Case: Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353
Outcome: discussed
WRVM contends that the Heads of Agreement is not enforceable as a contract for want of intention to create legal relations. WRVM contends that it is a document by which the parties have done no more than record a stage in their negotiations with no intention to be bound by it: Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353 at 360-361. Alternatively, WRVM contends that if the document is not wanting for intention, it is insufficiently certain in its terms to be enforceable as a contract. In support of the latter submission, WRVM identified a number of respects in which it submitted the document was insufficiently certain in its terms. WRVM's primary complaint was that there was no indication as to who were the parties to the joint venture. 25 For the sake of completeness, it is appropriate to record at this stage that WRVM contends that even if the Heads of Agreement is enforceable as a contract: (1) it was replaced by two later agreements a Development Agreement (see [43] below) and a Second Development Agreement (see [47] below); and (2) even if the amounts identified in [8] are payable under the Heads of Agreement or Development Agreements, none of the amounts is secured by the AVS mortgage or the AVS charge. 26 Notwithstanding WRVM's contentions in this litigation that it was not contractually bound by the Heads of Agreement, WRVM took steps to satisfy the obligations stipulated in the Heads of Agreement. On 24 or 25 May 2005 (after execution of the Heads of Agreement), WRVM entered into the AVS Facility Agreement. Under the AVS Facility Agreement, AVS agreed to provide to WRVM what was described as the "Tranche 1 Loan" ($1 million) and the "Tranche 2 Loan" ($3 million): cl 2.1. The Facility Limit was $4 million: sched 1. Clause 3 of the AVS Facility Agreement provided that: (1) [WRVM] must use part of the Tranche 1 Advance to repay [the] principal owing to Westpac under the Westpac Facility ... (2) [WRVM] must use all of the Tranche 2 Advance to repay the then remaining proportion of moneys owing to Westpac under the Westpac Facility and / or to fully discharge any existing encumbrances over the Land. 87 As noted previously, WRVM contends that the Heads of Agreement is not enforceable as a contract for want of intention to create legal relations. WRVM contends that it is a document by which the parties did no more than record a stage in their negotiations with no intention to be bound by it: Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353 at 360-361. Alternatively, WRVM contends that if the document is not wanting for intention, it is insufficiently certain in its terms to be enforceable as a contract. 88 The simplest answer to any questions about the validity or enforceability of the Heads of Agreement is that those questions need not be answered because cl 1 of the Development Agreement terminated that agreement. Accordingly, the parties agree that no money can be owing under the Heads of Agreement. However, because the same arguments are put by WRVM against each of the three agreements, it is convenient to address them together. 89 WRVM identified a number of respects in which it submitted that the agreements were insufficiently certain in their terms including: 1) the identity of the contracting parties was not known but a matter for further negotiation; 2) although the agreement was in relation to the development of land, there was no agreement as to what the proposed development would be; 3) the identity of the party on whom obligations were imposed was not certain; 4) although each agreement provided for the appointment of a manager who was entitled to substantial benefits, no corresponding obligations were imposed on the manager. WRVM identified a number of matters which it will be necessary to consider in further detail below.