Allison v Tuna Tasmania Pty Ltd - [2015] TASSC 31

[2015] TASSC 31

COURT: SUPREME COURT OF TASMANIA

CITATION: Allison v Tuna Tasmania Pty Ltd [2015] TASSC 31

PARTIES:  ALLISON, Paul Francis
  v
  TUNA TASMANIA PTY LTD
  FARRER, John Frederick
  FARRER, Sharon Tina
  LAWRENCES MOTORS PTY LTD as trustee of
  The Farrer Superannuation Fund and as trustee of
  The Farrer Superannuation Fund (No 2)
  HAVENFLASH PTY LTD as trustee of
  The Farrer Family Trust

FILE NO:  95/2003
DELIVERED ON:  17 July 2015
DELIVERED AT:  Hobart
HEARING DATES:  1-5, 8-12 December 2014
JUDGMENT OF:  Blow CJ

CATCHWORDS:

Partnership – Generally – Facts and agreements evidencing partnership – Partnership in fact – Consideration of intention or relationship – Consideration of intention – Intention that business be carried on by company as trustee of unit trust.

Partnership Act 1891 (Tas), s 6(1).
Mollwo, March & Co v The Court of Wards (1872) LR 4 PC 419; Pooley v Driver (1876) 5 Ch D 458, referred to.
Aust Dig Partnership [1001]

REPRESENTATION:

Counsel:
             Plaintiff:  A J H Morris QC, J P Murphy
             Defendants:  D J Gunson SC, T J Williams
Solicitors:
             Plaintiff:  No solicitor
             Defendants:  Gunson Williams

Judgment Number: [2015] TASSC 31
Number of paragraphs: 35

Serial No 31/2015
File No 95/2003

PAUL FRANCIS ALLISON v TUNA TASMANIA PTY LTD,
JOHN FREDERICK FARRER, SHARON TINA FARRER,
LAWRENCES MOTORS PTY LTD as trustee of
the Farrer Superannuation Fund and as trustee of
the Farrer Superannuation Fund (No 2), and
HAVENFLASH PTY LTD as trustee of the Farrer Family Trust

REASONS FOR JUDGMENT BLOW CJ

17 July 2015

This case concerns a falling out between two businessmen in the mid-1990s. The two men were the plaintiff, Paul Allison, and the second defendant, John Farrer. Mr Allison comes from Tasmania. Mr Farrer is a successful Rockhampton car dealer. They had business dealings in 1994 and 1995 in relation to the acquisition of fishing boats, fishing licences, and other assets with a view to profit. Mr Allison contends, as he put it, that he was "dudded".
Mr Allison contends that certain arrangements made between him and Mr Farrer in about September 1994 were of such a nature that a partnership came into existence between them, with the result that Mr Farrer owed him the fiduciary duties that are owed by members of partnerships to one another. In late October 1994 the two men saw a Hobart solicitor, Mr Boland, in relation to their activities. Amongst other things, Mr Boland advised the setting up of a unit trust with a corporate trustee holding newly acquired assets, and assets to be acquired in the future, upon trust for the unit holders. Mr Farrer arranged for his solicitors and accountants in Queensland to establish the necessary structure. He arranged for all the shares in the trustee company and all the units in the unit trust to be held by himself, his wife, and entities that he controlled. Mr Allison contends that he and Mr Farrer had an arrangement whereby half of the units in the unit trust were to be issued to him, or perhaps to individuals or entities that he would influence or control, and that Mr Farrer acted dishonestly and in breach of the fiduciary duties owed by a partner by making arrangements that placed assets and profits beyond Mr Allison's reach. He brought this action in 2003, and is seeking declaratory relief, as well as orders for accounts, equitable compensation, transfers of assets, and interest.
The first, defendant, Tuna Tasmania Pty Ltd ("TTPL"), is a company that took title to most of the disputed assets. It did so as the trustee of the Tuna Tasmania Unit Trust – the unit trust that Mr Farrer caused his solicitors and accountants to establish.
The third defendant, Sharon Farrer, is Mr Farrer's wife. She is also a director of the fifth defendant, Havenflash Pty Ltd.
The fourth defendant, Lawrences Motors Pty Ltd, is the trustee of two superannuation funds controlled by Mr Farrer.
The fifth defendant, Havenflash, is the trustee of a family trust controlled by Mr Farrer.
The defendants' principal contentions in the action are as follows:
·     There was no partnership between Mr Allison and Mr Farrer.
·     Mr Farrer did not owe any fiduciary duties to Mr Allison, nor did he breach any.
·     Mr Allison has no interest in, or rights in relation to, any of the assets of Tuna Tasmania or the Tuna Tasmania Unit Trust.
· If Mr Allison did acquire any causes of action against any of the defendants, any such causes of action must be barred by the operation of ss 4, 9 and 24 of the Limitation Act 1974.
·     Mr Allison should not be granted any equitable relief because of the application of limitation periods by analogy, laches, acquiescence and delay.

The partnership issue

In order to determine whether a partnership was created it is necessary to consider the evidence of three important witnesses – Mr Allison, Mr Farrer and Mr Boland. It is also necessary to consider some documentary evidence.
Mr Allison's case, as pleaded, is that he and Mr Farrer met in Melbourne in about September 1994; that, in the course of that meeting, he proposed that they enter into an equal partnership to conduct a fishing business in common for their mutual profit; and that Mr Farrer orally accepted that offer.
Mr Allison's evidence was somewhat unsophisticated. He said that he went to Melbourne for the AFL Grand Final in September 1994, and went to the home of a Mr Chaplin, where he met Mr Farrer. He gave evidence that he sought to persuade Mr Farrer to invest in the Tasmanian fishing industry, and that Mr Farrer replied with words to the effect of, "Yes, we should have a crack at this." In his evidence in chief he did not assert that anything more formal or more detailed was said between him and Mr Farrer that day in relation to their future arrangements. Under cross-examination he conceded that no partnership agreement had been entered into at that time, but asserted that Mr Farrer was very excited. By the end of the trial, Mr Allison's case was not that an oral partnership agreement was made in Melbourne, but that it should be inferred from a body of circumstantial evidence that the relationship that was formed between him and Mr Farrer was one whereby they agreed to carry on business in common with a view to profit, and that it followed that a partnership between them had been created.
Section 6(1) of the Partnership Act 1891 provides:
"Partnership is the relation which subsists between persons carrying on a business in common with a view of profit."
A partnership can be created only by a contract between the partners. In Mollwo, March & Co v The Court of Wards (1872) LR 4 PC 419, the Privy Council said, at 436:
"… to constitute a partnership the parties must have agreed to carry on business and to share profits in some way in common."
In Pooley v Driver (1876) 5 Ch D 458 at 472, Jessel MR said:
"Whatever may amount to a partnership is a subject which has been settled by decision according to English law, and the incidents of the partnership simply follow from the establishment of the fact of the partnership … But it is a contract of some kind undoubtedly – a contract like all contracts, involving the mutual consent of the parties: and it is undoubtedly a contract for the purpose of carrying on a commercial business – that is, a business bringing profit, and dividing the profit in some shape or other between the partners. That certainly partnership is."
It is therefore necessary for me to determine whether Mr Allison and Mr Farrer entered into a contract which had the characteristics of a partnership agreement. That must be determined by applying an objective test, and not by reference to what Mr Allison or Mr Farrer thought, or said they thought, about the nature of their arrangements. As Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]:
"It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe."
In assessing the evidence, I have taken the view that both Mr Allison and Mr Farrer, the two principal witnesses, were extremely unreliable.
The following comments were made about Mr Allison's evidence in counsel's final written submissions:
"That Mr Allison was in many ways an unsatisfactory witness cannot sensibly be denied. Much of his evidence, especially under cross-examination, was unresponsive and discursive. Some parts of his testimony were hard to follow, some parts practically unintelligible.
There is some explanation for this in the fact that Mr Allison is dyslexic and has difficulties in expressing himself; also in the fact that he is clearly a person of limited education and (as it may reasonably be inferred) of less than average intelligence."
Those comments were made by his own counsel. The submissions of opposing counsel were far less charitable.
Mr Farrer is much brighter than Mr Allison, but it is clear that he was willing to resort to dishonesty when it suited him. Under cross-examination he conceded, with enormous reluctance, that he had told lies to a man named Nielsen in 1995 in order to improve his commercial position. That concession led to the following question and answer:
"And how is his Honour to know that if you were prepared to tell lies in May of 1995 to improve your commercial position you're not prepared to tell lies in December of 2014 [the month of the trial of this action]? …… It's up to his Honour to make his decision."
It is clear, however, that in October 1994 and subsequent months Mr Allison supplied information to Mr Farrer about opportunities in the Tasmanian fishing industry, and that, as a result, Mr Farrer caused entities controlled by him to acquire a number of vessels and licences, as follows:
·     In October 1994 a vessel named the D'Entrecasteaux was for sale by tender. On 25 October 1994 Mr Farrer instructed Mr Boland, whose name had been given to him by Mr Allison, to submit a tender for the purchase of that vessel for $188,010. On the same day an employee of Mr Boland wrote a letter offering that price on behalf of "John Frederick Farrer of Tuna Tasmania". That tender was accepted the following day. Mr Farrer subsequently caused TTPL to be incorporated. It was incorporated on 3 November 1994. The next day, it paid for the D'Entrecasteaux, and took title to that vessel.
·     By a contract dated 31 October 1994, Mr Farrer agreed to purchase a package of fishing licences from a Mr Lowth for $280,000. Mr Farrer arranged for a shelf company named Sutron Pty Ltd to take title to those licences, as trustee of a unit trust named the Sutron Unit Trust. That trust was established by a deed dated 3 November 1994. The purchase money was paid on 18 November 1994.
·     On 22 November 1994 TTPL purchased a Tasmanian fishing licence for the use of a boat described as "size category greater than 20 metres" from a Mr Friend for $22,000.
·     On 24 November 1994 TTPL purchased a vessel named the Coaster and an 18-pot crayfish licence for a total of $137,000. That price comprised $20,000 for the vessel, and $117,000, or $6,500 per pot, for the licence.
·     On 24 November 1994 TTPL also purchased a vessel named the Cape Cleveland, together with a number of licences and permits, for $370,000.
·     In 1995 TTPL acquired a tug named the Greshanne. The arrangements for its acquisition were very messy. It had belonged to Mr Nielsen. He had entered into an arrangement to sell it to a company named APAI Pty Ltd. That company was controlled by Mr Allison, though he was then neither a shareholder nor a director of it. TTPL arranged to acquire the tug from APAI. It became the registered owner of the tug upon the registration of a bill of sale under the Shipping Registration Act 1981 (Cth) on 2 February 1995. Mr Nielsen was paid $100,000 at that stage. That money came from one of Mr Farrer's companies, possibly Lawrences Motors Pty Ltd. By a deed dated 8 September 1995 TTPL agreed to transfer to Mr Nielsen some land in a proposed subdivision at Risdon Vale by way of further consideration for his transfer of the vessel. The subdivision did not proceed. In 1998 Mr Nielsen agreed to take $55,000 in full satisfaction of his remaining rights in relation to the Greshanne.
Mr Farrer also spent some money in relation to a fishing vessel named the Merinda. It appears from the evidence of Mr Allison, Mr Farrer and Mr Boland that the sequence of events in relation to that vessel was as follows. In the beginning the vessel and a 19-pot crayfish licence were owned by a Mr Buchanan. APAI had made some sort of arrangement to acquire the vessel and the licence from him. Money was owing to Mr Buchanan. There was also a mortgage debt of $140,000 to the ANZ bank. On or about 23 November 1994 Mr Farrer caused $16,259 to be paid to Mr Boland so that the 19-pot licence could be transferred out of the name of Mr Buchanan. Of that sum, $12,484 went to Mr Buchanan, $3,400 was paid by way of transfer fees, and the balance represented Mr Boland's costs and petty disbursements.
Neither TTPL nor Mr Farrer nor any entity controlled by him ever received any licences or any money in relation to the Merinda. The vessel was sold, possibly by APAI, in October 1995. Mr Farrer did not get Mr Boland to do any work for him or his companies after that because he was unhappy that he and his companies received nothing from the proceeds of sale. At the trial, his evidence was that he and his companies made a number of payments in relation to the Merinda apart from the payment of $16,259 that I have mentioned. He was hoping to recover over $21,000 from the proceeds of sale.
In early 1995 TTPL acquired about 97ha of land at Scotts Road, Risdon Vale from a Mr Fenner. That land was the site of the proposed subdivision that I referred to earlier in relation to Mr Nielsen and the Greshanne. It is common ground that Mr Allison had arranged for a Mr James to enter into a contract to purchase that land from Mr Fenner; that Mr Allison and/or Mr James did not have the money to complete the purchase; that TTPL was nominated as the purchaser; and that it completed the purchase. It appears from documents produced by Mr Farrer that the purchase price was $159,000; that no deposit had been paid; that the contract required completion to take place on 20 January 1995; and that completion took place at a later date.
In November 1995 Mr Farrer caused Sutron Pty Ltd, which he controlled, to purchase a vessel named the Seapremacy. That occurred after he and Mr Allison had fallen out. Counsel for Mr Allison referred to the acquisition of that vessel in their final submissions, but I regard its acquisition as irrelevant to the question of whether a partnership came into existence in 1994.
One of the arguments of counsel for Mr Allison as to the existence of a partnership was that Mr Allison did a great deal of work for the benefit of the enterprise that he says was established by him and Mr Farrer. Mr Allison's contentions, some of which were disputed, were essentially as follows:
·     He cancelled the original insurance on the Cape Cleveland at Mr Farrer's request.
·     He worked out the wages for the Cape Cleveland crew at Mr Farrer's request.
·     He liaised with a man named Garry Lowe in relation to an inspection and sea trials relating to the D'Entrecasteaux.
·     He recommended to Mr Farrer that he appoint a Mr Patrick as skipper of the Cape Cleveland, and Mr Farrer appointed him.
·     He was the shore manager who controlled the small items of maintenance for the vessels.
·     He purchased some beacons and fishing gear for the Cape Cleveland.
·     He was responsible for buying fuel for the vessels.
·     He was involved in selling fish that was brought into port by the various vessels.
·     He was responsible for getting surveys of the Greshanne and the D'Entrecasteaux.
·     He assisted in getting a survey of the equipment on the Greshanne.
·     He organised the slipping of the Greshanne.
·     He organised paint for the Greshanne.
·     He organised refrigeration work on the Greshanne.
·     He sourced most of the vessels and the Risdon Vale land.
·     Mr Farrer used Mr Allison's home address as a business address for TTPL.
·     Mr Farrer provided him with financial information about the vessels' fishing operations on at least five occasions in 1995.
·     On 22 June 1995 Mr Farrer requested him to obtain inventories for the Greshanne and the D'Entrecasteaux.
Mr Allison received no remuneration for his work. It was submitted that the doing of so much unpaid work was inexplicable unless there was an agreement between him and Mr Farrer whereby they were "carrying on a business in common with a view to profit". I reject that submission. For one thing, the capital investment by Mr Farrer and the entities controlled by him must have been out of all proportion to the value of Mr Allison's work. Over $1 million had been invested by Mr Farrer or at his direction. Mr Allison had invested little or nothing. And Mr Allison was not alone in contributing time and expertise to the new enterprise. Mr Farrer was involved in administrative and managerial activities at a higher level. In the circumstances, the investment of so much money by Mr Farrer and the entities he controlled makes it extremely unlikely that he ever agreed or assented to a 50:50 partnership.
There was a body of evidence that suggested a strong unwillingness on Mr Allison's part to have any assets or income in his own name. At all material times he was a disability support pensioner. Disability support pensions are, and always have been, means tested, both as to assets and income, pursuant to the Social Security Act 1991 (Cth). There was evidence that Mr Allison was unwilling to hold any shares in APAI, or to be a director of that company, even though it was a company that he controlled. Its initials stand for "Another Paul Allison Investment". Given his apparent attitude to the ownership of assets and the receipt of income, it is highly unlikely that he would have been willing to enter into a two-man partnership, rather than some other sort of arrangement in which his involvement was not obvious.
As I said at [2] above, Mr Allison and Mr Farrer went to see Mr Boland in late October 1994 in relation to their activities, and Mr Boland advised the setting up of a unit trust with a corporate trustee holding assets upon trust for unit holders. In Mr Allison's evidence in chief, he said the following about the conversation at that meeting:
"I never knew anything about unit trusts and not much about companies, but yes, he [Mr Boland] went on with how we could structure it. Mr Farrer was asking him the best way to do it, I remember that, and he was saying it was some unit trust, I remember that. And there was two companies going to run it."
He went on to recount conversation to the effect that he was to have "fifty per cent of the shares and Mr Farrer was the other fifty per cent". When Mr Boland gave evidence, he confirmed that the proposal that was discussed involved Mr Allison receiving 50% of the shares in the trustee company and 50% of the units in the unit trust. For the purpose of determining whether or not a partnership was created, it does not really matter whether there was a discussion about a 50:50 arrangement or not. The important point is that the evidence of Mr Allison, Mr Farrer and Mr Boland as to what was said at that meeting is entirely inconsistent with the proposition that Mr Allison and Mr Farrer intended to enter into a two-man partnership. Plainly, they both intended that a more sophisticated structure should be set up, and one was. Mr Allison had reserved the business name Tuna Tasmania. Mr Allison, Mr Boland and Mr Farrer all gave evidence that it was proposed that that name be used as the name of the new company. Mr Boland and Mr Farrer both gave evidence that it was proposed that the unit trust would be named the Tuna Tasmania Unit Trust.

There was some dispute as to the date of the meeting with Mr Boland. He gave evidence that it was on a Friday afternoon in October 1994, but he was unable to say which Friday afternoon. He said that he remembers very well that it was a Friday afternoon because Mr Allison was carrying $50,000 in cash and asked him to place that money in his safe for the weekend. That request was declined. No other client has ever made such a request of Mr Boland. There is documentary evidence that the tender for the D'Entrecasteaux was accepted on 26 October 1994. That was a Wednesday. One of the purposes of the meeting was to discuss the arrangements that were to be made as a result of the acceptance of that tender. I am therefore satisfied that the meeting must have occurred on Friday 28 October 1994.
Before that meeting, there had been discussions between Mr Allison and Mr Farrer, and they had started to make plans for the carrying on of a business in the fishing industry, but they had not commenced to carry on business. No one had caught or sold any fish. APAI might have been using the Merinda to carry on the business of fishing, but I am not satisfied that Mr Farrer had any interest in that enterprise prior to 28 October 1994. There is a distinction between the carrying on of business in partnership and the taking of preliminary steps by intending partners prior to the commencement of business: Keith Spicer Limited v Mansell [1970] 1 WLR 333; Pioneer Concrete Services Limited v Galli [1985] VR 675 at 705-708. At the time of the meeting in Mr Boland's office, Mr Allison and Mr Farrer had gone no further than taking preliminary steps. They had had some conversations. Mr Farrer had successfully tendered for the purchase of the D'Entrecasteaux. It had not been delivered. It had not been paid for. Similarly, Mr Allison had made some sort of arrangement for the acquisition of the Greshanne, but it had not been delivered or paid for either. They had not started fishing. They had not commenced to carry on business. It follows that they were not then in partnership. Any arrangement that they had was abandoned with a view to possibly implementing the proposal for the creation of a unit trust structure. There was never a partnership between the two men. Mr Allison's primary claim in this action must therefore fail.

The unit trust issue

In the final edition of Mr Allison's statement of claim, relief is sought not just on the basis that there was a partnership between him and Mr Farrer, but also on an alternative basis. Essentially, it is pleaded that there was a contract made between him and Mr Farrer, pursuant to which he became entitled to half the issued units in the Tuna Tasmania Unit Trust. This contention received little attention at the trial, but it is important that I deal with it. Paragraph 10 of the statement of claim pleads the making of an oral agreement, as follows:
"10 Between about September 1994 and about 3 November 1994, Allison and Farrer further orally agreed that:
(a)   the Fishing Business would be conducted through a corporate trustee to be known as 'Tuna Tasmania Pty Ltd';
(b)   each of Allison and Farrer would own 50% of the shares in Tuna Tasmania;
(c)   each of Allison and Farrer would be a director of Tuna Tasmania;
(d)   Tuna Tasmania would act as the trustee of a unit trust, to be known as the 'Tuna Tasmania Unit Trust';
(e)   each of Allison and Farrer would:
(i)own 50% of the units in the Trust; and
(ii)derive equal profits from the Fishing Business through those units;
(f)    Allison would assist in capitalising Tuna Tasmania as trustee of the Trust by:
(i)causing the title to the Greshanne to be transferred to Tuna Tasmania as trustee of the Trust, as set out in Part G of this pleading; and
(ii)giving Tuna Tasmania the opportunity to acquire the Risdon Vale land, and to have the title to the Risdon Vale Land transferred to Tuna Tasmania as trustee of the Trust, as set out in Part H of this pleading;
(g)   Allison would be responsible for:
(i)conducting operations of the Fishing Business; and
(ii)the purchase of further fishing vessels and licences as agreed from time to time between Allison and Farrer; and
(h)   Allison would be paid a wage for the personal exertions referred to in subparagraph (g)(i) hereof;
(i)    Farrer would:
(i)assist in capitalising Tuna Tasmania by advancing money to it as trustee of the Trust for the purchase of further fishing vessels and licences as agreed from time to time between Allison and Farrer; and
(ii)be responsible for the financial and administrative aspects of the Fishing Business;
(j)    Farrer would, in accordance with the terms of the Agreement set out in subparagraphs (a) to (e) hereof:
(i)incorporate Tuna Tasmania; and
(ii)form the Trust; and
(k)   each of Allison and Farrer would have the authority to bind the other in respect of the operations of the Fishing Business."
The defendants denied the whole of that paragraph. It is clear from the evidence as to the meeting in Mr Boland's office on 28 October 1994 that Mr Allison and Mr Farrer reached an understanding as to some of the matters pleaded. It is clear that they both proposed that there would be a fishing business using vessels and licences whose acquisition was financed by Mr Farrer. It was contemplated that the business would be conducted through a company that would act as the trustee of a unit trust. Mr Farrer did not agree to that structure at that meeting because he wanted to take advice from solicitors and accountants in Queensland. He sought their advice in the days following the meeting, and decided to accept Mr Boland's advice as to the appropriate structure. I am prepared to accept that Mr Allison expected that he or his nominees would receive half of the units in the unit trust, and that Mr Farrer induced that expectation. However I am not satisfied that a contract was entered into at the meeting or at any later time.
The most reliable evidence as to what was said at the 28 October meeting was that of Mr Boland. He gave evidence to the effect that he proposed the unit trust structure with a view to tax minimisation; that Mr Farrer requested him to put his advice in writing; and that he provided that advice in a letter dated 4 November 1994. Under cross-examination Mr Boland said that, as a result of the meeting, his understanding was that Mr Allison and Mr Farrer "were going to take equally in the units and equally in the shares in the trustee company". However, later in his cross-examination, he made it clear that any such arrangement was discussed only in relation to the initial issue of units, and that future contributions of assets could have resulted in adjustments of unit holdings to depart from the initial 50:50 allocation. At the time of the meeting, no arrangements had been made in relation to the acquisition of any vessels other than the D'Entrecasteaux and the Greshanne.
At the end of the 28 October meeting, the establishment of a unit trust structure with a 50:50 initial allocation of units was no more than a proposal. Mr Boland, having proposed the structure, hoped that Mr Farrer would engage him to do the necessary legal work to put that structure in place. But Mr Farrer engaged Queensland solicitors and accountants to put the structure in place, to the disappointment of Mr Boland. That gave Mr Farrer an opportunity to arrange for all the units, shares and directorships to go to him, his wife, and entities controlled by them. There is no evidence that, at any time after the 28 October meeting, Mr Allison and Mr Farrer orally agreed that they would proceed to implement the 50:50 proposal discussed with Mr Boland. Mr Farrer acted unilaterally in putting the proposed structure in place with the significant variation that Mr Allison did not become a unit holder or even a shareholder.
There are circumstances in which the making of a contract by joint venturers gives rise to fiduciary obligations. See, for example, Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FCR 300. But in this case there was no contract.

Conclusion

Mr Allison's claims in this action are all claims for equitable relief. They are founded on only two contentions: a contention that he and Mr Farrer formed a partnership, and a contention that he and Mr Farrer made a contract governing the allocation of units in a unit trust. No other basis for equitable relief, such as proprietary estoppel, was pleaded. I have rejected both of the fundamental contentions relied on by Mr Allison. Judgment must therefore be entered for the defendants.