Contracts – general principles of contract – contract formation – whether the signed minutes of a meeting was an enforceable agreement – whether inferences drawn by the trial judge from the primary facts were open on the evidence
This case turns on its own facts. It is an example of the application of basic principles of contract formation. It also discusses when an appeal court may substitute its own inferences drawn from the primary facts for those drawn by the trial judge.
Pasado Pty Ltd (appellant) is the corporate entity of Mr Elms. Totally Raw Pty Ltd (first respondent) is the corporate entity of Mr Ramsey, and the second respondent is the corporate entity of Mr Rafter. These three men combined their businesses to form one company, Stratogen Holdings Pty Ltd (Holdings). Elms, Ramsey and Rafter were the only shareholders in Holdings.
In 2007, Elms raised the possibility of his retirement from Holdings. Elms, Ramsey and Rafter had ongoing discussions about arrangements for Elms's retirement. In May 2008, Ramsey and Rafter called a meeting with Elms, without notice, pushing for resolution of a number of issues. These issues were discussed and resolved at the meeting, and a document setting out the minutes of the meeting was signed by the parties (Minutes).
Elms later regretted signing the Minutes and engaged a solicitor who wrote to Ramsey and Rafter saying the Minutes did not constitute a binding agreement because Elms had signed them under duress.
At trial, Elms argued the Minutes failed to deal with two key issues which he had previously raised for discussion. He argued the Minutes were therefore incomplete and uncertain because there were terms which were yet to be agreed between the parties.
The trial judge drew inferences from the primary facts and held that, while those issues may have been important to Elms, he had shown at the time of signing the Minutes that he was content to leave them to be decided later. The trial judge found the parties intended to enter a binding agreement.
On appeal, the key issue was whether the inferences drawn by the trial judge were open on the evidence.
The appeal was dismissed. Boddice J, with whom Holmes JA and Gotterson JA agreed, stated that an appellate court will only substitute its own inferences for those drawn by the trial judge where the primary judge fails to consider, or gives undue or too little weight to an issue, or where an opposite inference is so preponderant.
Boddice J agreed that Elms, Ramsey and Rafter, who were all experienced, qualified accountants, intended for the Minutes to be a binding agreement. The Minutes were not uncertain or incomplete because they did not deal with two issues which had previously been raised by Elms. Elms had not raised these issues as essential terms. The Minutes dealt with a large number of issues and appeared to be a concluded agreement, signed by all parties.