Bunker Bros Trucking Co Pl v Linehaul Holdings Pl & Anor No. DCCIV-01-1266

BUNKER BROS TRUCKING CO PL v LINEHAUL HOLDINGS PL & ANOR
[2003] SADC 43
Judge Herriman
Civil
INTRODUCTION

On the night of 27/28 March 2001, a person or persons unknown broke into the Green Fields business premises (“the premises”) of the first defendant (“Linehaul”), a road transport operator, and stole, from its truck parking area, a Kenworth prime mover, registered number WEC-949 (hereafter referred to as “K949”). That vehicle has never been recovered, nor has there been any successful insurance claim arising out of its loss.
At that time, K949 was owned by GE Commercial Corporation (Australia) Pty Ltd (“GEC”) and leased (“the WRB lease”) to another road transporter, WRB Transport Pty Ltd (“WRB”), a company then under administration, but which later went into liquidation.
The circumstances in which the vehicle came to be kept in the premises on that night were the subject of some dispute at trial, but, neutrally, the following things can be said about them:
(1)Up to April 2000, WRB, the plaintiff and another corporation known as Wintide Pty Ltd (together referred to as “the Bunker Group”), had been associated entities in the road transport business and had been owned and/or controlled, variously, by the Bunker brothers, Wayne (“WB”), Philip and Raymond. Broadly speaking, Wintide Pty Ltd (“Wintide”) had owned the premises, the plaintiff had owned most of the stock and plant used in the business and WRB had been the transport operating entity. For historical and financial reasons, however, WRB had retained ownership of or interests and liabilities in certain items of stock and plant still then in use. K949 was one such item.
(2)WB was, at relevant times, a director and the manager of the plaintiff and WRB. He was the plaintiff’s principal witness.
(3)The second defendant was, at relevant times, the director and manager of Linehaul.
(4)Just prior to the 11^th day of April 2000, the Bunker Group had resolved to quit its transport operations and to place WRB under administration. It had agreed with Linehaul for the latter to take over the premises and to acquire or hire much of the plaintiff’s stock and plant.
(5)On 11 April 2000, WRB entered into voluntary administration.
(6)Some short time afterwards, its administrator, Mr Nick Gyss (“Gyss”), with the consent of GEC, arranged for K949 to be placed with Mason Gray Strange (“MGS”), auctioneers, for sale. Over the next several months, however, it remained unsold.
(7)In July/August 2000, GEC and Gyss were approached by WB, a guarantor of the WRB lease (along with Philip and Raymond Bunker and the plaintiff), and both entities agreed to release K949 to WB to be “worked”, provided leasing arrears were paid and so that ongoing leasing payments could be maintained.
(8)The circumstances and capacity in which WB retrieved the vehicle from MGS were disputed at trial, but there is no doubt that it then found its way to the premises of the first defendant, where it was put to work in Linehaul’s business.
(9)At that time, Linehaul was still hiring or otherwise acquiring from the plaintiff, various items of its stock and plant. It was also negotiating the purchase of the premises from Wintide.
(10)Much of the plaintiff’s stock and plant was ultimately acquired by the first defendant, but, if not, Linehaul acted as the plaintiff’s agent for the purposes of selling it to others, albeit that, in the meantime, it continued to use it on hire.
(11)Other items being used by Linehaul were, however, subject to hire purchase and leasing arrangements between the plaintiff and various financiers. With respect to those, it was agreed, inter alia, that Linehaul would use them and, in turn, pay the plaintiff’s hiring or leasing fees and cover them with comprehensive insurance.
(12)As I have noted, K949 fell into a somewhat different category from any of the above items, as it had never been owned or leased by the plaintiff, but rather had been leased by WRB from GEC.
(13)Several months after the first defendant had acquired possession of and put K949 to work, and in about March 2001, WB asked for it to be returned, as he believed he could sell it favourably and clear all its leasing obligations. The first defendant agreed to that request and K949 was recalled from Sydney. It was scheduled to arrive at the premises late in the afternoon of 27 March 2001.
(14)There is, then, a dispute as to its estimated and actual time of arrival at the premises and as to the agreed arrangements for its delivery to WB.
Linehaul says that WB knew it was estimated to arrive there at 4.00 or 4.30 p.m., that he undertook to call at the premises later that afternoon to collect it, that it did, indeed, arrive at that time, but that WB did not call to receive it. WB denies that, saying that as a result of being told by Linehaul, at 3.00 or 3.30 p.m., that the vehicle was at Renmark, he reasonably estimated its arrival time at the depot at 6.00 or 6.30 p.m. Hence, he said, he agreed with Linehaul that it would deliver K949 to him on the following morning.
(15)At all events, the truck was stolen some time between early evening on 27 March and 5.30 a.m. on 28 March.
The plaintiff’s claim was based upon these premises:
(a)that the first defendant had agreed, either orally in July or August 2000 or, alternatively, in writing by a Deed dated 18 August 2000 (Exhibit P3), to keep K949 comprehensively insured whilst it was in its possession, and its performance of the Deed had been guaranteed by the second defendant. In breach of one or other of those agreements, said the plaintiff, the first defendant had, at some time on 27 March, cancelled the comprehensive cover on K949 effective as of that day and, as a result, no insurance claim was available for its loss and the theft had therefore resulted in a total loss;
(b)alternatively, it said that, in consequence of their dealings in August 2000, there had been a bailment agreement concluded between it and Linehaul with respect to K949, that it had been an implied term of that agreement that the first defendant would take reasonable steps to protect the vehicle from loss by theft or otherwise, and that in breach of that agreement, the first defendant had not properly secured it at the premises, so that it was stolen;
(c)that it was entitled to sue for its losses arising from these breaches by virtue of its status:
(i)as a guarantor (albeit one of four) of the WRB liabilities under the WRB lease;
(ii)as the holder of an expectant interest in equity in K949, deriving, it says, through its receipt of the vehicle as a principal through its agent WB, its assumption of the role of principal guarantor of the WRB debt and, thus, a party expecting to pay out the lease and negotiate the purchase of K949;
(iii)as the party effectively receiving K949 from MGS and then bailing it to Linehaul.
The defendants responded as follows:
(a)they denied that, either orally or by the Deed, the first defendant had ever agreed to keep K949 comprehensively insured. They said that such an obligation had always remained with the vehicle’s lessee, WRB, thence with WB, to whom the vehicle had been released. They conceded that, along with many other Bunker Group vehicles in Linehaul’s fleet, Linehaul had voluntarily sought to maintain additional comprehensive insurance over K949, but said that had been done solely for its own protection. Linehaul had thus been entitled to remove K949 from that policy when it chose, and had in fact done so on 27 March 2000;
(b)in any event, they said, the plaintiff had no legal or equitable interest in K949 upon which it could sue. The lessee was at all relevant times WRB, the liquidator of WRB and GEC had authorised its release solely to WB for it to be worked, and the plaintiff had acquired no legal or equitable interest in it at any time. They said that the circumstances of that release were such as to confer some possessory right in WB, but in him alone, and the plaintiff acquired no possession of it, nor any expectant interest. There was, they said, no evidence of any consent by the liquidator or GEC to the release of the vehicle to the plaintiff, or to its being dealt with by the plaintiff in the manner set out in the Deed P3;
(c)they argued that, even if the plaintiff had had some title upon which it could sue, and even had Linehaul undertaken an obligation to the plaintiff to comprehensively insure K949, it had not breached that obligation, because in all the circumstances, its cancellation arrangements were proper and were induced by the plaintiff’s representations (made through WB) about when it would be collected;
(d)as to the bailment claim, they attacked the title of the plaintiff to sue, for the reasons mentioned above;
(e)if any obligation to take reasonable care of the vehicle had fallen upon Linehaul, (which it denied), the defendants said that it had discharged that obligation because, on the evidence, it had shown that reasonable care had been taken of K949;
(f)that, in so far as the plaintiff’s claim was based upon an alleged oral agreement to insure or upon an alleged bailment, the second defendant was never, on the plaintiff’s case, a party to either alleged arrangement.
That completes the outline of this matter, and I will now deal with the evidence of the parties.
THE PLAINTIFF’S CASE
Wayne Bunker
WB said he had been involved in heavy road transport for many years, as a driver, manager and proprietor. He had begun his own business in 1979, but, before then, had managed a similar business for his uncle. In 1992, he had merged his own business with that of a cousin, Ron Bunker, but that arrangement had not been satisfactory and soon afterwards, in September 1993, he had incorporated WRB and became its principal director and manager.
WRB then operated as a road transporter from the premises until the year 2000, when it went into voluntary liquidation. After that time, WB established a new business known as Salisbury Truck and Trailer, which he continues to operate.
At some point during the 1990s, a semitrailer being operated by WRB had been involved in an accident at Blanchetown in which six people had been killed. One outcome of that experience was that WB decided to restructure his business arrangements so as to make his and his company’s assets less vulnerable to predation. I have already described how that was done and the plaintiff and Wintide were thus incorporated.
As I have also noted, despite these re‑arrangements, pre‑existing financial contracts relating to certain plant, including prime movers and trailers, meant that WRB continued as owner, hirer or lessee of some of the older assets, including K949.
WRB then encountered financial difficulties in 1999/2000 and, on 11 April 2000, went into voluntary administration.
In anticipation of that, WB had, in March 2000, entered into negotiations with Richard Andrews (“Andrews”), the second defendant and the managing director of Linehaul, their subject being the proposed transfer of assets, whether by sale or hire, from Bunker Bros and Wintide to Linehaul so that, effectively, Linehaul could take over the Group’s operations.
Those negotiations led to an interim agreement whereby Linehaul took on hire from the plaintiff, most of the plant and equipment which it then held, whether as owner or hirer, the intention being that, ultimately, Linehaul would either purchase it or otherwise arrange for it to be sold to third parties. That agreement became a Deed of Hire dated 10 April 2000 (P1) and its terms broadly required Linehaul:
(a)to take over and maintain the plaintiff’s leasing or hire purchase commitments on nominated plant and equipment (it did not emerge at trial whether each of the relevant hirers or lessors consented to these assignments, but I do not presume otherwise);
(b)with respect to unencumbered vehicles, to take them on hire for an annual fee, to be fixed by a formula which need not be repeated here; and
(c)to maintain comprehensive insurance on the vehicles it had thus acquired for its use.
P1 further recorded the respective parties’ desire that the plant and equipment would in due course be sold either to the first defendant or, if not, through Linehaul to other parties. For the latter purpose, the plaintiff appointed the first defendant as its selling agent and that appointment was confirmed in a Deed of Appointment of Agent (P2).
Finally, Andrews, by clause 8 of P1, agreed to indemnify Bunker Bros for any losses arising from a breach by Linehaul of the Deed.
- Kenworth 949
It is important to stress that at this point (i.e. just prior to 11 April 2000), K949 was not affected by either of the Deeds P1 or P2. At that time, it was leased by WRB from GEC. The original lease agreement relating to K949 had been with Textron Financial Corporation (Australia) Pty Ltd and had begun on 29 May 1998, but it was not disputed at trial that the interests of Textron in that agreement had been later assigned to GEC.
To the extent that WRB then had any “interest” in K949, as of 11 April 2000 it passed to Gyss upon his appointment. The ownership of K949, of course, still remained with GEC, but that financier was then interested in any disposition of the vehicle which might clear lease liabilities. With that in mind, the administrator of WRB (no doubt with the concurrence of GEC) at some time after 11 April 2000, placed it with MGS for sale.
Between April and July 2000, it remained unsold. Accordingly, in July 2000, WB, after discussions with Andrews about Linehaul’s needs, approached GEC and proposed that K949 be released by it and put back to work or, otherwise, that it be sold by him. WB and Andrews had already agreed that K949 would then be delivered to Linehaul to operate as part of its fleet, provided that arrears of lease payments totalling $13,500, plus the monthly leasing fee of $3,318 were paid by Linehaul to WB. WB was a guarantor of the GEC lease, and he intended to then pass on such payments to GEC. WB says that Linehaul also then agreed to keep K949 covered under its own fleet insurance whilst that arrangement continued (Linehaul denies this). Some repairs to the vehicle were also to be carried out and it was to be repainted in the first defendant’s colours.
At all events, as appears from Exhibit P6, the financier agreed that K949 be released to WB, subject to:
(1)he, Philip and Raymond Bunker and the plaintiff (being the original guarantors) consenting to it;
(2)the lease arrears of $13,500 being paid forthwith;
(3)production of proof of “Comprehensive Insurance, registration ...” relating to the vehicle;
(4)a direct debit form being completed, enabling monthly lease payments to be debited to a nominated account.
Further, GEC required to be kept informed of any negotiations relating to the sale of K949.
On that same day, but, as I apprehend from the documents, subsequently, a letter under the plaintiff’s heading was sent to GEC (P7) advising, inter alia, that “as the guarantors”, the plaintiff would pay arrears and would sign a direct debit for future lease payments until the truck was “disposed of”.
After the exchange of some further correspondence, the lease arrears were paid by Linehaul to WB, who in turn passed the money on to GEC, and the truck was then collected from MGS and ultimately delivered to the first defendant’s premises for use.
WB said that, on or before the collection day, Andrews had arranged to add K949 as a vehicle covered under Linehaul’s insurance policy as, of course, proof of such coverage was a condition of its release by the auctioneer. He said that that proof took the form of a covering letter and a Linehaul policy schedule, and it was produced to MGS at collection. On that day, he said, he and Andrews went together to MGS, produced an authority from GEC, a bank deposit slip confirming payment of leasing arrears and the documents proving insurance coverage. K949 was then released to them.
WB said he then drove it back to Craig Arthur for necessary repairs to be undertaken, before it was later delivered to Andrews, but that Andrews himself received and paid Craig Arthur’s invoice, totalling $1,675.65 (P8).
The questions of who arranged comprehensive insurance on K949 and who produced proof, and what proof, of such coverage to MGS at the time the vehicle was collected, were issues at trial, but neither side called witnesses from MGS or GEC as to these matters.
Over this time, through WB and Andrews, the plaintiff and Linehaul had been negotiating the sale to Linehaul of certain items of the plaintiff’s plant and equipment. Ultimately, a Deed of Sale (P3) relating to them was executed, on 18 August 2000. That Deed contains schedules, which, inter alia, purport to describe unencumbered vehicles and, separately, other vehicles said to be “encumbered”, in the sense that they are subject to leasing or hire purchase arrangements with various financiers. These latter are identified in Schedule III of the Deed, which in clause 4 provides, inter alia:
“Linehaul agrees to take an assignment in respect of all vehicles referred to in Schedule III hereof and agrees to maintain all leasing and hire purchase commitments until the said leasing or financial obligations have been paid out in full ...”
There is, of course, a real question as to the nature of the plaintiff’s interest in those “encumbered vehicles” as of the time P3 was executed, but for the moment, I will pass over that.
It is important to note, however, that amongst the plant and equipment in Schedule III, is K949, a vehicle which was then leased, not by the plaintiff but, rather, by WRB. Prima facie, therefore, the plaintiff, as the purported assignor of K949 under P3, in fact had no interest in it.
Further, there was no documentation produced at trial, nor was any person from GEC called, to prove either GEC’s knowledge of or consent to the delivery by WB or the plaintiff to the first defendant of K949, following its retrieval from MGS. Indeed, the documentation emanating from GEC (see P6 and D3) suggested that its specific requirement or understanding was that the vehicle was being released to WB personally (or, at the most, if the plaintiff’s contentions as to P7 were correct, to the plaintiff). Lease payments were paid directly to GEC by the plaintiff and it was reimbursed by Linehaul, so GEC would not by these means have become aware of Linehaul’s involvement.
The plaintiff argued that GEC nevertheless knew about Linehaul’s use of K949 and WB said, indeed, that, at a later stage and following discussions and agreement with Andrews (see Exhibit P9), representations were made to GEC about Linehaul taking over the lease, albeit that it did not agree to that. There was no other evidence led of GEC’s knowledge or consent, however, and, in the circumstances, I am not satisfied either was present.
WB went on to say that, as all of the vehicles contained in its Schedule III were required, under financing terms, to be comprehensively insured, he expected that, by virtue of the previously quoted terms of clause 4, the first defendant would be obliged to arrange that, inter alia, for K949.
After about August 2000, certain financial and other disputes arose between the plaintiff and its directors, on the one hand, and the first and second defendants, on the other. They included argument about the amount of moneys owed by the first defendant with respect to the vehicles in Schedule III of the Deed (P3). In consequence, much of the plant and equipment contained in that Schedule was, by agreement between the parties, sold and the financiers repaid, so that, by March 2001, there remained only six or so vehicles in the possession of Linehaul, including K949.

WB then spoke of a meeting he had with Andrews at the first defendant’s offices on 5 March 2001 relating to them. He produced a note made at that meeting and signed by both of them (P9), and which he said recorded agreements they had reached about them. Included in those notes is a reference to vehicle “# 43” (agreed as referring to K949), which, it is noted, is to be assigned to Linehaul. He said it was then agreed that Linehaul would take over all responsibility for K949 and thenceforward deal directly with the lessor. This was the time at which attempts were unsuccessfully made to secure a consent to that arrangement by GEC.
After then, WB said, he decided to take K949 back, as he had it in mind to sell it separately himself. He knew of some potential buyers and wanted to show it to them. (It is of interest, here, to note that WB was not purporting to say that it was the plaintiff who would be on‑selling K949.) For that purpose, the vehicle had to be brought back from Sydney, where it was then being worked by Linehaul.
According to WB, his initial discussions about the return of the vehicle were with Andrews, but Andrews then left for the United States and subsequent communication was with his acting manager, George Cushnie (“Cushnie”). This took place in the latter part of March 2001 and it is not disputed that Linehaul then agreed to return K949 to WB. It was simply, WB said, a question of when it could be retrieved from Sydney. Ultimately, in late March, Cushnie told him that it was to be returned to Adelaide on Tuesday, 27 March 2001.
WB said that on the morning of 27 March 2001, Cushnie told him K949 was expected in the depot at about 4 p.m. that day. He later visited the premises at 3.00 or 3.30 p.m. to enquire about it and was told by Cushnie that it was at Renmark and would arrive at the depot later. On his own reckoning, based on his own experience (and, indeed, supported by other evidence), it would take three hours to travel from Renmark to Adelaide. In consequence of being told that, WB said, he agreed with Cushnie that he would not collect K949 that day: instead, it would be prepared by Linehaul and delivered to his depot on the following day.
From his perspective, the next thing that happened was that, at 7.00 or 7.30 a.m. the following morning, Cushnie rang him, asking if he had been to the premises to collect K949. He said he had not. Cushnie then told him the vehicle had arrived there from Sydney on the previous afternoon, but had since disappeared and was apparently stolen. He said the car gate to the premises had been forced by cutting the securing chain. No other vehicles appeared to be missing from the premises.
These events were later reported to the police, but K949 has not since been recovered.
WB’s account of some of these events was challenged in cross‑examination and his credit was attacked generally. He agreed that his company had sought asset protection following the Blanchetown accident. Further, he agreed that the publicity from that accident, including police involvement and industry audits, had led to the demise of WRB, albeit he said there were other factors as well, including rising fuel costs.
He was invited to provide a copy of the depreciation schedules of WRB and the plaintiff at relevant times. He did not have them, but said he would bring them to court.
He said the initial dealings with Andrews in March 2000 had related only to the assets of the plaintiff and Wintide. Discussions about assigning K949 had first come up in June or July of that year, when it was with MGS for auction, although he agreed it was possible that use of the vehicle had been mentioned earlier.
It was put to him that, as of April 2000, WRB had owed the first defendant $168,000. He denied that, saying that any debt then owed by WRB would have been minimal. It was then put to him that the liquidator of WRB had accepted the first defendant’s proof of debt in that amount. He said if that was so, the liquidator’s decision was made despite what he himself had said about the debt.
He agreed that Exhibit P6 identified a personal request by him for the release of K949 from MGS and that the truck was, indeed, to be released to him personally, subject to the nominated conditions. He did not seek to resile from that characterisation of the document. Those arrangements were also referred to in the dealings between MGS, the liquidator and GEC (as evidenced in the documents D3). It is of note that the liquidator of WRB, in his letter of 23 June 2000 (also in D3), is recognising his rights with respect to K949, but saying to GEC that he does not intend to exercise them. For its part, GEC, in that correspondence, acknowledges the liquidator’s prima facie interest in the lease.
WB agreed that he had taken part in preparations for the collection of K949 from MGS, including the payment of arrears under the lease, but said that it was Andrews who had arranged the insurance covering that vehicle and which was to be produced. He had specifically discussed insurance protection with Andrews and had seen Linehaul’s insurance document confirming coverage. So far as he was concerned, K949 had thereafter remained comprehensively insured by Linehaul until its loss on 27 March 2001.
He was pressed on whether Andrews had actually accompanied him to retrieve the vehicle from MGS. He said that that was his recollection. When pressed further on it, he became less sure. He said certainly it was either his brother Philip or Andrews who had driven him there, because he himself had driven K949 away. He was confident that MGS was, at that time, shown evidence of insurance coverage for the truck and that it was Andrews who provided it. He had not himself produced it to them as neither he nor his companies had any relevant insurance coverage for it at that time. All of their vehicles were with Linehaul and covered under its policy.
He was then given an opportunity to inspect bundles of insurance broker’s documents produced by Linehaul (D4). He agreed that the schedules within them, covering progressive periods from 9 August 2000 onwards for some months, did not appear to include K949, but later, however, they showed it as covered for $30,000 as at 7 December 2000 (P20).
He was then shown a document under the heading of “Aon Risk Services”, which ultimately became Exhibit D5. It was a letter dated 30 January 2002, with attachments, confirming insurance coverage for WRB and the plaintiff for the period 23 December 1999 to 11 April 2000. Included in its schedule, was K949. (The letter does not, in its terms, purport to say that coverage actually ceased on 11 April 2000, although other documentation does.)
Further, he identified an Aon Risk Services Australia Client Coverage Summary addressed to WRB relating to policy coverage from 27 January 2000 to 23 December 2000 and, again, included in the schedule of that document was K949 (Exhibit D6). Interestingly, each page of D6 appeared to be marked with the date “13.04.00” and he agreed that was likely to be the date when the document was printed.
He also agreed that the total debts of WRB in liquidation was in the range of $1.5 million to $3 million and that he had at one point offered $400,000 of his own funds to satisfy all creditors.
He was referred to the document P9 (noted above), the mention in it of “outstanding lease payments” of $69,368.54 and then the reference “cheque no good”. He said that it related to a payment made by Linehaul to the plaintiff by a cheque which was later stopped and which was then substituted by two cheques, each of $10,000. It was put to him that, in consequence of these matters, he had attended at the first defendant’s premises on 11 June 2001, demanding the balance of $49,000. He agreed to that. He agreed that a conversation which then took place with Andrews had at first been cordial, but had later become heated. He agreed that he had then said to Andrews words to the effect that he would get the money one way or the other and he would take something to its value if necessary. He said that such had been done before, not by him but by Andrews. It was then put to him that he began poking Andrews in the chest and pushing him with his shoulder. He denied that, but said they “collided at the front door on the way out” and “accidentally” ... “the door’s not very big and we’re both big boys” (p.178).
There then followed this exchange at p.178/179:
“Q.... What did you mean by come and take something to the value of, just come and grab it, did you.
A.No, you don’t just do that. I asked him what he’s got freehold. I asked him what he had freehold.
Q.You’re suggesting that you were asking for some goods to the value of - with his permission.
A.Yes, if he can’t give you money, he’s got to give you goods to the value of. He said he had no money until he sold his business. We had a conversation after that.
Q.You didn’t suggest that you might come and take something from him.
A.I didn’t say - we can have connotations of whatever in the heat of the moment, right, but it’s no good taking something if its encumbered or whatever and it’s got to be to the goods of the value of.
Q.In the heat of the moment, the connotation might be that you’d just come and take it without his permission, but that’s not what you meant.
A.No, don’t do that.
Q.You don’t do that.
A.No.”
He was then asked about a separate business arrangement he had had with a Mr Doug Park, whereby he had permitted Mr Park to store some transport equipment with him to the value of $5,000 or $10,000. Park had then asked for it back, but he had refused to return it and, in fact, had sent it to Southern Cross Trailers “for some modification or something”. It was put to him that it had been sent there to have the identification numbers ground off and he denied that. He said he had not been charged with theft over that incident, but Cushnie (then employed by him) had been. He had not been there at the time Cushnie had taken the items to Southern Cross, but it had been at “our direction” (p.180). There followed this exchange:
“Q.You just took the dolly, I thought you said you didn’t do that sort of thing.
A.I said Mr Cushnie was looking after the interest - which he was also a director of WRB at that point in time, did.
Q.With your knowledge.
A.I said I wasn’t there at the time when that happened.
Q.It happened with your knowledge I suggest, do you deny that.
A.I don’t deny that but one must protect your own interests as far as owed money.
Q.Even if that means taking something without permission to make sure - excuse me.
A.He’d already given it to us.
Q.Could you wait for the question. He’d allowed you the use of it and then he’d requested it back, isn’t that correct.
A.Yes, and I wasn’t going to give it back until I got my money.
Q.No, in fact you were removing or had arranged with your knowledge, for the identifying marks to be removed so he couldn’t get it back.
A.No, that’s not correct, that’s your assumption.
Q.I suggest you later in fact told Mr Park that you’d instructed Southern Cross Trailers to grind off the serial numbers.
A.I would suggest that wouldn’t be right.
Q.Would or wouldn’t.
A.It’s not right.”
He agreed that the premises of the first defendant had been those from which WRB had formerly conducted its business. He had worked from there between August 1993 and April 2000, and even after their transfer to the first defendant, had gone back there, on occasions, afterwards.
He agreed that when Linehaul first took over that property, some repairs had been done to the fence and part of it had been replaced. He agreed that when WRB had occupied those premises, it had habitually stored trucks in the yard there, that their keys were usually left in the ignition, but that the yard gates were padlocked overnight. The doors to the trucks themselves were left unlocked.
Cushnie had been his line controller and had continued in that role with Linehaul after it moved into the premises. He said that WRB’s system of securing the gates to the premises had been put in place by them, that it was an appropriate one, being supported, as it was, by visits from a security provider on six occasions each night, checking the office and each truck.
He had not retained the gate keys after the first defendant had begun operating at the premises, but had gone back there weekly or fortnightly, with the consent of Andrews or Cushnie, “chasing money” (p.183) or accessing vehicle parts. He said that that arrangement had continued regularly until March 2001, but even since then he had gone there, on occasions, to borrow tools. He had not taken a lot of notice about how the business operated when he had gone back there and could not say how the premises were secured at night, because he was only there during working hours.
He was asked about which trucks were habitually stored in the yard by Andrews. All he knew was Andrews had a practice of storing in the shed overnight, all trucks which were not going out.
It was suggested to him that he knew that the keys of those vehicles stored in the yard overnight by Linehaul were habitually left on their dipsticks. He denied that.
He agreed that some of the plaintiff’s equipment not being used by Linehaul had been left in Linehaul’s yard between April 2000 and March 2001. That equipment included trucks and trailers and it had been stored there because there had been nowhere else to keep it. As each item was sold, he would come and collect it, with the consent of Cushnie or Andrews. Some were sold by Linehaul, with his consent, and most items first came to his premises for repairs. The process of selling them had begun in about July 2000, when he had secured his new premises. Vehicles delivered to him for this purpose were stored in his own shed or at Adelaide Truck Wholesale. None were ever stored in his yard and he had never, whilst at the premises, left keys overnight on truck dipsticks, nor told Cushnie to do that – keys were either kept in the office (if the truck was out of service) or otherwise left in the ignition. On all the evidence, I was not persuaded that there was any practical difference between storing keys in the ignition or on the dipstick, or for that matter, in the bull bar. If anything, the two latter practices seemed safer to me, but I heard no expert evidence on that.
It was Andrews himself, he said, who had first approached GEC, albeit unsuccessfully, about assigning the lease on K949 to Linehaul. Prior to then, he had himself had no discussions with GEC about it.
By March 2001, he had identified two potential buyers of K949 and he had then spoken to Andrews about returning the truck. This was about one week before Andrews had left the country. It was Cushnie, however, who later told him he had organised the return of the vehicle.
At this point of cross‑examination, he was again asked to produce the depreciation schedules he had undertaken to provide from the previous day. He said he could not produce them, as they were with the liquidator.
He was shown his 2001 workshop diary. It contained several entries relating to various trucks and items of equipment, but he agreed there were no entries in it relating to K949 and said that was because it was a repairs diary. Otherwise, he said his general diary for the relevant period contained no mention of it. He did not dispute that it may have been 21 March when he had spoken to Cushnie about the return of the vehicle from Sydney and he may have then mentioned to Cushnie that there were potential buyers. He did not dispute he might have been contacting Cushnie daily, afterwards, for reports on its return. It was a matter of priority for him and he agreed he was “hounding” Cushnie about it (p.201).
On Monday, 26 March, Cushnie told him K949 was leaving Sydney that day and would be in Adelaide on the following afternoon. He telephoned Cushnie again on the morning of 27 March and was told by him it might be arriving between 3.00 and 4 p.m. that day. It was put to him that Cushnie had in fact suggested it might be arriving at about 5 o’clock that day. He said he did not know, he could not recall if that was said.
He had himself gone to the premises at 3.30 or 4.00 on 27 March. It was put to him that his visit was, in fact, at lunch‑time that day. He said he may have been there at lunch‑time as well as at 3.00 or 4 p.m. It was suggested to him he was not there at 3.00 or 4 p.m., to which he replied: “Whether I attended the premises or rang, I don’t know. I can’t recall” (p.202). Then he went on:
“Q.Do you agree that you might have gone there at lunchtime, physically gone there.
A.I went there physically that day and lunchtime, for me, is anywhere from 1 to 2 o’clock. I may have been there, but I know that I rang him around 3 or 4 o’clock, or he rang to find out where the truck was. I was in his office when I did so. That is when he ascertained what time it would be in.
Q.That might have happened between 1 and 2, though, you say.
A.It may well have, but I don’t think it was then, but anyhow.”
(The emphasis is mine).
It was put to him that when he had visited the yard that day, Cushnie had told him he could pick up K949 between 5.00 and 5.30. He said that that had been the original estimated collection time, but that when he had later contacted Cushnie at 3.30 or 4 p.m., he had been told it would not be in till 6.00 or 7 p.m. and (p.203):
“That is when we said we would then - he would make arrangements to do what he had to do with it and then deliver it to me, my depot, or workshop, the following day.”
He was challenged on this, but maintained Cushnie had said the truck would be delivered to him the next day, because he (Cushnie) was not going to be there after‑hours and he (WB) could not pick it up after‑hours. The vehicle was to be in late and would have to be cleaned and made ready. Cushnie habitually left work at 5.30 or 6 p.m.
Cushnie later told him, on 28 March, that he had, in fact, gone home before 6 p.m. on 27 March and before the truck had arrived at the premises, but that he (Cushnie) knew it had been at the premises by 7 p.m. on 27 March because another driver had seen it there.
He denied that the last arrangement made about K949 was that he was to collect it from the yard on the afternoon or early evening of 27 March.
He was asked what insurance arrangements he had put in place to cover the vehicle, once collected. He said he then had an insurance cover for hired‑out vehicles and would have placed K949 on that policy by making a phone call to his broker once it had come into his possession. He did not ring the broker on 27 March because he knew by 3 p.m. or so that it would not be there or not available until the next day. He assumed it would remain insured by the first defendant whilst in its possession.
It was not until a week after these events that he learned from Linehaul that K949 had been removed from its insurance policy schedule on the afternoon of 27 March. He discovered that after pressing Cushnie about putting in a claim for its loss. He then became angry and removed other items of the plaintiff’s equipment from the first defendant’s premises.
It was then put to him that he had attempted to claim for the loss of the truck under the first defendant’s Marine cover, but he denied that.
In re‑examination, he was shown the Exhibit D8 and said that on his understanding, the insured sum of $30,000 placed against K949 might in fact have been intended to be $130,000, that the “1” digit was missing.
He was then referred to the Certificate of Currency attached to the Exhibit P11 and said that when he had received it, he had understood it confirmed that Booker International Pty Ltd (“Booker International”) was, at Linehaul’s request, covering, inter alia, K949 for the period 2 May 2000 to 9 August 2000. The document does not, however, identify the policy holder or include a sum insured for K949.

At no time after the liquidation of WRB, had he sought to insure K949, as he had first thought that it was the liquidator who was covering it and then the first defendant.
Philip Bunker
Philip Bunker gave evidence. He was formerly a director of WRB and its manager of operations. He spoke of the voluntary administration of WRB in 2000 and of how assets of the plaintiff were assigned or sold to Linehaul. The plaintiff was then the owner of most of the vehicles and stock operated by WRB, but there were items which it did not own, but which were the subject of hire purchase and leasing arrangements directly with WRB. The first defendant agreed to take over hiring or leasing payments with respect to these.
As of 11 April 2000, K949 had been owned by GEC and leased to WRB. It had been placed with MGS for sale and had remained there for three to four months. The difficulty in selling it arose out of the “borderline” margin between the amount repayable to the lessor, GEC, and its market value. “That is why Nick couldn’t sell it, the administrator, and it was sitting there” (p.227).
In the weeks before the vehicle was collected from MGS, there were a couple of meetings with Linehaul, as it was interested in taking over its payments. It required another truck. The meetings involved WB, Andrews and himself. He was at first unable to recall what was said at them, other than that Andrews was interested in taking it over, but he then said “there would have been” (p.229) discussions about keeping the vehicle insured, although he could not remember their detail. He went further then and said he did recall asking Andrews about it and Andrews replying that the vehicle would be covered by Linehaul “the same as the rest of the contract” (p.229) and “like all the others were insured” (p.230). He understood this to mean it would be covered in the same manner as had been resolved in the “original agreement with Linehaul”. It was plain from this evidence and his re‑examination that he was there referring to the Deed P1. He was aware Andrews was at liberty to add or subtract plant to his insurance policy and he thought K949 would be simply added to it.
He had had nothing to do with any later documentation concerning K949.
He remembered driving WB to the premises of MGS to retrieve the prime mover and he said that Andrews was not with them.
In cross‑examination, he said he had been asked to give evidence in the matter only the night before.
He had been involved in negotiations over the original contracts between the plaintiff and the first defendant. They had been completed in about April 2000.
He was asked about the conduct of the meetings with Andrews which led to the transfer of K949. He said that most of the talking for the plaintiff was done by WB, but that he was present.
After the meeting which led to the agreement over K949, he had had no involvement in doing any of the things required by the financier for the release of the vehicle by MGS. He recalled the conditions requiring the liquidator’s consent and payment of outstanding arrears and he thought Andrews had to provide an assurance of insurance cover, but he believed he was not there for that discussion.
He said nothing, and was not asked by either party, about production to MGS, at the time of collection, of evidence of comprehensive insurance.
He was shown Exhibit P3. He had been involved in negotiations leading to it, but he could not recall the specifics of any discussion about it. He had countersigned it. He had an imperfect memory of how many meetings he went to concerning it, but remembered he was present at a time when insurance for K949 was discussed.
Actuarial Report
There was then tendered by consent the defendant’s actuary’s report of Brett & Watson, dated 14 February 2002, and it became Exhibit P12.
THE DEFENDANTS’ CASE
George Cushnie
Linehaul’s first witness was Cushnie, its transport manager. He is the son‑in‑law of WB and had previously worked for WRB as transport manager. He carried on in that same post for the first defendant after it purchased the plaintiff’s stock and plant and went into occupation of its business premises in April 2000.
He spoke of the security arrangements existing at the premises prior to that transition (i.e. at the time the plaintiff had conducted its transport business there). The premises had been fenced with eight‑foot‑high cyclone barbed wiring and their two gates were chained and padlocked at night. Trucks were kept overnight, both in the yard and in a locked shed. If in the shed, keys were left in the truck ignition, but if outside, trucks were locked and keys were placed in a hidden location in the truck bull bar or on the engine dipstick, the latter being accessed by raising a small flap on the cabin. In addition, a security company would visit the premises six times per night.
After Linehaul went into occupation of the premises, he said, the fencing, gates and the locking arrangements remained the same. Trucks were also stored overnight in the same way and the security operator continued to visit six times each night. Those arrangements remained in place up to the time of the loss in March 2001. In short, there was no change.
He agreed that, following the transfer of the business, WB continued to visit the premises once every week or two.
He then spoke of discussions he had with WB in March 2001 about K949. He had kept a contemporaneous diary and sought and was granted permission to refer to it in connection with those discussions.
On the basis of that reference, he said, inter alia, that:
(1)on 19 March, WB attended the premises, looking for Andrews to “finalise his account” (p.247). Following that visit, he (Cushnie) spoke by telephone with Andrews, who was overseas, and, in consequence, began making notes of all dealings “because it was coming to the end of the contracts and the agreements that they had” (p.247);
(2)on the following day, 20 March, he stopped payment on a cheque for $69,600 made payable to WB;
(3)on 22 March, he had a discussion with WB, who wanted to know the whereabouts of K949;
(4)on 23 March, there was a further discussion between them as to when K949 would be available for WB to collect. He told WB he was attempting to get the vehicle back to Adelaide “by the weekend” (p.250). It was then interstate;
(5)on 24 March, WB rang him to see whether the truck was back in Adelaide. WB wanted it in a hurry, but for his own (Cushnie’s) reasons, he was attempting to use K949 for as long as possible;
(6)WB contacted him again on 26 March and he then told him that the truck was leaving Sydney that morning and was expected back in Adelaide the following afternoon;
(7)on 27 March, WB contacted him by telephone - his note did not record the time of day. He then told WB the truck was expected back at approximately 5 p.m. that day. Subsequently, WB called at the premises “to get an update on where it was and it was on track” (p.251). He could not say at what time that visit was, but he then informed WB that he could pick it up at 5 p.m. or 5.30 “by the time we got the stuff off it” (p.251);
(8)at all events, he said, the truck came into the depot at 4.00 or 4.30 p.m. that day and he was there when it did. He stayed on at work until 5.30 p.m., but WB had not come to collect it by then. That did not surprise him because WB was always late. The driver of the vehicle was Shane Rowe.
His attention was then drawn to a handwritten piece of paper contained within Exhibit D8, being a facsimile from Linehaul to All Transport Insurance Brokers (“ATIB”) and dated 27 March 2001. He identified it as a facsimile that he had written and sent that day, advising that Andrews had instructed him to request the removal of K949 from the policy schedule “as Wayne Bunker is picking it up today” and that he would advise when other trucks were also to be removed. He said he had then expected that, in consequence of it, the truck would be removed from Linehaul’s insurance schedule at the “End of that day, when I sent the fax” (p.252). He said that Linehaul habitually added and removed vehicles from its insured list on a daily basis, in particular, so that they were paying no more than the correct premiums.
Interestingly, Exhibit D8 then contains a letter from ATIB dated 27 December 2001, saying that in response to the fax, ATIB had removed K949 from its schedule effective 4 p.m. on 27 March 2001. I will return to this matter later, but I observe in passing that neither of these documents was contained in ATIB’s subpoenaed documents (P20).
At the end of that day, when he left the premises, he still expected that WB would come there that afternoon or evening to collect the truck, but he had made no specific arrangement with him about that. He lived only five minutes away from the premises and expected WB would ask him to come back to unlock them - which he would have done.
He came to work at 5.20 a.m. on the next day and noticed that the padlock had been cut from the gate to the car‑park. That was not the gate habitually used by trucks, but it was possible to drive a truck through it.
K949 had been parked in the yard when he had left the premises the night before, but when he followed track marks back from the car gate, he discovered that K949 was missing. He first rang the driver, Shane Rowe, to ask him if he had it, but he said he did not. He then rang the police and, next, Andrews. Finally, he rang WB to see whether he had picked it up.
He commented that the other trucks which had been parked outside overnight and adjacent to the position of K949, were later model trucks and more valuable, but none had been stolen.
He was cross‑examined about the chain securing the car gate and said it was the same security arrangement that had been in place when the plaintiff occupied the premises. He agreed that he had not noted K949’s time of arrival in his diary, but said he remembered it independently and it was consistent, anyway, with his diary record that Wayne could pick it up at 5.00 or 5.30. He knew that at least an hour was needed after its arrival to complete changeover formalities. He went on to describe these. He was tested on the time of arrival of the truck and said it did not arrive as late as 5 o’clock.
He said he had been instructed by Andrews to remove the truck from the insurance schedule on that day, and it was usual practice to do it, anyway.
He was then shown the schedule Exhibit P11. He was familiar with the table of vehicles shown in it and believed he had first seen it at about the time of the Booker International signature on it, namely, 25 May 2000. Linehaul had insured its vehicles through Booker International. He said the Craig Wells mentioned in it was an insurance broker for Johansen Insurance. He himself had not known specifically whether K949 had been insured by Linehaul through Booker International in about May 2000, but he had believed that all vehicles on the transfer schedule had been so insured.
He recalled that, at one point, the plaintiff had queried, by fax, whether certain vehicles were covered under Linehaul’s policy. He recalled that Craig Wells had been involved in those enquiries. He could not specifically relate P11 to that enquiry, nor remember exactly how it came into being, but he was “pretty sure” (p.265) that he had faxed information to Craig Wells. Some attempt was made to have him trace the history of that document through the fax notations on it, but I was not greatly assisted by that, other than to note that it appeared from it that, at one stage, it had been faxed by Linehaul to another party.
He was asked why Bunker vehicles being used by Linehaul, were to be insured by it. He could not remember that (insurance was not part of his responsibility - Andrews did that), but had just assumed that once vehicles were taken over “we automatically insured them because we had the vehicles” (p.267). He would only take steps about insurance if Andrews instructed him to. Andrews also instructed other staff to attend to such matters.
He was tested on how it came about that the ATIB schedule of 30 March 2001 (Exhibit P14) not only omitted K949 as an insured item (consistently with the termination request), but, as well, two other trucks belonging to the plaintiff, which, it was suggested, Linehaul was still using. He was not able to explain that and said he had played no part in insurance arrangements relating to those other vehicles. I take little account of that, anyway, as I heard no other evidence to the effect that those two trucks were then being used (as opposed to being stored) by Linehaul. The only person who could have authorised their removal from the schedules was Andrews. All he could remember was that, a short time after 27 March, WB was told that a particular vehicle in their yard did not have insurance on it, so he had come to collect it. He had concluded that, by that time, WB must have learned that insurance had been terminated with respect to that vehicle, too. He did not know why that had happened, but did not find it unusual, because that particular truck was merely parked in a freight shed and was not then being used.
He was tested about the circumstances in which he came to draft the facsimile (D8), requesting cancellation of insurance over K949. He said he had received a telephone call from Andrews in the USA earlier in that day, Adelaide time, and the request was in response to instructions Andrews then gave him. Unfortunately, the typed request to ATIB of 27 March 2001, apparently under his authorship, was not then in evidence and was not put to him. It requested removal of the relevant vehicles (including K949) “as of midnight”. That letter seems to have been then posted and to have been received by ATIB on 29 March 2001.
He described the tasks that were undertaken with respect to K949 when it was returned. The driver first cleaned out the cabin and it was then washed by people specifically employed for that task.
Mr William Mettyear was Linehaul’s workshop manager and was responsible for workshop security. At the end of each working day, at about 4.30 or 5 o’clock, he said, Mettyear’s duty was to ensure that vehicles to be kept overnight were stored in the shed if possible. Mettyear would thus enquire which vehicles were going out that night and would attempt to place in the shed those that were not. If a vehicle could be locked in the shed, it was preferable and that would happen. Mettyear would stop work at 5.00 or 5.30 p.m. each day.
It was suggested to Cushnie that K949 had not been going out that evening, yet it had not been placed in the shed. He denied it was not to go out, but agreed it could have been placed in the shed, as it could then have been later accessed by him for handing over to WB. On this point, I heard no evidence as to whether in fact there was spare parking space in the shed that night.
He explained how any driver accessing the premises after hours would have a key to get into the yard and would then retrieve any truck keys from within its bull bar or on its dipstick. The driver would then be obliged to secure the premises behind him. He was tested further on the time of arrival of K949 at the premises on 27 March. He said it was not possible that it had arrived later than 5.30. It was most unlikely that Mettyear was at the premises when he was not, because Mettyear always left at 5 o’clock or soon afterwards.
Shane Rowe
The driver of K949 at that time, Shane Rowe, was called by the defendants. He had been working with Linehaul since August 2000 and remained in that employment. He recalled being in Sydney in March 2001 and being contacted by Cushnie and asked to bring K949 back to Adelaide. He said it was a two‑day journey. He had arrived at Linehaul’s premises between 4.00 and 4.30 p.m. on 27 March. He had then handed the truck over to other employees to wash it. Later, he had removed his own belongings, locked the truck and put its keys on the dipstick. He had left the premises in another vehicle and locked the gates behind him. He had gone to a nearby roadhouse, where he spent the night. He thought it was about two hours after his arrival there that he had left Linehaul’s premises. He remembered being contacted by Cushnie the next morning and asked whether he had taken K949 with him.
In cross‑examination, he described the papers that he took to Cushnie on arrival at the depot on 27 March. He was asked about his logbook for the journey. He did not have it with him, but said he would produce it if it could be found. He spoke about truck‑driving restrictions en route to Adelaide and how relevant times had to be recorded in it. They meant that he would likely have had to stop at or near Mildura, at about 1 a.m. on 27 March, and then have a break until noon of that day. He said that the trip from Mildura to the premises was four and a half hours. It is a flat trip and he would expect to average about 100 kilometres per hour. He said that during the time K949 was being washed at the premises, he was in the workshop there having a break, but he had later cleaned out the cabin, which might have taken him one and a half to two hours. He had not been in a hurry.
He had driven into the yard at about 4.00 to 4.30 p.m., the truck had been washed and he had then parked it in the yard at about 5 p.m. and begun cleaning it out. Had he known somebody was waiting for it, he could have cleaned it more quickly.
He was asked about Mettyear’s practices over storage at the premises of trucks that were not to go out overnight. He could not speak of them. If he arrived early, he would simply leave the truck parked in front of the workshop, take what he needed and leave the premises. He had never been asked to park a truck in the shed. He knew trucks were parked in the shed as a security measure if they came in early, but he did not know who was responsible for them. Any late arrivals would be left in the yard because the drivers would not have access to the shed. He was not specifically instructed to leave K949 in any particular position in the premises. He had parked it in the yard: “... it’s just what we do. It’s common knowledge” (p.304).
It could not have been locked in the workshop overnight because by the time the workshop was secured, he still had not cleaned it out. He did not recall any particular telephone conversations with Cushnie on his way from Sydney to Adelaide, but said it would be common practice for them to be in touch.
Richard Andrews
The second defendant, Andrews, gave evidence. He described his proprietorship of the first defendant and his general experience in truck‑driving. He had known WB well for four to five years, but otherwise for 10 to 15 years. He and WB had been discussing a lot of things relating to the business of WRB during 1999 and 2000, and it was mainly because of WRB’s financial problems. Their talks centred round his acquiring the assets of the Bunker Group, including the premises.
He had actually been operating his own business from the premises himself during 1999 and had then subleased his plant to the Bunker Group for a time whilst he attended to other things. During that time, Linehaul’s vehicles had been “dry‑leased” to the Bunker Group (that is to say, the Group had used them and paid all outgoings with respect to them) and Linehaul had been paid a fee for that. Later, he had resumed his involvement in Linehaul and moved its operations to Burton.
He then described how, from the time Linehaul occupied the premises after April 2000, some Linehaul trucks were kept in the open yard of the premises overnight and how it was the responsibility of the last person at the premises to lock the gates. The number of trucks kept in the yard overnight depended on how full the shed was and what time drivers brought them back. Any trucks left in the yard overnight, if conventional vehicles, would be locked and the key put in the bull bar. If they were “cab over” vehicles, they would be locked and the key put on the dipstick. He was asked, at p.312:
“Q.And is that practice of storing the keys on trucks overnight in the yard something that the WRB drivers were doing.
A.That’s where I picked up the idea of doing it or we just continued with the WRB operation.”

He said that the discussions with WB relating to the transfer of vehicles and the premises to Linehaul took place in the offices of Ron Bellman, solicitor. Bellman then had about three days within which to prepare the relevant documents, because WRB was to go under administration on 11 April 2000. He said there was more than one meeting in Bellman’s office about these matters and that the first meeting was on Monday, 10 April. That was not the day on which the agreements were signed, however.
K949 was not the subject of those particular negotiations and was not included in the P1 or P2 schedules, because it was then “under finance in WRB’s own name and until Nick Gyss gave the release of it nothing could be done with that truck” (p.314). It went to MGS for auction within days of that time and was taken there by one of his drivers.
He denied returning to MGS (with WB or at all) in July of that year, to retrieve that vehicle.
He thought that settlement of the purchase of the premises had occurred in December 2000, but there were difficulties leading up to that time over reconciliation of the respective amounts owed by each party to the other. The first defendant was owed money by WRB at the time of the administration and, ultimately, a claim of $168,000 by Linehaul was submitted and accepted by the administrator. That was the balance due after reconciling debits and credits between WRB and Linehaul. His disputes with Bunker Bros only occurred after the administration of WRB began. He had had to threaten court action over the exercise of Linehaul’s option to purchase the premises.
With respect to Exhibit P3, he agreed that, notwithstanding the first defendant’s acknowledgment in the documents that it had undertaken due diligence in respect of the transaction, he had in fact never inspected the lease and hire purchase agreements relating to particular vehicles comprised in that Deed. He had first seen the lease agreement relating to K949 after the theft. Further, notwithstanding that clause 12 of P3 acknowledged that the first defendant had taken independent legal and accounting advice, that was not in fact the case.
With respect to the vehicles in the schedule to P3, he said that not all of them were held, either by the plaintiff or Linehaul, by 18 August 2000. Vehicles were constantly being sold off by the plaintiff, by Linehaul or through agents, or they were otherwise being refinanced.
With respect to Schedule III items, he said that the schedule was accurate up to 4 June, but between that date and 18 August, some of those vehicles were:
“... either sold or given back to Mr Bunker, because he’d made arrangements to lease them out to other companies or something like that. So, there was constantly vehicles changing all the way through.” (p.325)
He was asked about his general policy of removing trucks from policy schedules as they were disposed of. He said he would ring his broker if he wanted to include a vehicle in a schedule, and that might take about four hours for confirmation. If a vehicle was to be taken off the schedule, it was easier. He would just send a fax requesting its removal and it would be removed:
“... even if I sent it 5 o’clock today to have it removed, the actual fees stop tonight. Although they may not physically take it off the policy until tomorrow morning, I stop paying as of this afternoon.” (p.328)
He recalled a conversation he had with Cushnie concerning K949 when he was in the USA. He was in Los Angeles when Cushnie telephoned him to say that WB wanted to pick it up. He then instructed Cushnie to wash it, take the numbers off it, remove Linehaul’s equipment and take it off their insurance policy. He said those steps were standard practice.
Otherwise, there had been numerous meetings with Wayne and Philip Bunker between April 2000 and March 2001 and Wayne, in particular, had come to the premises very frequently, sometimes every day. He would be borrowing equipment or returning equipment or spare parts, or visiting his family. WB’s daughter worked there, also Cushnie (his son‑in‑law), who, with WB’s nephew, ran the workshop. WB’s son now works there.
He had no recollection of discussing with Wayne or Philip Bunker, in any of those meetings, insurance on the trucks, but he thought the plaintiff would have had cover over all trucks that Linehaul was using:
“I would have thought they would have because, on the lease agreements and stuff, it says that you’ve got to have it under the hire purchase agreement and lease agreements; you’ve still got to have current insurance cover on them.” (p.329)
In much the same way, he said, he had maintained his own insurance on his fleet when he had previously dry-leased it to WRB.
He first learned about the theft of K949 when he arrived at Sydney Airport upon his return from the USA.
Linehaul then had a Marine insurance policy, which covered freight. He had not made a claim upon his insurer over the loss of K949, but “Mr Bunker did” and he (Andrews) was subsequently questioned by an assessor about its circumstances.
He then went on to relate the details of a meeting he had had with WB a week before the trial began. It was a discussion about money and, during the course of it, there was pointing and pushing of shoulders. This happened about six times and WB was the aggressor. It was not in a doorway, but in the foyer of the premises. WB said to him that if he was not paid money, “He would take something to the value of and one thing ‘I will get it one way or the other’” (p.333). Although he and WB gave different accounts of the timing of this alleged incident, I am satisfied they were talking about the same event.
In cross‑examination, he was asked about Linehaul’s insurance schedules. He said that whilst the insurance policy was negotiated for a one‑year period, various endorsements were made on it affecting coverage for lesser periods and dated from the time any particular item was added to or taken from the schedule. He said his annual premium was about $520,000 and was paid in equal monthly instalments, with one final adjusted payment. It was paid through an insurance funder. The rate charged for comprehensive cover on various property items varied between three and six per cent.
He then spoke about his workshop manager, Bill Mettyear, and how he had first worked for WRB, then for Linehaul at Burton, and later at the premises. His employment had ended about a week after the time of this loss. Andrews was actually overseas at the time he left.
He was questioned about time zones and his telephone call to Cushnie about K949, but nothing in particular came of that. He related how, whilst overseas, he regularly spoke to Cushnie first thing in the morning, Adelaide time, and every evening, normally at his home, between 6.00 and 8 p.m. With respect to the conversation he had with Cushnie over removal of K949 from the insurance policy, that did not fall into this pattern in the sense that it had not been discussed in the morning call of 27 March, but had been raised when Cushnie had called him just after lunch that day (Adelaide time). Cushnie simply said that the truck would be in that afternoon and that WB wanted to pick it up. He said his instructions to Cushnie were to remove K949 from the policy, get it steam‑cleaned and remove Linehaul’s numbers and equipment from it. No precise cancellation times were then discussed.
He was then asked about his policy about locking up vehicles in the shed and he explained:
“Our shed, unfortunately, and our workshop – because of the amount of vehicles we had, if we had, what we call, a heavy night, where we had a lot of vehicles home, we could not fit the vehicles inside the shed. If we had a trailer being repaired in the shed, and freight in the other side of the shed, we couldn’t fit all the trucks in the shed if we wanted to. That is the reason why Wayne’s number 28 and 29 sat for some two months outside by the fence in our yard. Later on, they were shifted to Burtons because we could not fit all the vehicles in. We had too many vehicles.” (p.349)
He said he was not in a position to say why K949 was not put in the shed on the night of 27 March, because he was not there. However, he could say that it was his requirement that any vehicle that came in early enough was to be put in the shed, unless it was going to go out that night.
He agreed that there had been an occasion previously when thieves had stolen radios and CBs from “Wayne Bunker’s trucks ... not mine” (p.349): that was when WRB had occupied the premises. A person from Chubb had been charged over it.
He went on to explain how he had gone to America on five occasions in that year (2001) and he thought he had returned to Australia for probably only three days at the end of March.
He was questioned about the schedule Exhibit P11 and commented (pp353/354):
“Q.Can you just go back a step. Do you say that there was a front page to that.
A.No; I didn’t say that at all. I said there was a page prior to this, which was handwritten and sent to Craig Wells. The only reason I am aware of this is because I’m going through another insurance claim at the moment, and that is why I know about this document, that actually went to Craig Wells requesting these vehicles be added to the policy. So, there is a handwritten one that actually went first; then there is this one, that Wayne Bunker drew up, that was signed off, which Wayne agreed with Craig Wells. I remember at the time that it was very hard for Wayne to get through to Craig Wells to get this insurance cover on, and I spoke to Craig Wells and then Wayne organised it with him, and everybody was happy with it.
Q.And that table records that the Kenworth 949 was insured by you with Booker International.
A.No; it doesn’t. Like I said -
...
Q.Was the Kenworth 949, in or about May of 2000, insured by Linehaul.
A.Once again, I can’t answer that. I don’t know. I didn’t do this insurance schedule; Wayne Bunker did.”
He agreed that the vehicles listed in P11 were most likely owned by WRB or the plaintiff, but that they were being used as part of Linehaul’s fleet at that time.
He agreed that he had himself insured K949 and said it was on a policy schedule, D8, shown as being covered from 16 March 2001. There were also other vehicles on that schedule which had been part of the WRB fleet. The December 2000 schedule was not then available and thus not put to him.
He agreed that some 18 of the 24 encumbered vehicles listed in the schedule to P3 had been insured by Linehaul as from 6 October 2000 (see Exhibit D4) and it had paid the premium on them. He was asked why Linehaul had insured them at all. He said it was not because of a perceived obligation to do so, but rather to cover his interest in those goods which they were using and on which they had expended moneys.
He went on to explain that he had first sought to insure all vehicles Linehaul was using, but had faced problems with insurers because he had been told Linehaul had no insurable interest in those which were leased or on hire purchase to WRB or the plaintiff. Later, he was told that if Linehaul had work carried out on them, it would have an insurable interest, and that was how he was able to bring them under a policy coverage. They were then insured for their full values (pp359/360):
“A.Not only to protect the money we had spent on it ... but to protect if it came back on us, that the vehicle had been damaged then we would end up in legal proceedings due to where a vehicle had hit something else and we needed cover to cover our interest in the vehicle and the problem they had is the vehicles weren’t registered in our name, they were in Bunker Bros’ name and we didn’t have - as the insurance company said, we didn’t have an insurable interest in those vehicles.
Q.But you found an insurer that said you did.
A.That is correct.”
All these dealings he had were conducted orally with his insurance broker.
He agreed that his experience was that vehicles acquired under hire purchase or lease always had to be kept insured and he expected that there would have remained an obligation upon WRB, as the lessee of K949, to keep a comprehensive insurance policy in place, irrespective of who used it.
He was then shown Exhibit P6. He had not seen it before, but was aware of its contents because of his undertaking to pay $13,500 by way of arrears. He said there was no discussion at that time between him and WB over insurance, but he was then aware that there was an obligation on the lessee to keep it comprehensively insured.
He did not pick the truck up from Craig Arthur’s until some eight weeks after 18 July and he did not pay the $13,500 until nine weeks after. When he eventually did retrieve it, he believed it remained insured by Bunker Bros.
He was asked why, in this event, he chose to also insure it. He said that he had not understood he had in fact done that until several months later. Even then, he believed it continued to be insured by Bunker Bros. He was asked why he had bothered to insure it at all. He said it was because the insurer accepted he had an insurable interest in it by then: he had expended moneys on it.
His attention was drawn to the amount of that insurance, which was shown as $30,000, a sum well short of the true value of the vehicle. Other Bunker Bros vehicles had been insured for their full value (and, as he believed it, were also insured for that amount by Bunker Bros). They were thus doubly insured. He was asked why he had chosen to insure them again. He answered:
“To cover in case - in one case where somebody doesn’t insure something, it’s covered ... because six months earlier we had a vehicle that was supposed to be insured by somebody else. They hadn’t paid the premium as much as I had the certificate of currency and the vehicle was involved in an accident and it wasn’t insured.” (p.368)
He believed that the plaintiff had always remained obliged, under the lease contract, to insure K949, so there was never any need for Linehaul to reach any agreement with it about that matter. He had simply thought that Linehaul would be protecting itself more by doing so.
There had been a particular problem with K949 because, unlike the other vehicles, which were leased or hired by the plaintiff, it was a WRB truck and he had sought to bring it onto the policy later than the others (it was, of course, a one‑off transaction) and at a time when there was a dispute about insurable interest. Insurers had not questioned the other vehicles, but they had questioned K949. The insurance with respect to it had been negotiated at a separate time from the others. That was probably why it was insured for less.
He was cross‑examined at length about the items within Schedule III of P3. He said he did not have, nor had he sought, particulars of hire purchase or financial arrangements relating to them. As they were individually sold, he was aware that outstanding moneys were paid either directly to the financiers or through the plaintiff and he was only interested in ensuring that Linehaul obtained a clear title, if it was the purchaser. With respect to K949, it was not the plaintiff’s vehicle, but a WRB vehicle.
He was tested yet again on why he comprehensively insured encumbered vehicles. He said these arrangements had arisen in an unusual way. When P3 had been signed and the vehicles delivered to Linehaul, it had:
“... continued with Bunkers’ insurance, which was approved by Booker’s to the end of when his insurance run out which was in September and they allowed us to continue and it was towards the end of the year, I don’t know, exactly, September, but for that period all the vehicles were left on the Bunker policy which was agreed by Andrew McMahon from Booker Insurance. So I had no need when this was signed, to insure these vehicles, because they were already insured under the policy, which actually had Linehaul noted on it, which we continued, with Wayne’s permission, Booker’s permission and my permission, until the end of the insurance running out.” (p.373)
In other words, he said, whilst he believed those vehicles remained insured under the Booker policy and the interests of Linehaul were noted on it, he did not bother to insure them elsewhere. That was as he then understood the position and it was only later in the course of this action that he discovered that that insurance (the Booker policy) had in fact been cancelled by the administrator of WRB, notwithstanding that premiums had been paid up to the end of the policy period.
With the exception of K949, all the rest of the vehicles in the third schedule of P3 had been the subject of finance arrangements between the plaintiff (as opposed to WRB) and the financier. It was suggested to him that the administrator had had no authority to cancel those insurance policies in which the plaintiff had an interest. Of course, the witness was not in a position to properly answer that, but he pointed out that on the top of the Booker policy, there were endorsed the names of both WRB and the plaintiff.
It was put to him that he was paying quite substantial premiums on the plaintiff’s vehicles, notwithstanding his claimed belief that they were otherwise insured by the plaintiff, anyway. He replied (p.378):
“A.But I’m under an obligation to insure them if Mr Bunker hasn’t got them insured. I wouldn’t be able to cover myself as well which I’ve always done even when I leased vehicles to Mr Bunker; if you look on his insurance policy, I still had them insured as well.
Q.That was for an overlapping period, you say.
A.No, I’m not saying that at all. I gave you - for argument sake, when I leased Mr Bunker a vehicle it rolled over; Mr Bunker didn’t have it insured and I had to pay for it. That’s why from then on I’ve always covered myself that if I leased you a vehicle, as much as any document I tell you to insure it, I still keep it insured and I still do to this day, and insurance is cheap and I’ve learnt a big lesson. My insurance only comes into place if you don’t insure the vehicle.”
He worked on the assumption that no insurance company would pay twice for a loss and any claim would go to one or the other insurer. He regarded his insuring the vehicle as a “cheap safety net” (p.381). He explained how there were three types of insurance by which the company double‑checked itself, “Trailer in Control” insurance, Marine insurance and Comprehensive insurance. That way, he said, he could ensure that he was always covered. The extra cost of doubly insuring a vehicle is a better risk than the cost of losing it altogether.
It was put that he had an obligation under the Deeds P1 and P2 to insure the vehicles affected by it. He agreed, saying he complied by ensuring that Linehaul’s interests were noted on the Booker policy in any event, albeit that the liquidator subsequently cancelled it without notifying them.
A number of propositions were then put to him. First, it was suggested that it was his understanding that the plaintiff’s vehicles acquired by Linehaul under Deeds P1 and P2 were insured through Booker International. He agreed. It was put that he knew that policy was cancelled on 11 April. He said he had not known that until this litigation began. He said that he had believed that the interests of the first defendant had been endorsed on the Booker policy and that, as both Bunkers Bros and Linehaul were then insured by Booker, Booker had “amalgamated the two together” (p.393). He could not say when that had happened.
He was then shown the document P16, which he agreed was a schedule of Linehaul and Bunker Bros vehicles and which was part of a proposal to have all vehicles covered under one policy in and from about April 2000. He did not agree, however, that that policy was to be paid for by Linehaul and said he had done a deal with Booker International, whereby there was to be no added premium for coverage of any of the Bunker vehicles. Booker International informed him that they would be covered until the end of Linehaul’s own policy period and Linehaul’s interests would thus be protected. That deal had been concluded by Booker because Booker had said it was having some difficulty with new reinsurers in England, so it agreed to carry Linehaul’s risks for a short period until the end of the policy period, until Linehaul arranged “new insurance” (p.396).

In summary, I am satisfied that the following events transpired with respect to the insurance of K949:
(1)Whilst leased by WRB, it was initially insured by that entity with Booker International, through Aon, under Policy No. 30422 for a period commencing 23 December 1999 and expiring in 12 months.
(2)For reasons which were not fully explained, that policy was cancelled on 11 April 2000.
(3)At about that time and in conjunction with its accepted obligation to comprehensively insure the vehicles referred to in the Deed P1, Linehaul also sought coverage from Booker International for K949 (a vehicle not subject to P1). Andrews was then told by that company that all Linehaul and Bunker stock would be brought under a single amalgamated policy which would remain in force until Linehaul’s policy period expired.
(4)The amalgamated policy then arranged by Booker International became Policy No. 629234, a policy in the name of Linehaul, and it was scheduled to expire on 9 August 2000. Andrews did not realise that, received no premium adjustment and believed that the amalgamated policy was a Bunker Group policy.
(5)It can reasonably be inferred from the evidence that MGS was, indeed, shown some proof that K949 was comprehensively insured and I am satisfied that Andrews was not present when this happened. In the absence of any identified document, however, I am not prepared to make a finding as to what it was shown. It might variously have been a copy of Aon document P6 - which in its own terms suggested K949 remained covered until 23 December 2000, even as of 13 April 2000 - or a copy of P11 or, indeed, some other document not produced.
(6)Linehaul then arranged, through ATIB, for the issue of a new policy by Zurich Australian Insurance to commence from 9 August 2000 and to cover its fleet of vehicles (which fleet included many, if not all, of the vehicles formerly belonging to the plaintiff and the subject of Deeds D1 and D3). K949 was not then covered by Zurich because it would not, at first, accept that Linehaul had an insurable interest in the truck.
(7)On 7 December 2000, however, K949 was endorsed as a vehicle covered under the Zurich policy for an amount of $30,000. That sum insured was likely the result of a clerical error.
(8)K949 continued to be insured under that policy for that amount until, along with several other vehicles, it was taken off the policy by ATIB with effect from 4 p.m. on 27 March 2001 and in purported response to Cushnie’s facsimile and letter of the same date. I am satisfied that the earliest time at which that cancellation was effective was 11.59 p.m. on 27 March 2001.
The Expectancy Argument
In claiming that the first defendant had breached a covenant in P3 to keep K949 comprehensively insured, the plaintiff had first to demonstrate that it had an interest in K949 capable of being assigned under clause 4 of that Deed. Its counsel argued that the plaintiff here had an interest in the form of an equitable expectancy.
I remind myself that an “expectancy” or “possibility” is “a mere expectation that some beneficial interest will be received ... in the future” (Keeton & Sheridan, Equity 3^rd ed., 1987, at 228). An expectant interest is one that is capable of being assigned, provided the assignment is for valuable consideration (ibid at 239).
The plaintiff’s expectancy argument was based upon these propositions:
(1)that pursuant to the letter Exhibit P7, the plaintiff undertook to GEC to pay all leasing arrears and ongoing rental to GEC;
(2)that it may be reasonably inferred from this undertaking that, as one of the four guarantors of the subject lease (the other three being Philip Bunker, Raymond Bunker and WB), the plaintiff was thereby representing their interests as guarantors and assuming the role of principal guarantor of liabilities under the lease;
(3)that I should take judicial notice of a custom, in commercial asset leasing, whereby lessees, whilst having no legal option to purchase the asset, generally successfully negotiate with lessors for its transfer upon payment of a residual sum;
(4)that, by virtue of the above matters, I should find that the plaintiff acquired a “right” to so negotiate and thus had an expectation of purchasing K949 from GEC upon payment of arrears, ongoing rental and a calculated residual sum - that is to say, that the plaintiff acquired an expectancy;
(5)that that expectancy was capable of being assigned and was, indeed, assigned by the plaintiff to Linehaul, as appears from clause 4 of the Deed P3;
(6)that the plaintiff could thus sue Linehaul for breach of its asserted covenant in clause 4 to keep K949 comprehensively insured.
On the whole of the evidence, I am not persuaded that the facts or the law support the plaintiff’s contention that the plaintiff had an expectant interest in K949 and I say so for these reasons:
(1)Putting Exhibit P7 aside for a moment, I can see no reason to assume or find that the plaintiff undertook the role of principal guarantor - indeed, if it were necessary to make a finding as to that role, I would be disposed to find, by virtue of P6 and D3, that it fell upon WB. Those exhibits reveal a proposal whereby, subject to various conditions, K949 is to be released by GEC to WB personally and, indeed, pursuant to his personal request and, for that very reason, the other guarantors (including the plaintiff) are called upon to consent to such a release. It is pertinent, too, that WB (in Exhibit P6) is requested to keep GEC informed of attempts to sell K949. In the events which followed, it appears to me that WB accepted the proposal, acted in response to it and ensured its conditions were complied with.
(2)The plaintiff sought to rely on the contents of Exhibit P7, however, saying the plaintiff thereby undertook the obligations of all guarantors. I do not read P7 that way. It is ambiguous to the extent that it uses the plural “guarantors”. It is not signed under seal, is not signed by Raymond Bunker and may be no more than a response by the plaintiff and the personal guarantors to GEC’s requirement in P6 that all guarantors consent to the proposed arrangements for release of K949 to WB. True it is that the plaintiff says in P7 it will pay arrears and sign a direct debit, but against that is WB’s own evidence that he actually paid the $13,500 (p.113) and, further, the evidence that the plaintiff was to be a mere conduit, anyway, for payments between Linehaul and GEC.
(3)Whilst I would be disposed to take judicial notice of the commercial custom contended for, whereby a lessee can expect to successfully negotiate for the purchase of the leased goods, and whilst I would be prepared to accept that such a custom might give rise to an expectancy, such an expectancy would vest in the lessee (here, WRB) and not in the guarantors of a lease. It seems to me to be too remote a proposition to postulate that guarantors have an “expectation” of acquiring the leased goods - indeed, I would have thought that would ordinarily be their last desire. No authority was advanced for such a proposition and I reject it.
For these reasons, I am not persuaded that the plaintiff had any expectant interest in K949. There was no evidence that it had any other interest in the vehicle and I thus find that it could not validly purport to deal with it pursuant to the Deed P3 (or, for that matter, pursuant to any asserted oral agreement with Linehaul).
It follows that the plaintiff may not rely upon any asserted breach by Linehaul of clause 4 of P3.
The Meaning of Clause 4 of Exhibit P3
It is, therefore, strictly unnecessary for me to deal with the competing arguments as to the proper interpretation of that clause, but I will do so relatively briefly.
- the parole evidence question
In support of its argument that that clause incorporated a covenant by Linehaul to keep K949 comprehensively insured, the plaintiff sought to introduce evidence of discussions between Philip Bunker, WB and Andrews which preceded the time of that Deed and in the course of which, it is contended, Andrews undertook to comprehensively insure the truck.
For their part, the defendants contended that the true meaning of clause 4 of P3 could be gleaned by contrasting it with similar provisions in the Deed P1, and the existence in that other Deed of a separate and specific covenant to keep subject vehicles comprehensively insured. It was contended that as the documents were prepared by the same solicitor and involved the same parties, the court might take account of that same distinction in interpreting clause 4 of P3.
The law relating to the admission of parole evidence in the interpretation of an agreement is perhaps not as clear‑cut as it once was. In Codelfa Construction Pty Ltd v State Rail Authority of NSW (1981-2) 149 CLR 337 at 352, Mason J, having reviewed the authorities, commented:
“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning ... It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable ... Consequently, when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties ...”
Against that background, I regard myself as at liberty to examine the “objective framework of facts within which the contract (i.e. Exhibit P3) came into existence, and to the parties’ presumed intention in this setting”.
I do not, however, regard as falling within that description, evidence as to what each of the parties claims to have said to the other in the negotiations which led to the formation of P3. That is not objective evidence.
Even were I to consider that I could take account of what was said between Philip and Wayne Bunker, on the one hand, and Andrews, on the other, in the negotiations which led to the formation of P3, I would, in any event, have preferred the evidence of Andrews, such as it was. He did not purport to say positively, as he might have, that the question of comprehensive insurance was not discussed. He said simply that he had no recollection of any such discussion. For their part, Philip and Wayne Bunker said there was such a discussion, in the course of which Andrews agreed to continue that cover in respect of the Schedule III vehicles. As I have already said, I had little confidence in their evidence and I am not persuaded that Andrews agreed to any such matter. That is not to say, however, that the topic was not mentioned. It may well have been and, indeed, Andrews plainly conceded that he had kept K949, along with all other “hired vehicles”, insured under his own policy, as well, simply as a matter of prudence. Perhaps he even mentioned that fact to the Bunkers, but I am not persuaded that he covenanted to do so at any stage.
I am satisfied, though, that it is an objective fact, well known to all parties at relevant times, that pursuant to its lease with GEC, WRB was obliged to keep K949 comprehensively insured and that that obligation was to endure whilst the lease remained on foot or until GEC released WRB from it or otherwise agreed to its assignment. Both parties were aware that neither of those things had happened.
I am also satisfied that part of the objective framework within which P3 came into existence, is constituted by the previous agreement between the parties, the Deed P1. That Deed was the first formal step in dealings between them over Linehaul’s acquisition of the plaintiff’s fleet of vehicles. It involved the same parties and was prepared by the same solicitor. It envisaged that Linehaul would hire most of Bunker Bros’ stock and plant, the plan being that Linehaul would ultimately purchase those vehicles or otherwise assist in their sale (hence the Deed of Appointment of Agent, P2). To the extent that any items referred to in P1 were the subject of hire purchase arrangements, Linehaul undertook to make equivalent payments to the plaintiff. To the extent the vehicles were not subject to such arrangements, Linehaul agreed to pay a leasing fee. Pursuant to clause 6 of that Deed, Linehaul undertook to keep all the vehicles comprehensively insured and provide the plaintiff with proof of such insurance.
By the time of the Deed P3, certain agreements had been reached between the plaintiff and Linehaul whereby the items in its Schedule I were being sold for a fixed price, to be settled on a particular date, the items in Schedule II were subject to a similar arrangement, to be settled on a separate day, and the items in Schedule III were plant and equipment subject to leasing or hire purchase arrangements. As has already been noted, clause 4 purported to deal with the Schedule III plant contained in the provision and Linehaul agreed, with respect to it, “to maintain all leasing and hire purchase commitments”.
There was no specific provision in P3, however, equivalent to clause 6 of P1 (where Linehaul specifically undertook to keep vehicles comprehensively insured). Obviously, the vehicles affected by Schedules I and II were at its own risk, but the vehicles in Schedule III exposed others to risk.
The defendants sought to compare the two documents P1 and P3 and to argue:
(1)that the use and meaning of the word “commitments” in clause 3 of P1 is to be distinguished from the specific covenant in clause 6 to maintain comprehensive insurance;
(2)that the same word “commitments” appears in clause 4 of P3, but, in contrast, there is no covenant in that document relating to the maintenance of comprehensive insurance;
(3)that I may draw upon the contents of P1 as constituting background against which P3 came into existence, and that I may thus infer that (just as in P1) the presumed intention of the parties in P3 was that the word “commitments” would not include any covenant to insure and, perhaps more pertinently, that the absence of any covenant to insure in P3 can be presumed to be deliberate, particularly in the context of another objective fact, namely, the ongoing obligation of the lessee of K949 to keep the vehicle comprehensively insured.
I have considered that argument at some length and, in the end, am persuaded that I may take some account of that background and those objective facts in considering the true meaning of the term “commitments” in clause 4 of P3. In doing so, I find that it argues against the interpretation of that word as encompassing a covenant to keep the vehicles in Schedule III comprehensively insured.
That is one line of argument. The other line of argument leads me to the same conclusion, and it relies upon the contextual meaning of the word.
- the contextual meaning of “commitments”
Under clause 4 of the Deed of Sale P3, Linehaul, inter alia, agreed “to take an assignment in respect of all vehicles referred to in Schedule III hereof and agrees to maintain all leasing and hire purchase commitments until the said leasing or finance obligations have been paid out in full” (the emphasis is mine).
The plaintiff argued that that passage should be interpreted as casting an obligation upon Linehaul to keep K949 (as one of the vehicles referred to in Schedule III) insured during the hiring period. I am not satisfied that it does, and for these reasons:
(1)the word “said” in the phrase “said leasing or finance obligations” appears to me to be creating some equivalence with the phrase “leasing and hire purchase commitments”, hence the words “commitment” and “obligation” can be regarded as interchangeable;
(2)the expanded phrase “until the said leasing or finance obligations have been paid out in full, in its plain terms, can only be referring (pertinently) to a payout of the total of all lease payments due under the relevant contract and cannot be referring to other covenants of the lease, such as a covenant to insure;
(3)hence, given their equivalence, the word “commitments” can likewise be referring only to the payment of rental and not to compliance with other covenants;
(4)had it been the intention of the agreement to ensure that the purchaser undertook all the obligations of the subject lease, then that could simply have been spelled out, yet it was not. One probable reason for that would be that the agreement lacked the consent of at least one lessor, namely GEC with respect to K949.
I thus reject the assertion that, on its plain terms, clause 4 of D3 imposed an obligation upon Linehaul to comprehensively insure the vehicles referred to in Schedule III.
Was there any independent oral agreement to insure?
I have already discussed this question in the context of the plaintiff’s application to adduce parole evidence of prior discussions in order to interpret P3. I expressly reject the evidence of Philip Bunker to the effect that Andrews, on behalf of Linehaul, orally agreed to keep K949 comprehensively insured whilst it was in possession. This argument therefore fails. Even had he done so, on all the evidence, I could never have found on the evidence that that agreement was concluded with the plaintiff (as opposed to WB).
Was any insuring obligation breached?
Even if one were to allow that the plaintiff had at some relevant times a legal or equitable interest in K949 and there was a contractual obligation upon Linehaul to comprehensively insure that vehicle, I am not persuaded that Linehaul breached that obligation, and for these reasons:
(1)I am satisfied on all the evidence, and find, that WB and Cushnie agreed, on 27 March 2001, that WB would attend at the premises late on that afternoon to collect K949. In this respect, I strongly preferred the evidence of Cushnie as to these matters over the evidence of WB, who contended that the agreement was for Cushnie to have the vehicle delivered to him (WB) on the following day;
(2) I am satisfied, and find, that Cushnie wrote the two letters of 27 March 2001 contained within D8 and P20, requesting the cancellation coverage over K949 variously as of that day or as of midnight on the evening of 27 March;
(3)I am satisfied, and find, that given the terms of the relevant policy and the request of Cushnie, Zurich Australian Insurance was not entitled to cancel that insurance as of 4 p.m. on 27 March, nor, indeed, am I yet persuaded that it did. The broker’s advice (D8 and P20) plainly infers it did, but I heard no evidence as to the broker’s status in advising that, nor from the insurer itself. It is a more interesting point as to whether the proper cancellation time was thus midnight on the evening of 27 March 2001 or 4 p.m. on 28 March 2001. I cannot resolve that question on the evidence before me, but nor am I persuaded that the plaintiff has shown, on balance, that the insurance was not in place or otherwise enforceable as a claim. In this respect, it is of interest to note that I heard no evidence whatsoever as to any attempts to pursue indemnity over the loss.
THE BAILMENT QUESTION

The other ground of claim relied upon by the plaintiff was that K949 “passed from the plaintiff as bailor to the first defendant as ...” a bailee for hire, the express terms of the bailment being in clause 4 of the Deed of Sale (P3) and there being an implied term, as well, that Linehaul would keep K949 “reasonably secure from loss or theft”.
That plea was made as a result of the plaintiff’s application to amend the Statement of Claim and it led to an adjournment of the action.
I have already discussed the evidence in the case, but during his final address, I asked counsel for the plaintiff to outline the basis of his client’s assertion that the plaintiff was, at relevant times, a bailor of K949. He responded in these terms (p.526):
“It’s my submission if your Honour were to find that by reason of P7, in particular, when the truck was released into the physical custody of Wayne Bunker, he took it as agent for Bunker Bros, then Bunker Bros had been entrusted with possession of the vehicle by GE Commercial who had a right to possession and Bunker Bros in turn passed possession of that on to Linehaul, both actually by the arrangement which is set out in the evidence of both Mr Bunker and Mr Andrews, and which is not controverted, and also under P3, so bailment was created both in fact and under the terms of clause 4 of P3.”
On the basis of my above findings, that reasoning is not supported by the facts, that is:
(1)I have already found that GEC specifically authorised the release of K949, not to the plaintiff, but to WB personally.
(2)Further, I am not satisfied that it can be inferred from the contents of Exhibit P7 or any other evidence that GEC, in some manner, authorised the plaintiff to receive the vehicle from MGS, whether directly or through the agency of WB.
(3)I have found that, as of that time, the plaintiff was no more than a conduit through which Linehaul’s payments with respect to K949 were channelled to GEC.
(4)I am satisfied, on the evidence, that in compliance with the requirements of GEC as outlined in Exhibit P6, the vehicle was retrieved from MGS by WB personally, that it was first taken for repairs and then delivered to Linehaul to be worked. Nowhere in that sequence of events, nor in the documentation, nor, indeed, in WB’s own evidence, is there to be found anything which suggests, or a least satisfies me, that at some point in that sequence, K949 at some point came into the possession of WB as an agent for the plaintiff and was then (as the plaintiff contends) passed on by it to Linehaul as bailee.
(5)On the facts as I have found them to be, there was thus no set of circumstances which led to the creation of a bailment between the plaintiff and Linehaul.
(6)Nor am I persuaded that a bailment came into being because of what is recited in the Deed P3. There is no doubt that, by virtue of clause 4 of P3, the plaintiff “purported” to deliver possession of K949 to Linehaul and thus create a bailment, but I am satisfied, and find, that the plaintiff did not, at any relevant time, have possession of or any interest in K949 such as to enable it to bail the vehicle to Linehaul. I note, in passing, Exhibit P4 discloses that K949 was at relevant times registered in the plaintiff’s name, but that is not evidence of proprietorship.
The true legal position, as I apprehend it, was that, at all relevant times, ownership of K949 remained with GEC, that it was bailed to WRB pursuant to clause 4.2(g) of Exhibit P5 and that GEC consented to a sub‑bailment to WB. Beyond that point, it has not been established to my satisfaction, on any of the evidence, that after that time:
(a)GEC was aware of or consented to WB taking delivery of the truck on behalf of the plaintiff or otherwise passing possession of it to the plaintiff - the most that can be said (giving the Exhibit P7 its most favourable meaning - which I have previously rejected) is that it was aware that, of the guarantors, the plaintiff was the one proposing to pay the outstanding moneys;
(b)GEC was aware, at the very least in the early stages, that possession of the vehicle then passed from WB to Linehaul. There are, indeed, two aspects of the evidence which incline me to the view that GEC cannot have been aware of these matters. The first is that payments of arrears of rental were not paid directly by Linehaul to GEC, but rather through the agency of the plaintiff. Secondly, there was some evidence of a later attempt to procure GEC’s consent to the assignment of the lease to Linehaul, and that consent was refused.
It may well be that the circumstances whereby the truck was delivered from WB to Linehaul constituted a further sub‑bailment (albeit unauthorised by GEC), but if such occurred, WB was the bailor and not the plaintiff.
For all these reasons, I find against the plaintiff’s contention that it was a bailor of K949 to the first defendant.
If, however, I am wrong in that and there was, indeed, such a form of bailment, then I make the following findings:
(1)To the extent that the terms of the bailment were expressed in the Deed P3, I am satisfied that they did not contain a provision that Linehaul was to keep the truck reasonably secure from loss or theft.
(2)I am satisfied, however, that there would have been a term implied in it that Linehaul take reasonable care of the truck (see Palmer, Bailment (2^nd ed., 1991, page 1263)). I am further satisfied that that duty of reasonable care included a duty to ensure that the truck was reasonably secure from loss or theft.
(3)I must then consider the question of whether the circumstances of the truck’s loss breached that implied term. In that respect, I remind myself that there is a reversal of the ordinary onus of proof in respect of any such matter and I quote again from Palmer, Bailment (2^nd ed., 1991 at 49):
“In an action for negligence the general rule is that the plaintiff must prove breach of the duty of care. When goods are injured or lost while in the possession of a bailee, this rule is displaced and the bailee must prove either that he took the appropriate care of them or that his failure to do so did not contribute to the loss.”
I should then consider whether Linehaul has proved to my satisfaction that it took appropriate care of the K949 or that its loss was not the result of any proven lack of care.
In that respect, I have considered the evidence relating to the steps taken by Linehaul to secure vehicles kept at its premises overnight and, indeed, to secure its premises generally. I have already found that Linehaul’s security arrangements differed in no material respect from those formerly adopted by the plaintiff itself when it was conducting its business from the premises.
As the plaintiff’s counsel properly pointed out, such an observation is not determinative: Linehaul’s duty to take reasonable care of the truck must be evaluated objectively and without reference to the past practices of the plaintiff or WRB, which might, themselves, have been less than careful.
Having said that, however, I am persuaded, on all the evidence, that the steps taken by Linehaul to care for K949 and to make it reasonably secure from loss or theft over the evening of 27 March 2001, were in fact reasonable. I have already rejected the evidence of WB to the effect that the arrangement was that the vehicle would be kept at the premises overnight and delivered to him on the following day. I find that the arrangement concluded with Cushnie was that he would be collecting K949 at or soon after 5.00 or 5.30 p.m. on 27 March. I find that, in those circumstances, it was reasonable for Linehaul to leave the truck in the yard with the ignition keys stored on the dipstick (as I find they were), having regard to the nature of the perimeter fencing, the locked gates and the security monitoring then in place.
For all those reasons, I find that, even had there been in place a bailment between the plaintiff and first defendant, Linehaul nevertheless took reasonable care of K949 whilst the vehicle remained on its premises over the night of 27/28 March 2001.
To the extent that the plaintiff’s claim rests upon bailment, it must therefore fail.
Further, given my finding that no bailment can have arisen under the Deed P3, there can be no basis for the second defendant being held liable in any respect.
SUMMARY
I have thus found:
(1)At no relevant time did the plaintiff have any interest as an expectant in K949, nor did it have any other interest in the vehicle capable of being assigned under the Deed P3. It cannot therefore sue upon the Deed, nor can the second defendant be liable as a guarantor of P3.
(2)If I am wrong in that, clause 4 of P3 did not oblige Linehaul to comprehensively insure K949.
(3)If I am wrong with respect to both (1) and (2), then the plaintiff has not established to my satisfaction any breach of such a covenant.
(4)There was no oral agreement concluded between the plaintiff and Linehaul whereby the latter undertook to keep K949 insured. If there was such, it was not breached.
(5)There was no bailment of K949 by the plaintiff to Linehaul.
(6)If I am wrong and there was such a bailment, Linehaul has shown on balance that it complied with an implied obligation falling upon it to take proper care of the truck and keep it secure from loss or theft.
On the basis of these findings, the plaintiff’s claims against both defendants cannot succeed.
Were my decision otherwise, the question of the plaintiff’s loss would remain an open one. No evidence was adduced as to whether the truck’s value exceeded the lease payout figure, nor as to precisely what lease payments had been made by the plaintiff (as opposed to Linehaul), nor as to whether other guarantors, GEC or the liquidator of WRB made any claims with respect to K949. I received the exhibit P12, but it was of limited assistance in this context. In all the circumstances, it is not a matter where I can or should attempt an assessment of loss.
The plaintiff’s claims against both defendants are dismissed.

[2003] SADC 43

25 March 2003