Supreme Court New South Wales Medium Neutral Citation: In the matter of Painaway Australia Pty Ltd (in prov liq)(admin apptd) - Painaway Australia Pty Ltd v JAKL Group Pty Ltd & ors [2011] NSWSC 205 Hearing dates: 3, 4, 8-11 February 2011 Decision date: 24 March 2011 Before: Ward J Decision: Held that a binding agreement came into existence by mutual assent (or on the application of principle of conventional estoppel) under which Painaway has exclusive licence regarding intellectual property, trade marks and formulas, such licence not validly terminated by Nature's Remedies. Short minutes of order to be prepared. Catchwords: CONTRACT - OFFER & ACCEPTANCE - whether offer constituted by signing of licence and shareholders agreements by some parties thereto - whether inferred acceptance thereof - whether manifestation of mutual assent to contract - HELD - contract established by mutual assent - ESTOPPEL - whether conventional estoppel applied to preclude denial of licence agreement - HELD - conventional estoppel established - INTELLECTUAL PROPERTY - whether exclusive licence in respect of registered trade marks and formulas -whether registered owner of trade marks can contractually fetter statutory right to use trade mark - whether confidential information in formulas is assignable - HELD - exclusive licence - statutory right of registered owner can be so fettered by contract - confidential information not property assignable as such - CORPORATIONS - whether pre-incorporation contract - HELD - no pre-incorporation contract Legislation Cited: Corporations Act 2001 (Cth) Therapeutic Goods Act 1989 (Cth) Trade Marks Act 1995 (Cth) Trade Practices Act 1974 (Cth) Fair Trading Act 1987 (NSW). Cases Cited: Aarn E Levine and Co Inc v Calkraft Paper Co 429 F Supp 1039 (1976) Ainsworth v Criminal Justice Commn (Qld) [1992] HCA 10; (1992) 175 CLR 564 Air Great Lakes v K S Easter (Holdings) (1985) 2 NSWLR 309 Aquaculture Corp v New Zealand Green Mussel Co Ltd (1985) 5 IPR 353; (1986) 10 IPR 319; (1990) 19 IPR 527 Attorney-General (NSW) v Brewery Employees Union (NSW) (1908) 6 CLR 469 Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406; (1996) 139 ALR 663 Australian Blue Metal Ltd v Hughes and Ors [1962] 3 All ER 335 Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 Aztech Science v Atlanta Aerospace (Woy Woy) [2005] NSWCA 319; (2005) 55 ACSR1 Banks v Transport Regulation Board (Vic) (1968) 119 CLR 222 Barrier Wharfs v W Scott Fell & Co (1908) 5 CLR 647 Baulkham Hills Private Hospital Pty Limited v G R Securities Pty Limited (1986) 40 NSWLR 622 Boardman v Phipps [1967] 2 AC 46; [1966] 3 All ER 721 Bowden Wire Co Ltd v Bowden Brake Co Ltd (1914) 31 RPC 385 Brambles Holdings v Bathurst City Council [2001] 53 NSWLR 153 Branir Pty Ltd & Ors v Owston Nominees [No 2] Pty Ltd & Anor [2001] FCR 1833; (2001) 117 FCR 424 B Seppelt & Son Limited v Commissioner for Main Roads (1975) 1 BPR 9147 Budget Rent A Car System Pty Ltd v Kay Rent A Car Pty Ltd (1985) 8 FCR 116 Campbell v Backoffice Investments Pty Ltd (2009) 83 ALJR 903 Coles v Wood [1981] 1 NSWLR 723 Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075 Con-Stan Industries Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 Crawford Fittings Co and Ors v Sydney Valve & Fittings Pty Ltd and Anor (1988) 14 NSWLR 438 Cypjayne Pty Ltd v Rodskog [2009] NSWSC 301 Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361 Delphic Wholesalers Pty Ltd v Elco Food Co Pty Ltd (1987) 8 IPR 545 DPC Estates Pty Ltd v Grey & Consul Development Pty Ltd [1974] 1 NSWLR 443 Electronic Industries Ltd v David Jones Ltd (1954) 91 CLR 288 Empirnall Holdings v McMahon Paull Partners (1988) 14 NSWLR 523 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 Film Bars Pty Limited v Pacific Film Laboratories Pty Limited (1979) 1 BPR 9251 Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 General Electric Co v General Electric Co Ltd [1972] 1 WLR 729; [1972] 2 All ER 507 G R Securities v Baulkham Hills Private Hospital Pty Limited (1986) 40 NSWLR 631 Hanson v Radcliffe UDC [1922] 2 Ch 490 Heap v Hartley (1889) 42 Ch D 461 (CA) Heggies Bulkhaul v Global Minerals Australia (2003) 59 NSWLR 312 Hillas v Arcos Ltd (1932) 147 LT 503 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810; [2008] ATPR 42-410 Ibeneweka v Egbuna [1964] 1 WLR 219 Industrial Equity Ltd v Lyons (NSWSC unreported, Cohen J, 15 October 1991) Inline Logistics Ltd v UCI Logistics Ltd [2002] R.P.C 32 Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11 Integrated Lighting & Ceilings Pty Limited v Phillips Electrical Pty Limited (1969) 90 WN (Pt 1) (NSW) 693 Lawfund Australia Pty Limited v Lawfund Leasing Pty Limited (2008) 66 ACSR 1 Lohar Corp Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177 Mackay v Dick (1881) 6 App Cas 251 Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616 Masters v Cameron (1954) 91 CLR 353; (1954) 28 AJLR 438 Mid-City Skin Cancer & Laser Centre v Zahedi-Anarak [2006] NSWSC 844 Milne v Sydney MC (1912) 14 CLR 54 MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 Morison v Moat (1851) 9 Hare 241; 68 ER 492 Neeta (Epping) Pty Ltd v Phillips [1974] HCA 18; (1974) 131 CLR 286; (1974) 3 ALR 151 Newbery v James (1817) 35 ER 1011 Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 Pacific Carriers v BNP Paribas (2004) 218 CLR 451 Pioneer Kabushiki Kaisha v Registrar of Trade Marks (HCA, unreported, Aickin J, 1 November 1977) Prints for Pleasure Ltd v Oswald-Sealy (Overseas) Ltd [1968] 3 NSWR 761 Ray v Davies (1909) 9 CLR 160 Re Judiciary and Navigation Acts (Advisory Opinions Case) [1921] HCA 20; (1921) 29 CLR 257 Re Keene [1922] 2 Ch 475 Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1 RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128 R T & Y E Falls Investments Pty Limited v The State of New South Wales & ors [2001] NSWSC 1027 Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Smith Kline & French Laboratories (Aust) Ltd v Secretary, Dept of Community Services and Health (1990) 22 FCR 73 The Commonwealth v Verwayen (1990) 170 CLR 394 Thomas v Sorrell (1674) Vaughan 330; 124 ER 1098 Thompson v Palmer (1933) 49 CLR 507 Toll (FGCT) v Alphapharm (2004) 219 CLR 165 Trans Realties Pty Limited v Grbac [1975] 1 NSWLR 170 TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151 United Dominion Corporation Limited v Brian (1985) 157 CLR 1 University of New South Wales v Moorhouse Angus & Robertson (Publishers) Pty Ltd [1975] HCA 26; (1975) 133 CLR 1 Vroon BV v Fosters Brewing Group Ltd [1994] 2 VR 32 Waldorf Apartment Hotel v Owners Corp SP 71623 [2010] NSWCA 226 Waltons Stores v Maher (1988) 164 CLR 387 Watson v Foxman (1995) 49 NSWLR 315 Winter Garden Theatre (London) Ltd v Millenium Productions Ltd [1947] 2 All ER 331 Texts Cited: McKeough et al, Intellectual Property: Commentary and Materials (4th edn) Meagher, Gummow and Lehane's Equity - Doctrines and Remedies (4th edn) Radan et al, Equity and Trusts (2nd edn) Stuckey 'The Equitable Action for Breach of Confidence: Is Information Ever Property?' (1981) 9 Sydney Law Review 402 Category: Principal judgment Parties: Painaway Australia Pty Ltd (Applicant) JAKL Group Pty Ltd (First Respondent) Mickey Rose Investments Pty Ltd (Second Respondent) Angelo's Angels Pty Ltd (Third Respondent) Nature's Remedies Pty Ltd (Fourth Respondent) John William Carroll (Fifth Respondent) Linda Jane Carroll (Sixth Respondent) Angelo Hyder (Seventh Respondent) Elias Michael Nassar (Eighth Respondent) Representation: Counsel: J Svehla (Applicant) J Ireland QC with C Cassimatis (First, Fourth, Fifth & Sixth Respondents) D Stack (Second, Third, Seventh & Eighth Respondents) Solicitors: Holding Redlich (Applicant) PA Legal (First, Fourth, Fifth & Sixth Respondents) Kemp Strang (Second, Third, Seventh & Eighth Respondents) File Number(s): 10/253120 Judgment 1HER HONOUR: These proceedings were commenced in July 2010 on an application by Mr John Carroll, a director of Painaway Australia Pty Ltd (and also a director of one of its shareholders - the first respondent, JAKL Group Pty Limited), seeking to have Painaway wound up on the just and equitable ground under s 461(1)(k) of the Corporations Act 2001 (Cth) and on the basis of oppression (based on allegations that the other two directors, Mr Elias Nassar and Mr Angelo Hyder, had acted in their own interests rather than in the interests of members). (JAKL, as a shareholder of Painaway, was subsequently substituted as the plaintiff in the proceedings.) 2Painaway carried on the business of the marketing and distribution of pharmaceutical products, comprising arthritis creams and sprays and sports creams and sprays, to which I will refer collectively as the Painaway products. (These include products marketed under a "PainAway" trade mark and others marketed under a "Johno's Edge" trade mark.) 3JAKL, as trustee for the Carroll Family Trust, is one of the three shareholders of Painaway. The remaining shareholders are Mickey Rose Investments Pty Limited and Angelo's Angels Pty Limited, being the trustees of family trusts established by the Nassar and Hyder families respectively. 4In August 2010, the shareholders other than JAKL (Mickey Rose and Angelo's Angels), together with Messrs Nassar and Hyder, filed an interlocutory process in the winding up proceedings, seeking (amongst other things) the appointment of a receiver, relief from oppression and an order for the sale of the Painaway business and compulsory purchase of either the Nassar/Hyder companies' shares or JAKL's shares in Painaway by the remaining shareholder(s) as the case may be. One advantage of a receivership over a winding up was, as I understand it, perceived to be that it avoided the possibility that any licence held by Painaway in respect of the Painaway products might be automatically terminated as a consequence of a court-ordered winding up of the company. 5The matter came before me initially in November last year on the application of Mr Neil Geoffrey Singleton, who had been appointed in August 2010 as the receiver and manager of Painaway. By a Second Amended Interlocutory Process filed in court on 11 November 2010, Mr Singleton sought various orders, including an order for his appointment as provisional liquidator of Painaway. Although this was at first opposed by JAKL, ultimately each of the Painaway shareholders on that occasion consented to an order for Mr Singleton's appointment as provisional liquidator of Painaway; leaving as the only matter then before me Mr Singleton's application (made consequent upon his appointment as provisional liquidator) for leave pursuant to s 436B(2)(g) of the Corporations Act 2001 (Cth) to appoint himself and his business partner, Mr Alan Hayes, as voluntary administrators of Painaway. That application was opposed by JAKL (and by a creditor of the company, Alchemy Agencies, who was represented by Mr Carolan of Counsel on that occasion). After hearing argument on that (more limited) application, I acceded to it for the reasons given on 11 November 2010 and gave leave accordingly. 6As a consequence, since November 2010, Mr Singleton and Mr Hayes have acted in the capacity of voluntary administrators of Painaway. In that capacity, they were obliged to convene a meeting of creditors within the statutory time period and to report to creditors on their investigations. Relevant for that purpose was the question as to what rights, if any, Painaway now has in relation to the manufacture, marketing or distribution of the Painaway products (and, in particular, whether any such rights are assignable, so as to provide a potential commercial benefit for the company, by way of entry into a Deed of Company Arrangement or the like that the administrators might in due course be able to recommend to creditors). 7The view of Mr Singleton, as at November 2010, was that the company was then, or was likely to become, insolvent but that if Painaway could sell the stock presently in its possession, and make use of the raw materials also in its possession to manufacture and sell more stock, then it would be able to repay trade creditors; and that, if it does have an assignable exclusive licence in relation to the Painaway products, then it would be able to realise value for the company by its sale. 8On 2 November 2010, I ordered that particular questions (broadly relating to the binding or otherwise nature of a licence agreement that the administrators, and the Nassar/Hyder interests, asserted was in place between Painaway and another company associated with Mr Carroll, Nature's Remedies Pty Ltd, in relation to the Painaway products) should be heard and determined separately from other matters in the proceedings. I listed the matter for the hearing of those separate questions on an urgent basis. In anticipation of that hearing, Painaway filed and served an Interlocutory Process dated 24 November 2010 in relation to the separate questions. 9The order for the hearing of the separate questions was subsequently vacated by me when it became apparent that the issues raised in relation to the alleged licence (and rights claimed by Messrs Nassar and Hyder in relation to matters concerning Nature's Remedies) were such that pleadings would be necessary. In particular, the Nassar/Hyder interests had sought an order that the hearing and the determination of the Separate Questions not prevent them from seeking, arguing and obtaining, at some future time, relief on the basis that they have an equitable and/or legal interest in Nature's Remedies and in the Intellectual Property and/or the Painaway Formulas, as those terms are defined in a document entitled Shareholders Agreement. This gave rise to the need for pleadings. I made directions for this aspect of the matter (ie, the disputes in relation to the alleged licence and the shareholdings in Nature's Remedies) to continue on pleadings, with a view to there being an expeditious hearing of the licence issues early in the 2011 law term. 10Pleadings were filed by the respective parties and the matter was listed for hearing (broadly on the issues raised in those pleadings) before me from 3 February 2011. The winding up application and the oppression claims were not the subject of the hearing before me in February; in relation to the latter it being accepted as a matter of practicality that any oppression suit was predicated on there being some value remaining in the company. (If, as is submitted on behalf of the Carroll interests, Painaway has no enduring or valuable intellectual property or other rights in relation to the manufacture or distribution and sale of the Painaway products which the administrators are in a position to sell or otherwise deal with on a commercial basis, then it is unlikely as I understand it that a compulsory purchase order will be of much value to the parties even if one or other of the oppression suits were to succeed.) 11The administrators sought (and obtained) in December last year an extension, under s 439A(6) of the Corporations Act , to late February, of the convening period for the holding of the requisite creditors' meeting in the voluntary administration of the company, in order to enable the administrators (in assessing the recommendations or opinions that they would be required by statute to make for the purposes of their report to creditors) to obtain the court's determination of the separate questions. (As noted, however, the matter did not ultimately proceed by way of separate questions.) 12As it became apparent, not least from the volume of material tendered during that hearing, that it was unlikely that my reasons for judgment would be published in sufficient time for consideration by the administrators and report to the creditors (with such consequential recommendations as they might make as to the ongoing course of the administration) in advance of the convening of the creditors' meeting within the extended time period to late February 2011, the administrators made (and I acceded to) a further application for an extension of the convening period for the creditors' meeting until April 2011. Issues 13With that introduction, I turn to the issues that are now before me for determination which are as follows: (i)did a binding agreement come into existence under which Painaway was granted an irrevocable and exclusive licence to manufacture, market and distribute the Painaway products and to use the Painaway trade marks in relation to those products: and, if not, is Nature's Remedies (the registered owner of the Painaway trade marks) estopped from denying the existence of such an agreement? (ii)if the answer to either part of (i) is in the affirmative, is the licence so granted to Painaway assignable by it? (iii)if all that Painaway had at the relevant time (as the Carroll interests contend) was an implied licence in relation to the marketing distribution and sale of the Painaway products, was that implied licence terminable at will or only on the provision (and, if so, on what period) of reasonable notice? (iv)if the answer to (i) is in the negative, then on the alternative claim put by the Nassar/Hyder interests are Messrs Nassar and Hyder entitled to a beneficial interest in the Intellectual Property and Painaway Formulas (and the net proceeds of any sale thereof) or, alternatively, to a 49% shareholding in Nature's Remedies. Summary 14For the reasons set out below, I am of the view that: (i) a binding agreement did come into existence under which Painaway was granted an exclusive licence to manufacture, market and distribute the Painaway products and to use the trade marks in relation to those products, that licence being irrevocable (though terminable in accordance with the provisions of the signed Licence Agreement); had that not been the case, Nature's Remedies (the registered owner of the Painaway trade marks) would in any event have been precluded by virtue of the principles of conventional estoppel from denying the existence of such an agreement; (ii) while the licence so granted to Painaway in relation to the use of the Painaway trade marks is assignable by it, the confidential information comprised in the Painaway formulas is not property which is assignable, as such; nevertheless the court should strive to give meaning to the intent of the parties expressed in their agreement that the rights under the Licence Agreement be transferable; Nature's Remedies and the Carrolls having agreed that the rights in relation to the formulas are transferable could not complain if Painaway were to grant rights to use the Painaway Formulas to an "assignee" (provided that did not materially affect the integrity of the intellectual property) and, if Painaway did so, Nature's Remedies and the Carrolls would have a contractual obligation to facilitate the use of such formulas by an "assignee" in accordance with the agreement; (iii) this issue does not arise given the finding in (i); had it arisen, I would have held that the implied licence (that the Carroll interests have acknowledged Painaway had in relation to the Painaway products) was terminable only on reasonable notice and that the period of such notice would in all the circumstances not expire before 31 December 2012; (iv) Messrs Nassar and Hyder are not entitled as a matter of contract to a shareholding in Nature's Remedies nor are the Carroll interests estopped from denying such an entitlement; as to the claimed beneficial interest in the Intellectual Property and Painaway Formulas (and the net proceeds of any sale thereof), the entitlement of the Nassar/Hyder interests is, as contained in the signed Licence Agreement, limited to a contractual right to a share of the net proceeds of sale if the Carrolls at their election decide to sell such of the goodwill, or such of the Intellectual Property, "as is attributed to the Painaway Formulas" but in the interim Messrs Nassar and Hyder have no proprietary interest in the said Intellectual Property. Further, as there is no sale currently in the contemplation of the parties, it is not possible to determine in advance whether a liability to pay any part of the net proceeds of such a sale would arise and it is not appropriate to grant any declaratory relief in those circumstances. Parties 15Before setting out the relevant facts, I outline the relationship between the respective parties. 16When I refer in these reasons to the Carroll interests, I refer collectively to the fifth respondent (Mr John Carroll), the sixth respondent (his wife, Mrs Linda Carroll) and the companies associated with them, namely the fourth respondent (Nature's Remedies) and the first respondent (JAKL, the plaintiff in the winding up proceedings and the trustee of the Carroll Family Trust). Mr & Mrs Carroll are the shareholders and directors of both JAKL and Nature's Remedies. 17It was Mr Carroll (whose grandfather had earlier developed a pain relief formula, as deposed to by Mrs Carroll in her affidavit of 18 October 2010 para [10]) who created or developed the formulas now used in the manufacture of the Painaway products. Much emphasis has been placed by the Carroll interests on the confidentiality of the said formulas (not so much as to the ingredients used therein, but as to the manner in which they are combined), a matter to which I return in due course. 18Nature's Remedies is the registered owner of the "PainAway" and "Johno's Edge" trade marks, under which the respective Painaway products are sold. (Although the registered trade mark is "PainAway", for convenience I have used the lower case when referring to each of the company Painaway, the Painaway products and the Painaway trade marks throughout this judgment. Further, I have in general not differentiated between the "PainAway" and "Johno's Edge" trade marks simply referring to them collectively.) Nature's Remedies is licensed for distribution of the Painaway products under the Therapeutic Goods Act 1989 (Cth). Mrs Carroll is the Qualities Assurance Manager of Nature's Remedies (having what she describes as "many roles" in that position, at least two of which relate to the certification for release to the public of the Painaway products.) 19As noted earlier, JAKL is one of the three shareholders of Painaway. The other two shareholders are the companies associated with the Nassar/Hyder interests. Broadly speaking, the Nassar/Hyder interests are aligned. 20When I refer to the Nassar interests, I refer collectively to the eighth respondent (Mr Elias Nassar) and the second respondent (Mickey Rose), which is the trustee of the Nassar family's discretionary family trust. (Mrs Nassar, not a party to these proceedings, is the sole director and shareholder of Mickey Rose. Some of the Nassar family's contributions to the Painaway business venture were made through another corporate entity, Blackrock Multiworx Pty Ltd, but nothing seems to turn on this as it is not disputed that each of the Nassar and Hyder interests separately contributed a substantial amount of funding for the venture.) 21When I refer to the Hyder interests, I refer collectively to the seventh respondent (Mr Angelo Hyder) and the third respondent (Angelo's Angels), which is the trustee of the Hyder family's discretionary family trust. Mr Hyder's wife (Mrs Leanne Hyder) gave evidence in the proceedings but is not a party to the proceedings in her own right. She worked for some time as bookkeeper in relation to the Painaway business, although the extent of her role seems to be disputed by the Carrolls. 22I have referred in these reasons to the critical documents in question (the Shareholders Agreement and Licence Agreement) for convenience by their titles, though it is not disputed that neither was fully executed and the question to be determined is whether those documents in fact record a binding agreement between the parties. I have used the word 'venture' or 'joint venture' in these reasons in the general sense of a joint endeavour or undertaking in which the various individuals or entities were involved, as a more neutral term (given that there is a live dispute between the parties as to the form in which their venture was conducted). In that regard, I note that in United Dominion Corporation Limited v Brian (1985) 157 CLR 1 , Mason, Brennan and Deane JJ said [at 746]: The term "joint venture" is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots' law, "adventure") will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a "joint venture" and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred . (My emphasis) 23I should also note that I have not based my findings in this judgment on any particular credit issues in relation to the witnesses (although criticism was levelled against the Carrolls and Messrs Nassar and Hyder by the opposing sides). It was apparent that feelings have run high in relation to this matter and that the relationship between the parties that had led to such a successful financial venture has unfortunately deteriorated such that the parties are now on very poor terms as between themselves. The fact that there are different versions of the conversations, and that the parties had different understandings of what was to occur from time to time, is not surprising given that each would naturally have perceived matters from his or her own perspective and none has taken any detailed note of the relevant meetings (nor would be likely to have done so). 24The difficulties in such a situation were recognised in Watson v Foxman (1995) 49 NSWLR 315 (at 318-319), McLelland CJ in Eq (as his Honour then was): ... human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. (my emphasis) 25His Honour went on to say that: Each element of the cause of action [there, for misleading and deceptive conduct, though his Honour noted that the principles also applied in considering a claim in contract or estoppel] must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712 . 26In Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810; [2008] ATPR 42-410 (at [41]), referring to the above passages, Rares J said: His Honour's observations as to the frailty of human memory are, of course, not to be taken as limited simply to cases invoking claims under the Trade Practices Act or its analogues. They are just as apposite in a case such as this where the question arises of what oral terms of the contract were agreed in the course of negotiations. 27I have therefore placed weight instead on the contemporaneous notes and records of the meetings and conversations between the parties as recorded by their legal and accounting advisers and, in particular, the solicitor who acted in the preparation of the documents signed at the 18 April meeting, Mr Innis. He struck me as a careful and considered witness, whose evidence was that of an objective observer of the relevant events. Mr Innis was candid in his acceptance of the proposition that in hindsight it would have been better for him to have taken other steps in relation to the execution of the relevant agreements, but there was no suggestion that he had any personal interest in the outcome of the proceedings and no criticism of the truthfulness of his evidence or the accuracy of his note-taking. 28The underlying dispute (and genesis of the current proceedings) is one between the Carroll interests and the Nassar/Hyder interests. It is clear from Mr Carroll's evidence in the witness box that he regards Messrs Nassar and Hyder as seeking to take from him something that is rightfully his or as otherwise having acted wrongly in relation to the business venture in which they were together involved (to put it in more neutral terms than did either Mr Carroll or his adviser, Mr Lombardo). For their part, Messrs Nassar and Hyder have emphasised the 'spectacular' success of their marketing and promotional efforts (through their contacts in the sporting, and more particularly boxing, world) and the significant financial contribution they made in order to prepare for the 2007 launch of the Painaway products. They complain that this is an attempt by the Carroll interests to prevent them from sharing in the fruits of that investment. 29In the midst of this dispute, the administrators stand in a neutral position, their concern being to establish what assets are available for the benefit of the company (having regard to the statutory objective of Part 5.3A of the Corporations Act , which is to maximise the prospects of a better return for creditors than on a winding up of the company). While the administrators and the Nassar/Hyder interests both contend that there is an existing and enforceable licence agreement in respect of the Painaway products, the administrators do not take a position in relation to the alternative claims made by the Nasser/Hyder interests. Pleadings 30Painaway was the moving party on the hearing before me, though not the plaintiff in the substantive proceedings. It filed a Statement of Claim on 17 December 2010 and an Amended Interlocutory Process on that date. The Nassar/Hyder interests (by their Defence filed on 27 January 2011) have (save for a few paragraphs to which they do not plead) admitted the entirety of Painaway's claim. In contrast, the Carroll interests (who filed their Defence on 31 January 2011) take issue with the substance of Painaway's claim (though admitting various parts either on a qualified basis or without qualification). 31Filed also in the proceedings since the filing of the Painaway Statement of Claim were various statements of cross-claim: (i) First, the Nassar/Hyder interests filed on 12 January 2011 the First Statement of Cross-Claim (the Nassar/Hyder cross-claim), against the Carroll interests and Painaway, in which they principally seek declaratory relief. In particular, Mr Nassar and Mr Hyder seek declarations that they own or are otherwise beneficially entitled to 40% of the Intellectual Property and Painaway Formulas (as defined in the Shareholders Agreement) and the goodwill therein and are entitled to 40% of the net proceeds from the sale thereof (the IP Ownership Claim) or, alternatively, that they are the beneficial owners of 49 shares in the capital of Nature's Remedies and own or are otherwise beneficially entitled to 49% of the Painaway Formulas and the Painaway Trade mark, and to that percentage of the net proceeds of the sale thereof (the Shareholding Claim). Relief is also sought by reference to alleged oppression in the conduct of the affairs of Painaway (though, as noted earlier, the claim in oppression was not argued in the hearing before me) or damages for misleading and deceptive conduct by Mr and Mrs Carroll and Nature's Remedies. The Carroll interests filed a Defence to the Nassar/Hyder Cross-Claim on 19 January 2011 and Painaway filed its Defence thereto on 2 February 2011. (ii) Secondly, on 19 January 2011, Nature's Remedies filed the Second Statement of Cross-Claim (the Nature's Remedies Cross-Claim) against Painaway in which Nature's Remedies seeks orders permanently to restrain Painaway from manufacturing, marketing, advertising and selling Painaway products without the licence or consent of Nature's Remedies. Significantly, for the administrators' alternative claims in relation to the implied licence, Nature's Remedies pleads that Painaway sold and distributed Painaway products with its implied licence from March 2006 (at [5]) but alleges that, by a letter dated 9 December 2010 from its solicitors, Nature's Remedies terminated all authority or licence that might then exist for Painaway to continue to manufacture, market, advertise and sell products bearing the Painaway trade mark. Painaway filed its Defence to the Nature's Remedies Cross-Claim on 27 January 2011. At the outset of the hearing in February, issue was taken between the Carroll interests and the administrators as to whether the actions of Nature's Remedies in terminating the only licence that the Carroll interests concede Painaway had in relation to the Painaway products precluded the administrators from selling the Painaway stock currently on hand, or from using the existing stock of raw materials to manufacture and sell further Painaway product. Suffice it at this stage to say that as at the conclusion of the hearing before me it was agreed by the Carroll interests that the administrators could sell such of the stock presently on hand that was not otherwise quarantined by Mrs Carroll and could make use of the existing raw materials to produce and sell further stock but they maintained that it was open to Nature's Remedies to manufacture and market its own stock and thus to compete with Painaway in the marketplace. (iii) Thirdly, on 27 January 2011, Painaway filed a Third Statement of Cross-Claim (the Painaway Cross-Claim) against all of the other parties, alleging a failure by Nature's Remedies (since the appointment of Mr Singleton as receiver on 31 August 2010) to comply with certain alleged terms of the implied licence pleaded by Nature's Remedies in the Nature's Remedies Cross-Claim. It is alleged that this has precluded the advertisement, distribution, marketing and sale of the Painaway products first by the receiver and then by the voluntary administrators and is in breach either of the agreements as alleged by Painaway or alternatively in breach of the implied licence acknowledged by the Carroll interests. In this Cross-Claim, Painaway sought, among other things, an order that the Carroll interests grant to it a transferable non-revocable exclusive perpetual right and licence to use the Intellectual Property and the Painaway Formulas and to manufacture and sell the Painaway products. 32Objection was raised by Senior Counsel for the Carroll interests (Mr Ireland QC) to the administrators moving on the Painaway Cross-Claim given that it was only filed (outside the time for the filing of cross-claims set out in the directions I made in December last year) and on the basis that it purported to be a cross-claim by a party in the position of the plaintiff in the proceedings. Without making any concession in this regard, Counsel for Painaway (Mr Svehla) indicated that his clients did not press the Third Statement of Cross-Claim at this time (though suggesting that relief of the kind articulated therein might be sought at the conclusion of the hearing based on the matters established on the issues raised in the other pleadings - in particular, its defence to the Nature's Remedies Cross-Claim). I therefore did not need to deal with the discretionary/procedural issues thrown up by Mr Ireland's objection to the Painaway Cross-Claim. Background Facts 33It is not disputed that, in or about 1996, Mr Carroll developed a formula for a product then called "Johno's All Natural Pain Spray". That product was manufactured by a company known as Building Health Pty Ltd (in which the Carrolls had an interest) and distributed by a company known as Australia's Own Pty Ltd. It was registered with the Therapeutic Goods Administration in 1997. (Later, in May 1999, products known as Painaway Sports & Recovery Spray and Painaway Pain Relief Therapy were similarly registered). 34Nature's Remedies was incorporated in May 1998, with Mr and Mrs Carroll as its directors and Mr Carroll as its secretary and sole shareholder. Its principal place of business was the Carrolls' property at Jilliby. 35On 20 July 1998, a Mr Gary Valentine was appointed a director of Nature's Remedies and his company, LSJK Holdings Pty Ltd, became a shareholder of Nature's Remedies, holding 49% of the share capital (Mr Carroll retaining the remaining 51%) of the company. (It is LSJK's shareholding to which Messrs Nassar/Hyder contend, in the alternative claim contained in the Nassar/Hyder Cross-Claim, that they are entitled.) LSJK also held an interest in the Building Health company. The precise arrangements between Mr Valentine and the Carrolls were not made clear. The books of Nature's Remedies (as at late 2003/early 2004) recorded a loan from Mr Valentine to the company in the sum of $100,000; however, Mr Hyder deposed to discussions with Mr Valentine in 2003 in which he says the latter claimed to have invested $500,000 in the company. 36At various times in 1998 (May and August, respectively), the trade marks "PainAway" and "Johno's Edge" were registered in Australia under the Trade Marks Act 1995 (Cth), the registered owner of those trade marks being Nature's Remedies. ("PainAway" was also in due course the subject of a registered patent in the United States in the name of Mr Carroll.) As between Nature's Remedies and the Carrolls, it seems that the latter assert that the confidential information comprised by the Painaway formulas belongs to them (and presumably made available to Nature's Remedies in some fashion). However, some of the documentation (such as the distribution agreements entered into in 2006 with a third party) expresses equivocation as to who, as between Nature's Remedies and the Carrolls has the rights in relation to the confidential information comprised in the formulas. 37On 26 March 1999, Nature's Remedies was issued a licence under the Therapeutic Goods Act to manufacture therapeutic goods. Under the Act, there is a statutory regime mandating a code of practice in relation to the manufacture and sale of therapeutic goods. It is not disputed that the Painaway products can only be manufactured and released for sale by licensed entities in accordance with that Act and that code of practice. Under the Australian Code of Good Manufacturing Practice, regulated by the Therapeutic Goods Administration, there must be appointed a Quality Control Officer. (Mrs Carroll has filled that role.) Mr Singleton's report to creditors of 5 October 2010 noted that Nature's Remedies was the Therapeutic Goods Act sponsor of the seven Painaway products registered on the Australian Register of Therapeutic Goods. 38In about August 1999, another company (The Pain Away Company Pty Limited) was formed by Mr & Mrs Carroll, together with two other individuals (Mr Peter Beeby and Mr John Crisp) for the purpose of distributing the Painaway product. That company launched and promoted the initial Painaway product during 1999 for sale to pharmacies and to warehouses supplying pharmacies. (The Carroll interests apparently subsequently bought out the interests held by Messrs Beeby and Crisp in that company and it ceased trading.) It does not seem to be disputed that this product launch was on a minor scale compared to that which took place in 2007. 39By letter dated 28 April 2000, Mr Valentine notified Mr Carroll of his intention to resign as a director of Nature's Remedies. There was a suggestion from the Nassar/Hyder interests that there had been a falling out or dispute of some kind between Mr Valentine and the Carrolls, which had led to Mr Carroll seeking to force Mr Valentine out of the business. Certainly, a dispute of some kind seems to be indicated by the presence of releases in the Deed of Sale of Shares ultimately entered into between the Carrolls and the Valentine interests. However, the precise nature of any such dispute was not articulated in the Deed. Suffice it to note that for some time from 2000 Mr Valentine had communicated an intention to resign as a director and that, from at least around 2002/2003, there were discussions as to a parting of the ways between Mr Valentine and the Carrolls (the cause of which does not seem to be of relevance to the issues in these proceedings). 40Mr Hyder says that in around 2002 he had a discussion with Mr Carroll (whom it seems he had met in about mid 2001) in which there was a general discussion as to Mr Hyder and Mr Nassar (whom Mr Hyder had met in 2000 but whom Mr Carroll had not at that stage met) becoming involved in a business venture with Mr Carroll in relation to the Painaway products (as noted I use this as a generic term to cover the various pharmaceutical products produced from time to time by Nature's Remedies/Painaway). Mr Hyder says that what was discussed was that there would be a 51% 'share' to Mr Carroll and 49% to Messrs Hyder and Nassar (in effect, mirroring the existing Valentine/Carroll shareholding in Nature's Remedies) and that the intellectual property rights would be owned as to 60% by Mr Carroll and as to 40% by the others (see Mr Hyder's affidavits of 20 August 2010 at [17] and 29 November 2010 at [6]). (It is not clear that there was any precision in the discussions at that time as to what the respective percentage 51%/49% 'shares' were to be in - ie, whether this was a reference to a share of the company shareholding (as had been the case with Mr Valentine) or more generally of the 'business' and, if the latter, how that was to be achieved.) 41In July 2002, Mr Carroll was introduced to Mr Nassar and from shortly after that time discussions took place as to the Painaway business. At least by 2003, those discussions seem to have included discussion as to the opportunity for Mr Hyder and Mr Nassar to become involved in some way in the 'Painaway business'. 42(Issue was taken by Mr Ireland during the cross-examination of the Carrolls to the use of the term "Painaway Business" as something prone to lead to confusion (and I note that in some of the affidavit evidence - such as para [20] of Mr Nassar's 20 August 2010 affidavit, the term "Painaway Business" might be read as being a reference to the company Nature's Remedies and not the business of that company as such). Where I use that term in these reasons, I do so simply as a shorthand means of referring to the business activity involved in the manufacture, marketing, advertisement, distribution and sale of the Painaway products from time to time.) 43The Carrolls say that what was discussed at this time was an arrangement whereby Mr Hyder and Mr Nassar would assist the Carrolls with the buy-out of Mr Valentine from the company and that Mr Hyder and Mr Nassar each agreed to lend a sum of $50,000 (i.e. $100,000 in total) for the purpose of assisting the buy-out of Mr Valentine (with Mr Hyder, according to Mr Carroll, having said that he wanted to be repaid within five years) and that the four individuals agreed to continue discussions with respect to the business terms upon which the future manufacture and marketing of Painaway products might take place. 44Messrs Nassar and Hyder, in contrast, say that what was referred to by Mr Carroll in 2003 was for them , not the Carrolls, to buy Mr Valentine out of the company (Nassar 20/8/10 affidavit at [21]; Hyder 20/8/10 affidavit at [17]). The distinction is a critical one for the Nassar/Hyder interests' alternative cross-claim in these proceedings - in other words, were they to acquire the shares held by LSJK (for payment of the sum of $100,000) or were they to fund the buy-out by the Carrolls of those shares? (The Nassar/Hyder alternative claim is predicated on there being an agreement in late 2003 for them to gain a 49% share of the company itself (though, as Mr Ireland explored in cross-examination, there was no later demand for any shares to be transferred to them in Nature's Remedies until the commencement of these proceedings and it seemed to be accepted by Messrs Nassar and Hyder that at least as at late 2003 the arrangements under which they had agreed to fund the Valentine buy-out had not been finally agreed). 45The main point of difference between the parties as to the subsequent discussions is whether they resulted in a concluded and binding agreement and, if so, the substance of that agreement. 46As at around September 2003, Mr Tim Cullen an accountant of Purkiss Cullen (who had been acting for the Carroll interests) became involved in the discussions as to how the buy-out of Mr Valentine was to be effected. At p15 of the Applicant's Trial Tender Bundle is a document headed "Mr John and Mrs Linda Carol [sic] - Points for Discussion - Meeting 10 September 2003" in which two options were set out: the first was for payment to Mr Valentine of the sum of $100,000 'for his shares', with the waiver of the loan, cancellation of distribution agreement and the transfer of shares to the 'new entity'. Under that option, the new entity was to own 49% of the 'company' (presumably Nature's Remedies) and under this entry was the comment "Agree capitalise and advertising company". All rights to the "Intellectual Property Bank" were to be transferred to the Carrolls from Nature's Remedies (and the document noted that there might be 'TGA issues'). The second option was a loan of $100,000 to the company ("Terms"); Mr Valentine was to sell shares to the Carrolls and they were to enter into a distribution agreement with the new entity. Again this option recorded that all rights to "Intellectual Property Bank" were to be transferred to the Carrolls from Nature's Remedies (though did not again note that there might be 'TGA issues'). 47I refer to this note only as an indication that there was at least some consideration given, prior to the payment of the money in respect of the Valentine buy-out, to the creation of a new entity to be involved in the distribution of the Painaway products. 48In September 2003, a meeting took place at the offices of a firm of accountants (Purkiss Cullen) attended by the Carrolls and each of Mr Hyder and Mr Nassar. The Carrolls admit that at this meeting there was discussion of a possible partnership in relation to the Painaway business (see paragraph 8 of Mrs Carroll's second affidavit and the Carroll interests' Defence at [11]). Mr Cullen apparently suggested that they consult a law firm (Gillis Delaney Brown) in relation to this and on 18 September 2003, Mr Cullen wrote to that firm "re Nature's Remedies" in which he said: Further to our earlier meetings we have come to a satisfactory arrangement with Gary Valentine. The agreement is that Angelo Hyder and Elias Nassar (or their nominee) will loan $100,000 to John and Linda Carol [sic] on the following terms: ... [Reference was made to an interest rate of 8% payable over 5 years with security over stock holdings] John and Linda will then use this money to purchase shares held by LSJK in Nature's Remedies and Building Health Pty Ltd. LSJK Gary Valentine and Mrs Valentine will waive all distribution rights or any rights over Intellectual Property or other assets of the 2 companies. Gary Valentine will also wave [sic] his rights to the $100,000 loan made to Nature's Remedies. [There was also a reference made to a supply of product free of charge to Mrs Valentine for a period of time] 49Mr Cullen gave instructions to Gillis Delaney Brown to draw up the documents to evidence the transaction to which reference was made in his letter. 50Cross-examined on this issue, Mr Hyder could not recall any agreement as to a loan to the Carrolls nor could he recall any discussion as to the terms of any loan arrangement. He and Mr Nassar were adamant that what they were agreeing to do in late 2003 was to purchase Mr Valentine's company's shares in Nature's Remedies (or a 'share of the business'). I consider this issue in due course. However, insofar as the contemporary documents suggest that the Carrolls' understanding (as must have been conveyed to Mr Cullen) was inconsistent with such a position, this is inconsistent with any consensus having been reached at that time. 51On 17 and 19 December 2003, respectively Mrs Hyder (on behalf of the Hyder family) and Mr Nassar each paid a sum of around $50,000 to Nature's Remedies (for some reason it seems that the amount paid by Mr Nassar may have been slightly more - $50,008, but nothing turns on this). This amount was recorded in the books of Nature's Remedies as a loan from Mr and Mrs Carroll to the company. (At that stage the books of the company recorded a loan of $100,000 from Mr Valentine to the company.) The Nassar/Hyder interests say that this payment was for the purchase by them of Mr Valentine's share in the "Painaway business" (Hyder para [19] - [20]). (Mr Nassar further deposed that from that time he understood that there was a 'joint venture' between Nature's Remedies, he and Mr Hyder operating the Painaway Business (at [24]), with his role and that of Mr Hyder being the promotion and marketing of the product and Mr Carroll's responsibility being the creation, production, manufacture and licensing of the product (at [41].) The Carroll interests say that this money was a loan to the Carrolls that was then used by them to pay out Mr Valentine's loan. (The company's books record that the Valentine loan was repaid on 23 December 2003.) 52There was no signed documentation recording any concluded loan agreement between the Carrolls and the Nassar/Hyder interests in respect of the sums paid in December 2003 (although as noted above there had been an instruction to produce documentation to record such a transaction and it seems to have been the understanding of Mr Cullen, consistent with his earlier letter outlining the transaction, that the money paid by the Nassar/Hyder families represented a loan to the Carrolls -see his letter of 17 May 2004 to Gillis Delaney Brown, Ex AH1 p 63, to which I will refer shortly). 53Whatever may have been in the contemplation of the parties in September 2003, it was accepted by Messrs Nassar and Hyder in cross-examination that as at the time that the money was paid (in December 2003) there was no firm agreement as to how their business arrangements were to go forward (and that included how the payment of the moneys was to be treated) although it seems to have been understood that Messrs Nassar and Hyder were expecting that the moneys would be repaid to them in some fashion. 54In February 2004, a deed was signed between the Carroll interests, on the one hand, and Mr Valentine and his company, on the other. (The delay between payment of the moneys and discharge of the Valentine loan in late December and the documentation of the sale of shares in February was not explained.) Under that Deed, LSJK agreed to sell its shares in Nature's Remedies to Mrs Carroll. Mr Valentine resigned as a director and LSJK's shares were transferred as to 48 to Mrs Carroll and as to one share to Mr Carroll. (A similar transfer of the shares in Building Health occurred.) 55Significantly, in my view, on 23 February 2004, Mr Carroll (on the letterhead of Nature's Remedies) sent a facsimile transmission to Mr Nassar (Ex EN1 p 1) (signed off by him as "Johno your partner and friend") saying: Linda and I would like to know what you and Angelo intend to do regarding the structure of a new company whether you will be separate to Nature's Remedies or you would like to draw along side Linda and I in Nature's Remedies, your decision. 56The letter went on to give an explanation as to the use of arnica as an ingredient in the formula, including its price, and promised to answer all questions in relation to the product. (Presumably, given the emphasis later placed on the confidentiality of the formula, this was not an offer to answer every question that the Nassar/Hyder parties might have had in relation to the product notwithstanding the terms in which it was expressed.) 57Both Mr Nassar and Mr Hyder accept that there was a decision open to them to be made as at February 2004 as to how their business venture with the Carrolls was to be structured. This is of relevance when considering their alternative claim to part of the shareholding in Nature's remedies (since the adoption of the arrangements put in place in April, whether binding or not, seems to be consistent with an election being made as to which of two alternative structures was to be followed - ie a shareholding in the new company - Painaway - or a shareholding 'alongside' the Carrolls in the existing company, Nature's Remedies). 58In early 2004 (and Mr Svehla places some weight on the timing of this and later steps of this kind as being consistent with the parties acknowledging the existence of an agreement or understanding as to their business arrangements) an order was placed for 13,000 units of arnica (one of the main ingredients used in the Painaway formulas). It is suggested that it is significant that this order went forward only after Mr Valentine no longer had an interest in the company. 59Further consideration of the structure of the parties' arrangements occurred in April 2004 - in the applicants' trial tender bundle is a note dated 8 April 2004 in which there is contemplated a joint venture between Nature's Remedies and a new company with proposed profit share of 51%:49%. The involvement of Messrs Nassar and Hyder in the joint venture is indicated by the note "loan of $100,000 forgiven" (that can only have been referring to the payments made in December 2003, since there was no suggestion of any other loan of that amount) and possibly by the note "repay stock as soon as possible" (which may or may not refer to a repayment of amounts paid for the raw materials such as arnica). The note recorded that new product formulas were to be owned by 'John & Linda' and that product rights were to be owned by the joint venture. 60On 17 May 2004, Mr Cullen of Purkiss Cullen wrote to two separate firms of solicitors - he wrote to Aubrey Brown Partners (p 23 applicants trial tender bundle) and in that letter Mr Cullen referred to having previously set out instructions to have a partnership agreement drawn up by another firm and stated that: "We now realise our clients would prefer to have a shareholders agreement drawn up between the parties" (thus seemingly indicating a change in instructions from a venture carried out solely through a partnership and a venture involving a jointly held company). 61Mr Cullen also wrote on that date to Gillis Delaney Brown (Ex AH1 p 63) (having written back in September to instruct them to prepare documentation to record a loan transaction) enclosing "details regarding the formation of a partnership to promote the sales of Painaway products". That letter stated "As a background Elias Nassar and Angelo Hyder have injected $100,000 into Nature's Remedies Pty Ltd to repay a loan made by Gary Valentine. As consideration for entering into this new partnership agreement the $100,000 loan will be forgiven (this will need to be considered as part of the settlement documents as all shares in Nature's Remedies are now held by John and Linda Carroll.) In addition all formulas are owned by John and Linda Carroll personally." (That letter broadly reflects the 8 April note as to the proposed structure of the venture between the parties.) Mr Cullen referred to a proposed partnership between Nature's Remedies and a company owned by Messrs Nassar and Hyder (Nitro Boxing) and set out the "main terms" of the proposed partnership, including a term that the profit was to be split 51 % to the Carrolls and 49% to Nitro Boxing. Item 3 noted that the partnership was to be set up with capital to be treated as loans and repaid back to the respective parties as soon as practicable; item 5 referred to the formulas being licensed to the partnership; and item 6 stated that if the Carrolls "sell the IP, being the formulas , while the partnership is still in operation" (my emphasis) the split of profits will be Nitro Boxing 40% and John and Linda Carroll 60%. 62On 20 May 2004, Mr Hyder and Mr Nassar incorporated Nitro Boxing (and thus must have been privy to the discussions which had led to that company being nominated as the other partner in the proposed joint venture in Mr Cullen's earlier letter to Gillis Delaney Brown). 63Gillis Delaney Brown then proceeded to prepare a draft Partnership Deed, clause 9(3) of which included a provision that if the "intellectual property" was sold then 40% of the proceeds of that sale would be paid to Nitro Boxing, and forwarded to that Mr and Mrs Carroll in September 2004. They also forwarded a copy of the draft partnership agreement to Purkiss Cullen, placing on record that they were acting only for Nature's Remedies and not for Nitro Boxing or its directors (see letter 3 September 2004 Ex AH 1 p 69). That draft partnership deed contained a definition of Intellectual Property as including, among other things, the Painaway trade marks; the Business Name (Painaway Australia) and the Painaway Formulas (themselves defined as the therapeutic formulas created by Mr and Mrs Carroll). The draft also recited that Mr and Mrs Carroll granted to the partnership the right and licence to manufacture and produce the Painaway formulas. 64Gillis Delaney Brown recommended to Purkiss Cullen that a corporate agent be appointed to act as agent of the partnership to manage the business of the partnership (Ex AH 1 p 69). 65At this stage, therefore, what seemed to be contemplated (at least by the Carrolls and the solicitors then acting for them) was the creation of a partnership between Nature's Remedies and Nitro Boxing, with the partnership having the right and licence to manufacture and produce (and presumably then to sell) products using the Painaway formulas. 66Meanwhile, on 30 June 2004, "Painaway Australia" was registered as a business name in New South Wales and on 29 June 2004 a patent was registered in the United States by Mr Carroll in relation to the Painaway formulas. 67In late 2004, according to Mr Nassar, there were conversations as to the placement of a large order for arnica (12 tonnes) and on 15 and 24 November 2004, respectively, each of Mr Nassar and Mr Hyder contributed a sum of around $50,000 towards that arnica order. (They pressed Mr Carroll in due course to contribute a half share to that order, which he did.) 68On 19 October 2004, Nature's Remedies entered into a manufacturing agreement with Teradoran Pty Ltd trading as Kenkay Pharmaceuticals. (In evidence was a copy of the form of secrecy agreement required to be entered into by the Carrolls in relation to the formulas provided to Kenkay for that purpose). Kenkay had been the manufacturer for Nature's Remedies of the earlier products and Mr Carroll had dealt with "George" of Kenkay. 69On 4 February 2005, the name "Painaway" was registered as a business name in New South Wales. 70It does not seem to be disputed that, at least from the time that it was contemplated that a new entity (ie separate from Nature's Remedies) was to become involved in relation to the Painaway products, what was contemplated was that the new company should advertise, market and sell those products. Mrs Carroll was, however, adamant in the witness box that when Painaway was incorporated it was not intended that it also be involved in the manufacture of the products. Mrs Carroll's affidavit of 18 October 2010 at [33] deposes that the role of the company was "and has always been since its incorporation to market and distribute the Painaway products that had been ordered by Nature's Remedies" (evidence inconsistent at least in part with her husband's evidence that since March 2006 Nature's Remedies has not manufactured Painaway products and with the evidence of placement of orders for those products direct from Painaway to Kenkay). (Reliance was placed on the technical meaning of "manufacture" contained in the Therapeutic Goods Act , as including steps in the process of the kind Nature's Remedies did to certify the product as fit for release, but the actual physical manufacturing process was never carried out by Nature's Remedies.) 71In the period from around the end of 2004 through to 2005, further discussions took place as to the business arrangements between the individuals in relation to the Painaway products. In that time period both Mr Nassar and Mr Hyder contributed not insignificant amounts in relation to the proposed development of a stock of Painaway product for launch in due course to the market. 72According to Mr Nassar, Mr Carroll said that he wanted a 51%/49% split in the business in his favour (evidence that is consistent with the apparent understanding of the Carrolls' legal and accounting representative at the time) and had referred to having been involved in a failed partnership before (presumably a reference to the Valentine arrangements or perhaps to the earlier company - The PainAway Company). As I understand it, it is suggested that the Carrolls' desire to maintain control of the company was what was underlying the 51%/49% split. 73Messrs Nassar and Hyder depose to a meeting with Mr Carroll in February 2005 in which they say they called on Mr Carroll to pay the balance ($96,000) of the money for the arnica order placed in late November 2004 (in respect of which Messrs Nassar and Hyder had together already paid for half of the order). It is not disputed that the respective families provided substantial funds from time to time which were used to manufacture stocks for product bearing the trade mark " Painaway ". 74Messrs Hyder and Nassar depose to there being some disagreement between Mr Carroll and Mr Cullen towards the end of 2004 (which accords with the recollection of the accountant subsequently retained in relation to the business venture - Mr Anastasios (Tas) Demos, who said that he was told Mr Carroll was not happy with Mr Cullen (and that they had been charged a lot of money). However, it may not simply have been Mr Carroll who was unhappy. Mr Nassar said in cross-examination that there were "trust issues" with Mr Cullen and it seemed that he was one of those who had lost trust in him. 75Whatever be the case in that regard, in early 2005 contact was made (apparently first by Mr Nassar) with Mr Demos of BDH. According to Mr Demos' affidavit (at [7]), Mr Nassar telephoned him to organise a meeting regarding a new business venture for a pain relief product and there was a meeting in February 2005, attended by the Carrolls and Mr Nassar, at which Mr Demos says that Mr Carroll said that they had entered into a venture to grow and develop the business. 76Aubrey Brown Partners initially prepared a draft shareholders agreement (signalling a move from a partnership structure between Nature's Remedies and Nitro Boxing for the business venture to a corporate structure). Clause 17.3 of that draft agreement included a provision that if the 'intellectual property' was sold then 40% of the proceeds of that sale would be paid to Mr Hyder and Mr Nassar. 77Meanwhile, Mr Demos had recommended that another firm of solicitors (Coleman & Greig) become involved and it seems that from about that time the ongoing discussions between the Carrolls and Messrs Nassar and Hyder were with Mr Demos' firm (BDH & Co), chartered accountants, in relation to their future business arrangements (see Carrolls' Defence at [16]) and with Mr Wayne Innis, then a senior solicitor at Coleman & Greig and now practising as a contract specialist in Qatar. 78The Carroll interests accept in their Defence (at [18]) that between February 2005 and 18 April 2005 various proposals were made as to future business arrangements between the Carrolls, on the one hand, and Messrs Nassar and Hyder, on the other. Relevantly, it is not suggested by any party (other than as an alternative pleading under the Nassar/Hyder cross-claim) that any agreement was concluded prior to April 2005 as to the manner in which the business venture (in which, by then, the four individuals were clearly engaged) was to be structured. 79By mid 2005, Messrs Nassar and Hyder (or their respective family interests) had contributed a substantial sum to the Carrolls and Nature's Remedies in relation to the business venture and it seems that there was then seen (at least by Mr Nassar) to be some urgency in ensuring that the arrangements between the parties were documented. That is not surprising given that by then the Nassar/Hyder interests had by then expended close to $100,000 each in the absence of anything other than an oral agreement or understanding that this would in some way be recovered out of the proposed business venture (or, as the Nassar/Hyder Cross-Claim contends, by way of a share in Nature's Remedies). (To that point, it seems to me that it might be said that Messrs Nassar and Hyder had been remarkably trusting.) 80Both Mr Demos and Mr Innis gave evidence in the proceedings (and were cross-examined) as to the steps taken by them, respectively, in relation to the structure of the business arrangements. 81I note that Mr Innis' file notes of the relevant meetings and conversations were in evidence and it seems to me that his contemporaneous notes are likely to be the most reliable evidence of the matters discussed and/or agreed at those meetings (since the parties did not seem to have taken notes themselves of the meetings and none appeared to have a precise recollection of what had been said at the meetings - Mrs Carroll, in particular, had no more than a very generalised recollection of discussions and events and did not have a reliable recollection, though having deposed to various matters relating to those events in her affidavit). Where there is any inconsistency I would therefore place weight on Mr Innis' file notes as recording what had occurred. 82Mr Innis initially had a telephone conversation with Mr Nassar in which he says that Mr Nassar informed him that there was to be a joint venture company incorporated (Painaway Australia Pty Limited) and that there was to be a 60-40 split. Mr Innis says he was asked to review draft documentation that had been prepared by Aubrey Brown Partners. (Unlike Gillis Delaney Brown (who had regarded themselves as acting only for the Carroll interests), Mr Innis regarded himself as acting for all parties to the proposed arrangements then in existence (the Carrolls, Nature's Remedies and Messrs Nassar and Hyder), though he opened the file in relation to that matter in the name of Painaway.) 83Relevantly, Mr Innis deposed to a meeting with Mr Nassar and Mr Carroll on 25 February 2005 in which he says that one of the two had said to him that there would be a company (Painaway Australia); that the Carrolls would have 51% and Messrs Nassar and Hyder 49%; and that "If the patents or trade marks are sold it will be 60% to the Carrolls and 40% to Elias and Angelo". He says that he was instructed by either Mr Nassar or Mr Carroll to bill Painaway and that he opened a file in that name (with Mr Nassar as the contact) care of the Carrolls' Jilliby property. 84Following that meeting Mr Innis obtained from Aubrey Brown Partners a copy of the draft Shareholders Agreement that had been prepared by them for the parties and he proceeded in due course to prepare successive re-drafts of the shareholders agreement and a draft licence agreement. 85Mr Demos deposed to advice given by him at a meeting with the Carrolls and Messrs Nassar/Hyder on 17 March 2005 in which he says he told them they should each hold their shareholdings in the proposed new company (Painaway) through a family trust and that each shareholder should be a company. (Mr Nassar understood that this was for tax and security reasons.) 86Mr Innis says that he spoke to both Mr Nassar and Mr Carroll (separately) by telephone on 21 March 2005 to obtain instructions in relation to the draft shareholders agreement and sent a revised marked up version of that first Aubrey Brown Partners draft by email to each of them on 21 March 2005. His notes on the draft document included that: John + Linda = 51% of PA Elias = Angelo - 49% of PA IP - Patent Combination sold J + L agree give 40% of net proceeds: - TM - PainAway sold Ext ? Service Company owns IP - 60-40 J wants to remain owner of secret ingredients formula in 3 separate areas - instruction - will give same on death Property = Johno's (my emphasis) 87The first draft Shareholders Agreement circulated by Mr Innis on 21 March 2005 contained, as clause 14.2, a provision to the effect that the "goodwill and the Intellectual Property attributed to the Painaway Formulas from time to time shall belong" to Mr and Mrs Carroll (as to 60%) and as to Messrs Nassar and Hyder (as to 40%). 88On 22 March 2005, there was a meeting between the four individuals and Mr Innis in which the then draft shareholders agreement was discussed. Amendments to the first draft shareholders agreement were forwarded on that date by email to Mr Demos and copied to Mr Carroll. Mr Innis was instructed to finalise the agreement "as per amendments suggested by client" and to liaise with Mr Demos in relation to the family trusts. 89Relevantly, at that stage the draft made reference to a payment of $197,000 by the new company (ie, the company later incorporated as Painaway) for the grant by Nature's Remedies of a licence in relation to the Painaway products. The email of 22 March 2005 noted Mr Innis' understanding that the Carrolls had agreed on the name JAKL Holdings (later the company name as registered was JAKL Group Holdings) and that Messrs Nassar and Hyder were yet to confirm the names for their respective trustee companies. (Mr Hyder deposed to a conversation at that meeting in which he says he told Mr Carroll that he (Mr Carroll) could not expect 51% of the company and 'something on top of that' apparently in response to a suggestion to the effect that if Messrs Nassar and Hyder were to get a payment back for the money they had put into the business to that point so should he.) 90The following day, 23 March 2005, Mr Innis spoke with Mr Demos and there was discussion as to the drawing up of a licence agreement. Further, following on from the meeting on 22 March 2005, Mr Innis circulated a second draft Shareholders Agreement. (Clause 14.2 was in the same terms as the earlier draft.) 91On 4 April 2005, Nature's Remedies purchased a quantity of emu oil (another ingredient for the secret Painaway formulas) for $41,903 (the relevance of which being that this amount was ultimately referred to in the Shareholders Agreement signed by each of the individuals on 18 April 2005 as an amount to be treated as a loan by the Carrolls to the new company Painaway). 92On 7 April 2005, Mr Innis had a telephone conversation with Mr Nassar in which it appears that he had noted to Mr Nassar two changes requested by Mr Carroll to the draft (in relation to a loan account for emu oil and for the transfer of "40% IP etc contingent on Co Trading and cont. 2yrs"), to which Mr Nassar apparently said he would have to speak to Mr Hyder. 93Also on this date Mr Innis had a telephone conversations with Mr Demos who advised Mr Innis that he considered there would be a capital gains tax issue if Painaway paid $197,000 as a lump sum payment for the licence. This led to the drafting of a separate licence agreement for a nominal yearly licence fee. That draft licence agreement was prepared on 7 April 2005 and forwarded on that date, together with a third draft of the Shareholders Agreement. There had been a meeting around that time with the Carrolls. Mr Innis circulated the draft Licence and the third draft Shareholders Agreement by Mr Innis' email to Mr Carroll, copied to Mr Nassar but not to Mr Hyder as Mr Innis did not have his email address. Mr Innis also noted Mr Carroll's instructions to prepare an appropriate Deed of Confidentiality for use in the manufacture of Painaway products, including Kenkay and two TGA consultants, and went on to say: I confirm the recent advice of Tas Demos that the proposed raising of a loan account for the contribution of the IP and Formulas may raise some CGT issues and have prepared a separate Licence Agreement dealing with the IP and Painaway Formulas for your consideration. 94The email also noted that the revised version of the Shareholders Agreement incorporated recent changes "requested by John Carroll", identifying clauses 11.5(iii) and (iv) and 14.2 (in relation to the latter, those being to insert certain pre-conditions to the entitlements of the Nassar/Hyder interests under that clause. As to the clause 11.5 amendments, initially clause 11.5(iii) had contained an agreement by Nature's Remedies to manufacture "and sell" Painaway products on behalf of the company at cost "for consideration of an amount of $197,000 which amount will be treated as a loan to the company". The revised draft amended that clause. 95(As far as the Deed of Confidentiality was concerned, it was to impose obligations of confidence by the third parties (it did not seek to do so vis a vis the Nassar/Hyder interests) and the draft contained an acknowledgment of entry into the Painaway licence agreement.) 96Mr Ireland points out that there was no evidence of instructions from the Carrolls in relation to the draft Licence Agreement (the requests from Mr Carroll being confined, according to Mr Innis' email, to the draft Deed of Confidentiality and the draft Shareholders Agreement). 97Further, although the draft Licence and Shareholders Agreements at this stage named "Painaway Australia Pty Limited " as a party thereto Mr Ireland points out that no immediate steps were taken to incorporate such a company or to reserve the name. (He also notes that up until 11 April the instructions on behalf of the Nassar/Hyder interests had come from Mr Nassar alone and that it was not until 11 April 2005 that there was any communication directly between Mr Innis and Mr Hyder, though it is not clear to me that anything turns on this given that by the critical meeting Mr Hyder was clearly involved and giving instructions to Mr Innis.) 98A further revised draft of the Shareholders Agreement was issued on 11 April 2005 (the fourth draft). Mr Innis' fourth draft Shareholders Agreement contained clause 14.2 (in its by then once amended form) and included a new clause 11.5(ii). Mr Innis wrote: I confirm Tas Demos' advice that the suggestion of having John and Linda contribute $197,000 worth of goodwill in the company in respect of their IP and Painaway Formulas (IP) etc is fraught with Capital Gains Tax issues. Accordingly, I have replaced the goodwill on the IP clause with the recognition of a similar amount for the Painaway products that John and Linda will contribute to the company on it's [sic] incorporation. 99It seems clear that the $197,000 figure was derived largely as a figure to mirror the contributions that had already been made by Messrs Nassar and Hyder (those being treated as a loan to the company) and was nominally attributed to stock (rather than goodwill) due to concerns that otherwise there would be capital gains tax issues. Mr Demos' view in that regard was that as Nature's Remedies had traded at a loss any payment of a substantial sum attributed to goodwill in the Intellectual Property and formulas would amount to a large capital gain. 100On 14 April 2005 there were further discussions between Mr Nassar and each of Mr Innis and Mr Demos. Mr Demos says that he was asked at that stage to set up Painaway and the shareholder companies. 101A critical meeting took place on 18 April 2005 at the offices of Coleman & Greig, at which the four individuals were in attendance. It is admitted by the Carroll interests (Carrolls' Defence at [25]) that at that meeting a document headed "Licence Agreement" was signed by each of Mr and Mrs Carroll (both personally and in their capacity as the two directors of Nature's Remedies) and that a document headed "Shareholders Agreement was signed by each of Mr and Mrs Carroll (again both personally and as the directors of Nature's Remedies) and by each of Mr Hyder and Mr Nassar. Mr Innis witnessed the signatures of Mr and Mrs Carroll, as well as of Messrs Nassar and Hyder. Each of those signed original documents was retained in the files of Coleman & Greig. 102Relevantly, at that meeting there was a discussion in relation to three amendments that were contained in the fourth draft of the Shareholders Agreement (ie to clause 11, referring to the payment made in relation to the emu oil by the Carrolls; an amendment to the description of the amount referable to the $197,000 changing it from a reference to 'goodwill - IP' to a reference to 'product given to Co'; and the pre-conditions in the draft clause 14.2). Mr Innis says he took the parties through each of the amendments and noted in his file note the outcome of the discussion as to each. 103At the meeting, Mr Nassar and Mr Hyder objected to the alteration that had been made to clause 14.2 (which introduced a qualifying period and pre-conditions before they were to be entitled under that clause to a share in the profits on sale of the Intellectual Property and formulas). They demanded that the preconditions be deleted (and apparently took the position that this was a "deal breaker"). As noted in Mr Innis' file note, "J&E discussed at length - re frustration, timing etc" and then "All agreed take it out". There can be no doubt that consensus was reached by those present at the meeting as to the terms of the documents they there approved and signed. 104As approved, clause 14.2 in the version of the Shareholders Agreement signed on that date by the Carrolls and Nature's Remedies (as well as by Messrs Nasser and Hyder) read as follows: John, Linda and Nature's Remedies acknowledge and agree that from the date of commencement of this Agreement, tth [sic] goodwill and the Intellectual Property attributed to the Painaway Formulas from time to time shall belong to John and Linda as to 60% and to Elias and Angelo as to 40%, such that in the event of the sale of the Intellectual Property attributed to the Painaway Formulas John and Linda will together be entitled to 60% of the net proceeds and Elias and Angelo will together be entitled to 40% of the net proceeds of such sale. 105Each of Mr Hyder and Mr Nassar deposes that there was a discussion at that meeting in which Mrs Carroll objected to the licence being irrevocable and that Mr Innis explained to the Carrolls that the rights under the Licence Agreement were irrevocable (and what that meant). Mr Innis' evidence was to similar effect. (Since Mrs Carroll has no reliable recollection she is not in a position to shed light on this.) Significantly, Mr Innis says that he told the four individuals that "Painaway will have the exclusive right to manufacture, market, distribute and sell the products without restriction". He also noted that Mr Carroll had said he would not give up the ownership of the formulas and the 'IP'. Mr Innis then confirmed to those present that " Painaway won't own the formulas and the IP. The licence will be non revocable and perpetual provided Painaway doesn't breach. Painaway will have to maintain and protect the good name of the product." (my emphasis). 106I accept that the Carrolls were told, prior to signing the Licence Agreement and Shareholders Agreement on 18 April 2005, that the rights to be granted under the Licence Agreement were to be exclusive, perpetual and non-revocable. By signing the agreements with that understanding they must be taken to have accepted that this would be the case. 107According to Mr Innis' note of the meeting he advised that when Painaway and the family trusts were incorporated then they were to sign the agreement also and all present agreed to that. 108(Mr Stack contends (in the context of a submission, as I understand it, that even if the agreement did not bind the (yet to be incorporated) parties on 18 April 2005, it nevertheless bound those who had signed it to the 'core promises' contained therein, including clause 14.2) that the only parties affected and hence bound by clause 14.2 of the Shareholders Agreement were those who did in fact sign it (namely, the Carrolls, Nature's Remedies, Mr Nassar and Mr Hyder.) 109There is no doubt that in a number of respects both the Shareholders Agreement and Licence Agreement, as signed, were incomplete on their face (even leaving aside the question of its lack of execution by various of the entities stated as being party to one or both as the case may be). The ACN details and company names for the corporate shareholders were (not surprisingly since they were not yet incorporated) left blank in the Shareholders Agreement, as were the ACN details for Painaway on both that agreement and the Licence Agreement; there was an internal cross reference missing from the Licence Agreement (clause 3.1); and various of the annexures (containing logo details) were missing. Four of the nine named parties to the Shareholders Agreement were not in existence. 110Not only was there no actual execution of the Shareholders Agreement by those four entities (and no execution of the Licence Agreement by Painaway), no person purported to sign the agreement(s) on behalf of any of the yet to be incorporated companies. Rather, each signed only in the space referable to himself or herself as individuals or (in the case of Nature's Remedies) as director for that company. The draft Confidentiality Deed was not signed at all. 111There was (and could not have been since the companies were not then incorporated) no actual execution by Painaway of the Licence Agreement or the Shareholders Agreement, or by the Painaway shareholders of the Shareholders Agreement. (Significantly, in the context of the present claim as to these amounting to pre-incorporation contracts, there was no signature on the document expressly said to be on behalf of the yet to be incorporated companies - those execution clauses simply remaining blank.) Shareholders Agreement 112The Shareholders Agreement, as signed by each of the Carrolls, Nature's Remedies and Messrs Nassar and Hyder (and expressed to be executed as a deed), contained the following relevant provisions: Recital D, under which it was recited that the Carrolls and Nature's Remedies had agreed to grant the company (Painaway) an "exclusive perpetual and non-revocable right and licence to use the Painaway Formulas and Intellectual Property and to manufacture and sell the Painaway Products for the benefit of the company" and that the shareholders had agreed to regulate their relationship A definition of "Intellectual Property" that included the Painaway trade marks, the registered business name and the Painaway Formulas Clause 11.5, headed Funding and Contributions, in which the parties agreed that (i) Messrs Nassar and Hyder had each procured and contributed an amount of $98,000 to the business of the company and that this was to be treated as a loan to the company; (ii) the Carrolls had contributed Painaway Products in an amount of $197,000 and that this was to be treated as a loan to the company; (iii) the Carrolls and Nature's Remedies had entered the Licence Agreement and had granted the company an exclusive perpetual and non-revocable right and licence to use the Painaway Formulas ans the Intellectual Property; (iv) Nature's Remedies had agreed to manufacture Painaway Products on behalf of the company at cost; (v) the Carrolls had contributed an amount of $41,901.40 for emu oil and that this was to be treated as a loan to the company [this being one of the agreed amendments to the fourth draft after discussion at the 18 April meeting]; (vi)the Carrolls and Nature's Remedies were obliged to sell or otherwise make available to the company all ingredients that they presently had in their possession or control to produce the products. Clause 11.8, under which the parties agreed that in the event that the company required and engaged Nature's Remedies to manufacture Painaway Products then Nature's Remedies would manufacture and only charge actual cost; Clause 14.2, headed Capital, under which the Carrolls and Nature's Remedies acknowledged and agreed that from the date of commencement of the agreement "the goodwill and the Intellectual Property attributed to the Painaway Formulas from time to time shall belong [to the Carrolls as to 60% and to Messrs Nassar and Hyder as to 40%], such that in the event of the sale of the Intellectual Property attributed to the Painaway Formulas [the Carrolls] will together be entitled to 60% of the net proceeds and [Messrs Nassar and Hyder] will together be entitled to 40% of the net proceeds of such sale; Clause 17, headed Intellectual Property, Confidentiality and Goodwill, under subclause 17.1 of which, Messrs Nassar and Hyder acknowledged and agreed, among other things, that (a) the Carrolls or Nature's Remedies owned the Intellectual Property; (b) the Carrolls or Nature's Remedies had granted to the company an exclusive perpetual non-revocable right and licence to use the Intellectual Property; (c) the Carrolls or Nature's Remedies had no right to terminate the right of the company to use the Intellectual property without compensation to the company; and that (f) it was intended that they would greatly contribute to the goodwill attaching to the Intellectual Property or the Painaway Products via the various marketing and sale strategies and plans they would implement in their capacities as directors of the company. Clause 17.3 under which it was agreed in certain circumstances that Messrs Nassar and Hyder would receive a fee referable to 40% of the net proceeds of sale of the Intellectual Property or Painaway Formulas (thus seemingly distinguishing between a sale of the goodwill attributed to the Intellectual Property and Formulas - dealt with in clause 14.2 and a sale of the Intellectual Property or Formulas themselves); Clause 17.4, under which it was acknowledged that the decision to sell was in the discretion of the Carrolls "in consultation with" Messrs Nassar and Hyder and clause 17.5 which set a minimum value for such a sale at 5 times gross annual turnover; Clause 28.1, which provided that the rights under the Shareholders Agreement were not assignable. Licence Agreement 113The Licence Agreement, as signed by each of the Carrolls and Nature's Remedies (and was not expressed to be executed as a deed) contained the following relevant provisions: Recitals in which it was noted that Nature's Remedies and the Carrolls had used the Intellectual Property and the Painaway Formulas in Australia in relation to Painaway and had used the trade mark in other countries and (B) that the company (Painaway), Nature's Remedies, the Carrolls and others had entered into a Shareholding Agreement that set out "(among other things) the terms for supply of goods to the company and the company's manufacture of goods using the Intellectual Property and Painaway Formulas"; and (C) wished to grant the company an "exclusive non-revocable and perpetual right and licence to use the Intellectual Property and the Painaway Formulas" on the terms of the Licence Agreement; A definition of "Intellectual Property" by reference to Item 8 of Schedule 1 that mirrored the definition in the Shareholders Agreement and of "the Painaway Formulas" by reference to Item 9 in the Schedule that similarly mirrored the definition of that term in the Shareholders Agreement; Clause 2.1, headed Conditions Precedent, which provided that the obligations of the parties under the Licence Agreement "are conditional on the satisfaction or waiver of all of the obligations of each of the parties under the Shareholders Agreement"; Clause 3.1, headed Licence, which provided as follows: "Subject to clause [Error! Reference source not found] , each of Nature's Remedies, John and Linda (as the case may be) grants to the Company a transferable, exclusive, perpetual right and licence to use in the Territory but only in connection with the manufacture, sale, distribution and marketing of Goods and otherwise on the terms of this Agreement"; Clause 4, which provided for the licence fee as $1 each per annum; Clause 5.2 dealing with the obligation of Painaway to comply with Nature's Remedies' directions; clause 5.3 containing an obligation to provide information; clause 5.4 a non-disparagement clause; clause 5.5 precluding the grant of a sublicence to any person in relation to the Intellectual Property or Painaway Formulas without the consent of Nature's Remedies (such consent not unreasonably to be withheld); Clause 7 dealing with termination (and, relevantly, providing that the agreement terminates automatically on the court ordered winding up of Painaway); and Clause 9, which provided that nothing in the agreement limited the application of the Shareholders Agreement, Clause 17 under which Nature's Remedies and the Carrolls acknowledged and agreed that Painaway may assign or otherwise deal with this agreement or any right under the agreement without their prior written consent provided that any such dealing does not materially 'effect' the integrity of the Intellectual Property or Painaway Formulas; Clause 18 which was a standard entire agreement clause and clause 19 which contained a best endeavours clause to give full effect to the agreement. 114According to Mr Innis, after the Licence Agreement and the Shareholders Agreement had been signed at the 18 April 2005 meeting, he advised the four individuals that when Painaway was incorporated, along with the corporate trustees of the family trusts, they should sign the Agreement also and each of the Carrolls, Mr Hyder and Mr Nassar responded by saying "OK" (at [73] of Mr Innis' statement). None of the individuals at the 18 April 2005 meeting was provided with the signed Licence and Shareholders Agreements or a copy of these documents, nor were those documents or any copy provided to Mr Demos. They remained in Coleman & Greig's files. (Mr Innis seems to have regarded the execution of the documents by the yet-to-be incorporated entities as a mere formality, from which it might be inferred that he understood the individuals in attendance at the 18 April meeting to have manifested a clear intention at that meeting to be bound by the terms in the documents that they had signed and to be committing themselves to take the necessary steps to put this in place.) 115It is alleged by Painaway's administrators (and the Nassar/Hyder interests) that the signing of the Licence Agreement and the Shareholders Agreement on 18 April 2005 amounted to an offer, capable of acceptance on the incorporation of the relevant corporate entities, by the parties who had signed the document to be bound by its terms. In that regard, it is admitted by the Carroll interests (in their Defence at [35]) that at that time (22 June 2005) the Licence Agreement Offer (as defined in the pleading) became capable of acceptance by Painaway and the Shareholders Agreement Offer (as also defined in the pleading) became capable of acceptance by each of Painaway and the Painaway corporate shareholders. It is contended by Mr Svehla (and Mr Stack) that Painaway (and, in the case of the Shareholders Agreement, the Painaway Shareholders) accepted those offers by its conduct after incorporation. 116Following the 18 April meeting, steps were taken to incorporate the various companies. On 19 April 2005, Mickey Rose was incorporated (with Mrs Nassar as the sole director and shareholder); on 20 April 2005, JAKL was incorporated (with Mr and Carroll as its directors and Mrs Carroll as the secretary) and each of the Carrolls was issued one ordinary share in JAKL; on 29 April 2005, Angelo's Angels was incorporated (with Mrs Hyder as the sole director, secretary and shareholder). 117Similarly, in the period from 30 April 2005 to 13 July 2005, each of the family trusts was established (the Carroll Family Trust, with JAKL as its trustee; the Hyder Family Trust, with Angelo's Angels as its trustee; and the Nassar Family Trust, with Mickey Rose as its trustee). 118Following the 18 April 2005 meeting, Nature's Remedies ceased manufacturing Painaway products (at [18] of Mr Carroll's affidavit of 3 December 2010). (Mr Carroll deposed in the same paragraph that Nature's Remedies did not sell any Painaway products to Painaway after it was incorporated.) 119On 22 June 2005, Painaway was incorporated. Each of Mr Carroll, Mr Hyder and Mr Elias was appointed as a director and secretary of Painaway. Fifty ordinary shares in Painaway were issued to each of the Painaway Shareholders (ie, the three corporate trustees) (contrary to the proposed 51%/49% split - a matter that gave rise to some consternation on the part of the Carrolls in due course but was not disputed by either Mr Nassar or Mr Hyder). It is accepted by all parties that, subsequent to the incorporation of Painaway on 22 June 2005, neither Painaway nor the corporate shareholders of Painaway signed the relevant documents (Licence Agreement or Shareholder Agreement). 120From about June 2005, Messrs Hyder and Nassar took steps to market the Painaway products under and by reference to the trade mark and on 1 July 2005, Painaway was registered in the Australian Business Register and was registered for GST. Mr Carroll was recorded as the public officer of Painaway. 121On 14 July 2005, after the formation of the relevant trusts and companies, Mr Innis sent an updated copy of the Shareholders Agreement to the individuals under cover of an email stating that the Shareholders Agreement was attached "for your consideration and execution". The only amendment to the said agreement was the insertion of the company name and ACN details. No reference was made to the Licence Agreement and it was neither updated nor attached to the email. In that email, Mr Innis stated: Re: Shareholders Agreement - 14.5.05 (final) By now you should all have received (and hopefully executed) your respective Family Trust Deeds I now attach a final copy of the proposed shareholders agreement for Painaway Australia Pty Limited which company was registered on 22 June 2005, for your consideration and execution. I note that this updated document includes the names addresses and ACN details ... Please feel free to contact should you wish to discuss. Otherwise I look forward to hearing about the Painaway Product launch in due course. 122Mr Innis gave no instructions to the parties as to how the document was to be executed nor did he make any arrangements for the parties to attend his office for execution (something emphasised in the witness box by Messrs Nassar and Hyder - as the basis for their understanding that they had done all that was necessary to effect their agreement). Mr Innis did not press the parties in this regard. He simply invited them to contact him if they had any queries. Mr Innis said that he did not think it necessary for the Licence Agreement to be executed by Painaway after its incorporation because Painaway had been named in the contract and that all that was missing was the ACN. 123None of the Carroll interests or the Nassar/Hyder interests executed the updated Shareholders Agreement but neither was there any suggestion at the time that there was any dispute as to the terms of the document. 124Significantly, the parties then proceeded with the steps leading up to the eventual Painaway product launch without any further discussions about the structure of their business relationship (other than a demand by Mr Nassar in 2006 for the profit distribution arrangements to be changed and a request by the Carrolls for the shareholding to be rectified when it was realised that the shares had been issued on a one third each split and not the 51%/49% split referred to in the Shareholders Agreement). The lack of any such discussion, while the parties proceeded with the venture contemplated by the documents, is a factor pointing to the parties having assented to the contractual terms (or having accepted the offer to be bound by an agreement in terms of the signed documents). 125From around August/September 2005, Mr Nassar and Mr Carroll had discussions with a Mr Bill Culleton concerning the proposed distribution by a company associated with Mr Culleton of the Painaway products in the European Union, excluding Russia. On 12 September 2005, Mr Innis was contacted by Mr Nassar in relation to a proposed distribution agreement for Painaway products overseas. On 13 September 2005, Mr Innis was provided with draft Heads of Agreement for the exclusive distribution of Painaway products to a company associated with Mr Culleton for export sales in Europe. The draft Heads of Agreement identified Nature's Remedies as the contracting party. 126Mr Innis revised the draft Heads of Agreement and passed them on to Mr Nassar on 14 September 2005. (On that same date, Mr Culleton incorporated a company by the name of Painaway Pharmaceuticals Pty Ltd unbeknownst to any of the Nassar/Hyder interests or the Carroll interests. When this was discovered, Mr Nassar and Mr Carroll demanded that Mr Culleton change the name of Painaway Pharmaceuticals Pty Ltd, as a condition of the discussions continuing. Mr Culleton did so and the company (at one stage identified as Blend International Pty Ltd) became known as Blend Corporation Pty Ltd in late November 2005.) 127The discussions culminated in a meeting with Mr Innis on 7 November 2005, attended by the Carrolls, Mr and Mrs Hyder, Mr Nassar and Mr Bill Culleton. Mr Innis prepared a draft distribution agreement, which he forwarded by email to the Carrolls and to Messrs Hyder and Nassar on 8 November 2005, referring to the recent conference with Mr Culleton and requesting instructions as to "whether [the attached draft] adequately capture's [sic] Painaway's intentions in respect of its dealings with Bill Culleton/Blend International". The recitals to that draft agreement noted that Painaway was the 'manufacturer of the Painaway Products and had the exclusive right and title to the Intellectual Property'. Mr Innis was apparently satisfied that he had those instructions as he then forwarded the draft agreement to Blend (copied to Mr Nassar) by email on 11 November 2005. (There was criticism of Mr Nassar in the witness box as to his assertion that he had carefully reviewed the recitals - Mr Nassar not being familiar with the distinction between recitals and clauses of an agreement. Nevertheless, I would infer from Mr Innis' conduct in relation to the drafting of the agreement that he was satisfied that Messrs Nassar and Carroll accepted the contents of the draft agreement.) 128On 15 November 2005, Mr Innis forwarded a revised and marked up copy of the draft distribution agreement to Messsrs Carroll, Nassar and Hyder, with Mr Culleton's amendments (to which he recommended they agree). The attached revised draft identified Painaway, rather than Nature's Remedies, as the relevant contracting party. Mr Innis sought instructions from his clients on the amendments. 129On 16 November 2005, presumably having satisfied himself as to those instructions, Mr Innis sent to Blend an 'execution copy for [its] consideration'. A final execution copy of the agreement was sent to Blend on 28 November 2005 and executed by Mr Carroll and Mr Hyder on behalf of Painaway at the Carrolls' home at Jilliby. Mrs Carroll was present when the agreement was signed. 130Significantly, the Blend Distribution Agreement recited and contained clauses which were predicated upon Painaway having valuable rights in relation to the Painaway products which Painaway would agree to sub-license to Blend in respect of the European Union. Mr Svehla points in particular to recital A and clauses 10.1(a), (d), (e), 11.1, 11.2, 11.3, 11.4, 11.11, and 13.1 of the agreement. Recital A acknowledged that Painaway was the manufacturer of Painaway products and had exclusive right and title to the Intellectual Property. The term of the agreement was for 3 years with 2 options for renewal. It was expressed to be a temporary appointment for the opportunity for Blend to research the market. 131Under the agreement (clause 11.1), Painaway authorised and licensed Blend to use the trade mark in connection with the distribution and sale of the Painaway products in the defined territory only; and Blend (clause 11.3(a) acknowledged that the trade mark and name were the property of Painaway. (Mr Ireland emphasis that the Blend agreement was only for distribution not for manufacture.) 132Shortly after the Blend Distribution Agreement was signed (by Mr Carroll and Mr Hyder on behalf of Painaway), the parties signed a Memorandum of Understanding which was to be added as an addendum to the agreement. That MOU dated 5 December 2005 provided for the distribution agreement to commence as of 1 July 2006 and included New Zealand within the distribution territory. (By the time the Distribution Agreement as so amended was signed on 8 December 2005, Mr Innis had just left the employment of Coleman & Greig - on 6 December 2005.) 133Mr Ireland points out that the Blend Distribution Agreement was never put into effect (in the sense, as I understand this submission, that no payments were made in accordance with its terms and no goods were ever supplied to Blend under that agreement). That, however, does not alter the fact that Mr Carroll (to his wife's knowledge) had seen fit to commit Painaway in late 2005 to a binding agreement under which it represented that it had the exclusive right to distribute the Painaway products and committed itself to obligations on that basis. (The fact that Painaway considered it had entered into a binding agreement with Blend is evidenced by the fact that it formally terminated that agreement, for non-performance by Blend, in October 2006.) Mr Ireland submits, however, that no admission or significance can be drawn from the entry into the Blend agreements on the basis that Painaway was at that stage in fact the exclusive distributor of the products - having the benefit of the implied licence conceded by Nature's Remedies - and thus the agreement can be seen simply as a recognition of what had happened rather than as an assertion of rights under the agreements earlier under consideration. I do not consider that the significance of entry into the Blend agreements can so readily be dismissed. 134In April 2006, there were communications in relation to a draft Heads of Agreement with another entity (Cat Media Pty Ltd) in relation to the distribution of Painaway products worldwide (except for the European Union). Draft Heads of Agreement were prepared as at 18 April 2006, in which clause 2 contained an acknowledgement that Painaway legally owned all Intellectual Property, know how and rights to the Painaway products. That draft was forwarded by Mr Nassar to Mr Matthew Rowe (then dealing with the matter at Coleman & Greig following Mr Innis' departure) and a marked up version was then forwarded by Mr Rowe to Mr Nassar. The Cat Media negotiations did not reach a concluded agreement (the suggestion being that it was the Carrolls' refusal to disclose the contents of the formulas that led to the cessation of discussions, though nothing turns on this other than that it emphasises their consistent maintenance of confidentiality in relation to the formulas). 135Notwithstanding that the Cat Media discussions did not result in any concluded agreement (and the drafts must therefore be treated with caution) there does not seem to be any suggestion that Mr Carroll cavilled with the proposition on which the draft was predicated, namely that Painaway had legal rights which it was capable of conferring on third parties in relation to the distribution of the Painaway products. 136Perhaps as a result of the failure of the Cat Media discussions, on 18 July 2006, Painaway entered into the Blend Supplementary Distribution Agreement, which amended the terms of the existing Blend distribution arrangements. The draft Supplementary Distribution Agreement had been prepared by Mr Rowe and sent by him to Mr Hyder and Mr Carroll in July 2006 prior to its finalisation and execution by Painaway. Under the Supplementary Distribution Agreement the term was for three 3 year terms with a July 2006 commencement date; Australia and New Zealand were added to the territory. It was signed for Painaway by Messrs Hyder and Carroll (and Mr Culleton's signature was witnessed by Mrs Carroll). 137(Blend failed to pay Painaway the amounts required to be made under the Blend Distribution Agreement and the Blend Supplementary Distribution Agreement and, in or about October 2006, Painaway entered into the Blend Termination Agreements.) 138In December 2006, Mr Nassar raised with Mr Carroll his view that the contribution by the Nassar/Hyder parties had been greater than that of the Carrolls in relation to the venture and Mr Nassar put forward "the terms that would be needed to progress with Painaway Australia" (email 11 December 2006 from Mr Nassar to Mr Carroll). Those terms were for the profit share to be adjusted to a 50/50 split as between the Carroll interests and the Nassar/Hyder interests. Pausing there, it might well be said that this was inconsistent with there being a concluded agreement at that stage (since, if so, Mr Nassar would have been in breach of the agreement had he refused to perform his obligations thereunder). However, the response from Mr Carroll seems to make it clear that the Carrolls understood (and were indeed insisting upon adherence to) that there was a concluded and binding arrangement already in place. By email (which Mrs Carroll acknowledges she typed on Mr Carroll's instructions, since he was not able to use the computer), Mr Carroll on 21 November 2006 responded as follows: ...Due to the seriousness of your email, I am not in a position to respond or agree to your request. As a shareholders and a licensing agreement between us is already in place" 139Also of significance is that shortly thereafter (Court Book vol 1 p 15), the Carrolls sent a facsimile transmission to Messrs Hyder and Nassar calling upon them to perform in accordance with their obligations and to produce the Painaway future company plan (referring to a meeting on 30 January 2007): Over the last 20 months since the agreement was signed by all 3 partners in Painaway Australia Pty Ltd there has not been a proper marketing plan documented or implemented by either of you Angelo or Elias ... Linda and I would like a proper marketing plan in writing by 12 February. Alternatively we would like the option of Linda and I finding someone appropriate to buy your share so we can move forward immediately 140Pausing there, if all that Painaway had was an implied licence at that point (terminable at will as they now contend) and there was no other agreement between the respective parties, then it is not clear why it was that the Nassar/Hyder interests being called upon to perform their marketing obligations and, even if that could be read as not inconsistent with there being no agreement then in place, why there would be any need for the Carrolls to buy out the Nassar/Hyder interests shares in Painaway in order to move forward immediately. 141Prior to Painaway's incorporation, Nature's Remedies had caused the Painaway Products to be produced and those contained in bottles were in a 150ml size. From about September 2005, there was a redesign of the product and it was produced in 120 ml bottles with new packaging. The first stocks of the new 120ml Painaway bottles were received in Nature's Remedies warehouse at Jilliby in early March 2006. It is not disputed that from the time of its incorporation, Painaway purchased the materials to manufacture the products and the moneys for that purpose were supplied by the Nassar/Hyder and Carroll interests (and those payments were treated as loans to Painaway). Painaway did not operate a bank account until early/mid 2007. 142The Carroll interests admit that Nature's Remedies did not itself manufacture any Painaway products after April 2005 nor did it sell any products to Painaway after that company was formed in June 2005. 143It was proposed that there be a substantial product launch (with promotion and marketing by the Nassar/Hyder interests) in early 2007 and in the period up to the launch of the product, a supply of Painaway products was built up in order to have sufficient stock on hand. Painaway issued the purchase orders to suppliers of raw materials, containers and other products, and paid for the supplies. Painaway also issued purchase orders to Kenkay, the licensed manufacturer under the Therapeutic Goods Act who manufactured the Painaway products. (The Painaway formulas were provided to Kenkay for that purpose under the terms of a secrecy agreement.) 144Following manufacture and compliance with the regulatory requirements by Kenkay, the practice was that the Painaway products were delivered to and stored in a large shed located on the Carrolls' property at Jilliby. (In the later part of 2005 and 2006, Mr Hyder, at his expense, had increased the size of the shed on the Jilliby property for the admitted purpose of accommodating the (then anticipated) expanded business of distribution of Painaway Product (Carrolls' Defence at [54]). (By October 2009, Painaway had entered into a lease of larger warehouse premises at Tuggerah to store the goods.) 145The Painaway products were launched with a major advertising campaign (paid for by Mr Nassar) in early 2007 and in about March 2007, Painaway commenced the sale of the Painaway products and opened a bank account in Tuggerah (to which Mr Carroll and the Hyders were signatories). It was not until after March 2007 that Painaway commenced to derive income from the marketing and sale of the Painaway products. From April 2007, payments commenced to be made from Painaway to Nature's Remedies and the Carrolls. (In the period to 16 March 2009, the Carroll interests recouped approximately $370,000 out of Painaway. The Nassar/Hyder interests recouped roughly equivalent amounts.) 146By about June to September 2007, Painaway had established a website which marketed and promoted the Painaway products and through which prospective buyers of Painaway products could purchase them online. (It does not seem to be disputed that the website made no reference to Nature's Remedies.) 147The Carroll interests admit that the packaging of products sold by Painaway bore the words "Distributed by Painaway Australia Pty Ltd" and made no reference to Nature's Remedies (Carrolls' Defence at [67]). 148A Sales Agency Agreement was entered into by Painaway on 19 June 2007 with Clearsales Austraia Pty Limited as a selling agent/distributor of Painaway products. Mr Carroll and Mr Nassar were signatories to that agreement. Under that agreement Painaway warranted that it had the authority and capacity to enter the agreement and deal with the products (5.2) and indemnified Clearsales inter alia in relation to its use of the trade mark (9.2(B)). 149Mr Nassar deposed (at [42] and in the witness box as to the steps taken to promote Painaway products over the period up to 2010. 150Painaway entered into commitments in the course of 2008/2010 which suggest that its directors understood it to have more than a licence terminable at will in respect of the Painaway products. It entered into a Sponsorship Partnership Agreement with a prominent rugby league player (Jarryd Hayne) in 2009 and an agreement on 22 January 2010 with the Parramatta National Rugby League Club Ltd (under which a sponsorship fee is payable twice yearly up to 1 June 2012 at a total financial commitment including the supply of product at somewhere in the order of $1m). 151I see the entry into commitments of this kind as significant in that it indicates that the directors considered there was a sufficiently secure source of income that the company would be in a position to meet its financial commitments under those agreements as and when they fell due (as otherwise they would risk exposure for trading while insolvent). This suggests that they, including Mr Carroll, cannot have understood the position to be that Painaway was operating at the whim of Nature's Remedies). 152It is admitted by the Carroll interests that each of Painaway, Nature's Remedies, Messrs Hyder and Nassar (and entities associated with them) incurred liabilities in respect of the acquisition of raw material and the manufacturing and marketing of products to be sold under the name " Painaway " (Carrolls' Defence at [46(a)]); that Painaway, Nature's Remedies and Angelo and Elias made arrangements for the acquisition and delivery of products to the premises identified to be used by Kenkay for the purposes of manufacture of products to be sold under the name " Painaway " (Carrolls' Defence [46(b)]); that Mr Carroll from time to time made arrangements with Kenkay on behalf of Painaway for the manufacture of products to be sold by Painaway under the name " Painaway " (Carrolls' Defence at [46(h)]); that Nature's Remedies from time to time received raw materials used in the manufacture of products and intended to be marketed by Painaway under the name " Painaway " (Carrolls' Defence at [46(i)]); that Nature's Remedies from time to time received supplies of products manufactured by Kenkay bearing the name " Painaway " intended to be marketed by Painaway (Carrolls' Defence at [46(j)]); that from time to time Painaway made payments to Kenkay in respect of the manufacture of products bearing the name " Painaway " (Carrolls' Defence at [46(k)]); that Nature's Remedies released for supply from time to time batches of goods bearing the name " Painaway " (Carrolls' Defence at [46(l)]); and that from time to time Messrs Hyder and Nassar undertook arrangements for the advertising and promotion of products to be sold by Painaway under the name " Painaway " (Carrolls' Defence at [46(m)]). 153It is further admitted that Painaway used the Painaway Trade Mark between 2006 and 2010 within the meaning of the Trade Marks Act in connection with the sale and supply of goods (Carrolls' Defence at [46(p)] and see Nature's Remedies' Cross-Claim at [4]); that from time to time between 2006 and 2010, Painaway entered into contracts with third parties for the supply of products bearing the name " Painaway " (Carrolls' Defence at [46(q)]); that between 2007 and 2010, Nature's Remedies and Mrs Carroll received payments from Painaway (Carrolls' Defence at [46(t)]); that prior to March 2007, each of the Carrolls, Nature's Remedies and Messrs Hyder and Nassar paid expenses relating to the manufacture and supply of products sold under the name " Painaway " (Carrolls' Defence at [46(u)]); and that Painaway used the trade mark " Painaway " in relation to the sale of products between 2006 and 2010 (Carrolls' Defence at [46(v)]). 154It is not disputed that the Painaway formulas were never disclosed to the Nassar/Hyder interests (indeed this was a source of some contention between the parties - though, interestingly, the desire to know the content of the formulas was put to the Carrolls as being a concern as to what would happen if Mr Carroll, who had suffered from cancer, were to die; not as being that they had any entitlement to know the content of the formulas). 155On 14 May 2008, the renewal date of the Painaway Trade Mark was extended to 14 May 2018 (Carroll's Defence at [70]). 156Around June 2008, Mr and Mrs Carroll had become aware that the shares in Painaway had been issued in 2005 upon the basis of equal shareholdings to JAKL, Mickey Rose and Angelo's Angels. In July 2008 Mrs Carroll sent an email to Mr Demos under her husband's name, asking him to rectify the company shareholding to the amount of shares which were in the Shareholders Agreement. The Carrolls' position as stated as at 10 July 2008 was: No meeting has ever been held to change that shareholders agreement and neither Linda or I are going to..... 157In September 2008, it was agreed between the four individuals that the shareholding in Painaway be altered and that the new shareholding would be JAKL - 50%; Angelo's Angels - 25%; Mickey Rose - 25%. In September 2008, it was also agreed between the four individuals that available profit made by Painaway in the future would be distributed to the three shareholding interests in Painaway (namely, the Carroll interests, the Hyder interests and the Nassar interests) as to one third each. On 10 September 2008, 50 ordinary shares in Painaway were issued to JAKL and1 'E' class share in Painaway was issued to each of the Painaway corporate shareholders. Since then the shareholding of Painaway has been that each of Angelo's Angels and Mickey Rose owns 1 of 3 'E' shares and 50 of 200 ordinary shares and JAKL owns the remaining 1 'E' share and the balance (100) of the 200 ordinary shares. 158Mr Svehla submits that the restructure of the profit share was because, by this time, because Mr Nassar and the Hyders, were spending significant time in running Painaway's affairs (Mrs Hyder having taken on a bookkeeping role in relation to the company), (see Mr Nassar's affidavit at [46]). The equity shareholding was renegotiated from 51% to 50% to JAKL and 25% (rather than 24.5%, to each of Angelo's Angels and Mickey Rose), a change that appears to reflect an acceptance by all the parties that there had been an incorrect allocation of shares in the first place, and the profit was agreed to be split a third each. Mr Svehla characterised this as a variation to the Shareholders Agreement (and not as something that indicated that it had not come into effect in the first place). 159On 10 February 2009, Nature's Remedies entered into a further (2009) Manufacturing Agreement with Kenkay. 160Between 2007 and 2010, payments to Nature's Remedies totalled approximately $740,000 and these were accounted for as management fees. It is accepted that Painaway did not in that period pay to Nature's Remedies or the Carrolls, any licence fees for use of the Painaway trade mark. 161On 1 May 2009, a meeting took place between the Carrolls, the Hyders and Mr Nassar at the Central Coast Leagues Club. This meeting, according to Mr Nassar, was to "square off" accounts in relation to the moneys paid to date. It seems that there was a process of reconciliation of what had been paid by each of the respective families or their companies to that date (the figures being recorded in handwritten documents produced at the meeting). That reconciliation took into account the initial sum of $100,000 paid as to half each by Mrs Hyder and Mr Nassar in December 2003 (which was used to pay out Mr Valentine). (Such an exercise is consistent with the contemplated treatment of such amounts in clause 11.5 of the Shareholders Agreement) namely that the amounts paid (or notionally paid) would be treated as loans to the company.) 162The Carrolls contend that the funds repaid to the Nassar/Hyder interests on that occasion, included the $100,000 loan that the Carrolls were liable to repay to Messrs Hyder and Nassar (being the funds they say they borrowed to purchase LSJK's 49% interest in Nature's Remedies). Mr Hyder and Mr Nassar resisted that contention (and maintained that while the payments received on 1 May 2009 in some way took into account the December 2003 payment - and were justified by reference to the Shareholders Agreement - this did not mean that there was not still an entitlement to the 49% equity in Nature's Remedies that they say was purchased by that December 2003 payment.) 163At the conclusion of the 1 May 2009 meeting, it nevertheless appears to be the case that each of the respective families received an amount that was accepted to reflect their monetary contribution in relation to the joint venture to that date. Since then, distributions of around $600,000 have also been received by the respective family interests (hence Mr Ireland submits that the Nassar/Hyder interests have been well recompensed for their involvement in the business to date). 164It therefore does not seem to be disputed that significant financial contribution was made by the Nassar/Hyder interests not just before the incorporation of Painaway but in the period from 2006 onwards (see Nassar affidavit [84] - [90] - sums in the order of $875,000; Hyder affidavit 20 August 2010 [29] - sums in the order of $515,000). Nor does it seem to be disputed that the marketing and sale of the Painaway products was very successful, such that the company went from having no sales in 2006 to having sales of approximately $1m in 2008, $4.6m in 2009 and $8.7m in 2010. 165It seems that it was from about July 2010 that disputes began to emerge between the Carrolls, on the one hand, and the Nassar/Hyder interests, on the other. 166The manner in which those disputes were first articulated (at least on the material before me) seems to have been via the involvement of a Mr Joseph Lombardo (an accountant) who wrote to Mr Demos by letter dated 12 July 2010 referring to the "chronic dysfunctional nature of the relationship". Mr Lombardo advised in that letter that he was acting for Mr Carroll who had a 50% interest in Painaway and, perhaps tellingly, said that he had a "pre-disposition towards saving the company" but made various allegations as to related party transactions and asserted a belief that the company accounts might be false and misleading or incorrect (presumably intending thereby to cover both knowingly incorrect accounts and unknowingly incorrect accounts). (Mr Carroll deposed that in June 2010 he stopped receiving his "usual management fee" of $30,000 per month - and it might be reasonable to infer that this may have precipitated Mr Lombardo's retainer to review the accounts and the position of the company.) 167The distrust and suspicion to which Mr Lombardo adverted in that letter (on the part of Mr Carroll) seems to have rapidly escalated since by 20 July 2010 Mr Lombardo was writing of a "total failure of governance" and asserting that Mr Carroll "requires complete transparency past, present and future". Mr Lombardo then asserted that the "licence currently does not exist given serious breaches" (my emphasis) and that the "existing shareholders agreement is probably not valid given the scale of deliberate breaches" (again, my emphasis). (There was no suggestion by Mr Lombardo that the Licence and Shareholders Agreements had never come into operation - rather the suggestion was that, due to breaches thereof, they had come to an end or been invalidated in some fashion not clearly expressed in the letter.) 168It may well be that Mr Lombardo's views were what had led Mr Carroll so firmly to believe that he was being cheated by the Nassar/Hyder interests - which was the nub of his emotional outburst in the courtroom (at T 340). However, the suggestion that any inaccuracy in the company's accounts was something that had disadvantaged Mr Carroll seems to have been contradicted by the initial independent review carried out for the receiver of the company's accounts (albeit that the review was said to have been hampered by the lack of co-operation by the Carrolls). 169In the receiver's report to creditors of October last year there is a report obtained by Mr Singleton from Kelly & Partners as to the books and records of Painaway that concludes that the books and records of the company are materially incomplete - relevantly, on the basis that major transactions since 2005 have not been recorded; expenditure incurred by two directors on behalf of the company for marketing and advertising (ie presumably Messrs Nassar and Hyder) had not been charged to the company; and no accruals had been taken up. The major differences in the revised company accounts as prepared by them related to the reinstatement of directors' loan accounts. However, on that report it has been concluded that the accounts understated the Carroll interests loan account by some $680,000; understated the Hyder loan account by a much smaller amount; and failed to credit Mr Nassar for an amount of $245,346 owed to him. Therefore, it would seem that insofar as it is said that the Nassar/Hyder interests had not properly accounted for amounts in the books of the company, this seems to have favoured the Carroll interests at least on the preliminary review commissioned by the receiver of the accounts. 170This brings me to the events since the commencement of the present proceedings and the appointment on 31 August 2010 of Mr Singleton as the receiver to Painaway. By 31 August 2010, the Painaway products sold by Painaway under its name exceeded $8m per year. Mr Singleton's report, as receiver of the company on 12 October 2010, noted that Painaway had some 483,613 units of stock on hand with a book value of about $2.13 million (Court Book Volume 3, page 1093). 171Within a week, on 7 September 2010, Mrs Carroll had written, expressly in her capacity as the Quality Assurance Manager of Nature's Remedies (the Therapeutic Goods Administration licensee for the Painaway products), to Mr Singleton formally notifying him that " No stock exists at the premises of Painaway Australia Pty Ltd that has been released by me as Quality Assurance Manager that is available to be shipped to customers" and that "I, as the Quality Assurance Manager of Nature's Remedies Pty Ltd on Monday on 6 September 2010 have quarantined all stock" . 172On 8 September 2010, Nature's Remedies advised Kenkay that all Painaway stock had been "quarantined due to the fundamental breaches in design specifications". 173On 9 September 2010, Mrs Carroll, again making clear that she was writing in her capacity as the Quality Assurance Manager of Nature's Remedies, requested that the receiver pay Nature's Remedies $440,000, including GST, "to carry out the work for the quarantine stock in the warehouse" and enclosed a tax invoice for payment in that sum ( Court Book, Folder 3, p 1119 invoice No 2529) and advising that Nature's Remedies was charging Painaway in advance for a recall of product in the sum of $1.1m. Mrs Carroll, writing on behalf of Nature's Remedies ("Proud Inventors of Painaway products") also issued a tax invoice for a not insubstantial sum ($3,300,000, including GST) to the receiver "as per our letter dated 9/9/10 in regard to stock released to the Public" and claiming a lien over all stock for unpaid invoices. (I t is not clear how that sum was comprised but it was demanded immediately - Court Book, Folder 3, p 1120 invoice No 2530). 174Perhaps not surprisingly, Mr Singleton refused to make such payments on the basis of the information then to hand. He retained Mr Bruce Graham, as an expert consultant, to inspect the stock and report thereon. He also instructed his solicitors to seek information as to the basis of the quarantining of the stock. In evidence was correspondence from the solicitors for Mr Singleton, Holding Redlich, seeking to obtain information as to the basis of the quarantine that had been (rather suddenly after the dispute arose) imposed by Mrs Carroll and seeking to meet with the Carroll interests for that purpose (see Court Book, Folder 3, pp 1045 and 925; and the letter of 3 November 2010 from Holding Redlich Lawyers annexed and marked "E" to Mr Singleton's affidavit sworn 10 November 2010). It seems that nothing came of these requests. (There was also evidence of the sale of some Painaway products in the local markets which may cast some doubt on the basis for the stock being quarantined and which in any event led to the suggestion that there had been moneys for sale of stock not properly accounted for by the Carroll interests.) 175Mr Graham, a consultant with pharmaceutical qualifications and extensive experience in food, chemicals and pharmaceutical industries as a chemist (and a senior Good Manufacturing Practice auditor with the Therapeutic Goods Administration), in due course reported to the receiver as to his inspection of the Painaway stocks. His report (Court Book, Folder 3 pp1108-1110) notes that on 11 October 2010 he viewed the stock and formed the view that the Painaway Arthritis Cream (96,677 units) and Painaway Sports Cream (123,676 units) were saleable ( "I could see no evidence of fault that should prevent sale") though noting a labelling issue which in his view amounted to no more than a technical defect and one that stood a very "high chance" of obtaining exemption under the Act. Conversely, Mr Graham formed the view that the Painaway Arthritis Spray (130,102 units) and Painaway Sports Spray (133,158 units) were unacceptable for sale due to deterioration of labels (peeling or buckled or both) and also, in the case of the Painaway Sports Spray, trigger spray performance issues (see report Court Book, Folder 3, pp 1107-1108). 176The technical defect identified with the labelling of the Painaway Sports Spray and the Painaway Sports Cream was that the label did not include the words "and recovery", contrary to the terms of the TGA licence. Mr Graham's view, as noted above, was that this was a technical breach of the Labelling Order and that there would be a "very high chance of success" of obtaining a temporary exemption under section 14 of the Therapeutic Goods Act to permit such stock (otherwise being saleable) to be released with this label defect. He observed that no steps had apparently been taken by Mrs Carroll or Nature's Remedies to resolve this issue. 177By letter 14 October 2010, the solicitors then acting for Nature's Remedies and the Carrolls (Pigott Stinson) wrote to the receiver's solicitors asserting ownership of the Painaway Intellectual Property and denying that Painaway had been granted a licence to deal with the Painaway Intellectual Property. In that letter, Pigott Stinson denied that the Licence Agreement reflected the terms on which a licence was granted to Painaway in respect of the Painaway Intellectual Property and asserted that the terms of the Licence Agreement did not entitle Painaway to deal with the Painaway Intellectual Property; any right, title or interest in or any access to or any Painaway Formulas or any know-how related to the manufacture of the Painaway Products; or access to certificates of analysis in respect of the Painaway Products (see also Carrolls' Defence at [104]). 178By letter dated 9 December 2010, PA Legal (the Carroll interests' current solicitors) wrote to the receiver's solicitors asserting that Painaway had no continuing right to manufacture Painaway Products under or by reference to the Painaway Trade Mark. In that letter, notice was given to Painaway that any existing licence of Painaway to use the Painaway Trade Mark was thereby terminated. The letter stated that Nature's Remedies proposed to undertake manufacturing and distribution of its products under the Painaway Trade Mark. For the Carroll interests, it is asserted that this letter was effective to terminate any right or claim on behalf of Painaway to continue to manufacture and distribute products bearing the name " Painaway " under the Painaway Trade Mark held by Nature's Remedies (Carrolls' Defence at [106]). Mr Svehla emphasised that this and a letter darted 16 December 2010 had referred to termination of the 'use' of the trade marks and thus was not confined to an objection in relation to the future manufacture of the goods. 179Mr Svehla points out that from the time of Painaway's incorporation on 22 June 2005 until the existence of the dispute in July 2010 between the three shareholders of Painaway (which apparently gave rise to Messrs Hyder and Nassar, and, for that matter, Mrs Hyder, being excluded from access to the Tuggerah leased premises), there was no written or oral communication between the Carrolls and Nature's Remedies, on the one hand, and Messrs Hyder and Nassar, on the other hand, which disputed that Painaway had the exclusive rights under the Licence Agreement. It is submitted by Mr Svehla that the communications were to the opposite effect. (By the same token, nor was there communication over that period - or earlier - from the Nassar/Hyder interests calling for the shares in Nature's Remedies that they now say they had acquired an entitlement to by reason of the payments each made in December 2003.) 180The receiver reported to creditors in October 2010 that Painaway's stock at the time of the receivership had been valued at $7.5 million on a market value basis (5 October 2010 Report, pp 16-17; Court Book, Folder 2, pp 553-554 and Appendix H Court Book, Folder 3, pp 785-799). It does not seem to be disputed that Painaway presently has several hundred thousand dollars of raw materials, containers and labels in its possession, as well as the quarantined stock. 181Of the Painaway products quarantined, the receiver's investigations further suggested that at least 16,000 items (of Painaway Arthritis Spray) had already been "quality assured" by Mrs Carroll and labelled as released for supply (see Mr Singleton's affidavit sworn 22 October 2010 at [3]) and those have been valued on a gross sales revenue basis at approximately $224,000 (at [5]). (Mr Singleton deposed that Painaway has outstanding orders for these items.) 182By affidavit sworn in these proceedings, Mr Diego Elvas Malafai, a supervisor employed by Mr Singleton's firm, deposed to a visit to the Tuggerah warehouse or factory on 8 October 2010 on which occasion he says that Mr Carroll said that the 16,000 units of arthritis spray were good for sale but that "we paid for this stock and we are not releasing it for sale until we are paid what owed". (The administrators point to the fact that the purchase order and delivery note/tax invoice in relation to this product are consistent with Painaway having ordered and been invoiced for the spray.) 183In that regard, I expressed the view at the commencement of the hearing that it must be in the interests of all parties (and certainly the creditors) for stock that was the subject of a committed purchase order and that had already been released for supply, should be sold (even if the funds were then to be quarantined pending the determination of this dispute). This led to some argument as to the terms of the correspondence in December 2010 and what they had precluded but the upshot, as I understood it, was that at least those items were to be sold by the administrators without objection by (and without competition from) the Carroll interests. Whatever may have been the position up until that point (and it seems to me that it is not necessary at this stage that I determine this), Mr Ireland made it clear during the hearing that his clients did not contest the 'saleability' of the manufacture stock (rather, the issue was whether Painaway had anything more than the right to deal with the stock and materials on hand (and whether Nature's Remedies could compete therewith). 184Further correspondence was tendered (Exhibit D) in which the parties' positions in this regard were aired. Mr Singleton accepted in the witness box that he had not been precluded from selling the stock by any conduct of Nature's Remedies - a concession on which Mr Ireland relies. In any event the Painaway Cross-Claim was not pursued and nothing seems to turn for present purposes on this issue. 185For completeness I note that there was also evidence of some sales after the appointment of the receiver for which Mr Carroll accepted that account had not been made to Painaway. However, I do not here address the question of any financial accounting in that regard (as that was not pressed). 186Mr Singleton deposed that, as at 11 November 2010, Painaway's trade creditors at the time of his appointment as Receiver were $1,104,392 (Mr Singleton's affidavit sworn 10 November 2010 at [6], [7] and Annexure B thereto), together with contingent liabilities of some $1.5m, comprising the Commissioner of Taxation for $661,800 and Parramatta National Rugby League Club for $786,500. Thus, as I understand it, as at 11 November 2010, the known external trade creditors of Painaway were approximately $2.5m. At the same time, Painaway has some 483,000 units of products with a book value of around $2.2m and a market value in excess of $7m. 187Mr Svehla submits, in effect, that on the case put forward by the Carroll interests, Painaway must be said to have operated at the whim of Nature's Remedies since that entity (controlled as it is by the Carrolls) could at any time have withdrawn the implied licence they concede Painaway had and thereby leave it unable to obtain proper value for the substantial quantities of products and raw materials presently in its hands. Mr Svehla also notes that between 2007 and 2010 approximately $740,000 was received by Nature's Remedies from Painaway, including receipt of recurrent monthly payments of $30,000 per month (later reduced to $25,000 per month) which Nature's Remedies accounted for as management fees (referring to Mr Carroll's 31 January 2011 affidavit at [34]. 188As a result of the above matters, Mr Svehla submits that the 'absolute minimum' position for which Painaway contends is that Painaway has an exclusive licence to market, advertise and sell the Painaway products which it presently holds in the Tuggerah warehouse (said to have a market value in excess of $7m) and to manufacture and then market, advertise and sell Painaway products with the use of the existing raw materials it owns. He presses for a further finding that Painaway has an ongoing exclusive licence to deal with and sell the Painaway products; such licence not being terminable at will (but, rather, a perpetual licence terminable only in the circumstances of clause 7.2 of the Licence Agreement). 189I turn then to the issues for determination. Issues (i) Was there a binding agreement under which an exclusive and non-revocable licence was granted to Painaway and, if not, is Nature's Remedies estopped from denying such an agreement? 190For Painaway, Mr Svehla (as does Mr Stack for the Nassar/Hyder interests) relies upon a variety of arguments for the contention that Painaway has an exclusive and non-revocable licence in relation to the Painaway products (on the terms of the Licence Agreement that was admittedly signed on 18 April 2005 by all of the Carroll interests other than JAKL). (Mr Svehla accepts that the Licence Agreement and the Shareholders Agreement are interdependent - in the sense that the Licence Agreement is intended to operate upon the incorporation of Painaway; the three individuals (Messrs Hyder, Nassar and Carroll) becoming the three directors of Painaway; and the corporate trustees becoming shareholders in Painaway - but submits that it is not necessary that the Shareholders Agreement itself be held to be binding for Painaway to have the benefit of the licence granted under the Licence Agreement.) 191First, it is said that the signing of the Licence Agreement amounted to an offer, (capable of acceptance on its incorporation by Painaway) and that such an offer was accepted by the parties' conduct post the incorporation of Painaway; secondly, that the contract arises on the basis of the parties' manifestation of mutual assent to the contractual regime for which provision is made in the Licence Agreement; thirdly, the principle of conventional estoppel is invoked to preclude the denial by the Carroll interests of the existence and operation of the Licence Agreement; and, finally, it is said that 18 April Licence Agreement amounts to a pre-incorporation contract subsequently ratified by Painaway by its conduct in relation to the Painaway products. 192To the extent that it is necessary to do so in order to assert rights under the Licence Agreement (and it is not conceded by them that it is), Counsel for Painaway and the Nassar/Hyder interests, respectively, contend that the same reasoning applies in relation to the existence and operation of the Shareholders Agreement. 193Reliance is placed on the same conduct to establish the conventional estoppel claim as is relied upon for the conclusion that the relevant corporate entities (Painaway, in respect of both Agreements; the Corporate shareholders of Painaway, in respect of the Shareholders Agreement) by its (or their) conduct, had affirmed, or impliedly accepted the offer to enter into, the relevant Agreement(s). 194It is accepted that questions as to whether a contract has been formed, and as to the terms of any such contract, are matters to be determined on an objective not subjective basis, though relevant inferences can be drawn from the conduct of the parties ( Pacific Carriers v BNP Paribas (2004) 218 CLR 451 at [ 22]; Toll (FGCT) v Alphapharm (2004) 219 CLR 165 at [40]). In RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128 Newnes JA in the Court of Appeal in Western Australia noted that the "legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon subjective beliefs or intentions", citing the High Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 [34]; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [25]; Pacific Carriers [22]. 195What must be determined is not only that the parties reached a consensus that was capable of forming a binding contract but that they did so with the objective common intent that such consensus should constitute a binding contract ( Air Great Lakes v K S Easter (Holdings) (1985) 2 NSWLR 309). 196Furthermore, whilst it is recognised that contracts generally arise out of an identifiable offer and an acceptance of that offer communicated to the offereror, Mr Svehla relies on the line of authority considered in Branir Pty Ltd & Ors v Owston Nominees [No 2] Pty Ltd & Anor [2001] FCR 1833; (2001) 117 FCR 424 at [369], for the proposition that, even in the absence of an identifiable offer and acceptance in the classic sense, a contract may arise on the basis of a clearly manifested mutual assent to a particular arrangement capable of constituting an enforceable contract. 197In Branir (at p 525), Allsop J (as his Honour then was), with whom Drummond and Mansfield JJ concurred, rejected a submission to the effect that a "springing contract" was not something known to the law, saying: On the contrary, a number of authorities discuss the need not to constrict one's thinking in the formation of contract to mechanical notions of offer and acceptance. Contracts often, and perhaps generally do, arise in that way. They can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting "i"s and crossing "t"s or where they think they have done so. ... Sometimes this failure occurs because , having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances, even in the absence of clear offer and acceptance, and even without being able (as one can here) to identify precisely when a contract arose, if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract . Sometimes this is said to be a process of inference or implication. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: 'and we hereby agree to be bound' in this or that respect. The essential question in such cases is whether the parties' conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract (his Honour then citing the various authorities from which that proposition had been drawn) (my emphasis). 198In Brambles Holdings v Bathurst City Council (2001) 53 NSWLR 153, Heydon JA (as his Honour then was) had said: ... While the process by which many contracts are arrived at is reducible to an analysis turning on the making of an offer, the rejection of the offer by a counter-offer and so on until the last counter-offer is accepted, that analysis is neither sufficient to explain all cases nor necessary to explain all cases. Offer and acceptance analysis does not work well in various circumstances. 199Thus, the fact that the precise time at which the parties concluded their contract cannot be determined will not necessarily preclude a finding that there is a binding contract (and, in the present case, Mr Svehla submits that nothing turns on the precise time at which this particular contract was concluded). 200Similarly, in Empirnall Holdings v McMahon Paull Partners (1988) 14 NSWLR 523 at 534 to 535 McHugh JA (as his Honour then was) had said that communication of acceptance was not always necessary (giving as examples of when it is not the situation where the offeror has dispensed with the need to communicate the acceptance of an offer and, relevantly in the present case, where the silence of an offeree "in conjunction with other circumstances of the case" may indicate that the offeree has accepted the offer). 201The conduct of the parties must be capable of proving all of the essential elements of an express contract ( Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd ( 1988) 5 BPR 11,110 at p 11,117-11,118 per McHugh JA (as his Honour then was), with whom Hope and Mahoney JJA concurred). His Honour there said: It is often difficult to fit a commercial arrangement into the common lawyers' analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of 'offer', 'acceptance', 'consideration' and 'intention to create a legal relationship' which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship ... Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed. 202Mr Svehla also referred to what was said by Macfarlan J in Prints for Pleasure Ltd v Oswald-Sealy (Overseas) Ltd [1968] 3 NSWR 761 at 765-6, namely that: "...in dealings between business people there cannot always be certainty or predictability about the future course of events arising out of or in the performance of a business relationship which they desire to, and may lawfully, create. The course of business often means that this must be so and it would, as Lord Tomlin said, be a reproach upon the law if parties who intended to agree, and believed they had agreed in this way, should be told that their agreement for legal reasons had never come into existence". and noted that the fact that parties have embarked on significant elements of their business venture is a matter which has been recognised as something that would influence a court to give effect to the parties' implicit intentions (see Ormiston J in Vroon BV v Fosters Brewing Group Ltd [1994] 2 VR 32 at 87, applied in Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 by Finkelstein J and referred to by Allsop J in Branir ). 203With the above in mind I turn to the particular bases on which it is contended that there was an enforceable licence agreement concluded between the parties. Offer & acceptance/mutual assent 204I have had little difficulty in concluding that the circumstances in which both the Licence Agreement and the Shareholders Agreement were signed on 18 April 2005 were such that their execution amounted to the making of an offer by the respective signatories (capable, on incorporation, of acceptance by Painaway and the Painaway shareholders, as the case may be, so as to give rise to a binding agreement on the terms set out therein with the said corporate entities). (I would also have been inclined to find that the signing of the documents constituted an agreement between the signatories that they would cause the relevant corporate entities to be brought into existence and to enter into such an agreement, though this is not necessary given the findings I have made as to the manifestation of mutual assent.) 205The formality with which the respective Agreements were signed and witnessed on 18 April 2005 can only, it seems to me, be seen as signifying that the signatories had agreed to be bound by an agreement in those terms. Otherwise there would have been no purpose in the formal execution of the documents in advance of the incorporation of all of the entities that were (on the face of the documents) intended to be party thereto. Messrs Carroll, Nassar and Hyder had, by this stage, been in discussions over a period of time and had been provided with various draft agreements to consider (not simply drafts of the documents ultimately signed by them but also, for example, the earlier draft prepared by Aubrey Brown Partners) and, before then, had been in discussion as to the manner in which their business venture was to be structured. There is no suggestion that the parties had had a practice of formally signing draft agreements as some kind of record of the stage at which they then were in their negotiations and there would seem no purpose to be served in them having done so simply as a record of discussions on 18 April 2005. (Mr Carroll himself seemed to accept that he had signed the documents on 18 April 2005 on the basis that he was entering into an agreement of some kind on that date.) 206I consider that the inference to be drawn from the signing of the Agreements on 18 April 2005 (after the discussion as to their terms, of which Mr Innis gave evidence including his emphasis as to the exclusive and irrevocable nature of the licence) is that this signified an objective intention of the signatories to commit to enter into and be bound by an agreement in these terms with the yet-to-be incorporated entities (and arguably to take the steps necessary for the yet to be incorporated entities to do so). Thus I find that the signing of the documents in question constituted an offer by the signatories capable (on acceptance by the entities that had not yet signed) of giving rise to a binding contract. 207What is less clear is that there was any specific act signifying the acceptance of the offer by those corporate entities after their incorporation. Rather, the evidence suggests that no real attention was paid to the need for execution of the documents, or communication of acceptance of their terms, by Painaway or the Painaway shareholders. Mr Svehla accepted that the mere fact of incorporation would not be enough to signify such acceptance but relied on overt acts that he submitted were referable to the right of Painaway to manufacture and produce under the licence and with the knowledge of Nature's Remedies the Painaway products and the fact that Nature's Remedies made the decision no longer physically to manufacture the products from about March 2006 (and for all matters to be dealt with through Painaway). 208Weight was placed by Mr Svehla in this context on the authorities which permit acceptance of an offer of contract to be inferred by reference to the parties' conduct, having regard to the circumstances of the commercial relationship between the parties. (In that regard, also, Mr Stack submits that formal communication of acceptance of the respective offers made by the signing of the Licence and Shareholder Agreements was not necessary, since the officers of Painaway included the Carrolls and since the terms of those agreements had been accepted by its controlling minds (and, in the case of the Shareholders Agreement, by the controlling minds of the companies named as shareholders). 209In Brambles , it was said to be relevant, when determining the issue as to whether there is a binding agreement in such cases, to ask the following: ... in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of the [plaintiff] and a reasonable person in the position of the defendant think as to whether there was a concluded bargain? 210In answering such questions, regard may be had to both the pre and post contractual conduct of the parties. Nevertheless, the court's conclusion is based on an objective view of those facts, rather than on the subjective beliefs of the parties. 211In relation to the kind of conduct which will establish an "inferred agreement", in Waldorf Apartment Hotel v Owners Corp SP 71623 [2010] NSWCA 226 at [44] , MacFarlan JA (with whom Beazley JA agreed) said: Accepting that the true position was, as I have decided, that representatives of the parties had in various ways attempted to enter into an agreement in the terms of the Building Management Agreement, but not succeeded in doing so, I would regard the conduct of the parties undertaken in conformity with the terms of that agreement as manifesting an intention to comply with an agreement that they mistakenly believed was in place , rather than an intention to make a contract in those terms that had not already been made. (my emphasis) 212It is hard not to see the present as just such a case - one where the parties mistakenly believed an agreement was in place and acted on the common assumption that they were bound thereby. 213Mr Svehla relies on the conduct pleaded in the Statement of Claim as giving rise to the inferred acceptance/mutual assent - placing particular reliance on: the circumstances in which the shareholding in Painaway was rectified in September 2008 to accord with what had been provided for under the Shareholders Agreement (and to correct the admitted error of Mr Demos in arranging for the issue of 50 shares to each of Angelo's Angels, JAKL and Mickey Rose); the entry by Painaway entered into the Blend Distribution Agreement on 8 December 2005, which was premised upon Painaway having rights in relation to the Painaway Products conformable with the terms of the Licence Agreement; and the entry into other arrangements with third parties based on the existence of such rights. Mr Svehla also points to the fact that (as Mr Carroll deposed in his affidavit) after April 2005, Nature's Remedies did not manufacture any Painaway product (para [24]), which is said to be consistent with the grant to Painaway of an exclusive licence conformable with the Licence Agreement and the obligations of the parties under relevant clauses of the Shareholders Agreement. 214Mr Stack, for his part, emphasises three matters. 215First, that Mr Carroll is the controlling mind of both Nature's Remedies and JAKL (and hence his knowledge as a director of Painaway can be attributed to both). That is significant in circumstances where Mr Carroll, in his capacity as a director of Painaway, entered into transactions and discussions that were premised on the company having valuable rights in relation to the Painaway products (such as the Blend agreements) and must have assumed that the company had more than a licence terminable at will (such as the Parramatta and Hayne sponsorship agreements, under which Painaway undertook obligations that it could not fulfil if its licence in relation to the Painaway products were terminated. Not only was Mr Carroll apparently comfortable in so doing (and one might have thought he would be concerned to exposure as a director if he was committing to obligations without having a reasonable basis to believe that the company would be in a position to comply with those obligations as and when they fell due) but one would have thought that had he considered that this went beyond any licence that had been granted by Nature's Remedies then (as a director of Nature's Remedies) he would have been astute to protect its position. 216Secondly, Mr Stack submits that the conduct of Painaway and the Nassar/Hyder interests over the last 5 years was consistent with the terms of the Licence and Shareholder Agreements and otherwise demonstrated that Painaway considered itself bound by those Agreements. In this regard, Mr Stack points to the operative part of the Licence Agreement and clause 3, which provides that Painaway had exclusive rights to use the relevant intellectual property "in connection with the manufacture, sale distribution and marketing" of the products and notes that, s ince incorporation and up to the time of the present dispute, Painaway has paid all of the expenses associated with the manufacture of the products, including the costs associated with acquiring the raw materials, producing and packaging the products; has paid all expenses associated with marketing the Painaway products; has paid all expenses associated with the transportation and sale of the Painaway products; and has marketed and sold the Painaway products. (In so saying, it must be noted that at least up until March 2007 the payment of moneys on behalf of Painaway came from the respective families but it is clear that the individuals treated such contributions as a loan to the company and ultimately there was a reconciliation done to that effect, consistently with what was contemplated by the Shareholders Agreement.) Mr Stack also refers to the financial contributions and marketing efforts by Messrs Hyder and Nassar consistent with the acknowledgement in the Shareholders Agreement as to what was intended in relation to their role in the venture (clause 17.1). 217Thirdly, reference is made to the lack of any assertion by the Carroll interests (prior to these proceedings) to the effect that the Licence and Shareholder Agreements were not binding (or that the offers contained therein had been withdrawn). Not only is it said that their own conduct has been consistent with the terms of those Agreements and with the Agreements otherwise being operative (including Mr Carroll, as a director of each of Painaway, Nature's Remedies and JAKL, having negotiated and/or executed agreements with third parties, such as Blend and Cat Media which were only consistent with the Agreements being operative) but significance is placed on the fact that the Carrolls have previously asserted and relied upon the terms of the Agreements, in answer to various matters raised by Mr Hyder and Mr Nassar. (I also note that the correspondence issued by Mr Lombardo on the Carrolls' behalf in mid 2010 was predicated on the assumption that the agreements were in existence albeit said not to be valid by reference to alleged 'serious breaches' of those agreements, assertions that run counter to the argument that no such agreements were ever in force.) 218What significance is to be attached to the fact that the Agreements were not executed by the respective corporate entities? Mr Svehla's case is, in effect, that there was at most an inadvertence to the formalities but that the parties proceeded on the basis of and acted upon the arrangements contemplated in those agreements (subject to some variations over time). Mr Ireland, on the other hand, characterises this as a situation where the parties may have settled what are to be the terms of their agreement (if it should be made) but have not yet made that agreement (referring to Barrier Wharfs v W Scott Fell & Co (1908) 5 CLR 647 at 650). 219Mr Ireland, in contrast, places weight on the fact that Mr Innis, who prepared the Shareholders Agreement before Painaway or the shareholders were incorporated, had sent that document out as a 'final' document in July 2005 to be executed by all relevant parties - thus suggesting that there had been no finality in what had earlier been signed - and did not take any steps at all in relation to the Licence Agreement. Mr Ireland contends that even if the Shareholders Agreement signed by Mr & Mrs Carroll on 18 April 2005 could be regarded as an offer capable of acceptance by the other parties, there is no evidence of acceptance by conduct and the Court should not find that there has been a manifestation of mutual assent thereto. 220Emphasis was placed, as to the question of acceptance by conduct, on what Mr Ireland submitted was a disconformity between what was contemplated under the draft Licence Agreement and the draft Shareholders Agreement and what in fact occurred (in two respects - the manufacture of the products and the drawing of profits). Mr Ireland submitted that the documents were drawn to some degree interdependently (the Licence Agreement assuming the existence of the Shareholders Agreement (Recital B) and the Shareholders Agreement purporting to set out terms for the supply of the product to Painaway by Nature's Remedies) and that, having regard to the two agreements, the expectation of the parties must be said to have been that Painaway products would be manufactured by Nature's Remedies using the formulas owned by the Carroll interests and branded with the Painaway trade mark , owned by Nature's Remedies; and that those products would then be sold 'at cost' by Nature's Remedies to Painaway. Mr Ireland submits that none of that occurred; that, rather, what happened was that, following its incorporation, Painaway itself became a manufacturer of the goods (acting as the principal) and Mr Carroll acted as its agent to arrange that manufacture. 221Mr Ireland therefore submitted that the subsequent conduct of the parties, (which he accepts is admissible to discern whether an agreement was formed) is out of line with the terms of the draft Licence Agreement. 222In that regard, the terms of the Licence Agreement are consistent with Painaway having the ability either to utilise the services of Nature's Remedies in the manufacture of the products or not to do so. The complication arises that Nature's Remedies was the licensed entity for the purposes of the Therapeutic Goods Act, so was required to be involved in the process in some part of the process of manufacture in any event. 223Mr Ireland submitted that once the shareholder companies and the discretionary trusts were established in 2005, it was made clear to the parties by Mr Innis that the Agreements needed to be executed. Mr Ireland placed weight on the evidence given by Mr Innis in cross-examination that it was "was up to them" whether or not to do so. (The email from Mr Innis did not in terms advise the parties that it was necessary for them to execute the final form of the Shareholders Agreement for it to be binding on them - indeed the passing reference to "for consideration and execution" (without any detail as to the mode of execution or what was to be done with the document as executed) and the failure to send out the Licence Agreement as a 'final' document for consideration and execution by Painaway suggests that there was no importance attached by Mr Innis as to whether the formalities of execution were attended to by the parties.) 224It is submitted by Mr Ireland that this is an instance where the terms of the documents which were prepared in 2005 (and the commercial relationships and roles which those documents clearly contemplated) were not ultimately followed by the parties and that, instead, after 18 April 2005 the parties continued to negotiate their commercial relationship, culminating in the steps taken in September 2008 to issue additional shares in Painaway. (For the Carroll interests, it is said that it is what occurred in September 2008 which had actual financial consequences for the parties, both as to equity and profit entitlement, rather than the unexcuted agreements in 2005.) Thus the case for the Carroll interests is that the expectations set out in the unexecuted Shareholders Agreement and Licence Agreement were "simply left behind" in the process of ongoing negotiation as to the structure of the parties' relationship. 225In my opinion, the conduct of the parties after 2005 (whether or not one can infer from it an acceptance by Painaway and the Painaway shareholders of the offer that I have found was constituted by the execution of the Shareholders and Licence Agreements) did manifest the mutual assent of the parties to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, so as to lead to the conclusion that there was in existence a binding contract (to adopt the terminology in Branir at [369]). 226Mr Ireland characterised the case propounded by the administrators, and to a greater extent by the Nassar/Hyder interests, as being that certain "core promises" were made (in a legally binding manner from the outset), giving rise to the consequence that irrevocable and assignable rights were created no later than 18 April 2005 in favour of companies not then in existence which did not execute documents that had been prepared. The corollary of this, he says, is that those companies would take the benefit of rights contemplated by the documents but would not be committed to the correlative obligations which the parties had framed in the unsigned documents. (The unfairness of such a result, as I apprehend it, is said to exemplify why the courts are slow to enforce general understandings and expectations of commercial parties in the absence of a concluded agreement). Mr Ireland submitted that those who negotiate in detail and make a determined effort to define their legal relationship in detailed commercial documents prepared under advice should not be bound by such general understandings or expectations. 227In that regard, while I accept that there is an element of attempted reliance by the Nassar/Hyder interests on 'core promises', insofar as their alternative claim to the shareholding in Nature's Remedies based on an agreement in around 2003 (hence some time prior to the 18 April documentation) I did not understand the claim by the administrators to be suggesting that any agreement (inferred or implied or otherwise) for the grant of a licence would not import the correlative obligations under that documentation. Nor did I understand Mr Svehla to be suggesting that there was a binding agreement no later than 18 April 2005 (unless that conclusion was reached by reason of the ratification of a pre-incorporation contract). Rather, the principal way by which he sought to maintain a claim that there is a non-revocable exclusive licence was by conduct, post 18 April 2005, that it was said amounted to an acceptance of the 'offer' constituted by execution of the 18 April document (ie an offer to be bound by its terms once the corporate entities were incorporated and adopted the agreement) or evidenced mutual assent to the contract (or led to the application of the doctrine of estoppel). Intention to be bound 228Mr Ireland points to the fact that the parties, acting upon legal and accounting advice, adopted quite complex structures involving trusts and companies to define and protect their legal position, yet did not finalise the execution of the legal documentation. (Nor, however, did they continue with discussion in relation to the documentation at that stage and, when discussion resumed as to the profit sharing arrangements in late 2006, Mr Carroll referred back to the terms of the 18 April document as being the relevant document defining the parties' arrangements.) 229As to the question of intent to enter into a binding legal relationship, Mr Ireland submitted that the terms of the documents provide strong indicia that the parties did not intend to be legally bound until the instruments were executed and that commercial certainty as to the obligations undertaken by all parties was required. Thus it is submitted that failure to finalise the execution of the documents leads to the conclusion that they were never in force. 230Mr Ireland suggested that the matter could be tested by asking the question whether any of the non-executing corporate parties could be sued on the agreement and submitted that the answer to this must be 'no'. With respect, it does not seem to me that this would necessarily be the answer to that question. A finding that Painaway has enforceable rights under the agreements must carry with it the conclusion that, had the same evidence been relied upon by, say, Nature's Remedies to enforce the obligations owed by Painaway under the Licence Agreement, a similar conclusion would follow. 231Mr Ireland submitted that if the Masters v Cameron (1954) 91 CLR 353; (1954) 28 AJLR 438 question is posed (namely, whether the parties objectively intended to be legally bound before the legal documents were executed), the answer would be plainly 'no'. 232In R T & Y E Falls Investments Pty Limited v The State of New South Wales & ors [2001] NSWSC 1027, Palmer J (referring among others to Film Bars ; Air Great Lakes Pty Limited v K S Easter (Holdings) Pty Limited (1985) 2 NSWLR 309; Baulkham Hills Private Hospital Pty Limited v G R Securities Pty Limited (1986) 40 NSWLR 622 at 627; and G R Securities v Baulkham Hills Private Hospital Pty Limited (1986) 40 NSWLR 631 at 634) said at [50]) that: Where, as in this case, an informal contract arising from discussions or negotiations between the parties is alleged, the Court must be satisfied that the parties arrived at a consensus as to the terms of the agreement, that the terms were sufficiently certain to be capable of forming a binding contract and that the parties, by their words and conduct taken in the context of the surrounding circumstances, evinced a common intention that the consensus at which they had arrived should constitute an immediately binding contract. 233The decisive issue, as stated by McHugh JA in G R Securities at 634, is always the intention of the parties, which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances. In other words, the relevant intention is not the individual subjective intentions of the parties, as such, but rather what the law takes to have been their intentions at the relevant time (Mahoney JA in B Seppelt & Son Limited v Commissioner for Main Roads (1975) 1 BPR 9147 at 9151). There, his Honour recognised the possibility that in the process of negotiation the parties might reach an interim consensus which nevertheless did not amount to a binding agreement upon all of the terms of the proposed transaction. 234Mr Ireland submitted that this was an instance of the case where a court would be slow to conclude that the parties had bound themselves to a contract in the absence of a signed agreement. However, Gleeson CJ in Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 at 543, recognised that parties who have negotiated about and made an agreement (there concerning price) could be held to have entered at that stage into a formal contract (albeit that such a contract might have been intended later to be overtaken by a further more formal contract containing additional terms and conditions). It is by no means implausible that the parties who appear to have reached agreement as to the licence rights and recorded that in an incomplete agreement, would be found thereby. 235Subsequent communications may be considered when considering whether a binding agreement has been reached. In Film Bars , McLelland J (as his Honour then was) noted that, in determining whether the communications between the parties constituted a contract, the court was not confined to a consideration of the terms or manner in which the communications were made, but could interpret them by reference to the subject matter and surrounding circumstances, (including the nature of and relationship between the parties; previous communications between the parties; and standards of reasonable conduct in the known circumstances); and that it was legitimate to refer to and take into account subsequent communications between the parties. 236His Honour considered that the probative value of subsequent communications must be found in the light they throw on the proper interpretation of the earlier communications alleged to constitute the contract and said that, perhaps more commonly, subsequent communications might be legitimately used against a party as an admission by conduct of the existence or non-existence as the case may be of a subsisting contract, referring to Barrier Wharfs . 237In R T & Y E Falls Investments , Palmer J accepted that, as a general rule, when parties had been negotiating a substantial commercial transaction in the common expectation that at some stage a formal contract would be brought into existence, the court should be reluctant to find a common intention that a binding informal contract should come into existence at any time prior to the execution of the formal document; especially when the terms of the alleged informal contract would have to be pieced together or implied from various conversations and from selective extracts from correspondence. His Honour said (at [53]): Commonsense has a part to play in the Court's enquiry: it is inherently improbable that commercial people will intend to bind themselves to a substantial transaction in that haphazard and imprudent fashion, so potentially productive of subsequent dispute, when they have already recognised the need for a formal contract to record the terms of the transaction. 238The magnitude, subject matter or complexity of the transaction or dispute may in appropriate cases lead to an inference that the parties' common intention was not to be bound by any agreement until a formal document was executed - see Baulkham Hills Private Hospital Pty Limited v G R Securities and ABC v XIV Commonwealth Games . In the ABC case, Gleeson CJ noted (at 548) that: ... in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention. 239His Honour considered it would normally be of importance in such a case that the court have an understanding of the commercial context in which the dispute arose: ...[a]nd a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract. 240In that regard, I would accept that it would not have been unreasonable to expect that parties who had instructed lawyers to document their arrangements and who had engaged in discussion as to various drafts would intend that they be bound only by the final signed version of their agreement. Here, however there was a document (not fully executed or complete) signed by those who are the controlling minds of the parties who did not sign. It is significant that none of the individual parties appears to have considered that anything more was necessary after the execution of the agreement on 18 April 2005. (I have noted above the significance I think should be drawn from the fact that the parties then in existence at the 18 April meeting (though obviously not the yet to be formed corporations) thought it necessary (or perhaps important or prudent) to sign, and have formally witnessed, the Licence Agreement and Shareholders Agreement. It might be thought that there was no need to have those documents signed at all on 18 April 2005 if they were to be of no binding effect. It followed a process of negotiation and amendment of the terms of the documents and seems to have been carried out with an emphasis on formality.) 241The inference I have drawn, from the formal witnessing of the signatures of those who were then in existence and able to sign the documents, is that this was intended to be more than simply an acknowledged record of the consensus reached at the conclusion of that meeting. It has the flavour of a commitment that this is the arrangement they would enter into (once the formalities of the companies' incorporation were complete) and the lack of any caveat in the document they signed or in the correspondence at that time as to the agreement not becoming binding unless and until signed by the (missing) parties suggests to me that the existing parties had assumed that all that was necessary was for the incorporation of the companies in order to bring this agreement into effect. 242As to the significance of the fact that thereafter the documentation was not finalised, there seem as at late 2006 to be two possibilities - either an agreement was reached as to the basis of the arrangements in 2005 and the later discussions related to amendments to those arrangements or, as Mr Ireland suggests, there was no initial agreement (simply an understanding that was not implemented in any formal way and not proceeded with, in favour of different arrangements concluded at a later stage). 243To my mind the two matters that tend towards the conclusion for which Mr Svehla and Mr Stack separately contend are, first, the entry into the Blend distribution agreement (and the entry into significant ongoing commitments with other third parties), which I see as inconsistent with the suggestion that there was at most an implied licence terminable at will, and, secondly, the conduct of the Carrolls in seeking to assert and rely upon the arrangements then in place (when calling on Mr Nassar in early 2007 to provide the required marketing plan and when asserting, both to Mr Nassar and later to Mr Demos, a refusal to change the shareholder arrangements). 244It might well be said that (when seeking a greater profit share) in late 2006 the Nassar/Hyder interests had behaved inconsistently with an agreement of the kind for which they now contend (ie having said that the only way that Painaway could progress was by the Carrolls' agreement to other arrangements) but it seems to me this is consistent with them applying some economic pressure to seek to procure a change to the arrangements and does not involve an admission that there was no such arrangement in the first place. 245I have concluded that binding agreements did come into existence at some point after June 2005 (but at the latest by late 2006 when Mr Carroll invoked that agreement to resist the changes Mr Nassar was seeking to the then arrangements) both in terms of the Licence Agreement and the Shareholders Agreement, under which Painaway has the rights referred to in both those agreements (namely a transferrable, non-revocable and exclusive, right and licence to use, in the Territory as defined in Item 7 of Schedule 1 of the Licence Agreement, the Intellectual Property (as defined in the Licence Agreement), encompassing the Painaway trade marks, the Painaway business names and the Painaway Formulas, including those relating to the Painaway products. I consider later in these reasons the assignability of such rights. Estoppel 246Strictly speaking, in light of the above finding, this question does not arise, but had it done so I would have held that Nature's Remedies was estopped from denying the existence of the Licence and Shareholders Agreements. 247The claim based on estoppel in this context (as opposed to the estoppel claimed in the Nassar/Hyder Cross-Claim) is a conventional estoppel. 248Reference was made to Empirnall Holdings Pty Ltd at 528B for the recognition that an estoppel may lie to preclude one party from denying that a contract exists even though the court cannot find the precise act of acceptance. 249In MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39, Beazley, Hodgson and Ipp JJA noted at [71] that the common law doctrine of conventional estoppel is analogous to, but distinct from, the equitable doctrine of promissory estoppel. The common law doctrine of conventional estoppel precludes either party from denying an assumption which has formed the conventional basis of a relationship between them. Their Honours held (at [71]) that there can be such an estoppel as to rights and not merely as to facts (citing Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175; Heggies Bulkhaul v Global Minerals Australia (2003) 59 NSWLR 312). 250In Roche, their Honours held that evidence of reliance and detriment are essential for the existence of conventional estoppel (at [72]). In Con-Stan Industries Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, Dixon J makes it clear that the relevant principle is that "the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations" (at [674]), and that this involves both action such that the party relying on the estoppel would suffer a detriment if the other party were afterwards allowed to set up rights inconsistent with the assumption and also that the party against whom the estoppel is asserted "must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it" (at [675]) (see also Thompson v Palmer (1933) 49 CLR 507 at [547]). Conventional estoppel requires that the party relying on the estoppel must have "placed himself in a position of significant disadvantage if departure from the assumption be permitted" ( The Commonwealth v Verwayen (1990) 170 CLR 394 at [444]). 251Accordingly, in order to determine the applicability of the common law doctrine of conventional estoppel, it is necessary for there to be findings, first as to whether a particular assumption has formed the conventional basis of the relationship between the parties; secondly as to whether there was significant detriment to the party relying on the estoppel arising from the adoption of the assumption; and thirdly as to whether it would be unfair or unjust to permit a departure from that assumption (following the line of reasoning of Beazley, Hodgson and Ipp JJA in Roche at [74]). 252Mr Ireland concedes that from time to time the Carrolls referred to the Shareholders Agreement, but says that it was never in their possession in signed form. It is submitted that it was an agreement which, to the knowledge of all parties was incomplete, uncertain in its operation and which provided financial formulas (as to drawings) that were never followed. In relation to the Licence Agreement, Mr Ireland points out that the Carrolls did not refer to it nor did they assert any reliance on it. 253As to this, the evidence does suggest that the Carrolls thought there was in existence a signed copy of the Shareholders agreement and appeared to invoke it to their benefit both when calling upon the Nassar/Hyder interests to come up with a marketing plan (in 2007) and when calling for the shareholding in Painaway to be rectified in accordance with the Shareholders Agreement that they refused to change. 254Mr Ireland submits that the pressure from late 2006 from Messrs Nassar and Hyder for the Carrolls to adopt, implement and document financial entitlements which were inconsistent with the terms contained in the shareholders agreement prepared by Mr Innis, is inconsistent with there already being in existence a binding agreement. The alteration of the shareholding in Painaway in September 2008 from 51%/49% to 50%/50% and the creation of a dividend/profit share of l/3 rd are matters said to have constituted fundamental departures from the original discussions. (It is said that as the revised profit entitlement was created in a quite different manner (by the issue of 'E' class shares) to that contemplated by the Shareholders Agreement it cannot be said to constitute a 'variation' of any agreement then in force). 255As indicated earlier, I consider that the response from the Carrolls to the requested amendment to the profit sharing arrangements agreed in 2005 is consistent only with an understanding by them that there was already in place an agreement and that the request was an attempt to vary something already in place. The fact that Messrs Nassar and Hyder sought a variation to those arrangements (and the Carrolls ultimately agreed to this) is not inconsistent with the arrangements having been put in place nor is it inconsistent with Messrs Nassar and Hyder having acted in reliance on a common assumption that at the least (absent any amendment) they would be entitled to a licence on the terms of the 2005 arrangements. It does not seem to me consistent with commercial sense (or with the commitments entered into in 2006) that there was at that stage no arrangement in place for the parties' joint venture. 256I am satisfied that the basis for a conventional estoppel has been established. First, the assumption as from 18 April 2005 (evidenced by the stance taken by Mr Carroll himself, in late 2006 and early 2007, as well as the entry by Painaway into significant obligations with third parties) was that the parties were bound by the arrangements and consensus reached on 18 April 2005. Secondly, the detrimental reliance by the Nassar/Hyder interests seems to me to be obvious. They made significant contributions to the venture that I accept they only did on the expectation that they would share in the profits of that venture on a long term basis. Thirdly, it seems to me unconscionable for the Carroll interests to seek to depart from that common assumption, having taken through Nature's Remedies the benefit of the Nassar/Hyder interests' contribution. Other matters going to enforceability or existence of agreement 257Mr Ireland maintains that the incomplete state of the documents as signed renders them uncertain. In particular, Mr Ireland refers to Clauses 1.1, 3.1 and the absence of annexures 'A', 'B' and 'C' referred to in Schedule 1 to the Licence Agreement. 258Mr Ireland suggest that the missing reference in clause 3.1 makes the grant of the licence in favour of Painaway entirely conditional upon some other unidentified obligation. On that additional ground, it is said that the purported grant of the licence fails for uncertainty. 259In that regard, Mr Svehla submits that the identified omissions from the Licence Agreement (recorded in paragraph 54 of the Carroll interests' submissions) are of no moment. The relevant limitation to which clause 3.1 is subject must, it is said, mean clause 7.2 (Termination), as it is a limitation on the non-revocable perpetual right and licence. The omission of the logos in Annexures "A" to "C" to Schedule 1 is also said to be of no moment as they were readily identifiable being already in existence. 260The court will strive to give a reasonable meaning to a contract to enable it to stand ( Hillas v Arcos Ltd (1932) 147 LT 503 at 514 being oft quoted in this regard), and will seek to uphold commercial arrangements between parties (see Macfarlan J in Prints for Pleasure ). I do not consider the incomplete details to be so fundamental as to warrant the conclusion that there was no binding agreement. 261Reference is made to clauses 14 and 18 (which deal for example, with amendments to the Licence Agreement only being in writing 'signed by each party') as indicating an intention that the contract could not be formed otherwise than 'in writing signed by each party' . The fact that variations or that alteration or waiver of the terms of the Licence Agreement were required to be in writing signed by each party is submitted by Mr Stack not to mean the Licence Agreement (unsigned by Painaway) did not become operative - I agree. 262Mr Ireland notes that the Licence Agreement is predicated upon Painaway and the other parties 'having entered into Shareholders Agreement' (Recital B) and it was stated that because that agreement had been entered into the Carroll interests wished to grant certain rights in respect of intellectual property and formulas. 263A condition precedent to the obligations of the parties under the Licence Agreement is the satisfaction or waiver of all of the obligations of each of the parties under the Shareholders Agreement (clause 2.1). Mr Ireland thus submitted that if the Shareholders Agreement never came into operation, it follows that the Licence Agreement also never came into operation. That conclusion is logical but in my view both agreements came into existence and therefore the interdependency of the two agreements does not tell against the operation of either. 264There is clearly an interaction or interdependency between the two agreements. However, if both are operative, the only relevance of this lies in whether an assignee could comply with the requirements of the Licence Agreement insofar as they require compliance with the Shareholders Agreement. 265As to the "condition precedent" clause, itself, on ordinary principles of construction the heading would have little relevance in construing the content of the clause but in any event it does not assist in determining to what the condition is precedent. In its terms, the clause requires satisfaction or waiver of all of the obligations of each of the parties under the Shareholders Agreement as a condition for any obligations (and presumably any correlative obligations) arising under the Licence Agreement. 266It does not make sense for this to be a condition precedent to the formation of a contract - since it focuses on performance of ongoing obligations in very broad terms ("all of the obligations of each of the parties"). Therefore, if it were a true condition precedent in that sense, it would be impossible to know when the obligations under the Licence Agreement were to commence. 267It seems to me this cannot be a true condition precedent to the coming into existence of the agreement itself but must at most be a condition precedent to the continuing existence of the contractual obligations from time to time, those obligations having come into existence at an earlier point. I would thus construe this clause as in effect, encapsulating the thrust of the termination provision applicable where there has been default in performance. 268It seems more likely to be a clause operating as a condition precedent for the continuation of obligations (and correlative entitlements), almost as the mirror to the termination clause, - ie, that Nature's Remedies and Painaway will have the obligations under and be entitled to the benefit of the rights under the Licence Agreement only so long as each of the relevant parties complies with its obligations under the Shareholders Agreement. 269How then does such a clause operate if there is an assignment of the licence (or perhaps more precisely, an assignment of the benefits or rights under the Licence Agreement (the agreement itself could not be assigned without the consent of all of the parties thereto)? It seems to me that this is conceptually no different from the situation where a sub-lessee's rights may be affected by a breach by the sub-lessor of obligations in the head lease (though without the statutory overlay in the context of leasehold interests). To test that proposition, if the Painaway shareholders ceased to comply with their obligations under the Shareholders Agreement (to which any 'assignee' is not and would not be a party) in circumstances entitling Nature's Remedies to terminate the Licence Agreement or to argue that the condition precedent clause had the effect that there were no subsisting obligations thereunder, then an 'assignee' might be exposed to the risk that the agreement from which it derived its rights might be terminated. However, I do not accept that this means the assignee could not be the recipient of rights in the first place (it just underscores the care that will need to be exercised in determining how best the Painaway rights should be dealt with in this regard). 270Finally, it is noted that the Licence Agreement is not in the form of a deed and it is said that, until executed by Painaway, fails for want of consideration. In the absence of execution by Painaway it is said that there is no effective consideration for the licence beyond a licence fee (which it is common ground was never paid). However, Painaway did assume obligations under clause 5 (obligations of importance to the maintenance of the trade marks) and it seems to me that this provides sufficient consideration. Pre-incorporation contracts 271In relation to both the Licence and the Shareholders Agreements, it is further contended that these amount to pre-incorporation contracts that became binding pursuant to section 131(1) of the Corporations Act 2001 when ratified by Painaway and the respective corporate shareholders. 272Section 131 of the Corporations Act provides that contracts entered into by a 'company' before its incorporation are enforceable provided they are ratified within a reasonable time after incorporation. 273In Aztech Science v Atlanta Aerospace (Woy Woy) [2005] NSWCA 319; (2005) 55 ACSR1 , Basten JA (with whom Handley JA agreed) said, as follows, of the elements required to establish ratification. at [81] to [82]: The primary judge set out the basic principles in the following passage: "[49] It is generally said that ratification may be express or implied. Express ratification occurs when the alleged [principal] has, by unequivocal language or conduct, acknowledged that the contract is his. Implied ratification may arise in various ways. It often occurs when the alleged principal, although not expressly acknowledging the contract as his own, acts in a way which can only be explained on the basis that he accepts the contract as his own. The essence is, in either case, a manifestation of the principal's intention to be bound. [50] Determining whether there has been ratification, in the sense relevant to the law of agency, therefore depends on an assessment of the conduct of the alleged principal. The conduct may consist of acts of the alleged principal himself or acts of someone else who clearly acts with the authority of the alleged principal. The reference here to 'acts' extends also to omissions to the extent that, in a particular context, omissions are capable of being of probative value. And it goes without saying that, in a case such as the present, conduct can be relevant only if occurring after the time at which the alleged principal came into existence." Generally speaking, these propositions may be accepted, subject to two qualifications. The first qualification is one of form, rather than substance. The distinction between language and conduct is a matter of emphasis, in many cases. It is likely that conduct will more usually involve implied ratification, rather than express ratification, to the extent that such a distinction is usefully drawn. The second qualification is of more substance: implicit in some of his Honour's language is an assumption that the act of ratification must necessarily be communicated to the other party. Where ratification is implied from conduct, it may well be conduct directed to the other party (or a third person), in circumstances where the relevant implication may reasonably be drawn by the other party. However, an express act of ratification may be an internal action of a company, such as the signing of a board minute stating that the company ratifies the contract. Given the need to act within a specified time, it may in some cases be important to determine whether the signing of a minute, or other internal act of a company is effective immediately, or only if and when communicated to the other parties to the contract. 274Mr Stack contends that in this case the conduct of the corporate shareholders is consistent with an acknowledgement of the agreements (that conduct also being relied upon for the allegation that there is an implied agreement). 275The difficulty I have with this argument is that there was no execution purportedly in the name of or on behalf of the companies to be formed in either agreement. Rather it seems to have been acknowledged at the time that the document or documents would need to be executed once those contracts came into existence. Therefore, whether or not the conduct of the entities after incorporation would have amounted to an effective ratification of the agreements I am not satisfied that the pre-condition for the operation of s 131 has been established. 276I do not accept therefore that these were pre-incorporation contracts duly ratified by the relevant companies. (ii) Is the licence granted to Painaway under the Licence Agreement (or are the rights under that Agreement) assignable by it? 277Having found that there was a binding agreement under which Painaway was granted the licence rights (or alternatively that Nature's Rights is estopped from denying such a licence), the question is what follows therefrom - an issue critical to the value which the administrators of Painaway may be able to derive for the benefit of creditors (and which may not be able to be realised if the company is wounds up). 278Mr Svehla notes that the licence granted under the Licence Agreement is in its terms a licence in connection with the manufacture, distribution and marketing of the Painaway Products and one that not only permits Painaway to grant sub-licences (with the written consent of Nature's Remedies not unreasonably to be withheld) but also one that is stated to be transferable by Painaway (clause 17 containing an express acknowledgement and agreement by each of Nature's Remedies and the Carrolls that Painaway may "assignor otherwise deal with this agreement or any right under this agreement" without the prior written consent of any of them, provided that such assignment does not materially affect the integrity of the Intellectual Property or the Painaway Formulas. 279The agreement is terminable in certain events (under clause 7.2), relevantly including if Painaway is wound up by a court order or if Painaway is in breach of the Licence Agreement and fails to remedy that breach within 30 days of notification to do so by Nature's Remedies. (Interestingly, given the description of the licence as perpetual, the agreement was also terminable on 12 months notice by Nature's remedies at any time after the sixth anniversary of the Shareholders Agreement or if the 'Carroll Family Trust' ceased to be a shareholder of the company.) 280As noted earlier, the licence is to an extent interdependent on the Shareholders Agreement. Satisfaction (or waiver) of "all of the obligations of each of the parties under the Shareholders Agreement", discussed earlier, is specified (in the clause headed "conditions precedent) as something on which the obligations or the parties under the Licence Agreement were conditional. Relevantly. in the event that Painaway requires and engages Nature's Remedies to manufacture Painaway products, it has agreed to do so 'at cost'. There are also express obligations of confidentiality in relation to the Painaway Formulas. 281Notwithstanding that the Licence Agreement expressly contemplates the grant of a sub-licence or transfer of the rights in relation to the Painaway Formulas and Intellectual Property, it is submitted on behalf of the Carroll interests first that even if (as I have found) the Licence and Shareholders Agreements became operative there are no rights (or no rights of any commercial value) which are saleable by the administrators. In essence, this is said to be the consequence of the fact that Painaway could not restrain Nature's Remedies, as registered owner of the relevant trade marks from using those marks (hence the exclusivity of the licence is illusory in that sense) and of the fact that there is no property in the confidential information comprising the Painaway Formulas (thus it is said that equity cannot enforce an assignment of the use of the Painaway Formulas, whether or not on an 'exclusive' basis. 282The Licence Agreement defines 'Intellectual Property' by reference to various items. Relevantly, however, the intellectual property in issue is that comprised by the two registered Painaway, the registered owner of which is Nature's Remedies and the Painaway Formulas (not patented in Australia and, in effect, comprising confidential information as to the manner of production of the Painaway products (the ingredients themselves, though perhaps not the composition thereof, apparently already being in the public domain - such as arnica and emu oil). I consider each of these in turn. Trade marks 283A registered trade mark is personal property (s 21(1) of the Act). Hence it is said that, as a chose in action, an exclusive licence to use the registered trade mark is capable of being assigned at law or in equity. 284Mr Svehla submits that, while the licence subsists, Painaway is as an "authorised user" of the Painaway trade marks under section 8(1) of the Trade Marks Act , in its capacity as a licensee of a registered trade mark and capable of effecting a valid assignment of the licence to use the Painaway trade marks. Section 8 of the Act provides that: (1) A person is an authorised user of a trade mark if the person uses the trade mark in relation to goods or services under the control of the owner of the trade mark. (2) The use of a trade mark by an authorised user of the trade mark is an authorised use of the trade mark to the extent only that the user uses the trade mark under the control of the owner of the trade mark. (3) If the owner of a trade mark exercises quality control over goods or services: (a) dealt with or provided in the course of trade by another person; and (b) in relation to which the trade mark is used; the other person is taken, for the purposes of subsection (1), to use the trade mark in relation to the goods or services under the control of the owner. (4) If: (a) a person deals with or provides, in the course of trade, goods or services in relation to which a trade mark is used; and (b) the owner of the trade mark exercises financial control over the other person's relevant trading activities; the other person is taken, for the purposes of subsection (1), to use the trade mark in relation to the goods or services under the control of the owner. (5) Subsections (3) and (4) do not limit the meaning of the expression under the control of in subsections (1) and (2). 285As provided in s 8(2) above, the definition of "authorised user" requires actual use of the trade mark in order for a licensee to be an "authorised user". Here, however, Painaway has made actual use of the trade mark at least since early 2007 when the Painaway products were launched, and it has done so in circumstances where Nature's Remedies, through Mrs Carroll, has exercised quality control over the goods (to which Mrs Carroll has herself deposed and which is evidence in her actions in quarantining the goods after the appointment of the receiver to Painaway). 286(As to the statutory requirement that the registered owner of the trade mark maintain control of the use of the trade marks, Mr Svehla submits that Nature's Remedies has maintained control through the provisions in the Licence Agreement such as the requirement for Painaway to comply with Nature's Remedies directions (clause 5.2 of the Licence Agreement); the obligation on Painaway to provide information to Nature's Remedies in relation to Painaway's use of the Painaway trade marks (clause 5.3 of the Licence Agreement); the obligation of Painaway not to take any action which might disparage or diminish the value of the Painaway trade mark (clause 5.4 of the Licence Agreement); the prohibition on the grant of a sub-licence of the Painaway trade mark without the written consent of Nature's Remedies, which must not be unreasonably withheld (clause 5.5 of the Licence Agreement); and the requirement to advise Nature's Remedies of infringement of the Painaway trade marks (clause 6.3 of the Licence Agreement). It is said that in circumstances where Painaway has had exclusive use of the Painaway trade mark, admitted by the Carroll interests since at least March 2006, these provisions of the Licence Agreement would be implied into that use to give effect to the authorised use by Painaway. 287Thus to the extent that Painaway's use has been under the 'control' of the owner of the Painaway trade marks (as that term is understood in ss 8(3) - (4)), it is an authorised user and would be in a position both to restrain infringement by third parties of the Painaway trade marks (s 26(2) of the Act) and, if permitted to do so under its agreement with Nature's Remedies, to confer rights on third parties in relation to the use of the trade marks. 288However, what Mr Ireland says Painaway cannot restrain is use by Nature's Remedies itself (and hence that Nature's Remedies would be free to compete with Painaway in the market, thus presumably affecting the commercial value of any rights acquired from Painaway by a third party). In other words, it is submitted by Mr Ireland that Painaway's rights (even if construed as those of an exclusive licensee) do not involve a right to sue Nature's Remedies as trade mark owner for infringement by reference to use by the trade mark owner of its own trade mark (since Nature's Remedies has a statutory right so to do pursuant to s 20(1)(a) of the Act). 289I interpose to note that the administrators have not presently formed a view as to the manner in which they would recommend the rights under the Licence Agreement be dealt with and it may, for example, be that rather than assigning any rights in relation to the Intellectual Property, the administrators would instead sub-license or otherwise deal with those rights. However, I consider the issue of assignment as it is in this regard that Mr Ireland submits the Intellectual Property rights are of no commercial value to the administrators. 290The central issue in this submission is whether, if Painaway is an exclusive "authorised user", Nature's Remedies nevertheless has a statutory right to use its trade marks under s 20(1)(a) of the Act and can compete with it in the market place. 291"Trade mark" is defined in s 17 of the Trade Marks Act as a "sign" used or intended to be used to distinguish goods or services from those of other traders. A "sign" includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent (s 6). 292The law of trade marks is an extension of the law of passing off and protects the marketing of goods and services. It is noted that a system of registered marks overcomes what was a major hurdle of passing off litigation, namely the need to prove reputation, as once a mark is registered it is the property of the registered owner (McKeough et al, Intellectual Property: Commentary and Materials (4 th edn) at [14.05]). The nature of "property" in a trade mark was discussed in Attorney-General (NSW) v Brewery Employees Union (NSW) (1908) 6 CLR 469. 293The registered owner of a trade mark may license another person or entity to use the trade mark (though it had historically been thought that the licensing of a trade mark, by the separation of the owner of the trade mark from the origin of the relevant goods or services would deceive the public and thereby jeopardise the owner's rights in the trade mark (see Bowden Wire Co Ltd v Bowden Brake Co Ltd (1914) 31 RPC 385, per Earl Loreburn said [at 392]). 294The present position is that the licensing of a trade mark, whether registered or unregistered, will not undermine the owner's rights in the trade mark, provided that a sufficient trade connection is maintained between the owner and the goods or services in respect of which the trade mark is used by the licensee, and provided that the licensee's use of the trade mark is otherwise not likely to deceive the public ( General Electric Co v General Electric Co Ltd [1972] 1 WLR 729; [1972] 2 All ER 507; Pioneer Kabushiki Kaisha v Registrar of Trade Marks (HCA, unreported, Aickin J, 1 November 2011). 295Use of a trade mark by a licensee is distinguishable from "use" of the trade mark by a contract manufacturer. A contract manufacturer, who makes goods to the specific order of a trade mark owner, applies the relevant trade mark to those goods and then supplies the goods to the owner, does not "use" the trade mark in a legal sense, that is, as a "trade mark" pursuant to the Act. Because the trade mark owner only assumes responsibility for the quality of the goods ( Budget Rent A Car System Pty Ltd v Kay Rent A Car Pty Ltd (1985) 8 FCR 116), a contract manufacturer is not regarded as licensed to use the relevant trade mark. Here, however, it is difficult to see the role performed by Painaway as merely that of contract manufacturer (since the goods were not delivered to Nature's Remedies for supply to the public but were marketed and distributed by Painaway itself). 296Mr Ireland relies on authority for the proposition that use of a registered trade mark by its owner does not amount to infringement even though it may be in breach of an exclusive licence granted by the owner ( Delphic Wholesalers Pty Ltd v Elco Food Co Pty Ltd (1987) 8 IPR 545, thus submitting that Painaway could not bring an action for trade mark infringement against Nature's Remedies if it commenced to manufacture and sell the Painaway Products. However, it was recognised in Delphic that the licensee may have an action for damages against the owner for breach of contract in those circumstances. 297Mr Ireland submits that insofar as Painaway would be restricted to a claim in damages for breach of the Licence Agreement, such a claim is not "property" which is assignable and nor is it realistically something that a purchaser would pay for in circumstances where that purchaser (as an assignee of the so-called "licence rights") could not restrain Nature's Remedies itself from manufacturing and selling goods using the mark. 298In response, Mr Svehla submits that s 20(1) of the Act is not to be construed to mean that the Act precludes a trade mark owner granting an exclusive licence which, during the currency of the licence, fetters or limits the ability of the registered owner of the trade mark from using the mark. Rather, it is submitted that the exclusive right of the trade mark owner to authorise another person to use the trade mark, means that it can be exclusive of use by the registered owner during that period. 299Further, it is said that Painaway would not sue Nature's Remedies for infringing the Painaway trade mark; instead Painaway would sue Nature's Remedies for breach of the exclusive licence and for injunctive relief on that basis (Nature's Remedies, as the registered owner of the Painaway trade mark, having by contract fettered its statutory right to use the trade mark under s 20(1)(a) of the Act). 300I accept that the effect of s 20 is that Painaway could not bring an action against Nature's Remedies for trade mark infringement as such. However, I do not read Delphic as suggesting that Painaway could not enforce its contractual rights against Nature's Remedies (to restrain a breach of the exclusivity of the licence granted to it) and I was not taken to any authority which suggested that an injunction might not in appropriate circumstance lie in that context. 301(Mr Svehla submits that the heart of the exclusive licence is that Painaway will have the exclusive use, and that there will be significant growth in the goodwill attaching to the Painaway trade mark, which will not be owned by Painaway. Therefore it is said that there is a benefit to the registered trade mark owner, Nature's Remedies, to come through these contractual mechanisms and it is logical that Painaway is to have exclusive use to the exclusion of Nature's Remedies.) 302Mr Ireland further submits that insofar as the licence granted under clause 3.1 is a licence 'to use ... the Painaway formulas' qualified by the words "but only in connection with the manufacture, sale, distribution and marketing of the Goods (as defined) and otherwise on the terms of this Agreement.", the obligations under the licence depend directly upon positive obligations on the part of the shareholders arising under the collateral Shareholders Agreement. Even if both documents are operative, then it is submitted that the 'licence' so far as it relates to Intellectual Property is not assignable because an assignee of the licence rights under the Licence Agreement does not and could not ever become a shareholder without a fresh agreement on the part of the Carroll interests. The consequence is said to be that the terms of the licence under clause 3.1 of the Licence Agreement are unclear, uncertain, and inoperative in the way they are expressed. I have considered this argument above. 303I consider that the licence granted by clause 3.1, insofar as it relates to the Painaway trade marks is, therefore, assignable and that it would be open to Painaway as a contractual matter to restrain Nature's Remedies from breaching the exclusivity of the licence so granted to it (and to enforce an implied contractual obligation to cooperate in the matters required to permit the assignment of the licence insofar as the requirements under the Act for maintenance of control by Nature's Remedies are concerned - such as to continue to make available the quality control processes that under the Licence Agreement it was obliged to provide to Painaway). Painaway Formulas 304The Painaway Formulas are, however, in a different category. 305Mr Ireland submits that insofar as the formulas are capable of protection as confidential information it is by no means clear how equity would enforce an 'assignment' of the use of the formulas in favour of Painaway. Mr Ireland submits that there is nothing assignable and saleable to commercial interests in respect of the formulas, whether or not on an 'exclusive' basis. (In this respect he points again to the tension in the construction of the Licence Agreement which on the one hand acknowledges the Carrolls' ownership of the formulas yet on the other purports to grant a perpetual and exclusive right 'to use' the formulas in Australia for the manufacture and distribution of the Painaway products). 306Mr Ireland submits that the agreement should not be construed so as to deprive the Carrolls, as acknowledged owners of the formulas, from themselves using them to manufacture and sell future Painaway products. 307The issues that arise in respect of this in the submission made as to the formulas are whether confidential information is capable of being assigned in equity; and whether it is possible to grant an exclusive licence to 'use' confidential information. 308Where information is disclosed confidentially to others, with the intention that the information only be used for particular purposes, equity will prevent the unauthorised use of information by recipients in these circumstances and may hold them accountable for any wrongful use. Such claims are generally referred to as actions for 'breach of confidence' (Radan et al, Equity and Trusts (2 nd edn) at [15.1.1]). However, there has been said to be no strict definition possible of the phrase 'confidential information' ( Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 per Gummow J at [449-50]); it being viewed as a term that covers information that is subject to an obligation of confidentiality. Obligations of confidentiality may, of course, arise as a matter of contract between the parties or in the imposition of a duty owed in equity. 309The Painaway Formulas would seem likely to fall within the class of "trade secrets" commonly protected by the courts as information that is subject to an obligation of confidentiality (see, for example, Newbery v James (1817) 35 ER 1011, which concerned a secret formula for pills for the treatment of gout and rheumatism). It has been recognised that even where the ingredients or methods used in such formulas may not themselves be viewed by the courts as confidential, the effort in creating and trialling the possible uses to which familiar components can be applied may require a period of market exclusivity in order for the creator to recoup its investment (see, for example, Aquaculture Corp v New Zealand Green Mussel Co Ltd (1985) 5 IPR 353; (1986) 10 IPR 319; (1990) 19 IPR 527, which concerned an arthritis cure made from green mussels, and protected the technique involved in creating the formula as well as the formula itself). (i) Is confidential information capable of being assigned? 310The basic principle in relation to assignment at law or in equity is that only property, or a right in property, is capable of being assigned. In Norman v Federal Commissioner of Taxation (1963) 109 CLR 9, Windeyer J [at 26] and Dixon CJ [at 16] agreed that: "[a]ssignment means the immediate transfer of an existing proprietary right, vested or contingent, from the assignor to the assignee. Anything that in the eye of the law can be regarded as an existing subject of ownership, whether it be a chose in possession or a chose in action, can today be assigned, unless it be excepted from the general rule on some ground of public policy or by statute." 311There have been differing views on the nature of confidential information, namely, whether it can be classified as "property" that is capable of being assigned. It has been generally accepted that confidential information is not, of itself, property ( Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414). The key attribute of intellectual property rights such as patents, registered trade marks and copyright is enforceability against the world without the need to establish any pre-existing relationship between the right owner and the defendant. Confidential information, however, is of a different nature, as the transferee does not have exclusive possession. Thus it is said (Bridge, Personal Property Law (3 rd edn) p 6) that: The transferor retains the information that was transmitted, which denies one of the features of a property right, namely its exclusivity. A diamond ring cannot support two wearers at the same time. 312Rather than protection as a property right, confidential information is generally protected by equity as an "obligation of conscience" arising from the circumstances in which the information was communicated or obtained ( Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at [438]). Thus, although confidential information is "not property in any normal sense, ... equity will restrain its transmission to another if in breach of some confidential relationship" ( Boardman v Phipps [1967] 2 AC 46; [1966] 3 All ER 721 per Lord Upjohn). Nevertheless, on the traditional view, confidential information is not, in itself, property capable of being assigned. 313Hence it has been argued that the interest protected in actions of breach of confidence is, in its purest form, a right in personam and therefore not property in either the legal or equitable senses (see, for example, Stuckey 'The Equitable Action for Breach of Confidence: Is Information Ever Property?' (1981) 9 Sydney Law Review 402). 314However, in some cases there has been an attempt to characterise confidential information as an asset or as having some proprietary characteristics. Thus, it has been held that trade secrets can be devised by will ( Morison v Moat (1851) 9 Hare 241; 68 ER 492); may be held on trust as trust property ( Boardman v Phipps per Lord Upjohn); and can be held by a trustee in bankruptcy ( Re Keene [1922] 2 Ch 475). It has been held that the fact that bundles of rights concerning trade secrets can be transferred indicates that they have property characteristics ( DPC Estates Pty Ltd v Grey & Consul Development Pty Ltd [1974] 1 NSWLR 443 per Jacobs P at [460]; Smith Kline & French Laboratories (Aust) Ltd v Secretary, Dept of Community Services and Health (1990) 22 FCR 73 per Gummow J at [121-2]). 315In TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151 Finkelstein J said [at 75 - 76] that: Although confidential information is not property and hence is not capable of being assigned, it now seems to be accepted that confidential information can be passed on by one person to another, and the person to whom it has been imparted can take action to protect the information. In O'Mustad & Son v S Allcock & Co Ltd (1928) 1B IPR 773; [1964] 1 WLR 109 the liquidator of a company sold to the appellant the company's business including the benefit of trade secrets. One of the former employees took up employment with a competitor, with the intention of passing on trade secrets to his new employer. The appellants obtained an injunction to restrain the disclosure. In Douglas v Hello! Ltd (No 2) [2006] QB 125; (2005) 65 IPR 449; [2005] 4 All ER 128; [2005] EWCA Civ 595 at [129]-[134] it was observed that the decision in O'Mustad & Son "supports the proposition that a purchaser of confidential information can restrain disclosure of that information in breach of confidence, but again the picture is complicated by the fact that the benefit of [the employee's] contractual obligation not to disclose the information was purchased by Mustad. That may be a good explanation for the decision of the Law Lords but, even if the employment contract had not been assigned, in my opinion, consistent with principle, a "purchaser" of the confidential information is entitled to the court's protection . In the Spycatcher case ( Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 281) Lord Goff said: "a duty of confidence arises when confidential information comes to the knowledge of a person (the confidant) in circumstances where he has noticed ... that the information is confidential, with the effect that it would be just in all the circumstances that he should be precluded from disclosing the information to others. 316This debate raises the question what exactly is being assigned under a commercial sale agreement that seeks to assign "confidential information", "trade secrets" or "know how" to a purchaser. 317In TS & B Retail Systems Finkelstein J sheds some light on this debate, but there is still uncertainty surrounding the nature of confidential information. TS & B Retail Systems involved an attempted assignment of confidential information pursuant to an agreement, which purported to assign "all intellectual property and proprietary rights...including...drawings, trade secrets, technical data formulae...databases, know-how...and similar industrial or intellectual property rights". Finkelstein J held that the assignee was entitled to "whatever protection a court of equity will give in respect of the confidential information it obtained" [at 77]. He therefore characterised what was being assigned in the commercial agreement as the right to enforce an obligation to keep information confidential, as opposed to the confidential information itself. 318This view was also taken by Campbell J in Mid-City Skin Cancer & Laser Centre v Zahedi-Anarak [2006] NSWSC 844 at [196 - 238], where his Honour held that a skin cancer clinic that had acquired certain assets (including patient details and records) from another clinic had the right to sue a doctor who used those records in another practice. 319Overall, although there is still uncertainty surrounding this area, it is generally accepted that it is not possible for equity to assign confidential information, as confidential information is not "property" capable of being assigned. There is authority, however, for the proposition that it is possible to assign the right to enforce an obligation to keep information confidential. (ii) Is it possible to grant an exclusive licence to 'use' confidential information? 320The remaining issue for consideration is whether it is possible, in the absence of being able to assign confidential information, to grant an exclusive licence to 'use' confidential information. 321The classic statement of the nature of a licence was propounded by Vaughan CJ in Thomas v Sorrell (1674) Vaughan 330; 124 ER 1098 at [351]: A dispensation or licence properly passeth no interest, nor alters or transfers property in anything, but only makes an action lawful, which without it had been unlawful. 322Barwick CJ referred to this proposition in Banks v Transport Regulation Board (Vic) (1968) 119 CLR 222 describing it as the repeated notion that a mere licence does not create any estate or interest in the property to which it relates, and that it only makes an act lawful which without it would be unlawful. In that sense, a licence to 'use' the confidential information contained in the Painaway Formulas would be no more than a permission or authorisation to do something that otherwise the party in whom that knowledge reposes may be able to restrain. If so, then there would seem no reason in principle why the acknowledgement and agreement of Nature's Remedies and the Carrolls in clause 17 of the Licence Agreement should not be construed as granting the Painaway the right to authorise others (by way of some form of dealing with the rights under the Licence Agreement) similarly to make use of the Painaway Formulas and I would so construe that clause. 323As to whether that may be done on an exclusive or non-exclusive basis, it has been said that an exclusive licence is a licence to do a thing and a contractual promise by the licensor not to do the same thing or give permission to anybody else to do the same thing ( Heap v Hartley (1889) 42 Ch D 461 (CA); Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1 per McTiernan J at [14 - 15]). Thus, for example, where a landowner grants an exclusive licence to cut timber or to graze cattle upon its land, it implies that the licensor would not exercise the same rights or give similar rights to another person during the currency of the licence ( Reid v Moreland Timber ). Similarly, if Painaway were to authorise a third party exclusively to use the Painaway Formulas (whether it sought to achieve this by way of an assignment of the rights under the Licence Agreement or by some other dealing), then that would carry with it the consequence that Painaway itself could not at the same time use those formulas. (The difficulty for Painaway's administrators in this regard will obviously be that they are dependent on Nature's Remedies continuing to comply with its obligation to make the formulas available for that purpose - but that would be a matter for them to consider when determining what dealings with the Licence Agreement they consider it appropriate to recommend to the creditors.) 324The issue whether an exclusive licence can be granted over the use of confidential information as such has received, so far as I can discern, little judicial attention. I note, however, that in Inline Logistics Ltd v UCI Logistics Ltd [2002] R.P.C 32, the Court of Appeal in the United Kingdom considering a claim for alleged misuse of confidential information contained in a design drawing for a warehouse concluded that, as a matter of business efficacy of a contract for the provision of design and build construction services in relation to the warehousing and handling systems for goods, it was necessary to imply a licence (which the parties conceded existed) for the use of work provided in the context of a purposed tender and that this licence extended "so as to authorise the use of the [confidential] information in [a particular design drawing]), in effect treating the concept of the implied licence as a permission to make use of confidential information in circumstances where that might otherwise be said to be in breach of an obligation of confidence. 325Therefore, while I have difficulty seeing that the confidential information in the Painaway Formulas is property capable of assignment in the strict sense, I consider that what Nature's Remedies and the Carrolls have done is to authorise Painaway to grant to a third party the exclusive or other right to use that information (without Painaway or the third party thereby being in breach of an obligation of confidence owed to Nature's Remedies or the Carrolls by so doing). 326Another way to approach the question of what rights Painaway has in respect of the licence is to consider the application of the implied obligation of cooperation and good faith that may arise as a matter of contract law or the express obligation contained in clause 19 of the Licence Agreement on the part of Nature's Remedies and the Carrolls to do all things necessary or desirable to give full effect to the Licence Agreement. 327In that regard, in Mackay v Dick (1881) 6 App Cas 251, (in a passage applied by the High Court in Ray v Davies (1909) 9 CLR 160; Milne v Sydney MC (1912) 14 CLR 54; Electronic Industries Ltd v David Jones Ltd (1954) 91 CLR 288; Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596), Lord Blackburn stated: I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something will be done, which cannot effectively be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. 328However, as noted in Campbell v Backoffice Investments Pty Ltd (2009) 83 ALJR 903, (by Gummow, Hayne, Heydon and Kiefel JJ) at [168] "care must be exercised in identifying both the content and operation of an implied obligation to cooperate lest it be at odds with the terms upon which the parties have expressly agreed." 329Here the obligation contained in clause 19 of the Licence Agreement is of importance given that the ability of Painaway (and any third party to whom it may seek to assign rights or benefits under the Licence Agreement) to obtain the benefit of the licence granted to it in relation to the Painaway products is necessarily dependent on Nature's Remedies and the Carrolls making available for use in the manufacture of the products the Painaway Formulas and Nature's Remedies (and Mrs Carroll in her capacity as Quality Assurance Manager) properly carrying out its functions as Therapeutic Goods Act licensee. 330In conclusion on this question, I am of the view that the licence in respect of or right to use the Painaway trade marks (as part of the Intellectual Property) is something that is assignable (though the Painaway Formulas themselves are not) and may be made on an exclusive basis (to the extent that Painaway could seek to enforce the contractual fetter on the ability of Nature's Remedies to exercise its statutory right to use the trade marks (though clearly some care would need to be taken in the documentation of any such transfer in order to protect against the possibility of a breach by Nature's Remedies (by competing with the Painaway assignee) of its contractual arrangements with Painaway. As to the Painaway Formulas, while the confidential information comprised therein is not of itself assignable, it seems to me that Painaway could rely on its rights under the Licence Agreement in order to authorise a third party to have use of the Painaway Formulas and then seek to enforce the obligation on the part of Nature's Remedies and the Carrolls to facilitate such use (albeit preserving the confidentiality thereof as between that user and the rest of the world). (iv) If the only licence Painaway had was no more than an implied licence, was it terminable at will and, if not, how is it able to be terminated? 331Painaway's Defence to the Nature's Remedies' Cross-Claim, at [8], sets out what Painaway contends would have to be the terms of any implied licence (whether that alleged by Nature's Remedies or otherwise found by the Court), including that it be exclusive (including as against Nature's Remedies); that it require Nature's Remedies, as the holder of the Therapeutic Goods Administration Act Licence, to release for supply; that it require Nature Remedies to assist and cooperate with Painaway in the manufacture of Painaway products conformable with Nature's Remedies' rights as Therapeutic Goods Administration Act licensee; that it require Nature's Remedies to grant a sub-licence or transfer of the Therapeutic Goods Administration Act licence to a person or entity nominated by Painaway acceptable to the Therapeutic Goods Act or otherwise approved pursuant to the Therapeutic Goods Administration Act; that it require Nature's Remedies to do all such things necessary on its part to enable Painaway to have the benefit of the implied licence; that it require Nature's Remedies to act in good faith towards Painaway in its dealings in relation to the implied licence; that it require Nature's Remedies to give reasonable notice of its intention to terminate the implied licence; and that it preclude Nature's Remedies from effecting a termination of the implied licence where in breach of the above terms. 332As noted earlier, as an absolute minimum it is said that Painaway must have a licence to advertise, market and sell the approximate 480,000 units of Painaway products located at the Tuggerah leased premises and to manufacture further Painaway products utilising the raw materials, containers and the like which Painaway owns; and that this licence must be exclusive of any rights of Nature's Remedies. (On previous annual turnover, it seems to be estimated that it might take about a year to sell $7m worth of stock, although it may be that an additional period would be required as a result of the fact that the products have now been off the market for some months.) 333Such a licence would, it is said, ensure that Painaway can realise its assets to discharge its liabilities to trade creditors, which debts (including contingent) have been incurred in the business activities of Painaway prior to July 2010 and 9 December 2010 when the implied licence was purported to be terminated. 334In this regard, Mr Svehla points to the economic contributions which the Nassar/Hyder interests had made towards the Painaway business up to the time at which any implied licence must have been granted (the payment of the sum of $100,000 to enable Mr Valentine's company to be removed as a shareholder of Nature's Remedies and Mr Valentine's loan to that company to be discharged; the payment of about $96,200, made towards payment of the large order of arnica, as well as minor amounts up to that point in time as reflected in clause 11.5(i) of the Shareholders Agreement). 335Mr Svehla referred to the acknowledgements in clause 17.1 of the Shareholders Agreement, including that Mr & Mrs Carroll or Nature's Remedies owned the Intellectual Property, and that it was intended that Messrs Hyder and Nassar would greatly contribute to the goodwill attaching to the Intellectual Property of the Painaway product via marketing and sales strategies and plans they will implement in their capacities as directors of Painaway (clause 17.1(a) and (f) of the Shareholders Agreement). 336I note that clause 7 of the Licence Agreement seemed to contemplate that the first occasion when termination other than for breach or winding up would be able to occur was on 12 months' notice after the expiration of six years from the Shareholders Agreement (thus indicating an intention for the arrangements to be in place for at least 7 years. (Mr Svehla raised the question whether clause 7.2 should be regarded as indicating the only circumstances in which any licence could be terminated - ie an exclusive code for termination; noting the apparent contradiction between a perpetual licence and one that is nevertheless terminable on particular events.) 337In Australian Blue Metal Ltd v Hughes and Ors [1962] 3 All ER 335 Lord Devlin said that the implication of reasonable notice is to be determined in light of the circumstances existing when the contract was made and that the reasonable time for the notice is to be determined as at the date of the notice (342); reasonable time not being the time during which one party or the other could reasonably wish for the contract to continue. His Lordship noted that that the implication of reasonable notice is intended to serve only the common purpose of the parties and that the common purpose is frequently derived from the desire of both parties that they be cushioned against sudden change and have time to make alternative arrangements of a similar sort to those being terminated. The notice may also allow them to 'reap where they have sown' ( Winter Garden Theatre (London) Ltd v Millenium Productions Ltd [1947] 2 All ER 331). However, the court must consider whether that was a consideration of the parties at the time when the contract was made (342). 338In Crawford Fittings Co and Ors v Sydney Valve & Fittings Pty Ltd and Anor (1988) 14 NSWLR 438 McHugh JA (as his Honour then was) considered the issue as to the term of notice required for termination of an implied licence. His Honour noted that the chief purpose of notice for a reasonable period is to enable the parties to bring their relationship, which has existed for a reasonable period, to an end in an orderly way so that they will have a reasonable opportunity to enter into alternative arrangements and to wind up matters which arise out of their relationship (448). The reasonableness of the period of notice depends on the circumstances existing when the notice is given (444). Thus his Honour indicated that the period of notice must be sufficiently long to enable the recipient to deploy his labour and equipment in alternative employment, to carry out his commitments, to bring current negotiations to fruition and to wind up the association in a businesslike manner (444). Extraordinary effort and expenditure is relevant to the reasonableness of the notice period even though the agreement has been in existence for more than a reasonable period (446); it being said that the parties should be able to obtain the fruits of any extraordinary expenditure or effort carried out within the scope of the agreement (448). 339His Honour went on to note that reasonable notice cannot be given in a situation where a business arrangement is in its early stages and a person is expending money or effort in developing the business, as a term is implied that the business is to continue for a reasonable period and that it is not to be presumed that the parties intended the agreement could be put to an end before the person incurring the expenditure or effort has had an opportunity to recoup his initial expenditure or effort. His Honour said that this is not confined to arrangements in their initial stages but also should be taken into account when determining reasonableness where a party has engaged in extraordinary expenditure or effort. The weight accorded to those factors will vary depending on the circumstances of each particular case (448). 340Other circumstances, such as that promotional efforts were needed and that the real reward would come in the future ( Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361) and the amount of time necessary to enable the distributor to look for a new source of supply ( Aarn E Levine and Co Inc v Calkraft Paper Co 429 F Supp 1039 (1976)), may also be taken into account. 341As Brereton J observed in Lawfund Australia , at least in some single undertaking joint ventures a term may be implicit to the effect that the relationship continues until the object of the venture is achieved whereupon it comes to an end, though ultimately the terms of the parties' agreement will be decisive. 342Had I been of the opinion that a binding agreement had not come into existence on the terms of the Licence Agreement, then I would have had no hesitation in finding that it was a term of the implied licence conceded by Nature's Remedies that the licence be terminable on reasonable notice (and not at will). The circumstances that I take into account in that regard are the substantial contributions that had been made by the parties to the joint venture in the period up to the time at which it is conceded that an implied licence came into existence (ie from March 2006); the nature of the obligations assumed by Painaway in relation to the manufacture of the Painaway products (involving significant outlay and commitment to a substantial product launch); and the fact that the arrangements discussed and agreed at least as between the three individuals all contemplated a 'perpetual' and 'non-revocable' licence (therefore hardly short term let alone one susceptible of immediate termination at any time). The Nassar/Hyder interests' only ability to obtain a financial benefit from their significant contribution to the joint venture (on the Carroll interests case) was through their family trust companies' shareholding in Painaway. This points to an intention that there be something more than a mere licence terminable at will. 343As to whether the term of the notice in fact given (purporting to terminate the implied licence with immediate effect) was reasonable, I would also have had no hesitation in finding that this was not a reasonable period of notice. Painaway had entered into substantial commitments on the apparent assumption that what it had was a valuable licence to manufacture and sell the Painaway products on a non-revocable (sometimes described as perpetual) and exclusive basis. It had ordered a substantial amount of raw materials from which to amass a stock of product to sell and had put in place a major product launch. 344At the very least, I would have found that a reasonable term would have been one determined by reference to the time necessary to sell the stock (both existing and that manufactured with the existing raw materials) in the ordinary course of business (not at a fire sale) and by reference to the sponsorship commitments it had entered into (so as to enable the company to fulfil those obligations). That would address the needs of creditors and the expectations of the parties to what was on any view of things a substantial joint business venture. Furthermore, given that there had been a considerable investment by the Nassar/Hyder interests in the company, it seems to me to be reasonable for them to be able to reap what had been sown. This was a company whose turnover was built up from nothing to in excess of $8m per year over a period of some 4 years. Further, the termination provisions of clause 7.2 (having the effect that apart from breach or winding up the arrangement would be in place for at least 7 years) and the suggested level of earnings to be utilised as the minimum for a share sale indicate that the parties could reasonably have anticipated a substantial reward from the investment of their time and funds in the venture. 345Mr Ireland pointed out that the parties' financial contributions had been paid (or 'squared off') in 2009 (though there was some discrepancy as between the sums paid to the three individuals - Mr Nassar seemingly having received some $200,000 less than the others). However I do not think I should assume that all the parties expected was to recoup the moneys actually contributed to the company. I consider that the evidence warrants the inference that they anticipated earning substantial profits over a minimum 7 year period (on the assumption that the product and the marketing activities were both successful). 346Mr Svehla submitted that the Carroll interests should not be permitted to 'collapse' the licence to the detriment of the other two shareholders and that any period of reasonable notice would have to take into account not only the shareholders' interests but also those of creditors. 347Against this, Mr Ireland submitted that the salient circumstances to take into account when determining the period of notice that would be reasonable for termination of the implied licence (assuming it was not a licence terminable at will) included the fact that the parties are now at loggerheads; that the administrators have been appointed (something that might I would have thought assist in addressing the loggerhead situation) and that there has been no continuity of sale of the product now for some months. 348When looking at the reasonableness of notice, Mr Ireland contended that if one assumes that Nature's Remedies will eventually get back the exclusivity of use in respect of the trade marks, the question should be how long must it wait for that to happen and he submitted that 6 months would be too long a period. Mr Ireland argued that the Carrolls should not be precluded from utilising the formulas that they developed. However, it seems to me that this is precisely what they were prepared to do in the anticipation that with the marketing and promotional activities of the Nassar/Hyder interests they would be able to realise a significant profit from their formulas. 349When reference is made to the terms of the Licence Agreement to which the Carroll interests other than JAKL were prepared to commit, it can be seen that the minimum period of the Licence Agreement (assuming no breach and no winding up of the company by the court) was to be 7 years from the commencement of the Shareholders Agreement. Assuming such a notice were to have been given on the sixth anniversary of the date that agreement was approved in final form (other than ACN details and the like) that would expire in about July 2012. The sponsorship arrangements go through to the end of 2012. In the circumstances I would have held that the reasonable period for termination of any implied licence that had arisen (assuming that the Licence Agreement itself did not become operative) was a period expiring no earlier than 31 December 2012. (v) Are Messrs Nassar and Hyder entitled to a shareholding in Nature's Remedies or otherwise to declaratory relief? 350There are various alternative bases upon which Messrs Nassar and Hyder put their cross-claim. 351The primary relief sought (which in submissions Mr Stack said was in addition to the principal relief sought in relation to the Licence Agreement) is a declaration that Messrs Nassar and Hyder: (a)own or are beneficially entitled to 40% of the Intellectual Property and the Painaway Formulas, as those terms are defined in the Shareholders Agreement, and the goodwill; and (b)are entitled to 40% of the net proceeds from the sale the Intellectual Property and the Painaway Formulas, as those terms are defined in the Shareholders Agreement, and the goodwill. 352Mr Stack submits that the evidence demonstrates that, from the outset, it had been agreed between the parties that Messrs Nassar and Hyder would have an entitlement to 40% of the value of the intellectual property and the associated goodwill (and this is supported by the initial file notes taken by Mr Innis of his meetings with Mr Carroll and Mr Nassar). 353Mr Stack submits that terms of clause 14.2 of the Shareholders Deed are consistent with that original agreement in that, by virtue of that clause, Messrs Nassar and Hyder owned 40% of the intellectual property and the associated goodwill and were otherwise entitled to 40% of the revenue from the sale of that property and goodwill. 354As set out earlier, clause 14.2 contained an acknowledgement and agreement by the Carrolls and Nature's Remedies that from the date of commencement of the Shareholders Agreement, the "goodwill and the Intellectual Property attributed to the Painaway Formulas from time to time shall belong to John and Linda as to 60% and to Elias and Angelo as to 40%, such that in the event of the sale of the Intellectual Property attributed to the Painaway Formulas John and Linda will together be entitled to 60% of the net proceeds and Elias and Angelo will together be entitled to 40% of the net proceeds of such sale". 355The wording of this clause is somewhat circular in that the Intellectual Property is itself defined as including the Painaway Formulas, so that the words "attributed to the Painaway Formulas" seemingly qualify the broader category of Intellectual Property as defined in the agreement. (Indeed, Mr Ireland submits that no declaratory relief should be granted in circumstances where one could not prejudge whether some future sale would involve Intellectual Property "attributed to" the Painaway Formulas.) 356Further, as a matter of construction the question is as to what work the words commencing "such that in the event of the sale" are intended to perform. If the "Intellectual Property attributed to the Painaway Formulas" is (as the first part of the clause states) to 'belong' to the individuals in the specified shares then it would surely not be necessary to go on to specify that the net proceeds of sale should also be determined in that proportion. Mr Ireland submitted that there is a difference between a provision that intellectual property belonged to the parties in the stated percentages and a provision that if there were to be a sale of the intellectual property then the parties would receive a certain proportion of the proceeds - and I agree. I would ordinarily have read the words "such that ..." as explaining the consequences of what had been meant by the preceding words (though, for the reasons I set out below, in this instance I think those words must be read as a limitation on the ambit of the foregoing words). 357The Nassar/Hyder interests submit that even if the Shareholders Agreement did not bind the companies who did not execute it, clause 14.2 is still operative because the relevant parties who signed that agreement (the Carrolls, Nature's Remedies, and Messrs Nassar and Mr Hyder) had agreed to those terms and, pursuant to clause 27 of the Shareholders Agreement, had agreed that that invalidity of other provisions would not invalid the operation of other terms. It is submitted that the terms of the agreement provided for in these clauses, and the other related clauses, were independent of the other provisions that related to the incorporation and operation of Painaway. (In that regard, I consider that clause 27 in its terms addresses a different situation, namely the situation where clauses in the agreement might be invalid - not where the whole agreement may not have come into force because of a failure of all the parties to execute it). 358It is only in the alternative to this principal submission (ie in the event that clause 14.2 is not held to be operative to confer on Messrs Nassar and Hyder such an interest) that it is said that they are entitled to 49% of the shares in Nature's Remedies pursuant to the initial agreement they say was reached with Mr Carroll, namely that Messrs Nassar and Hyder would take up the interest which LSJK and Mr Valentine then held in the Painaway business (represented by the 49 shares held by LSJK in Nature's Remedies). 359That alternative claim is put on the basis of either equitable or conventional estoppel, namely that it was on the basis that they had a 49% interest in the Painaway business (which was being conducted through Nature's Remedies), as represented to them by the Carrolls, that during 2004 and 2005 Messrs Nassar and Hyder made additional payments of approximately $225,000 and spent time and effort on developing that business. 360Thus, it is said that Messrs Nassar and Hyder are entitled to the 49 shares in Nature's Remedies which the Carrolls acquired from LSJK with the moneys provided by them or, alternatively, that given the reliance by Messrs Nassar and Hyder on the terms of their agreement with the Carrolls, their payment of the $100,000, their subsequent payments and their efforts to develop the Painaway business, the Carrolls are estopped from denying the entitlement of Messrs Nassar and Hyder to the 49 shares in Nature's Remedies, which the Carrolls acquired from LSJK. 361Further and in the alternative, Messrs Nassar and Hyder assert that between 2003 and 2005, various representations were made to them, by the Carrolls and Nature's Remedies, to the effect that they would have a beneficial interest in 40% of the intellectual property and related goodwill and a 49% interest in the business of Painaway. It is alleged that between 2003 and 2010, the Carrolls and Nature's Remedies, knowing of these representations, allowed and encouraged Messrs Nassar and Hyder to invest in excess of $1.7m into the business of Painaway; to spend significant time and developing the business of Painaway; to cause the annual sales of the Painaway products to grow from nothing as at 30 June 2006 to in excess of $8.7m as at 30 June 2010; and to cause the value of the good will in the Painaway products and the underlying intellectual property to increase significantly. 362The conduct referred to above is said to be conduct in relation to the Painaway business and carried out in "trade and commerce" within the meaning of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) . As to damages claimed to be suffered by reason of that conduct, it is submitted that if clause 14.2 of the Shareholders Agreement is found to be inoperative, and if Messrs Nassar and Hyder are otherwise not beneficially entitled to 40% of the interest in the intellectual property and the associated goodwill and 49% of the shareholding in Nature's Remedies, then they will suffer significant loss (in that, rather than sharing in the value which they have added to the Intellectual Property, they will receive nothing). 363As to the Nassar/Hyder Cross-Claim, Mr Ireland submits that this issue involves consideration of the evidence of conversations that took place in the discussions with Mr Cullen of Purkiss Cullen in September 2003 at or about the time the initial money was provided. Mr Ireland submits that the documents which Mr Cullen produced are entirely consistent with the position that the moneys provided by Messrs Nassar and Hyder were treated at the time as a loan by them to the Carrolls in order to enable the Carrolls to pay out the Valentine debt and acquire the Valentine shareholding and that the accounts of Nature's Remedies are consistent with that conclusion. The draft loan agreement prepared at the time (although not executed by the parties) is also said to be consistent with that position. 364It is said that a decisive matter against the Nassar/Hyder contentions is that when the parties settled up their financial contributions at the meeting on 1 May 2009, the two sums of $50,000 which Messrs Nassar and Hyder had provided in 2003 were each taken into account and treated as moneys repaid to them out of the available funds of Painaway. The contrary case, advanced by the Nassar/Hyder interests is said by Mr Ireland to be inconsistent with all the documents prepared by the parties and should be rejected. 365Mr Ireland says that the claim that the Nassar/Hyder interests acquired some form of equity in Nature's Remedies in 2003 in consequence of the payment of $100,000 should be rejected for the reasons that Messrs Hyder and Nassar acknowledged in evidence that no agreement had been reached at the time they each paid the sums of around $50,000 to Nature's Remedies in December 2003; the contemporaneous documents, especially those prepared by Mr Cullen, indicate that a loan was intended to be made to the Carrolls until further binding arrangements were concluded; there is no evidence that Messrs Hyder and Nassar ever claimed an interest in Nature's Remedies after they paid their money until December 2010 when the present claim was first articulated; there is an irreconcilable tension between the claim to an equity in Nature's Remedies that Messrs Hyder and Nassar make and the administrators' case which they also support (and it is further submitted that the evidence given by Messrs Hyder and Nassar concerning the circumstances of the payment of $100,000 in 2003 was unconvincing and should not be accepted ). 366In relation to the claim based on estoppel, Mr Ireland contends that, insofar as the essence of an estoppel is that a party acts in reliance upon a representation by the opposite party asserting a particular legal position in future conduct of the mutual affairs, and that here the Nassar/Hyder interests did not rely on the execution of the documents or any assurances given by the Carrolls as to the binding nature of the documents but simply assumed that Mr Innis (who had prepared the documents) had done everything necessary to conclude their legal relations (that not being a representation made by the Carrolls). Mr Ireland places weight on Mr Nassar's evidence in this regard, namely that because he had employed Mr Innis as a solicitor, he expected that Mr Innis had done everything necessary to complete the task. 367As to estoppel, reliance is placd both on an equitable estoppel and conventional estoppel. Mr Stack refers to what was said in The Commonwealth v Verwayen at 409 by Mason CJ , namely that the various forms of the doctrine of estoppel are "intended to serve the same fundamental purpose, namely 'protection against the detriment which would flow from a party's change of position if the assumption (or expectation) that led to it were deserted'." 368Mr Stack points out that while, in a case such as this, equitable estoppel may have the appearance of contract (in that it forces the parties to honour their 'agreements'), it is a contract imposed irrespective of any actual agreement between the parties, referring to what Mason J (as his Honour then was) said in Waltons Stores v Maher (1988) 164 CLR 387 at 425 : But there are differences between a contract and an equity created by estoppel. A contractual obligation is created by the agreement of the parties; an equity created by estoppel may be imposed irrespective of any agreement by the party bound. A contractual obligation must be supported by consideration; an equity created by estoppel need not be supported by what is, strictly speaking, consideration. The measure of a contractual obligation depends on the terms of the contract and the circumstances to which it applies; the measure of an equity created by estoppel varies according to what is necessary to prevent detriment resulting from unconscionable conduct . 369His Honour there noted the elements ordinarily required for establishing an equitable estoppel: It is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiffs reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs. 370To the extent that Mr Stack submits that it was the Nassar/Hyder interests who provided the expertise to market and sell the Painaway products (as evidenced by the growth in sales to in excess of $8.7m), while the Carrolls despite having the knowledge necessary for the manufacture of the Painaway Products had been unable to procure any commercial benefit therefrom, this seems to go to the benefit obtained by the Carrolls out of the venture, not the detrimental reliance by Messrs Nassar and Hyder on any state of affairs under which they would be entitled to a shareholding in Nature's Remedies. 371It is submitted by Mr Stack that the evidence makes it plain that Mr Nassar and Mr Hyder were not prepared to provide their skills and money unless they were given, on a "non-revocable" basis, a share of those sales and in the Intellectual Property and the Painaway Formulas, as those terms were defined in the Shareholders Agreement and that, by signing the respective Agreements, the Carrolls represented to and otherwise induced Messrs Hyder and Nassar to believe that they would be given a share of those sales, the Intellectual Property and the Painaway Formulas, through and on the terms of the Agreements. Certainly, there is evidence that at times Messrs Nassar and Hyder seem not to have been prepared to proceed with the venture unless assured of profits obtained from the venture. That seems unsurprising given their evidence that they had mortgaged their homes and spent less time on their business interests in the expectation of a profit from the launch of the Painaway products. 372However, it seems to me that the only representation made by the Carrolls and the Nature's Remedies interests (by reference to the signing of the Licence and Shareholders Agreements) was that they agreed to the terms and that they would proceed with a venture of that kind once the corporate entities were brought into existence (and any earlier representations as to the acquisition of a share of the business were in effect superseded by the April 2005 arrangements). 373What I consider to be decisive against the alternative claim made for a beneficial interest in the Nature's Remedies shareholding is that Messrs Nassar and Hyder seem to have made an election (as invited to do under the terms of the 23 February 2004 letter) to proceed with arrangements for the incorporation of Painaway and their involvement in the joint venture through Painaway rather than to pursue a shareholding in Nature's Remedies. If so, then whether or not that election proved in hindsight to be the best decision (and whether or not the relevant agreements were properly executed) I cannot conclude that from at least April 2005 Messrs Nassar and Hyder were acting under any belief (encouraged or not discouraged by the Carrolls) that they were to be shareholders in Nature's Remedies. (Significantly, when asked why no claim had been made for the shares over the period after the payment of the $100,000, Mr Nassar's response was that this was all tied to the Licence and Shareholder Agreements with Painaway - T 54.50 - 50.3.) 374In that regard, it seemed to me that the evidence of Messrs Nassar and Hyder reflected the likelihood that their attention at the time was on the commercial aspects of the venture and that they relied on others to document the arrangements - I accept that they understood that in some fashion what they were to share in was the 'business' of the manufacture and sale of the Painaway product. However, I also accept the force of Mr Ireland's submission that there is an irreconcilable tension between the claim to the licence (under arrangements entered into following the presentation of a choice offered to Messrs Nassar and Hyder either to carry out the venture through a new company in which they would have a share or through a shareholding in Nature's Remedies) and a claim to the shareholding in Nature's Remedies. Having elected the Painaway option, it does not seem to me that it follows that if, for whatever reason, that did not achieve the result they sought or had hoped for, then the court should in effect re-make the deal in order to revert to the shareholding arrangement. 375Therefore, while I consider that there was a conventional estoppel in relation to the 2005 arrangements (and in that regard Mr Stack relies on the fact that at no time after the execution of the Agreements did the Carrolls indicate that they did not consider themselves bound by the Agreements or would not otherwise act in accordance with the terms of the Agreements but, rather, had acted in a manner which made it plain that they considered themselves bound by the Agreements and that the Agreements were operative and had called upon Messrs Nassar and Hyder to perform their part under the agreements, those being matters that I have considered above and that have in part led to the conclusion that there was a binding arrangement on the terms of the Licence and Shareholder Agreements), I do not consider that the claim to a shareholding in Nature's Remedies is sustained whether in contract or by application of the principles of estoppel. 376As I have found in favour of the Nassar/Hyder interests on the principal claim as to the operation of the Shareholders Agreement, the alternative issue raised on the Nassar/Hyder Cross-Claim (as to the entitlement to a shareholding in Nature's Remedies) does not strictly arise. Had it arisen I would have found against the Nassar/Hyder interests because I consider that the arrangements proceeded with from April 2005 are inconsistent with any such agreement or understanding. What happened was that an election was made to proceed in a particular way and the fact that the Carrolls may have repudiated that arrangement some time later does not permit the conclusion that there was to be a reversion to the original or alternative arrangement (ie the option that was not pursued at the time the election was made to proceed along the Painaway path), 377As to the beneficial interest claimed in the Intellectual Property attributed to the Painaway Formula, that turns on the construction of the Shareholders Agreement (which I have found binding). Had I not found the Shareholders Agreement binding then I would have been inclined to accept that there was an estoppel precluding the Carroll interests from denying an arrangement pursuant to which the proceeds of sale (if any) of the "Intellectual Property attributed to the Painaway Formulas" were to be distributed as to 40% to the Nassar/Hyder interests on this aspect of their cross-claim because it seems to me that the basis on which they acted in the venture was that they would make a contribution of the kind referred to in the Shareholders Agreement and would have such an entitlement and that they did so with the investment of significant time and effort that could otherwise have been devoted to other activities (even if the financial contribution was ultimately recouped by them). 378In those circumstances, having found for the Nassar/Hyder interests on the existence and operation of the Shareholders Agreement, is it necessary to go further and grant declaratory relief as to the entitlements on a sale of this kind? This gives rise to the issue as to whether there is any utility in the making of such declarations (and Mr Ireland says that there is none). 379The court has a wide discretion to grant declaratory relief ( Hanson v Radcliffe UDC [1922] 2 Ch 490, at 507; Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421, at 438; Ibeneweka v Egbuna [1964] 1 WLR 219, at 225 ; Re Judiciary and Navigation Acts (Advisory Opinions Case) [1921] HCA 20; (1921) 29 CLR 257; Ainsworth v Criminal Justice Commn (Qld) [1992] HCA 10; (1992) 175 CLR 564, at 581, per Mason CJ, Dawson, Toohey and Gaudron JJ). 380The tests outlined by Lockhart J, (with whom Spender and Cooper JJ agreed) in Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406; (1996) 139 ALR 663, at 670-671 for the grant of declaratory relief were as follows: For a party to have sufficient standing to seek and obtain the grant of declaratory relief it must satisfy a number of tests which have been formulated by the courts, some in the alternative and some cumulative. I shall formulate them in summary form as follows: · The proceeding must involve the determination of a question that is not abstract or hypothetical. There must be a real question involved, and the declaratory relief must be directed to the determination of legal controversies: Re Judiciary Act 1903 and Navigation Act 1912 (1921) 29 CLR 257. The answer to the question must produce some real consequences for the parties. · The applicant for declaratory relief will not have sufficient status if relief is "claimed in relation to circumstances that [have] not occurred and might never happen": University of New South Wales v Moorhouse (1975) 133 CLR 1 at 10; 6 ALR 193 per Gibbs J; or if the court's declaration will produce no foreseeable consequences for the parties: Gardner v Dairy Industry Authority New South Wales (1977) 18 ALR 55; 52 ALJR 180 per Mason J at 180 and per Aickin J at 189. · The party seeking declaratory relief must have a real interest to raise it: Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 per Gibbs J at 437 and Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 per Lord Dunedin at 448. · Generally there must be a proper contradictor: Russian Commercial and Industrial Bank at 448; and Ainsworth per Brennan J at CLR 596. The relevant principles are laid down by the High Court in Ainsworth, in particular in the joint judgment of Mason CJ, Dawson, Toohey and Gaudron JJ at CLR 581-2. Their Honours made the point that "[i]t is now accepted that superior courts have inherent power to grant declaratory relief", and "[i]t is a discretionary power which `[i]t is neither possible nor desirable to fetter ... by laying down rules as to the manner of its exercise' " (a reference to a passage from the judgment of Gibbs J in Jododex at CLR 437). See also Oil Basins Ltd v Commonwealth (1993) 178 CLR 643 at 649; 117 ALR 338 per Dawson J. These are the rules that should in general be satisfied before the court's discretion is exercised in favour of granting declaratory relief. This court has undoubted power to grant declaratory relief whether or not any consequential relief is or could be claimed: s 21 of the Federal Court of Australia Act 1976 (Cth), and Ainsworth per Mason CJ, Dawson, Toohey and Gaudron JJ at CLR 581-2. See also Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297 per Barwick CJ at 305; Telstra Corp Ltd v Australian Telecommunications Authority (1995) 133 ALR 417 per Lockhart J at 424-5, and Young on Declaratory Orders , 2nd ed, p 74. 381Is the present dispute (as to the right to share in the net proceeds of sale if and when those rights are sold) hypothetical? It has certainly been the subject of dispute between the parties. That said, its resolution will not affect the value to Painaway of the rights under the Licence Agreement and, insofar as there is no sale presently contemplated, Mr Ireland submits that there is no justiciable issue at this point. 382It might be said that both parties would benefit from know the position in advance of such a sale and so as to quell potential further disputes. In Forster v Jododex it was said that (at 435 - 436): The jurisdiction to make a declaration is a very wide one. Indeed, it has been said that, "under O. XXV, r. 5, the power of the Court to make a declaration, where it is a question of defining the rights of two parties, is almost unlimited; I might say only limited by its own discretion": Hanson v. Radcliffe Urban District Council ; and see Barnard v. National Dock Labour Board ; and Ibeneweka v. Egbuna. ... It is neither possible nor desirable to fetter the broad discretion given by s. 10 by laying down rules as to the manner of its exercise. It does, however, seem to me that the Scottish rules summarized by Lord Dunedin in Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd , should in general be satisfied before the discretion is exercised in favour of making a declaration: "The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought." Beyond that, however, little guidance can be given. As Lord Radcliffe said in Ibeneweka v. Egbuna : After all, it is doubtful if there is more of principle involved than the undoubted truth that the power to grant a declaration should be exercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances that call for their making. Beyond that there is no legal restriction on the award of a declaration. 383In Forster v Jododex the question was as to whether Jododex held a valid exploration licence, an issue in which Jododex had a real interest in the circumstances of that case. The availability of an alternative remedy, it was said, did not require the court to refuse to make a declaration. 384In Trans Realties Pty Limited v Grbac [1975] 1 NSWLR 170, Glass JA said, at 176: ... the High Court has emphatically laid down that the practice of incomplete adjudication requires reconsideration: Neeta (Epping) Pty Ltd v Phillips . The declaratory jurisdiction now derived from s 75 of the Supreme Court Act, 1970 is subject to the admonition in s 63 that, in the interest of avoiding multiplicity of proceedings, all matters in controversy should be finally determined. Where equitable relief is concerned, in particular, the public interest in finality will generally override the private interest in selective litigation. 385However, as to the possibility of a future sale, declaratory relief is not available for mere future possibilities and it has been said that if the declaratory relief is for the purpose of defining a right or liability in anticipation of future events, then unless those future events are at least likely to occur the relief sought is arguably only in respect of a 'purely hypothetical' question (see the observation of Gibbs J (as his Honour then was) in University of New South Wales v Moorhouse Angus & Robertson (Publishers) Pty Ltd [1975] HCA 26; (1975) 133 CLR 1, at 9 - 10; (1975) 6 ALR 193, as to the existence of many examples of cases in which a declaration has been refused because it was claimed in relation to circumstances that had not occurred and might never happen.) 386In Meagher, Gummow and Lehane's Equity - Doctrines and Remedies (4 th edn), the authors observe that the fact that a declaration might not finally conclude the dispute between the parties can hardly ever be, of itself, a proper ground for not making a declaration. The authors (citing Hope J in Integrated Lighting & Ceilings Pty Limited v Phillips Electrical Pty Limited (1969) 90 WN (Pt 1) (NSW) 693) state that the likelihood of further litigation is something which should affect, but does not determine, the exercise of the court's discretion and go on to say (at [19-130]): It will be otherwise if the declaration will leave unsettled issues between the parties consequent upon it; for example it is one step to declare that a contract for the sale of land is on foot, but this will be inconclusive if the parties are then clearly in dispute as to whether specific performance or damages is the consequential remedy, and are agreed only that the declaration still leaves matters at issue between them. And it would be inefficacious to declare that specific performance was available without administering that remedy: Lucas and Tait (Investments) Pty Limited v Victoria Securities Limited [1975] 1 NSWLR 170. In such a case the appropriate course is to administer the final remedies in the same proceedings as those in which the declaration is made. Of course, the plaintiff may have sought a declaration and no other relief. In such a case it appears that the court should refuse to make the declaration unless the plaintiff seeks or submits to the final relief. 387After citing a number of cases following Neeta (including Trans Realties ), it is further said that: However, too rigid an application of the principle would destroy the utility of declaratory relief, at least in vendor purchaser cases . If applied literally and uniformly, it would have the result that no relief by way of declaration could be granted unless consequential relief both could have been, and actually was, sought - a retreat to 1880. This obviously could not be correct, and the judges have accordingly contained the principle of Neeta (Epping) Pty Limited v Phillips. They were fortified in their attitude by the consideration that s 63 of the Supreme Court Act 1970 (NSW) did not, on any view, require all questions between the parties to be determined at the same time. Thus, in vendor and purchaser proceedings, Wootten J in Winchcombe Carson Trustee Pty Limited v Ball-Rand Pty Limited [1974] 1 NSWLR 477 made a declaration as to the validity of a notice to complete and stood over generally the balance of the proceedings, a course which also commended itself to Needham J in Wighams Enterprises Pty Limited v Smith [1975] 1 NSWLR 76. The position was put into its proper perspective by the New South Wales Court of Appeal in Lohar Corp Pty Limited v Dibu Pty Limited ....(my emphasis) 388In Neeta it was held that a party seeking a declaration concerning rescission (where no other relief was sought) should at the same time demonstrate readiness and willingness to perform the contract and hence submit to performance or in the alternative be ready to pursue its damages claim for breach of contract, as to fail to do so would leave open the opportunity to pursue one or such other remedies in future proceedings which would be contrary to s 63 of the Supreme Court Act. Barwick CJ and Jacobs J said at 168: Unless the parties are agreed on the consequences which flow from a declaration that such a contract has or has not been validly rescinded it is generally undesirable that a court should so declare without any orders for consequential relief. If a party to such a contract claims that a contract has not been validly rescinded such a judicial declaration is proper if that party continues ready and willing at the conclusion of the litigation to perform the contract. A consequence of the declaration should be that the party submit to the performance of the contract on his part and to an order for specific performance of the contract if that is appropriate. If such an order is not or cannot be made, nor an inquiry into damages ordered, then a declaration that on a certain day the contract had not been validly rescinded serves no purpose in the litigation. Before such a declaration is made the party seeking the declaration may already have elected to treat the other party's purported rescission as a repudiation and may have himself rescinded the contract. All that has then been achieved is an issue estoppel if and when the claim for damages for breach of contract is pursued in other proceedings. This was not the intention of the legislation as appears from s 63. Conversely, if a declaration be made that a contract has been validly rescinded but no consequential orders for damages or for return or retention of the deposit are made in those proceedings the purpose of s 63 is not achieved. In these circumstances we are of the opinion that the matter should be remitted to the Supreme Court of New South Wales for further hearing in the light of these reasons so that as far as possible all matters in controversy between the parties may be completely and finally determined. 389In Lohar Corp Pty Limited v Dibu Pty Limited (1976) 1 BPR 9177 d, Street CJ defended the utility of declarations (there in the context of conveyancing cases) and stated that: Where a vendor and a purchaser have come to issue in connection with their contract and its fulfilment, and where the Court can see that real utility will attach to resolving that issue on a summary application for a declaration, a court of first instance need not anticipate that an appellate court will fail to recognise the width of the declaratory jurisdiction as established by Foster v Jododex Aust Pty Limited (1972) 127 CLR 421 or that the discretion to exercise that jurisdiction will be too freely reviewed. 390In Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075, Brereton J, when considering a submission by the Commonwealth that the proceedings before his Honour afforded an opportunity to decide a discrete question in a cost effective way, said, at [34]-[35]: This amounts, in effect, to an application to the court to decide a preliminary question, in the absence of any proceeding to which it is preliminary. Accordingly, granting the declarations sought would not completely and finally determine any controversy that may arise between the parties. The present litigation is essentially an anterior step to further litigation, in which further issues will necessarily arise. If the declarations were made, then should the Commonwealth subsequently seek to obtain substantive relief, there would remain a range of factual and legal issues that would not have been addressed during the proceedings for declaratory relief, in respect of which liability would still have to be proved. This would probably necessitate revisiting at least some of the evidence that would be adduced in the proceedings for a declaration. The declarations if granted would therefore not finally resolve the issues between the parties. In the absence of any claim for substantive relief, it is not apparent that there is any utility in deciding the "preliminary question" raised by the claim for declaratory relief. 391His Honour said, at [28]: ... it is generally inappropriate to grant declaratory relief if it will be inconclusive, in the sense that the proposed declaration would leave unresolved issues, with the parties still in dispute as to the consequences so that further litigation would be required to resolve the controversy [ Smart v Allen (1970) 91 WN(NSW) 241; Integrated Lighting & Ceilings Pty Ltd v Phillips Electrical Pty Ltd (1969) 90 WN (Pt 1) (NSW) 693, 702]. 392His Honour considered t he case to be practically indistinguishable from Neeta , saying that, at [35]: Nothing appears which makes it such an exceptional case as to warrant the exercise of the discretionary jurisdiction to grant a declaration, despite Supreme Court Act, s 63: granting the declarations would not resolve a potential future dispute, because they would leave subsequent issues unresolved. 393(I note, however, that in dismissing leave to appeal from his Honour's judgment in BIS ( Commonwealth of Australia v BIS Cleanaway Limited [2008] NSWCA 170), Hodgson JA expressed the view (at [4] - [5]) that there was some force in the contentions that the trial judge had erred (first) in applying s 63 of the Supreme Court Act , because there were no claims that had been brought forward which the court would not be determining and (secondly) in considering that the cases of Neeta and Coles v Wood dictated that the only proper exercise of discretion would be refusal of declaratory relief. Hodgson JA said that he did not wish to be taken as endorsing everything which had been said as to those points. A similar qualification was made by Ipp JA (at [21] - [22]), it would seem as to whether the appropriate test for exercise of discretion was whether other issues would be left unresolved.) 394Brereton J in Cypjayne Pty Ltd v Rodskog [2009] NSWSC 301 again considered the issue of declaratory relief in circumstances where it was said to be hypothetical, and said at [16]: This is not a case of resolution of only one step in litigation ... there may be a further dispute, but it will involve issues different from those immediately under consideration. Absent intervention, the partners cannot progress their negotiations with the Adelaide Bank. The declaratory relief sought at this stage will, if granted, permit the negotiations with the Adelaide Bank to move forward. 395His Honour there held that even if there might be such a further dispute, the declaration was not hypothetical and would have utility because there was a live controversy and its resolution would have practical consequences, at [59]. 396I have set out my findings in relation to the existence and operation of the Shareholders Agreement (and, for that matter, the Licence Agreement). I consider that the proper construction of clause 14.2 is not that Messrs Nassar and Hyder have any beneficial or ownership interest in the "goodwill and Intellectual Property attributed to the Painaway Formulas" but rather that, if and when there is a sale of that goodwill/Intellectual Property (which is at the Carrolls' discretion), Messrs Nassar and Hyder would have a contractual entitlement to 40% of the net proceeds of sale thereof, assuming that the contractual arrangements between the parties by then relevantly remain on foot. However, in circumstances where there is no proposed sale and where it is impossible to know whether any such sale would be of the "Intellectual Property attributed to the Painaway formulas" or as to whether events might arise in the future to preclude reliance by the Nassar/Hyder parties on such an entitlement, I consider it inappropriate to make any formal declarations as to the proper construction of the clause. I accept Mr Ireland's characterisation of the position in this regard: that there is simply a promise to pay money in certain circumstances that have not yet eventuated. Conclusion 397For the reasons set out above, I find that a binding agreement came into existence on the terms of the Licence Agreement (as did a binding agreement on the terms of the Shareholders Agreement) as executed by the Carroll interests other than JAKL on 18 April 2005 (by mutual assent) and that the Carroll interests are estopped from denying such an agreement. In reaching that conclusion I have placed weight on the conduct of the Carrolls in insisting on adherence to the arrangements agreed with Messrs Nassar and Hyder as documented in the 2005 agreements and Mr Carroll's conduct, as a director of Painaway, in committing it to obligations consistent either with the existence of such a licence (the Blend agreements) or with Painaway having the benefit of licence rights of more than the ephemeral nature suggested by the Carroll interests (such as the NRL sponsorship agreement). It follows that the Nature's Remedies Cross-Claim should be dismissed. 398I find that under that agreement Painaway has the right to assign the exclusive right to use the Painaway trade marks without the consent of the Carroll interests (provided this does not materially affect the integrity of the Intellectual Property or the Painaway Formulas) and that, although the Painaway Formulas are not property assignable as such, Painaway is entitled to authorise the use of those by, or sub-license those to, a third party (again provided this does not materially affect the integrity of the Intellectual Property or the Painaway Formulas). I find that Nature's Remedies and the Carrolls have an implied obligation not to hinder (and a positive obligation to do what is necessary to enable) such dealings with the rights under the Licence Agreement. 399I further find that Nature's Remedies, as a contractual matter, cannot compete with Painaway (or any assignee or sub-licensee) in the manufacture, marketing advertising distribution and sale of the Painaway products while the exclusive licence remains on foot. As the Painaway Cross-Claim was not pressed, I make no orders in relation to that Cross-Claim but will stand it over to a date to be fixed in the event that Painaway's administrators wish to press for any of the relief therein claimed, 400It follows from the above that I find that the Licence Agreement (and Painaway's right to use the Painaway trade marks and Intellectual Property, as defined under the respective agreements) was not validly terminated in December 2010. 401Had there been no more than an implied licence (as contended for by the Carroll interests), I would have held that it was not a licence terminable at will but that there was an obligation to provide reasonable notice of termination and that, in the circumstances, that reasonable notice would be one not expiring before 31 December 2012. 402I find that Messrs Nassar and Hyder are not entitled to a shareholding in Nature's Remedies and that their rights on a sale of the goodwill and Intellectual Property attributed to the Painaway Formulas are as provided for under clause 14.2 of the Shareholders Agreement (as it may be properly construed and apply in the circumstances of any ultimate sale). Given that there is no such sale contemplated by the Carrolls at the present, I do not think it appropriate to grant any declaratory relief in that regard. Accordingly, other than in relation to the claim based on oppression (which was not pressed) the Nassar/Hyder Cross-Claim should be dismissed. The balance should be stood over to a date to be fixed. 403I direct the parties to bring in Short Minutes of Order to reflect these reasons and I will hear any submissions as to the form of those orders and as to costs at a time convenient to Counsel. ********** 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. Decision last updated: 25 March 2011