Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2014] QCA 173

SUPREME COURT OF QUEENSLAND CITATION: Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2014] QCA 173 PARTIES: DAWNLITE PTY LTD ACN 010 647 677 (appellant) v RIVERWALK REALTY PTY LTD ACN 006 606 000 (first respondent) ELDSURE PTY LIMITED ACN 071 335 861 (second respondent) SAMEL HOLDINGS PTY LIMITED ACN 114 423 755 (third respondent) INTEGRATED ASSET MANAGEMENT (QUEENSLAND) PTY LTD ACN 117 065 264 (fourth respondent) BROADBEACH RENTAL MANAGEMENT PTY LTD ACN 075 025 900 (fifth respondent) NRGC MERMAID BEACH PTY LTD ACN 122 594 530 (sixth respondent) NRGC COMMERCIAL PTY LTD ACN 122 398 396 (seventh respondent) NRGC REAL ESTATE GROUP PTY LTD ACN 122 593 177 (eighth respondent) TREVOR IAN MILLS (ninth respondent) GLENN DAVID MILLS (tenth respondent) WANTANA PTY LTD ACN 001 653 612 (eleventh respondent) LYNNE ROBYN YALDWYN (twelfth respondent) PHILIP JOHN L NICOLSON (thirteenth respondent) DAVID WILLIAM SOMMERVILLE (fourteenth respondent) ADAM JEREMY GAITER (fifteenth respondent) -- 1 of 25 -- 2 SHAWN ROBERT BISHOP (sixteenth respondent) CHRISTOPHER JAMES HOLT (seventeenth respondent) TOHL PTY LTD ACN 106 015 221 (eighteenth respondent) DAVID MILLS (nineteenth respondent) JARED KARL HODGE (twentieth respondent) KIMBA EQUITY INVESTMENTS PTY LTD ACN 101 847 198 (twenty-first respondent) MATTHEW GERARD STEINHOUR (twenty-second respondent) FILE NO/S: Appeal No 9543 of 2013 SC No 8735 of 2009 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 25 July 2014 DELIVERED AT: Brisbane HEARING DATE: 8 May 2014 JUDGES: Muir and Fraser JJA and Martin J Separate reasons for judgment of each member of the Court, each concurring as to the order made ORDER: The appeal be dismissed with costs. CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE'S FINDINGS OF FACT – FUNCTIONS OF APPELLATE COURT – WHERE FINDINGS BASED ON CREDIBILITY OF WITNESSES – GENERALLY – where the appellant carried on a real estate agency business before selling it to the third respondent – where a shareholder and director of the appellant (Mr Adams) and the ninth respondent (Mr Mills) discussed a proposal to form a company to conduct a group of real estate businesses – where the appellant alleged two agreements were entered into between Mr Mills and Mr Adams – where the appellant alleged that under the first agreement it was entitled to an equity interest in the expanded group of businesses and it would be paid the value of its initial interest or repaid the amount of its contribution no later than 60 days after demand – where the appellant alleged that -- 2 of 25 -- 3 the executive committee of the company orally agreed with Mr Adams that the appellant’s interest in the expanded group would be treated as a loan repayable, with 10 per cent per annum interest paid monthly – whether this Court should interfere with the primary judge’s findings of fact based on her Honour’s findings of credit – whether the primary judge’s findings in relation to the agreements are glaringly improbable, inconsistent with incontrovertible facts or contrary to compelling inferences Australian Energy Ltd v Lennard Oil NL [1986] 2 Qd R 216, cited B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147, cited British Bank for Foreign Trade Ltd v Novinex Ltd [1949] 1 KB 623, considered Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, cited Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243, considered Devries v Australian National Railways Commission (1993) 177 CLR 472; [1993] HCA 78, cited Fox v Percy (2003) 214 CLR 118; [2003] HCA 22, cited Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110, considered Trentham (G Percy) Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25, considered COUNSEL: P W Hackett with A S Katsikalis for the appellant A J H Morris QC, with V G Brennan, for the respondents SOLICITORS: Bernard Ponting & Co for the appellant Clarke Kann for the respondents [1] MUIR JA: Introduction Mr Bruce Adams and his wife, at material times, were the shareholders and directors of the appellant, Dawnlite Pty Ltd. Dawnlite, which was controlled by Mr Adams, carried on a real estate agency business under the name “The Professionals, Palm Beach” for about 16 years until November 2005 when it sold the business to the third respondent. The contract of sale contained a three year restraint of trade provision. The ninth respondent, Trevor Ian Mills, had interests through some of the corporate respondents in four real estate agency businesses: Elders Real Estate, Ballina; Elders Real Estate, Coolangatta/Tweed Heads; Elders Real Estate, Palm Beach (after completion of the sale and purchase of the business) and Elders Real Estate, Broadbeach. For ease of reference, these four businesses will be referred to as the original Elders businesses. [2] The primary judge found that in about September 2006 Mr Adams telephoned Mr Mills with a view to obtaining a relaxation of the restraint of trade imposed under the Palm Beach sale agreement with a view to the acquisition by the appellant of a real estate agency business at West Burleigh. It was not contentious that in about October 2006 Mr Mills picked Mr Adams up from his home and drove him to visit the offices of the Elders real estate businesses at Ballina, Tweed Heads, Broadbeach and Palm Beach. -- 3 of 25 -- 4 [3] The men discussed a proposal under which a company to be formed and named NRGC Real Estate Group would conduct the original Elders businesses and also future acquired businesses. There was discussion of the proposed acquisition of the West Burleigh business. Mr Mills had previously told Mr Adams that the LJ Hooker Mermaid Beach franchise was for sale. The primary judge accepted that the proposed acquisition of the Mermaid Beach business was discussed during the car tour, as was the acquisition of the West Burleigh business. The discussion included a proposal to combine the Mermaid Beach rent roll with the Elders Broadbeach rent roll with a view to its management by Elders Broadbeach.1 [4] Mr Mills caused three companies to be incorporated with Mr Adams and himself as the initial directors. NRGC Commercial Pty Ltd was incorporated on 26 October 2006. The appellant and Mr Mills each held one of the two issued shares. NRGC Real Estate Group Pty Ltd was incorporated on 9 November 2006. Mr Adams and Mr Mills each held one of the two issued redeemable preference shares. NRGC Mermaid Beach Pty Ltd was also incorporated on 9 November 2006. Its shares were held by NRGC Real Estate Group. [5] NRGC Mermaid Beach purchased the LJ Hooker Mermaid Beach business for $200,000 pursuant to a contract dated 18 November 2006. The purchase price was paid by Dawnlite which borrowed the money from a bank. After settlement the rent roll of the business was transferred immediately to the Elders Broadbeach business. [6] The West Burleigh business was purchased for $375,000 by NRGC Commercial pursuant to a contract dated 12 December 2006 negotiated by Mr Adams. That purchase price was also paid by Dawnlite. After completion, the name of the West Burleigh business was changed to Elders Commercial Gold Coast. Mr Adams managed the business and Mr Mills was “called in regularly to monitor progress”.2 The alleged entering into of the first agreement [7] Dawnlite alleged that in two telephone conversations in about late September 2006 between Mr Adams and Mr Mills and in discussion between them in the course of the tour of the Elders real estate agency offices on or about 8 September 2006 an agreement was entered into between Mr Mills and Mr Adams on behalf of Dawnlite. It was alleged in the alternative that Mr Mills had express or implied authority to enter into the agreement (“the first agreement”) on behalf of the proprietors of the original Elders businesses and their respective directors and that those persons and entities were also parties to the agreement.3 [8] The pleaded terms of the first agreement were that, in consideration of Dawnlite paying approximately $650,000 for the acquisition of the new businesses and for the provision of “some working capital”, such businesses would be consolidated with the original Elders businesses to create an expanded business (“the expanded group businesses”); Dawnlite would receive an equity interest in the expanded group business “reflecting the proportion of the total value of the Expanded Group Business represented by the amount of Dawnlite’s contribution” and Dawnlite would be paid the value of Dawnlite’s initial interest or, alternatively, repaid the 1 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [43]. 2 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [75]. 3 It is not expressly pleaded that the first agreement was wholly oral but the only conduct alleged is Mr Mills taking Mr Adams on the tour of inspection. -- 4 of 25 -- 5 amount of Dawnlite’s contribution no later than 60 days after demand by Dawnlite in that regard. The Glades Golf Club meeting on 3 March 2007 and events prior to the alleged entering into of the second agreement [9] The proposed merger of the original Elders businesses and the Mermaid Beach and West Burleigh businesses (the new Elders businesses) under the ownership and/or control of NRGC Real Estate Group was discussed at a meeting on 3 March 2007 at the Glades Golf Club, Robina. Those present at the meeting included Mr Mills, Mr Adams and controlling directors of each of the respondent corporate proprietors of the original Elders businesses. [10] Minutes of a meeting of 5 March 2007 held between Mr Mills, Mr Adams, Mr Glenn Mills (brother of Mr Mills and a director of the companies which had interests in the Ballina, Coolangatta/Tweed Heads and Broadbeach businesses), Ms Yaldwyn (the 12th respondent who had an indirect interest in the Ballina and Coolangatta/Tweed Heads businesses), Mr David Mills (Mr Mills’ son who was involved in, at least, the Coolangatta/Tweed Heads, Palm Beach and Broadbeach businesses) and Mr Bishop (who had an interest in, at least, the Ballina business) stated: “This meeting was to discuss the umbrella company and its layout. Figures were provided by Aaron [an accountant with the accountancy firm used by the original Elders businesses] which were accepted by the group and we are going ahead with the figures as at the 30th June, 2006. Discussion was held re the new Directorship … Directors of the new company will be Ian [Mills], Glenn [Mills], Lynne [Yaldwyn], John [Nicholson], David Mills & Bruce Adams.” [11] On 17 May 2007, Mr Mills wrote to Mr Adams, using an Elders Real Estate, Ballina letterhead, in these terms: “Dear Bruce Re: Purchase of Shares in NRGC Real Estate Group Pty Ltd We write in relation to your Interest in purchasing shares in NRGC Real Estate Group Pty Ltd. Your $700,000 investment has initially be [sic] placed in NRGC Mermaid Beach Pty Ltd and NRGC Commercial Pty Ltd on a loan basis, on which you will be paid Interest at a rate of 9% pa from the dates that the funds were deposited into our companies [sic] bank accounts. These loans will then be converted to equity in NRGC Real Estate Group Pty Ltd on 1 July 2007, using the 30 June 2006 balance sheet valuations already supplied by Emerson Randell Young. If you accept the above proposal please sign where indicated in the presence of a witness.” [12] The letter was signed by Mr Adams on behalf of Dawnlite and returned to Mr Mills. -- 5 of 25 -- 6 [13] Dawnlite alleged that the respondents ratified the 17 May letter and that Mr Mills had the express or implied authority of the respondents to make the offer contained in it. The second agreement [14] It was not alleged that the sending and acceptance of the 17 May letter gave rise to an agreement, at least an agreement upon which Dawnlite relies in the proceedings. It was alleged that a second agreement was entered into at a meeting of the executive committee on 16 July 2008 at which the executive committee orally agreed with Mr Adams on behalf of Dawnlite that Dawnlite’s interest in the expanded group business “be treated as a loan repayable by 30 June 2009 and in the meantime … Dawnlite receive 10% pa interest paid monthly”. [15] The primary judge found, regarding the forming and composition of the executive committee, that it was decided at the Glades meeting that “there should be an Executive Committee comprised of two people from each office to oversee the merger and to run the business until the formal structure was in place”4 and that:5 “The Executive Committee was formed either at or soon after the meeting at The Glades. Its membership varied over time but – (a) from March 2007 it included all the personal defendants apart from Mr Sommerville and Mr Bishop; (b) from March 2007 to January 2009 it included Mr Adams; and (c) from about July 2008, it did not include Mr Steinhour.” [16] The respondents accepted at first instance and on appeal that the executive committee had authority to enter into agreements that were legally binding on the respondents. The primary judge’s rejection of the first and second agreements [17] The primary judge found against the existence of the first and second agreements. She also found that Dawnlite’s estoppel case had not been made out. It is unnecessary to discuss the estoppel case. No oral argument in support of it was advanced at first instance or on appeal. Dawnlite’s written outline of submissions made no reference to it. The primary judge’s findings on credit [18] In the introductory part of her reasons, the primary judge commented that the “outcome of the case depends largely on credibility”.6 She generally preferred the evidence of Mr Mills to that of Mr Adams. She remarked of the latter:7 “Overall I do not think that Mr Adams was deliberately dishonest in his evidence, but I think even his evidence in chief was unreliable in critical respects about the agreements he alleged.” 4 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [83]. 5 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [84]. 6 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [12]. 7 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [182]. -- 6 of 25 -- 7 [19] The primary judge said of Mr Mills and his evidence:8 “He was a shrewd, nimble operator, adept at maintaining control by force of his personality and elder statesman image, and by privately reaching different arrangements with other, smaller and less experienced investors. Mr Mills gave his evidence carefully and in most respects it was consistent with other, objective evidence of what occurred. While I do not accept that he had no memory of some communications that sat awkwardly with his account of what occurred, I generally accept his evidence as truthful and reliable.” [20] The primary judge found in relation to the role of Mr Mills in relation to the original, new and subsequent Elders businesses:9 “Mr Ian Mills was an astute and experienced businessman. He had managed the Ballina business for many years, while his brother Mr Glenn Mills, Mr Nicolson and Ms Yaldwyn concentrated on sales. I am satisfied that he was the driving force behind the establishment or acquisition of the other initial businesses – Coolangatta/Tweed Heads, Palm Beach and Broadbeach, the introduction of new investors and the proposed merger and restructure. He continued to play a dominant role after The Glades meeting. Members of the Executive Committee often made decisions by falling in with what he wanted. Until the downturn in the market following the GFC, the other investors were content to follow his lead.” [21] The primary judge did not accept all of Mr Mills’ evidence. For example, she regarded evidence of Mr Mills concerning his lack of recollection of a letter dated 27 June 2008 from Mr Adams to him as “disingenuous”. Dawnlite’s contentions in support of the alleged 60 day repayment term in the first agreement [22] The thrust of Dawnlite’s argument was that the primary judge’s findings as to the non-existence of the pleaded agreement were so inconsistent with objective fact as to compel the conclusion that the findings were “improbable and contrary to compelling inferences”. Reliance was placed also on the inconsistent versions of the facts given by the respondents. Dawnlite’s case as to the 60 day repayment term included in the first agreement rested essentially on acceptance of the evidence of Mr Adams. I say “essentially” because, in cross-examination, Mr Jensen accepted that at the 16 July 2008 meeting Mr Adams had said that Mr Mills had told him he could ask for his money back on 30 to 60 days notice. [23] Asked if anyone responded to this statement, Mr Jensen replied: “Yes. Hell broke loose. [Two persons present] said, ‘This is not’ – that’s – and that’s – they were shocked, basically.” [24] He also said: “I think at the time Ian [Mills] was pretty shocked as well, in that he actually said that he couldn’t give the $700,000-odd or the $700,000 back immediately …” 8 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [181]. 9 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [181]. -- 7 of 25 -- 8 [25] Mr Jensen had been an employed real estate agent at the Palm Beach agency when Dawnlite was its proprietor. He was still employed there in July 2008 and had been approached by Mr Mills to invest in the proposed consolidated business. He did, in fact, invest $300,000 by means of a bank cheque in favour of Samel Holdings Pty Ltd and had been unsuccessful in recovering his money. The primary judge noted that Mr Jensen was the only witness who gave evidence that Mr Adams mentioned the alleged 30 to 60 day repayment agreement at the meeting on 16 July 2008. Her Honour rejected Mr Jensen’s evidence in this regard, noting his hostility towards Mr Mills and the possibility of his being mistaken as to the occasion on which Mr Adams had made such a statement. [26] Dawnlite submitted that it was highly unlikely Mr Mills did not either “directly or indirectly” make a representation to the effect of the alleged repayment term. The 60 day repayment term - consideration [27] There was no evidence that any similar term had been agreed with any other investor. The alleged term was not mentioned in correspondence between Mr Adams and Mr Mills or between their respective solicitors. Nor was it supported by Mr Adams’ evidence concerning what he said at the 16 July 2008 executive committee meeting or by the evidence of the respondents present at the 16 July meeting who gave evidence. The notion that it was not mentioned in the minutes of the 16 July meeting is inconsistent with the arrangement recorded in the minutes and is objectively improbable. [28] As the respondents’ contended, the alleged term amounted to an unqualified, open ended option which would enable Dawnlite to obtain repayment on short notice regardless of how Dawnlite had conducted the Mermaid Beach and commercial businesses and without reference to the income or losses generated by the businesses. Having obtained repayment, there would be no contractual restriction on Mr Adams or Dawnlite commencing business in opposition to the Mermaid Beach and commercial businesses. [29] Plainly the primary judge’s credibility based findings in relation to the alleged repayment term, are not “glaringly improbable, contrary to compelling inferences” or otherwise so implausible as to warrant interference by an appellate court.10 Dawnlite did not succeed in showing that the primary judge erred in finding against the existence of the first agreement. The first agreement – Dawnlite’s contentions [30] The respondents argued that a failure to overturn the primary judge’s finding in relation to the alleged repayment term was fatal to any claims based on the first agreement. That was because it was only the repayment term that was alleged to have been breached and it was only this breach that was relied on to support Dawnlite’s claim for damages for breach of contract. Dawnlite submitted that, subject to determination of its claims in respect of the second agreement, the appellant would have been entitled to a declaration as to its interest in the Group. [31] The central plank of Dawnlite’s argument in support of the first agreement was that, at times subsequent to the making of the first agreement, the parties conducted 10 See in particular Fox v Percy (2003) 214 CLR 118 at 128. -- 8 of 25 -- 9 themselves as if the alleged first agreement had been made. The relevant conduct was: (a) the documents provided by Mr Mills to Mr Adams, Mr Jensen and another potential investor, Ms Fletcher, concerned an investment in the expanded group; (b) Mr Mills conceded that the instructions he provided to his accountants before Mr Adams caused Dawnlite to make its payments were to the effect that Mr Adams was investing in the expanded group; (c) an email dated 26 October 2006 from Mr Mills to the accountants stated: “Subject: Purchase of LJH Mermaid Beach … Bruce Adams has agreed to fund the purchase of this office – $200K. This will make his contribution $600-$650k in our group. If he decides against the group situation we will run the Commercial Industrial as a separate business, but I doubt that will happen as he is very keen to be part of the group. We have NRGC Commercial Pty Ltd I understand. Should we now set up our new company NRGC Real Estate Group Pty Ltd ?” (d) an email from the accountants to Mr Gaiter, the group financial controller of the original Elders businesses, dated 2 May 2007 stated, inter alia: “Re the Adams investment, there was no valuation as at 31 December 2006. The original instruction was that the % of group allocation would be based on the 30 June 2006 valuations excluding investment assets of RRUT (these have been provided by email previously – let me know if you don’t have a copy). If Ian/Bruce/group want to treat differently we need to determine the exact basis of calculation for his ultimate %. I think it is prudent that this is agreed amongst all.” (e) there was evidence that the new Elders businesses were being operated as part of the proposed group even before the Glades meeting. Immediately upon the settlement of the acquisition of the Mermaid Beach business on 15 December 2006, its rental roll was moved to the Broadbeach office. Upon settlement of the commercial office acquisition, the Coolangatta/Tweed Heads commercial rent roll and Mr Hodge were moved to the new Burleigh office; (f) after Mr Adams requested the return of his investment, the Mermaid Beach rent roll was moved to the Broadbeach office and sold as part of the Broadbeach rent roll and there was no accounting to Dawnlite for any part of the sale proceeds; and -- 9 of 25 -- 10 (g) Macquarie Bank provided a $6,000,000 facility on 27 February 2008 to NRGC Real Estate Group to “consolidate existing debt of the group and to assist with future rent roll acquisitions”. The loan agreement was executed by or on behalf of each of the respondents, as was a deed of guarantee and indemnity dated 3 March 2008 under which the respondents guaranteed payment of the monies advanced under the loan agreement. The guarantee given by Mr Adams was limited to $895,000, the value attributed to his investment in the expanded group business as a percentage of the value of that business. [32] Dawnlite’s argument also relied on the following: (a) a concession by Mr Mills that discussions held with other investors such as Mr Jensen were about investing in the existing real estate agencies; (b) Mr Gaiter said that it was always the understanding from the commencement of his employment that Mr Adams’ investment was in all of the businesses; (c) the 17 May letter; and (d) the evidence of Mr Adams and Mr Jensen. The primary judge’s findings in relation to the first agreement [33] In relation to the question whether the first agreement had been entered into as alleged, the primary judge held:11 “[183] The discussions which resulted in an oral agreement between Mr Adams and Mr Mills in about late September 2006 grew out of Mr Adams’ wish to re-enter the real estate industry and Mr Mills’ desire to expand the group of businesses with which he was associated. From Mr Adams’ perspective, those discussions were about immediate investment in two businesses (the Michael Lowing business and LJ Hooker Mermaid Beach) and, in the longer term, participation as an investor in the merged business. From Mr Mills’ perspective, they were about immediate expansion by the acquisition of two new businesses and longer term development by the merger of the various businesses under an umbrella company. [184] The merger was a mere aspiration, not even at the embryonic stage of development. I am satisfied that Mr Adams knew that the Initial Group Businesses were operated discretely by different entities, and that he knew that while Mr Mills had an (undefined) interest in all of them, they were ‘ultimately owned and controlled’ by different groups of people. I am satisfied that Mr Mills told him that the merger was dependent on the agreement of all the ‘shareholders’ and that it ‘wasn’t a certainty’ that it would occur. In other words, the merger was no more than a proposal which was dependent on the agreement of the entities which owned and operated the four businesses and, realistically, of those who stood behind those entities. … 11 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [183]–[184] and [189]. -- 10 of 25 -- 11 [189] The parties’ subsequent conduct was largely consistent with the agreement between Mr Mills and Mr Adams being in the limited terms I have found. The three companies were formed. The LJ Hooker Mermaid Beach business was acquired by one of the companies with funds provided by the [appellant], and the Michael Lowing business was acquired by another of the companies with funds provided by the [appellant]. It was not until the meeting at The Glades on 3 March 2007 that representatives of the Initial Group Businesses and Mr Adams on behalf of the two new businesses agreed in principle to merge the businesses.” The first agreement - consideration [34] Dawnlite criticised the primary judge’s description of the merger proposal as “a mere aspiration”. It was submitted that although the original Elders businesses were owned by separate companies with separate shareholding arrangements, that situation could not continue in circumstances in which Mr Mills was introducing investors such as Dawnlite. To do that a new “parent company” would be necessary so that shares in it could be issued and equities established. It was submitted that once “Mr Adams was on board, Mr Mills promptly wrote to his accountant and organised the setting up of the necessary corporate structure”. From then on all that was required was simply the “formal touches” and those were provided at the Glades meeting. [35] It is clear that the discussions between Mr Mills and Mr Adams in September 2006 contemplated that Dawnlite would acquire shares in a company to be formed that would acquire, by means unspecified, the original real estate businesses. The criticism of the primary judge’s “mere aspiration” description has some validity. Nevertheless, at the time of the discussions alleged to have given rise to the first agreement, the holding company of the proposed group had not been incorporated and, as the primary judge found, the agreement of all interested parties had not been obtained. [36] Dawnlite placed emphasis on the principle that the existence of an agreement may be inferred from the subsequent conduct of the parties.12 Moreover, the fact that there has been performance of a transaction by both sides tends to be regarded as strong evidence of the existence of an intention to enter into legal relations.13 [37] The following passage from the reasons of McHugh JA in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd discusses the way in which the existence of a contract may be identified despite difficulties in identifying an “offer” and an “acceptance of the offer”:14 “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 12 Brogden v Metropolitan Railway Co (1877) 2 App Cas 666; Australian Energy Ltd v Lennard Oil NL [1986] 2 Qd R 216; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147. 13 British Bank for Foreign Trade Ltd v Novinex Ltd [1949] 1 KB 623 at 630; Trentham (G Percy) Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25 at 27. 14 (1988) 5 BPR 11,110 at 11,117–11,118. -- 11 of 25 -- 12 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.” [38] On the pleadings, the first agreement was allegedly constituted by words spoken in the discussions on the tour of the offices of the original Elders businesses and in two telephone conversations in late September 2006. In those circumstances, subsequent conduct, which is part of an evolving state of affairs which necessarily involves other persons and entities, and requires their consent before they can be contractually bound, can provide only limited assistance in determining whether a binding agreement was reached in the course of the three conversations. I acknowledge the alternative allegation that the first agreement was between Mr Mills and Dawnlite. [39] The transferring of the rent rolls of the Mermaid Beach and West Burleigh businesses could be regarded as acts done in performance of the alleged agreement. Such acts, however, are also explicable as conduct of parties which were sanguine about the prospects of an agreement being arrived at and implemented. It is not uncommon for parties to contractual negotiations to perform acts contemplated by the proposed agreement in anticipation of it being entered into. [40] There is little evidence, however, which suggests that, viewed objectively, Mr Mills was acting on his own behalf in his dealings with Mr Adams. As the primary judge held, Mr Adams was aware throughout that other persons and entities held interests in the original Elders businesses. [41] The fact that the persons capable of binding the proposed participants in the restructured business met on 3 March 2007 and reached a consensus, at least in principle, as to the transferring of assets of participating companies to NRGC Real Estate Group and concerning the consequent shareholdings in that company assists Dawnlite’s argument but is not conclusive. The evidence does not establish that, prior to the meeting, the participants had been afforded the opportunity of perusing, let alone approving, the balance sheet valuations of the participating companies and adjustments to be made “to remove inter-entity investments”. That makes it less likely that those present on 3 March intended to enter into any legally binding agreement. [42] The emails of 26 October 2006 and 2 May 2007 suggest that, at the times they were sent, the terms of the proposed arrangements were still being worked out. The fact that a written proposal was made by Mr Mills to Mr Adams in an email of 17 May 2007 and accepted by Mr Adams also supports the primary judge’s findings. The document assumes the absence of agreement about its subject matter. -- 12 of 25 -- 13 [43] Significantly, the primary judge also found:15 “Mr Adams knew that the four businesses were run independently of one another. He knew that they were owned by different companies on behalf of trusts, and that through those companies and trusts Mr Mills had an interest in each. Mr Mills told him that the plan was to create a company to be called NRGC Real Estate Group, and that the existing businesses, together with future acquisitions, would be carried on under its umbrella. Mr Adams acknowledged in cross- examination that he knew that the merger was dependent on the agreement of all the shareholders, and that ‘it wasn’t a certainty’ that the companies or trusts would be rolled into one company. Although he said a little later that it was his understanding that Mr Mills already had the agreement of all the shareholders, when he was asked what Mr Mills actually said in that regard, he could not do so, but instead responded in terms of an ‘indication…that the plan for the group was to create this parent company’.” [44] These findings, which were not shown to be unsustainable, are plainly inconsistent with the existence of the alleged first agreement. [45] The primary judge’s findings were not “inconsistent with facts incontrovertibly established by the evidence”. The findings, however, were consistent with the evidence of Mr Mills. Dawnlite has not succeeded in showing that the primary judge’s findings as to the existence of the oral agreement fell within the principles articulated in Fox or Devries v Australian National Railways Commission16 in relation to the circumstances entitling an appellant court to interfere with a primary judge’s findings of fact based on findings of credit. Was the first agreement ratified at the meeting at the Glades? [46] In view of the foregoing conclusion, ratification of the first agreement is no longer an issue. I note, however, that Dawnlite’s arguments faced difficulties. [47] The primary judge found in relation to the Glades meeting:17 “… as counsel for the [respondents] submitted, the only decisions made at that meeting were that, in principle, the merger should proceed, and that an Executive Committee be formed to oversee the merger and to run the businesses in the meantime. No-one expressly ratified the First Agreement in the terms alleged by the [appellant] (whether on his own behalf or on behalf of one or more of the Original Group Companies). Ratification of an agreement in those terms could not be inferred from the decisions actually made.” [48] No doubt was cast by Dawnlite’s submissions on the correctness of these observations by the primary judge. It is unlikely that the alleged first agreement could have been ratified at the Glades meeting without reference having been made to it or to evidence that its terms had been identified and considered. Mr Mills, who 15 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [36]. 16 (1993) 177 CLR 472 at 479. 17 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [86]. -- 13 of 25 -- 14 the primary judge found acted on behalf of the first to fifth respondents, had knowledge of the terms of the first agreement, had it existed. However, the evidence does not suggest that the business at the Glades meeting consisted of anything other than the consideration by those present of a proposal to merge the initial group businesses and the Mermaid Beach and commercial businesses by the mechanism discussed earlier. The second agreement [49] Dawnlite alleged a “redemption decision” and a “second agreement” as follows: “63. The [27] June 2008 letter [from Mr Adams to Mr Mills] comprised notice of Dawnlite’s requirement that: (a) the Dawnlite Contribution be repaid in accordance with the First Agreement and/or in the alternative, the Representations; or, in the alternative (b) Dawnlite’s interest, (expressed, consistently with the Common Assumptions of Fact, as an interest in NRGC Real Estate Group), as at 27 June 2008 (Dawnlite’s interest in NRGC Real Estate Group) be redeemed and the value of that interest paid out to Dawnlite. 64. Further, in or about July 2008, Mr Adams resigned as a director of NRGC Mermaid Beach, NRGC Commercial and NRGC Real Estate Group (the NRGC Companies), leaving Mr Mills as the controlling mind and will of those companies (along with Mr Hodge in respect of NRGC Commercial until about February 2009). … On 16 July 2008, the Executive Committee: (a) in response to the June 2008 letter, orally decided at its meeting on that date that Dawnlite’s Contribution, Dawnlite’s interest in NRGC Real Estate Group and Dawnlite’s interest in the Expanded Group Business fixed in the sum of $700,000.00 (Dawnlite’s Interest in the Expanded Group Business) be treated as a loan repayable by 30 June 2009 and in the meantime that Dawnlite receive 10% pa interest paid monthly (the Redemption Decision); Particulars The Redemption Decision was in part subsequently reflected in the following documents: (i) minutes of the Executive Committee meetings on 16 July 2008, 3 September 2008 and 21 October 2008, and (ii) email by Mr Mills to various recipients dated 25 September 2008 and entitled shareholders update. (b) orally agreed with Mr Adams on behalf of Dawnlite that Dawnlite’s Interest in the Expanded Group Business be treated as a loan -- 14 of 25 -- 15 repayable by 30 June 2009 and in the meantime that Dawnlite receive 10% pa interest paid monthly (the Second Agreement) by: (i) Mr Mills speaking the words in the presence of the entire Executive Committee which in effect: (A) communicated (on behalf of the Executive Committee), the substance of the Redemption Decision to Mr Adams (being a decision which as a matter of law Mr Adams was not obliged to accept), and (B) enquired of Mr Adams whether he/Dawnlite was prepared to accept the same in respect of Dawnlite’s Interest in the Expanded Group Business; (ii) Mr Adams speaking words at the Executive Committee meeting on 16 July 2008 responding to the enquiry in paragraph (i)(B) above indicating his acceptance of the Redemption Decision. Particulars (1) The [appellant] cannot now recall the words communicating the Redemption Decision and offer but what was said were words to the effect that: The Executive Committee had resolved that Dawnlite’s interest in the Expanded Group Business be fixed in the sum of $700,000.00 and be treated as a loan repayable by 30 June 2009 and in the meantime Dawnlite will received 10% pa interest paid monthly, together with words enquiring whether he (Mr Adams) was prepared to accept that on behalf of [Dawnlite]; …” [50] Dawnlite thus alleged that the second agreement was made orally by Mr Mills, in the presence of and with the acquiescence of the executive committee, communicating the substance of the redemption decision to Mr Adams, enquiring whether Dawnlite was prepared to accept it and by Mr Adams’ oral acceptance.18 [51] The respondents denied the making of the redemption decision and the second agreement and denied that Mr Mills and Mr Adams communicated orally as alleged. [52] Events relevant to this issue unfolded as follows. Mr Adams wrote to Mr Mills in his capacity as managing director of the NRGC Real Estate Group on 27 June 2008 advising that he wished to relinquish his holding of 700,000 shares in NRGC Real Estate Group as soon as possible. There were communications about the possibility that Mr Adams and Mr Hodge might acquire NRGC Commercial. On 8 July 2008, Mr Mills emailed Mr Adams as follows: “In light of you not wanting to remain in real estate long term and the complications of the mortgage over the commercial rent roll, I was thinking of a scenario that may be attractive to you and assuming Jared [Hodge] would be happy with the proposal. We guarantee you a draw at 10% each month on the basis that you stay on as a sales/leasing consultant whilst ever you desire. 18 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [135]. -- 15 of 25 -- 16 Your shares would be frozen in value and you would not receive any other dividend and they would be the first sold to any new or existing shareholder, but we would undertake to fully redeem your shares within 2 years. Jared [Hodge] would become sales manager of the business and I would expect that he would increase his shareholding over the next 2 years. In broad terms, this what (sic) I propose… subject to Director’s approval. Let me know your thoughts.” (emphasis added) [53] Mr Adams responded to the above email, on a date unspecified in the evidence, as follows: “Broadly speaking I would agree to those terms, we would just need to clarify a couple of areas: 1) I would envisage there be no time restriction on my employment arrangements. 2) In order for Jared to build a strong and successful team, I can work from home, making the odd sale or lease as my old clients require, or assisting Melinda as property manager when required or Emily who has the desire to be involved in Sales when the time is right. 3) I would agree to the shares being frozen in value, neither up or down as at to days (sic) date or similar time. 4) I would also like the time frame for full redemption to be twelve (12) months in stead (sic) of two (2) years” [54] The minutes of the executive committee meeting held on 16 July 2008 included: “4. Commercial office remaining NRGC or going it alone … Notes from the meeting … 4. Commercial office a. Bruce [Adams] is looking to be bought out of the business completely within 12 months, with view to be out of it earlier if possible b. Bruce’s money in the business is viewed as a loan only, with 10% variable paid monthly c. Jared [Hodge] to run the office, with salary package of $80k inc car allowance as of 1st August” -- 16 of 25 -- 17 [55] Mr Adams gave evidence-in-chief to the effect that Mr Mills raised at the 16 July 2008 meeting the issue of Mr Adams wishing to be bought out of the group. He said that he did not recall anyone at the meeting saying anything in response to the mentioning of that matter by Mr Mills. The following exchange then occurred: “Did Mr Mills elaborate on your wish to retire or be bought out of the group?-- Yes, he did. Could you tell her Honour what he said?-- He said that an arrangement would be made whereby I would receive my funds back in full by the 30th of June 2009 and in the interim that I would receive 10 per cent interest paid on a monthly basis on the capital. Did you or anyone else respond to that statement?-- I said I would be happy with that. And did anyone else say anything else on that topic at that meeting?- - No-one - no-one else - no.” [56] In cross-examination, Mr Adams gave evidence to the effect that Mr Mills said at the meeting that Mr Adams would be paid out by 30 June 2009. [57] Referring to this evidence, the primary judge said:19 “Later in cross-examination Mr Adams was taken to paragraphs 65 and 67 of the original statement of claim, which was filed on 11 August 2009, and further and better particulars of it dated 14 December 2009. He agreed that these accorded with his instructions to his solicitor Mr Ponting. Immediately preceding paragraphs referred to Mr Adams’ letter to Mr Mills of 27 June 2008. Paragraphs 65 and 67 were in these terms – ‘65. In response to that letter, the Executive Committee decided, on behalf of NRGC Real Estate Group, that: (a) Dawnlite’s interest in NRGC Real Estate Group be redeemed or acquired within 12 months after 16 July 2008 or earlier for the amount of $700,000; (b) Dawnlite’s interest in NRGC Real Estate Group would be treated as a loan in the meantime and receive 10% interest paid monthly (the Redemption Decision). Particulars The decision is to be inferred from decisions made at the Executive Committee meetings on 16 July 2008, 3 September 2008 and 21 October 2008. 19 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [141]. -- 17 of 25 -- 18 ……………… 67. The Redemption Decision was communicated to Mr Adams, and his acceptance of the Redemption Decision was communicated to the Executive Committee, by (a) his presence at each of the meetings pleaded in paragraph 64[sic]; and (b) his concurrence while attending those meetings in each of the decisions comprising the Redemption Decision.’ Defence counsel had him acknowledge that it was not alleged in those paragraphs – (a) that Dawnlite’s interest in NRGC Real Estate Group and its interest in the Expanded Group Business was to be fixed in the sum of $700,000; or (b) that the loan was repayable by 30 June 2009. The further and better particulars contained the following about the meeting on 16 July 2008 – ‘A. There was a meeting of the Executive Committee on or about 16 July 2008; B. The attendees at that meeting included at least by Mr Mills, Mr David Mills, Ms Yaldwyn, Mr Glenn Mills, Mr Nicholson, Mr Holt, Mr Ryan Gaiter, Mr Hodge and Mr Jensen; C. At that meeting words to the following effect were used: Bruce is looking to be bought out of the business completely within 12 months, with a view to be out earlier if possible; D. Thereafter, Mr Mills said words to the effect of: Bruce’s money in the business is viewed as a loan only, with 10% variable paid monthly. E. Mr Adams said words to the effect of: I’m happy with that. F. The agreement of the other Executive Committee members was manifest by the lack of any objection to the content of that discussion.’” [58] The reasons then discuss other oral evidence in relation to the 16 July meeting. Mr Jensen’s evidence and some of the evidence of Mr Mills in that regard have been -- 18 of 25 -- 19 touched on above. The reasons contain a passage from Mr Mills’ evidence-in-chief to the effect that those present, apart from Mr Adams, “were all taken a little bit by surprise” by Mr Adams’ statement that he wanted to be paid out as soon as possible.20 The reasons then state:21 “[147] Mr Hodge recalled leaving the meeting with an understanding that Mr Adams’ investment would be treated as a loan. He said paragraphs 4(a), (b) and (c) of the minutes recorded the substance of what was said. He did not recall a vote being taken; rather there was an agreement in principle that it be treated as a loan, and that they would endeavour to work out a restructure to allow this to occur. [148] I accept that the others present at the meeting (Mr David Mills, Mr Glenn Mills, Mr Holt, Mr Nicolson, Ms Yaldwyn and Mr Ryan Gaiter) were all shocked by Mr Adams’ wanting his money back, and that there was heated and lengthy discussion about how this might be achieved. They all received the minutes in due course, and none of them took issue with paragraph 4, whether by email or at any subsequent meeting. At trial they all seemed to accept that paragraph 4(a) was correct. But none of them accepted that an agreement in terms of paragraph 4(b) of the minutes was reached at that meeting, and none of them gave evidence that the date 30 June 2009 was expressly mentioned at the meeting. … [150] Importantly, none of those witnesses gave evidence of an agreement being made at that meeting – (a) that Dawnlite’s interest in NRGC Real Estate Group and its interest in the Expanded Group Business was to be fixed in the sum of $700,000; or (b) that the loan was repayable by 30 June 2009.” [59] The primary judge’s findings in paragraph [148] of her reasons were supported by the evidence of respondents. Much of the evidence in this regard, although inadmissible opinion evidence, was given without objection and the primary judge was thus entitled to have regard to it. [60] Mr David Mills recalled Mr Adams saying at the 16 July meeting, “I want my money back” and Mr Mills responding, “Yeah, I’d love my money back too, we all would, but we’ve made an agreement”. He said “the mood in the room was very much of shock, obviously”. [61] In cross-examination, he was asked, “And I have gathered from your evidence in chief that you say no agreement of any sort was reached at that meeting; is that right?” He replied, “That’s correct”. He also denied that there was ever an agreement reached with Mr Adams for repayment of Dawnlite’s investment. 20 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [144]. 21 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [147]–[150]. -- 19 of 25 -- 20 [62] Mr Nicholson professed the following recollections that at the 16 July meeting Mr Adams, who was sitting “directly across” from him at the table, lent back in his chair and said words to the effect, “I want out. I don’t want to be part of this anymore”. There was a stunned silence to start with. Mr Glenn Mills said, “We’d all like our money back but we’ve invested in this”. There was discussion as to how money could be raised to acquire “Mr Adams’ shareholding and that would have been about selling assets”. No vote was taken at the meeting. In cross-examination, asked when Mr Adams ceased to be a shareholder, he responded, “In my opinion he never ceased to be a shareholder”. [63] Mr Glenn Mills professed a vivid recollection of Mr Adams saying at the 16 July meeting, “I want my money back” and of his responding, “So do I”. He gave further details of the discussion at the meeting between himself and Mr Adams. He said that those present at the meeting tried to work through a process of finding ways in which they could “separate the businesses for [Mr Adams] to take his share of the NRGC Commercial business” but no conclusion in that regard was reached. [64] In cross-examination, asked if any agreement was reached at the meeting concerning Mr Adams’ request for his money back, he said, “No, there was not”. He denied that agreement in that regard was reached at any other time. [65] Mr Holt, who had interest in the entity that conducted the Ballina and Coolangatta/Tweed Heads offices and was Mr Mills’ son in law, recalled a shocked response to Mr Adams’s statement at the 16 July meeting that “he wanted to get out”. He said there was discussion about how Mr Adams could be bought out. He did not accept that discussion about Mr Adams ceasing to be a shareholder occurred at the 16 July meeting. He professed a belief that Mr Adams is still a shareholder. He conceded that there was some agreement made with Mr Adams at some stage for him to receive interest at the rate of 10 per cent per annum on $700,000. [66] Ms Yaldwyn recalled the meeting on 16 July 2007 being “heated”. She said, “… we all said we’d all love our money back if we could”. She recalled that the discussion did not result in a decision at the meeting. She said: “We had no funds, and we did agree to pay him interest on the money that he had borrowed, which was disadvantageous to the rest of the shareholders, but [Mr Adams] was a bit of a bully at meetings and it was basically to keep him quiet.” [67] Ms Yaldwyn’s recollection was that an agreement to pay Mr Adams such interest was reached some time after 16 July 2007. She thought that Mr Adams had ceased to be a shareholder at some stage. [68] Asked in cross-examination when Mr Adams’ shareholding converted to a loan, she replied, “It was never converted to a loan”. Shown Mr Mills’ email of 25 September containing the statement about an arrangement “to convert [Mr Adams’] shareholding to a loan and … payout by 30th June 09”, she denied that any such arrangement was ever reached. She said that she did not recall seeing the email and that “… we never agreed to pay out on a certain date, or a certain time, or a certain amount”. [69] Mr Hodge was managing the Elders Real Estate commercial rent roll at relevant times. He recalled that at the meeting on 16 July Mr Adams made it clear “he -- 20 of 25 -- 21 wanted his money back and wanted to be out of the group”. He recalled Mr Mills “advising” and he “thought it was agreed that it was going to be in principle a loan and we would endeavour to work out to restructure or get his money back”. He did not believe that a vote was taken at the meeting. He accepted that the substance of what was said at the meeting was recorded in the minutes. After 16 July, he discussed with Mr Mills and Mr Adams a proposed acquisition by himself of the commercial business as part of “an exit strategy for everyone”. [70] In cross-examination he accepted that the arrangement described in Mr Mills’ email of 25 September 2008 was reached at the 16 July meeting. In re-examination, asked if “30 June 2009” was mentioned at the 16 July meeting, he responded, “I honestly don’t know”. [71] Mr Gaiter was the employed accountant of the Elders Group of businesses. He invested $75,000 in the businesses in May 2008. He denied that Mr Mills had the final say on decisions made at meetings of the executive committee. He said that it was always his understanding that Mr Adams had “invested in the entire group”. [72] Mr Gaiter recalled that, in response to Mr Adams saying at the 16 July meeting that he did not want to go ahead with the merger and would like his money back, Mr Glenn Mills said something like “Yeah, we all would, mate, but we know the business hasn’t got the cash to pay us out”. He recalled general discussion on how an investor could be paid back if he wanted his money back having regard to the lack of funds to make any such payment. He did not recall any discussion about a loan at the meeting. [73] Mr Adams resigned as a director of NRGC Commercial Pty Ltd on 18 July 2008. The primary judge rejected Mr Adams’ evidence that Mr Mills had suggested he do so at the meeting on 16 July 2008. Mr Adams resigned as director of NRGC Real Estate Group Pty Ltd and of NRGC Mermaid Beach Pty Ltd on 31 July 2008 but continued to attend and participate in executive committee meetings until December 2008.22 [74] Agenda items for the executive committee on 3 September 2008 included: “Does Bruce remain a director if he is no longer a shareholder? … 1. Previous meetings minutes read a. Bruce: interest repayments not getting met; wants paid by 4th of each month b. Business money within 90 days: wants it in 90 days c. Mark Jensen: wants money back out of the business. Stay on as employee of the company. d. Sandy money back out of business. e. With sales of Broadbeach and Mermaid, possible net result would be $1.0m cash to fund this.” 22 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [152]–[153]. -- 21 of 25 -- 22 [75] An email from Mr Mills dated 25 September 2008 to Mr Adams and other investors, stated inter alia: “We have come to an arrangement to convert Bruce’s shareholding to a loan and will payout by 30th June 09 and we cannot guarantee anyone’s funds back on demand, but will do our best restore income and return funds asap……pending the Broadbeach sale.” [76] On 30 September 2008, Mr Adams, in an email to his solicitors, requested that they draw up an agreement “whereby [his] investment of $700,000.00 in the company N.R.G.C. Real Estate Group of which [he is] a director is treated as a Loan”. The email provided, “This loan is to be repaid to me in full no later than the 1st of March 2009. In the interim I am to be paid by the company and (sic) interest rate of 10% per calendar month…”. [77] A document headed “Agenda & minutes from meeting 21/10/08” included: “8. Shareholder Loan As I understand it is only Bruce, Sandy & Graeme? that have requested to sell their shares ...... converted to loans. How do we fund without the sale of BB rent roll? – Order of people to pay out in the business? – First and foremost: loans to existing shareholders = $208,000 ○ 1. Sandy $150,000 ○ 2. Graeme $300,000 ○ 3. Mark $300,000 ○ 4. Bruce $700,000 TOTAL $1.45m” [78] The primary judge observed23 that Mr Adams said in cross-examination that he agreed to Ms Sandy Fletcher and Mr Graeme Roberts being paid out ahead of him and Mr Jensen. [79] The appellant received four interest payments of $5,833.33 each between 11 August 2008 and 29 December 2008. [80] On 13 January 2009, Mr Adams sent Mr Mills the following email: “As discussed and agreed on several occasions in the past, the amount of $700,000 invested by me with N.R.G.C. Real Estate Group, is to be treated as a loan only, and is never to be converted to shares in the company or N.R.G.C. Real Estate Group.” [81] Mr Mills responded to the 13 January email (and to another on 19 January) on 19 January as follows: 23 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [169]. -- 22 of 25 -- 23 “In regard to your recent email re your investment in NRGC, as you are aware your investment is shares in a company (NRGC Commercial & NRGC Real Estate Group), and further, we have been using our best endeavours to provide a return on your shareholding so much so that you were assure[d] a priority and preferential return as against all other shareholders – just to keep you happy. I have been further assessing the real cost of the Commercial Office. Apart from the list previously provided ($805k) there are also liabilities to the ATO and OSR for approximately $40k, plus, the operating loss from last year (2008) (whilst you drew $138k in salary, wages and commissions for the year $38k of which was unauthorized ) and $30k operating loss in 2007. This would make the total economic cost well over $900k. Are you willing to make a fairer offer in regard to taking over the Commercial office? You only need to buy my share and there is no stamp duty implications (as far as I am aware). … I have the support of all directors and shareholders (except I have not spoken to Sandy as yet) and for the sake of all concerned we would all like to move forward as soon as commercially possible.” [82] In support of the argument that the primary judge’s findings were inconsistent with incontrovertible facts, glaringly improbable or contrary to compelling inferences, Dawnlite relied particularly on the following matters:  The evidence given by the respondents was unsatisfactory; varying from evidence-in-chief to cross-examination and departing from the respondents’ counsel’s opening; none of the respondents’ witnesses were able to offer any plausible explanation for Mr Mills’ statement in his email, “We have come to an arrangement to convert Bruce’s shareholding to a loan and will payout by 30th June 09”. That, in substance, accords with the second agreement and the redemption decision.  The 19th respondent, Mr David Mills, gave evidence-in-chief of his understanding that the documents presented to him at the Glades meeting showed his percentage ownership of the NRGC Group.  Other evidence of the 19th respondent was either not considered or not given proper weight, namely: his evidence that Mr Mills would make “the final call” in respect of decisions being made by the Group; his evidence that he had negotiations to acquire shares in the NRGC Group with Mr Mills and that he subsequently acquired such shares; his evidence that it was agreed that the arrangement reached at the meeting was “to convert Bruce’s shareholding to a loan and … payout by 30th June 09”. [83] Dawnlite further argued as follows. In view of the foregoing and the whole of the evidence on the trial, Mr Mills’ evidence should not have been accepted in any material respect where it conflicted with that of Mr Adams. Although the primary -- 23 of 25 -- 24 judge rejected Mr Adams’ evidence that Mr Mills said at the meeting on 16 July that an arrangement would be made whereby Mr Adams would receive his funds back by 30 June 2009 and be paid monthly interest at 10 per cent per annum in the interim period, the documentary and oral evidence shows such an arrangement. The finding that Mr Mills said words to the effect that the appellant’s “$700,000 investment should be treated as a loan and that interest should be paid monthly at the rate 10% pa, but that no vote was taken and no binding agreement was reached” was inconsistent with the documentary and oral evidence. [84] The finding that the interest had been paid to the appellant from “whichever companies in the Group had funds available” can only be consistent with the finding that the appellant had invested in the Group. Consideration of second agreement [85] The respondents present at the meeting, other than Mr Mills, Mr Adams and Mr Jensen, gave evidence of being taken by surprise and shocked at the revelation that Mr Adams wanted out. It is probable that vigorous, if not heated, debate followed the disclosure. It is also probable that those participating in the debate were acutely conscious of the difficulty, if not impossibility, of funding the acquisition of the interest held by Dawnlite in the NRGC Group. It is thus not particularly likely that the respondents expressly or implicitly committed to an acquisition of Dawnlite’s interests within a particular period at the meeting. Mr Adams’ himself swore that “an arrangement would be made” concerning the repayment of his “funds … by the 30th of June 2009”. [86] Paragraphs C and D of the further and better particulars of the second agreement set out in paragraph [57] above do not support the existence of an agreement that Dawnlite be paid within 12 months. The particulars substantially mirror paragraphs 4(a) and (b) of the minutes of the meeting of 16 July. [87] The appellants have not shown that the primary judge erred in finding Mr Adams’ evidence generally unreliable and in generally preferring the evidence of Mr Mills. Also, the particulars originally provided by Dawnlite in support of its allegations concerning the second meeting did not support the existence of a term fixing the value of Dawnlite’s interest in the group or a pay out date.24 Accordingly, the evidence of Mr Adams about the events surrounding the alleged second agreement, where it is inconsistent with the primary judge’s findings, is of little assistance to the appellant. The evidence of Mr Jensen in this regard is also of little benefit to the appellants for the reasons already discussed. [88] Mr Mills’ email of 8 July shows, not surprisingly, that he considered that any agreement by which Mr Adams would extract himself and Dawnlite from the NRGC Real Estate Group would require “investors’ approval”. The evidence of those present at the 16 July meeting, discussed above, leaves open a finding that no agreement as alleged by Dawnlite was concluded at that meeting. So too does the “notes from the meeting” contained in the agenda prepared by Mr David Mills for an executive committee meeting to be held on 21 August 2008. Paragraph 4a of the notes, on which Dawnlite placed much reliance is more consistent with there having been a discussion about the buying out of Mr Adams and Dawnlite than with the existence of a legally binding commitment or even an arrangement. 24 Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [141]. -- 24 of 25 -- 25 [89] The wording of Paragraph 4c also has a flavour of an executive decision made as a result of business exigencies rather than a term of an agreement or arrangement. [90] Taken in context paragraph b, (“Bruce’s money in the business is viewed as a loan only, with 10 percent variable paid monthly”) although capable of supporting the existence of an agreement such as that alleged, is also capable of being regarded as an arrangement arrived at with a view to satisfying some of Mr Adams’ demands whilst the directors investigated ways of solving the financial and other problems which would arise from the acquisition of whatever interests in the Group were held by Mr Adams and Dawnlite. These conclusions are consistent with the evidence of some of the respondent directors. [91] The first document to mention the alleged repayment date of 30 June 2009 was the email of 25 September 2008 from Mr Mills. It referred to coming to “an arrangement to convert Bruce’s shareholding to a loan”. It did not link the “arrangement” with the 16 July meeting. [92] The matters just discussed support the primary judge’s finding that Dawnlite failed to prove the second agreement in the terms alleged and that Dawnlite’s contractual claim should be dismissed. As with the first agreement, the primary judge’s findings cannot be said to be “glaringly improbable,” “inconsistent with incontrovertible facts” or “contrary to compelling inferences.” [93] It is possible that a legally binding agreement in relation to Dawnlite’s exit from the Group or in respect of the payment to Dawnlite of a capital sum and interest was entered into between Dawnlite and various respondents at some stage, either by conduct or otherwise. However, the pleaded case and the way in which the appellant’s case was confined at first instance made it inappropriate to explore such a possibility. Conclusion [94] The grounds of appeal have not been made out. I would order that the appeal be dismissed with costs. [95] FRASER JA: I have had the advantage of reading the reasons for judgment of Muir JA. I agree with those reasons and with the order proposed by his Honour. [96] MARTIN J: I agree with Muir JA. -- 25 of 25 --