Unique Lifestyle Investments v Robertson [2005] VSC 347
In the Commercial and Equity Division of the Supreme Court of Victoria, Dodds-Streeton J, deciding the case finally on the balance of probabilities after the defendant elected to call no evidence, held that an Investment Agreement, read with a signed document agreeing to its principal terms, was a contract binding at once although fuller documents were to follow, under which the defendant was jointly and severally liable to repay the investment sum on the repayment date [100], [105], [107], [126], [129].
What the court decided
Unique sought an order that Mr Robertson repay $2 million allegedly advanced or lent in 2001 to him or his company [1]. The purchaser of the land was Radomi Pty Ltd, of which Mr Robertson was sole director and shareholder, later renamed and called B&R [21]. Including Mr Facione's $150,000 of 24 April 2001, the investors invested a total of $2 million between May and October 2001 [23].
On 2 July 2001 Mr Robertson executed a document entitled an "Investment Arrangement" [35]. It recorded that the relevant parties agreed to the principal terms of four attached arrangements, including an Investment Agreement, and must execute fuller documents prepared by Unique's solicitors [36].
At the close of the plaintiff's case defence counsel submitted that there was no case to answer and elected to call no evidence, and counsel agreed that their no case submissions would also be their final addresses [80]. Her Honour noted that a finding of a case to answer is not a finding that the plaintiff has established its case on the balance of probabilities [82]. Defence counsel argued that the Investment Agreement was unenforceable, conditional on further documentation, uncertain and unsupported by consideration [86], [87]. He also argued that the evidence did not establish that Unique, rather than the investors, advanced the investment sum [111].
Her Honour stated that the modern approach is generally to uphold commercial bargains by a commercially sensible construction, absent "irremediable obscurity or a like fundamental flaw" [88]. In her Honour's view a reasonable commercial person would regard the term for repayment of the investment sum as a highly important principal term [97]. Her Honour concluded that clause 11.2(b) made Mr Robertson jointly and severally liable with B&R to repay the investment sum on the repayment date [100]. The investment sum was a loan by whatever name called, and his liability to repay it was not precluded by its being advanced to others [102]. The agreement was somewhat "crude and summary" but not unenforceable for uncertainty [105].
Accepting the plaintiff's submission, her Honour held that the Investment Agreement fell within the Masters v Cameron category in which parties reach finality and intend to be immediately bound, while proposing to restate the terms more fully [107]. The contract was not conditional on executing further documentation, although the parties had agreed to that course [107]. Her Honour said it was unnecessary to decide the scope of the indemnity in clause 15.1, but expressed the view that it was not limited to legal costs [110]. Her conclusion nonetheless recorded that the defendant indemnified Unique for losses from claims due to B&R's breach of its obligation to pay [126].
Her Honour accepted the directors' uncontradicted evidence of the advance and payment of the funds [120]. She was satisfied that Unique advanced the $2 million for the purposes specified in the Investment Agreement [127]. The past consideration argument disregarded the fact that a substantial proportion of the investment sum was advanced after execution [123]. Her Honour noted that Callaway JA, dissenting on other grounds in Ipex Software Services Pty Ltd v Hosking, approved Lord Scarman's statement in Pao On v Lau Yiu Long [123], [124]. She held that Callaway JA's analysis applied equally to the amount advanced before execution [125]. The defendant was liable to pay $2 million and the counterclaim should be dismissed [129].
Why it matters
A signed document agreeing to the principal terms of attached agreements can bind at once, even though fuller documents are to follow, where a commercially sensible reading shows the parties had reached finality. Electing to call no evidence left the plaintiff's evidence of the factual matrix and the advance uncontradicted.
The Court of Appeal dismissed the appeal, Neave JA agreeing with both Warren CJ and Habersberger AJA (Robertson v Unique Lifestyle Investments Pty Ltd (2007) VSCA 29). Warren CJ rejected the certainty challenge, placed the agreement in the first category of Masters v Cameron and held the appellant bound by forensic decisions at trial, so unable to reopen the facts (Robertson (2007) VSCA 29). In the principal reasons Habersberger AJA held that all the Investment Agreement's terms were principal terms, upheld the trial judge's narrower approach in the alternative and held the earlier advance supported by forbearance and the promise to advance the balance (Robertson (2007) VSCA 29).
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.