Reported Decision : (2007) NSW Conv R 56-204 New South Wales Supreme Court CITATION : Dencal Pty Limited v CB International Pty Limited [2007] NSWSC 1373 HEARING DATE(S) : 14, 15, 16 and 19 November 2007 JUDGMENT DATE : 6 December 2007 JUDGMENT OF : McDougall J at 1 DECISION : See paragraph 109 of the judgment. CATCHWORDS : CONTRACTS – Construction and interpretation – Heads of agreement for sale of hotel – "Subject to formal exchange of contracts" – Whether heads of agreement created binding obligation on defendant to procure sale of hotel to plaintiff. Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 Ballas v Theophilos (No.2) (1957) 98 CLR 193 Ballas v Theophilos [1958] VR 576 Butt v M'Donald (1896) 7 QLJ 68 CASES CITED : Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Mackay v Dick (1881) 6 App Cas 251 Masters v Cameron (1954) 91 CLR 353 Santa Fe Land Co Ltd v Forestal Land etc Ltd (1910) 26 TLR 534 Sinclair, Scott and Co Ltd v Naughton (1929) 43 CLR 310 PARTIES : Dencal Pty Limited (Plaintiff) CB International Pty Limited (Defendant) FILE NUMBER(S) : SC 3973/07 COUNSEL : M J Leeming SC / C H Withers (Plaintiff) S D Epstein SC / H P T Bevan (Defendant) SOLICITORS : JDK Legal (Plaintiff) Baron & Associates (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION McDOUGALL J 6 December 2007 3973/07 DENCAL PTY LIMITED v CB INTERNATIONAL PTY LIMITED JUDGMENT 1 HIS HONOUR: On 6 July 2007, the defendant (CB International) as "Vendor" and the plaintiff (Dencal) as "Purchaser" executed a document described as "heads of agreement". By that document, CB International agreed to procure the sale to Dencal, and Dencal agreed to purchase, the freehold and plant, equipment, goodwill and business of the CB Hotel in Pitt Street Sydney. That agreement was expressed to be upon terms and conditions set out "and subject to a formal exchange of contracts". The essential question for decision is whether, upon the proper construction of the heads of agreement and in the events that have happened, CB International is bound to sell to Dencal's nominee the subject matter defined in the heads of agreement. For convenience, I will refer to that subject matter as the CB Hotel unless the context requires a more precise usage. The issues for decision 2 The parties stated the issues for decision as follows: 1. Did the legal effect of the Heads of Agreement executed on 6 July 2007 extend to any positive obligation upon the Defendant (other than its obligations to provide due diligence material, a draft contract, confidentiality and not to exchange contracts) to take steps to procure an exchange of contracts for the sale of the CB Hotel? 2. Did Mr Miller's 31 July 2007 letter to Mr Baron constitute notification under clause 4 of the Terms and Conditions of the Heads of agreement? 3. If yes to (2), did the Plaintiff thereby obtain the right to acquire the CB Hotel, either (i) on the basis of the terms included in the Heads of Agreement irrespective of whether agreement on additional contractual terms was reached, or (ii) subject to the parties' agreement on material contractual terms not included in the Heads of Agreement? 4. If yes to (2), did the Defendant thereby come under an obligation to procure an exchange of contracts for the sale of CB Hotel? 5. If yes to (3) or (4), did the Defendant then come under an obligation (i) to take all steps necessary, (ii) not to impede or defeat and/or (iii) to act reasonably, in order to enable finalised contracts to be exchanged by close of business Friday, 3 August 2007? 6. If yes to (5), did the Defendant fail to comply with that obligation and, if so, in what respects? 7. Had agreement been reached with respect to all material issues in the transaction by 3 August 2007? 8. In the events which happened, was the Defendant obliged to procure the exchange of contracts by close of business Friday, 3 August 2007 and, if so, what were the Special Conditions and other terms of those contracts which it was so obliged to procure? 3 Issue 3(ii) was not agreed, in the sense that CB International contended that it was devoid of legal content. The heads of agreement 4 The document that the parties signed was intituled "heads of agreement". Those words were followed by these words: "Purchase of freehold properties, hotel business and assets of the CB Hotel site, 403 – 427 Pitt Street and 71 – 81 Goulburn Street, Sydney, NSW 2000". 5 Those words in turn were followed by these words: "This agreement is made the 6 day of July two thousand and seven between:" 6 The parties and their solicitors were then described. CB International was described as "Vendor"; its solicitors were described as "Vendors' Solicitor". Dencal was described as "Purchaser"; its solicitors were described as "Purchaser's solicitor". The "Agents for the Sale" were also named. 7 The agreement then continued: Freehold Property, Hotel Business and Assets being sold: The Vendor agrees to procure the sale to the Purchaser and the Purchaser agree to purchase the subject matter (set out below) upon the following terms and conditions and subject to a formal exchange of contracts Subject Matter: The Freehold Properties and Hotel business, Plant and Equipment, Goodwill in respect of the Business ("the Business") including all current licences necessary to operate the business and stock in trade of the: * CB Hotel being 1. Sale by Corporation A Pty Limited Lots 3, 4 & 13 in SP 47076 2. Sale by Corporation B Pty Limited Lots 2, 6, 7, 8 & 9 3. Sale by Corporation C Pty Limited Lots 10, 11 & 12 4. Sale by Corporation D Pty Limited Lots 14, 15, 16, 17 & 18 in SP 47076 5. Sale by Corporation E Pty Limited Lot 1 in SP 47076 6. Sale by CB International Pty Limited Lot 5 in SP 47076 7. Sale of Business by CB Operations Pty Limited Purchase Price $51,000,000 plus gst if any Deposit 5% being $2,550,000 payable on exchange of contracts to the Vendor's agent Settlement 8 months from exchange of contracts Balance of Purchase Price At settlement Exclusive Dealing Period An exclusivity fee (for the purpose set out in point 3 below) of $10,000 will be paid upon acceptance of the terms as set out in this document. Exclusivity to exchange contracts for the purchase of the properties is to apply for the due diligence period commencing on the date of this agreement until July 31 2007. Exclusivity can be extended by a further 3 working days for final contract amendments and exchange by close of business Friday 3 August 2007. Confidentiality: Both parties to keep the terms of this agreement and its contents strictly private and confidential and shall only be disclosed to the parties legal and financial advisors. Terms and Conditions See attached Binding Agreement Subject to the Terms and Conditions 1-12 below the Vendor and the Purchaser acknowledge that this Exclusive Dealing Period Agreement is intended by them to be a valid, enforceable and legally binding Agreement. [There followed the signatures of Mr Boris Markovsky for CB International and Mr John Nelson Miller, attorney (and solicitor) for Dencal.] 1. This Agreement is to enable the Purchaser to conduct a due diligence in respect of the business, land, buildings, licensees and other assets and being satisfied of such by 5pm July 31 2007. 2. The Vendor shall provide to the Purchaser available due diligence information and a draft contract within 2 business days from signing this Agreement. 3. During the exclusive dealing period the Vendor will not exchange contracts for the sale of the properties with any other purchaser. 4. If the due diligence is satisfactory to the Purchaser at its sole discretion, the Purchaser must notify the Vendor's solicitor in writing, that it wishes to exchange contracts by the deadline date in points one above and the Purchaser must exchange contracts on terms as are acceptable to the Vendor (incorporating the Vendors special conditions, the agreed purchase price settlement term and deposit) by that date. 5. If the due diligence and other matters are not satisfactory to the Purchaser as stated above the Purchase will forfeit the $10,000.00 fee paid to the Vendor's agent. 6. The Sales Contract shall be in the form of The Law Society of New South Wales Contract of Sale of Land and include special conditions as required by the Vendor's solicitor. To the extent possible, the Vendor and Purchaser will ensure that each Contract is prepared such that the sales are of a going concern. 7. Any Leasing or Hire Purchase Agreement in existence regarding any Plant and Equipment at the Hotel premises shall be paid out by the Vendor on the Settlement Date and unencumbered ownership of the Plant and Equipment transferred to the Purchaser. 8. The Sales Contract shall include provisions to the effect that the Vendor will not: (a) vary an existing lease in any material way (a variation of a demolition clause, and extension of a term and a reduction of rent are material ways); (b) grant a new lease other than at a market rent and with a demolition clause similar to the demolition clauses in existing leases (c) vary the Hotel Management Agreement in a material way (and a variation to Clause 22.2 is a material way) and that Vendor will keep the Purchaser informed of any negotiations with Nomads World Hotels Pty Limited that may diminish any opportunity the Purchaser may have to negotiate a successor agreement with that company. 9. The Vendor shall prior to settlement comply with any orders, of any Authority or Body that issue in respect of the Premises or the Business prior to the date of this Agreement. 10. Purchaser has the right to seek development consent or a modification at the purchasers costs (owner to consent) before settlement but the sale is not condition on its outcome. Issue 1: Construction and legal effect of the heads of agreement 8 There is no doubt that the heads of agreement creates rights and obligations that are binding as a matter of contract. Thus: (1) Dencal was bound to pay the exclusivity fee of $10,000.00. (2) Dencal thereupon had the right "to conduct a due diligence in respect of the" CB Hotel. (3) CB International was obliged to provide Dencal with "available due diligence information and a draft contract within two business days from signing…". (4) CB International was prohibited during the defined "exclusive dealing period" from exchanging contracts for sale of the CB Hotel with another purchaser. 9 The parties made detailed written submissions. In what follows, I do no more than summarise some of the principal themes appearing from those submissions. The submissions for Dencal 10 Dr M J Leeming of Senior Counsel, who appeared with Mr C H Withers of counsel for Dencal, submitted that the wording of the heads of agreement considered in totality was sufficient to dispel the prima facie effect of the words "subject to formal exchange of contracts". He accepted that the presumption arising out of the use of those words was of particular significance in relation to contracts for the sale of land, and that this transaction was in substance one for the sale and purchase of land. 11 Dr Leeming relied on the words following "Exclusive Dealing Period" and clause 4 of the terms and conditions. He relied also on clause 5 of the terms and conditions which, as he submitted, gave Dencal an alternative to clause 4, namely "to walk away" and forfeit the $10,000.00 "exclusivity fee" (outline of submissions dated 9 November 2007, para 17b). 12 In particular, Dr Leeming pointed to the words in clause 4 "the Purchaser must exchange contracts on terms as are acceptable to the Vendor". He submitted that of necessity this imposed obligations on both parties: there can be no exchange unless both parties are involved. 13 Thus, Dr Leeming submitted, "[t]he Heads of Agreement on its true construction gave Dencal an option to purchase the Property which could not be withdrawn during the exclusivity period" (ibid, para 41). He submitted that this construction was consistent with commercial common sense, whereas the contrary construction was not. He submitted that the provision of an exclusive dealing period and an opportunity to undertake due diligence made no sense without any obligation on CB International to procure a sale if Dencal were satisfied with the results of the due diligence. He pointed to the right to extend the exclusive dealing period for a further three days "for final contracts amendments and exchange…", submitting that these words did more than merely extend the exclusive dealing period. Thus, Dr Leeming submitted, the case fell within either: (1) The first category in Masters v Cameron (1954) 91 CLR 353 (91 CLR at 360): the parties have reached finality in arranging the terms of their contract and intend immediately to be bound, but intend also to have the terms restated in a fuller or more precise form, no different in effect; or (2) The so called "fourth category", based on the decision of Knox CJ, Rich and Dixon JJ in Sinclair, Scott and Co Ltd v Naughton (1929) 43 CLR 310 at 317 and McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628. His Honour's decision was affirmed on appeal (1986) 40 NSWLR 631, and the existence of the fourth category was confirmed by McHugh JA (with whom Kirby P and Glass JA agreed) at 634. 14 Dr Leeming submitted that the failure to respond to the proposition in the letters of July, "that no legal liability is to arise until formal exchange," was not determinative. On one view, he submitted, the statement was correct. The only "vendor" named in the heads of agreement was CB International. That company was only one of six proprietors of the real estate comprised in the CB Hotel. Nor was CB International the proprietor of the hotel business. That was owned and conducted by a related company, CB Operations. Thus, Dr Leeming submitted, the actual vendors could have no legal liability until they had become bound through the contemplated mechanism of exchange of contracts. (I assume that this submission did not extend to CB International.) He submitted that this did not displace what he said was the obligation binding CB International, immediately upon execution of the heads of agreement, to procure the sale of the CB Hotel to Dencal. I have to say that, whilst I think that Dr Leeming's analysis is correct as a matter of construction of the heads of agreement, the distinction that is drawn in the analysis is not one that is likely to have occurred to Mr Baron or Mr Miller at the time. The submissions for CB International 15 Mr S D Epstein of Senior Counsel, who appeared with Mr H P T Bevan of counsel for CB International, took his stand on the words "subject to a formal exchange of contracts". Relying on the authority of Masters (91 CLR at 362 – 363), he submitted that the natural meaning of those words was that there was no contract for the sale of the CB Hotel binding upon the parties to the heads of agreement before that "formal contract" was prepared, executed and exchanged. Thus, he submitted, this case fell into the third of the classes described in Masters at 360: a case "in which the intention of the parties is not to make a concluded bargain at all [for the sale of the CB Hotel], unless and until they execute a formal contract." Mr Epstein submitted, following the decision of the Court in Masters at 362 – 363, that the words in question "prima facie create an overriding condition, so that what has been agreed upon must be regarded as the intended basis for a future contract and not as constituting a contract". 16 Mr Epstein submitted that the presumption was one of particular strength where the transaction involved the sale and purchase of real estate; and he pointed out the magnitude to the particular transaction. In this context, it may be noted that in the events that happened, the great bulk of the purchase price - $48.8 million out of a total of $51 million – was allocated to the various parcels of real estate. Mr Epstein pointed also to the complexity of the transaction, involving as it did many different strata title lots with six separate vendors, and a business with another separate vendor. 17 Mr Epstein also referred to matters leading up to the making of the agreement. He noted that the first draft of the heads of agreement had been prepared by CB International's agent Jones Lang LaSalle Hotel (JLL), and that the draft had been reviewed by the parties' solicitors. Thus, he submitted, the parties must be taken to have known of the meaning usually given to words such as "subject to contract". He submitted that this was not one of the exceptional cases where the words had been used (or misused), in apparent ignorance of the effect usually attributed to them, where in truth the agreement was not provisional and where all of the terms of the contract were agreed. Mr Epstein also referred to correspondence emanating from Dencal's solicitor, Mr John Miller. 18 Mr Epstein pointed also to the fact that the heads of agreement created immediately binding rights and obligations. He submitted that this showed an intention to contract in respect of those rights and obligations, and did not mean that the words of contract used in the heads of agreement had no effect in law. 19 Mr Epstein submitted that, if, as was Dencal's case, the heads of agreement should be construed as giving Dencal an option to purchase the subject property, there would be no commercial purpose served in giving it also an exclusive dealing period. He submitted that the vendors would be disabled from dealing with other purchasers by the very fact that they had granted an option to Dencal. 20 Mr Epstein relied on the parties' conduct both before and after 6 July 2007. As to the latter: on 10 July 2007, CB International's solicitor Mr Gil Baron provided to Dencal's solicitor Mr Miller draft contracts for sale "for approval and execution by your client" for each of the strata title lots that comprised the realty component of the CB Hotel, and a separate draft contract for sale of the hotel business. Each of those contracts was provided pursuant to clause 2 of the terms and conditions forming part of the heads of agreement (6 July being a Friday, and 10 July being a Tuesday). Each contract was forwarded under copy of a draft letter that stated, among other things: "Would you also note that no legal liability is to arise until formal exchange, and that the contract is forwarded subject to receiving our client's instructions." 21 Mr Epstein noted that there had been no denial of this proposition. Decision 22 There was no submission that the words "subject to a formal exchange of contracts" were employed in ignorance of their prima facie effect; nor is there any basis in the evidence for such a submission. (Indeed, Mr Miller acknowledged that he was familiar with the expression "subject to contract" and that in his 38 years of practice he had never found it to be used other than as "preliminary to a binding contract being formed": T33.7-.15.) Thus, as Mr Epstein submitted, the starting point of the analysis is the prima facie effect of those words as recognised in Masters at 362-363. Is that prima facie effect dispelled by the wording of the heads of agreement as a whole, considered in context? 23 Starting with Dr Leeming's basic proposition – that the heads of agreement were intended to give Dencal an option to buy the CB Hotel – it is difficult to understand why the parties would have used the language of the heads of agreement if what they had intended to achieve was the grant of a call option. It is clear that the parties were experienced in matters of commerce, and in the sale and purchase of valuable commercial real estate. Likewise, their solicitors were experienced and capable in those matters. The suggestion that the parties intended to negotiate and document a call option, without using the express language of option agreements, defies common sense. Equally, it defies common sense to think that those parties, with the legal advice that they had, would have entered, as it were accidentally and unintentionally, into an agreement that had the effect ascribed to it by Dr Leeming. Nonetheless, there being no suggestion of any vitiating factor, if that is the effect of the parties' bargain then it must be recognised. 24 The key provision is clause 4 of the terms and conditions. For convenience, I repeat it: 4. If the due diligence is satisfactory to the Purchaser at its sole discretion, the Purchaser must notify the Vendor's solicitor in writing, that it wishes to exchange contracts by the deadline date in point one above and the Purchaser must exchange contracts on terms as are acceptable to the Vendor (incorporating the Vendors special conditions, the agreed purchase price settlement term and deposit) by that date. 25 I accept that the first draft of the heads of agreement was prepared by the agent. But it was reviewed by the parties and their solicitors. I would be slow to conclude that an agent experienced in broking commercial real estate transactions was ignorant of the form of words usually employed to achieve the grant of a call option; and I would certainly not reach that conclusion in respect of the parties and their solicitors. 26 I do not think that clause 4, either considered by itself or considered in context (including, in particular, the words following "Exclusive Dealing Period") gives Dencal a contractual right to purchase the CB Hotel if it is satisfied with the results of its due diligence inquiries and has notified CB International's solicitor accordingly. What it does, I think, is set out the steps that must happen if Dencal is satisfied with the results of its due diligence inquiries: (1) It must give notice to CB International's solicitor in writing that it wishes to exchange contracts by the specified date. (2) It must in fact exchange contracts by that date. (3) The contracts are to be on terms acceptable to CB International; (4) Those terms must incorporate the agreed purchase price and deposit and settlement provisions set out in the heads of agreement, and may also incorporate "the Vendors [sic] special conditions". 27 Nothing in this is cast in the language of present, even though contingent, entitlement. Instead, I think, clause 4 of the terms and conditions specifies the precise steps by which the "formal exchange of contracts" is to occur. The point is not that Dencal has a right to proceed to exchange but rather that, if it wishes to satisfy the requirement that there be an exchange of contracts, it must do so on the terms and by the time specified (expressly or by incorporation) in clause 4. None of this suggests that CB International has given away the right, ordinarily implied by the words "subject to contract", to withdraw from the transaction before the execution and exchange of formal documentation (see Masters at 361; and see also the Court's approval of the rationale for this stated by Neville J in Santa Fe Land Co Ltd v Forestal Land etc Ltd (1910) 26 TLR 534 at 534 – 535: "That the parties should be able to protect themselves by some suitable words from being bound by the negotiation they are conducting." 28 It is significant that although CB International is named as the "Vendor" in the heads of agreement, it is in truth only one of six vendors of the real estate, and is not the vendor of the business. The seven companies involved did not have identical directors and shareholders, although there were some common directors and shareholders. It is entirely understandable that whilst the companies other than CB International might have been happy to negotiate, they would not want to be bound until the detailed terms of the transaction had been negotiated to finality. 29 In this context, I note that the purchase price was specified as $51 million (together with any GST payable). The heads of agreement recognised that there were would be seven vendors: six as to realty and one as to the business. The heads of agreement did not specify the way in which the purchase price would be allocated to the various parcels of realty and the business. That was a matter for later negotiation. In circumstances where the vendor companies did not have identical shareholders and directors, it would be unusual to expect them to commit to be bound to a sale of their individual interests for some unspecified fraction of the overall price. 30 Thus, I conclude, the heads of agreement created no binding obligation (whether contingent or otherwise) on CB International to procure the sale of the CB Hotel to Dencal. Nor did it give Dencal any enforceable right (again, whether contingent or otherwise) to require CB International to procure that result. It follows that Issue 1 should be answered "no". 31 That conclusion is sufficient to dispose of the proceedings: it means that the summons must be dismissed. However, in case I am wrong in that conclusion, I will deal relatively briefly with the remaining issues. I do so to the extent of finding the relevant facts, on the assumptions that: (1) Contrary to what I have just said, the heads of agreement did impose a binding obligation (conditional on the giving of notice pursuant to clause 4 of the terms and conditions, and perhaps on other matters) on CB International to procure the sale of the CB Hotel to Dencal; and (2) There is to be implied into the contract constituted by the heads of agreement an obligation on each party to do all such things as are necessary on its part to enable the other party to have the benefit of the agreement (see Griffiths CJ, with whom Cooper and Power JJ agreed, in Butt v M'Donald (1896) 7 QLJ 68 at 70-71); or (3) The contract is to be construed so that each party agrees to do all that is necessary to be done on its part for the carrying out of that which the contract (by hypothesis) agreed should be done (see Lord Blackburn, with whom Lord Selborne LC agreed, in Mackay v Dick (1881) 6 App Cas 251 at 263); and (4) There is also to be implied into the contract a duty to act reasonably, so that the parties' enjoyment of the rights granted to them would not be undermined or rendered nugatory (see the judgment of McHugh and Gummow JJ in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 450: in particular, their Honours' explanation of the concept of necessity in relation to implication of terms into a contract). 32 For convenience, although with less than complete accuracy, I shall refer to those three duties jointly as "the duty of cooperation". Issue 2: the letter of 31 July 2007 33 As I have indicated, on 10 July 2007 Mr Baron sent to Mr Miller six draft contracts for the sale of land and one draft contract for the sale of the CB Hotel business. Mr Miller reviewed those draft contracts. On 11 July 2007 he wrote to Mr Baron. The letter noted that the draft contracts "do not include documents we would naturally wish to inspect within our due diligence". It listed those documents and asked that they be provided. Mr Baron replied by email later that day forwarding a number of the documents on the basis that they form "part of any due diligence [but do] not form part of any of the contracts". 34 On 18 July 2007, Mr Miller wrote again raising a number of questions, in particular as to the hotel business. 35 On 20 July 2007 Mr Miller wrote again to Mr Baron. The letter dealt with the contract for sale of business. It sought a number of amendments. 36 On 23 July 2007, Mr Miller wrote to Mr Baron in connection with the draft contracts for sale of land. Again, he requested a number of amendments. 37 I interpose to note that some criticism was made of Mr Miller in the course of argument on the basis that he had been less than prompt in dealing with the draft contracts. That suggestion was not put to Mr Miller in cross-examination. It was said to be self evident on the documents. I do not accept that Mr Miller necessarily would not have been able to deal with the criticism. In those circumstances, I do not accept it. 38 On 24 July 2007, Mr Baron replied to Mr Miller's letters of 18, 20 and 23 July. Some of the requested amendments were accepted. Some were not. 39 Mr Miller wrote to Mr Baron on 26 August 2007, in relation to the hotel business. His letter did not deal with Mr Baron's (or his clients') attitude to the amendments sought to the draft contract for sale of that business. Also on 26 July 2007, Mr Miller sent the relevant correspondence to Mr Mark Durran of JLL and asked him to "work through the issues with the Vendor so we are able to make the tight timeframe." 40 A draft deed of confidentiality was prepared, submitted, and in due course executed. Nothing turns on that. 41 On 31 July 2007, Mr Miller replied in detail to Mr Baron's letter of 24 July 2007 relating to the draft contracts for sale of the hotel business and the realty. He accepted some of Mr Baron's responses, and pressed other requests for amendments. 42 Also on 31 July 2007, Mr Miller had a telephone conversation with Mr Baron. There is some dispute as to what was said during that conversation. On any view, reference was made to the need for Dencal to give Mr Baron a notice in writing of the kind contemplated by clause 4 of the terms and conditions in the heads of agreement if Dencal wished to proceed to the point of exchange, and to invoke the extension of time set out earlier in the heads of agreement (following the words "Exclusive Dealing Period"). Thereafter, but still on 31 July 2007, Mr Miller wrote to Mr Baron as follows: "We refer to the Heads of Agreement and to our telephone conversation this morning. We confirm that our client intends to proceed with the purchase of the properties. We request that exclusivity be extended by a further 3 working days for final contract amendments and exchange to take place in accordance with the Heads of Agreement." 43 Mr Miller and Mr Baron had a further discussion on 1 August 2007, relating to the terms of the draft contracts. Mr Baron did not recall this discussion at all. Mr Miller gave evidence of it; and his account of it was supported both by a contemporaneous file note and by a letter that he wrote to Mr Maloney setting out what had been discussed. As I mention later, this is a point relevant to my assessment of the competing evidence of Messrs Miller and Baron. 44 On 2 August 2007, there was a meeting attended by Mr Miller, Mr Kim Maloney of Dencal, Mr Baron, and Messrs Boris Markovsky, Felix Milgrom and Michael Teplitsky of CB International (and the associated vendor companies). On any view, the purpose of that meeting was, as Mr Miller said on more than one occasion, to settle the outstanding issues in relation to the terms of the various contracts. On any view, a number of outstanding issues were discussed. It will be necessary to return to that meeting in detail in considering issues 6, 7 and 8. 45 The meeting of 2 August concluded with agreement that Messrs Miller and Baron should meet the following day to complete the redrafting of the contracts. Messrs Miller and Baron did indeed meet on 3 August 2007. On any view, they went through the terms of the contracts. On any view, they discussed the redrafting of a number of clauses. Again, it will be necessary to return to the detail of that meeting, and following events, in discussing issues 6, 7 and 8. 46 At no time before the commencement of these proceedings did CB International or its legal advisers suggest that the letter of 31 July 2007 whose terms I have set out above was not an effective notice for the purposes of clause 4 of the terms and conditions. To my mind, it is obvious from the events of 1, 2 and 3 August to which I have referred that the parties did treat it as effective for those purposes. 47 In particular, it is clear that Mr Miller intended the letter to be a notice pursuant to clause 4, and it is equally clear that Mr Baron accepted it accordingly. Each of them is a careful and capable solicitor, with substantial experience in transactions of the kind in question. I have difficulty in understanding why the Court should substitute its own view for those of experienced parties and their experienced legal advisers. 48 Nonetheless, if on its proper construction the letter is inadequate for the purposes of clause 4, it must be treated so notwithstanding that the parties treated it differently (there being no reply of estoppel, conventional or otherwise). 49 Clause 4 requires Dencal, if it wishes to proceed to exchange, to notify the vendor's solicitor in writing "that it wishes to exchange contracts by the deadline date …". It is correct to say that the letter did not in terms incorporate those words. However, it did say that "our client intends to proceed with the purchase of the properties" – the properties being those defined in the heading to the letter, and the subjects of the draft contracts for sale. Further, the letter requested extension of the exclusive dealing period "by a further 3 working days for final contract amendments and exchange to take place in accordance with the Heads of Agreement". 50 Mr Epstein submitted that the words that I have just quoted indicate that the letter was doing no more than extending the exclusive dealing period for three days as contemplated by the heads of agreement. I do not agree. When the letter is read as a whole, and in context (including, on Mr Baron's evidence, his request for notification "that your client wishes to proceed with the transaction and… to extend your due diligence period… to exchange contracts"), I have no doubt that the letter should be treated, as indeed the parties did treat it, as a notice for the purposes of clause 4 of the terms and conditions. 51 However, Mr Epstein submitted, this did not mean that if issue 2 arose, it should be answered in favour of Dencal. He submitted that if, as Dr Leeming submitted, the heads of agreement were to be construed as giving Dencal an option to acquire the CB Hotel then it was essential that the option be exercised according to its terms. He submitted that an exercise of an option must be clear and unequivocal: Ballas v Theophilos (No.2) (1957) 98 CLR 193. Mr Epstein submitted that a clear and unequivocal exercise would require Dencal, as the grantee of the option, to make "an unqualified election to be… entitled to the rights, and bound by the obligations, of a purchaser upon the terms set out in the option" (quoting from the judgment of Smith J, whose judgment was upheld on appeal, in Ballas v Theophilos [1958] VR 576 at 581). 52 Mr Epstein submitted that in the present case there was no such unqualified election to be bound to the obligations of the purchasers set out in the heads of agreement, because Dencal had made it clear, on the day that it gave the notice, that it did not accept the terms and the special conditions propounded by the vendors through Mr Baron. 53 I accept that submission. If clause 4 conveyed an option, it was an option to purchase on terms acceptable to the vendors and incorporating their special conditions. Mr Baron had set out those terms in the contracts attached to his letters of 10 July 2007. He had indicated on 24 July 2007 that the vendors would accept some of the amendments proposed by Mr Miller, but would not accept others. Thus, as at 31 July 2007, the terms acceptable to the vendors, and the special conditions required by them, were those as set out in the draft contracts furnished on 10 July 2007 modified in some respects by the concessions recorded in Mr Baron's letter of 24 July 2007. If the heads of agreement did grant Dencal an option to purchase, and if Dencal did wish to exercise that option, it was required to accept those terms and conditions. Mr Miller's longer letter of 31 July 2007 made it plain that Dencal did not: he pressed for further amendments. 54 Thus, when the shorter letter of 31 July 2007 is considered in its context – which context includes the longer letter written on the same day – it is plain that Dencal was not making an unqualified election to be bound by the obligations of the purchaser under the various contracts for sale propounded by Mr Baron on 10 July 2007 modified to the extent set out in his letter of 24 July 2007. 55 Thus, if issue 2 arose, it should be answered "no". Issues 3 and 4: sale of the CB Hotel 56 Since I have concluded that if issue 2 arose for consideration it should be answered "no", and since these issues are predicated on a positive answer to issue 2, they should be answered "do not arise". Issue 5: obligations to procure the contractual object 57 I have set out above the assumption that the parties were bound by what I have called the duty of cooperation. Determination of the content and application of any such duty would depend on the particular circumstances (including the nature of the contractual obligations undertaken by each party). 58 Having regard to the hypothetical nature of this aspect of my reasons, I see no point in pursuing the issue further. Issue 6: breach of duty of cooperation? 59 For the reasons that I have just given, I do not think that this issue can be answered in a vacuum. In the circumstances, I propose to set out my findings on the facts, but to leave the question of breach of the duty of cooperation unanswered. 60 Dr Leeming's submissions assumed that the duty of cooperation required the parties – specifically, CB International – to negotiate in good faith to resolve the outstanding contractual issues. Some of those issues were questions of principle. Some were questions of drafting. However, it is by no means clear that the duty of cooperation would have that content, having regard in particular to clause 4 of the terms and conditions. 61 Dr Leeming's submission was in effect that CB International had breached the duty of cooperation because of the circumstances in which it had withdrawn from the transaction on 3 August 2007. 62 The evidence is clear that on 3 August 2007, Mr Teplitsky (whose interest in the CB Hotel was apparently the greatest of the three "partners", and who appears to have been the one whose views would prevail in the event of disagreement) instructed Mr Baron that CB International did not wish to proceed with the transaction. It is clear from Mr Teplitsky's evidence (which on this point I accept) that this was a commercial decision on his part. It is equally clear that he made the decision because he wished to pursue other options, including I think the possibility of redevelopment, for the CB Hotel. 63 At the time Mr Teplitsky communicated those instructions to Mr Baron, Messrs Miller and Baron had met and, on Mr Miller's evidence (which on this point I accept) worked through and resolved the great bulk of the remaining drafting issues in dispute. Mr Miller had undertaken to redraft the clauses in question. He did so later that morning, and (at Mr Baron's suggestion) sent the redrafted clauses electronically to Ms Jacqui Latherope, an employee of Mr Baron's firm. It appears to have been Ms Latherope's responsibility to include the revised clauses into the contract or contracts to which they were relevant. (Mr Baron was out at his office, following his meeting with Mr Miller in the morning of 3 August 2007, until about 11:30am or 12 noon.) 64 Mr Teplitsky sought in cross-examination to suggest that he had reasons other than "commercial reasons" for deciding not to proceed. He referred in particular to dissatisfaction with the agreed deposit provisions. I do not accept that aspect of Mr Teplitsky's evidence. He was an extremely unimpressive witness. His evidence was marked by lengthy pauses between question and answer: frequently, as to questions that were capable of a simple "yes or no answer", that were so answered, and that cannot possibly have required the reflection to which Mr Teplitsky subjected them. I formed the very strong impression that Mr Teplitsky was considering his answers with a view to minimising the harm that they might cause, rather than with a view to ensuring that they were to the best of his ability complete and truthful. Further, many of Mr Teplitsky's answers were completely nonresponsive. I do not accept that a man of his obvious intelligence and ability (as marked by his apparent commercial success, among other things) could have misunderstood the questions to the extent that his nonresponsive answers suggested. 65 Mr Teplitsky frequently asserted lack of recollection of matters that were put to him. I was left with the feeling that the asserted lack of recollection was on many of those occasions no more than a cloak on avoid giving an answer that Mr Teplitsky perceived, or feared, might be inimical to his defence of these proceedings. I found it very difficult to accept that a man of Mr Teplitsky's obvious intelligence and business ability could have had so poor a recollection as he asserted of recent and in many cases significant events. 66 Further, Mr Teplitsky denied that on 6 July 2007 his company had entered into more than one agreement. It was shown that it had. I simply cannot accept that Mr Teplitsky could have overlooked the second agreement. It was another agreement relating to the CB Hotel. It proposed what was in substance a joint venture for the redevelopment of the site. It was plainly impossible for the defendant and its associated companies to carry through those heads of agreement whilst at the same time (and on the assumptions governing this part of my reasons) performing its obligations under the heads of agreement with Dencal: particularly once (on the same assumptions) the obligation to procure the sale of the CB Hotel had been triggered on 31 July 2007. 67 I regret to say that I see only two explanations for much of Mr Teplitsky's evidence: (1) His recollection of recent events is so appallingly bad that his evidence cannot be accepted as credible; or (2) He was seeking to obfuscate and to lie. 68 Neither of those alternatives provides any basis for accepting Mr Teplitsky's evidence. I do not accept it save to the extent that it is corroborated by other, credible, evidence or is against interest. 69 Returning to the issue: Messrs Milgrom and Markovsky confirmed that the decision to withdraw from the transaction with Dencal was taken by Mr Teplitsky, and that it was taken for commercial reasons. For reasons I shall give in discussing issue 7, I am satisfied that by the conclusion of the meeting of 2 August 2007, agreement in principle had been reached on all but one of the outstanding commercial issues. I am also satisfied that by the conclusion of the meeting on 3 August 2007, Messrs Miller and Baron had worked through the bulk of the consequential drafting issues, and that with further work and cooperation they would have resolved all of those issues. 70 There is of course a question as to whether, but for Mr Teplitsky's decision not to proceed, the outstanding issues would have been resolved and contracts in a mutually acceptable form would have been exchanged by close of business on 3 August 2007. I think the better view is that those issues would have been resolved. Whether that could have been done in time is something that, on the evidence, I cannot say. Issue 7: agreement on all material issues? 71 The issues of principle that were unresolved immediately prior to the meeting of 2 August 2007 were: (1) Dencal's requirement for a restraint of trade; (2) The amount of the deposit: 5% or 10%; (3) Whether Mr Maloney should give a personal guarantee; (4) Whether the transaction should proceed through a sale of shares; (5) Allocation of the purchase price. 72 As to those issues, I conclude that the issues relating to the deposit and Mr Maloney's personal guarantee were resolved in principle at the meeting of 2 August 2007. The question of allocation of the purchase price was resolved either at that meeting or early on the following day. The proposed share sale transaction was and is an irrelevant diversion in circumstances where no one suggested that the failure to resolve it was an irremovable obstacle to an exchange of contracts on 3 August 2007. The only issue of principle left unresolved was that of restraint of trade. Assessment of the competing witnesses 73 In general, I prefer the evidence of that meeting given by Messrs Miller and Maloney to that given by Messrs Baron, Markovsky, Milgrom and Teplitsky. In part, that preference is based on my assessment of each of the witnesses in the witness box. In this respect, I should make it clear that I accept each of Mr Miller, Mr Maloney and Mr Baron as a witness who sought to tell the truth to the best of his ability. In general, I think that the same can be said of Mr Milgrom, although there were some aspects of his evidence that I regard as equivocating, and that have led me to conclude that I should examine it carefully. In general, I thought Mr Markovsky too sought to give evidence to the best of his ability. Again, however, there were some instances of equivocation which have led me to the view that I should examine his evidence carefully. 74 Notwithstanding what I have just said as to Mr Baron, I prefer Mr Miller's evidence where the two are in conflict. In general, Mr Miller kept careful notes of events. Mr Baron did not. Thus, as I have already noted, Mr Miller was able to give evidence of a telephone conversation with Mr Baron that occurred on 1 August 2007; Mr Baron had no recollection at all of that conversation. 75 Again, Mr Baron gave evidence to the effect that Mr Miller had sought to have inserted into the heads of agreement a provision to the effect that any dispute over special conditions required by the vendor would be resolved by an expert acting in effect as arbitrator. Mr Miller made no such request of Mr Baron. I think that Mr Baron was confusing, with requests for amendments to the draft heads of agreement made by Mr Miller, a previous draft of the heads of agreement prepared by Mr Durran in which such a provision appeared. That provision had been deleted at Mr Baron's insistence before the draft heads of agreement were sent to Mr Miller. There is no evidence that Mr Miller sought its reinstatement, or the insertion of a provision to the same effect. There is evidence that Mr Miller did seek a different amendment to the same clause. I am satisfied that if Mr Miller had sought the amendment suggested by Mr Baron, there would be some record of it. 76 Thus, whilst I accept that Mr Baron sought to give evidence that was truthful and accurate to the best of his ability, I prefer Mr Miller's evidence where they are in conflict. 77 Another reason for preferring the version of events given by Messrs Miller and Maloney is that in my view it is consistent with other unchallenged evidence and with the probabilities, looking at the matter objectively. As to the former: the meeting was attended by Mr Durran of JLL, to whom I have referred above. He was the person actually involved as CB International's agent in the negotiation of the transaction. His handwritten notes were in evidence. The particular notes are dated 3 August 2007. They say: "All parties present including solicitors. All shook hands ready for exchange today. Solicitors just putting into words what was agreed at the meeting. Gil Baron to contact John Miller for exchange time today." 78 The unmistakable inference from this is that at the conclusion of the meeting Mr Durran was satisfied that the outstanding questions in dispute had been resolved, and that all that remained was to document the parties' agreement and to proceed to exchange. 79 There is a concern with Mr Durran's notes, in that a little later on they refer to a conversation with "Felix + Boris on speaker phone" and record that "Felix is pulling out – no reason". Clearly, Mr Durran was mistaken in referring to a conversation with, or decision taken by, "Felix" (Mr Milgrom). Mr Milgrom's unchallenged evidence is that he was at a hospital on that day with his wife. It is equally clear that the decision to pull out was taken by Mr Teplitsky. Mr Durran's notes must be taken to be referring to a conversation with Mr Teplitsky and "Boris" (Mr Markovsky). That error in the notes is a factor bearing on their reliability; but I do not regard it as infecting Mr Durran's view of the results of the meeting on 2 August 2007. That view supports the evidence of Messrs Miller and Maloney. The meeting 80 The purpose of the meeting was to resolve all outstanding issues. I do not accept that the parties would have left, and agreed for their solicitors to meet the following day, without substantially achieving that aim. Certainly, they would not have done so if there remained fully unresolved a "deal-breaker" issue. Thus, I think, the probabilities are that the shaking of hands recorded by Mr Durran was, as Mr Miller and Mr Maloney said, a signification that an agreement in principle had been reached and that what was left was indeed "just putting into words what was agreed". True it is that no agreement, even at the level of principle, had been reached as to the restraint of trade. However, Mr Markovsky had put forward a proposal which appeared likely to resolve that issue, and the parties had agreed to consider it overnight and communicate on the following day. 81 This analysis is confirmed by the fact that the parties instructed their respective solicitors to meet the following day to resolve drafting issues. It is difficult to understand why the parties would have given those instructions if there were still significant matters of principle to be resolved. It is worth noting that the meeting was not intended to, and did not, involve any representatives of their respective clients. If there were still matters of principle to be agreed, one would have expected reference to be made to the clients, or the clients to be involved. Restraint of trade 82 The only matter of principle that in my view was not the subject of a complete agreement was the question of restraint of trade. There had been discussion of that. A term of two years seems to have been agreed (to the extent that Mr Milgrom sought to suggest that there was no reference to term, his evidence was inconsistent with that of the others and I do not accept it). The remaining question was one of radius. There was discussion of radii of 500 metres, 750 metres and 1 kilometre. Mr Markovsky suggested that a radius of 750 metres would be acceptable in principle, but that he would wish to confirm it by looking at a scaled map. Mr Miller said that Mr Markovsky said words to the following effect: "We will need to check the map or a better one [a map of sorts was available at the meeting of 2 August 2007) but 750 metres for 2 years should be alright." 83 I accept that evidence. The following day, Mr Miller sent an email to Mr Baron that confirmed among other things that "the restriction suggested by Boris of a radius of 750 metres is acceptable". At no stage did Mr Baron controvert his email. At no stage during 3 August 2007 did Mr Markovsky indicate that the suggested radius was in fact unacceptable. Mr Miller's evidence is that during the meeting with Mr Baron on 3 August 2007, he completed the relevant section of the contract for sale of business by noting a restriction for two years and a radius of 750 metres. I accept that evidence. 84 It does not follow, however, that the one issue left unresolved in principle at the conclusion of the meeting of 2 August 2007 must be taken to have been resolved the following day. Mr Markovsky's reference to a possible 750 metre radius was conditional. He needed to check to see if it would be suitable; and so did Mr Maloney. Although Mr Miller confirmed that the proposed radius was acceptable to Mr Maloney, at no stage did Mr Markovsky (or anyone else) communicate that it was acceptable to the vendors. I suspect that there were two reasons for this: (1) Mr Milgrom, who was to check the radius, was unable to do so because he was at hospital with his wife; and (2) From the vendors' point of view, the issue became irrelevant once Mr Teplitsky had decided not to proceed. 85 Accordingly, I do not think that agreement was reached either at the meeting of 2 August 2007 or thereafter on 3 August 2007 as to the restraint of trade required by Dencal. Deposit 86 The heads of agreement provided for a deposit of 5% of the total purchase price: $2.55 million. The draft contracts submitted by Mr Baron provided for a deposit of 10%, with the relevant vendor having an "absolute discretion" to accept 5% on exchange but to call for a further 5% at any time thereafter up to completion. Although there was some equivocation in the evidence of Messrs Markovsky, Milgrom and Teplitsky on this point, it is plain that those gentlemen sought to renegotiate, to their commercial advantage, what had been stipulated in the heads of agreement. It may well be that their attempt to do so, and their insistence on a deposit over and above that for which the heads of agreement provided, was of itself a breach of the duty of cooperation. 87 Be that as it may, the reality is that Mr Maloney was prepared to give ground. What was discussed at the meeting was a proposal whereby 5% would be paid on exchange and a further 5% on default. In other words, the vendors' "absolute discretion" to require the payment of a further 5% was given up, and Mr Maloney gave up his "right" under the heads of agreement to pay no more than a 5% deposit. 88 Insofar as Mr Teplitsky sought to suggest that a reason for his "commercial decision" to withdraw from the transaction was his dissatisfaction with Dencal's attitude to the deposit, I do not accept it; on the contrary, I think it is disingenuous. Alternatively, if (contrary to Mr view of Mr Teplitsky) that evidence should be accepted, it might indicate yet another breach of the duty of cooperation. 89 Thus, I conclude, the dispute as to the deposit was resolved on the basis that 5% would be paid on exchange and that the vendors would have the right to call for, and the purchaser would be obliged to pay, a further 5% on default. Personal guarantee 90 The heads of agreement made no reference to a personal guarantee. There was no obligation under them for Mr Maloney or anyone else to give a personal guarantee of the obligations of the purchaser. However, Mr Baron inserted into the draft contracts forwarded on 10 July 2007 a requirement that such a guarantee be given. There is a question, which it is not necessary for me to resolve, whether the heads of agreement permitted this to be done. If on their proper construction they did not then the requirement for a personal guarantee, and the subsequent insistence on that requirement, may well have amounted to a breach of the duty of cooperation. 91 In the longer letter of 31 July 2007, Mr Miller had indicated that Mr Maloney would not give a personal guarantee. Nonetheless, Mr Miller's evidence was that he had been instructed that Mr Maloney would give a personal guarantee if required; and Mr Maloney confirmed that those were his instructions. I accept that evidence. Thus, if the issue remained alive, it could have been resolved in a manner satisfactory to the vendors. 92 But the matter did not remain alive. I find, contrary to the suggestions of Messrs Baron, Teplitsky and Markovsky, but consistently with the evidence of Messrs Miller, Maloney and Baron, that the issue of personal guarantees was not raised at all during the meeting of 2 August 2007. The position before that meeting was that the personal guarantees had been sought and refused. Although Mr Miller essentially conducted the meeting, he asked at least once, including at the conclusion of the meeting, whether anyone else had any issues that they wished to raise. No one replied. Specifically, neither Mr Baron nor his clients raised the issue of personal guarantees. 93 Mr Maloney was directly concerned in the giving of a personal guarantee, and Mr Miller as his solicitor was well aware of Mr Maloney's desire not to give one. Their account of the relevant events makes sense: they would not raise the question, but were prepared to deal with it if it were raised. 94 Further, Mr Markovsky said that the question of the personal guarantee was a "deal breaker". That aspect of his evidence comes from his cross-examination, and is not to be found in terms in his affidavit (although, to be fair, Mr Markovsky did say in his affidavit that he regarded the personal guarantee as being of critical importance: perhaps an equivalent expression). In any event, if that evidence is to be accepted, it is unlikely that the parties would have instructed their solicitors to meet the next day and proceed with the task of redrafting the contracts, with a view to effecting an exchange. Yet on any view that is what happened. 95 In my view, the clear inference was that the vendors had decided to accept Mr Maloney's refusal to give a personal guarantee. If this were not correct, and if they were not in effect reserving their position (or hedging their bets), that might be another reason for finding that they had breached their duty of cooperation. 96 It is clear that Mr Maloney is a successful businessman possessed of substantial assets. In my view, Messrs Markovsky, Milgrom and Teplitsky were aware of that. I think the reality is that, once the question of the deposit had been resolved to their satisfaction, they decided not to pursue the question of personal guarantees. 97 There is an alternative approach to this issue. Under the heads of agreement, Dencal or its nominee was obliged to pay only a 5% deposit. That was to be paid in cash. There could be no question that a personal guarantee would be required for that deposit; the cash would be available. The personal guarantee was only required in respect of the additional 5% payable on default, in respect of which there was no cash fund to which the vendors could have resort. Since, on my view of the proper construction of the heads of agreement, the vendors had no right to demand a further 5% deposit, it must follow that their attempt to obtain a personal guarantee for that further 5% was equally unjustified. If the vendors, or specifically CB International, were not prepared to proceed to exchange because of the absence of a personal guarantee, then (on the assumptions governing this part of my reasons) that might be another breach of the duty of cooperation. Proposed share sale transaction 98 This is not an issue. There is no doubt that Messrs Miller and Maloney raised, as a possibility, that the transaction proceed by way of acquisition of shares in the vendor companies rather than by way of acquisition of the real estate and business. There is no doubt that the parties committed to using their best endeavours to seek to negotiate such a transaction. However, this was never put as the only form in which Dencal would proceed. In my view, the clear inference on the evidence is that Dencal was prepared to proceed to exchange of contracts, and to seek to negotiate thereafter for an alternative form of transaction. Allocation of the purchase price 99 As I have said above, the heads of agreement did not allocate the purchase price between the various vendors. Mr Baron had proposed an apportionment in the draft contracts forwarded on 10 July 2007. I accept that this apportionment was subject to his client's instructions. I accept that his clients had a different view. 100 Clearly, if only for capital gains tax purposes, the parties to the heads of agreement had differing interests in the fixing of the purchase price at particular levels for particular parcels of land and the business. Mr Baron proposed a particular allocation at the meeting. The evidence of Messrs Miller and Maloney was that Dencal said that it would accept that allocation. I prefer that evidence to the evidence of Messrs Baron, Markovsky, Milgrom and Teplitsky that the position was reserved. 101 In any event, when matters proceeded as they did on 3 August 2007 (by the redrafting of the contracts) without any reference to the subject matter, it must have been clear to all concerned that the allocation proposed by Mr Baron on behalf of his clients had indeed been accepted. It was certainly clear to Mr Baron (T123.17 - .24): "In any event, by the time Mr Miller came to your office first thing the following morning it was absolutely clear to you that this break-up of the purchase prices was acceptable to Mr Maloney, correct? A. I don't recollect there was any discussion on 3 August, but I assume because there was no discussion that his client had accepted those, that break-up." Miscellaneous matters 102 Mr Epstein pointed to a number of other issues raised by, in particular, Mr Baron. I do not propose to deal with them in detail. It is sufficient to say that I regard none of them as leading to problems that could not have been resolved as a matter of drafting between Messrs Miller and Baron, or by the parties in the course of performing their respective duties of cooperation. 103 There were a number of issues as to the outcome of Mr Miller's discussions with Mr Baron on the morning of 3 August 2007. Mr Miller gave evidence that he made notes in red ink on copies of the draft contracts for sale (one relating to realty and one relating to the business) at that meeting. He said that he used a pen with black ink to write over those notes. When copies of the contracts were produced, they contained annotations wholly in black ink, as well as in red ink overwritten with black. They appeared to contain annotations in other inks as well. 104 Mr Baron made a careful study of the draft contracts with their annotations. He gave evidence that not all the annotations on them had been the subject of discussion, let alone agreement, at the meeting of 3 August 2007. That evidence was not challenged, and I accept it. Nonetheless, I do accept that what might be called the "red" amendments reflected either agreements reached before the meeting or agreements reached at the meeting. The question is, rather, as to what might be called the "black amendments". 105 In view of the less than satisfactory way in which this evidence was adduced (late, and without CB international having any real opportunity to examine or test it) I do not propose to draw inferences favourable to Dencal from the "black" amendments to the draft forms of contract. On the contrary, to the extent that Mr Baron said that those "black" amendments were not the subject of discussion or agreement at the meeting of 3 August 2007, I accept that evidence, although I note that it does not preclude the possibility (not addressed by Mr Baron) that they may reflect earlier discussions or agreements. However, since Mr Miller's evidence did not enable this fascinating question to be pursued, I shall not do so. Issue 8: exchange of contracts 106 Any attempt to grapple with this issue involves in effect hypothesis upon hypothesis. I do not propose to do more than note that: (1) If forms of contract for sale could be identified, the purchase price for the various items of realty and the business should be allocated in the manner either agreed on 2 August 2007 or taken to have been agreed on 3 August 2007; and (2) There should be no restraint of trade incorporated into the sale of business. 107 There is one other matter that perhaps should be mentioned. 108 In the course of opening submissions, Mr Epstein raised a question as to the readiness, willingness and ability of Dencal or its nominee to perform. As will be seen from the statement of issues for decision, that no longer remains an issue. If it were, I would be satisfied, on Mr Maloney's evidence, that Dencal was and is ready willing and able to perform. Orders 109 I make the following orders: (1) Order that the summons be dismissed. (2) Subject to order (3), order that the plaintiff pay the defendant's costs of the proceedings. (3) Direct any party seeking to vary or discharge order (2) to give notice to the other of that fact, of the orders sought in place of order (2) and in brief the reasons why that order is sought; any such notice to be given within 14 days; a copy of any such notice to be given to my associate; (4) Order that each party be released from the undertaking given by it to the Court on 21 August 2007. (5) Stay order (4) up until and including 5:00pm on 14 December 2007. (6) Order that the exhibits remain with the file for one month and that thereafter they be held or disposed of in accordance with the rules. 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.