly property the dispute can be resolved on that basis. Roth: No, that's not the case but if any resolution was to be reached I suggest that Mr Baloglow should meet with Mr Pollard who is an accountant carrying on his practice in the same building as I do. He is a close friend of Mr Konstantinidis and if Mr Pollard believed that a proposition was reasonable he would be able to convince Mr Konstantinidis to accept it. Xenos: I think that a meeting should take place between us and Mr Pollard. Roth: I will get instructions. 24 Mr Xenos claims that he recalls responding to Mr Roth's opening comments with words to the effect: I am not aware of all the precise details, there is a long history between Simon and Theo, I think there is some Law Society issue between the two but Theo may be prepared to forget about it all if the dispute is settled and he is paid the amount owing to him. 25 Mr Xenos denied that he made a number of the statements attributed to him by Mr Roth and claimed that he said that: McDonald, like any liquidator will be concerned about fees and bearing in mind the complexity of the matter, it wouldn't surprise me if the costs were several hundred thousand dollars. 26 After the telephone conversation on 23 July 1999 Mr Xenos dictated a file note. That file note is dated 28 July 1999, the date upon which Mr Xenos' secretary typed it. The file note (Ex. 1 tab. C) reads as follows: On 23 July I had a telephone conversation with Charles Roth the solicitor acting for Simon Konstantinidis. We discussed a number of options as far as settlement was concerned and Roth told me that there was some difficulty in arranging a settlement in view of the personal conflict between the parties. I suggested to him that perhaps we should try and look beyond that and look to attending to a settlement whereby Simon would keep the Leichhardt property and Baloglow would keep the Manly properties and they would split the proceeds of the sale of the Marrickville property. He suggested that there was a Warwick (I don't remember his surname) who knows Baloglow and who is a friend of Simon and perhaps he could arrange a meeting with Baloglow and with Simon and convince Simon to attend to a settlement. I suggested that it was probably best to keep the personalities out of it once more and it may be an idea that Roth, Warwick and I meet to try and resolve the matter subject to instructions bearing in mind that we don't personally know each other. He said that he would speak to Warwick and get back to me. 27 A meeting was arranged for 28 July 1999 at Mr Roth's premises in Elizabeth Street, Surry Hills. 28 July 1999 Meeting 28 The meeting was attended by Mr Roth, Mr Xenos and Mr Warwick Pollard, Mr Konstantinidis' accountant. 29 In his affidavit of 1 August 2000, Mr Xenos gave evidence that he recalled making an initial statement at the meeting in words to the following effect: We need to look beyond the personalities that are involved in this matter and it is my suggestion that we come to a settlement whereby Simon would keep Leichhardt and Theo would keep the Manly properties, with the proceeds of Marrickville split after it is sold. If need be there can be a cash adjustment between the two depending on the value of the respective properties. After a detailed and careful cross examination and in particular after having had his attention drawn to the content of the file note in relation to the 23 July 1999 telephone conversation, Mr Xenos accepted that he had been mistaken that he said this as an opening statement at the 28 July meeting. It is clear that in preparing his affidavit Mr Xenos has transposed the substance of part of the contents of his file note of the 23 July telephone conversation into the 28 July meeting. 30 Mr Roth gave evidence that at the meeting Mr Xenos said: I have instructions to submit the following offer. Based on your letter and our telephone conversation. Your client to pay the sum of $1,200,000 in return for the transfer to him of all the partnership assets other than in relation to Larripalm Pty Ltd as contracts have been exchanged in relation to the Marrickville property. One half of the net proceeds of sale can then be distributed to Mr Konstantinidis and Mr Baloglow. In addition Mr Baloglow will withdraw his complaint to the Law Society and discontinue the District Court and Supreme Court proceedings and the Receivership will be terminated. I am aware of the proceedings commenced by Mr Darin as liquidator against Mr Konstantinidis and Mr Baloglow but I do not have any instructions in relation to those proceedings and indeed I would have difficulty as I had an involvement. The subject of those proceedings cannot form part of these settlement discussions. 31 Mr Pollard gave evidence that at the commencement of the meeting Mr Xenos said words which included the following: I assure you I would not be wasting my time coming here if I did not have the authority to reach a settlement and I have made this clear to my client. I told him that if he did not give me the authority and follow my advice I would not act for him. I am instructed that my client will settle all matters by payment to him of $ (he did not remember the amount) and all properties would be transferred to your client except for Marrickville which is the subject to a contract for sale. The proceeds of sale of Marrickville will be shared equally. 32 After Mr Xenos had put the offer Mr Pollard telephoned Mr Konstantinidis and Mr Roth gave evidence that the following conversation took place: Roth: We are instructed that the offer is acceptable provided that Mr Konstantinidis takes over Mr Baloglow's loan accounts with the companies other than that with Larripalm Pty Ltd. Xenos: I need to get instructions will you excuse me for a short time. 33 Mr Roth's evidence is that a short time later Mr Xenos then said: Xenos: I must apologise. I misunderstood my instructions. I have made an error in that I have not taken into account a debt of $600,000 due to Carlisle Developments Pty Ltd by Larripalm Pty Ltd. Since the amount would be paid to a company in which Mr Konstantinidis would become the sole beneficial shareholder he would receive a benefit of the whole of the amount and therefore the offer should be adjusted accordingly and the sum of $1,500,000 should be paid by Mr Konstantinidis and not $1,200,000 as I communicated earlier. Roth: We will need to get instructions and respond to you shortly. 34 Mr Pollard then telephoned Mr Konstantinidis and thereafter had a conversation with Mr Xenos. He did not recall the detail of those discussions at the time he swore his affidavit or at the time that he gave evidence. However, Mr Roth recalled the conversation between Mr Pollard and Mr Xenos and gave evidence that words to the following effect were used: Pollard: Mr Konstantinidis is prepared to compromise on the amount to the extent of one half the additional amount you have requested as an offer had been made and accepted. The additional amount agreed being $150,000. The amount to be paid by Mr Konstantinidis could be decreased by $150,000 to $1,050,000 and the amount of $600,000 due to Carlisle Developments Pty Ltd by Larripalm Pty Ltd would be assigned to Mr Konstantinidis and Mr Baloglow as to one half each or alternatively the payment by Mr Konstantinidis would remain at $1,200,000 and Mr Baloglow could receive by way of assignment from Carlisle Developments Pty Ltd of $150,000 of the debt due to it by Larripalm Pty Ltd. Xenos: I need to get instructions would you excuse me for a short time. 35 Mr Xenos accepted that there were a number of occasions during the meeting that he telephoned his client for instructions and that he was given privacy so to do. Mr Roth's evidence is that after this telephone conversation Mr Xenos said: Xenos: The offer whereby the amount to be paid by Mr Konstantinidis is decreased by $150,000 to $1,050,000 and the amount of $600,000 due to Carlisle Developments Pty Ltd by Larripalm Pty Ltd would be assigned to Mr Konstantinidis and Mr Baloglow as to one half each is accepted. 36 Mr Xenos denied these two conversations in his affidavit. He claimed that he said words to the effect: The offer for Simon to pay $1,050,000 with the $600,000 debt to be assigned equally between Simon and Theo is something that Theo wants to consider further. I am not an accountant and I advised him to seek accounting advice, particularly in relation to the outstanding tax liability. Why don't we record what has been discussed and we can both get further instructions. 37 Mr Xenos also claimed that a number of times during the meeting he said to Messrs Roth and Pollard words to the effect: I can't even balance my own cheque book let alone give anyone accounting advice. I can't take the matter further unless Theo gets advice from his accountant. 38 Mr Roth gives a different version of events. He said that he informed Mr Xenos that he would write up the agreement reached and that Mr Xenos could check each page "as I go", to which Mr Xenos responded "yes that's a suitable course". Mr Roth then wrote out the document and gave evidence that the following conversation took place: Roth: Before you go can you just check to make sure that nothing has been omitted. Xenos: Yes I will do that. Mr Roth claims that Mr Xenos then checked the whole agreement and after having checked it he said: Xenos: That seems to cover it all. Its a sensible conclusion. Roth: I will make a photocopy for you to take with you and I will have the written agreement typed up in a more comprehensive form and will fax it to you as I have written it in an abbreviated form. Xenos: Yes that's a good idea thank you. 39 Mr Xenos claims that he said: Xenos: Your handwriting is difficult to read, but I think that covers all the matters we have discussed to date. I will discuss this with Mr Baloglow and contact you in due course. He denied saying "its a sensible conclusion" and the balance of this conversation given in evidence by Mr Roth. 40 The handwritten document reads as follows: A TB transfer to SK or his nominee:- 1. All S/H in:- (a) Carlisle Developments (b) Balkon (c) Ricvale Holdings 2. All his loan A/cs in (a) Carlisle Developments (b) Balkon (c) Ricvale Holdings 3. All his interest in:- (a) 58 Whistler Street (b) 4 Denison Street B SB, cB and LB transfer all their interest in - 58 Whistler St to SK or his nominee. C SK pay or cause to be paid to TB on or before the sum of $1,050,000 D Other than is provided herein each party releases the other from any claim, demand, action etc which each party had or may have had against the other EXCEPT FOR CHRIS DARIN as ----…and SK and TB as def. E TB and SK join in and do all such things as may be necessary to effect the termination of the Receiver's appointment. F Each party shall pay one half of the Receiver's costs and disb up to the date of the termination of the appointment. G Each party shall do all such things as are necessary to effect the sale of 342A Mville Road by Larripalm P/L as soon as is reasonably practicable. H The respective solicitors for each party shall jointly act for Larripalm Pty Ltd in relation to sale of M'ville. I Each party shall be responsible for the costs of the respective solicitors in acting on the sale of Marrickville. J Each party shall be responsible for the costs of their respective solicitors in relation to the removal of the Receiver. K Each party shall nominate an accountant for the purpose of the nominated accountants acting jointly in the preparation of income tax returns up to and including 30 June 1999 for: Carlisle Developments Balkon Larripalm Ricvale and the partnership of the parties L Each party shall pay and be responsible for the fees and charges of the accountant nominated by them respectively. * Loan $600,000 from Carlisle to Larripalm The parties shall do all such things as are necessary for Larripalm to retain the net proceeds of sale to pay from the following in the same order of priority: (a) All income tax liabilities in relation to: (i) Carlisle Development (ii) Balkon (iii) Ricvale (iv) Larripalm for all years up to and including the financial year ended 30/6/99 (b) all expenses of the companies referred to in (a) incurred to the date of completion of the matters referred to herein. (c) one half to each TB and SK * The District Court proceedings and the Supreme Court proceedings between the parties shall be discontinued by consent with each party to pay its own costs. * TB shall irrevocably, unconditionally and unreservedly withdraw the complaint to the Law Society in relation to the matters the subject of the DC and SC proceedings. * Carlisle Development shall assign all its interest in a loan of $600,000 made by Carlisle to Larripalm to TB in the sum of $300,000 and SK in the sum of 300,000. Conversations and Correspondence after the Meeting 41 The meeting on 28 July 1999 between Mr Roth, Mr Pollard and Mr Xenos took place between about 9.30 and 11.00 am. At 2.10 pm Mr Roth forwarded a letter to Mr Xenos in the following terms: We refer to our meeting today in the presence of Warwick Pollard and enclose copy of the draft Terms of Agreement which were reached at the meeting and in respect of which you were provided with a photocopy of a handwritten draft. Please let us have your urgent comments so that we may attend to the preparation of a draft deed for your approval. The handwritten document set out above had been typed with the expansion of the initials into full names and with the addition of two paragraphs as follows: P The parties shall be entitled to receive in equal shares all rents received by them on the partnership account and by the companies referred to herein to the date of completion of the agreement. Q The parties are to pay in equal shares all interest outstanding to the date of completion of this agreement to all mortgagees in relation to the partnership, debts and the debts of the companies referred to herein. 42 Those two paragraphs reflect part of a handwritten note which Mr Xenos apparently was given by Mr Roth which states: * Interest up to date * Rents 50-50 * Bank a/c equally * Receiver be checked + 43 A little later that afternoon at about 2.45 pm Mr Roth forwarded a further letter to Mr Xenos in which he wrote: We refer to our earlier letter today and advise we have suggested to our client that if he approves of the terms of the agreement he should sign same and return to us by fax. We have since been instructed that the terms are as agreed and that they will be signed and returned to us shortly. In the event your client agrees that the terms reflect the agreement please have your client sign same and we can exchange by fax. 44 At about 4.30 pm Mr Roth forwarded a further letter to Mr Xenos: We refer to previous communication in relation to the above matter and advise that Warwick Pollard has drawn to our attention the following omission from the terms of the agreement. In relation to C. the date has been omitted and we suggest the following: "Eight weeks from the date of this Agreement or two weeks after the date of the removal of the receiver whichever is the later" In relation to D. and M. the Agreement was that neither party would take any action in relation to the matters the subject of the District Court and Supreme Court proceedings. In this respect an appropriate amendment is required. 45 On 29 July 1999 a conversation took place between Mr Roth and Mr Xenos. Mr Xenos has not denied the terms of this conversation. It was as follows: Xenos: Theo's wife was furious with the agreement. Theo and his wife had one of the worst fights ever over the terms of the agreement. Theo and his wife are coming to see me tomorrow and I will do my best to persuade Theo to sign and I will point out to him the consequences of the receivership continuing in terms of costs, expenses and extensive delays before he sees any return. Roth: You should also remind him that an agreement was reached by which he is bound. Xenos: I suppose that's correct. Roth: I have just completed a letter to you about this matter before you called. Xenos: If Theo does not follow my advice I will not act for him any further and Theo can take his chances with the receivership. Roth: Any dispute will revolve around the terms of the agreement not the receivership. Xenos: That's most probably right. 46 On 30 July 1999 Mr Roth wrote to Mr Xenos in the following terms: We refer to the concluded agreement reached in our meeting on 28 July 1999 and subsequent communication between us in relation to the above matter and in the absence of any suggestion to the effect that the typed version of the agreement, with the amendments submitted by us, did not properly reflect the agreement we propose the following: We prepare: # draft deed; # transfers in relation to the matters referred to in clauses in A1, A3 and B; # process for filing in relation to the removal of the Receiver; and # deeds of assignment in relation to the matters referred to in clauses A2 and O. We advise that our client nominates Warwick Pollard as the accountant pursuant to clause L. You prepare: # notices of discontinuance in relation to the District Court and Supreme Court proceedings in accordance with clause M. You arrange: # for your client to comply with the provisions of clause N and provide us with a copy. You advise: # your client's nomination of the accountant pursuant to clause L. We suggest that the accountants contact each other to make arrangements in relation to the matters referred to in clause K. Once the receiver's appointment has been terminated we shall make arrangements with our client in relation to the sale of the Marrickville property to be provided to you so that its sale may be completed. We shall submit to you for your approval all the necessary documentation referred to above as soon as possible. There was no written response to this letter. 47 Between 30 July 1999 and 4 August 1999 Mr Roth requested Mr Xenos by telephone and fax to contact the Receiver and Manager to confirm "the present position". On 4 August 1999 Mr Roth confirmed his previous telephone conversation in which he noted that Mr Xenos "agreed to telephone the receiver and manager to confirm the present position for the termination of the receivership". The letter went on to state Mr Roth's understanding that Mr Xenos had not telephoned the Receiver. After referring to costs running he requested Mr Xenos to contact the Receiver and Manager urgently. 48 He wrote again on 5 August 1999 confirming his conversation with Mr Xenos on 4 August in which he noted again that Mr Xenos had agreed to telephone the Receiver and Manager to confirm the agreement and in particular the termination of the Receivership. Mr Roth's letter of 5 August stated: We consider your conduct since the agreement was reached as, at the very least, discourteous and we are considering our options in that regard. 49 On 5 August 1999 the Receiver wrote to Mr Xenos enclosing the copy of the typewritten document he had received from Mr Roth and stated: Numerous messages have been left on your mobile phone message bank, which you have not responded to. Please, confirm in writing to my office if in affect an agreement has been reached for the termination of my appointment as receiver. 50 On 5 August 1999 Mr Xenos wrote to the Receiver as follows: The writer has returned the messages you refer to, and has asked to speak to Mr McDonald, Mr Civil, and to assistant to Mr Civil. We spoke to Mr Civil's assistant, and confirmed that the parties had reached an agreement in principle. Heads of agreement have been prepared, and Mr Roth is currently in the process of preparing the agreement reflecting the terms and conditions between the parties. We were requested to confirm this in writing and we now take the opportunity of doing so. Would you please confirm that Mr McDonald will consent to being removed as a receiver, and forward both to the writer and to Mr Roth the itemised memorandum of costs as soon as possible. 51 On the same day Mr Roth forwarded to Mr Xenos a copy of a draft deed (Ex. 1, tab L). That deed included many more parties than the plaintiff and the first defendant. It included the plaintiff's wife, the first defendant's wife, and the first defendant's children. Mr Baloglow terminated Mr Xenos' retainer on or about 11 August 1999 and instructed his present solicitor, Mr Pringle of Messrs Gordon & Johnstone. Agreement on 28 July 1999 52 Although the parties are very much at issue as to what occurred on 28 July 1999, Mr T.G.R. Parker, who appeared for the defendant, conceded that if I am satisfied that the conversations took place in the terms alleged by Mr Roth then the defendant would have difficulty maintaining his claim, but for the Statute of Frauds defence. 53 To assist in assessing the versions of events, Mr Parker submitted that I should look to the document which was prepared by Mr Roth before turning to the competing versions of events and conversations. He pointed out a number of features to that document which would persuade me that the conversation as alleged by Mr Roth would not have occurred. Those matters included that there was no signature on the document, its "ragged" form more in the nature of a solicitor's note, the absence of parties and the fact that there were gaps, for instance, the time within which the payment had to be made. Mr Parker submitted that it looks like a draft and indeed Mr Roth called it a draft in his correspondence of 28 July 1999. 54 It was further submitted that if one applies good practice as an objective measurement then the fact that the parties were not consulted during the course of the drafting of the document, a fact not in issue between the parties, would objectively lead me to the conclusion that this document was not a document intended to bind the parties but was one which more probably than not was as Mr Xenos claimed, to be "subject to instructions". 55 As a matter of forensic analysis of the documents unaccompanied by what actually happened at the meeting, this was a persuasive argument. However the facts of the matter need to be settled. It is one thing to say that an agreement is subject to instructions. It is quite another thing to say that instructions are to be taken to confirm that a document reflects the terms of an agreement already reached. I have to decide what took place at the meeting of 28 July 1999. 56 I have absolutely no doubt that Mr Xenos has little recollection of the actual words that were used on 28 July 1999 and I am comfortably satisfied that he went to that meeting with what was suggested that the plaintiff would be interested in, which was a "take it or leave it offer". I have no doubt that further negotiations took place and instructions were taken by each of the respective solicitors. 57 Mr Parker conceded that I would be entitled to be highly critical of the "manner" in which Mr Xenos gave his evidence. He submitted that it did not follow that all of his evidence should be rejected as false or unreliable. There is no doubt that in so many respects Mr Xenos' evidence could not be relied upon. 58 One very telling conversation which is not in issue was the conversation of 29 July 1999. Mr Xenos referred to the "agreement" as the subject upon which the fight between the first defendant and his wife had occurred. The whole tenor of that conversation was Mr Xenos desire to persuade the first defendant to sign the handwritten document in recognition of the agreement that was reached the previous day. He even went so far as to say that he would not act any further for him if he did not take his advice. 59 No letter or memorandum was forwarded to Mr Roth by Mr Xenos suggesting that he was instructed to reject Mr Roth's document as not reflecting the terms and conditions agreed to on 28 July 1999. Indeed, quite to the contrary, Mr Xenos forwarded the letter to the Receiver, Mr McDonald, on 5 August 1999 in which he admitted that the document that was being prepared was to reflect "the terms and conditions between the parties". In my view that reflects a recognition of terms and conditions that had been agreed between the parties on 28 July 1999. Mr Xenos said that the term "Heads of Agreement" in this letter was a reference to the document prepared by Mr Roth at the meeting on 28 July 1999. 60 Mr Xenos changed his evidence so many times during a very searching and effective cross examination by Mr B Oslington QC. He told me he read the Verekers' file carefully then he told me he did not read it carefully. He told me he did not make a file note of the meeting of 28 July and then he told me he did make a file note. He later told me he believed he would have made a file note. He denied matters in his affidavit and then gave oral evidence that he could not deny them. He told me that he used the terms of denial and lack of recall as interchangeable terms. However it is clear that his affidavit delineated between the two as separate and different concepts. 61 He swore in his affidavit that he had never acted for the Baloglow children, yet his file (Ex.K) reveals that the month before this meeting, on 15 June 1999 he wrote to the mortgagee of the partnership properties advising that he acted "for Theo, Stephen, Christopher and Lynette Baloglow who are also directors and/or shareholders of Larripalm Pty Ltd and Ricvale Pty Limited". 62 I prefer the evidence of Mr Roth in every respect. He was careful, thoughtful and seemed to me to be giving evidence truthfully. I accept that the conversations that occurred on 28 July 1999 are as deposed to by Mr Roth in his affidavits and his oral evidence. 63 I am satisfied that Mr Roth said to Mr Xenos "before you go can you just check to make sure that nothing has been omitted" and that Mr Xenos did so. I am further satisfied that Mr Xenos said; "That's seems to cover it all. It's a sensible conclusion". I have no doubt that Mr Xenos used the word "offer" and informed Mr Roth that the offer made by Mr Konstantinidis had been accepted. I am also satisfied that Mr Roth was informed by Mr Xenos that it was a suitable course to write up the agreement reached and that he would and did check each page as Mr Roth wrote it. 64 The conversation on 29 July 1999 between Mr Roth and Mr Xenos would leave no doubt in an objective listener that these two men were referring to a concluded agreement that had been reached the previous day and that each was satisfied that the document prepared by Mr Roth and checked by Mr Xenos reflected the terms agreed to which each had authority and instructions from their respective clients to agree. 65 In my view the term "draft" in Mr Roth's letter does not mean that a concluded agreement was not reached on 28 July 1999. The balance of the letter suggests consistently with the facts that the document prepared was, so far as the solicitors authorised to conclude the agreement were concerned, a reflection of the terms and conditions that were reached. The request by Mr Roth for the first defendant to sign the document was, I accept, what he saw as a "formality". I accept that Mr Roth did not at that time turn his mind to the necessity for a signature pursuant to s 23C of the Conveyancing Act 1919 (NSW). Mr Roth's focus was upon the "settlement" by agreement of all the disputes between the parties. 66 The use of the term "agreement in principle" in Mr Xenos' letter to the Receiver on 5 August 1999 is a little odd. It is certainly inconsistent with the sworn evidence in his affidavit of 1 August 2000 and his oral evidence that this was not an agreement at all. 67 Prior to his cross examination Mr Xenos had claimed that the handwritten document was merely a recording by Mr Roth of what they had discussed "so far" and that Mr Xenos would take his client's instructions and then his client would take some form of financial or accounting advice and then he would come back to Mr Roth. This evidence was left in tatters after Mr Oslington QC, with impressive forensic precision, demolished each of the struts upon which Mr Xenos had built his unsustainable claims. 68 The mention of the word "in principle" in the 5 August letter is not in my view evidence that a concluded agreement had not been reached. I am of the view that it is a reflection of the arrangement made after the agreement was concluded that Mr Roth would, as he said he would, and Mr Xenos ultimately agreed he said, have a more "comprehensive" document prepared. 69 This case has necessarily involved a determination of the intention of the parties in the context of their communications over a period of time: ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 -550. I am satisfied that each of the plaintiff and first defendant authorised their respective solicitors, Mr Roth and Mr Xenos to reach a concluded agreement in respect of all the properties as evidenced in the handwritten document prepared on 28 July 1999. I am satisfied that the handwritten document represents the terms of a concluded agreement by which the parties intended to be immediately bound and that they intended to restate the terms in a fuller and more precise form not different in effect: Masters v Cameron (1954) CLR 353 at 360. 70 I am satisfied that by this agreement the first defendant agreed that he would do all things reasonable to cause the registered proprietors of the properties, (the 'vehicles' used by the partnership to purchase the partnership properties - the companies and the children) to transfer those properties to the plaintiff on the payment of the agreed sum: Butts v O'Dwyer (1952) 87 CLR 267 at 280. I am also satisfied that the apportionment of the amounts in respect of the various properties and the date for the payment of the agreed sum were matters of "machinery" and their absence from the document does not vitiate the binding agreement that was reached: Hall v Busst (1960) 104 CLR 206 per Fullager J at 222. Statute of Frauds Defence 71 The only matter then for consideration is whether the agreement is unenforceable by reason of its failure to comply with ss 23C & 54A of the Conveyancing Act 1919 (NSW). Section 54A(1) prohibits any action or proceedings upon any contract for the sale or disposition of land or any interest in land unless the agreement upon which such action or proceedings is brought is in writing, "and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged". 72 The history to ss 23C & 54A, is s 4 of the Statute of Frauds which was enacted when "the legislature was somewhat inclined to provide that cases should be decided according to fixed rules" rather than leaving it to a jury to consider the effect of the evidence in each case. The law developed to the point that if the Court is satisfied that the document that came into existence was issued as a perfect agreement, an impediment in law - the absence of a signature, would not prevent a finding that there is a sufficient memorandum to bind the vendor: Hubert v Treharne [1842] 3 Man & G 743; Leeman v Stocks [1951] 1 Ch 941 at 951. 73 This principle has been recognised by this Division (Roper CJ in Eq.) and by the High Court firstly without adverse comment as to its correctness: Neill v Hewens (1953) 89 CLR 1 at 12, and secondly by express acceptance: Pirie v Saunders (1960) 104 CLR 149. In this latter case the High Court said at 154: With respect to those members of the Full Court who thought otherwise we are of the opinion that their Honours' decision pushes too far the principle applied in Leeman v Stocks and the earlier cases referred to in Neill v Hewens . The principle applied in those cases can, we think, have no application to any document which is not in some way or other recognizable as a note or memorandum of a concluded agreement. We do not mean by this that it is necessary that the written note must always appear to have been made after the making of the contract for it clear that a written proposal or offer may by its subsequent acceptance become by the conduct of the parties recognizable as a sufficient note or memorandum of the resulting contract. 74 In Pirie v Saunders there was an allegation of a prior concluded contract and the solicitor's notes were said to constitute a note or memorandum of that contract. In that case the Court found that the notes were no more than the solicitor's instructions for the preparation of a draft lease for submission to the respondent's solicitor. The Court found that neither the existence of the document nor its contents were indicative of the existence of any binding contract (at p 155). 75 Mr Parker submitted that the "doctrine" of the perfect instrument should not be adopted in this case because it only applies to a document that is written by the person against whom it is to be enforced and in this case the document was written by Mr Roth. He also submitted that the party to be charged must affix his name to the document in such a way as to demonstrate that he recognises and acknowledges that the document is a binding contract. He submitted this did not happen. 76 This case is different from Pirie v Saunders in that Mr Roth wrote out the document as a reflection of what was agreed between the authorised representatives of the parties. This document was checked by Mr Xenos as Mr Roth wrote it and a further check was made at the conclusion of the meeting. I have found as a fact that Mr Xenos said that it was a "sensible conclusion". There is no issue that the document was then handed to Mr Xenos. The fact that Mr Roth was to complete a more comprehensive form of the agreement, not different in effect, does not detract from the application of this principle. 77 Mr Xenos in checking the document and accepting it as a sensible conclusion in my view recognised that the initials "TB" signified his client's name Theo Baloglow. I am of the view that this is a document that is "recognizable as a sufficient note or memorandum of the concluded agreement" to bind the vendor, the first defendant. 78 An additional approach is the plaintiff's submission that the handwritten document together with the correspondence between Mr Roth and Mr Xenos and Mr Xenos and the Receiver may be regarded as a memorandum or note which satisfies s54A: Tonitto v Bassal (1992) 28 NSWLR 564 per Sheller JA at 570 -571. 79 Mr Parker submitted that the letter did not unambiguously acknowledge that the Heads of Agreement constituted a binding contract: Thirkell v Cambi [1919] 2 KB 590; Parbury Henty & Co Pty Ltd v General Engineering and Agencies Pty Ltd (1973) 47 ALJR 336. Mr Xenos conceded that the term Heads of Agreement referred to in his letter to the Receiver of 5 August 1999 referred to the handwritten document prepared by Mr Roth which Mr Xenos checked. 80 I am of the view that this letter does refer to the agreement reached in a manner which acknowledges it as a binding contract in its reference to the reflection of the "terms and conditions between the parties". In the context of this letter and in light of its purpose this can only be a reference to the agreement reached on 28 July 1999. 81 The purpose of the letter is important. Mr Xenos was confirming that terms and conditions had been agreed, one of which required the termination of the Receivership. Mr Xenos was acknowledging that part of the agreement when he requested the Receiver to confirm his consent to his removal and to forward his memorandum of costs as soon as possible. I am satisfied that the handwritten document and the letter to the Receiver constitute sufficient writing to satisfy s54A. 82 It is unnecessary in the circumstances to decide the claims of part performance and estoppel. There is no issue that the conduct must be unequivocal and in its nature referable to the agreement. If it was necessary to decide I am of the view that the fax of 5 August 1999 is such a step. Both parties approached the Receiver for the purpose of requesting him to cease work and forward to them an itemised Memorandum of Cost as soon as possible. In my view these were clear steps referable to the concluded agreement. 83 The plaintiff took further steps including the arranging of finance for the purpose of paying Mr Baloglow the amount agreed and withdrawing from a purchase to ensure that he would not be over-committed at a time when the payment to the first defendant was imminent. Conclusion 84 I am satisfied that there is a binding and enforceable agreement between the plaintiff and the first defendant and that the plaintiff is entitled to an order for specific performance. 85 The parties are to bring in Short Minutes of Order together with an agreed order as to costs. If a costs order is not agreed I will hear argument. ******************* Last Modified: 12/21/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.